Whether it be the World Series, World Cup or the Olympic Games, sponsorship is big business. Some estimate that sponsorship rights for the 1988 Olympics yielded about $338 million in sponsorship fees. Indeed, it has been estimated that the total sponsorship for the 1992 Olympic Games was approximately $700 million, almost double the sponsorship fees for the same event just four years earlier.The obvious rationale for underwriting such sponsorships is to achieve audience awareness and image enhancement. This sponsorship role permits marketing communicators to "talk" more directly to particular market segments in a manner more efficient and less costly than traditional media advertising.

Not surprisingly, such high visibility marketing, promotional and advertising opportunities attract aggressive competitors intent on creating their own "association" with the event. "Ambush marketing" is a phrase that describes the actions of companies who seek to associate themselves with a sponsored event without paying the requisite fee. The "ambush" consists of giving the impression to consumers that the ambusher is actually an official sponsor or is somehow aflliated with the event. Such marketing can provide some of the benefits of a legitimate, paid-for sponsorship at relatively little cost.

The danger, of course, is that such marketing may cause confusion among consumers, or otherwise impact the sponsorship rights. Such activities could also conceivably raise questions of tortious interference with prospective business advantage, violation of the states' various "little FTC acts," often codified as the Uniform Deceptive Trade Practices Act, or prima facie tort. For example, in connection with last year's World Cup, Mastercard was awarded (at substantial cost) the exclusive worldwide sponsorship to use World Cup logos on and in association with "all card-based payment and account access devices." Sprint Communications was also involved as a backer of World Cup as an "Official Partner," a category that was neither as extensive as that of a Sponsor nor as costly. Sprint's exclusivity was in the field of long-distance telecommunications. Sprint began marketing prepaid telephone calling cards bearing World Cup logos despite MasterCard's strong objection. In the litigation that ensued, MasterCard established that Sprint's use of World Cup logos on its telephone cards infringed on MasterCard's category of "card based payment and account access devices" even though the telephone cards were not functionally the same as MasterCard's cards.

The Court held that consumers would, on seeing the Sprint card bearing a World Cup Logo, mistakenly assume that Sprint had rights in a category that, in fact, belonged exclusively to Mastercard. This case, MasterCard International Incorporated v. Sprint Communications Co. v. ISL Football A. G., 30 U.S.P.Q. 2d 1963 (S.D.N.Y. 1994); aff'd per curiam 23 F3d 397 (2d Cir. 1994), is one of the rare decisions where ambush marketing was the subject of a court injunction.

To enable your client to minimize ambush marketing efforts by competitors or combat them in court, it is vital to appreciate the myriad contexts in which ambush marketing can arise. These include tangential actions ranging from the placement of competitive advertising on t.v. broadcasts of the event to the underwriting of popular promotions, e.g. to send Olympic athletes or their families to the event. In addition, with sporting events like World Cup soccer or the Olympic Games, a legitimate "small" sponsorship may present an opportunity to ambush an official "big" sponsor. For example, Adidas was an Official Sponsor of the soccer World Cup, yet other footwear companies signed up national teams to wear their shoes. To anticipate all potentials for ambush marketing is, practically speaking, impossible. However, event organizers and sponsors can adopt several practices which will improve the odds against ambushing.Primary among these strategies is making certain that the event organizers have effectively protected, usually via trademark registration, the principal visual identifiers of the event, from the names and logos to the obligatory "mascot".

Likewise, photo and broadcast rights should be controlled within the realms of common sense. In connection with broadcast rights, it is worthwhile for sponsors to consider placement of advertising during the broadcast. Event owners should arrange for such time to be pre-sold to sponsors and blocked from principal competitors. Souvenirs and signage, on-site and near the locus of the event, should also be tightly controlled via contract. The event owners must effectively tie up all rights and carefully control the disposition thereof via effective licensing.

Another method for minimizing ambush opportunities is to take advantage of all opportunities afforded by a particular sponsorship agreement. By "filling" perceived voids, there is less opportunity for a potential "ambusher" to capture the true sponsor's market. Sponsors and organizers also need to establish clear provisions and procedures allowing for enforcement by the courts of the proprietary rights in general and the particular rights granted under license to the Sponsor.

With respect to legal protection, section 43(a) of the Lanham Act is the primary source of redress against ambushing. In most situations where the question involves a "false sponsorship" message, the courts analyze the advertising message under a two-part test. If an advertisement is literally false (e.g., a company claims, "We are proud sponsors of the Winter Olympics," knowing that statement to be untrue) the courts will grant an injunction under the Lanham Act 15 U.S.C. 1125. On the other hand, if the advertisement is literally true but, nevertheless, tends to cause confusion, the Lanham Act has been interpreted to forbid such "innuendo." In such instances, the courts generally require a consumer survey to be submitted in order to establish what message the consumers deduce. If that message is a false one, then an injunction will issue. See Coca-Cola Co. v. Tropicana Products, Inc., 690 F.2d 312 (2d Cir. 1982).

One cannot effectively insulate against all ambush marketing. And not all such marketing is actionable. Indeed, ambush marketing, properly executed i.e., to avoid (i) blatant use of licensed logos; (ii) literal falsehoods; and (iii) undue emphasis on the event as opposed to tangential references will more often than not be very difficult to prevent. However, attention to the general points raised above can help assure that core rights are protected and help establish a stronger foundation for asserting those rights against ambushers. © Russell H. Falconer, 1995

Russell H. Falconer is a litigation partner at Brumbaugh Graves Donohue & Raymond, an intellectual property law firm based in New York. Mr. Falconer specializes in trademarks, copyrights false advertising and trade secrets.

We trust, now that you have read this article, that you will come to the conclusion that you should include an IP specialist on your list of professional advisors.

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