There can be few things worse than launching your Christmas campaign, then opening up your computer to be greeted by a social media post from someone claiming that you've ripped off their book, illustration, music or other artistic work.

So yesterday I was delighted to host a webinar with my Intellectual Property litigation partner Oliver Fairhurst, together with Richard Morley and Vauhgn Braithwaite from Sutton Winston, leading insurance brokers and risk advisory firm to the advertising and marketing sector. We discussed what brands and agencies should do if their advertising campaign runs into trouble.

What do we mean by “run into trouble”? 

‘Trouble’ usually means someone claiming that your ad infringes their intellectual property rights. One example was the well-known case of John Lewis’s 2019 Christmas ad featuring the cute but excitable dragon called Edgar.  In that case, an author called Faye Evans alleged that Edgar was based on her creation, ‘Fred the Fire Sneezing Dragon’. In the end, we were able to prove conclusively that Edgar had been hatched before Fred, so that copying was not possible.

What are the issues that typically lead to trouble?

There are common themes between the claims typically encountered by advertisers and their agencies. These include:

• a concept being similar to a third-party work.
• incidental use of copyright works, such as graffiti in the background of an ad.
• using taglines that infringe third-party trademarks.
• infringing publicity or image rights of famous people, particular people from the USA.
• not having the correct licences for third-party rights for the relevant media schedule.
• or continuing to use the licenced rights beyond the end agreed licence period. 

How does a crisis start?

Sometimes the first you hear of a potential claim is when the claimant posts social media that their rights have been infringed. Alternatively, you might receive a formal letter of claim from lawyers alleging that you have infringed their client’s rights and wanting you to stop the campaign, pay them damages etc. These letters are often sent to the advertiser, rather than the agency. Most advertisers want to complete their media schedule, so stopping the campaign early is not on their wish-list.

What do you need to do?

Don’t panic.  And call us, obviously!  But also, call your insurance broker.  Don’t admit liability or make any offers or payments without your insurer’s consent.  Don’t go to meetings on your own.  Also, expect insurers to ask lots of questions about contracts and clearance procedures.  In turn, make sure you know the terms of your policy.

Preserve documents and don’t create new ones.  For example, don’t send emails like “I knew this was going to happen” – this is very telling and might be disclosable to a court. Also don’t threaten the complainant with defamation proceedings unless they withdraw their claim – this often backfires. Very occasionally, this may be appropriate, but only after careful consideration and not as a knee-jerk reaction.

Set up a core team to deal with the issue and any adverse publicity.  Consider where the claim is being brought- if it’s overseas it will be more complicated and expensive to defend, but we can introduce to suitable local lawyers through our colleagues in the Global Advertising Lawyers Alliance. Are you going to use the insurer’s panel lawyers or your favourite specialist advertising lawyers (who might that be, I wonder….?) and are you going to use one firm to represent both the advertiser and the agency? That can work well, although advertiser or agency may also need to have independent advisers in the background with a watching brief, just to make sure their interests remain aligned. Check the contract between the agency and the brand – what does it say and who has conduct of any claims. If the brand wants the agency to cover the costs of defending and settling the claim from their insurance, then the corollary of that is that they must accept that the agency must have conduct of the claim so that their can give their underwriters the final say. Consultation may be possible, but ultimately, the final say is with the people writing the cheques.

Can you take the heat out of the claim?  It might be that all that is needed is settle or avoid a claim is to give the claimant a credit or make a small edit to the ad.  A carefully handled meeting might diffuse the situation.

What are the 5 key lessons?

1. Make sure you have suitable insurance and client/agency contracts – and make sure that they are compatible! When we review client/agency contracts, the biggest issue is to ensure that the agency’s insurance cover is preserved. If you’re a client, remember that there is no point requiring your agency to have PI insurance and then imposing terms that mean their policy won’t respond to claims.
2. A penny of prevention is worth a pound of cure. Train your staff on IP issues (they don’t need to be experts but know enough to recognise red flags) and make sure you have clearance procedures in place. For example, you can use our AdSlogans service to check for potential trade mark issues.  
3. Make sure you have an audit trail and a sensible document retention policy so you can demonstrate the creative process that was used and prove that there was no copying. Be careful when communicating about a claim – even internally - and remember that any emails that you circulate may end up being ‘disclosable’, i.e., they will be shared with the other side and the court!
4. If you spot a potential issue in advance, remember that your PI insurance is not there to help you take known risks. Work out your mitigation strategies before you produce the ad, with alternative edits and shots. And make an agreement between the client and the agency about who is responsible for the disclosed risk. The key issue is always whether you will be able to complete the media schedule, so what tweaks or alternatives do you need to make that possible?
5. Don’t let the claimant drive a wedge between the client and the agency and always keep the insurers in the loop. When the dispute is all over, have a ‘wash up’ meeting so that you can apply the lessons learned, as this may help to limit the impact on future insurance premiums.  

In the end, if you defend a claim correctly, with the client and agency standing together with support from their lawyers, brokers and underwriters, you can defeat an unmeritorious claim, preserve your reputation, complete your media schedule and minimise the financial impact. For example, in the claim by Faye Evans against John Lewis and adam&eveDDB, not only did claim fail, the judge made a declaration that there had been no infringement of copyright. Also, because Faye Evans had used social media to promote her claim against John Lewis, the judge also ordered her to post a statement announcing that she’d lost her claim. 

If you would like to see a recording of the webinar, please click here.