SCL Meeting Report: ‘Online Advertising Masterclass: Display, Data, Search and Social’.

November 13, 2013

The first speaker was Steve Chester, Director of Data & Industry Programmes at the Internet Advertising Bureau UK (IAB). Steve, set the scene by explaining how the online display advertising market has evolved over the past 10 years and, in particular, how real-time online display advertising works. He explained that the display ecosystem has developed from direct buying and selling into an increasingly complex environment with data now powering real-time bidding and selling. To demonstrate this, Steve showed the audience a video produced by the IAB which has had tens of thousands of views. The video can be viewed on the IAB web site here.

Steve also gave an update on the size of the digital advertising market. According to figures from an IAB/PwC Digital Adspend study, in 2012, the digital advertising market was worth £5.4bn, an increase of £607m year-on-year. Real-time bidding also constitutes a growing percentage of total digital display ad spend (10% in 2012, 15% in 2013, and predicted to rise to 19% in 2014).

Finally Steve talked about the issue of Brand Safety. In particular, he explained the IAB’s work on tackling ad-funded copyright infringement and how rightsholders are working with the City of London Police on a register of infringing sites known as ‘Operation Tradebridge’.

The next speaker was Mark Watts, a partner in the data protection team at Bristows. Mark gave an update regarding the data protection issues associated with online display advertising.

Mark started by giving an overview of the relevant regulatory framework in the EU and UK, in particular, the Data Protection Directive and the E-Privacy Directive in the EU, and the Data Protection Act 1998 and Privacy & Electronic Communications (EC Directive) (Amendment) Regulations 2011 in the UK.

Mark then went on to discuss the Article 29 Working Party’s stance regarding online behavioural advertising (in particular as set out in Opinion 2/2010). Mark explained how the Working Party have generally been most concerned with online ‘tracking’ over time and across web sites. He also explained the Working Party’s emphasis on the need for prior consent under Article 5(3) of the E-Privacy Directive and the difficulties and complexities that have been associated with efforts to interpret and enforce the cookie consent requirements in the context of the online display ecosystem. Mark also discussed whether ad network opt-out mechanisms could constitute valid consent. The position taken by the Working Party is that, whilst these are welcome generally, they do not amount to consent under the data protection and e-privacy regulatory regime.

Finally, Mark took the audience through the various self-regulatory responses. These include (i) the various US-led industry codes based on FTC Principles, (ii) the World-wide Web Consortium (W3C) Do Not Track/TPE standard, (iii) the pan-European framework put in place by EASA and the IAB, and (iv) the ASA’s ‘Transparency and choice rules for Online Behavioral Advertising’ implemented in the CAP Code earlier this year.

The third speaker was Amanda Michaels, a barrister from Hogarth Chambers. Amanda gave an update on keyword advertising (the ‘search’ aspect of the online advertising masterclass).

Amanda focused on Interflora v Marks and Spencer, a case in which Interflora brought proceedings for infringement of the Interflora word trade mark arising as a result of the use of the mark as a Google keyword to generate adverts for M & S. Importantly, the adverts themselves did not include the mark. The key question which Amanda discussed was whether the purchase of someone else’s trade mark as a keyword amounts to an infringement, and if so, why?

Before, going into more detail on Interflora, Amanda provided a quick run-through of some of the earlier key CJEU cases. In particular, she covered Google France v Louis Vuitton (Cases C 236-8/08, 23 March 2010), Bergspechte (Case C 278/08, 25 March 2010), and Portakabin (Case C 558/08 8 July 2010). Amanda then returned to Interflora and the trial before Arnold J ([2013] EWHC 1291 (Ch) (21 May 2013)) where it was held, amongst other things, that the onus lies on the defendant to show that there is no likelihood of confusion and that there was in fact an infringement under s. 10(1) of the Trade Marks Act 1994 because of the particular nature of Interflora’s business model as a network of florists. Amanda ended by flagging to the audience that there is currently an appeal and there may be another CJEU reference, so people should watch this space.

The final speaker was Ashley Hurst, a partner in the commercial litigation team at Olswang. Ashley gave a legal and compliance update on social media advertising.

Ashley started by giving a quick reminder of the various laws which relate to social media advertising, such as the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs), intellectual property laws (eg under the Copyright, Designs & Patents Act 1988 and the Trade Marks Act 1994), common-law considerations (eg libel, privacy, passing off), and the various regulatory rules (eg the CAP Code).

Ashley then moved onto the tricky issue of celebrity endorsements and how the regulatory rules can be broken by failing to make it clear that the celebrity is being paid, ie as this falsely gives the impression that a celebrity has endorsed a product. In particular, Ashley explained the prohibition of unfair commercial practices under reg 3(3)(b) of the CPRs whereby a commercial practise is unfair if it ‘materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product.‘ The best example of the enforcement of this prohibition is the Handpicked Media case where the OFT investigated the blogging company Handpicked Media in 2010 for not fully disclosing that promotional blogs and tweets were made in return for payment.

Ashley also explained the recent Rihanna passing off case where Topshop used Rihanna’s image on one of their T-shirts without her consent. In that case, the judge decided Topshop’s customers would have been misled into thinking that Rihanna had endorsed the product. Ashley explained that the key points for compliance are (i) whether the celebrity has goodwill in his/her image (ii) would you normally expect to pay the celebrity to use his/her image to promote the product/brand, and (iii) could readers be confused into thinking the celebrity has endorsed the product.

Sacha Wilson is an associate at Bristows LLP.