‘Crack-down on Olympic profiteering’ raises fears

Topic:   Ambush marketing
 
Who:     London 2012 Organising Committee, British Olympic Association, DCMS
 
Where:  London,
 
When:   July 2005
 

London 2012 and marketers’ freedoms

The year 2012 may seem a long way off, but the UK government has already tabled special legislation relating to the London Olympics. The new Olympics Bill provides for tough new laws to combat so-called “ambush marketing”. But does it go too far in giving substantial commercial benefits to the International Olympic Committee and its official sponsors, to the detriment of advertisers, the media and Britain’s athletes?

This article looks at some of the detail and history of the new Bill, which received its first reading in the House of Commons on 14 July 2005. It also examines some of the trade mark protections sought by the BOA and the IOC and considers the Bill’s potential impact on freedom of speech for advertisers, on media revenues and on endorsement revenues for athletes.

The Olympics Bill and ambush marketing

The Olympics Bill does a number of things that are essential for the proper organisation and running of the London 2012 Olympics. Amongst other things, it lays the statutory foundations for the new Olympic Delivery Authority and the Olympic Transport Plan, it gives new powers to the Greater London Authority and it provides for new street trading and ticket touting offences.

It also proposes brand new laws to combat ambush marketing.

“Ambush marketing” is generally understood as being marketing activity by someone who is not an official sponsor, where the activity seeks to take advantage of the goodwill associated with an event or other sponsored property. Classic examples include:

• Linford Christie’s Puma logo contacts at the 1996 Olympics, where Reebok was an official sponsor.
• Heineken giving away branded foam megaphones/hats outside venues at Euro 2004.
• American Express’s ad campaign in the VISA-sponsored 1994 Lillehammer Winter Olympics, featuring the slogan “If you are travelling to Lillehammer, you will need a passport, but you don’t need a Visa!”

In the UK, some level of ambush marketing has to date been legally permissible, provided the activity does not infringe trade marks or copyright, breach contractual rights or create the false impression that the brand in question is an official sponsor or otherwise officially connected with the event.

However, there is a growing trend (see “History” below) for governments to bow to pressure from event organisers and introduce specific anti-ambush laws that go beyond those traditional legal protections. It is clear from the first published version of Olympics Bill that the UK government proposes to follow that route.

General ban on Olympic allusions

If enacted, the Bill would create a “London Olympics association right” (Schedule 3, paragraph 1). This would effectively be a new, specific form of intellectual property right which would be enforceable by the London Organising Committee. It would:

“confer exclusive rights [on the London Organising Committee and its licensees] in relation to the use of any visual or verbal representation (of any kind) in a manner likely to create in the public mind an association between the London Olympics and (a) goods or services; or (b) a person who provides goods or services”

Subject to certain exceptions, any such use of any visual or verbal representation in the course of trade would be an infringement of the London Olympics association right and would be unlawful under the Bill (Schedule 3, paragraph 2).

Exceptions

The London Olympics association right would not be infringed by use of a registered trade mark in relation to goods or services for which it is registered (paragraph 6).

Use by a person of their own name or address would also not be an infringement provided the use is “in accordance with honest practices in industrial or commercial matters”(paragraph 7). Subject to that same proviso, representations which are “necessary to indicate the intended purpose of a product or service” or of indications concerning the kind, quality, quantity, intended purpose…..or other characteristics of goods or services” would also be permitted, under wording similar to that in section 11(2) of the Trade Marks Act 1994.

There would be a limited media exception under paragraph 8. This provides that the London Olympics association right is “not infringed by the use of a representation in the course of publishing or broadcasting a report of a sporting or other event forming part of the London Olympics”.

Ban on specific 2-word combinations

Oddly, the Bill provides that certain combinations of words/expressions will be presumed to create an association with the London Olympics in the absence of evidence to the contrary (paragraph 3). Combining the word “games” or “2012” (whether in numerical or fully written form) with any of the following words would be a problem: “gold”, “silver”, “bronze”, “London”, “medals”, “sponsor” and “summer”. The combination of “2012” and “games” is also presumed to be an infringement.

Civil or criminal?

It appears infringement of the new right would be a civil rather than criminal matter, enforceable through the courts by the London Organising Committee.

However the provisions of paragraph 10(1) of Schedule 3 could perhaps be argued to bring infringement of the London Olympics association right under the criminal provisions of the Olympic Symbol etc (Protection) Act 1995. Clarification on this point would be helpful.

Trade mark protections

Separately, the IOC has applied to register “2012” as a community trade mark in relation to an extremely wide specification of goods and services. (See http://webdb1.patent.gov.uk/RightSite/formexec?DMW_DOCBASE=ibis&
DMW_INPUTFORM=ibis/ohim.htm&ohimnum=E4482147.)

LONDON 2012 is already a UK registered trade mark belonging to the British Olympic Association.

Advertising in the “vicinity” of venues

The Olympics Bill additionally gives the Secretary of State wide new powers to control poster advertising, field marketing and other marketing activities in the “vicinity” of the London Games (sections 17-22). Under these powers, poster advertising by non-sponsors could be completely banned. However, there is little indication at this stage as to the nature of the controls that will be imposed in this regard.

Potential consequences of the Bill

As currently drafted, the Bill would give clear benefits to official Olympic sponsors, by prohibiting other advertisers from making any allusion whatsoever to the London 2012 games. This clearly also gives a strong commercial benefit to the IOC, who should be able to command higher sponsorship fees in future by demonstrating the extent of sponsor protections they have been able to achieve in the UK. Indeed, the IOC might argue that protections of this nature are essential in today’s economic climate in order to maintain the ongoing commercial viability of the Games.

However, do these provisions give rise to any economic benefit for the UK? And if they do, does the benefit outweigh the potential adverse consequences of this legislation? A number of those potential consequences are examined below.

Freedom of speech

The Bill would substantially curtail advertisers’ freedom of commercial speech.

UK advertisers have always been free to make reference in their ads to topical news events and current issues. They have just had to be careful not to infringe trade mark rights or copyright, and to ensure that the reference does not amount to “passing off” by falsely suggesting some kind of commercial linkage between the advertiser and the event, entity or persons referenced in the ad.

The ambush provisions of the Olympics Bill would remove this freedom.

Reduced media and advertising spend

The ban on references and allusions to the Olympics could have a significant adverse impact on advertising revenues. It is likely that the usual “Olympics factor” in uplifting media spend would be severely dented, with brands finding it too risky to run ads with sporting imagery, themes or allusions.

Travel, hotel and other providers

Many travel, accommodation and tourist businesses will wish to offer special deals for visitors planning to travel to or within the UK in order to attend the 2012 Olympics. However, would those companies be able to advertise their products and services at all in light of the broad prohibition in paragraph 2 of Schedule 3?

It may be argued that paragraph 7 would permit them to do so, and to make reference to London 2012 to the extent necessary to indicate the intended purpose of their services. However this is by no means clear, particularly in the context of the presumption that statements such as “great deals on flights to London in summer 2012″ are an infringement by virtue of containing the word “summer” and the word “2012”. And the “honest practices in industrial or commercial matters” test remains as opaque as ever.

Accordingly, without significant clarification, the Bill may have a direct and adverse impact on the UK’s travel and tourism operators.

Kelly Holmes, Steve Redgrave etc

Many of Britain’s current and former Olympic heroes rely on endorsement and advertising revenue for their incomes. But if the Bill goes through as it stands then they may not be able to appear in UK marketing (other than for official Olympic sponsors) until after 2012. Any such appearance in the period leading up to 2012 may naturally give rise to an association in the public mind between the advertiser and London 2012. As such, it would be an infringement of the London Olympics association right.

Outdoor advertising contractors

The Bill potentially allows the Secretary of State to ban all poster advertising by non-sponsors within a wide geographic area. But there are no provisions for financial compensation to outdoor advertising companies, who may lose significant revenues as a result of the Bill effectively removing market competition for their sites.

Adverse PR

If any legislation in this area goes too far, or if its enforcement is too heavy-handed, then this also could lead to bad publicity for the IOC, for the London Organising Committee and for the UK as a whole. In South Africa, for instance, there was considerable media disapproval of the way that cricket fans were apparently ejected from stadia for being in possession of tins of the wrong kind of cola.

Oddities and potential loopholes

There are a few interesting consequences of some of the drafting and the approach taken in the current version of the Bill:

• It is interesting that the Bill’s anti-ambush provisions talk only of “visual” and “verbal” representations. Is there a potential loop-hole for advertisers to use non-verbal radio sound effects to make reference to the London Olympics?
• The exception for registered trade marks also opens up some possibilities for advertisers who are prepared to move quickly in filing relevant slogan marks. For instance, Osborne Clarke might consider applying to register “OSBORNE CLARKE, UNOFFICIAL AMBUSH MARKETING LAWYERS FOR THE 2012 GAMES” as a trade mark…
• Charities, political organisations and other non-trading entities appear to be exempt from the anti-ambush provisions, which apply only usage “in the course of trade”.
• Also, can it really be the intention of Parliament that a swimwear company advertising its “summer 2012″ collection should be presumed to be infringing the London Olympics association right? 
• What about UEFA’s Euro 2012 football tournament? Won’t UEFA and its sponsors wish to be able to refer to “2012 football games” and to “Euro 2012 sponsors” without fear of being sued by the London Organising Committee?
• Indeed, if the IOC gets its way, no advertiser will be able to use the numerals “2012” in its materials without risking court proceedings for infringement of the IOC’s “2012” trade mark!

History

The proposals in the Bill are the latest in a line of developments around the world, where national governments have been persuaded to introduce specific anti-ambush legislation favouring the commercial interests of an event organiser.

South Africa

Extract from South Africa’s Merchandise Marks Amendment Act 2002
 
(2) For the period during which an event is protected, no person may use a trade mark in relation to such event in a manner which is calculated to achieve publicity for that trade mark and thereby to derive special promotional benefit from the event, without the prior authority of the organiser of such event.

(3) For the purposes of subsection (2), the use of a trade mark includes-

(a) any visual representation of the trade mark upon or in relation to goods or in relation to the rendering of services;

(b) any audible reproduction of the trade mark in relation to goods or the rendering of services; or

(c) the use of the trade mark in promotional activities,

which in any way, directly or indirectly, is intended to be brought into association with or to allude to an event.

(4) Any person who contravenes subsection (2) shall be guilty of an offence.

(5) For the purposes of this section ‘trade mark’ includes a mark.
 
South Africa introduced its Merchandise Marks Amendments Act 2002 in order to put in place additional ambush marketing protections for the Cricket World Cup, which it hosted in 2003.

The new statute made any unauthorised promotional reference or allusion to the Cricket World Cup a criminal offence (see extract in box to right). This would apply even where the advertiser or promoter had not claimed or suggested that they had any kind of official status. The key test was whether the defendant had used a trade mark or mark (typically their own mark) “in relation to [the] event in a manner which is calculated to achieve publicity for that trade mark and thereby to derive special promotional benefit from the event, without the prior authority of the organiser of the event”. The legislation also allows the South African Minister of Trade and Industry to designate further future events as protected under this legislation.

Interestingly, the explanatory notes to the South African legislation set out an analysis of the kinds of activity that were considered “ambush marketing” and which the Act set out to prohibit. The notes draw a distinction between what they call “ambush by way of association” and “ambush by way of intrusion”.

Ambush by association is seen as covering activity where the ambush marketer “creates the impression that [it] is an authorised sponsor or contributor associated with the event”.

Ambush by intrusion is seen as including:

(a) placing advertisements for a product on the outskirts of a stadium at which a sponsored event is taking place;

(b) running advertisements making reference to a sponsored sporting event, without suggesting that the advertiser is a sponsor of the event; or

(c) bringing the product or its promotion to the attention of people interested in a sponsored event but without suggesting or implying any form of sponsorship of the sponsored event.

Portugal

Extract from Portugal’s Decree-law 86/2004
 Approximate English translation
 
Artigo 4.º

Proibições

1 – É proibida a utilização, directa ou indirecta, por qualquer meio, de uma firma, denominação, marca ou outro sinal distintivo do comércio por quem não tenha obtido autorização das entidades responsáveis pela realização da fase final do Campeonato Europeu de Futebol de 2004 que sugira ou crie a falsa impressão de que está autorizada ou que está, de alguma forma, associada ao evento.

2 – A proibição contida no número anterior aplica-se, também, nos casos em que a promoção de produtos, serviços ou estabelecimentos por entidade que, não utilizando qualquer meio previsto no artigo 3.º e ainda que reconhecendo não estar associada ao Euro 2004, seja, ainda assim, passível de criar um risco de associação ao evento ou às respectivas entidades promotoras, independentemente do local ou momento em que ocorrem.
 Article 4

Prohibitions

1. It is prohibited to use, directly or indirectly, by any means, any name, logo, trade mark or other distinctive sign of commerce without prior authorisation from the organisers of the final phase of the European Football Championship 2004 if the use suggests or creates the false impression that the user is authorised or in any way associated with the event.

2. The prohibition in the previous section applies to the promotion of goods, services or enterprises by an entity even if none of the means set out in article 3 are used [ie Euro 2004 trade marks and other Euro 2004 intellectual property], and even if the entity gives an acknowledgement that it is not associated to Euro 2004, if the promotion could still give rise to a risk of association with the event or with any of its sponsors, regardless of where or when the promotion occurs.
 
Portugal followed a similar approach with the legislation it introduced in relation to UEFA’s Euro 2004 football tournament. Decree-law 86/2004 (see extract and rough translation in box to the right ) put in place a similarly wide regime.

Pretty much all the forms of ambush by intrusion and ambush by association outlined in the South African legislation also became unlawful in Portugal in respect of Euro 2004. Under the new Portuguese legislation, it was no longer necessary to show that an advertisement or other piece of marketing created a false impression that the marketer is an official sponsor or otherwise connected with the event. The test now became whether the activity gave rise to a risk of “association” with the event.

Future developments

The anti-ambush proposals in the Olympics Bill relate solely to the London 2012 Olympics. However, if these are allowed onto the statute books then there is every prospect that other sports bodies may in the future lobby for equivalent protections or for a more general law based on the principles set out in this Bill.

Next steps

The Bill will next go to Committee stage, which will start after the end of the parliamentary summer recess (10 October). We understand that the chairman of the committee is John Whittingdale.

Action points

Concerned parties may wish to lobby the DCMS, the committee and other relevant people in relation to the proposed Olympics Bill. Issues that may be of particular concern might include:

• the impact of the Bill on advertisers’ freedom of speech;
• its financial impact on Britain’s current and former Olympic athletes;
• its financial impact on the tourism and travel industries;
• its financial impact on media owners and the advertising sector generally;
• the need for clarity as to whether the Bill’s ambush marketing provisions could give rise to criminal sanctions;
• the fact that, as drafted, advertisers may be caught by the anti-ambush provisions even if they had no intention of creating any association with the London Olympics – shouldn’t an “unintentional infringement” exception be included?; and
• the bizarre provisions (at paragraph 3 of Schedule 3) relating to two-word combinations.

Advertisers may also wish to oppose the attempt by the IOC to seize exclusive trade mark rights in relation to the number “2012”…

We will continue to cover these issues on www.marketinglaw.co.uk as they develop.

12 August 2005
nick.johnson@osborneclarke.com
+44 (0)20 7105 7080
www.marketinglaw.co.uk