By Steve McKelvey, J.D., Associate Professor, Mark H. McCormack Department of Sport Management, Isenberg School of Management, University of Massachusetts Amherst
The run-up to mega sporting events always entails huffing and puffing by sport properties threatening to “blow down the house” of non-sponsoring companies and brands that seek to associate themselves with the event through the so-called practice of “ambush marketing.” These properties, most notably the IOC and FIFA, are further emboldened by event-specific ambush marketing legislation (ESAML), required as a condition for hosting the event, that provides an extraordinary layer of trademark protection.[i]
However, as a recent Federal Court decision in Australian Olympic Committee (AOC) v. Telstra Corporation Limited[ii] attests, courts are not readily predisposed to side with sports properties that seek to “own” the entire thematic space of its sport event.
The AOC sued Telstra, Australia’s leading telephone company, after the company released a series of TV commercials leveraging their association as the “Official Technology Partner” of the Seven Network. Telstra had been for many years an official sponsor of the AOC (the partnership ended in 2012), which only exacerbated the AOC’s claim that Telstra’s campaign was an “ambush” designed to be a “back-door” effort to associate itself with the Rio Olympics without having to pay for the privilege.
The advertising campaign consisted of three 30-second ads featuring ordinary Australians being inspired to do Olympic sports by watching Seven’s “Olympics on 7” app. The case was complicated because Telstra was in a sponsorship-like arrangement with the Seven Network, the official Australian broadcaster of the Olympics. The AOC had pre-approved the following designation: “Seven’s Olympic Games broadcast is supported by Seven’s official technology partner, Telstra.”[iii] The AOC’s lawsuit, however, claimed that Telstra’s advertisements, promotions and marketing materials totaling 34 separate types (hereinafter “campaign”) crossed the legal line.
The decision required the court’s analysis of two claims by the AOC: 1) that Telstra’s campaign contravened §36 of the Olympic Insignia Protection Act 1987 (“OIP Act”), and 2) that they were misleading and deceptive contrary to §18 and §§29(1)(g) of the Australian Consumer Law (analogous to a false designation of origin claim under §43 of the Lanham Act).
As to the first claim, the OPI Act provides, inter alia, that “(1) A person, other than the AOC, must not use a protected Olympic expression for commercial purposes.”[iv] The OIP further stipulates, in §30, that the usage “to a reasonable person, would suggest that the first person is or was a sponsor of, or is or was the provider of sponsorship-like support” for, inter alia, the AOC, IOC, the Rio Olympic Games or the Australian Olympic team or any section or member of it (hereinafter “Olympic entities”).
The court held at the outset that there was no dispute that Telstra applied Olympic expressions (“Olympic”, “Olympics”, and “Olympic Games”) to its services within the meaning of the OIP Act. Nor was there any apparent dispute that the relevant applications of the Olympic expressions were for advertising or promotional purposes, or were likely to enhance the demand for Telstra’s services. The real question, as stated by the court, was whether, in each case, the application of the expression or expressions would suggest to a reasonable person (emphasis added) that Telstra was a sponsor of, or was the provider of sponsorship-like support for the AOC or other Olympic entities.
As the court stated, this question involved an objective test of what the use of the Olympic expressions would suggest to a reasonable person” “The word ‘suggest’ must bear its ordinary meaning, which includes, in this context, to ‘bring before a person’s mind indirectly or without plain expression; to call up in the mind (another thing) through association or connection of ideas’ (Macquarie Dictionary); and ‘make known indirectly; hint at, intimate; imply, give the impression’ (Shorter Oxford English Dictionary).”[v]
Notably, the court refused to engage in what it called “over-intellectualising” the relevant test a reasonable person standard. Additionally, the court noted that although the Explanatory Memorandum to the OIP Act referenced an intended purpose to combat so-called “ambush marketing,” that expression “is a distraction.”[vi] As the judge stated:
“At the end of the day the statutory test is quite clear. It is simply a matter for the Court to make a factual finding concerning what the relevant application of the Olympic expression would, in context and in all the relevant circumstances, suggest to a reasonable person. The question of what would be suggested to a ‘reasonable’ person necessarily involves a value or normative judgment about which there may well be legitimate differences of opinion. That is particularly so given that the question of what may or may not be suggested by a combination of images and words, and in some cases sounds, is inherently impressionistic.”[vii]
The court, in looking at the context and wording in the ads, held that they tend to suggest that Telstra’s relationship in relation to the broadcast is with Seven, not any Olympic entity: “While there is a degree of ambiguity concerning Telstra’s connection to the broadcast rights, it cannot be considered, on the balance of probabilities, that the use of the Olympic expression would suggest to a reasonable person that Telstra was a sponsor, or was the provider of sponsor-like support to any Olympic body.”[viii]
The court also held that while Telstra’s “wished to push the envelope as far as it could,”[ix] Telstra’s internal marketing materials did not “clearly show an intention … to suggest it had a sponsorship-like relationship with the Olympics…. The material revealed that Telstra well understood that, because it was not a sponsor, there were limits to what it could say or imply.”[x]
While the original TV commercial was admittedly borderline, when contacted by the AOC, Seven and Telstra made revisions that included a disclaimer making it clear that Telstra was not an official sponsor of the AOC. In a novel argument, the AOC contended that the disclaimer was inadequate because it said only that Telstra was not an “official” sponsor. The AOC submitted that the limitation to disclaiming an “official” Olympic sponsorship “begs the question” and in fact reinforced the notion that there was or may have been some other type of sponsorship arrangement.
However, as the court held, “[i]t is … doubtful … that the hypothetical reasonable person would necessarily react to or interpret the disclaimer in that way. While it may be accepted that a reasonable person would be aware that there are many different types and levels of sponsorship, it is doubtful that, having seen the disclaimer, a reasonable person would think that Telstra might nonetheless have some sort of “unofficial” sponsorship.”[xi]
In sum, the court held that the AOC failed to prove, on the balance of probabilities, that Telstra had contravened the applicable sections of the OIP Act.
The court next turned to its application of the Australian Consumer Law, based on the AOC contention that Telstra’s campaign conveyed a false or misleading representation, or involved misleading or deceptive conduct in violation of §18 or §§ 29(g) and (h) of the Australian Consumer Law. Section 18 of the Australian Consumer Law provides, inter alia, that “(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” Section 29(1)(g) and (h) includes the following:
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: …
(g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or
(h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; …
According to the court, the pivotal issue was whether, viewed individually and collectively, the campaign conveyed a representation, or had a tendency to lead the audience to assume, that Telstra had some form of endorsement, sponsorship, affiliation, or licensing arrangement with the AOC and other Olympic entities.
The court began by stating that “the class of likely viewers is very broad and wide-ranging,”[xii] including those who are both highly educated as well as unsophisticated or gullible; those interested in the Rio Games and those not; tech-savvy Telstra customers and those who don’t even use a mobile phone. Furthermore, reasoned the court, the advertisements are likely to be viewed casually and subject to distraction, not intensely and in isolation. Hence, the critical question, in general terms, was whether Telstra’s campaign conveyed, or was likely to convey, to reasonable persons in the class to whom they were directed or likely to be received, that Telstra had some form of official relationship with the AOC and other Olympic entities. If so, under the Act, it would be deemed misrepresentative and deceptive.
This question essentially mirrored the one already answered in the context of the OIP Act claim. Although that analysis was more directly concerned with the use of the protected Olympic expressions, the Australian Consumer Law claim was more concerned with the overall impression conveyed by the campaign. Using more the same “reasonable person” rationale as applied in handling the OIP Act claim, the court held that the AOC failed to demonstrate that Telstra’s conduct was misleading or deceptive. Equally, it also failed to prove that the campaign conveyed the alleged representation concerning sponsorship by or affiliation with the Olympics. Hence, the court ruled in favor of Telstra on this legal claim.
In support of the concept that innovative and effective marketing should not be punished, the court concluded by suggesting that while companies may realize a benefit from ambush marketing type activities, that certainly does not make it de facto illegal: “There could again be no doubt that Telstra intended to, and may well have succeeded in, capitalizing or exploiting, in a marketing sense, the forthcoming Rio Olympic Games. It intended to, and may well have succeeded in, fostering some sort of connection or association between the Rio Olympic Games and the Telstra ‘brand.’ It did so, however, by effectively promoting its sponsorship arrangement with Seven in relation to Seven’s Olympic broadcast.”[xiii]
The court held that the IOC and AOC does not and cannot own the entire “theme” of international sports competition: “There could be no doubt that Telstra’s campaign was themed (emphasis added) around the forthcoming Rio Olympic Games. It is, however, not enough for the AOC to prove that the advertisements were Olympic themed. Were that so, any advertisement over the next month that used Peter Allen’s “I go to Rio’ song (and it is not difficult to imagine that everyone will be heartily sick of that son by the end of the Rio games) or images of people playing or watching sport, might equally be accused of misleadingly associating themselves with the Olympic Games or Olympic bodies.”[xiv]
This case stands for the proposition that sport properties remain vigilant in seeking to protect the “exclusive” rights “promised” to their sponsors and the overall integrity of their sponsorship programs. Score another point, however, for the proposition that ambush marketing is not illegal and that even the extraordinary trademark protections, via ESAML, generously granted to mega sport properties are not impenetrable and absolute. Ultimately, as the court suggested, no one entity can own the entire thematic space around a sporting event.
[i] See Grady, J., McKelvey, S. & Bernthal, M. (2010). From Beijing 2008 to London 2012: Examining event-specific Olympic legislation vis à vis the rights and interests of stakeholders. Journal of Sponsorship, 3(2), 1-13; McKelvey, S. & Longley, N. (2015) Event-specific ambush marketing legislation for mega-sporting events: An economics perspective. International Journal of Sport Marketing & Sponsorship, 16(5), 349-364.
[ii] [2016] FCA 857, File No. NSD 1158 of 2016 (decided July 29, 2016).
[iii] Id. at 5.
[iv] Id.
[v] Id. at 17-18.
[vi] Id. at 18.
[vii] Id.
[viii] Id. at 21.
[ix] Id. at 22.
[x] Id.
[xi] Id. at 24.
[xii] Id. at 31.
[xiii] Id. at 36.
[xiv] Id. at 33.
