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«Sponsorship Program Protection Strategies for Special Sport Events: Are Event Organizers Outmaneuvering Ambush Marketers? Steve McKelvey University ...»

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This act, which today exists in its amended form as the Ted Stevens Olympic and Amateur Sports Act of 1998 (hereinafter “OASA”; 36 U.S.C. 220506 (2000)), grants the USOC the power to govern amateur athletic events pertaining to the Olympic Games, to exercise exclusive jurisdiction over all matters pertaining to the United States’ participation in the Olympic Movement, and to maintain exclusive control, pursuant to §220506(a) of the OASA, over the use of Olympic marks, symbols, and technology within the United States. Control over the Olympic symbols is especially important because the United States is one of the few countries in the world whose National Olympic Committee does not receive direct monetary support from the government. In addition to the protections afforded the USOC marks and symbols via the OASA, the USOC also owns approximately 120 active federally registered trademarks, with another 15–20 pending applications (K. Maynard, personal communication, August 28, 2006). This control enables the USOC to attract the corporate sponsors, suppliers, and licensees that are critical to the funding and ultimately the success of the U.S. Olympic Movement and its athletes. The OASA also provides the USOC with additional ammunition with which to fight alleged infringers. The express language of the OASA lessens the USOC’s burden of proof by prohibiting any combination or simulation of the specified words “... tending to cause confusion or mistake, to deceive, or to falsely suggest a connection with the corporation or any Olympic, Paralympic, or Pan-American Games activity;.... ” (emphasis added; 36 U.S.C. § 220506(c)(3; 2000)). Thus, the OASA provides the USOC much stronger legal grounds upon which to prevent the misuse or misappropriation of its protected words and symbols and imagery (Moorman, 2002). As a result of this broader protection, the USOC has achieved unprecedented success in combating ambush marketers through the use of legal action (McKelvey & Grady, 2004). In addition, as discussed in more detail below, the Olympic Movement has been successful in gaining broader trademark protection (similar to that of the Ted Stevens Amateur and Olympic Sports Act) in countries outside the United States, often as a condition to hosting the Games (McKelvey & Grady, 2004).

However, U.S.-based events such as the Super Bowl, World Series, and NCAA Final Four face much higher legal hurdles in combating ambush marketers.

Obviously, if a company uses a trademarked name, symbol, or logo that is identical or confusingly similar to that owned by the event organizer, a lawsuit can be brought for trademark infringement under the Lanham Act ((15 U.S.C. §1114; 2000)), provided that the event organizer can also demonstrate that the alleged infringing mark is likely to cause consumer confusion. Such was the case before the 2006 Super Bowl, when the NFL successfully halted an Illinois state lottery promotion offering tickets to “The Super Game XL,” a mark quite similar to the NFL’s “Super Bowl XL” trademark (Finke, 2005). Most ambush marketers are, however, careful to Sponsorship Program Protection Strategies avoid blatant trademark infringement, instead using more generic phrases (e.g., “The Big Game”). Furthermore, the Lanham Act requirement that the event organizer demonstrate a likelihood of consumer confusion, most often achieved through the use of consumer surveys, creates a time consuming and costly hurdle for event organizers. The Lanham Act also provides a cause of action, based on the theory of unfair competition, for false designation of origin, which is designed to prevent the use of similar marks that cause confusion as to affiliation or sponsorship (15 U.S.C. 1125(a; 2000)). Although not governed in the U.S. under federal law, another possible avenue of legal recourse is a state-law-based claim of misappropriation of goodwill (commonly referred to outside the U.S. as the tort of “passing off”).

Neither of these claims has historically provided event organizers with a firm footing against companies that are able to navigate the legal gray areas of ambush marketing (Vassallo et al., 2005). Although one recent U.S. lawsuit (NCAA v. Coors Brewing Co., 2002) provided a novel opportunity to establish the legal parameters of ambush marketing with respect to the unauthorized use of NCAA Final Four tickets in a consumer sweepstakes, the lawsuit, alleging state law-based unfair competition and misappropriation theories, was subsequently settled out of court.

Hence, in the U.S., there remain no adjudicated cases applying federal or state laws directly to the practice of ambush marketing, resulting in a historical reluctance of event organizers to challenge the practice using the courts. Furthermore, because any potential legal claims are tied to the trademark rights of the event organizers, only the event organizer and not the sponsor could pursue such a legal claim.

Another reason that event organizers have been reluctant to bring suit against ambush marketers is the fear of an adverse court ruling. Such was the case in 1992, when a Canadian court upheld the legality of a host of ambush marketing tactics in NHL v. Pepsi Cola Canada (McKelvey, 1992). As illustrated by the NHL v.

Pepsi-Cola Canada case, courts beyond the United States have historically also been unsympathetic to the concerns of event organizers toward ambush marketing.





For instance, in New Zealand Olympic and Commonwealth Games Ass’n, Inc. v.

Telecom New Zealand (1996), the event organizer alleged a Telecom advertisement constituted unfair trading and passing off. The event organizer argued, unsuccessfully, that Telecom’s advertisement, featuring the word “ring” in positions similar to those of the five Olympic rings, suggested an association between the Olympic Games and Telecom. Indicative of the legal challenges in combating ambush marketing, the court held that the typical newspaper reader would not be misled by the advertisement (Hoek, 1997).

Despite the dearth of legal victories against ambush marketers, event organizers who are willing to aggressively pursue legal action may, on occasion, find a court willing to enforce their trademark rights against ambush marketers. For instance, in one of the few legal victories in the annals of ambush marketing, FIFA, before the 2006 FIFA World Cup, successfully obtained an injunction and mandatory order of the Tel Aviv-Yafo District Court forcing Burger King Israel to cease the use of FIFA trademarks and World Cup tickets in a website promotion (OC FIFA World Cup, 2006). Notwithstanding such rare victories, the trademark laws currently available in most countries, including the U.S., have proven largely ineffective against the creativity of companies seeking to maintain a market presence during an event. Furthermore, the unwillingness of courts to restrict or prohibit the practice of ambush marketing reflects the ongoing tension between protecting the interests 560 McKelvey and Grady of event organizers and their sponsors, and preserving the ability of companies to engage and compete in free and lawful enterprise.

Sponsorship Program Protection Strategies While use of the courts has provided event organizers with limited recourse against ambush marketers in the past, the conclusion of each successive major sporting event—arguably beginning with the 1996 Olympic Games in Atlanta—has provided an evolving roadmap to new and arguably more effective sponsorship program protection strategies. This sponsorship program protection roadmap can be divided into four overarching avenues, discussed in turn below: (1) pre-event education and public relations initiatives; (2) on-site policing, which ranges from confiscation of nonsponsor product and signage to the creation of “clean zones”; (3) the use of contractual language in athlete participation agreements and on spectators’ tickets;

and (4) the enactment and enforcement of special trademark protection legislation.

In particular, those organizers whose events are bid out to host countries or cities (e.g., the Olympic Games, World Cup, Super Bowl, NCAA Men’s Final Four) have capitalized on their leverage in awarding hosting rights by requiring the host venues to “guarantee” ambush marketing protection.

However, while event organizers have developed arguably more effective strategies for addressing what they define as ambush marketing, it is critical to acknowledge that nonsponsors have legal rights and ethical obligations to shareholders to maintain the salience of their brands during sports events. Furthermore, event organizers need to be careful about overpromising on their protection strategies and raising unreasonable expectations. One study of corporate marketers, for instance, found that event organizers act concerned about ambush marketing at the time of contract negotiations but seem to have little power to stop it when it actually occurs (McKelvey & Gladden, 2006).

Pre-Event Education and Public Relations Initiatives When event organizers are confronted by ambush marketing campaigns, particularly those that impact upon their official sponsors, they have typically reacted (if they publicly react at all) by denouncing the ambushing company through press releases and the occasional press conference. Drawing attention to an alleged ambush marketer can be a double-edged sword, however, by providing the nonsponsor with media exposure while the event organizer can be perceived to be whining.

Furthermore, when event organizers believe that they have valid legal grounds for a trademark infringement claim, they will issue cease-and-desist letters to alleged ambushers, threatening potential legal action if the company refuses to cease its unauthorized promotional activity.

However, many event organizers are adopting a more proactive approach toward the practice of ambush marketing through pre-event education and public relations initiatives implemented well in advance of the event. These initiatives are designed to ensure that both consumers and companies engaged in sport marketing understand the differences between official sponsors and ambush marketers, as well as the legal rights of the event organizer. One measure that some, but arguably not enough, Sponsorship Program Protection Strategies event organizers take is to post their “rules” on ambush marketing on their official Web site (e.g., ICC Cricket World Cup, n.d.). Other pre-event education measures used by more proactive event organizers include the production and dissemination of video news releases to the media, designed to generate stories about event organizers’ intellectual property rights protection programs, as well as initiatives to publicize legal actions. Event organizers are also increasingly conducting “sponsor brand protection workshops” designed to educate sponsors about what they can do to assist in the ambush marketing protection process (Wall, 2001).

The NCAA’s proactive initiatives with respect to its Men’s and Women’s Basketball Championships provide insight into the pre-event education and public relations strategy that a growing number of event organizers have adopted. It also provides guidance for other event organizers seeking to better protect the value and integrity of their sponsorship programs. Several months before these premier events, the NCAA conducts a mail campaign targeting various constituencies who have an influence over ambush marketing activity. For instance, before the 2006 Men’s Basketball Championship tournament hosted by the city of Indianapolis, the NCAA mailed letters to local businesses to inform them of the NCAA’s trademark rights and to urge local businesses not to ambush the Final Four (NCAA Memorandum, 2006a). This letter, couched in very nonthreatening language, provided four guidelines that local businesses should be cognizant of in their marketing efforts relating to the Final Four: (1) use of NCAA logos and marks; (2) temporary signage; (3) special events; and (4) “clean zone” definition and requirements.

The letter began by stating that “many of the items addressed in this document are mandated by city ordinance and regulations” (NCAA Memorandum, 2006a).

The letter was also accompanied by a document entitled “Guidelines for Local Companies/Businesses” that more specifically addressed the NCAA’s protected trademark rights. With respect to “Use of NCAA Logos and Marks,” the letter

stated in pertinent part:

Federal and state law protect against the unauthorized use of those trademarks such as Final Four® and March Madness® [the Guidelines provide a much more comprehensive list of protected marks].... In your advertising and marketing plans, we ask that you avoid any such usage or reference to the NCAA’s championships, tickets or marks/logos unless you have obtained prior written consent from the NCAA. The NCAA’s efforts to protect the goodwill associated with its championships are the same as your efforts to protect your business’ name and logo. (NCAA Memorandum, 2006a) The second section (“temporary signage”) prohibited temporary signage and activity on or from private property within the so-called “clean zone,” discussed below, as well as any unauthorized use of its logos and marks on signage and décor, whether temporary or permanent, unless the individual had first secured a permit from the city (NCAA Memorandum, 2006a).

The third section (“special events”) focused primarily on logistics of securing permits for businesses seeking to conduct such events on public rights-of-way.

It did, however, notify businesses that “viewing parties of the Championship” (i.e., display of the telecast by any means) must comply with the United States 562 McKelvey and Grady Copyright Act and be authorized in writing in advance by the NCAA (NCAA Memorandum, 2006a).

Finally, the NCAA addressed the “clean zone” authorized by city ordinance and designed to “support the objectives of the NCAA. Specifically, it is intended to minimize commercialism; create a clean, safe, and vibrant environment; and provide limited recognition for the NCAA corporate partners” (NCAA Memorandum, 2006a). In addition to specific boundaries of the clean zone, the letter further

states, in pertinent part:

Within the NCAA Clean Zone, all non-permanent signs and décor are restricted to official NCAA tournament and Final Four signs and materials, or programs approved by the NCAA... [or the local host organizing committee].



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