Marketing is a key tool for startups at all stages of the business lifecycle. Whether you are just getting started, or you are already up and running, effective marketing can help you promote your business and convert leads into clients and customers.
However, marketing communications are heavily regulated in Australia under a framework of established laws and industry self-regulation and it is important to understand the legal framework you operate in to ensure your marketing communications comply with the law.
These laws apply equally to all media platforms, whether traditional print or broadcast, or online or social media, and your startup can also be liable for user generated content on its social media sites.
This blog is the first in a series on Marketing your Startup: Risks, Tips and Traps which will highlight some key risks which startups should watch out for and some tips to avoid the risk of a legal claim. See our other blogs here.
Below we provide an introduction to some of the issues that may arise and provide some tips on how to reduce your legal risk.
If you use content which is owned by another person to promote your business without getting their prior approval you run the risk of breaching that person’s copyright. That includes taking content from the internet.
Copyright exists in artistic works (e.g. photos, pictures and drawings), literary works (e.g. books, articles and lyrics), dramatic works (e.g. film scripts), musical works and in other materials such as sound recordings, films and broadcasts.
This means the copyright owner has the exclusive right to reproduce and communicate that content to the public. In most cases you can only reproduce or communicate third party content with permission from the copyright owner. The copyright owner may allow you to use the content, but some owners may require specific licence terms and the payment of a fee.
See our blog here to find out if you can re-use content from social media for other purposes.
Australia’s consumer protection legislation, the Australian Consumer Law, prohibits businesses from making false, misleading or deceptive claims about their products or services. The law is deliberately broad and captures a wide range of marketing conduct.
Some of the key risk areas are:
The Australian consumer law regulator, the Australian Competition and Consumer Commission (ACCC) has a wide range of investigative and enforcement powers targeted at companies (big and small) who engage in misleading or deceptive marketing practices. The ACCC can require companies to substantiate claims and can take court action or issue an infringement notice where it identifies a breach of the law.
Most content published or communicated by your startup will be considered to be advertising material for the purposes of Australia’s self-regulatory framework for marketing communications.
There are self-regulatory codes of conduct which regulate marketing practices, including the Australian Association of National Advertisers (AANA) Code of Ethics, which is administered by the Advertising Standards Bureau (ASB). In practice, all advertisers comply with the self-regulatory codes.
The ASB considers and adjudicates on consumer complaints about advertising. If the ASB upholds a complaint about your advertisement, you will need to modify or discontinue it. No financial penalties apply (other than lost production costs for advertising), but the reputational risks can be significant.
The main code which must always be considered is the Code of Ethics. The code deals with ethical considerations such as discrimination, sexual exploitation, portraying violence and health and safety that may offend prevailing community standards. The code also requires that advertising content is clearly distinguishable as advertising.
Your trade mark is commonly referred to as your brand, and it is one of the most important and valuable assets of your startup. Using and marketing your brand distinguishes your goods or services from other traders and contributes to your startup developing an identity and goodwill. It is an integral component of any effective marketing strategy.
However, a trade mark can be more than just a word or a logo. You can register other distinctive features of your startup that distinguish your goods or services, including a letter, number, phrase, sound, smell, shape, picture, or combination of these.
It is not compulsory to register your trade mark but a registered trade mark will give you greater legal benefits, including better enforcement rights if a person uses a brand that is substantially identical with, or deceptively similar to, your trade mark in relation to the same or similar goods. It will also be expected by investors and other financiers.
See our blog on using competitor trade marks in SEO and Adwords here.
If your startup has an annual turnover of $3 million or more and handles personal information, you are required to comply with the Privacy Act in all aspects of your marketing communications. A business subject to the Privacy Act cannot collect, use, disclose or store personal information without complying with these laws.
Personal information is any information that can reasonably identify an individual. This could include a name, phone number or email address.
If you are under the $3 million threshold, although the legislation will not apply to you, it pays to plan for what you want your business to be in the future. Putting in place policies and procedures now will assist with managing and minimising privacy risks. It also has the important benefit of developing transparency and trust with customers in your marketing communications. Customers have greater comfort when they know what information about them is being collected, how it is being used and how secure it is. Your clients will also expect good privacy governance and data security.
The Privacy Commissioner has enforcement powers against businesses which are required to comply with the Privacy Act. Online marketplace site Freelancer received an adverse decision from the Privacy Commissioner last year when it disclosed personal information about a user on publicly accessible sites. The complainant was awarded $20,000 in damages.
Defamation is the communication, publication or broadcast of material about a person that injures that person’s reputation. The legal test is whether an ordinary reasonable person would think less of that person due to the defamatory material.
While businesses rarely intentionally seek to defame someone in their marketing communications, there are defamation risks that startups should be aware of. Key risk areas to watch out for are:
While defences to defamation may be available depending on the context, for example if the material is true, or an honest opinion, these defences should not be relied on to avoid a legal claim.
Companies cannot be defamed (unless they have less than 10 employees), however there is a separate legal action known as “injurious falsehood” which may apply if one business maliciously seeks to damage the reputation of another business.
We hope you enjoyed our first blog in a series of blogs about Marketing your Startup: Risks, Tips and Traps
Please see our other blogs in the series here.
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