The issue of the jurisdiction of the South African Advertising Standards Authority (“ASA”) to determine matters involving individuals and companies that don’t belong to the body has now been resolved by an agreement that has been made an order of the Supreme Court of Appeal in the case of Advertising Standards Authority v Herbex (Pty) Ltd.
Various challenges have been made against the ASA’s authority to make rulings against non-members and we have reported on this issue previously. Our interest as IP lawyers springs from the fact that the ASA has become a popular forum for determining what are essentially trade mark and passing-off disputes. This has been possible because the ASA Code does not only deal with consumer complaints such as misleading advertisements, but also competitor complaints that cover issues such as consumer confusion and copying. Our experience has been that the ASA has, over the years, become increasingly knowledgeable of, and sympathetic to, IP-related issues. The major benefit of the ASA as a forum for resolving disputes is that it is far quicker and cheaper than the High Court. The main challenge to the ASA’s authority came from a company called Herbex, which sells weight-loss products. Herbex is not a member of the ASA and, when the ASA made a ruling against the company in relation to its advertising for one of its products, the company took the matter to the High Court.
The High Court held that the ASA has no jurisdiction over any person or entity that is not a member of the organisation. It further held that the ASA must make it clear to people to whom it addresses letters of complaint that the body has no jurisdiction over non-members, and that non-members are not required to participate in its complaint proceedings. The court ruled that the ASA has no right to adjudicate any complaints involving the company Herbex, that all rulings it had made involving Herbex were null and void, and all such rulings had to be removed from the ASA website. It also ordered the ASA to repay the legal costs that it had ordered Herbex to pay. An appeal was lodged but the matter was settled out of court and the agreement between the parties was made an order of court. The agreement states:
- the ASA has no jurisdiction over any person or entity that is not a member of it. Unless a non-member submits to the ASA’s jurisdiction (in other words, voluntarily agrees to accept it), the ASA cannot require the non-member to participate in its processes, or issue any instructions, order or ruling against it.
- the ASA may consider and issue a ruling to members (which won’t be binding on non-members) on any advertisement, regardless of who published it, in order to determine whether its members should accept the advertisement (if it hasn’t yet been published) or withdraw it (if it has already been published).
- the ASA must include paragraph 1 in its standard letter of complaint, but must also point out that if the non-member chooses not to participate, the ASA can still consider the complaint and could issue a ruling as set out in paragraph 2.
So, what does this mean? The ASA can continue to consider complaints (including the trade mark style complaints I referred to earlier) as it has in the past. If the party about whom the complaint is made is a member of the ASA, then the body can make an order requiring that party to stop using the advertisement, which will be binding. If the party is not a member, then the ASA cannot order it to withdraw the advertisement. The ASA will, however, still be able to instruct its members to refuse to publish or print the advertisement. This sanction refers to the ASA’s Ad Alert system, something that has proved to be very effective in the past. The reason it’s been so successful is simple: all the major media companies in South Africa, including those operating in radio, TV, billboard and print, belong to the ASA, and if they are instructed to refuse an advertisement, this is likely to cut down the advertisement’s exposure quite considerably.
We are therefore hopeful that the ASA will remain a viable forum for trade mark style disputes.