Ambush marketing: when sponsors cry “foul”

By Kathryn Park, Strategic Trademark Consulting, formerly General Counsel for Brand Management, GE, Connecticut, United States

Ads bombard us daily – television, billboards, search engines and websites, apps, print and radio. Brands seek ways to break through this noise, to create a buzz and drive consumer demand for their products. In this pursuit, advertisers sometimes invest in sponsoring a big event, a famous individual or a team to leverage fans’ excitement to promote the sponsor’s brand. Events like the Olympic Games, the World Cup and the Super Bowl, to name a few, attract corporate sponsors that pay large sums, often in the hundreds of millions of dollars, to gain greater exposure for their brands. Sponsorships typically confer exclusive rights in a category to the sponsor, which can advertise itself as the official sponsor in that category, e.g., the official soft drink of the event.

These marketing investments are imperiled when the sponsor’s event-related advertising is ambushed by a competitor’s advertising that makes that same association, even though not an official sponsor.

Direct ambushes versus indirect ambushes

The easy cases to spot are direct ambushes – ones in which the actual trademarks of the event organizer are used to create the false impression that they are associated with an event; for example, if the use is of the distinctive symbol comprising five interlocking rings of the International Olympic Committee.

Events like the Olympic Games, the World Cup and the Super Bowl, to name a few, attract corporate sponsors that pay large sums, often in the hundreds of millions of dollars, to gain greater exposure for their brands.

The more difficult cases are indirect ambushes, ones in which the ambush marketer capitalizes on the event without misuse of the event’s trademarks or without making a direct false claim of affiliation with the event. A myriad of approaches can accomplish this, from buying advertising space near the event, branding transportation to the venue, featuring individuals participating in the event, and using a color scheme and words that imply the event, to name a few.

Indirect ambush marketing is best illustrated by examples. During the London 2012 Olympic Games, Nike launched the Find Your Greatness campaign featuring regular individuals doing all manner of sports, filmed in locations called London, other than London, England – for example, London, Nigeria. In another example, Puma, which sponsors Usain Bolt, flooded the media with images of the athlete holding his golden Puma shoes after he won gold medals in the 2016 Rio Olympic Games and filled social media with the post “When you are @Usain Bolt, you are #ForeverFaster,” which tied Usain Bolt’s gold medal performance with Puma’s Forever Faster slogan. These examples did not encroach upon any sponsor rights, notwithstanding the obvious implicit connection to the Olympic Games.

During the Winter Olympic Games in 2018 in PyeongChang, SK Telecom created a series of three broadcast ads using two South Korean Olympic athletes and the phrases “See you in PyeongChang” and “See you in 5G Korea”. Although the advertisements appeared carefully crafted not to make a direct association between SK Telecom’s services and the Olympic Games, the Korean Intellectual Property Office found that the campaign violated the rights of the official sponsor, KT Corporation. 

Indirect ambush marketing campaigns also occur when the non-sponsored brand physically intrudes on the event. For example, Beats Electronics has executed campaigns during World Cup games and the Olympic Games in London and Rio, providing free Beats headphones to athletes who wore them in the event venue and in some cases tweeted about them. In another example, at an Indian Premier League match in 2017, Reliance Jio, a mobile network operator, engineered a daring ambush. It had certain game attendees wear black and white shirts in a pattern that spelled out JIO and was clearly visible to those in the stadium and, even more importantly, to the many viewing the match on television, thereby successfully ambushing the official sponsor, and Reliance Jio’s rival, Vodafone. 

The single most important step a sponsor can take in anticipation of ambush marketing is to address it as a critical part of the sponsorship negotiation.

Enforcers beware of a potential backlash

Taking action against such intrusive ambushes comes with the peril of a viral backlash. In the 2010 World Cup, 36 attractive women all wearing orange mini dresses provided by Bavaria, a beer maker without a sponsorship deal, showed up to cheer the Dutch team. The women were ejected by FIFA, which asserted that this activity ambushed the rights of the official sponsor, Budweiser. Although the sponsor won in the short run, the enforcement of these rights backfired, as studies show that press coverage effectively cemented the association between Bavaria and the World Cup in the minds of consumers.

When a sponsor has paid dearly for exclusive advertising rights, it will want an immediate solution to prevent or stop a competitor from stealing that benefit and will look to the owner of the rights, the event organizer, to step in. The organizer may be reluctant to take aggressive action for fear of setting an unfavorable precedent that could encourage others to be bold in creating ambush advertising around the event. Moreover, when the ambushes occur during an event, the organizer may have many pressing issues to address. What may be of urgent concern to a sponsor facing an ambush may be less critical to an organizer dealing with the production of the event in its entirety.  

The single most important step a sponsor can take in anticipation of ambush marketing is to address it as a critical part of the sponsorship negotiation. While the business team may have other pressing concerns, the lawyer on the team needs to ensure that ambush marketing is addressed, with strict and measurable requirements, by the event organizer. The following is a list of suggestions for the sponsor, although often the facts of the event may dictate additional considerations.

Practical steps in negotiating a sponsorship deal

First, agree upon a specific set of steps that will be taken in response to ambush marketing, up to and including litigation, in what time frame and at whose expense. One of the great challenges for a sponsor is that when an ambush is effective, a cease-and-desist letter, after the fact, will not repair the damage caused. Determining in advance what steps will be taken can improve the relationship between the parties during the critical time a sponsor is demanding action. Such steps can include: 

1. Pre-event publicity by the organizer stating that ambush marketing will not be tolerated; proactive sweeps of media and the physical venue, up to and during the event, for potential infringements of the sponsor’s rights; designated personnel, including security and legal counsel, to address ambushes and the preparation of draft court papers.
2. Identification of competitors that the sponsor knows are likely to ambush an event. Often, a sponsor will have examples of past occurrences and even press clippings that show the ambusher was reported mistakenly as an official sponsor. Such documentation should be shared with the event organizer to support requests that the organizer issues advance warnings and prepares for immediate enforcement activity against the competitor as required.
3. Requiring the event organizer to establish clean zones around the arena or concert hall, working with the local municipality to establish a perimeter within which non-sponsor advertising is not permitted. This is often something the event organizer will have done, but nonetheless the guarantee of a clean zone should be specifically included in the agreement. A wily competitor could host a party near or on the day of the event in a building that falls within the clean zone, featuring invited guests and celebrities associated with the event, to build a subtle association with the event. A clear obligation to provide a clean zone will help the sponsor in that circumstance.
4. The sponsorship agreement should specifically impose obligations on the event organizer to ensure the organizer will have:
• adequate language on the back of tickets stating that certain actions will be grounds for ejection from the event and that tickets may not be used in promotional activities;
• rules for individual athletes or performers on how and when non-sponsor brands can be used within the venue; and
• terms in supply agreements with suppliers which haven’t also obtained a sponsorship, that expressly prohibit promotional activities or advertising in conjunction with the mere fact of supplying the event.
5. Focusing on the product category and making sure it is comprehensive and anticipates future product developments in the category, if possible. Broad category definitions may make it easier to convince the organizer to take action, even against other sponsors, where there is some question about where the product of the ambusher falls. In an early ambush case, Mastercard, the official sponsor of the 1992 World Cup for “all card-based payment systems and account access devices,” successfully enjoined Sprint, which was marketing pre-paid telephone calls with the event logo. However, category specificity is an issue that continues to lurk, particularly in categories where technology and social media have created new products and services.

To attract top sponsors, event organizers will often take proactive measures on behalf of all sponsors. Ensuring clean zones, as mentioned above, is one. Another is obtaining enhanced legal protections in the jurisdiction hosting the event, often as a condition of bringing the event to a specific country. Nonetheless, governmental response to enacting special legislation and needed implementing rules can be slow. Thus, sponsors should continue to raise these issues with the event organizer. 

A balancing act

Of course, non-sponsors will always try to compete, despite their lack of official rights. To be fair, if there is only one sponsor per category, some – even those willing to pay the sponsorship fee – will be left out. Free speech rights, such as those defined by the First Amendment in the United States and by common law in other jurisdictions can be implicated if restrictions are too broad. Where to draw the line is not black or white, but gray. Both the event organizer and the sponsor should be sensitive to taking steps that are perceived as an over-reaction, particularly in this day of social media.

Trademark bullying, a concept that has gained traction in the United States, among other places, is shorthand for the overreaction of a big brand to an alleged encroachment by a smaller one. The assertion that one’s free speech has been abridged or that one has been targeted by a bully, can be a very effective way to color public perception about the issue, and can work against the sponsor and the event. Yet, the organizer may have to weigh this concern against the fact that ambush marketing is a serious legal issue and that turning the proverbial blind eye against one ambusher may weaken a future legal action against a more serious ambush. Even more importantly, the organizer will know that a failure to act may have a negative impact on the value proposition of a sponsorship.

Despite the best efforts on the part of the sponsor and the event organizer, ambush marketers may well pull off a heist, and grab the spotlight sought by the sponsor. Planning clever marketing in advance to respond to an ambusher, or at a minimum, having a marketing team poised to take action at a moment’s notice to shift attention robustly back to the sponsor, may be the best option. Lawyers can help ensure that in the tit-for-tat, the sponsor does not itself stumble into trouble, by helping it avoid infringement, unfair competition and product disparagement claims.