There’s a great deal of uncertainty surrounding the South African Advertising Standards Authority (“ASA”) right now. This is important for IP owners because the ASA has become a significant forum for deciding what are essentially trade mark or passing off-type disputes.
Why is that? The ASA Code deals not only with “consumer complaints”, such as those regarding misleading or offensive adverts, but it also deals with “competitor complaints”, including complaints regarding adverts that lead to consumer confusion or involve slavish copying. In recent years, the ASA has become increasingly popular with IP owners, mainly because it provides a quick and cheap alternative to High Court proceedings. It’s probably also true to say that the ASA has become increasingly sympathetic to passing-off type complaints. One example of this is the growing acceptance of the fact that colour can play a distinguishing or trade mark role that’s worthy of protection.
But not everyone’s enamoured of the ASA. For years there have been grumblings about the ASA’s authority. The ASA is a voluntary body, and its members agree to be bound by its code and rulings. But what about non-members? To what extent are non-members bound by the ASA Code or ASA rulings? That’s controversial! ASA rulings tend to be effective because, once the ASA makes a ruling against an advert, it can also issue a so-called “Ad Alert”, a notification to its members not to accept the advert. As all the major media companies belong to the ASA, Ad Alerts are quite effective. The ASA publishes its rulings on its website, which is also seen as an effective weapon.
The first real challenge to the ASA’s authority came a year or so back in the case of Medical Nutrition Institute (“MNI”) (Pty) Ltd v The Advertising Standards Authority. A company that doesn’t belong to the ASA felt aggrieved when the ASA ruled that its advert for a product called AntaGolin contained unsubstantiated claims regarding the product’s efficacy. The ASA also issued an Ad Alert to its members. The company took the matter to court and the court issued an interim interdict (injunction) that stopped the ASA from imposing any sanctions (including an Ad Alert) against MNI in relation to its AntaGolin adverts, and requiring the ASA to remove its ruling from its website. In the process, the court discussed certain issues such as: What is the exact status of the ASA? Is it an “accredited regulator” under the Consumer Protection Act? Is it an organ of state? Is it regulated and recognised under the Electronic Communications and Transactions Act?
In 2016, there was an even more damning judgment. The case of Herbex (Pty) Ltd v The Advertising Standards Authority again involved a non-member company that had been adversely affected by an ASA ruling. Judge Du Plessis made various findings, and ruled that the ASA has no jurisdiction over any person or entity who is not a member of the organisation. The judge ruled that the ASA must make it very clear to people to whom it addresses letters regarding complaints that have been made about adverts, that the ASA in fact has no jurisdiction over non-members, and that non-members are not required to participate in the proceedings. The judge ruled that the ASA had no right to adjudicate any complaints involving the company Herbex, that all rulings that it had made involving Herbex were null and void, and that all such rulings had to be removed from the ASA website. To rub further salt into the ASA’s wounds, the judge ordered the body to repay the adjudication costs that it had ordered Herbex to pay to it. We understand that this decision has been taken on appeal, which is not surprising given how much is at stake.
In a more recent development, on 26 July 2016, a notice of the South African National Consumer Commission was published for public comment in terms of section 82(3)(a) of the South African Consumer Protection Act. The notice attached a proposed industry code and ombudsman scheme that was prepared by the ASA. This document is known as The Advertising and Marketing Industry Code of Practice. This is interesting, as it comes after the judge in the Herbex case made the point that laws such as the Consumer Protection Act and the Medicines and Related Substances Act may provide protection for misleading advertising.
It is also interesting that although there is still talk of competitor complaints in The Advertising and Marketing Industry Code of Practice, there’s absolutely no mention of complaints based on consumer confusion and slavish copying. So, basically, “the IP” has been taken out of the code, and it’s now pretty much confined to the substantiation of claims, misleading advertising and the like.
It’s very early days, but it could be that the regulation of advertising in South Africa is going to change dramatically. The question is: Will IP owners be happy with the development?