lawyers in India

Market Ambushing in India

Written by: Nalin Bawa - 4th Year Amity Law School
Environmental law
Legal Service
  • Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create, exchange, and satisfy individual and organizational objectives. Simply put Marketing is figuring out what one has to do to sell ones product or service for a profit. But recently the multinational companies all over the word in an attempt to maximize their profits have engaged themselves in what many baptize as ambush marketing.
    The term ambush marketing first coined by Jerry Welsh, is an attempt by a third party to associate itself directly or indirectly with an event(s) or the event(s) participant(s), typically major sporting events like the Olympics or the World Cups, without their sanction, thereby depriving the official sponsors, suppliers and partners of much of the commercial value deprived from the ‘official’ designation. It is for this reason that ambush marketing is frequently referred to as parasitic marketing.

    The objectives of ambush marketing are twofold:
    1. Firstly to get maximum returns on the marketing buck and
    2. Secondly to undermine the branding efforts of the rivals by stealing the attention, increasing the clutter and confusing the viewers.
    Ambush marketing can take various forms. It can be either direct or indirect.

    (A) Direct Ambush Marketing
    Sprints Communication Co. resorted to direct ambush marketing in the 1994 Football World Cup by using the official logo without permission of either FIFA (Football governing body) or Master Card who were assigned the exclusive rights for using the world cup logo.

    (B) Indirect Ambush Marketing
    Indirect ambushing can either be onsite or via the media.

    (a) Onsite Ambush Marketing
    Samsung, an unofficial Olympic sponsor, launched a very successful onsite ambush effort in Atlanta City during the 1996 Olympic Games. It was directed at Panasonic by taking squatters rights to a parking lot on the outer limits of the Centennial Olympic Park. Panasonic, the official Olympic sponsor, displayed its logo on the CNN tower looming over the Olympic Park. The result, Panasonic captured only three per cent awareness compared to the nine per cent stolen by Samsung.

    (b) Ambush Marketing via Media
    This is done by sponsoring the broadcast of the event, sponsor subcategories within the event and exploit this investment aggressively, purchasing advertising time around relays of the competitor’s event, engaging in major non-sponsorship promotions to coincide with event and an assortment of other highly creative and inventive strategies.

    (i) Sponsoring the broadcast of the event: This tactic is highly effective in accessing more consumers as the media audience for big events is normally much larger than the on-site audience. McDonald’s had paid a hefty sum of money for the right to be an official sponsor of the Games, which entitled it to use the Olympic insignia. Meanwhile Wendy became the proud sponsor of ABC’s broadcast of the Olympics. In addition to this they printed Olympic stories on its tray liners and also slapped the broadcast sponsorship logo on napkins, bags and signs in all its restaurants. Wendy was therefore successful in undermining the branding efforts of the rivals by stealing the attention.

    (ii) Sponsor subcategories within the event and exploit this investment aggressively: In essence this type of ambush marketing tries to associate itself with the overall event by investing a much smaller sum of money in some lesser elements. This tactic is, therefore, very parsimonious.

    # In the 1984 Olympics, Fuji was the official programme sponsor of the Games at considerable cost of $ 40 million. Their competitors, Kodak, became the ‘sponsor’ of the U.S. track team and of ABC television’s broadcast of the Games. Its film thereby became the official film of the U.S. track team, and it also proceeded to use the network’s own set of symbols to advertise its merchandise.

    # At the 1992 Barcelona Olympics, official sponsors including Reebok paid $700 million to be the official sponsors but when the US basketball team won gold, Nike sponsored the press conference.

    (iii) Purchasing advertising time around relays of the competitor’s event: Such tactics taken by ambushers are to ‘deny a competitor the full benefits of their event or broadcast sponsorship.’ However, ‘this practice successfully used by many ambushers in the past is less prevalent now as broadcasters in many countries will now either offer first option to the sponsor or refuse to allow any competing advertising in slots around televised events.’

    (iv) Engaging in major non-sponsorship promotions to coincide with event: This is understood to be the only way for ambushers to gain consumer consciousness when the sponsor has committed its marketing communications budget largely toward sponsorship. Since such tactics normally use mainstream media advertising it can be regarded as a form of ambushing in the broadest sense.

    Such form of advertising was resorted to in the Winter Olympics held in Lillehammer, Norway in 1994, where Visa was one of the official sponsors for the Olympic Games. American Express (Visa’s counterpart) launched an advertising campaign with the slogan: If you are traveling to Lillehammer, you will need a passport, but you don’t need a visa. A survey later found that 52 % of the respondents thought that American Express was the official sponsor of the games. Although it was lower than Visas 72%, American Express had a reason to be pleased since it had not paid a penny for the event while Visa paid $ 40 million to gain the official sponsor status.

    (v) Other highly creative and inventive strategies: Here ambushers display their creativeness, ingeniousness to conceive inventive ambush marketing practices.
    One such practice is In- Film advertising which includes placing of product bill boards behind the actors’ car, making the actors slurp famous Cola brands etc. In Film advertising was resorted to by Coca Cola when they ostensibly paid Sanjay Gupta, the producer of the film Kaante, Rs. 4 Crores to feature their product Coca Cola in some of the scenes of the movie and to air promos of the film that incorporate the Thums Up brand. Going by the promos of the film it appeared that Thums Up had roped in six stars to endorse their product. Pepsi were justifiably not too pleased with the advertising because it had the effect of hijacking their very visible brand ambassador Amitabh Bachchan.

    Another incidence of ambush marketing took place when a couple of streakers ran onto the field of play during a match with Vodafone logo emblazoned on their backs. The stadium was owned by Telstra, Vodafone’s rivals. Vodafone’s officials later conceded that had okayed the streaker’s suggestion for pulling of the prank that would give it publicity.
    The main consequences of ambush marketing are as follows:
    1. It decreases the commercial value of the event
    2. It creates unhealthy competitive environment.
    3. It may adversely effect the funding of the event as it will be beneficial for the company to be an ambusher instead of roping huge amounts of sponsorship.

    Ethical Aspects of Ambush Marketing

    The question which therefore arises is whether ambush marketing can be regarded as ethical and justifiable route of marketing. The answer to the particular query depends on whether the response comes from the ambusher or the sponsor/event organiser/marketer. Corporate sponsors obviously regard this practice as unethical and immoral. On the other hand the ambush marketers argue that it is all a fair game and further claim that without ambushing, they will be denied the right to participate in an important promotional opportunity due to the inability to meet the cost of official sponsorship.

    Legal Aspects of Ambush Marketing

    The majority of jurisdictions rely upon traditional laws such as the Intellectual Property Rights (Trademarks, Copyrights and Deign), Unfair Competition Laws and Passing Off laws to bestow protection on the sponsors. At times countries also enact special laws to stop market ambushers from appropriating some of the exclusivity reserved for the official sponsors.

    Intellectual Property Rights

    A good registration of Symbols and Words of the games, Sponsors Labels is a sine qua non for availing the entire gamut of intellectual property rights against market ambushers.

    Trademark Law

    India enacted a new trademark law in 1999 to bring it in conformity with the requirements of TRIPS. According to section 2 (zb) of the Trademarks Act, 1999 a ‘trademark’ is defined as a mark capable of being represented graphically and which is competent to distinguish the goods or services of one person from those of the others and includes the shape of goods, their packaging and the combination of colours. ‘Mark’ is defined under section 2 (m) of the Trademarks Act, 1999 to include device, brand, heading, label, ticket, name, combination of colours etc. Here it is pertinent to note that the terms packaging, shape of goods, colour combination were added under the new trademark law.

    The new law therefore gives an opportunity to the companies sponsoring the event and the ‘games committees’ to register their labels/marks as trademarks. This enables the registered proprietor of the trademark to have an exclusive right to use the trademark in relation to his goods or services in respect of which the trademark is registered. If any third person infringes the registered trademark, then in such an event it will be open for the proprietor of the trademark to institute passable legal proceedings against the third party.

    However trademark law alone cannot provide adequate remedy against market ambushing for the reason that in most cases market ambushers do not directly make use of the trademarks or designs of the sponsors. They (market ambushers) usually refer to the sponsors or the games in their products or services in an ingenious and creative manner in order to circumvent the law. Another predicament for the applicability of trademark law is that at times the label/mark is not capable of registration as it lacks the necessary distinctiveness.

    Copyright Law

    Copyright law provides a number of exclusive rights to the copyright owners of original literary, artistic, dramatic, and musical works as well as films, sound recordings, television and radio broadcasts. Artistic work as defined under section 2 (c) of the Copyright Acts means a painting, sculpture, drawing, engraving or a photograph whether or not such artistic work possess any artistic quality; work of architecture and any other work of artistic craftsmanship.

    For an artistic work to qualify for copyright protection it should be original, i.e. it must originate from the author. The skill, judgement and effort required are minimal.

    Get up, arrangement, and colour scheme of labels used as trademarks can constitute works of artistic craftsmanship and be the subject matter of copyright protection. Such labels can also be considered as drawings or engravings.

    However it is pertinent to note that that no copyright subsists in mechanically reproduced labels and cartons because no skill or labour is involved in the production of such labels or cartons. Copyright can be claimed only in original artistic work produced by natural persons by the expenditure of his skill and labour. Therefore in order to prove ownership of copyright in artistic label or carton the original work from which the printed reproductions have been made must be produced in evidence. In the case of Castrol Ltd. v. V.O. Muralidhar Reddy the defendant was held liable for copying the colour scheme, get up and layout of the plaintiffs Castrol; Noble tin of greases and oil products and an injunction was granted under the copyright and passing off.

    But the quandary which lies in the applicability of copyright law is that the ambushers only suggest an association with the sponsors, games whereas the law requires a substantial reproduction of copyright works in order to constitute infringement.

    Passing of

    Passing off is a form of tort. The tort of passing off has undergone a plethora of changes in the course of the time. Passing off is not defined in the Trademarks Act, 1999. It is referred to in Sections 27 (2), 134 (c) and 135. Section 27 (2) states that the rights of the action against any person for passing off goods as the goods of another person or the remedies in respect thereof are unaffected by the provisions of the Act. Section 134 (c) refers to the jurisdiction of the courts to try suits of passing off arising out of the use of any trade mark. Section 135 specifies the remedies available in respect of passing off arising from the use of the trademark.

    In order to succeed in an action for passing off, the claimant must establish that:
    # The claimant has goodwill;
    # The defendant made a misrepresentation that is likely to deceive/confuse the public and
    # The misrepresentation damages the goodwill of the claimant.
    These tests are often referred to as the ‘classical trinity’ of passing off.
    Passing off cases can be divided into two broad categories.

    First are those where the competitors are engaged in a common field of activity and the plaintiff complains that the defendants have named, packaged or described his product or business in a manner likely to lead the public to believe that the defendants' product or business is that of the plaintiff.
    Second type of passing off, is where it is alleged that defendant has promoted his product or business in such a way as to create the false impression/confusion that his product or business, is in some way approved, authorised or endorsed by the plaintiff or that there is some business connection between them. By this false linkage or relationship, the defendant hopes to gain on the goodwill of another. This observation also finds support in the decision National Hockey League et al v. Pepsi Cola Ltd in the following words:
    nowadays, perhaps the more common type of passing off, is where it is alleged that a defendant has promoted his product or business in some way approved, authorised or endorsed by the plaintiff or that there is some business connection between the defendant and the plaintiff. By these means a defendant may hope to cash in on the goodwill of the plaintiff.

    It is the second type of passing off that quite often results in market ambushing. For advancing a successful passing off action against market ambushers a sine qua non is to prove the existence of confusion in the market which misleads the members of the public into believing that the ambushers are official sponsors or somewhat associated with the games/events and/or the sponsors. This is also emphasized in the case of H.P.Bulmer Ltd. v. J Bollinger in the following words:
    However, not every kind of connection claimed amounts to a passing-off. There must be a representation that the defendant's goods are connected with the plaintiff in such a way as would lead people to accept them on the faith of the plaintiff's reputation.

    One of the rare market ambushing cases which succeeded in proving such confusion is the case of Master Card International Inc. v. Sprint Communication Co. v. ISL Football AG. Master Card was assigned the exclusive right before and during the World Cup 1994 to use World Cup logos on, and in association with, all card-based payment and account access devices. Sprint Communications was also involved as backer of World Cup as an official partner, a category that was neither as extensive as that of a sponsor nor as costly.

    Sprints exclusivity was in the field of long distance telecommunications. Sprint began marketing pre-paid telephone calling cards both in the US and Europe bearing World Cup logos, despite Master Card’s strong objection. In the litigation that ensued in the Federal Court in New York City, Master Card established that Sprint’s use of World Cup logos on its telephone cards infringed on Master Card’s category of card-based payments and account access devices, even though the telephone cards were not functionally the same as Master Card’s cards. The court held that consumers would, on seeing the Sprint card bearing a World Cup logo, would mistakenly assume that Sprint had rights in a category that, in fact, belonged exclusively to MasterCard.

    However in more recent cases the event owners and sponsors found it very difficult to prove the confusion required to constitute unfair competition or passing off.
    In the case of ICC Development (International) Ltd. v. Arvee Enterprises and Anr. the plaintiffs had filed a suit for permanent injunction restraining defendants from publishing any advertisement associating themselves with the plaintiff and the Cricket World Cup in any manner whatsoever. The challenge was to the sale promotion campaign by the second defendant offering Cricket World Cup tickets as prizes, using the slogans Philips: Diwali Manao World Cup Jao and Buy a Philips Audio System win a ticket to the World Cup, inserting a pictorial representation of a ticket with an imaginative seat and gate number saying Cricket World Cup 2003.

    It was inter alia pleaded that:
    # The ticket conditions of the event prohibit such distribution of tickets, unless authorised by the plaintiff, the defendants have resorted to ambush marketing to take advantage of the World Cup without investing a single rupee towards its success.

    # It was also the case of the plaintiffs that they have been using the words ‘World Cup’ since 1975 in the game of cricket and have used the same exclusively, therefore, ‘Cricket World Cup’ is associated with the plaintiffs and that the defendants by making use of the impugned words are guilty of passing off indicia, mark and identity of the plaintiff and the World Cup thereby causing irreparable harm and injury to them.

    # It was also pleaded that defendants are also depriving the sponsors of the Event from enjoying the exclusivity of rights granted to them and preventing the plaintiff from performing its contractual obligation.

    Qua the first contention the court held:
    So far as plea of ambush marketing is concerned, the phrase ambush marketing is used by marketing executives only. It is different from passing off. In the passing off action, there is an element of overt or covert deceit whereas the ambush marketing is opportunistic commercial exploitation of an event. The ambush marketer does not seek to suggest any connection with the event but gives his own brand or other insignia, a larger exposure to the people, attached to the event, without any authorization of the event organizer. However, in such cases, there is no deception, therefore, the defendants’ conduct cannot be categorized as wrongful or against public interest. It is now well settled that commercial advertisement is form of commercial speech. It is a part of the freedom of speech and expression guaranteed under Article 19(1)(a). The ‘World Cup’ or the Event is not protected by any International treaty or domestic law, unlike the word Olympics and its logo, which is protected under the Emblems and Names {Prevention of Improper Use} Act, 1950. It is for Legislature to determine how far to curtail legitimate fair competition and freedom of speech. From the material on record, the advertising campaign offering tickets of the Event as prizes without using the logo or the mark of the plaintiff cannot be held to be unlawful.

    Qua the second contention the court held that the word ‘World Cup’ is a generic term. The genericness of these words can be judged from the fact that these words have been used to refer to several other international sporting events, namely, Football-FIFA World Cup, Hockey-FIH World Cup, Para gliding, Skiing, Horse Racing, Skateboarding, Rugby, Boxing. The plaintiffs therefore have no trademark in the said words. These words belong to one genus. Such words can neither be brand names nor have any protection by the registered trade mark. The court further held that prima facie, defendants’ use of the disputed words, in the advertisement is descriptive and not as a mark. It is a fair use, permissible under the law. The court was therefore of the opinion that the defendants are not guilty of the tort of passing off.

    The court also rejected the third argument of the plaintiffs that the right of publicity, in respect of ICC cricketing events vests with the plaintiff, and they alone are entitled to profit from the same.

    Similarly in the case of NHL v. Pepsi the court was of the opinion that although the impugned advertisements might constitute ambush marketing but the advertisements in no way suggest that the plaintiffs approved, authorized or endorsed the contest in any way or that there was some business connection between the plaintiffs and the defendants.

    From the above discussion it becomes palpable that the courts are reluctant to find a violation of existing laws unless there is a clear trademark and trade name infringement and this infringement is a part of the overall marketing campaign.

    Unfair Competition

    Art. 10bis of the Paris Convention for the Protection of Industry Property requires that:
    (1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.
    (2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition. Though in Art 10bis (2) is a flexible notion, Art 10bis (3) further described a number of acts that are always considered to be unfair as following:
    1. All acts of such a nature as to create confusion by any means what so ever with the establishment, the goods, or the industrial or commercial activities, of a competitor;
    2. False allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;
    3. Indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.

    On the basis of above provision WIPO further maps out the acts in its document Protection against unfair competition. In the document the acts mentioned in Art 10 bis (3) were specified as the following:
    (a) Causing confusion as to (i) commercial source (ii) affiliation (iii) sponsorship by means of indications product shapes
    (b) Misleading
    (c) Discrediting competitor by statements of fact by false statements
    These above mentioned international principles for unfair competition provide some legal remedies for Games owners and official sponsors where ambushers misrepresent association with the Olympic Games and other major events.

    Ambush marketing is probably just the next step on the marketing evolutionary ladder. It is as inevitable as taxes. As ambush marketing becomes more and more widespread and acceptable the biggest losers will be the events who will become increasingly strapped for the means with which to host the events.

    The only remedy is to block out all the competitors. This can be done by enacting special legislations such as the Sydney Games (Indicia and Images) Protection Act, 1996. The principle objective of the Act was to supplement the existing intellectual property rights in the area of copyright, trademark, passing off, unfair competition. Similarly the UK Government is also preparing law to prevent any business making reference to the 2012 Olympics in its promotion unless it is an official sponsor. Another way to prevent one self from the debauched practice of market ambushing is drafting a proper contract. For instance LG has entered into a contract with ICC whereby it has seized the global sponsorship right to computer and computer peripherals apart from the durables. Consequently, Samsung cannot burst onto the TV screen even with its computer peripherals commercials that feature the cricket stars.

    The author can be reached at: [email protected] / Print This Article

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