The Journal on Sports and Entertainment Law recently sat down with Associate Professor Steve McKelvey, the Associate Chair for External Relations and Graduate Program Director in the Mark H. McCormack Department of Sport Management in the Isenberg School of Management at the University of Massachusetts, Amherst. Prior to joining the UMass Amherst faculty in 2002, he spent 15 years in the sports industry while traversing both sides of the ambush marketing debate. While serving in the corporate sponsorship division of Major League Baseball, he staunchly fought against companies seeking to align themselves with MLB without authorization. Over nine subsequent years, he advised a host of companies in designing and executing ambush marketing campaigns when official sponsorship rights were, for whatever reason, not an option. His experiences well illustrate the reality that, when it comes to ambush marketing, it ultimately depends on which side of the fence one is on.
The interview was conducted by Loren Shokes (Class of 2017), the Executive Editor of Online Content and the Online Interview Editor for the Harvard Journal of Sports and Entertainment Law. The interview is part of JSEL’s interview series with lawyers in the entertainment and sports field that will be featured on JSEL’s website. It has been edited for clarity.
**Please note that, throughout this interview, Mr. McKelvey was speaking in his capacity as an individual and a scholar, and not as a representative of the University of Massachusetts – Amherst **
Loren Shokes, Journal on Sports & Entertainment Law (JSEL): What are some of the challenges you anticipate will face Pyeongchang in regards to protecting companies’ intellectual property from ambush marketing at the 2018 Winter Olympic Games?
Steve McKelvey (SM): In a general sense, the challenges will be the same as with any other mega-sports event: Savvy non-sponsors will work within the boundaries and grey areas of the law to construct advertising and promotional campaigns that seek to associate their brands with the Winter Games. The prevalence of ambush marketing, however, varies depending on the event itself and with the host country. Ultimately, the extent of the ambush marketing is a function of the popularity of the event: non-sponsors have less interest in “ambushing” events that have little spectator interest or media coverage. As for the upcoming Winter Games, when compared to the Summer Games, these have historically been of less interest to non-sponsors. The fact that the Games are taking place a half a world away will also temper the amount of ambush marketing activity that occurs within the U.S. Finally, in terms of the host country itself, the political landscape also dictates the parameters of ambush marketing. If the Chinese government says to its local businesses “don’t ambush,” expect there to be little if any likelihood of ambush marketing.
JSEL: In your most recent case study, you stated that for the Vancouver 2010 Winter Olympic Games the Canadian Olympic Committee (COC) “made a conscious strategic decision to move away from the overly aggressive, heavy-handed enforcement mentality that had been utilized in previous Olympic Games. Instead, the COC emphasized education and relationship development, seeking to encourage cooperation from the Canadian business community in protecting the integrity of the COC’s official sponsorship program.” Do you feel that it is the duty of the individual companies, the organizers of the Olympic Games, or others to monitor and report instances of ambush marketing?
SM: Since the inception of the term “ambush marketing” (first popularized during the 1984 Los Angeles Olympic Games), sport properties (e.g., the Olympics, FIFA, NFL) have promulgated the pejorative notion of ambush marketing. One of my recent research studies indicates that the general print media has historically described and positioned the practice of ambush marketing as somehow illegal or unethical. Another older research study found that top sponsors were less concerned with so-called ambush marketing by competitors, and more concerned with sponsorship clutter (properties that signed on too many official sponsors). Marketing executives who are official sponsors of mega sports events understand that competitors will often seek to creatively align with these events (after all, if they were non-sponsors, they would!). They understand that their best defense is to out-market their competitors. The challenge lies in the fact that sport property rights-holders too often “promise” their official sponsors (often in sponsorship contracts) a level of category exclusivity that it can’t legally deliver. As a result, official sponsors come to expect that the properties will be able to halt so-called ambush marketing campaigns. While I have no problem when official sponsors report instances of ambush marketing, they should also expect legal recourse only to the extent that the campaign actually violates applicable trademark or unfair competition law.
JSEL: The US and Canada do not have a statute that directly addresses, let alone prohibits, ambush marketing, and as a result companies have to rely on common law or statutory law relating to trademark infringement and/or unfair competition. Do you feel that the penalties for trademark infringement and unfair competition are sufficient or do you think that ambush marketing warrants creating a sui generis law specifically tailored to stop this practice?
SM: Each country has its own existing system of trademark law, for which the consequence of infringement is well spelled out. Over the past 15 years or so, mega sport organizations including such as the FIFA and the IOC have also been successful in getting host countries to enact, for the duration of their events, event-specific ambush marketing legislation (“ESAML”) that provides an extra (and extraordinary) level of trademark protection (i.e., London’s “right of association” law). A growing cadre of legal commentators and scholars, myself included, have questioned the need for and efficacy of such extraordinary legislation, achieved largely as a result of the monopoly power of these mega-event organizations. While I appreciate the financial interests sought to be protected by these sports properties, I personally believe the existing trademark and unfair competition laws of each country should be sufficient. Anecdotally, all that EASML typically ends up doing is freezing out and “chilling the speech” of smaller companies who are simply afraid of being ceased and desisted by their local Olympic “trademark police.”
JSEL: In your opinion, what are some of the most effective mechanisms companies and organizations can utilize to prevent third parties from trying to imply a commercial association with them without having secured official sponsorship rights?
SM: What sport properties provide official sponsors is exclusivity within advertising and promotion to use their official marks and logos. Legally this exclusivity does not, and should not, extend to sports properties “owning” the entire “thematic space” of their respective events. It is appropriate for sports properties to communicate to the business community what types of advertising and promotional activities are legally acceptable. Within the Olympic context, the Canadian Olympic Committee provides a great example of educating the business community as to the parameters of their legal protections. This can be one of the more effective mechanisms: explaining to the business community how official sponsors support the overall program through their financial investments, and how the ambush marketing of non-sponsors can potentially devalue official sponsorship programs at the risk of losing such funding for Olympic programs. In other words, educating the business community can serve as a potential deterrent. The so-called “name & shame” campaigns, whereby sports properties publicly chastise non-sponsors can, however, backfire. One notable example of this is when FIFA and official beer sponsor Anheuser-Busch called out the Bavarian Beer Girls during the World Cup in South Africa in 2010. Their vigilance in arresting a handful of women for ambush marketing resulted in millions of dollars in publicity for the Dutch Bavarian Beer Company and a groundswell of negative publicity. I would contend that the best approach in this scenario would have been to simply ignore the Bavarian Beer girls’ publicity stunt! Ultimately, I think the most effective “mechanism” official sponsors can use is simply to “out market” their competition in terms of advertising/promotion dollars spent, and creativity in better capturing the consumers’ attention.
JSEL: The National Football League (NFL) partnered with local law enforcement to form Operation Team Player to help curtail the illegal importation of counterfeit sports apparel and merchandise. The successful operation led to the seizure of nearly 450,000 counterfeit sports-related items worth an estimated $39 million. Do you think that it would be an effective practice for companies concerned about third parties “ambushing” their brand’s marks to use similar tactics?
SM: It is important to distinguish between counterfeiting and ambush marketing. Counterfeiting entails the unauthorized use of protected trademarks on tangible products. This is clearly illegal. On the other hand, ambush marketing is implemented through advertising and promotion campaigns (not involving tangible products). Any non-sponsor seeking to align or associate with a sporting event is typically savvy enough to not include registered trademarks in their campaigns. Thus, during the Super Bowl, we see official sponsors using the Super Bowl logo and word mark, and non-sponsors using non-trademarked phrases like “The Big Game.” Whereas sports properties have mechanisms to stop counterfeiting (i.e., partnerships with governmental customs agencies and on-site “logo police”), these don’t apply to advertising/promotion campaigns, which instead can only be policed by the properties’ sponsorship/marketing divisions.
JSEL: Companies often utilize social media platforms such as Facebook, Twitter, and Instagram to advertise their newest collections and launch their latest advertising campaigns. Through monitoring various social media platforms, one of the COC’s interns at the Sochi Olympics discovered that a major brand was running a sweepstakes that erroneously used the COC’s brand mark. For companies and organizations with a global presence, how can they protect their intellectual property mark’s online from such activity?
SM: Social media remains a bit of the Wild West as it pertains to ambush marketing specifically. Ultimately, as with instances of ambush marketing in traditional media, the question is the same: has the company utilized protected trademarks in a manner that is likely to cause consumer confusion as to sponsorship or affiliation between the company and the respective sports property. The use of hashtags by non-sponsors has created an even thornier issue, as I and my co-author John Grady of the University of South Carolina recently addressed in a Sport & Recreation Law Association conference presentation in March.
Prior to the 2016 Summer Olympic Games, the United States’ Olympic Committee (USOC), in its efforts to prevent ambush marketing, took a novel legal approach by enforcing its trademark rights in event-related works marks when those marks are used as hashtags. They sent letters to non-sponsor companies warning they would infringe the USOC’s marks if they incorporated into social media posts any of the USOC’s protected marks, including #Rio2016 and #TeamUSA, regardless of the content of the social media messaging. The letter further prohibited the sharing of any Olympic results or retweeting from official Olympic accounts by any non-media outlets. This unprecedented step prompted immediate criticism as “trademark bullying,” and over-reaching beyond what rights the USOC can legally assert.
The constitutionality of the USOC’s initiative is currently pending in a lawsuit filed in federal court a few days prior to start of the Olympics by a small carpet cleaning business called Zerorez. The lawsuit is filed under HSK, LLC. v. United States Olympic Committee. Zerorez anticipated discussing the Olympics, contemplating social media posts on Facebook and Twitter such as “Are any Minnesotans heading to #Rio to watch the #Olympics? #RoadToRio.” Zerorez has requested declaratory relief from the court, arguing that speech is not commercial in nature merely because it is on a business’s social media account. This was in response to the USOC’s assertion that every social media post from a corporate account constituted commercial speech and was therefore prohibited.
Although the Supreme Court has long grappled with how to define commercial speech, it provided insight as to what is not considered commercial speech in its 1976 decision in Virginia State Bd of Pharmacy v. Virginia Citizens Consumer Council in which it held that speech is not necessarily commercial just because money was spent to project it. The Supreme Court has held that the fact that speech is commercial does not alone deprive it of constitutional protection. Although the 7th Circuit’s more recent decision in a right of publicity case brought by Michael Jordan against the grocery store chain Jewel Food Stores arguably broadened the scope of commercial speech, the USOC’s assertion that every social media post from a corporate account constitutes commercial speech is arguably over-reaching.
The second legal issue raised in the Zerorez lawsuit turns on the application of the Lanham Act to the USOC’s actions. The Lanham Act makes liable anyone who uses a registered mark in commerce “in connection with the sale … or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” Trademark law, however, also recognizes that there are other ways to use another’s mark without misleading consumers or infringing the owner’s rights, including inter alia descriptive fair use and nominative fair use. Furthermore, one can argue that the use of trademarked hashtags in social media posts that do not directly incorporate selling messages is not necessarily commercial speech (such as in congratulatory messages). Nor, it can be argued, are these posts likely to confuse or mislead as to the company’s affiliation, or lack thereof, with the Olympic Games. This issue reflects an emerging line of legal scholarship which further contends that given the foundational purpose and use of social media, hashtags are incapable of designating a sole source of origin as required under trademark law.
The Zerorez case is still working its way through issues of ripeness/case in controversy, so this will be an interesting case to watch. But even if it is tossed out on jurisdictional issues, a similar case is likely to arise if the USOC continues its aggressive stance on the use of hashtags. Ultimately, sports properties and official sponsors need to step up their policing game in order to monitor ambush marketing activity that may cross the legal lines, but at the same time they need to be cognizant of free speech rights as well.
JSEL: One of the challenges with policing ambush marketing is that the typical sports fan does not know about ambush marketing, including the fact that it can amount to trademark infringement and unfair competition. The music industry faced a similar challenge around a decade ago when the majority of the public did not understand that downloading music without paying for it was illegal. To counteract such practices, the music industry began to aggressively litigate against consumers but quickly realized that the threat of being fined or facing possible criminal charges did not have the deterrent effect that they were expecting. Do you think that companies should try to educate the public about ambush marketing, and if so, how do you think they should go about doing so?
SM: Good question. Ambush marketing is a very nuanced practice. It was a term created and perpetuated by sport properties but it is premised on consumers actually knowing not only what sport sponsorship is, but also understanding what rights official sponsors have (and hence, what non-sponsors don’t have). 99 out of 100 sports fans cannot tell you what “ambush marketing” is. Furthermore, research has consistently shown that sports fan cannot tell you what exactly constitutes an official sponsor versus a non-sponsor. Historically, sports properties, and especially the IOC, FIFA and country governing bodies, have tried to appeal to consumers with the message that “official sponsors fund our program and hence fund our success,” but this message only works from a nationalistic standpoint (again, assuming sport consumers know what “official sponsorship” entails). Furthermore, fans of sport properties like the NFL or MLB know that the games will go on, with official sponsors, or without. Today’s sport consumers are savvy enough to see through any messaging by sport properties that says “support our official sponsors and reject ambush marketers … or our property will eventually lose sponsorship funding and go out of business.” Furthermore, despite 30 years of legal ambush marketing activity – engaged in by some of the most well-known international brands – no sport property has “gone out of business,” let alone lost any significant sponsorship revenue due to ambush marketing. One might intuitively ask: if ambush marketing is so prevalent (which it is) and so financially damaging, why have the official sponsorship fees for every major sport property only increased with each subsequent negotiation?
For more information about this topic, consider McKelvey, S. & Grady, J., #JoinTheConversation: The Evolving Legal Landscape of Using Hashtags in Sport. Journal of Legal Aspects of Sport, 27, 90-105, available at: http://journals.humankinetics.com/doi/pdf/10.1123/jlas.2016-0013