IP and Sports Products: An Inseparable Symbiosis
By Jochen M. Schaefer, Legal Counsel of the World Federation and of the European Federation of the Sporting Goods Industry (WFSGI)
Like many other industries, the sporting goods industry relies on intellectual property (IP) rights as an essential tool. Without IP rights, the sporting goods industry would not be able to capture the value of its investment in innovation and brand development. But, just as IP rights are relevant to brand owners and manufacturers within the sector, they are also directly relevant to athletes, sports clubs, event organizers and consumers.
Without IP rights, the sporting goods industry would not be able to capture the value of its investment in innovation and brand development.
Brand owners and manufacturers
Top global sports brands belong to the “Premier League” of most valuable IP assets. According to Interbrand’s Best Global Brands 2018, Nike, the world’s most valuable sports brand, is ranked 17th, with a brand value of USD 30.120 billion. The world’s second largest sports brand, adidas, is ranked 50, with an estimated brand value of USD 10.772 billion. The sporting goods industry is, without doubt, big business. But while many may assume that the sports gear used by athletes competing in sports from cycling to skiing and everything in between is produced by large companies, in reality, the sporting goods sector is largely made up of small and medium-sized commercial operators.
Sports brands are highly visible in the world’s media. Preserving the value and exclusivity of these brands requires a carefully orchestrated and astutely managed portfolio of IP rights. The services provided by the World Intellectual Property Organization (WIPO) for the international registration of patents, trademarks and designs, support legitimate sports businesses, large and small, enabling them to protect their IP assets in global markets.
IP rights also play a key role in fostering innovation and the development of revolutionary new technologies within the sporting goods sector. Patents, for example, give manufacturers of sports goods the confidence that they will get a return on R&D investment, thereby providing an incentive to continue to invest in innovation to come up with better and safer sports equipment. The advances in sports technologies that result support athletes in their endeavor to achieve record-breaking performances and to live up to the Olympic motto “Citius, Altius, Fortius” (faster, higher, stronger).
Take, for example, the remarkable evolution of bicycles over the last 40 years. In the 1980s, a standard racing bicycle consisted of around 350 individual parts. The latest generation of high-end E-bikes, such as those developed by SCOTT, S.A., consist of more than 1,500 components.
To develop such sophisticated, complex, high-tech bicycles requires a huge investment of time, energy and resources. Companies can protect this investment with a protective layer of IP rights, including patents, design rights and trademarks. These indispensable rights create favorable conditions for companies to continue to develop high performance products that are marketable, comfortable and safe to use.
Another example of how strategic use of IP rights can foster breakthroughs in sports equipment, is the new flagship running shoe by ASICS, the Japanese sports brand. The ASICS Meta-ride, the company’s most technologically advanced running shoe, is designed to make running for longer distances a lot easier and more comfortable. The shoe is embedded with a range of IP-protected innovative technologies.
In its press release of February 27, 2019 introducing the new running shoe, ASICS notes that:
“METARIDE™ features no less than six proprietary technologies and a new circular upper:
- FLYTEFOAM™: durable lightweight midsole for cushioning and responsiveness;
- FLYTEFOAM™ Propel: midsole foam to enhance responsiveness in toe-off;
- Rearfoot GEL™ technology: cushioning system to improve shock attenuation during heel impact;
- GUIDESOLE™technology: new soft curved sole with stiff forefoot to reduce ankle flexion;
- 3D GUIDANCE LINE™ technology: evolved GUIDANCE LINE™ to shift center of mass and help leg swing;
- ASICS grip sole: new outsole for traction and durability;
- METACLUTCH™ technology: optimized external heel counter for premium fit and flexibility;
- KNIT UPPER: knit material upper for support and breathability and new eyelet structure to optimize shoelace tension and fit.”
Athletes benefit from IP rights
Athletes come in all shapes and sizes and perform at varying levels. The term “athlete” does not just cover world class performers, it also includes everyone, young and old, who plays sport at amateur level or for recreational purposes. In fact, it extends to anyone who manages to resist the temptation of becoming a passive consumer of sports via the television or other digital devices.
IP rights are relevant to all athletes and for various reasons. First, patent-protected innovative technologies mean athletes at elite and amateur levels get access to new and better equipment that allows them to run faster, or to hit the ball harder and with more control, while playing football, tennis, basketball, rugby or any other ball game.
Second, the trademark rights that underpin branded sports goods help athletes identify the best equipment (on the basis of the brand owner’s reputation and good will) in a crowded market. The same goes for recreational players, whose choice of sports gear is typically influenced by their perception of different sports brands and their desire to associate themselves with a certain hobby or passion or group.
Third, for top-tier professional athletes, IP rights represent an opportunity to benefit financially from new revenue streams associated with sponsorship, merchandizing and licensing deals. Companies pay significant sums of money to successful athletes to showcase their branded products. The association of a successful athlete with these products helps to boost sales by changing consumer perceptions and boosting product visibility in a crowded market.
Organizers of sports events and sports clubs
Without IP-protected innovative sports goods, organizers of top-tier sports events such as the Olympic Games, the FIFA World Cup and other World Championship series, would find it more difficult to attract sponsorship or viewers around the world. Without the record-breaking performances that these technologies support, these events would be a far-less exciting viewing proposition, making it significantly more difficult to attract commercial partners and finance the organization of these events.
Top soccer clubs are able to capture significant revenues from TV revenue streams and by developing the licensing and merchandizing side of their business. Clubs with an eye on the future wisely reinvest the funds generated from the commercial exploitation of their IP rights in young promising talent to safeguard the club’s longevity.
Consumers
Consumers pick one sports brand (underpinned by trademark rights) over another for a variety of reasons: they may have confidence in the reputation and quality of a given product or may consider it a symbol of their social status. Or, it may be that that they simply feel more comfortable and safe wearing or using that product. Whatever the reason, beyond the brand, it is unlikely that IP rights such as patents or industrial design rights associated with that product will be uppermost in their minds when they buy it. Few will be aware of the many complex business relationships underpinned by IP rights that enable consumers to benefit from the latest and best sports equipment. They will delight in their cutting-edge connected shoes, but will be totally unaware of the fact that that the sensor(s) embedded in those shoes are developed by an IT company that licenses out its proprietary software to sports brands for specific types of use.
Despite this general lack of awareness about all that goes into producing the next generation of sporting goods, one thing is certain; in the era of social media, manufacturers of sports equipment cannot afford to ignore the way consumers rate their products on platforms such as Amazon, Google or others. Such consumer feedback can have a significant and direct impact on the value of a sports brand. That explains why, in general, brand owners make it a priority to monitor consumer ratings and actively communicate and seek to engage with consumers through blogs and other social media channels.
The sporting goods industry: a united front in protecting IP rights
IP rights are extremely valuable business assets and rights owners in the sporting goods sector face many difficult challenges in protecting and enforcing them.
Acquiring IP rights in key markets is an important first step in protecting these valuable assets. WIPO’s Madrid System for the International Registration of Trademarks can help sports brands do this. The Madrid system offers a cost-effective and simple way of acquiring protection in up to 118 countries and territories. But acquiring IP rights is not an end in itself, it is the first step in successfully leveraging the commercial value of a sports product.
The World Federation of Sporting Goods Industry (WFSGI) is ever conscious of the need to provide its member companies – which also include many bicycle and bicycle component manufacturers and suppliers – with tangible and concrete services to help them combat effectively any infringement of their IP rights. In confronting this particular challenge, brands which in other circumstances compete fiercely with each other are joining forces. Their collective action generates considerable cost-savings and makes it possible to tackle IP abuses at scale and significantly more effectively.
WFSGI members are hot-wired to work together to protect their business assets against IP infringers.
The WFSGI supports its members in this endeavor by offering them access to a takedown service that tracks illegal offerings on multiple social media and other digital platforms. This highly successful service is offered by WFSGI’s exclusive partner, Convey. Since its launch in 2014, the service has acquired some 30 WFSGI-affiliated subscribers. It covers more than 200 online marketplaces, 20 social networks and other user-generated content portals, instant messaging applications, websites and domain names. Since its launch, the service has resulted in the take down of more than 550,000 online counterfeit offerings; the blocking of some 1.2 million transactions every year, with an estimated commercial value of USD 40 million; the closure of 110,000 accounts and/or web shops operated by IP rights infringers, in addition to around 11,000 counterfeit shops hosted on privately owned websites and domain names. These figures demonstrate both the scale of the challenge confronting rights holders and the effectiveness of Convey’s WFSGI-backed tracking service.
The WFSGI’s Legal Committee has also developed a Trusted Investigators Contacts Database which allows in-house legal professionals, such as IP counsels and brand protection managers, to access the contact details of trusted investigative agencies/agents around the world recommended by WFSGI members. This resource is designed to instill confidence and trust among WFSGI members and to provide them with an effective, scalable and cost-effective tool for future joint IP enforcement operations on the ground. Most recently, the WFSGI’s Legal Committee decided to form a working group to combat the production and sale of counterfeit goods in Southeast Asia and to lobby local enforcement authorities and governmental institutions to improve enforcement of IP rights in the face of rising levels of counterfeiting in a growing number of countries in the region.
When it comes to upholding the IP interests of the sporting goods industry, the WFSGI’s members are hot-wired to work together to protect their business assets against IP infringers. WIPO has been and remains a very important and highly appreciated partner for the WFSGI and its members in building greater respect for IP rights around the world. This year’s World Intellectual Property Day campaign – Reach for Gold: IP and Sports – is an ideal opportunity to further boost awareness among the general public about the critically important role that IP rights play in enabling the global sporting goods industry to continue to develop and thrive for the benefit and enjoyment of everyone.