Sports sponsorship

Sport sponsorship is one of the most powerful brand marketing tools because it connects with people at a very personal level. Already in 2002 more than 70% of all sponsorship investments were connected to sport and sporting events.

According to the European Sponsorship Association, sponsors look to sport to add value to their brand proposition given the fact that in most market sectors there is intense competition between companies and brands. Often, there is little to choose from in terms of quality, content and price. Therefore, in order to help its brand stand out from the crowd, a sponsor will use sport to create a unique association in the mind of the consumer.

Broadcasting is the most popular medium for sponsors. For example, at the 2004 Olympic Games in Athens, 35,000 hours of sports coverage was transmitted over 17 days by more than 300 television channels, delivering sport and sponsoring brand images to an audience of 3.9 billion television viewers in 220 countries worldwide.

The worldwide web is another popular medium for sponsorship marketing. For example, during the Sydney Olympics in 2000, the official website of the Games experienced more than 11.3 billion hits and was the most popular destination on the internet during those days.

Depending on the sponsorship agreement, sponsors are also entitled to various protected marketing rights, such as the use of FIFA logos and references (e.g. “official sponsor of the World Cup 2010”) in direct advertising (so called “co-branding”). This refers to an authorised use of trademarks or designs in the form of license regulations giving permission to intellectual property rights (e.g. use of a trademark for a special purposes).

This summer, companies have sought to position their brands and products in the lead-up to the World Cup in South Africa to enhance global brand equity. The World Cup has gained enormous economic importance as a major sporting event for sponsorships. Huge fees are paid by sponsors as financial support to the event organisers. In return, sponsors expect guaranteed exclusive marketing rights.

Ambush marketing

However, ambush marketers are also keen to jump on the World Cup bandwagon and profit from the unique marketing opportunities it presents.

“Ambush marketing” stands for a special kind of marketing campaign where companies cleverly connect their goods or brands with a popular event, such as the World Cup. Ambushers often try to catch a free ride by paying no sponsorship fees while leading consumers to believe they are official sponsors of the event.

Ambush marketers are usually direct competitors of sponsors, trying to succeed in bringing the sponsored activity to the audience’s mind by deceiving consumers into believing they are sponsors, too. Ambush marketing often leads to the result that consumers incorrectly associate the ambusher’s brand with official sponsorship.

From a legal point of view, Ambush marketing ranges from creative strategies that do not break any law to clearly illegal uses of logos, phrases, slogans and the like.

Sport as a prime target

McDonald’s was the official sponsor of the Beijing Olympics 2007. But in the lead-up to the games, KFC used the marketing slogan “I love Beijing”, while Pepsi replaced its usual blue cans with red ones “to show their respect for the year of China”.

During the 1996 Atlanta Olympic Games, referring to their new mobile phone, Telecom New Zealand Ltd was successful with an ambush advertisement containing the word “ring” (for the sound of a ringing phone) arranged five times like the Olympic rings and in the Olympic colours.

McDonald’s was also at work during the 2006 FIFA World Cup. Its Austrian advertising campaign showed the Austrian Federal Chancellor Wolfgang Schüssel holding up a red-white-red scarf (the colours of the Austrian flag) saying “AUSTRIA IS WORLD CHAMPION”. Another example is Media Markt’s “We will get the title” campaign at the 2006 FIFA World Cup in Germany.

And Mercedes’ indirect ambush marketing campaign at the New York City Marathon 1997 is famous. Although Toyota was the official automotive partner of the marathon, Mercedes had its name written in the sky above the event by aeroplanes.

The 2010 FIFA World Cup

The games have recently started at the 2010 World Cup in South Africa. But already in 2004, when South Africa was announced as the host, FIFA registered trademarks “SOUTH AFRICA 2010” (IR 843115; IR 903360; CTM 5119599,), “WORLD CUP 2010” (IR 910281; CTM 005100854) and the like. A comprehensive global rights protection programme, centred upon the registered FIFA marks, was meant to protect the event. At the same time the host nation, South Africa, formulated Sec 15A of the South African Merchandise Marks Act – a new anti-ambush marketing provision protecting FIFA’s mark and sponsorship rights. FIFA wanted to ensure that only official sponsors were allowed to display their brands, official emblems and mascots inside the stadiums.

The 2010 POPS

Based on such sponsorship rights, already in 2007 FIFA requested a company called Metcash Trading Africa Pty Limited to cease selling a lollipop under the name “2010 POPS” featuring football images together with the South African flag. It initiated legal proceedings when Metacash did not voluntarily withdraw the lollipops from the market. FIFA claimed that the product took advantage of the publicity surrounding the 2010 FIFA World Cup, thus constituting illegal Ambush Marketing. The High Court in South Africa confirmed FIFA’s trademark rights, thereby confirming the effectiveness of Section 15A of the South African Merchandise Marks Act already prior to the start of the tournament.

The Dutchy girls

They have been all over the media - the 36 women who attended the Netherlands – Denmark match in South Africa wearing matching orange dresses emblazoned with the “Dutchy” beer logo. Bavaria brewery supplied the dresses for promotional purposes during the FIFA World Cup. The trouble is, Bavaria is not an official World Cup 2010 sponsor; Budweiser, a competitor, is. This stunt was a fine example of Ambush Marketing. The women were escorted out of the stadium but the goal (and then some) had been accomplished: increased exposure of Bavaria’s trademark without having to pay official sponsorship fees.

Kulula Air

Kulula, a South African airline who is not an official sponsor, placed ads with the slogan: “UNOFFICIAL NATIONAL CARRIER OF THE ‘YOU-KNOW-WHAT’”. In the ad the national flag, footballs and a special kind of plastic horn used by South African fans at soccer matches (the so called “vuvuzela”) were shown. Kulula is generally known in South Africa for its humorous advertising. According to various reports on the internet, FIFA warned Kulula that the combined use of these attributes created an unauthorised association with the event and was illegal.

Kulula reacted to the warning by placing new ads with the slogan “NOT NEXT YEAR, NOT LAST YEAR, BUT SOMEWHERE IN BETWEEN”. The new ad shows a bridge resembling the Cape Town World Cup stadium and golf tees looking like vuvuzela with the accompanying text “Definitely, definitely a golf tee”, and other pictures with humorous remarks.

Although all such activities may be considered Ambush Marketing in the advertising sense, from a legal point of view we need to differentiate.

Direct v. indirect ambush marketing

Direct ambush marketing activities, such as the unauthorised, illegal use of a registered logo on merchandising goods, or a false or misleading claim to be an official sponsor of an event, clearly constitute infringements.

According to Curthoys and Kendall, ambush marketing can be divided into two broad classes of activity:

(i)        Activities traditionally considered piracies - these will usually have a clear-cut remedy in law. They are activities that clearly constitute infringements of the property rights in an event, for example, unauthorised use of a registered event logo on merchandise, or false claims to be official suppliers of a particular team.

(ii)       Other activities - more subtle practices for which the remedy is less clear-cut or may not even exist.

Did Quantas Airlines’ 2000 campaign featuring Australian athletes with slogans like “Australia Wide Olympic Sale” infringe the International Olympic Committee’s rights for the protected trademark “Olympic”? Ansett Australia, the official airline sponsor of the Sydney games, brought an action against Quantas for injunctive relief. However, the disputed was settled out of court.

Direct ambush marketing

A case where the WIPO Administrative Panel found Ambush domain grabbing to clearly constitute an infringement was ISL Marketing AG and The Federation Internationale de Football Association v. J.Y. Chung, Worldcup2002.com, W Co., and Worldcup 2002, Case No. D2000-0034, where J.Y. Chung registered the domains worldcup10.com, worldcup2010.com, worldcup2010.org and worldcup2010.net. The complainant ISL is the exclusive marketing agent for FIFA charged with the commercial exploitation and protection of FIFA’s intellectual property rights, including in particular the “WORLD CUP” mark and properties. FIFA is the owner of numerous trademark registrations for the “WORLD CUP” mark and variations thereof in countries throughout the world. ISL and FIFA argued successfully that the domains worldcup10.com, worldcup2010.com, worldcup2010.org and worldcup2010.net were identical or confusingly similar, and that the respondent had no rights or legitimate interests in respect of the domain names and that the domain names had been registered and were being used in bad faith. The WIPO Panel therefore ordered that the domain names be transferred to the complainant.

Indirect ambush marketing

Indirect ambush marketing, on the other hand, is more subtle and falls within a legal grey area.

In 1994, Nike succeeded in indirectly catching a ride on the ambushing wave when it produced and handed out 70,000 caps before the final of the FIFA championship in the colours of the Brazilian national team with their famous “Swoosh” logo. The effect was that everybody believed that Nike was the official sponsor. Nike achieved a similar success at the 2002 World Cup: Adidas was the official sponsor but Nike sponsored the winner, Brazil.

Another ambushing case to reach the courts was New Zealand Olympic and Commonwealth Games Association Inc. v Telecom New Zealand Ltd. In that case, the New Zealand Olympic and Commonwealth Games Association Inc. (NZO&CGA) unsuccessfully sued a mobile phone advertiser for a suggested association with the Olympic rings in its advertisement a few months before the 1996 Atlanta Olympic Games. NZO&CGA was the licensee of property rights to the Olympic rings in New Zealand. Based on that, it argued that an advertisement of Telecom New Zealand Ltd. infringed the Fair Trading Act (NZ) by “misrepresenting an association with the Olympic movement, sponsorship of the Olympic movement or of the Olympic team and/or approval of the advertisement by the Olympic Association”. The advertisement contained the word “ring” five times, arranged like the Olympic rings in the Olympic colours (blue, black, red, yellow and green), as follows:

It stated that, “With Telecom Mobile you can take your own phone to the Olympics”.

The Court reasoned that there was no trademark infringement:

There was no significant likelihood of assumption by readers that the defendant was connected with or a sponsor of the Olympics. Readers of newspaper advertisements tend to browse and will not read in a closely focused way, at least in the first instance. Those who noticed the five coloured “ring” words and then made an association with the five circle Olympic symbol would be mildly amused. The advertisement would then seem like a cartoon or clever device… It quite simply and patently is not the five circles as such. (New Zealand Olympic and Commonwealth Games Association Inc. v Telecom New Zealand Ltd (1996) 7 TCLR 167)

Smart indirect ambushers link the sponsored activity to their brand without violating trademark or copyright laws. The question is whether the campaign leads to unlawful consumers associations or other infringements, such as unfair competition.

Trademark protection

Ambushing clearly breaches intellectual property laws when trademarks are used without a contractual right or licence and trademark rights are infringed. According to the Austrian Trademark Protection Act (Markenschutzgesetz; MSchG) not only the use of an identical sign but also the use of a similar sign with a likelihood of confusion may be illegal. The protection of trademarks with reputation is even stronger. The owner of a trademark with reputation may request third parties to refrain from using an identical or similar sign for goods or services which are similar to those protected under the trademark.

Unfair competition

As a complement to trademark law, unfair competition regulations buttress IP law in almost every country. Unfair competition is defined by the Paris Convention as:

·         all acts of such a nature as to create confusion with the establishment, the goods or the industrial or commercial activities of a competitor;

·         false allegations in the course of trade of such a nature as to discredit the establishment, the goods or the industrial or commercial activities of a competitor;

·         indications or allegations, the use of which in the course of trade are liable to mislead the public as to the characteristics of certain goods.

Under the Austrian Act against Unfair Competition (Gesetz gegen Unlauteren Wettbewerb; UWG), unfair business activities include misleading business practices (Sec 2 UWG), imitation marketing of corporate brands (Sec 9 UWG) and other unfair business practices such as an unfair exploitation of the good reputation of an event or false allegations in advertisements misleading the public about the status of the ambusher as an official sponsor may be considered as unfair competition.

Copyrights and personal rights

Intellectual creations in the area of literature, photography, music and art enjoy (even without registration) copyright protection under the Austrian Copyright Act (Urheberrechtsgesetz). Personal rights such as the right to one’s own image may also be violated by an advertising campaign.

Remedies

To the holder of intellectual property rights, Austrian law provides for remedies such as an action for preliminary or permanent injunction, compensation, orders for disposal and destruction or publication of the judgement. The holder of rights may also initiate criminal proceedings against the infringer in various intentional cases.

However, ambush marketing campaigns are usually short-lived. Those associated with the 2010 World Cup will end in July when the event ends. That means that a court injunction would probably come too late. If FIFA or one of the official sponsors were successful in convincing a judge that their legitimate interests were being violated by an ambusher, the decision would probably be rendered long after the final blow of the whistle.

Even preliminary injunctions do not provide much protection as most ambush cases involve unique events that will not be repeated.

Ambush marketing cases are therefore rarely actionable. The claimant will usually be referred to damages, which are anyway hard to prove.