The credibility of the Advertising Standards Authority of South Africa (“the ASA”) as an effective mechanism for addressing trademark disputes has, in the recent past, been dealt a number of blows. The latest of which is the ASA voluntarily commencing business rescue proceedings in terms of Section 129(1) of the Companies Act 71 of 2008 - with the stated view of allowing the organisation time to 'restructure' itself.

This upset comes hot on the heels of two adverse High Court rulings, namely: the Medical Nutrition Institute (Medical Nutritional Institute (Pty) Ltd v The Advertising Standards Authority (South Gauteng High Court 15/30142, 18 September 2015) and Herbex (Herbex (Pty) Ltd v The Advertising Standards Authority (2016) (25 April 2016 (ZAGPJHC)), both holding firm that the ASA has no jurisdiction (legal authority) over the advertising of non-member organisations.

It should be noted that neither case focused on the nature of the complaint (i.e. misleading and/or unsubstantiated claims), but instead focused on whether the ASA was entitled to rule on adverts emerging from 'marketing agents' who do not belong to the ASA, to which membership is voluntary.

Both rulings have severely hampered the ASA’s former authority to rule on issues such as imitation or filching of advertising goodwill, and have damaged the ASA’s credibility as a viable and cost effective protective mechanism for both the consumer and marketers/advertisers alike.

It has been traditionally accepted in South Africa that the ASA is the primary independent self-regulatory body which has effectively and efficiently safeguarded consumers’ interests and has protected freedom of commercial speech.

The Code of Advertising Practice (“the Code”), which has long served as the ASA’s guiding document, is based on the International Code of Advertising Practice, a comprehensive document prepared by the International Chamber of Commerce.

The Code, drawn up and endorsed by representatives of the local marketing and communication industries, is updated and amended from time to time.

The ASA has applied for leave to appeal the Herbex judgment on the basis that the High Court was erroneous in its decision, which Herbex claims “directly challenges the system of self-regulation upon which the independence of the advertising industry in South Africa is based”.

It is presumably to give itself more “teeth” and to regain its former undisputed credibility, that the ASA has now applied for accreditation as an ombudsman with the National Consumer Commission in terms of the Consumer Protection Act 68 of 2008 (“the CPA”).

The ASA’s newly proposed lndustry Code (based on the ASA’s current Code) incorporates the recognition of an ombudsman scheme for alternative dispute resolution of complaints. It was published for public comment in July 2016.

If the ASA is accredited, it will become a statutory body established in terms of an Act (i.e. the CPA) and will regulate advertising in all media and will preside over all marketers, advertising agencies and media owners in South Africa. It will thus be able to make findings or rulings on all claims of deceptive and/or misleading advertising. However, it will no longer offer the comprehensive protection it used to offer under the Code, nor will it be able to impose the strict sanctions it was previously able to impose (and which kept repeat offenders in line). This includes, but is not limited to, non-compliance with sanctions, which will be referred to the Consumer Commission.

The obligations of all participants will be clearly set out in the proposed Code, which will be published in the Government Gazette. The purpose of the proposed Code is to ensure that advertising and marketing remains informative, factual and honest and that the contents thereof does not violate any laws of the country - thus shifting the emphasis to protection of the consumer.

Furthermore, the proposed Code makes provisions for claims such as those pertaining to substantiation claims (and misleading claims); the use of the words “free” and “new”; and the identification of advertisements.

Of particular significance to trade mark owners is that many of the provisions which previously provided protection to intellectual property rights holders, unfortunately no longer feature in the proposed Industry Code. Examples of clauses which have been removed include:

clause 6 (disparagement);
clause 7 (which dealt with comparative advertising);
clause 8 (which addressed the exploitation of advertising goodwill); and
clause 9 (which dealt with imitation).
These clauses have, in the past, offered substantial protection to marketers and advertisers, and have provided a quicker and more cost-effective method of resolving issues around trade mark and branding - certainly in comparison to proceedings before the High Court. It is unfortunate that this protection will no longer be available to brand owners.

What will be most interesting is to see if (and how) the ASA will succeed in restoring itself to a viable industry watchdog. Without providing a viable mechanism to protect intellectual property rights, the organisation will no longer be the significant role player and gate-keeper that it once was.