Wright, Johnston & Mackenzie Solicitors

Costa Coffee case highlights the dangers of comparative advertising

Coffee-house giant Costa Coffee has won a case brought against them by rivals Starbucks over Costa’s comparative advertising campaign.

Costa ran an advertising campaign claiming that “7 out of 10 coffee lovers prefer Costa”. The claim followed a blind taste test carried out on the public by Costa.

Starbucks complained to the Advertising Standards Authority (ASA), claiming that the adverts were misleading and that the taste test carried out by Costa was inadequate.

Costa’s taste test in fact only related to cappuccinos and Starbucks argued that their advertising campaign made it seem as if 7 out of 10 coffee lovers prefer all of Costa’s coffee.

However, the ASA did not agree with Starbucks. They held that:

- the taste-test had been reasonably conducted; and

- the fact that Costa’s advertisements explained in the small print that the survey only related to cappuccinos meant that readers were not likely to think that it related to all of Costa’s coffee. 

Despite Costa’s success, the case highlights the dangers of comparative advertising.

When comparing products to that of their rivals, companies must comply with comparative advertising rules in the UK and the EU. The adverts must not be misleading and must compare like-for like. There must also be some concrete basis (e.g. a survey) for making the claims.

If any of these rules are broken, the offending company will be forced to amend or withdraw the advertisment and could be subject to a big fine.

If you wish any further advice in relation to comparative advertising or the rules on advertising in general, please contact a member of the iTech team.

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Register Patents Faster!

A new fast-track scheme introduced by the Intellectual Property Office (IPO) should mean that applicants can register international patents faster.

The IPO claims the scheme will reduce waiting times for the UK part of the process from 18 months to 2 months.

An international patent is a patent which is registered in a number of different countries.

Under the current scheme, the patent application is initially made to a single international patent body. The application is then passed to each individual country for further examination by that country’s patent body.

The applicant is then given a report on the application by each country’s patent body - the report will either approve the application or set out any changes which need to be made to the application.

However, there is currently a massive backlog for this further examination in the UK – the average waiting time for a report is 18 months.

The Government hopes that the fast-track scheme will reduce this waiting time to 2 months. Any applicant can apply using the fast-track scheme and applicants do not have to show any special reason for wishing to enter the fast-track scheme.

If you wish any advice on how to register patents or on intellectual property rights in general, please contact a member of the iTech team.

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Make sure your terms and conditions reflect your actual sales practices and procedures

A recent decision of the High Court in England has highlighted the importance to companies of ensuring that their standard terms and conditions and contracts properly reflect their sales practices and procedures.

The case was brought by Kingsway Hall Hotel Ltd against software supplier Red Sky IT (Hounslow) Ltd. Kingsway bought software from Red Sky and the purchase was governed by Red Sky’s standard terms and conditions.

Kingsway were given a demonstration of the software at the premises of another of Red Sky’s customers. However, Kingsway soon experienced problems with the software and it proved to be unsuitable and unreliable. This resulted in additional costs for Kingsway.

Red Sky failed to solve the problems and Kingsway sought damages from them claiming that the software was neither fit for purpose nor of satisfactory quality.

In their defence, Red Sky tried to rely on a provision in their terms and conditions which said that Red Sky would not be liable for any defects in the software.

Red Sky argued that this was reasonable as the software had been demonstrated to Kingsway and Kingsway had evaluated the product and made up its own mind that the software was fit for its purpose.

Finally, they denied that the software was of unsatisfactory quality and argued that any failure of the software itself was from Kingsway’s failure to properly train its staff on the software.

However, the High Court found in favour of Kingsway. The Court held that Red Sky’s attempt to exclude any liability for defects was unreasonable in this case.

Red Sky’s terms and conditions set out that Red Sky would provide relevant demonstrations to Kingsway and that Kingsway would be provided with all of the operating documents relating to the software.

However, this is not what has happened in practice – the demonstrations were carried out by another customer of Red Sky and were not comparable with Kingsway’s intended use of the software. Red Sky had also not provided the operating documents to Kingsway.

As a result, Red Sky’s limitation of liability clause was unfair - Red Sky had not fulfilled their obligations under their terms and conditions and Kingsway was not in a position to decide whether or not the software was suitable for them. They had in effect been induced to buy the product as a result of Red Sky’s advice.

The case highlights the importance of regularly reviewing standard terms and conditions to ensure that those terms adequately reflect how products are sold in practice.

If terms and conditions refer to additional documentation or information being provided, then this should always be given to the customer to help them assess the product and make an informed choice.

If the terms and conditions contain terms relating to demonstrations, it is also necessary to ensure that the product is demonstrated in an environment appropriate to the customer in circumstances comparable to those in which the customer intends to use it.

If you wish any assistance drafting terms and conditions for your business, please contact a member of the iTech team.

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Loaded wins Bebo picture privacy case

The Press Complaints Commission (PCC) has held that Loaded magazine did not infringe a woman’s privacy rights when it published photographs which had already been widely circulated online. 

The woman had uploaded pictures to her personal profile on the social networking site Bebo. Approximately one year later, Loaded printed the pictures and ran an article about the woman without her permission.

At the time of publication, Loaded did not know the identity of the woman and offered a £500 reward to anyone who could persuade her to appear in one of their photoshoots.

The woman complained to the PCC for damages on the basis that the photographs and the article intruded her privacy rights and were published without her permission.

However, the PCC found in favour of Loaded on the basis that the pictures had already appeared widely on the internet outside the context of the woman’s Bebo page. The magazine article therefore did not breach the woman’s privacy rights. 

The Commission did have some sympathy with the woman saying that the article and the fact that the woman had been 15 years old when the photos were taken was in poor taste, but this alone did not give rise to a claim. 

If you have any queries relating to privacy rights, please contact a member of the iTech team.

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Sender held liable for defamatory email forward

In a highly controversial case, a US Court has found the sender of an email forward containing links to online defamatory material to be liable for defamation, even though the sender did not write or have any part in the original defamatory material.

The sender sent an email forward to a number of recipients with links to a blog containing offending material. The sender had not commented on the contents of the links, nor had he made any additions to the blog.

It was however held by the Court that simply the act of sending the links by email amounted to ‘publication’ under US defamation law. He was deemed to have acted either with ‘actual malice’ or with a ‘reckless disregard for the truth’.

The blog in question contained allegations that the Mayor of Texas was involved with former British Prime Minister Margaret Thatcher’s son, Mark Thatcher. It was alleged that the blog falsely suggested that they were acting together to try and overthrow the government of Equatorial Guinea.

The Court in coming to a conclusion reasoned that “A statement is published when it is said orally, put into writing or in print, and the statement was published in such a way that the third parties are capable of understanding its defamatory nature…An email, just like a letter or a note, is a means for a statement to be published so that third parties are capable of understanding the defamatory nature of the statements.”

The case was decided under US law and the decision does not have any direct impact on defamation law in the UK.

It will however be interesting to see the approach taken by the UK courts when such a case arises in the UK, in particular when considering the competing rights of freedom of speech and the rights of the person allegedly defamed.

The iTech team will keep you updated with developments in this area of the law.

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