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As a leading Entertainment law firm in Lagos, Nigeria, we
regularly advise Advertising companies. We often find that
Advertising companies incur legal problems mainly due to lack of
proper legal advice and at times honest mistakes or omissions.
However these failures can often result in costing the advertising
agency a lot of money and could also cost the advertising agency
important clients.
Sources of Legal Mistakes
So, what are the legal mistakes that advertising companies
normally make? The Advertising business like any other business has
legal obligations; regulatory and compliance obligations such as
corporate and tax obligations of a general business nature.
However, we have notices that most of the mistake arise as result
of either
- Failure to comply with applicable regulations or
- Failure to comply with applicable statutes or
- Failure to comply with contractual terms and obligations
or - Defects in contract drafting or
- Poor dispute management and resolution or
- Poor Intellectual Property Asset management or
- It can also be a combination of one or more of the above.
Failure to Comply With Applicable Regulations
Advertising Practitioner’s Council of Nigeria
(APCON) was established in 1988, and APCON says it
was established “to control and regulate advertising in all
its aspects and ramifications”.
However Section 1 of the Advertising Practitioners
(Registration Etc.) Act clearly shows that APCON was
established to register advertising practitioners and regulate
their practice of advertising. The Court of Appeal has also
determined in MIC ROYAL LTD v. APCON (2018)
LPELR-45314(CA) that the scope and extent of the
APCON Act is limited to the regulation and control of practitioners
of the profession of advertising.
The Governing Board of APCON approves the Nigerian
Code of Advertising Practice and Sales Promotion and
is binding on all persons registered as advertising practitioners,
and applies to the entire content of an advertisement including
words, numbers, presentations, music, sound effects and exposure.
The Code bothers on legality, decency, honesty etc. of
advertisements.
It further states that all categories of advertisements must be
vetted by Advertising Standards Panel
(APS), a statutory committee of APCON except:
- Vacancies;
- Notices;
- Financial Statements;
- Goodwill messages;
- Obituaries;
- Immemorial
Categories such as Foods, Consumables, Person Hygiene, Drinks,
Cosmetics, Over-the Counter Medicines, Tobacco Promotions,
Financial Services, Religious Programmes, Corporate Advertisements
of Regulated Products or General Nature, Telecommunications, Etc.
must be vetted before exposure or publication.
It is important to advertising companies to know these
regulations or have a lawyer focused on Entertainment Law practice
who can help advise you on the regulations. The Failure to have
proper legal advice is costly
Penalties for lack of compliance include:A minimum penalty of
N200, 000 (Two Hundred Thousand Naira) for a media house that
publishes an advertisement that was not approved;
- A minimum penalty of N200, 000 (Two Hundred Thousand Naira) for
an agency that places for publication of an advertisement that was
not approved; - An advertising practitioner may be subject to disciplinary
procedure for publishing or aiding in the publication of an
unapproved advertisement. - An advertisement may be discontinued or its publication and
exposure stopped not minding huge costs that may have gone into its
production. - An advertisement may be unapproved and therefore useless and a
financial loss to both the advertiser and the agency
- Failure to Comply with Other Regulations
There are other regulatory bodies and agencies of government
that regulate advertising for various sectors and products. For
example;National Agency for Food and Drugs
Administration and Control (NAFDAC) provides
some restrictions for the advertising of certain products within
its regulatory control.
– Guidelines For Advertisement Of NAFDAC
Regulated Products In Nigeria Advertisement of food
and drugs should be approved by NAFDAC before airing, exposure or
publication
- Advertisement materials for Prescription-only-Medicines (POM)
must contain abridged prescribing information including
composition, indication, dosage, administration, adverse effects,
drug interactions, contraindications, warnings and
precautions. - Advertising materials of alcoholic beverages must include the
phrases “18+” and “Drink
responsibly.” - Advertisement of Over-the Counter (OTC) medicines should
include the Caveat “If Symptoms Persists after 3
Days, Consult Your Doctor/Physician”.
- Herbal medicinal products (without established clinical
studies) labels and advert materials shall include the
caveat, “These claims have not been evaluated by
NAFDAC”
Although the NAFDAC regulations on advertisements have no
express sanctions for lack of compliance, Section 25 of
the NAFDAC Act prescribes fines between
N50, 000.00, N100, 000.00 and/or prison terms of one year for
individuals, corporate persons, directors and other principal
officers of non-compliant companies as the case may be.
If you are advertising Cosmetics, Food or Drugs, the
provisions under the National Drug Formulating and
Essential Drug List Act and The
Food and Drugs Act needs to be kept in mind.
The National Broadcasting Corporation
(NBC) is mandated to foster the monitoring,
broadcasting for harmful emission, interference and illegal
broadcasting.
Additionally, Lagos State Signage and
Advertisement
Agency (LASAA) are
established for the management, regulation and control of the
signage and outdoor advertising environment in Lagos State. Thus,
they manage all forms of signage and outdoor branding opportunities
in Lagos State.
The Nigerian Communications Commission
(NCC) has been given powers under
the Nigerian Communications Actand
the Nigeria Communications (Enforcement Processes,
etc.) Regulations 2005 to publish guidelines
specifying minimum standards and requirements in respect of
advertisements and promotions of products and services by licensees
for the purposes of protecting consumers and ensuring ethical
marketing and promotional standards by licensees.
Under the Nigerian Communications Commission
Guidelines on Advertisements and Promotions 2011
, The Commission reserves the right to place
appropriate sanctions on defaulting licensees including fines in
several millions of Naira and withdrawal or suspension of
operator’s license.
Furthermore, The Consumer Protection
Council has made the Consumer
Protection (Sales Promotions) Regulations.
Sales promotions with prizes worth more the N250, 000 must be
registered. Lack of compliance could attract fines or preclusion
from carrying on or conducting the sales promotion permanently or
for a specified duration.
Defects in Contract Drafting
An advertising agreement is a contract between a person or
company who wants to promote their products on the one side (the
Advertiser) and person or company who would help advertise their
product and help them in reaching the mass on the other side (the
Agency).
The possible defects in an advertising agreement will depend on
the type of advertising services required; creative services,
production services and/or media services – in some instances
public relations services may be involved.
- Medium/media: This has to do with HOW the
advertisement is delivered to the public; this could be by print,
electronic, online etc. media. It is important to clearly specify
this so that advertising materials would be specially prepared for
the applicable media. Failure to clarify this could be costly. This
term will also determine what kind of arrangements the agency will
enter into with third parties and suppliers. It will also provide
an important guide for clarity on scope of work.
- Payment: Failing to clearly state how
much is to be paid, when payment will be due, whether payment is to
be made in installments, whether commissions are also to be
chargeable, what fees are for what particular services, and such
other considerations could be very costly.
- Competition: It can cause an advertising
agency potential new clients or old clients, if to what extent an
agency can work for competitors in a market is not well stated in
advertising contracts. An error of this nature can cause agencies
not to take on some new clients, or stop working with some
others.
- Confidentiality: Information can be very
valuable, and care must be taken to ensure that a confidentiality
clause is not too broad as to cover information that parties may
already have. Otherwise, one may find that one is precluded from
using valuable information in other transactions simply because
such was also disclosed in the course of the
performance of an advertising agreement.
- Legal and Compliance Issues: One should
be careful to avoid advertising obligations that are contrary to
laws and regulations. Any such services or clauses that breach
legal provisions will cause disputes later on when it comes to
performance. The disputes may become complex and expensive as
significant resources may have been expended already, and the
agency may already be liable for a variety of penalties and/or
incurred unexpected costs, which may not be subject to
indemnification.
- Indemnification: Advertising agreements
should provide for adequate indemnification for losses incurred by
one party on account of the conduct or failure of the other
party.
- Intellectual Property: This is very
important not just for the advertising agreement, but with third
party contracts too. There is a very important need also for
agreements with creators of all kinds to be alignment with the
advertising agreement. Conflicts in this area could be costly to
the agency. For instance, if the advertising agreement requires
full assignment of rights in favor of the advertiser but agreements
with creators only acquire limited licenses.
- It is also important to properly spell out ownership of all
intellectual property created during the performance of advertising
agreements.
- it is important to set out all the details explicitly in the
agreement with regards to whether any additional remuneration would
be payable by the company to the advertiser for creating any
Intellectual property, consequences for non-disclosure of
intellectual property, whether the advertiser after the termination
of the agreement would be allowed to use the intellectual property,
etc.
Failure to comply with contractual terms and obligations
Failing to meet contractual obligations can cause a person to
incur serious consequences. A lot of money may have to be spent for
legal services, settlement fees or payment of damages. It is best
to comply or renegotiate terms of a contract, particularly terms
such as the foregoing.
Poor Dispute Management and Resolution
A stitch in time saves nine. When things go wrong in the
performance of advertising obligations, it is best not to allow
disputes escalate or endure to the extent that it affects other
obligations, particularly with third parties. Many disputes end up
being more costly simply because they were not properly
managed.
Poor Intellectual Property Asset management
In the advertising business, a lot of intellectual property,
mostly copyright is developed; literary and musical works, dramatic
and audiovisual works, sound recordings, artistic works and
photographs etc. are all made.
A good record of ownership and authorizations for the use of
these works should be kept and constantly examined. Otherwise,
works could be used by persons without authorizations to use them
or beyond authorized durations, territories or purposes.
Where works are used without appropriate authorizations,
liability for infringement occurs and these could amount to having
to pay compensations and for legal services far exceeding what
proper authorizations would have cost.
CONCLUSION
After examining all the various costly legal mistakes that one
could make in the advertising business, the next natural question
would be how to avoid these mistakes. The answer is obvious –
the engagement of competent legal professional to oversee the legal
and compliance matters in the advertising industry. It is important
that Entertainment Law, Copyright Law, Intellectual property law
and sector specific knowledge is needed for any lawyer in Nigeria
to advise on the laws and regulations surrounding advertising. As
lawyers specialized in the field of Entertainment law, Media Law
and Intellectual Property Law we regularly advise Media and
Advertising companies.
Originally published 15 Febuary 2022
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
#Advertising #Law #Nigeria #Advertising #Companies #Mind #Advertising #Marketing #Branding
