Masterclass Notes: Update on IP law and the CPA, plus social media and the law
by Johanna McDowell (@jomcdowell) It was a bumper, third masterclass session for marketers, with Danie Strachan of Adams & Adams Attorneys providing a huge amount of very important information regarding intellectual property law and the Consumer Protection Act (CPA), as well as social media and the law.
Strachan is very familiar with the marketing communications industry and Adams & Adams itself is a specialist in this particular sector.
Interaction between the 12 delegates on the course was spirited and engaging, as for most of them their previous knowledge had been sketchy at best. This session’s content therefore turned out to be extremely important.
Intellectual property and contracts
Strachan spoke about the four types of IP protection and what they protect:
- Copyright — protects copying
- Patents — protects inventions, systems and products
- Trademarks — distinguish goods and services
- Designs, Protect outward features
- Shape, pattern, configuration, ornamentation
These all become particularly important in agency contacts with marketers, and are designed to protect the agency rights until paid for by marketers — in the case of copy, photographs, images etc. For marketers, the learnings were important in terms of their own trademarks, brands etc which, again, have to be protected and maintained.
The first part of the session served as a useful introduction to the topic and was also helpful for marketers to deepen their understanding regarding legal issues around intellectual property — often an intangible element of the marketing process.
Consumer Protection Act
The following areas were covered but what is equally important to understand was the reason that the act had become necessary and why it had had to be updated and tightened up. Strachan explained the background to this:
The South African market had been characterised by: discriminatory and unfair market practices; proliferation of low-quality and unsafe products; lack of awareness of rights; limited redress; – inadequate protection for consumers; and weak enforcement capacity
An International Legislative Benchmarking Study reviewed the scope of consumer laws in various countries, including Argentina, Brazil, UK and Canada. A consumer survey was then conducted to establish the extent of consumer awareness of rights and what improvements were required; public consultation workshops were also held in all provinces.
Findings were that existing legislation was fragmented and outdated; incorporated as merely incidental to consumer protection; and premised upon principles that are no longer applicable to modern society. These findings were incorporated into the Consumer Protection Bill and the act was signed on 24 April 2009.
The more vulnerable the consumer, the more protection is required.
The act covers goods and services delivered or rendered in the ordinary course of business between parties within the republic. It applies to:
- the promotion of goods and services;
- transactions between suppliers and consumers; and
- goods and services themselves.
Various definitions were discussed below, along with the rules and regulations. It probably is the most interesting to look at h) Prohibited practices:
- Marketing standards
- Direct marketing
- Loyalty schemes
- Promotional competitions
- Prohibited practices
- General provisions affecting advertisers
What are prohibited practices?
- Bait marketing
- Goods or services for sale may not be advertised at a specified price in a manner that may mislead consumers as to the actual availability of those goods or services at that advertised price.
- If limitation is placed upon availability of goods or services advertised at a specific price, the goods or services which are available at the specified price must be marked to the extent of the limitation.
A supplier is not obliged to supply goods at advertised prices if there is an offer to procure another supplier to supply similar or equivalent goods at the same price within a reasonable timeframe and the consumer either accepts such an offer or unreasonably refuses to accept it.
- Referral selling
- Suppliers prohibited from engaging in referral selling.
This means that a supplier may not give or promise to give a discount or rebate to a consumer in terms of goods or services upon condition that the consumer agrees to give to the supplier names of other consumers, or the consumer agrees to assist the supplier in selling his/her goods or services to other consumers
One may not inform someone that he/she has won a competition if, inter alia:
- no competition has been conducted;
- the person has not in fact won a prize;
- the prize is subject to a previously undisclosed condition; or
- the person is required to offer further consideration.
One maynot inform someone that they have a right to a prize if:
- they do not in fact have such a right;
- the prize was generally available or offered;
- further consideration or purchase of goods/services required.
Hopefully this will put an end to those dreaded timeshare-win competitions!
But none of these laws will work without enforcement. So how will they be enforced, asked the marketers? The answers:
- National Consumer Commission
- National Consumer Tribunal
- Conciliation, mediation, arbitration
And what will the penalties be?
- Criminal and administrative sanctions.
- Administrative sanctions: the greater of 10% of annual turnover in previous financial year or R1 million.
Significant, agreed the marketers.
Social media and the law
Finally, the session moved onto social media and the law — possibly the most complex area to look at currently as things are changing frequently. The various types of social media were discussed, all of them well-known to marketers and advertisers in general. But what makes social media different to other media? Some interesting facts are:
Social media developed quickly:
- It took radio 38 years to obtain 50 million users
- It took television 13 years to do so
- It took the internet four years to do so
Social media is quick:
- Instant uploading
- Mobile access
- Wide audience
What are the risks?
- Damage to reputation
- Leaking of confidential information and secrets
- Spreading of rumours and panic
- Loss of control/unauthorised statements
- Infringement of copyright and trademarks
- Financial implications
- Security threats
Is there specific legislation to govern social media?
Not yet — but it is expected. Meantime, the normal IP laws governing copyright, trademark infringements, etc will be applied. For consumers, privacy laws as per the consumer protection act will be applied.
Marketers are therefore asked to exercise caution in their approach to social media and all of its various aspects in any marketing campaigns for their brands and products/services — and indeed for their companies.
Johanna McDowell (@jomcdowell) is managing director of the Independent Agency Search and Selection Company (IAS), and she is one of the few experts driving this mediation and advisory service in SA and globally. Currently she is running the IAS Marketers Masterclass, a programme consisting of masterclasses held in Cape Town and in Johannesburg. Twice a year she attends AdForum Worldwide Summits.
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