Asian Patents Attorney Association

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1 Asian Patents Attorney Association Hong Kong - Anti-Counterfeiting Committee Report 56 th Council Meeting [October 19, 2008] [9:00 a.m. 12:00 p.m.] By Tan Loke Khoon / Ruby Chan - Baker & McKenzie, Hong Kong This report will provide some updates on Hong Kong Government s activities and new legislative changes during The second part of this report will discuss the specific topic, ambush marketing. Part II Specific topic: ambush marketing A. What is ambush marketing? Major sports events, such as the Olympics or the World Cup, attract millions of audiences around the world. The events generate huge profits for the event organiser (through sponsorship fees, sale of television rights and sales of tickets, licensing of rights for production and sale of memorabilia). The association with the event such as the Olympic Games which is telecasted live worldwide can create publicity, revenue, valuable goodwill, prestige and reputation for the sponsor s business. Ambush marketing is a marketing method whereby companies (often competitors of the sponsors) associate themselves with a sponsored event without payment of sponsorship fees. Ambush marketing activities have the effects of misleading the public to believe the competitors brands and products are associated with a particular event and allowing the ambushers to take a free ride on the publicity generated by the event.

2 Ambush marketing would, to a lesser scale, also have application in arts and cultural exhibitions, concerts and other sponsored events. For the purpose of this discussion, we will focus on sports events and will use the Olympic Games as an illustration. There are a number of articles and academic discussions outlining a wide range of ambush marketing activities that have taken place in the past. The purpose of this report is not to go into the details of those articles and cases, but merely to give a bird s eye view of the topic and a brief summary of the position in Hong Kong. B. Exclusivity of sponsorship The core value of sponsorship is its exclusivity. A sponsor acquires a right to associate his name and his branded products with the event. Sponsors of the Olympic Games, for example, can claim in their advertisements as being the Olympic Worldwide Partner or Olympic Exclusive Supplier, according to their level of sponsorships. Alternatively, they may be allowed to use the Olympic rings alongside with their own trademarks on their products. C. Types of ambush marketing In the early days, ambush marketing consisted of simple acts, such as unauthorised use of an event logo on merchandise or false claims to be an official sponsor of a particular team. These could, depending on the facts, constitute copyright, registered design or trade mark infringement or passing off in Hong Kong. There are clear-cut remedies for these. Over the years, tactics for ambush marketing change and have become more subtle. For the purpose of this report, we will discuss ambush marketing which does not involve using the name of the event or the sponsor s mark. For the purpose of our analysis, there are two types of ambush marketing: (i) Intrusion; or (ii) Association (concealed ambush marketing). (i) By intrusion Some examples of intrusion include non-sponsors placing their own banners advertisements or their marks on the billboards outside the venue, distributing free branded products near the

3 venue with a view to enticing spectators to bring these with them inside the venue, or sponsoring spectators and commentators to wear its products. Without claiming themselves to be the official sponsors, these competitors have not only achieved the aim of publicity but have also misled the general public to believe they are in association with the sporting event, when they are not. In short, the non-sponsors hijack the sponsor s exclusive right to economically exploit the publicity generated by the event. While this can jeopardise the exclusive rights of the official sponsors who have paid large amounts of money to secure their sponsorship positions, there is no trade mark infringement because the non-sponsors are using their own marks, not the sponsor s marks. There is arguably no passing off of the event if the non-sponsors are only using their own marks and if there is no misrepresentation that they are sponsors of the event. (ii) By association (concealed ambush marketing) More often, sponsors find their legitimate interests and exclusive rights being ambushed by less obvious infringement or marketing activities surrounding the event and without claiming to be official sponsors. Here are some examples:- (a) An ambusher can run campaigns using current Olympic athletes to endorse their products; (b) An ambusher may sponsor a team participating in the event, instead of sponsoring the event itself; (c) An ambusher can offer customers free gifts to celebrate the success of the event or organise events with the event as the theme; (d) It can sponsor the broadcast of the event. The benefits of this approach is that the media audience for most events are much larger than the on-site audience. The so-called ambusher is seeking a legitimate advertising and marketing opportunity in its own rights; (e) An ambusher may purchase advertising time in the time slots around the television broadcasts of the events.

4 Qantas, for example, has sponsored Olympic athletes for many years and has frequently featured Olympic athletes in its advertising in years after the 1996 Atlanta Olympics. These campaigns centred around the I Still Call Australia Home theme song, which, one author claims, to have become the unofficial anthem of the Sydney Olympics in According to one report, Qantas has wider public recognition (or misconception) as a sponsor, even though Ansett was the official sponsor for the Sydney 2000 Games. In the Beijing Olympics, a Chinese clothing company (also a famous name in itself but was not one of the official sponsors) signed a deal with CCTV to sponsor television commentators introducing the torch relay as well as some high-profile members of the Chinese national teams. The deal was eventually not pursued, otherwise it would be interesting to see the outcome of the case. The official clothing sponsor for the 2008 Olympic Games was Adidas. D. Remedies - examples from other jurisdictions Legislation can be a direct and effective way of combating ambush marketing. Legislations are in place in Australia, New Zealand, China and the UK to respectively cater for the Olympic Games, the Paralympics Games and/or the Commonwealth Games or for major events. In New Zealand, the Fair Trading Act 1986 prohibits a person from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive and also prohibits a person making false or misleading representations that goods or services have any sponsorship, approval, endorsement. The Major Events Management Act 2007 aims to protect sponsors against ambush marketing against any event which is declared major under the Act and by specifying clean zones, clean transport routes and clean transport periods. In South Africa, the Merchandise Act 1914 prohibits the use of an ambusher s trade mark in relation to a sporting event where such use is unauthorised and where it is calculated to achieve publicity for that trade mark and thereby derive special promotional benefit from the event. E. Remedies in Hong Kong Hong Kong, as an Olympics co-host city for the 2008 Olympic Games, does not have a specific statutory system to combat ambush marketing activities.

5 The Olympic words and signs and mascots are registered trade marks in Hong Kong. For ambushers who use signs and symbols identical or similar to the event s names and symbols, there will be traditional remedies such as trade mark infringement, copyright infringement or passing off. If the claims are established, injunctive relief as well as an award of damages can be granted by the courts. However, legal remedies against more subtle or sophisticated ambush marketing are ambiguous and sometimes non-existent, especially where the ambusher is not using the sponsor or the event organiser s mark or is not claiming any association with the event (see examples given above). Some examples of possible remedies against such ambushing marketing activities are listed below:- (i) Contractual rights With venue providers - The event organiser / rights owner may require the venue holders to provide clean venues (i.e. the venue is free of all sponsorship, advertising and pre-booked seating). This ensures that the event organiser or rights owner will have exclusive rights to market the event, sell tickets and thereby maximise profits and minimise the risks of ambush marketing. With sponsors - Sponsorship agreement typically includes clauses on exclusivity and an undertaking not to grant any advertising, promotional and sponsorship opportunities and benefits to others competing in sponsor s business. The terms of the sponsorship agreement may give the sponsors rights to the extent of disallowing entry of participants who bring items of a competitor or removal of such items. With spectators - The event organiser may impose an obligation on the spectators (as a contractual term on display at the places where tickets are sold and printed on the admission tickets) not to wear or carry any hats, caps, clothing, shoes or other accessories, with a visible logo of non-sponsors. The event organiser may refuse those who breached such terms from entering into the venue or to leave the venue. This was the position taken by the Hong Kong Government in the Olympic Equestrian Events. With broadcasters - The event organiser can, when granting the broadcasting rights, require the television program hosts of the broadcasted event to wear the official sponsor s products. (ii) Common law action of passing off

6 To succeed in an action of passing off, the event organiser must prove that it has protectable goodwill and reputation in the mark or name of the event, that the non-sponsors misrepresented to the public of its relations with the event organiser and that the event organiser suffers damages as a result. If a non-sponsor use certain words in their advertisements to lead an average customer to believe this brand is also an event sponsor or somehow associated with either the event or the sponsor, this can be actionable under the common law action of passing off. For successful actions, the courts are empowered to grant injunctions in favour of the official sponsors to stop their rival businesses from continuing infringing their exclusive rights which can effectively put the harmful ambush marketing activities to an end. However, not all kinds of association will result in passing off and the outcome will depend on the facts of the case. (iii) Non-legal remedies Some examples of non-legal remedies include:- Advertising control The Beijing Organizing Committee for the Olympic Games ensured (with help from other governmental authorities) that all prominent billboards in Beijing, including the ones at the airport or on subway lines, were granted priority to Olympic sponsors. Public education and appeal - Take the Olympic equestrian event as an example, the Hong Kong Government (being the co-host / organiser of the event) appealed to the public not to accept commercial promotional items that might be given away for free near Olympic event venues. The Hong Kong Government has also demonstrated dedicated efforts to prevent any attempt by a third party to associate itself directly or indirectly with the Olympic Games to gain recognition and benefits without paying the sponsorship fees. F. Concluding remarks In a free world, ambush marketing can either be seen as entirely legitimate or it can be seen as an unfair hijacking of another s rights. In many cases, even if a legislation is in place, the innovativeness and creativity of ambush marketing activities enable companies to engage in such conduct without trespassing on the law.

7 Since the Olympic Games carry with them issues of national interest, it would justify the passing of supporting legislation to combat unauthorised use of the related signs and symbols. Unlike the Olympic Games, most art, cultural events and exhibitions and sporting competitions are organised and sponsored by the private sector and as such may not justify the passing of legislations for each individual event. A successful anti-ambush marketing exercise (whether or not appropriate legislations are in place) would require the cooperation of event organisers, rights owners, corporate sponsors and the venue administrators and the public. The moral level of the audience and spectators and persons attending the event will also have an important role to play. At the end of the day, event organisers, more than anyone else, have to take a vigilant approach to pre-empt and stop ambush marketing activities, as this will eventually affect the future funding and brand marketing of the event.

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