Is Ambush Marketing Shaking Up Sports Law?

The general definition and understanding of sports in the 21st century have widened extensively. Sports are no longer limited to traditional physical activities. It has now expanded to cover areas such as mind sports, e-sports, virtual sports and many others. But one common theme in all of these activities that falls under the umbrella of sports, is the traditional ethos of fair competition, sportsmanship and inclusivity. While it was established in an Australian case of Adamson v West Perth Football Club INC (1979), that there exists a distinction between the definition of competition in the economic sense and in the sporting sense.

However, it is undeniable that the free-market economy and sports share a similar set of fundamental principles. Ideally, athletes in the sporting world and corporations in the commercial world should be able to compete against each other while adhering to the same set of rules. The term that applies to both contexts is referred to as the right to compete and fair play. However, just as how corporations in the commercial world are constantly looking at “unlawful ways” to get ahead of the competition, athletes in the sporting world similarly are also finding various methods to get ahead such as doping and more recently genome editing. This goes to show that while there may be little similarity on the surface, sport and commerce are an inseparable nexus.

Ambush marketing occurs when a brand promotes itself in connection with a sporting event without any formal sponsorship or financial contribution. It is a form of marketing strategy which advertises goods or services in a manner that implies an association with the event, even though no such official relationship exists. Essentially, the brand leverages the interest and audience of the sporting event to gain exposure and market its products, capitalising on the event’s popularity without directly contributing to its costs.

This tactic diverts attention from the actual event sponsors, undermining their marketing efforts and reducing the effectiveness of their investment. The third-party brand benefits by associating with the event’s value and audience, often leading to a dilution of the official sponsor’s presence and impact.

The origins of ambush marketing can be traced back to the beginning of marketing and commercialisation of sports in the United States in the mid-to-late 1900s. Due to the spike in professionalisation in the sporting industries, company owners initially had the intention of obtaining sponsorships to supplement the rising operation and maintenance cost and deliver better hospitality experience for fans and supporters. But it was also at the same time when technology had progressed to such an extent where radios and television are now mass-marketed, thus enabling the first form of live streaming services. Live streaming services also meant that there are now advertisements and commercials. Which kick started the chain-effect of money and investments pouring into the sports industry.

With the development of mass-media, the sporting industry was one of the first industries to experience the positive effect of globalisation as it enables sporting events to be broadcasted around the world. Gradually big sporting brands started to invest heavily in successful athletes, teams with the objective of profiting through their association with sporting celebrities and successful clubs or teams. As advertisements and sponsorship were increasingly normalised, more and more businesses started to hop on the train of sponsorship into the sporting industry, and ambush marketing is the subsequent by-product of the intense competition for exclusive sponsorship rights and deals between corporation who wishes to profit from the global audience that the sporting industry commands.

In the present day, ambush marketing comes in various forms but can be categorised under three general categories: ambush marketing by association, ambush marketing by intrusion and opportunistic ambush. Ambush marketing by association would typically occur when a brand or company adopts marketing strategies which seeks to align or associate themselves with an event without authorisation. Ambush marketing by intrusion on the other hand occurs when the ambusher gains exposure by targeting the audience at Olympic venues and reaching a broad audience through television broadcasts. Typical tactics include distributing free products to event attendees, buying advertising space near the venue, or setting up noticeable displays visible to cameras. Lastly, opportunistic ambush marketing, this is probably the most difficult form to judge and gauge but the common characteristic of ambush marketing of this form, is that it typically only occurs during topical events and rather than trying to intentionally mislead the public over its formal association. The intention of opportunistic ambush marketers usually just wants to be free riders on the event’s popularity. An example of opportunistic ambush marketing occurred during the Sochi 2014 Winter Olympic torch relay, when the flame went out and was caught on camera being relit by a Zippo lighter. Zippo capitalised on this moment by sharing the photograph across its social media platforms.

Cases of ambush marketing have been on the rise over the last two decades, globalisation has made the world more interconnected than ever before. It is always said that sports are one of the world’s greatest unifiers and at its core presents itself as one of the greatest avenues for global connectivity and cross-cultural interaction. It is precisely this point in which global companies aim to promote and widen their market reach to profit and “ride off” from. In this section, we shall have a look at some of the case studies of ambush marketing in sports.

The Photography Giant Face-off (1984)

This significance of this case lies in the fact that this was the first ever ambush marketing case as highlighted by Prof Mike Beverland of the University of Bath. In the 1984 Summer Olympics, An American-based photography giant had run a series of aggressive campaigns which had suggested to the public that they were the official sponsors which was not the actual case. The actual official sponsor to the Summer Olympics 1984 was its Japanese-based main competitor. 

History would repeat itself in the 1996 Olympics, when the American based company once again managed to ambush their main rivals. In 1996, as soon as the Olympic council had announced that Atlanta would be the host city for the summer Olympics, They had snapped up hundreds of posters signs near the city centres and sign boards that had high volume of foot and car traffic for four years. Whilst the Olympic Council had tried to help the Japanese based company (which was the actual sponsor) by trying to negotiate a deal with the local city councils, poster companies and organising contractors to offer the Olympic sponsors first right of refusal. However, at that point it was too late, since most of the local poster companies had already agreed and had signed contracts with the American company beyond the time frame of the Summer Olympics and many of the poster companies were reluctant to risk breaking a profitable contract for a potentially less profitable deal and the legal liabilities that may be attached to it. 

“The Soda Dispute of 2008”

The 2008 Summer Olympics was significant in many ways, not only was it the most expensive Summer Olympics of all time and only the third Olympic games to be held in East Asia, but it was also the first one that was held in the internet era that not only had the audience base of the world’s largest population but was additionally watched by over 3.5 billion people globally. It was also in this showcase, that multi ambush marketing tactics were in full swing, with the biggest story being the clash between 2 of the largest soda beverage companies in the world.

It was in this context that, one of the companies had went big and splurged up to $400 million on marketing in the 2008 games including an $85 million exclusive Olympic beverage sponsorship deal. Yet in the subsequent market research conducted, 60% of consumers were under the impression that the rival company was the official sponsor. Unlike the direct ambush approach which was seen in the earlier The Photography Giant Face-off (1984) case, this case presented a more innovative and indirect form of ambush marketing.

The rival company (non-official sponsor) had effectively utilised the SMS and social media space, by coming up with an online competition in which had 160 million Chinese participants. Additionally, they had also made a seasonal change to the design of their product by replacing their iconic blue can into red which had two major effects. One was that red colour is synonymous with Chinese culture and secondly, this made their products less distinguishable to their rival whose products are also in red.

The 2008 Summer Olympics not only highlighted the fierce competition between two of the world’s largest beverage companies but also showcased the evolving landscape of marketing in the digital age.. This clash underscores the power of innovative strategies in a global arena, where brand perception can be as valuable as official partnerships.

N v A (2012)

When it comes to ambush marketing, no other brands have been involved in more related controversies than N. As far back as the 1984 Olympic games, N has been involved in ambush marketing controversies. For instance, whilst not an official sponsor of the 2012 Olympics, N had built large murals near the stadiums, transit stations and bus stations which had large displays of the signature N emblem. It was also one of the first instances where instead of sponsoring the whole event or team, N struck several deals with reputable sports persons and Olympians to wear their apparels and footwear.

While we could discuss the endless ambush marketing schemes that N had been involved with in the past (v U (1996 UEFA Euros), v R (1996 Olympics)), The 2012 campaign against long-time rival A was of such efficient chicanery that it completely overshadowed the fact that A was the supposed main sponsor.

Prior to the 2012 London Olympics, A had secured a sponsorship deal with the organisers worth $150 million with the aim of dominating the sporting scene. Having had past experience with N’s unapologetic style of ambush marketing, A had made sure that the exclusive sponsorship agreement with the Olympic council was strict and as airtight as possible which included the exclusive rights to use branding terms like ‘London 2012’ and the iconic Olympic rings. Additionally, the organisers also issued strict directives and restrictions to prevent any direct affiliation with the Olympics for non-official sponsors.

Despite the odds and handicaps, N again came up with a strategy to by-pass all these restrictions. They had exploited the fact that there were multiple cities around the world also named London and used those ‘alternative’ Londons to link and attach itself to the Olympics without making specific reference to London, United Kingdom. Furthermore, N once again dug into their old playbook and sponsored athletes and participating Olympians in their individual capacities. It was noted that nearly 400 plus athletes were sponsored by N during the 2012 event. Additionally, they intentionally designed their products to be of a brighter colour shade which distinguishes them from the A apparel that may have been worn together with its products.

Another key factor was the successful marketing of its tagline for the Olympic campaign. The ‘Find Your Greatness’ campaign was one that was centred around grassroots empowerment rather than the conventional approach of packaging and marketing the celebrity status of famous athletes. Almost all the market research conducted in the aftermath of the 2012 Olympics indicates that N had recorded a stronger surge in social media presence and a sizable number of respondents had mistakenly thought that N was the official sponsor for the 2012 Olympics as opposed to A.

The discussions and illustrations in the early sections on the origins and examples of ambush marketing probably had made many wonder, if there’s no actual legal consequences and liability in acting and operating in such a way. The reality is that one can never really be exempted from the prevalence and assertion of the letter of the law.

Generally, in cases of ambush marketing, the main legal issues surround intellectual property protection (trademark or copyright infringement) and torts such as passing off. It is now mandatory for host countries in which international sports competition are held to build up sufficient legal protection in the form of intellectual property and anti-ambush marketing laws. This is to ensure that the commercial contract and the licensing rights of broadcasters, sponsors and merchandisers are secured.

The passing off remedy under common law is designed to protect and uphold the goodwill of event organisers or national sports bodies from ambush marketing. Summarily, the current legal position of passing off can be found in the judgment of the English landmark case of Reckitt & Colman Ltd v Borden Inc (1990), where it was held that ‘no man may pass off his goods as those of another’. The House of Lords in the judgement reaffirmed the Court of Appeal’s decision and reiterated the three-part test that is required to prove a claim of passing off. To establish a claim of passing off, the claimant must demonstrate a clear connection or ‘association’ with the event, provide tangible evidence of actual damage suffered, and prove that the defendant had intended to cause this damage or had foreseen that they will profit at the expense of the claimants. The court requires all these elements to be satisfied before granting the remedy of passing off. This was also affirmed in the New Zealand case of New Zealand Rugby Football union v Canterbury International Limited (2001).

In such cases, most respondents would usually argue in their defence that throughout their marketing campaign they had not mentioned or specifically stated that they were the official sponsor or that there was an official endorsement with the event organisers. This defence was emphatically rejected in the New Zealand case of New Zealand Olympic and Commonwealth Games Association Ltd v Telecom New Zealand (1996) and the English case of Arsenal Football Club plc v Matthew Reed (2001).

Now that we have understood the potential legal issues that may arise in the event of ambush marketing, the next question is what legal protection mechanism is there to protect event organisers and national sports bodies. In passing off claims, there are typically two forms of claims. The first one involves competitors who are engaged in a common field of activity, and the claimant claim that the respondent had marketed or packaged the product or business in a way that would mislead or deceive the public into thinking that the respondent’s product is that of the claimant. The second category typically involves a situation where the respondent had marketed and promoted the product in a manner which paints the false impression that the respondent had got endorsement and affiliation with the claimant and through this false impression, the respondent stands to profit from the goodwill of the claimant.

For the first example, we shall refer to the Canadian case of National Hockey League v Pepsi-Cola Canada Ltd (1992). The National Hockey League (‘NHL’) had entered a contract with Coca-Cola limited to made them the official sponsor of the tournament in addition to granting Coca-Cola the rights to make Diet Coke the ‘Official Soft Drink of the NFL’. However, due to broadcasting rights being separately outsourced to Molson, the exclusive advertiser of competition, Pepsi-Cola was subsequently granted the advertising rights during the broadcast of all Hockey Night games. NHL then bought an action of passing off alleging that Pepsi-Cola had attempted to ‘pass off’ its products as being approved, authorised or endorsed with the NHL and its member clubs.

It was held in the case that the suit failed on the grounds that NHL in bringing on the suit had not established the requisite elements of the cause of action of passing off. Although the courts did note that the civil action of passing off had occurred in circumstances where it was alleged that a defendant had promoted the product in a way that had elements of painting a false picture that the marketed product is in some way approved, authorised, or endorsed by the claimant.

For the second example, where it involves products that have been derived from advertising of a distinctive character that the market recognises. We refer to the English case of Arsenal Football Club plc v Matthew Reed (2001), where the crux of the case revolves around the sale of unlicensed Arsenal Football Club merchandise. In the judgement, the court considered whether the third party was liable for passing off after the respondent had infringed certain registered trademarks of Arsenal Football Club since he operated a stall that sold unauthorised Arsenal goods and merchandise.

The part where this case comes under the category of ambush marketing was that the respondent had promoted and sold products under the pretence of a false perception that there was formal affiliation and association with Arsenal Football Club. However, the claim failed due to two main reasons. Firstly, Arsenal Football Club had failed to prove that the respondent’s activities had caused them any significant damage as the club still generated revenue of over 300 million and secondly the respondent had been selling the merchandises for 30 years near the old Arsenal stadium of Highbury and had put up notices and disclaimers stating that the products sold at his stall were not official merchandise.

From the above examples, we can infer and conclude that while it is possible theoretically and in legal jurisprudence to seek remedies for ambush marketing. However, it is a very tall order to succeed in claiming remedies such is the strict requirements of passing off principle. Even similar cases in Singapore (Singapore Professional Golfers’ Association v Chen Eng Waye & Ors (2012)) and India (ICC (Development) International Ltd v Arvee Enterprises & Anor (2003)) had come to similar conclusions. There are multiple theories and arguments on why the courts have stuck to such a strict interpretation on passing off laws and judicial attitudes towards granting remedies towards ambush marketing have been one that is cautious and conservative.

The issue of public policy interests has been the prominent argument. The courts are reluctant to risked creating an unnecessary dictum that could open the legal floodgates to all kinds of claims, especially in general advertising and marketing competition. In most countries in the world, it is a constitutional norm to have freedom of trade and commerce. Any form of regulation, legislation, directive that has the elements of restricting that fundamental right must be made cautiously and take into consideration the potential legal repercussions and possible unintended consequences.

As with many aspects of life, there are two approaches: remedy and prevention. If the remedial path as it currently stands, is proving to be less effective; it is imperative to intensify efforts and explore preventive measures. During the Beijing Olympics, there was an introduction of regulations which sought to protect the Olympic symbols from infringement of IP rights. Similarly in the 2012 London Olympic Games, the United Kingdom government legislated the London Olympic Games and Paralympic Games Act 2006 which had four main provisions tailored to counter ambush marketers.

At this point, many will ask ‘Doesn’t this bring us back to the earlier argument that this is against the fundamental principle of freedom to trade and commerce?’. The answer to this is no. It is not a breach or at risk of breaching fundamental rights because the law is of sui generis nature and only applicable until the conclusion of the Olympics. One country that has a comprehensive law on ambush marketing to date is New Zealand.

In New Zealand, the New Zealand Major Events Management Act 2007 (‘the NZ Act’), was enacted and encompasses protection mechanisms and frameworks not restricted to sporting events but to all matters. Section 3 of the NZ Act lists down the intention and objectives of the NZ Act with specific mention that the legislation is legislated to provide protections for events that are declared to be major events and prevent the unauthorised commercial exploitation at the expense of either a major event organiser or a major event sponsor.

Additionally, major event organisers had also bolstered their regulatory framework over the years to prevent these ambush marketers from profiting from their brands and ride on their long-established popularity and publicity. For instance, in the ongoing Paris Olympics 2024, several protectionist measures had been put in place to prevent ambush marketeers. For instance, the International Olympic Committee have now trademarked thousands of their logos and designs associated with the event. The French government also took proactive measures to counter these attempts as they introduce a new legislation named Law No 2018-202 of 26 March 2018 which grants French laws temporary derogative powers on advertisements throughout the event.

This power of temporary derogation essentially enables French authorities to be able to curb and control advertisements contents. In layman terms, this allows the French authorities to have temporary censorship and regulatory powers over all forms of advertisements throughout the Olympic season. Furthermore, amendments were also made to the French Sports Code to reinforce the CNOSF’s rights over the use and protection of Olympic symbols. Article L141-5 of Law No 2018-202 specifies that unauthorised use of these symbols is punishable under the Intellectual Property Code. This increased protection prevents non-official sponsors from using Olympic-related elements and terms without authorisation.

Besides the aforementioned preventive and remedial measures, it is also important to have sufficient public awareness and understanding of the nature of ambush marketing. More often than not, small and micro business traders do not intend to break the law but are merely trying to earn a living and probably do not understand the legal implications of ambush marketing as it is still a relatively unknown subject to many.

Therefore, it is imperative that adequate and comprehensive guidelines on marketing and advertising are released prior to the hosting of major sporting events. This will undoubtedly aid those who don’t have the intention to ambush the market to steer clear from breaking the law while also enabling the general public to aid in monitoring companies who ambush market and report them to the relevant authorities.

Secondly, event organisers of major sporting events that have massive followings around the world should be proactively trying to get their brand and products protected under existing intellectual property laws and regulations so that in the event of an ambush marketing incident. The organisers would be able to go after them under intellectual property infringements and remedies. Special event-specific legislation on marketing such as mentioned above would be helpful as well in terms of setting up an effective legal deterrence as well as providing a comprehensive framework for remedial claims. Event organisers, sponsors and local authorities of the host countries need to work together in understanding the proprietary rights of the rights holder associated with the event while the event organisers and local authorities need to formulate regulations for protection of IP rights in anticipation of ambush marketing tools and strategies.

As things stand, there is already Rule 40 in the Olympic Charter which was established to protect the rights of official sponsors to advertise and make reference to ‘Olympic related terms’.  Future host countries and cities of international sporting events could modify their legislation to uphold and strengthen Rule 40 in the attempt to counter ambush marketing campaigns. Although this is easier said than done, as any form of stringent anti-ambush laws are bound to face judicial scrutiny. This is because most countries in the world today see advertisements as a fundamental right to commercial free speech. Thus, it is foreseeable that there would be public resistance towards any laws which may contain elements of curtailing that right.