UK: How to comply with consumer protection laws — are you faking it?    

On 4 March 2016, the UK Competition and Markets Authority ("CMA") published guidance for businesses on how to comply with consumer protection law in relation to online reviews and endorsements.

Online reviews and endorsements are increasingly influential when customers decide whether or not to buy a product or service. The CMA has reported that more than half of adults in the UK use online reviews and that approximately 6% of consumers use blogs or vlogs before making purchases.

With this in mind, the CMA carried out investigations throughout 2015 which sought to identify unlawful practices having the potential to mislead consumers.

Its advice now comes in the form of three 60-second summaries for businesses entitled "Online Reviews: letting your customers see the true picture", "Giving a balanced picture: do's and don'ts for online review sites", and "Online Endorsements: being open and honest with your audience". The summaries explain what review sites, businesses, media agencies and those publishing opinions online should do to stay on the right side of consumer protection law.

So what should you do?

• Clearly identify paid endorsements
• Don't commission third parties to write fake reviews, you could be liable for their actions
• Don't offer incentives to customers to write positive reviews

Please contact us should you have any queries or would like to discuss this further.

EU and US: Will your data be protected by the EU-U.S. Privacy Shield? 

The Data Protection Act 1998 (being the main legislation in the UK governing the protection and use of personal information in the UK) dictates that an 'adequate' level of protection must be provided where personal data is transferred outside the EU.

The Wave of the Future    

We are seeing an interesting trend with our hotel clients that is worthy of note. More and more retailers, nail bars and local restaurant concessions are popping up in hotel lobbies and people are asking why?

Hotels have long outsourced their health and beauty offering to third parties. But, what is new is the introduction of product retailers and service providers one would normally find in a shopping centre within hotel lobbies, and it's not just the big hotel chains either — boutique hotels are getting in on the act as well. It seems clear that the trend is moving towards offering a holistic lifestyle experience all within a hotel environment so guests can have all their needs under one roof.

For many years, the more upscale the hotel, the more selective it was about such partnerships, in order to fully control the guest experience.

But times have changed. Not only millennials, but discriminating, time-limited travellers generally are ever more determined to make their own brand choices.

There is no universal way of contracting between hotels and occupiers. It can be a simple landlord/tenant relationship with a fixed rent like any other landlord/tenant relationship or it can be any one of the number of complex contractual relationships we discuss below. From the operators' perspective, they are looking to increase their brand presence and the built-in customer traffic hotels offer is attractive together with the opportunity to take space in prime locations with little fit out cost (the walls and floors are already there as are the utilities and luxury elements typical of hotel lobbies — the brands just need to add their branded fit out and design to the mix).

Hotels, especially in option rich environments such as major urban centres and destination resorts, have come to realise that guests expect leading edge dining, shopping, personal care, fitness, private film screening rooms and other experiences along with their lodging experience.

And similarly hotels have come to appreciate they cannot hope to replicate on their own the offerings of celebrity chefs, haute couture designers, Bond Street jewellers and the like who are just around the corner from their hotel.

These branding partnerships can be legally complex. Firstly, many hotel owners will often decide to directly control major sub-lettings rather than delegate this to their hotel operator. This is especially true where the hotel is part of a large mixed — use complex with significant retail, entertainment, residential and other components. The result is often a tangled network of overlapping traders, leases, management agreements, licences, shared utilities agreements, common access agreements with a variety of parties and timelines that are constantly changing.

We are seeing more varieties of contractual relationships in this sphere than ever before.

For example, profit-sharing arrangements have also become popular with a focus on turnover rent from third party operators where both the hotel and the operator are motivated to make a success of the business generated by the operator.

In the restaurant arena, some hotels have opted for franchise arrangements where the hotel pays a franchise fee and employs staff itself, using the name of a celebrity chef or recognised high-end restaurant chain for its in-hotel restaurant offering.

On the other hand, some hotels have opted for expanding their retail, restaurant and service offering under their own brand. These branded concepts are intended to encourage guests to stay in the hotel for their meals, treatments and shopping, opting for the own-brand leisure options rather than high street chains. The obvious benefit to the hotel is expansion of its brand with full control and exclusive benefit of the income stream. The risk may be greater but so is the potential reward.

Whichever direction hotels are choosing to take, it is clear that focusing only on overnight stays may have less and less relevance and the line between hotel operators and landlords is becoming more blurred , even as we write. As complex as some of these arrangements may be, they are clearly the wave of the future!

This article first appeared in Retail & International Leisure.

The U.S. is not considered to have adequate protections in place and the 'Safe Harbor' program was previously implemented as a way of providing adequate protection. Under that program, U.S. organisations (save for those in certain sectors) that signed up to and complied with it were automatically authorised to accept personal data from the EU without the need for individual approval or compliance with other legal or regulatory requirements. However, in October 2015 the EU Court of Justice ruled that the Safe Harbour framework was invalid, rendering data transfers from the EU to the U.S. unlawful under that arrangement, leaving many EU and U.S. organisations in breach of EU data rules and in doubt about how they could legally transfer data.

After much anticipation, details were announced in February of a new political agreement on a new framework for transatlantic exchanges of personal data for commercial purposes. The EU-U.S. Privacy Shield is set to replace the now redundant Safe Harbor and ensure that there is a mechanism in place that provides a level of protection in the U.S. that is essentially equivalent to that in the EU. It is intended that the Shield will impose stronger obligations on U.S. companies to protect personal data received from Europe and stronger monitoring and enforcement obligations on the relevant U.S. authorities.

However, in April a group of the EU's natural data protection authorities known as the Article 29 Working Party, while acknowledging that the Privacy Shield is an improvement on the Safe Harbour, stated that they will not support it in its current form, although their views are non-binding and the Commission could choose to disregard them. It is seeking clarification from the European Commission on a number of points. The next stage in the process will be the opinion of the EU member states' representatives, after which the Commission will formally vote on whether to adopt the Shield.

In the meantime, the Information Commissioner's Office has clarified that organisations may continue to use alternative methods of transfer such as standard contractual clauses and binding corporate rules for data transfers to the U.S.

For more information on this topic, read our client alert Privacy Shield Released — How Employers Can Take Advantage of the New European Data Transfer Framework.

Please contact us for more information on how your company can comply with data protection laws pending introduction of the Privacy Shield.

US and EU: 'Silver Lining' (Pantone 14-4501) for Colour Trade Mark Applicants

The global colour authority, Pantone, has recently increased its colour bank to 2,310 shades with the introduction of 210 contemporary creations, including Bright Chartreuse (Pantone 14-0445), Puffin's Bill (Pantone 16-1363), and Sea Turtle (19-0403).

This expansion of the Pantone palette spectrum is welcome news to trade mark applicants throughout the EU, where a colour trade mark is only per seregisterable if it is capable of, amongst other things, being graphically represented. To be capable of being graphically represented, a colour must be clear, precise, self-contained, easily accessible, intelligible, durable, and objective. These seven standards have previously created difficulties for colour trade mark applicants because, for example, the durability condition may preclude an applicant from registering a colour mark by reference to a paper sample or fabric swatch which will fade over time and therefore fail to provide a sufficiently permanent or consistent point of reference.

So, it is Pantone to the rescue! With its powers of standardisation, accessibility, and clarity, reference to a shade within this internationally recognised colour code will generally constitute a satisfactory graphic representation for the purposes of meeting the application formalities.

Given the increasing conversation brand owners are having surrounding trademarking colours, this facilitation of the application process could not have come at a better time!

US and EU: Sneaker Suspicions

Adidas have recently celebrated an early victory in their ongoing footwear feud with Skechers, being granted a preliminary injunction, (pending the final outcome of the trial), prohibiting Skechers from selling three types of sneakers and from using the term "Supernova" in relation to their products.

"Adidas had accused Skechers of an "unabashed assault" on, and an "egregious infringement" of, its intellectual property rights and asserted that there has been a violation of its "Stan Smith" sneaker trade dress (the shoe made famous by tennis star Stan Smith with it shape, green markings and perforations), its well-known three-stripe trademark, and its "Supernova" trademark associated with its running shoes. Adidas also claims that Skechers have been using metadata to redirect online customers searching for the Adidas Stan Smith sneaker to its "knock-off" — the "Onix".

This is the latest in a long history of intellectual property disputes between the world’s top footwear giants. Skechers was tied up last year with infringement complaints of its own in relation to its "GoWalk" shoe line and is also on the receiving end of trademark infringement claims in relation to its Flyknit designs.

An Oregon federal judge found that Sketchers' Onix shoes are a near exact copy of Adidas' famous Stan Smith sneakers and it is reported that he could not distinguish between them in court. The decision is not final, and with Skechers expressing an intent to appeal the decision, it remains to be seen who will champion in the ongoing sneaker wars.

GUEST INTERVIEW

London based Retail Team Partners Carol Osborne, Paula Levitan and Sarah Atkinson talk to Christopher Yu, managing director of United Perfumes.

What was the toughest challenge you faced when starting United Perfumes?    

We launched UP initially as a distribution business at the start of the global economic crisis which was a challenge in itself. On top of that, while we had a clear idea of what we wanted to do with UP, we did not properly assess the market at the time in terms of both monitoring what the market was doing and what customers wanted.

As the business developed, we had our "light bulb moment" and moved into consultancy work for a number of luxury hotels, corporates and high net worth individuals who were looking for a new approach to fragrance. The real turning point for the business though was in 2010/2011, following a chance meeting in the street with an industry contact who put us in touch with Fornasetti, and we secured our first licence to develop and market the brand.

Any new business needs to be open to seeing where the market takes it. We have had to move with the market and ended up with a very different business model from the one we started out with.

What are the main issues facing a new fragrance brand looking to develop and expand into new markets?    

The fragrance industry is very different from the beauty industry. Buying a fragrance is an emotional purchase, it is not going to make you feel 10 years younger, and a new brand needs to understand how different markets respond to fragrance. For example and perhaps surprising to hear, the Asian fragrance market remains relatively small compared to Western markets. It does not have a long history with perfume, with the concept still being relatively new and not viewed as particularly important or a necessary product.

A new fragrance brand must be mindful not only of the different approach it needs to take with regard to different cultures, but also more specifically to the requirements of the end customer, which are very different to those of a retailer.

At the moment, you have a retail business for Cire Trudon and a wholesale business for both Cire Trudon and Fornasetti Profumi. What are the challenges you see as a retailer in the luxury fragrance sector in today’s market?    

As I just mentioned, the key thing for any retailer is the end customer. The customer is king. Retailers need to ask and then listen to what a customer wants to keep up with their ever changing expectations. On the fashion side, retailers such as Burberry have listened to their customers who later this year will be able to buy clothes straight off the catwalk, rather than having to wait several months for them to become available in store and online.

Retailers also need to be incredibly organised. If a retailer is launching a new fragrance, the ordering process will need to have been completed many months in advance to be sure of meeting the launch date.

You are speaking at the Luxury Law Summit in London this year on routes to international growth. Can you share with us your experience and advice on the most effective strategies for international expansion?    

I think a key strategy is to work with local partners, whether through a joint venture, distribution or agency agreement, and not be afraid to admit that you need help in new jurisdictions. Of course, it's important to choose the right partner and to understand that every agreement in each different market will be different and needs to be tailored to the specific circumstances.

From a legal standpoint, what do you see as the biggest challenges to success in the fragrance business?    

There are a lot of legal issues for a new fragrance business to consider at the outset, when budgets are likely to be tight and all focus is on the creative and the product. Legal compliance and protection of intellectual property may not be seen as a priority cost and are often ignored or put on hold. On the compliance side, if a fragrance business is selling to different countries, the packaging requirements for each jurisdiction are likely to be different and should be checked. Protection of IP is obviously important, but the budget just may not be there. One way through this is to protect IP in phases, focussing on protection in markets key to the business to start with.

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