This article is written by Sampreetha SK, pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.com. Here she discusses “Ambush Marketing and Commercial Sponsorship”.

Introduction

Ambush marketing occurs when a brand attempts to advertise and capitalize (creating awareness and brand goodwill) through an event, predominantly a sport event by associating itself with the event while not being the event’s official sponsor. Hence it involves two major aspects to it, advertisement and sponsorship. Ambush marketing can be done by running event related promotions or by sponsoring individual sportsmen rather than the whole event. In its crude or direct form, ambush marketing uses the event’s logos and the like for their advertisements thereby directly infringing trademarks and copyrights held in the name of the event. Indirect ambush marketing takes place when the brand does not necessarily use the name of the event or its trademark^[i].

While organizing sports events on a grand scale such as the Olympics or the FIFA world cup, sponsorship plays a vital role. In return for this vital support, the official sponsors are guaranteed an association with the competition, especially through the right to use the Official marks in their promotions and advertising^[ii]; If anyone could associate with the official mark, the official sponsors would have simply no reason to invest. And this would undermine the sport’s revenue base. One of the best examples of ambush marketing is when Puma, which was not an official sponsor of Rio Olympics 2016 but sponsored athlete Usain Bolt, used a picture of him holding golden Puma shoes after he won gold medals in the 2016 Rio Olympic Games and filled social media with the post “When you are @Usain Bolt, you are #ForeverFaster”. This tied Usain Bolt’s gold medal performance with Puma’s Forever Faster slogan which gave puma a head start in sales^[iii]. They were however careful not to use any reference to the Olympics, this is one of the classic cases of ambush marketing.

Ambush Marketing and IPR

There exists a nexus between Ambush marketing and IPR Infringement. In the absence of any exclusive legislations prohibiting ambush marketing as in India, the official sponsors or the event organizers may seek protection under the Trade Marks Act 1999, the Copyright Act 1957 or under the tort of Passing Off.

Trademark infringement

We can understand through the jurisprudence of trademark law that it serves two main purposes: To protect the goodwill of businesses and to protect consumers from deception through the use of fraudulent marks^[iv]. In India, if the event organizer has a registered trademark, and that registered trademark or similar mark is used by an unauthorized sponsor, then the event organizer can sue for trademark infringement under Section 29 of the Trademarks Act and claim damages and/or injunction. Section 29(1) reads: “A registered trademark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which is identical with, or deceptively similar to, the trademark in relation to goods or services in respect of which the trademark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trademark.”

An important case in this context would be the case of Arsenal Football Club plc vs Mathew Reed^[v] where the football club sued a person called Reed who was selling club merchandise with the club’s logo on it which was trademark protected. Reed argued that since the use of logos showed its affiliation to the club and did not misrepresent where the goods came from, it was lawful. This argument was rightly rejected by the court.

Copyright infringement

When there is unlicensed commercial use of an event’s audio or video recordings/broadcasts or any pictorials for that matter, infringement proceedings can be initiated under Section 51 of the Indian Copyrights Act. Commercial use of rights and privileges, unauthorized use of athletes’ appearances for marketing are all examples of copyrights infringement^[vi].

In the case of Castrol Ltd. vs V.O. Muralidhar Reddy^[vii], the defendant was alleged to have copied the colour scheme and the layout of the plaintiff and an injunction was granted by the Supreme Court while noting that application of copyright law requires a substantial reproduction of copyrighted work to constitute infringement not mere association with the copyrighted work.

Passing off

Passing off is a common law offence based on the principle that no man may pass  his goods as those of the other^[viii]. Reputation, misrepresentation and goodwill are to be compulsorily established while alleging passing off^[ix]. Passing off appears to be the strongest defense available against ambush marketing. In the case of National Hockey League vs Pepsi Cola Canada Ltd^[x], Coca-Cola Ltd was originally designated as the official soft drink of the National Hockey League and was permitted to claim affiliation to the NHL. Pepsi-Cola the rival brand of Coca-cola landed the right to advertise during the broadcasts of NHL games and used promotion tactics and contests in such a way that it was likely to convey to the public a false impression that the NHL and its member teams approved or were in some manner associated with the contest and the company. Pepsi, in response, argued that its actions constituted little more than “an aggressive but legitimate marketing campaign”^[xi] After examining the tort of passing off, the court held that Pepsi’s actions clearly constituted ambush marketing.

Although the Trade Marks Act of 1999 does not define the term passing off, it is referred to in sections 27(2) and 135. While 27(2) confers rights of action for passing off, Section 135 specifies remedies available in a suit for passing off. Hence passing off has 3 requirements, firstly that the Plaintiff has a good reputation secondly, the third party’s marketing has led the public to believe that there is a connection with that party and the event organizer lastly, the misrepresentation has damaged the goodwill of the plaintiff by creating a confusion/deception in the market^[xii].

In another important Delhi High Court case of ICC Development (International) Ltd. vs Arvee Enterprises and Anr^[xiii],  the court dealt with the difference between passing off and ambush marketing. Philips organized a contest and used catchphrases such as “Philips: Diwali Manao World Cup Jao” while ICC had already filed for registration of words “ICC Cricket World Cup South Africa 2003” and logo and the mascot “Dazzler” in India. It was alleged that Phillips was taking advantage of the world cup without investing a single rupee, thereby depriving the sponsors from enjoying the exclusivity of the rights granted to them. The court rejected this contention on the ground that the words ‘World Cup’ are generic in nature and were used in several contexts and thus the logo of ICC had not been misused. It held that while passing–off has an element of deceit present, ambush-marketing only gives his own brand a larger public exposure attached to the event. This approach totally undermines the whole purpose of the sponsors and their right of exclusive usage.

As mentioned earlier, ambush marketing involves the direct use of the event’s trademarked logos only in its cruder forms, in such scenarios, there may be a remedy under the trademark or the copyright laws. Ambush marketing strategies are getting cleverer and deceptive by the day, many of such ambush marketing campaigns do not involve any direct use of the event’s logos. In addition, disclaimers are put up and the brands which use ambush marketing strategies always have the defense of the actions being their ‘marketing strategy’^[xiv]. We may say that IP Law offers only a limited protection against ambush marketing. Here are a few examples of statutes in various countries that deal exclusively with ambush marketing;

Ambush Marketing Legislation

South Africa has a legislation in place, which prohibits such practices under section 9(d) of the Trade Practices Act of 1976. The act states that “No person shall: in connection with a sponsored event, make, publish or display any false or misleading statement, communication or advertising which represents, implies or suggests a contractual or other connection or association between that person and the event, or the person sponsoring the event, or cause such statement, communication or advertisement to be made, published or displayed^[xv]“. This legislation thereby expressly prohibits ambush marketing by association, and intrusion. It prohibits advertising in any form or place that is likely to suggest to a reasonable person an association between a brand and the event. South Africa’s Merchandise Marks Amendment Act, 2002 also empowers the Ministry of Trade and Industry to declare certain events as protected events.  Section 15A reads, “For the period during which an event is protected, no person may use a trademark in relation to such event in a manner which is calculated to achieve publicity for that trademark and thereby to derive special promotional benefit from the event without the prior authority of the organizer of such event”. This section thereby prohibits ambush marketing for a time period during which the event occurs and not beyond it. The person is held liable if any benefit is derived without any authorization.

The United States of America, under the Lanham Act has also protected the rights of official sponsors by prohibiting acts which are false or misleading description or representation or representations in commercial advertising or promotion^[xvi].

The legislations enacted maybe a regular statute or an ad-hoc legislation like the London Olympics Games and Paralympics Games Act 2006 which was enacted to protect the Olympic games held in London. This act confers a civil right on the organizing committee to prohibit any activity which creates an ‘unauthorized association’ between the event and the brand^[xvii].

The US Olympic Committee, ahead of the 2020 Tokyo Olympics, has relaxed its guidelines by allowing personal sponsorships to the individual athletes. these sponsors can promote their brand during the event but under the scrutiny of the Personal Sponsor Committee^[xviii] thereby protecting the official sponsors from ambush marketing. Even though Ambush Marketing cannot be completely abolished, active steps are being taken by several countries to regulate the same.

New Zealand has an air tight law in place to restrict Ambush Marketing through the New Zealand Major Events Management Act 2007^[xix]. It restricts two major forms:

• Ambush marketing by association (sections 10 and 11): Representing that certain persons, brands, goods, or services have an association with a major event when there is no association as such.
• Ambush marketing by intrusion (sections 16 to 20): The use of certain emblems and words relating to Olympic Games and Commonwealth Games (and other designated events) without appropriate authorization.

In all these legislations, a point worth considering is how almost always there is a presumption that a representation including a major event’s emblem or a major event’s word suggests association. This presumption provides a very solid ground to the official sponsors. The judiciary’s view as in the case of ICC vs Arvee Enterprises that ‘World Cup’ is a generic term or that there was absence deceit would not stand when such legislations are applied.

Conclusion

Effective negotiation and a solid sponsorship deal between a brand and a sporting event may be of no use if an ambush marketing campaign is successful. One of the best scenarios to understand this would be when a survey concluded that the company American express was believed to be the official sponsor of the 1996 Atlanta Olympics by 54% of the respondents to the survey^[xx] while Visa spent $40 million for that privilege.

The benefits in terms of sales revenue may be calculated, intangible benefits like brand awareness and goodwill are what ambush marketers are mainly after. They use their creativity to grab the audiences’ attention to the disadvantage of the official sponsors while the official sponsors shell out millions to gain the attention of that very audience. Ambush marketing though not outright considered illegal is surely an unethical practice. While deciphering the legislations under the IPR and the courts’ interpretation while applying those laws one can clearly see that the provisions and protection under them are not sufficient. There is reluctance and confusion as demonstrated by the Delhi High Court in the ICC vs Arvee case, while the problem is dealt under the IP Laws. Enacting legislation is the only permanent solution to this unfair trade practice.

References

^[i] Definition of ‘Ambush Marketing’, ECONOMIC TIMES (Nov. 06, 2019, 10:00 AM), https://economictimes.indiatimes.com/definition/ambush-marketing.

^[ii] Brand protection, FIFA (Nov. 01, 2019, 12:00 AM), https://www.fifa.com/about-fifa/marketing/brand-protection/protect-the-rights-of-sponsors.html.

^[iii] Joscha thieringer, Usain bolt and Pama outsmart the IOC with a pair of golden shoes, ISPO (Nov. 01, 2019, 11:30 AM),  http://www.ispo.com/en/companies/id_78704878/usain-bolt-and-puma-outsmart-the-ioc-ambush-marketing.html?amp.

^[iv] Bainbridge David, Intellectual Property, 521 (4 ed. Pitman Publishing 1999).

^[v] Manu/EG/0202/2001.

^[vi] Bainbridge David, Intellectual Property, 521 (4 ed. Pitman Publishing 1999).

^[vii] y (2001) PTC 137 (Mad).

^[viii] James L.J., in Singer Manufacturing Co. vs Loog, 412 18 Ch.D.395 (1880).

^[ix] Reckitt & Colman Ltd vs Borden Inc 873 1 All E.R (1990).

^[x] National Hockey League vs Pepsi-Cola Canada Ltd., 70 B.C.L.R. (2d) 27, (B.C.S.C.) (1992).

^[xi] Bhattacharjee Sudipta, Ambush marketing – The problem and the projected solutions vis-à-vis intellectual property law – A global perspective, Journal of Intellectual Property Rights (2003).

^[xii] Venkat Reddy, D Law relating to trademarks in India study with special reference to passing off and infringement, SHODHGANGA, (Nov. 11, 2019, 10:00 AM), http://hdl.handle.net/10603/42957.

^[xiii] ICC development (Int’l Ltd.) vs Arvee Enterprises & Philips, 245 (26) PTC (Del) (2003).

^[xiv] ICC development (Int’l Ltd.) vs Arvee Enterprises & Philips, 245 (26) PTC (Del) (2003).

^[xv] Trade Practices Amendment Act 26 of 2001, (Oct. 30, 2019, 3:10 PM), https://www.gov.za/sites/default/files/gcis_docoument/201409/22792.pdf.

^[xvi] The Lanham act 1946 Section 13(a).

^[xvii] London Olympic Games and Paralympic Games Act 2006 21(1) and 31(1).

^[xviii] Margaret A. Esquenet; Benjamin F. Tookey, Let the Games Begin: USOC Eases Team USA Rule 40 Sponsorship Restrictions Ahead of Tokyo 2020 Olympics, FINNEGAN (Oct. 29, 2019, 10:00 AM), https://www.finnegan.com/en/insights/blogs/incontestable/let-the-games-begin-usoc-eases-team-usa-rule-40-sponsorship-restrictions-ahead-of-tokyo-2020-olympics.html.

^[xix] Parliamentary Counsel Office, (Nov. 05, 2019, 10:10 AM), http://www.legislation.govt.nz/act/public/2007/0035/latest/DLM411990.html.

^[xx] Bhattacharjee Sudipta, Ambush marketing – The problem and the projected solutions vis-à-vis intellectual property law – A global perspective, Journal of Intellectual Property Rights (2003).

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: