Advertising and promoting your business: What’s legal?

Advertisements in Singapore are generally self-regulated by industry. This role is performed by the Advertising Standards Authority of Singapore (ASAS), and the Singapore Code of Advertising Practice (SCAP). The SCAP is not legally binding.

However, this does not suggest that all forms of advertising practice are condoned. Consumers of advertisements and advertisers themselves act as the primary whistleblowers of advertisements in Singapore, especially since the SCAP aims to promote self-regulation in advertising practice. The ASAS handles complaints filed against businesses for adopting advertising practices that are against the SCAP. If necessary, a serious form of sanction applied by the ASAS is “adverse publicity” where the details of the outcome of investigations it undertakes will be published, hence naming those who have offended against SCAP[1]. Even so, it is only in rare cases that this sanction applies as businesses are given the chance to modify the offending advertisements. One must always bear in mind that the ASAS is not intended as a clearing house for the approval of all advertising.[2] The responsibility for observing the SCAP still rests primarily with the advertiser.

Hence, the effectiveness of the SCAP in weeding out unacceptable advertising practices, may be limited especially with the advent of social media in the new era for advertising.  Businesses have recognized the power of social media in embracing it as an extremely lucrative advertising platform. For instance, Facebook alone has 2.38 billion monthly active users and if it were a real, physical nation, it would be the most populous nation on Earth. Therefore, guidelines policing non-digital advertising practices may no longer be as applicable to social media advertisements .

In response to the new age media, new guidelines with regards to advertising on social media have been added to keep up with the changing times. The new guidelines were mainly a response to consumer feedback received with regard to social media advertisements. It is also an attempt by the ASAS to fill the “social media loophole” in the SCAP. Consumers have allegedly been misled by some social media accounts attempting to advertise for a company. Many social media influencers receive monetary incentives to sell the product, which may give rise to doubts whether they are giving honest reviews of a product.

To combat the above problems and allow consumers to make objective judgments for themselves, the new guidelines aim to achieve a greater degree of transparency by requiring the disclosure of commercial relationships via prominent disclaimers. For instance, paid reviews, testimonials and endorsements must be clearly indicated. An Instagram influencer will have to indicate whether a post is a sponsored one, or in other words, whether they have been paid to advertise the product. This enables consumers to judge reasonably whether the product had been honestly advertised.

Other than the  social media loophole in advertising practices, businesses can in fact use the trademarked names of fellow competitors in their advertisements in the name of comparative advertising. Section 1.3 of the SCAP promotes fair competition between businesses. Hence, if businesses tread carefully, they can use the name of their competitor in their advertisements and avoid having to take down their own advertisement.

In the case of Challenger Technologies Limited v Courts (Singapore) Pte Ltd, Challenger sued Courts as Courts used the words “Guaranteed 10% Cheaper Than Any CHALLENGER” to describe the price of their new mobile accessories brand, “3SIXT”. Challenger unsuccessfully sought an interim injunction to restrain Courts from using its trademarks in advertisements . Challenger’s action failed as Challenger failed to, among other things, demonstrate irreparable damage to its goodwill. Thus, pending the trial, the defendant was entitled to continue its advertising campaign.

Businesses may wish to consider using the comparative advertising exception if they wish to use their competitors’ trademarks in their advertisements. If a business wants to use the trademarked name of a competitor, it may do so if such use constitutes “fair use in comparative commercial advertising or promotion” under section 28(4)(a) Trade Marks Act.

The Challenger judgment is a reminder that a trademark owner (i.e. the competitor) who wants to restrain such advertising using an interim injunction has to satisfy certain requirements. In particular, it has to adduce evidence that it would suffer  irreparable damage to its goodwill. A good example is American Cyanamid Company v Ethicon Limited: the patent proprietor of surgical sutures was able to restrain a competitor from entering the market, as it would be extremely difficult to reverse the consequences after the trial, if doctors had gotten used to the competitor’s products. In contrast, in the Challenger case, the defendant’s advertising campaign was one that was limited in time.

Despite the apparent loopholes in the advertisement regulation system, there are still some general principles that advertisements must comply with. Those are found in section 1.3 of the SCAP, which includes non-denigration, non-exploitation of goodwill  and non-imitation. Non-denigration means that advertisements should not unfairly attack or discredit other products directly or by implication. Non-exploitation of goodwill means that advertisements should still avoid making blatant lies about another company, without justification. An action in defamation can also be launched against the offending company if companies are not careful with that. Non-imitation means that advertisements should not be so similar in general layout, slogans etcetera, such that it is likely to mislead or confuse a reasonable person. A more stringent rule under this section is found  under Article 16 of the International Chamber of Commerce’s (ICC) Advertising and Marketing Communications Code which states that “Where a marketer has established a distinctive marketing communications campaign in one or more countries, other marketers should not imitate that campaign in other countries where the marketer who originated the campaign may operate, thereby preventing the extension of the campaign to those countries within a reasonable period of time.”

On a separate note, based on a recent news article, ASAS received a total of 218 cases of feedback last year. This includes complaints as well as requests for advertising advice. The main complaint for consumers was misleading beauty-related advertisements, with complaints about the restaurant sector coming in a close second. “Advertisers are reminded that promotional information must be truthful, and all pertinent terms and conditions must be stated clearly. If an advertisement does not include the terms and conditions, it should make it easy for consumers to find them.”

The lines of legality are often blurred in the advertising world. As can be seen, advertisers could end up being on the receiving end of an injunction. It is advisable to consult a lawyer if you have any doubts about the legality of an advertisement.

 

[1] Paragraph 6.2 of the SCAP

[2] Paragraph 3.1 of the SCAP

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s