Swedish Court Decision on Advertising Labelling in Social Media

Published 16 January 2020 by Advokatfirman ReklamJuridik AB

The Swedish Patent and Market Court of Appeal has for the first time issued judgment regarding requirements on marketing in social media. The Patent and Market Court (court of first instance) and the Patent and Market Court of Appeal (the Court) are specialized courts that came into being in 2016. They hear all cases in Sweden relating to intellectual property law, competition law and marketing law.

The Swedish Marketing Act stipulates that all marketing shall be formulated and presented in such a way that it is clear that it is a matter of marketing.

The Consumer Ombudsman filed a lawsuit against a company run by an influencer, who had published advertising posts for another company on her blog and on her Instagram account. A lawsuit was also filed against a media company that had conveyed the advertising assignment, but not against the company that was behind the marketing (for mobile phone recycling services).

In two of the advertising posts, the advertising labelling had been placed at the very end through the expression "This post is in collaboration with" respective through the hashtag "#cooperation" and in the third post at the very beginning through the term "sponsored post" in a light purple field, see image. The posts had the same layout and the same font type and heading as editorial posts on the blog.

The court of first instance found that it was not sufficiently clear from the first two posts that it was advertising, but that, on the other hand, the advertising labelling "sponsored post" met the requirement. Furthermore , that the media company that had conveyed the advertising assignment had not participated to such an extent that it could be considered liable.

The judgment was appealed. The Court finds that the consumer's ability to distinguish marketing from other material is fundamental to the consumer's ability to make an informed business decision. Furthermore, that in the context of the current posts, where paid posts are intertwined with editorial posts and where the consumer can simply move to the trader's website simply by clicking on a link (which is considered as a business decision), the average consumer must already at a quick glance be able to comprehend that it is marketing.

The Court finds that the average consumer in this particular case is a young woman with experience of using social media and therefore used to take in information from these channels. She may therefore be presumed to be aware of that the activities of many influencers on social media at least to some extent are commercial.

In the influencer’s blogs and on the Instagram account, paid posts were alternated with other types of posts of a wide variety. The influencer also wrote about various goods and services without any contractual agreement and without receiving any compensation. The Court finds that these circumstances mean that high requirements have to be set on the marketing in order for the average consumer to be able to distinguish paid contributions from those that the influencer writes on her own initiative.

Regarding the first two posts the Court makes the same assessment the court of first instance. Regarding the post with the advertising labelling “sponsored post” however, the Court notes that the labelling was indicated in smaller font size than the main heading "Make money on your old mobiles". Furthermore, the Court states that the average consumer per se understands that "sponsored post" means that the post is paid and thus contains marketing. This is not enough though, since the average consumer shall be able to notice this already after a quick glance.

The Court prohibits the influencer's company to contribute to the promotion of mobile phone recycling services by designing marketing on blogs and Instagram in a way that it is not clear that it is marketing. The ban is combined with a fine, which means that the company may be obliged to pay the fine should it violate the ban. Regarding the issue of having materially contributed to the marketing, the Court finds, like the court of first instance, that the media company has indeed contributed to the unfair marketing by providing instructions and advice on how the posts should be formulated in text and image, but that it is the company of the influencers that has had control over the design of the marketing and how the posts would be advertised. The media company is therefore not considered liable.

The judgment can not be appealed.

Published by Lena Seratelius, Advokatfirman ReklamJuridik