Although the embedded ad has some false content in and of itself, it will not be recognized as false advertising if the relevant public, on the basis of daily experiences, advertising characteristics of the industry and the general attention, can spot the false information and will not have misunderstanding.
The purpose of an embedded ad is to create interest in consumers, who were not previously interested in a brand or business, for the brand or business after watching the TV show so as to stimulate their potential purchasing urge, thus capturing more commercial opportunities for the business. An ad has many elements, some of which play an important role in attracting consumer’s attention, while others are insignificant. For jewelry advertising, the style is usually the most eye-catching element. In a typical jewelry ad, either a static image ad or a dynamic heroine and tightly framed in a close-up, and the audience could clearly see the “CRD” logo and the pendant which was identical with “Angel’s Wings” of plaintiff. The two defendants argued that the two sides only agreed that the crew shot the store with the “CRD” logo and added subtitles at the end of the show, and did not agree on the plot of presenting the necklace. However, in terms of the plotting, My Daughter could merely shoot the Zhuomei store and add subtitles at the end to help Zhuomei promote its brand under the aforesaid agreement. Even for the sake of plotting, in framing the scene of giving the necklace and asking the heroine to put it on, it is utterly unnecessary to display the jewelry box with “CRD” logo and clearly exhibit the “CRD” brand in a close-up. Therefore, in terms of plotting, the presentation of the box with “CRD” logo and the way thereof has not been a must for the plot. As regards the third factor, the plot which caused public misunderstanding and was suspected of false advertising mainly involves giving the necklace with the pendant at issue from the hero to the heroine. At the beginning, My Daughter framed in a close-up the jewelry box with the prominent “CRD” logo, and framed also in a close-up the pendant identical with the “Angel’s Wings” in the style from plaintiff after the box was opened, besides, the close-up lasted for 4 seconds or so. Later on, the necklace was worn around the neck of the heroine and the shape of the necklace was also clearly visible. If the aforesaid plot was taken out, it would have almost the same pattern as a jewelry ad, utterly constituting an independent ad for the “CRD” brand. Judging from the perspective of a reasonable person, it will be sufficient to enable the audience to pay attention to the “CRD” brand and associate it with the necklace at issue, enabling, in conjunction with the site of the shooting and advertising words at the end of the show, the audience to regard the plot as embedded advertising for “CRD” brand.
Based on the above, the plot at issue constituted embedded advertising for the “CRD” brand.
II. Determination of false advertising
Article 9 of the Anti-unfair Competition Law provides that a business may not, by advertising or otherwise, make false or misleading advertising of their goods as to quality, ingredients, functions, usage, producers, duration of validity or origin. An advertising agent may not act as an agent for, or design, produce or release, a false advertisement while it knows or should have known its falsehood. The nature of false advertising is that it misleads. Since an embedded ad is integrated with plots of a show, there are circumstances of inconsistencies with facts where there are needs for artistic expressions. In determining whether the embedded ad constitutes false advertising, a reasonable balance should be struck between encouraging creations, protecting the legitimate rights and interests of competitors and those of consumers. On the one hand, it is necessary to encourage creations and protect reasonable use of props to avoid categorizing all information with commercial elements into false advertising. On the other hand, it is necessary to regulate embedded advertising in TV shows to enable both advertisers and advertising agents to exercise caution to prevent embedded advertising from harming the legitimate rights and interests of competitors and consumers as a result of intent or negligence. In specific cases, factors, such as daily experiences, advertising characteristics of the relevant industry, general public’s attention to the types of ads, actual misunderstanding and the actual condition of the advertised object, may be addressed to determine whether it is sufficient for the false advertising to cause public misunderstanding, and whether the public will show an interest in the product or service directed by the advertising due to misunderstanding, thus bringing real and potential commercial opportunities to the business. Although the embedded ad has some false content in and of itself, it will not be recognized as false advertising if the relevant public, on the basis of daily experiences, advertising characteristics of the industry and the general attention, can spot the false information and will not have misunderstanding.
The purpose of an embedded ad is to create interest in consumers, who were not previously interested in a brand or business, for the brand or business after watching the TV show so as to stimulate their potential purchasing urge, thus capturing more commercial opportunities for the business. An ad has many elements, some of which play an important role in attracting consumer’s attention, while others are insignificant. For jewelry advertising, the style is usually the most eye-catching element. In a typical jewelry ad, either a static image ad or a dynamic television ad will highlight the style of a pendant necklace, earring or bracelet. Some also have pictures of a star wearing the jewelry to enhance the advertising effects. Therefore, the style of the jewelry in an ad plays an extremely important role in the relevant public and is an important tool to attract public attention and rapidly enhance the public perception of a brand. In this case, the pendant identical with plaintiff’s “Angel’s Wings” appeared simultaneously with the “CRD” brand in the same plot and scene, subsequently was worn on the heroine’s neck, which was almost the same as common jewelry ads. Thus it is sufficient for the public to pay attention to the pendant and arouse an interest in the CRD brand, attracting the public to further understand the brand or purchase the product, thus creating real or potential business opportunities for Zhuomei. Arguments of Zhuomei in court also show that many consumers had called to ask for information or to purchase the jewelry after the TV show was aired. Therefore, it can be seen that the plot at issue has attracted many consumers for Zhuomei which has gained commercial interests from the embedded advertising. This was a successful embedded ad, but the problem is that the pendant necklace, which has aroused public attention, was not designed, manufactured or sold by Zhuomei. In other words, the main eye-catching element did not belong to Zhuomei, but the TV show had used it together with the jewelry box with the “CRD” brand, making it sufficient for the audience to mistakenly think that the “Angel’s Wings” pendant was designed, manufactured or sold by the business with the “CRD” brand. Because of the improper use of the disputed pendant and the “CRD” jewelry box in the embedded advertising, Zhuomei has gained commercial opportunities which had not belonged to it otherwise, thus constituting false advertising.
III. Liability of false advertisement producers and advertisers
Plaintiff and defendant B were both retailers of jewelry products, in competition with each other.
Plaintiff, as the copyright owner of “Angel’s Wings” pendant artwork, had the right to incorporate the artwork into jewelry products and make profits. The embedded ad at issue has made an objective use of plaintiff’s jewelry style to promote Zhuomei brand, inevitably having an impact on the competitive advantage of plaintiff’s jewelry style. The relevant public may mistakenly believe that plaintiff’s jewelry was modeled after that of defendant B, thus harming the legitimate interests of plaintiff and constituting unfair competition.
In this case, Syndication was the producer, publisher and copyright holder of My Daughter, also the producer and publisher of the embedded ad at issue. The company, knowing that the pendant at issue had nothing to do with defendant B, used the pendant together with the jewelry box with the prominent brand logo of defendant B, resulting in misunderstanding, harming the legitimate interests of plaintiff. Therefore, the company should bear corresponding civil liability.
False advertising does not require advertisers to be intentional; negligence can also lead to false advertising. Advertisers, as beneficiaries of embedded advertising, should assume liabilities resulting therefrom. Even though defendant B did not actively participate in designing of the plot at issue, it had established advertising privity with the show crew, knowing the show would promote its brand. Defendant B provided the jewelry box to the crew for use where appropriate, so it should have foreseen the box would be used to promote its brand in the show and should carry its duty to exercise reasonable care as to the content and consequences. Although defendant B did not subjectively intend to mislead consumers, it objectively caused misleading results and received commercial benefits that would not have belonged to it otherwise. Therefore, it should bear civil liabilities.
Conclusion
As embedded advertising has been gaining popularity nowadays, businesses and TV program producers should clearly understand embedded advertising is not a win-win act without any risk or liabilities. The ruling of this case above will help guide businesses and producers to incorporate advertising into TV shows in a careful and responsible manner, in an effort to maintain artistic features of audio-visual and cultural works, protect consumer rights and legitimate rights and interests of other businesses.
(Translated by Wang Hongjun)
