Anti-ambush marketing legislation – does it work?

The Australian government has released a report on the effectiveness of specific legislation enacted to enhance protection against ambush marketing associated with the staging of the Commonwealth Games in Melbourne in 2006 and in relation to Australia's ongoing participation of Australia in the International Olympic Committee (Ambush Marketing Legislation Review 2007; Tom Chan and Emily Hudson, Frontier Economics Pty Ltd & The Intellectual Property Research Institute of Australia).

In summary, the report concluded that the relevant legislation has been broadly successful in preventing the loss of licensing revenue for, respectively the Melbourne 2006 Commonwealth Games Corporation (“M2006 Corporation”) and the Australian Olympic Committee (AOC). Similar legislation is expected in relation to future major events in Australia, particularly events which draw heavily on government funding in order to be staged successfully.

Ambush marketing
Ambush marketing is an attempt by an organisation which is not an official sponsor of an event, team, athlete or celebrity to attract customers by implying a sponsorship relationship between that organisation and the target.

A narrow definition of “ambush marketing” encompasses advertising or marketing which is clearly and deliberately misleading, such as the unauthorised use of the Olympic logo in advertisements directly implying that the advertiser is a sponsor of the event or of a competing team. Such marketing would constitute infringement under existing trademark or unfair trading legislation.

However, a broader definition of “ambush marketing” includes myriad other clever marketing techniques which are not strictly illegal, but which nevertheless serve to promote a connection in the minds of consumers between the advertiser and the event or athlete. For example, during the Barcelona 1992 Olympic Games an Australian car manufacturer (not the official car sponsor of the Australian Olympic team) undertook to donate cars to all Australian gold medal winners. This action was heavily advertised and market research subsequent to the games demonstrated that a majority of the Australian public incorrectly believed that this company was the sponsor of the Olympic team.

In another example, the main competitor of the official airline of the Sydney 2000 Olympic Games used advertisements featuring Olympic athletes and undertook sponsorship of individual athletes and of pre-Olympic sporting events. Again, market research subsequent to the games demonstrated that a vast proportion of the public believed that this airline was an official games sponsor, to the chagrin of the official sponsor airline, which presumably had paid a large licensing fee for the honour.

Ambush marketing is said to devalue greatly the investment that sponsors make in securing exclusive rights. In turn, event organisers and sports managers cite a negative impact on the income that they can derive from granting sponsorship due to this dilution of the intended exclusivity of the sponsorship.

Anti-ambush marketing legislation
The depredations of ambush marketers have fuelled calls for specific legislation to prevent or minimise broader forms of ambush marketing by extending the normal prohibitions against trademark infringement and deceptive conduct, among other things. The review centred on the effectiveness of two such pieces of legislation.

The Melbourne 2006 Commonwealth Games (Indicia and Images) Protection Act 2005 (the M2006 Act) was enacted to discourage ambush marketing in relation to the Melbourne 2006 Commonwealth Games. The Olympic Insignia Protection Act 1987 (the AOC Act) was designed to provide ongoing protection of Olympic-related marketing controlled by the AOC. Both acts seek to: 

  • identify certain protected expressions, such as “Olympic”, “Olympics”, “Olympiad”, “Melbourne 2006 Games” and “Commonwealth Games”; and 
  • establish an exclusive right to authorise use of the protected expressions (or any other closely resembling expression) for “commercial purposes”.

Success or failure?
The review focused on the perceived effectiveness of the legislation in preserving exclusive use for the M2006 Corporation and the AOC. The results were based on interviews with stakeholders, including these organisations and their sponsors, as well as with other similar organisations not protected by similar legislation.

The M2006 Corporation reported no adverse ambush marketing related to its event. In addition to the effect of the M2006 Act itself, the M2006 Corporation cited changing perceptions of the ethics of ambush marketing among marketers and an energetic campaign prior to the event to publicise the legislation and its effect.

The AOC reported ongoing low-level ambush marketing activity. However, in all instances it was able to achieve the withdrawal of the offending materials without recourse to litigation.

Interestingly, these experiences were contrasted with those of unprotected organisations, including Cricket Australia, which reported being subject to audacious, high-level ambush marketing by major corporations.

It was noted that the very specific nature of the protections, via the listing of protected expressions in the acts, was itself an advantage in that it made the infringing position of the ambush marketer quite clear. This contrasts with, for example, the vaguer prohibition against “misleading or deceptive conduct in commerce” of the Trade Practices Act 1974. This clarity was also seen to be an advantage in relation to defining a proposition to potential sponsors.

It was difficult to quantify a revenue increase for the AOC or the M2006 Corporation based on the existence of the legislation since there was no effective comparison to unprotected sponsorship levels. Anecdotally, it appeared that both the AOC and the M2006 Corporation were less subject than other organisations to adverse comments from potential sponsors such as: “Why are we paying you this money when (our competitor) gets the same benefits?”

The existing definition of “commercial use” in both acts is limited to the suggestion of actual sponsorship. It was suggested that this should be expanded to include other activities that suggest an association between, for example, the infringer and the event.

It was also suggested that such acts should deem any use of the protected expressions to be commercial use unless the infringer can prove otherwise: an exceptionally powerful position.

The anti-ambush marketing legislation was welcomed by the M2006 Corporation and the AOC. Indeed, it appears that other sporting organisations, such as Cricket Australia, would greatly appreciate having similar supporting legislation.

But is the expansion of anti-ambush marketing legislation, in either scope or number, likely? The cost of major events such as the Olympic or Commonwealth Games would fall very squarely on government financing in the absence of sponsorship derived from licensing exclusive rights such as trademarks and other imagery. These activities are more likely to inspire the legislature to provide similar, or enhanced, legislation. The challenge will be to balance the need to reduce the burden on the public purse against what might be seen as the granting of overreaching prohibitions against normal commercial competitive activity.

Adam Hyland
Email: [email protected]
Tel: +61 2 9888 6600

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