Sport sponsorships generate billions of dollars in revenue each year, with many businesses clearly viewing sponsorships as a valuable asset.
Ambush marketing, which is a sly marketing strategy, can degrade the value of this investment. In an attempt to combat ambush marketing and preserve the value of sponsorship of major events, the Commonwealth Government has recently enacted new legislation.
What is ambush marketing?
Ambush marketing is a strategy used by businesses to create the impression that the business is associated with a particular event when, in fact, there is no formal sponsorship or association. In this way, businesses get many of the benefits and exposure of being an official sponsor of an event, without having to pay the (sometimes substantial) sponsorship fee.
Do a quick search of ‘ambush marketing’ and you will find hundreds of results of clever marketers hijacking the good efforts and huge outlays made by their competitors by using ambush marketing tactics.
One example of an ultimately thwarted attempt was by a brewer in the 2006 soccer World Cup. The company gave out free overalls emblazoned with the company’s logo to fans entering a soccer match. The company was presumably hoping to gain exposure when shots of the crowd at the match showed a sea of fans wearing the logo. Unfortunately, the company was not an official sponsor of the World Cup, so all the fans were asked to remove the overalls before entering the ground (some say the poor fans had to watch the game in their underwear!).
So what’s the problem?
Sports sponsorships can be extremely lucrative. Because of this, business will spend a lot of money having their brand associated with a major event, like the Olympics or the World Cup. How would you feel if you paid a lot of money to be an official sponsor of an event, and then your competitor gets just as much exposure from the event by using ambush marketing tactics?
Ambush marketing erodes the value of a sponsorship. If you can get the benefits of sponsorship without paying for a sponsorship, why bother? As a result, organisers of major events can find that they are not holding the valuable asset they once thought they had, because businesses are less likely to see the value in buying sponsorships. Ultimately, event organisers may seek to recoup these costs by charging fans more to attend.
Previous legislative framework
The Trade Marks Act 1995 (Cth) and the Copyright Act 1968 (Cth) don't combat ambush marketing. For example, they don’t protect generic or commonly used words or expressions, which are often the tools ambush marketers use to execute their strategy, and don’t prevent the use of a legitimate trade mark (like the brewery’s logo at an event sponsored by a competitor).
Previously, the Federal Government enacted discrete pieces of legislation to protect specific events, such as the Sydney 2000 Games (indicia and images) Protection Act 1996 (Cth) and theMelbourne 2006 Commonwealth Games (Indicia and Images) Protection Act 2005 (Cth). The Queensland Government also enacted legislation with respect to the upcoming Commonwealth Games to be held in the Gold Coast in 2018.
Victoria enacted the Major Sporting Events Act 2009 (Vic) which applies to multiple events, and the Federal Government has just adopted the same approach.
New Commonwealth legislation
The Major Sporting Events (Indicia and Images) Protection Act (Cth) (Act) came into force on 1 July 2014. This legislation is a shift from the previous approach adopted by the Federal Government because it seeks to combat ambush marketing in respect of multiple events, and contains scope to add new events in the future.
The Act prohibits the unauthorised use of 'protected indicia and images' in relation to 'major sporting events' for 'commercial purposes'.
Major sporting events
Currently, the Act contemplates the following 'major sporting events':
- Asian Football Confederation Cup 2015
- International Cricket Council Cricket World Cup 2015
- Gold Coast 2018 Commonwealth Games.
Protected indicia and images
Examples of protected 'indicia' include:
- Cricket World Cup
- Cricket World Champions
- International Cricket Council
- Commonwealth Games
- Commonwealth Games Gold
- Commonwealth Games Silver
- AFC Asian Cup
- Asian Cup
Protected 'images' are any visual or aural representation that, to a reasonable person, in the circumstances of the presentation, would suggest a connection with the event.
A user of a sporting event's protected indicia or images uses them for a 'commercial purpose' if they have caused the event's indicia or images to be applied to the goods or services and:
- the application is for the primary purpose of advertising or promotion or enhancing the demand for the goods or services
- the application would suggest to a reasonable person that the user is or was a sponsor or supporter of the relevant event or any other event arranged by the event body in connection with the relevant event.
Secondary users are also covered by the prohibition, for example if they supply, or offer to supply, goods or services in relation to which another person (who is not an official user) has used the event's protected indicia or images for commercial purposes (as described above).
Under the Act, the authorising body of a major sporting event must establish and maintain a register of persons authorised to use protected indicia and images. This register must be published on the authorising body's website.
To ensure fair reporting of the event won't be hindered, there are exceptions for using protected indicia or images for the primary purpose of:
- criticism or review
- providing information, including through reporting news and presenting current affairs.
The Act provides that unauthorised persons using protected indicia and images for a commercial purpose may be restrained from doing so by an injunction granted by a relevant court. Unauthorised users may also be required to publish corrective advertisements. If an official sponsor of the major sporting event suffers loss or damage, a court may also award damages or an account of profits.
Official users can also give the CEO of Customs a notice objecting to the importation of infringing goods in relation to the event, and Customs must generally seize any infringing goods imported after the objection notice is given.
The Act doesn't give official users unfettered rights however, as it contains a safeguard against groundless threats of legal proceedings. If an official user makes a groundless threat to take legal action under the Act, any person aggrieved may bring an action in a relevant court seeking a declaration or injunction, or damages for loss that the person has suffered as a result of the threat.
State and Federal Governments are becoming more proactive about protecting the value of official sponsorships.
If you are considering an official sponsorship, this legislation seeks to protect the value of your investment.
All businesses that are seeking to leverage off the exposure provided by associating with a major sporting event should ensure they are familiar with the legislation.
For fans, this legislation means the value of sponsorship of sporting events in Australia is preserved, ensuring Australia is still viewed as a first-class place to hold major events.