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Sports and Intellectual Property Rights

Sports and Intellectual Property Rights

Intellectual Property (IP) rights (patents, industrial designs, trademarks, copyright, etc) are usually associated with industry, typically the manufacturing industry. IP rights give exclusivity to the IP owner for a limited period of time. But organizers of sports activities are utilizing IP laws to take advantage of the interest in particular sports.

Sports activities started as a hobby or a pastime event to enable participants to enjoy the sports or as a form of physical exercise. Now certain games have evolved into giant international events, or more appropriately international businesses with their own “tailor-made” law. Such international events even challenge sovereign laws of countries.

Popular games such as football, golf, tennis, basketball, cricket, yachting, car-racing, and so forth have evolved into international events with a huge following, creating gigantic marketing potential for the organizers. The organizers of popular games such as FIFA (football), PGA (golf), NBA (basketball), and so on organize and manage the events, typically international competitions in such a manner to extract maximum value from others who want to exploit the marketing potential the events offer.

The organizers initially create a distinctive logo, emblem or phrase(s) to identify the event. If the logos or emblems are original, they would also be protected as copyrighted works.

As an example, the emblem of the 2010 FIFA World Cup is protected as a trademark and as an artistic work under copyright laws. Terms such as “2010 FIFA World Cup South Africa”, “2010 FIFA World Cup”, “2010 World Cup”, “Football World Cup” and similar derivations thereof are also protected against unauthorized use and subject to applicable laws in the various jurisdictions.

As the logo/emblem/phrases (“event identifiers”) are promoted heavily in the main media, they are easily and very quickly associated with the event by the public and thereby acquire a strong trademark value. Event organizers then proceed to exploit the trademark value to other businesses.

Let us look at various streams of revenue to the organizers. The first line of revenue is sponsorship fees. This includes the right to display the sponsor’s trademark inside the games venue/stadium, the right to use the event identifiers on articles manufactured by the sponsors or the right to use the event identifier in association with a service (e.g. banking, credit card (VISA), business process outsourcing (Mahindra Satyam)), or placement rights (e.g., a certain luxury watch brand adjacent to tee boxes in golf courses).

The second line of revenue is gate collection. Even here the printing of tickets may be sponsored – the ticket bearing the trademark of the sponsoring party.

The third source of revenue is exclusive supply of products for the games, such as footballs, tennis balls, shuttlecocks (badminton), fuel and lubricants (car racing), etc. The supplier of the articles has the right to describe themselves as the “official supplier” to promote their articles and advertise themselves as the exclusive provider of such articles. Ironically, although Adidas was a top-tier sponsor/partner in the FIFA World Cup 2010, it was Nike that attracted more of the viewers’ attention, whether through the players’ football boots or clever advertising spots. Is this a case of poor sponsorship strategy by Adidas?

The fourth source of revenue, and increasingly the most lucrative source of revenue, is exclusive right of recording and broadcasting the event over television and radio, and possibly over the internet in the near future. The broadcasting rights are given to regional and national broadcasting networks. All copyright in respect of recording and broadcasting the games are retained by the organizers or licensed to specific entities.

Lastly, the organizers also grant exclusive rights to manufacturers to manufacture and sell merchandise of mascots or products bearing the event identifier in return for payment of a royalty fee.

The organizers have a broad stream of revenue, namely:

1. Sponsorship fees

2. Gate collection

3. Exclusive rights to product use in event

4. Broadcasting rights

5. Merchandising rights

Apart from the event organizers, other manufacturers and service providers take advantage by sponsoring the sports attire and games equipment of particular teams or players. Just consider the brand of the player’s T-shirt, shorts, cap, gloves, shoes, socks, etc. In South Africa, shoes of a non-sponsor brand worn by the players stood out just as prominently (if not more so) than those of one of the official sponsors. In the case of race car drivers, have you ever seen plain drivers’ overalls? On the contrary, the driver’s overall, including the crash helmet is often plastered with an assortment of trademarks.

Even the refreshments/drinks consumed by the player during the game are sponsored, with full advertisement value taken advantage of. Here the advertisement of the trademark is not advertisement of the product, like what appears in a TV commercial, but the trademark or product is inherently associated with a successful player. What further convincing message can be produced, if not for a world-class player using the advertiser’s product?

Apart from the organizers earning revenues as aforesaid, players, especially the top players in the games, often endorse sports-related and even non-sporting products or services or businesses. For example, Tiger Woods not only endorses golf clubs, balls, T-shirts, caps, etc but also endorses watches, consulting services, and personal hygiene products (Note: He was later suspended/dropped from the latter two following his transgressions); Maria Sharapova, one of the top women tennis players, endorses footwear and apparel, cameras, and watches, amongst others; and football player Ronaldinho has endorsement contracts with Pepsi, Nike and Sony.

In order to derive maximum profit from the revenue streams, organizers of big game events like FIFA have to strictly enforce their trademark rights and act against those who associate themselves with their trademark without the consent of the organizer. Unless the organizers take strict action against infringers, it is unlikely that they would command high sponsorship rates for future events, not to mention possible breach of sponsorship contract.

Unfortunately, IP laws were not designed for such periodic international events. Many manufacturers or service providers would like to be associated with such prominent international events that draw TV audiences in the billions, but either they do not have the opportunity or cannot afford the fees and costs. So they try to associate their product/service to the event without the consent of the event organizer. This is where “ambush marketing” comes into play. Event organizers have a field day taking action against such marketers. But whether a particular event or advertisement amounts to ambush marketing is not clear under conventional IP laws. To avoid this, countries, especially host countries, are often required to enact specific laws to deal with ambush marketing before they are given the opportunity to host the event. Britain had to enact the London Olympic Games and Paralympic Games Act 2006 before the 2012 Olympics in London. The trademark “London 2012” is protected.

The next question arises as to how and what manner the revenue derived from the event, say the 2010 FIFA World Cup, is spent. Who benefits from the revenue? That, will be the subject of another article for another day.

Note: The trademarks and designs identified in the article belong to their respective owners. The author does not claim any proprietary right whatsoever; they are used merely for educational purposes.