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Report about 2023 AdLaw Conference

Report about 2023 AdLaw Conference

This year's AdLaw Conference was held in Rio De Janeiro on October 6, at the Hotel Nacional, which was designed by Oscar Niemeyer.

The main subjects of the conference were the role of influencers in social media advertising and artificial intelligence in advertising.

In the first part of the conference, the AdLaw members from Turkey (Bilge Derinbay, NSN Law Firm) and Germany (Christoph Kolonko, Kolonko Rechtsanwälte GbR) informed about the latest developments in the field of influencer marketing in these jurisdictions.

Bound to the global trend of influencer marketing, the market size of influencer marketing is substantial and continuously growing. The global market size for 2022 was indicated at USD 16.4 billion and expected to grow up to USD 21.1 billion in 2023. In Germany it is expected to reach over EUR 600 million by 2024.

While there are some guidelines in the USA with the FTC’s Guide „Disclosures 101 for Social Media Influencers“ and, at the European level with the EASA’s «Best Practice Recommendation on Influencer Marketing Guidance», in Turkey there are very specific Guidelines on Commercial Advertisement and Unfair Commercial Practices Conducted by Social Media Influencers. These guidelines include strict rules what is to be considered advertising combined with explicit statements on how advertising shall be marked and identified.

By shifting the liability for violations of the guidelines to advertisers in the first place, advertisers in Turkey have a strong motivation to educate its influencers to work within these guidelines. This resulted even in a penalty for one of the leading beverage companies when one of its influencers posted an alleged private photograph of himself including a cup bearing the company's trademark.

There is also a wide range of other decisions on influencers that clarify the implemented guidelines.

In contrast, in Germany there are no specific guidelines on how to identify commercial content in social media.

Regulations concerning surreptitious advertising are found primarily in the sector-specific regulations governing broadcasting and the press (such as the Telemedia Act and the State Media Treaty) and in cross-media regulations (primarily the German Act against Unfair Competition “UWG”).

Consequently, there are no specific rules on how to identify and label advertising in social media and this question is rather decided by the courts in individual cases when considering if the advertising is misleading.

In this respect, it is still a leading case of the Higher District Court of Celle from June 2017, which found that the sole use of "#ad" at the end of the post was insufficient labelling and held that both the influencer and the company were liable. The court held that the label must be clearly visible and recognizable at first glance but there are no clear guidelines about how that could be achieved.

There is also German case law indicating that the label "sponsored by" will not be considered as adequate labelling either, as it is less clear than the German words "Anzeige" or "Werbung" (both translating to advertisement). With this label, the public could not safely assume that a contribution qualifies as advertising.

Another point of discussion in Germany is, if social media posts about commercial products are to be considered advertising if the influencer receives no direct renumeration for a post from the referred company.

In a judgement of the German Federal Supreme Court of 2021, it is found that the referred contributions of the influencers constitute commercial acts, insofar as they were carried out for the benefit of the company, but there is no infringement of Section 5a (6) UWG because, according to the appraisal of the Court of Appeal, which is not objectionable under the law of review, this commercial purpose results directly from the circumstances. To the extent that the defendant acted in favor of other companies, no violation of Section 5a (6) UWG can be assumed either, because this conduct of the defendant complies with the provisions of Section 6 (1) No. 1 TMG, Section 58 (1) Sentence 1 RStV and Section 22 (1) Sentence 1 of the State Media Treaty. Accordingly, commercial communication or advertising must be clearly recognizable as such in the case of sales-promoting statements in telemedia. However, in the absence of any consideration from a third party, the objected contributions do not constitute commercial communication or advertising within the meaning of these provisions.

Finally, Christoph Kolonko informed that the German Unfair Competition Act has been amended last year and Section 5a para. 4 now clarifies that there is no commercial purpose if the influencer does not receive or cannot be promised any remuneration or similar consideration from a third party company. Also recently implemented is the statutory burden of proof, according to which it must be assumed that the influencer has received consideration. This means that a commercial purpose is initially presumed. However, the law allows a defendant providing evidence to the contrary.

The second part of the conference was dedicated to the use of artificial intelligence in advertising.

In the sense of an illustrative opening of this topic and pointing out that AI is already in actual use in advertising, Rodrigo Perri of the marketing agency BrandXP presented some insights and perspectives from the advertising industry. A very interesting example was the exemplary presentation of an entirely AI generated commercial film about a Brazilian newspaper, which was a solid collection of suitable images and some well sounding slogans but seemed not very creative.

In comparison, an original commercial about this newspaper, which won advertising prizes in Brasil had a very creative idea, which was transmitted in a simplistic film, showing a pixelated picture in black and white as a close up. While zooming out the picture, impressive facts about the restoration of the economy were cited, including a significant reduction of unemployment rate and growth of the gross national product. At the end of citing positive facts the total view of the picture showed Adolf Hitler and the comment was that it is possible to tell a lie by only telling the truth, thus requiring a trustworthy newspaper that provides the whole truth.

While the idea behind this commercial seems brilliant, the implementation to a commercial film sees rather simple and would have been possible to create via AI when giving the respective prompts ("provide positive facts about the economy under the command of Adolf Hitler and list them while zooming out from a pixelated picture of Adolf Hitler"). While the implementation of this idea via AI would not be copyright protected such implementation by a human author would be protected.

Another recent example of an AI generated commercial was recently published by Volkswagen in Brazil. In this spot two women are singing while driving two minibuses, one current model and one model from the 1960s. The intriguing aspect of the spot is that the singer in the older model is Elis Regina, a renown Brazilian singer, who died in 1982. The car company used AI to bring her back to life for the advertisement. Her daughter, Maria Rita, who is also a well-known Brazilian singer and appears in the video, gave her consent for this.

While the spot is not entirely AI created, besides copyright issues the spot gives also rise to concerns about personal rights.

The next presentation was given by Joep Meddens of Höcker Advocaten and considered the legal implementations of using AI in advertising. During an entertaining introduction, Joep Meddens raised some general and fundamental questions about the use of artificial intelligence and asked the speculative question if AI might be able to solve all of mankind’s problems.

He then went on to some practical use cases for AI, some of which are already in use in the advertising business. Concerning the use of AI for generating text, pictures or music the question was raised if such results could be protected by copyright. Since AI cannot be considered an author and the human input of prompts would likely be considered as unprotectable ideas, the legal protection of AI generated content would probably require the legislators implementing new rules.

It was noted that today not all intellectual property requires human originality: some intellectual property rights are based solely on the protection of investments. Such a legislative decision could also be made in the context of AI.

The protection of AI generated results by registered designs would perhaps be an option, which would best suit to AI generated pictures, while the use of existing pictures including existing people might also result in data protection issues. Trademark law could also be useful for some AI generated creations.

Given the link between intellectual property protection and monetization of a creation, this will be an interesting topic to follow.

In the EU, the use of artificial intelligence will be regulated by the AI Act, which is currently debated in the European Parliament and between member states and aims to turn Europe into a global hub of trust in AI.

The closing presentation was given by Riccardo Rossotto of RP Legal from Italy who entertained the audience with a story about the AI learning capabilities of robots and the unpredictable outcome if these robots train other robots subsequently.

With this vivid example, the conference concluded with a fruitful discussion emerging from the presentations. As a conclusion, this AdLaw conference stressed that AI will have an enormous influence on advertising resulting in interesting legal questions underlining the necessity of legal guidance to ensure legal protection of the advertising creators as well as ethical compliance in the industry as whole. Until of course, us lawyers are all replaced by AI as well.

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