Influencer Marketing – Instagram, Tap-Tags and more

Influencer Hat-Trick by the BGH

In September 2021, the BGH has for the first time decided on influencer marketing and issued three rulings of fundamental importance for the question of whether posts on Instagram must be labeled as advertising.  The overall conclusion was that a label obligation for "third-party advertising" of influencers shall generally only exist if they have received a consideration for their contributions and the intended third-party promotion is not already evident from the circumstances. 

• In one case (I ZR 90/20 – Influencer I) the BGH decided that the failure to disclose the commercial purpose of a post provided with so-called "tap tags" (i.e., clickable areas within posted images that link directly to other profiles of influencers or companies and retailers that offer the respective products, for example on Instagram) and other links is regularly suitable to induce the consumer to make a commercial decision – that is clicking on the link leading to the respective product - which the consumer would not have made otherwise.  In this particular case it was not sufficiently clear from the content and context of the posts that they in fact were advertising.  Therefore, the posts were considered to be anti-competitive surreptitious advertising (Schleichwerbung). 
• In the two other cases (I ZR 125/20 – Influencer II, and I ZR 126/20 – Influencer III) in which no consideration was paid to the influencers, the BGH pointed out that, insofar as a commercial act was carried out for the benefit of the influencer's own company, i.e., self-promotion (Eigenwerbung), there was no identifiable violation of competition laws.  The commercial purpose here was already evident from the circumstances (the influencers at issue have huge numbers of followers and their accounts were verified by the „blue checkmark“ (blauer Haken)).  In addition, the BGH highlighted that the posts did not constitute commercial communication or advertising due to the lack of consideration from a third-party. 

In January 2022, the BGH supplemented its case law with two further decisions (I ZR 9/21, I ZR 35/21) which concerned with provision of goods and service free of charge. The most recent decision on influencer marketing comes from the Higher Regional Court of Frankfurt am Main (dated 19 May 2022 – 6 U 56/21)., which followed the BGH case law.  The court ruled that an influencer who published posts linking to various e-books and highlighting the exceptionally high discount price of the e-books was considered unfair advertising – regardless of the fact that the influencer did not receive any further remuneration. 

Upcoming Legislation on Unfair Competition

While the court decisions already provide for some legal certainty for influencers and companies using influencers, the German legislator has in the meantime also taken action to address this issue.  The Act to Strengthen Consumer Protection in Competition and Trade Law (Gesetz zur Stärkung des Verbraucherschutzes im Wettbewerbs- und Gewerberecht) entered into force on 28 May 2022 and amended the German Law against unfair competition (Gesetz gegen den unlauteren Wettbewerb („UWG“)).

Similar to the arguments provided by the BGH, with respect to the existence of a labelling obligation, the new provisions distinguish primarily based on the fact if a consideration is received for the promotional content or not.  In accordance with the recent changes to the UWG, a person also acts unfairly if he/she fails to disclose the commercial purpose of a commercial act, unless this purpose is immediately apparent from the circumstances, and the failure to disclose is likely to cause the consumer or other market participant to take a decision that he would not otherwise have taken.  A commercial purpose shall not exist in the case of an action in favour of another company if the acting person does not receive any consideration or does not allow himself/herself to be promised any consideration.

Other Typical Legal Issues in the Context of Influencer Marketing

There is a variety of further legal issues that may arise in the context of influencer marketing.  Below we listed those issues that may typically become relevant:

• There is a discussion in legal literature on the legal qualification of influencers.  Usually, influencers will qualify as entrepreneurs, acting in the exercise of their commercial or self-employed professional activity.  However, this might be questionable for influencers who are only sporadically active via private accounts (in this case consumer protection rules may apply).
• Data protection rules play an important role in the context of influencer marketing, as personal data are usually processed for marketing purposes (e.g., personal data collected on influencer accounts and processed to the advertising companies, often via marketing agencies).  Thus, unfolding influencer marketing activities on social media platforms may generally trigger responsibilities for compliance with applicable data protection rules.   
• As already explained above, unfair commercial practices often become relevant in the context of social media marketing, e.g., with regard to "hidden" advertisements in social media and related labeling obligations of influencers.  The applicability and interpretation of the rules of the UWG in the context of influencer marketing has been extensively debated in German case law in the last years (see above Sections 1 and 2).
• Social media marketing may further generally also trigger questions around IPR protection.  Both protection of own IPR as well as potential third-party IPR breaches should be kept in mind here (e.g., by sharing third-party content via embedding or reposting or brand-tagging by influencers without permission). 
• Social media marketing is often closely linked to sales via online shops (e.g., if social media users are redirected to online shops via advertisements).  Regarding business-to-consumer contractual issues, comprehensive consumer protection legislation is in place on the EU level (and implementing national laws).
• Further, certain aspects of influencer marketing may also be covered by media related laws and regulations (e.g., rules on tele-media that may trigger imprint obligations or rules on the protection of minors in advertisements). 
• Finally, there is a variety of contractual issues that typically become relevant in the context of influencer marketing.  As an example, questions around liability (e.g., liability of marketing agencies that intermediate businesses between advertising companies and influencers) or other social-media specific issues (e.g., manipulation of ranges via bots and potential consequences on the remuneration of the influencer or control obligations regarding posts of advertising companies or intermediating marketing agencies).

Influencer Marketing in the Life Sciences Sector

Influencer marketing has recently become a more prominent topic also in the life sciences industry.  However, the heavily regulated environment requires that further legal aspects be considered in addition to the above.  Foremost, it is not allowed to promote prescription only (Rx) medicines to the general public, i.e., outside the closed medical community.  As access to social media channels can usually not be restricted to a specific audience (e.g., HCPs), permissible activities by influencers are limited to corporate promotion or disease awareness campaigns.  This may be different for medicinal products not subject to prescription (pharmacy-only / OTC products), where no prohibition of product promotion towards the general public applies.  Nevertheless, further legal requirements must be considered: E.g., for OTC medicines, advertising by way of celebrity endorsement is prohibited pursuant to Sec. 11 (1) No. 2 of the German Healthcare Advertising Act (HCAA).  At least influencers with a  significant number of followers (so called macro influencers; from 50-100k followers) will be considered celebrities and, therefore, cannot promote OTC medicines.  Arguably, the same applies for micro-influencers, who have less followers but often a very specific target audience and higher engagement rates.  The intention of the law is to prevent that patients use medicinal products due to the mere recommendation or endorsement by a well-known person – rather than due to a medical need.  Therefore, also micro-influencers can arguably be considered „celebrities within their specific audience“, thus falling under Sec. 11 (1) No. 2 HCAA.  Still, in the absence of case law there are certainly also arguments for micro-influencers not qualifying as „celebrities“.  However, even then Sec. 11 (1) No. 11 HCAA prohibits promotion with testimonials when they are improper, repulsive or misleading.

Besides advertising laws, influencer marketing also touches upon other legal topics.  E.g., in life sciences unwanted/side effects which are reported by patients/physicians may have to be followed up and monitored.  Whether the mere corporate promotion or disease awareness communication made by an influencer already triggers the requirement for a pharmaceutical company to monitor user generated content under the influencer’s posts for adverse event reports has not yet been decided – but would rather be a somewhat too strict interpretation.

Authored by Nadine Otz, Susanne Schuster, and Benjamin Goehl.