Comparative Advertising and Social Media - Are Your Employees Exposing You?

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Fortune Law provides businesses with "a one stop shop" service dealing with commercial property, commercial litigation, employment, hospitality, corporate and commercial law.

June 2011

Fortune Law's Briefing Update

Dear Subscriber, Budget briefcase

Welcome to our briefing update for June 2011.

This month, we focus on advertising, a fundamental part of any business, and social media, fast becoming the imperative space to promote that business. Are you using Facebook and LinkedIn to your full advantage? If so, you need to be sure that your employees are not exposing you to any unnecessary liability.

Based in offices in the media centre that is Soho, we act for a number of creative and media professionals and companies and assist them in every aspect of their business, from advice on intellectual property rights and negotiation of commercial contracts, to taking on third party finance and leases of West End premises.

This month, we feature articles on:

Keeping Control of Social Media in the Workplace;
A recent Case Update on how e-mail comments about an ex-employee lead to liability;
Comparative Advertising.

Our client of the month is Farhan Lalji of Ad Avengers Limited, a revolutionary advertising agency which is a platform built to connect brands and creatives to make it easier for brands of all sizes to have ads designed and built that truly represent them. Ad Avengers has created a unique credits system by which advertisers may purchase credits which can be redeemed for advertising on a publisher site or for commissioning an ad designed by one of Ad Avengers' creative teams.

Our offer this month is a fixed fee on a social media and networking policy so that you can be sure that your employees are not spending too much time on Facebook or representing their views as yours. See the footer coupon below.

Further information

If you have any questions in relation to any of the matters set out in this briefing update or wish to speak to us in respect of any other legal issues do not hesitate to call or email us on 0207 440 2540 or info@fortunelaw.com. We are always happy to help.

Fortune Law provides businesses with "a one stop shop" service dealing with commercial property, commercial litigation, employment, hospitality, corporate and commercial law.

Issue: 17

In This Issue

Featured Client - AdAvengers

Social Media and the Workplace

Ex-Employee Comments Liability

Comparative Advertising

View our previous newsletters

May 2011 - The Bribery Act, Corporate Hospitality and Cocktails

April 2011 - Legal Issues Facing Restaurants

March 2011 - Spring Clean Your Business

February 2011 - Hospitality Sector Services

January 2011 - Start Ups

December 2010 - How to have a Happy Christmas

November 2010 - Finance

October 2010 - Commercial Property

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"Shainul and the team at Fortune Law have been great. Shainul quickly understood our business, defined the key issues and got to work developing the key documents we needed to get our business started and our investment secured. Though we've only been using Fortune Law for a short period we're quite confident that it's going to be a lasting relationship."

Keeping Control of Social Media in the Workplace

Social media would appear to be a never-ending revolution.

Facebook, as at January 2011, had 600 million members and counting. They spend 700 billion minutes per month on the site, second only to Google's traffic.*

LinkedIn, as at March 2011, had 100 million users and it attracts another million every month. Last year, there were nearly 2 billion people searches on it.*

These tools are increasingly being used by businesses as platforms for growth in terms of marketing, sales, service and recruitment. Whilst you might be one of them, eager for your employees to exploit these networks to forge customer and supplier relationships and promote your offering, it is essential to regulate their usage to maintain efficiency and protect your business.

Here are our top 10 tips on developing a social networking policy:

1. Settle on clear company guidelines

You may decide to block all access to social media sites by using a firewall, but do consider the adverse effect this may have on your employees. Also, bear in mind that they could just log on using their mobile phone. The best option is to give clarity about what they can use, when they can use it, and how it may be used.

2. Define generally which sites are covered

New social media sites continue to pop up. Don't fall into the trap of restricting only Facebook, MySpace and YouTube usage. Include a catch-all definition of all social media and networking sites.

3. Employees should read the small print

Social media sites have terms of service and usage which should be followed. Make it the employee's responsibility to actually read and comply with these, rather than just "ticking the box".

4. Prohibit derogatory comments

Such comments about the company, business or its suppliers, customers, affiliates or even other employees should be forbidden, lest the company's reputation be damaged or liability be incurred.

5. No comment (in the course of business)

Derogatory postings could even be lies or mere opinions. If a person's reputation is damaged, you may find them trying to prove the employee's comments were made in the course of business, and therefore liability for libel, malicious falsehood, or even under employment claims such as victimisation and bullying could fall at your doorstep. Employees should always make it clear that they are speaking on their own behalf, not the company's. You could even prohibit employees from stating where they work on any profile page.

6. Promote careful business use

If social media is used for business purposes, ensure that anything posted on the company's behalf is reviewed by a superior. Provide training if necessary if an employee is regularly required to publish statements, articles, advice or answers online.

7. Protect your confidential and proprietary information

Confidential information will likely be mentioned in contracts of employment and/or your staff handbook. It is worth repeating contextually what is expected of employees. They should be restrained from discussing online the company's trade secrets, confidential information, and sensitive matters such as the company's performance.

8. Encourage respect for intellectual property

Employees should not dilute the company's IP or infringe anyone else's. Brand names, logos, slogans and trade marks should not be posted. Plagiarism should be avoided and any sources should be accurately referenced to prevent copyright infringement.

9. Use of searches for recruitment should be compliant

Where you allow your Human Resources team to carry out searches for recruitment purposes, ensure that they do not infringe equal opportunities and data protection law or any such policy by acting on any revelations in a discriminatory way.

10. Take action

The policy should state that an employee will be disciplined for misconduct and this should be strictly enforced. Misconduct here would mean that an employee has brought the company into disrepute in some way, or whose use of social media has made an adverse impact on their ability on perform their duties.

If you would like advice on developing a social networking policy or electronic information and comMunication systems policy to fit in alongside existing policies, procedures or your Staff Handbook, please do not hesitate to contact us on 020 7440 2540 or at enquiries@fortunelaw.com. Please see this month's special offer for a social networking policy at the bottom of this newsletter.

* Statistics have been sourced from the Facebook, LinkedIn and Alexa websites.

Case Update: E-mail Comments About Ex-Employee Lead to Liability

It is well-established law that giving a bad reference can lead to liability for an employer.

A recent High Court case has now extended this. Where a fallacious and untrue statement about an employee is made by an ex-employer to a new employer who, as a result, fires the employee, the employee can sue the ex-employer under the law of negligent misstatement. This need not be in a recruitment context.

The facts of McKie v Swindon College [2011] EWHC 469 (QB)

Mr McKie worked for Swindon College from 1995 to 2002, when he left with an excellent reference under his belt. In 2008, he became director of studies at the University of Bath. In his role, Mr McKie was involved in liaising with and visiting further education colleges, including Swindon College.

On 5 June 2008, Robert Rowe, HR director at Swindon College, sent an e-mail to the University of Bath, stating:

"We would be unable to accept Rob McKie on our premises or delivering to our students... we had very real safeguarding concerns for our students and there were serious staff relationship problems during his employment at this college. No formal action was taken against Mr McKie because he had left our employment before this was instigated. I understand that similar issues arose at the City of Bath College."

As a result, the University of Bath dismissed Mr McKie who sued Swindon College in the tort of negligent misstatement.

The law of negligent misstatement

Where a person ("A") owes another ("B") a duty of care and A makes a careless, false statement that is relied upon by B who suffers loss as a result, B may bring a claim under the common law tort of negligent misstatement.

To succeed in such a claim, B needs to prove that a duty of care exists, it has been breached and loss was caused as a result.

The test to establish whether there is a duty of care is:

Was it reasonably foreseeable that the conduct of A would cause loss to B?
Was there a sufficient degree of proximity between B and A?
Would it be fair, just and reasonable to impose a duty of care in the circumstances?

In 1994, the House of Lords extended the principle and held that an employer owes a duty of care to a former employee to take reasonable care in the preparation of an employment reference.

Decision - a statement, not a reference

Mr McKie's claim was upheld. His Honour Judge Denyer QC found from the evidence that Mr McKie was "well-regarded" and "an exemplary professional" and that the contents of Swindon College's e-mail were "largely fallacious and untrue".

Mr Rowe had no personal knowledge of Mr McKie and had based the e-mail on the comments of a colleague, whose evidence did not justify the statements. Swindon College lacked any formal procedure in respect of the e-mail, which should have been carried out due to its inevitable impact.

The Court held that this was not a reference situation as no recruitment was taking place. However, it was held that:

It was "eminently foreseeable" that the e-mail would have a damaging impact on Mr McKie's employment;
The College had itself established the necessary degree of proximity by purportedly relying on information concerning that employment relationship;
It was fair, just and reasonable in the circumstances to impose a duty of care on Swindon College.

That duty of care had clearly been breached and caused loss, i.e. Mr McKie's dismissal.

Comment

This case shows that a duty of care may arise in respect of ex-employees where a reference situation does not arise. Any statement of fact, opinion or otherwise about an ex-employee should be considered with care.

If you would like advice on the content of references and statements about ex-employees or otherwise please do get in touch by e-mail to enquiries@fortunelaw.com or by telephone on 020 7440 2540

Comparative ads Comparative Advertising

As a business, you might want to scream and shout from the rooftops about how much better your goods or services are than that of your competitors, how much worse theirs are, or simply draw on similarities or equivalent qualities between them.

Beware however, as there are many dangers associated with comparative advertising. When referring to a competitor's goods or services, you must comply with complex legislative restraints else face a trade mark infringement or passing off claim or complaint to the Advertising Standards Authority (ASA).

What comparisons are you allowed to make?

Under the Comparative Advertising Directive, comparative advertising is permitted provided that:

it is not misleading;
it compares goods or services meeting the same needs or intended for the same purpose;
it objectively compares one or more material, relevant, verifiable and representative features of those goods or services, which may include price;
it does not create confusion in the market place between the advertiser and a competitor;
it does not discredit or denigrate the trademarks, trade names or other distinguishing signs of a competitor;
it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name and
it does not take unfair advantage of the trade mark or other distinguishing sign of a competitor

Case examples

Tesco / Asda - 15 September 2010

A Tesco TV advertisement included the following statement: "... And when we compared prices with Asda's on Saturday the 30th of January, shopping was cheaper for over 1.1 million Tesco customers. Tesco. Every little helps."

Tesco baskets were then shown alongside Asda baskets with the statement "1,150,000 cheaper" and "940,000 cheaper". The footnote stated: "Equivalent products compared, covering over half our customers' purchases... To verify, contact Tesco Price EN8 9SL or www.tesco.com."

ASDA challenged whether Tesco offered an appropriate means of verification for the basket of goods comparison. Tesco, at ASDA's request, had evidenced its claims by sending a copy of the methodology used, a list of matched lines and a list of 380 baskets selected at random, showing the contents of each basket. Although not present on the website, Tesco later stated that the full data would be available on request.

Tesco argued that the 380 sample size was a statistically significant representation of the total number of baskets. The ASA, however, considered that Tesco should have disclosed the full data to allow proper verification of the data. The ASA concluded that the basket of goods comparison was not verifiable, a requirement laid down by the European Court of Justice

The ASA held that the advertisement must not be broadcast again in its current form.

Hutchison 3G UK Ltd t/a 3 - 19 January 2011

A leaflet, for the 3 mobile phone network, stated "Top-up. No other network gives you more for £10. 100 minutes 500 MB internet 3000 texts Lasts up to 30 days Pay as you go, but better".

Five members of the public challenged whether the leaflet was misleading, because they understood that Giff Gaff offered a better £10 package (150 minutes, unlimited text messages and unlimited internet).

3 said they had not included Giff Gaff because they did not regard them as a visible competitor in the pay as you go (PAYG) retail market and its business model (it did not sell handsets or have a customer call centre) meant that it did not merit comparison with other high street competitors. 3 also pointed out that their package allowed PAYG customers to make free Skype to Skype calls, chat on Windows Live Messenger and use Twitter without using any of their inclusive voice minutes or data allowance, and also had the widest 3G network coverage and a dedicated customer service team.

The ASA considered that a statement which claimed "No other network gives you more ..." without qualification, consumers would expect that comparison to include all mobile service providers. Further, 3's other claims regarding their package were not mentioned on the advertisement.

As such, the ASA held that the leaflet was misleading and must not be used again in its current form.

Comment

If you are considering comparative advertising in your next marketing campaign and would like advice on the content of your advertisements or marketing material or indeed the law of trade mark infringement, please do get in touch by e-mail to enquiries@fortunelaw.com or by telephone on 020 7440 2540.

Special Offer

Fixed fee on Social Media and Networking Policy

£250 plus VAT

For more details, email skassam@fortunelaw.com to discuss.

Offer Expires: July 30th, 2011

Please note that information contained in this briefing update does not constitute legal advice. All statements of law are applicable to the laws of England and Wales only. Copyright Fortune Law 2011. All rights reserved.