Ambush Marketing: Here to Stay?

“Ambush marketing,” a term coined by Jerry Wexler, manager of global marketing efforts for American Express in the 1980s, refers to the marketing activities of companies that manage to associate themselves, or their products or services, with high-profile events without paying to become an “official sponsor.” Wexler lucidly describes an ambush marketer's motivations in the 2002 “IEG Sponsorship Report” published by IEG, Inc.:

Given the escalating price of major sponsorships, it is hardly surprising that some companies willingly pass on the opportunity to sponsor and search instead for ways to compete in the sponsored space without bearing the onerous costs and the heavy burden of the scandals and other misadventures often associated with large, modern sponsored properties.

The point is that sponsors do not buy the rights to all avenues leading to the public's awareness of a given property, and more importantly, do not buy the rights to the thematic space in which the purchased property is usually the only one resident. In other words, all else other than that which is specifically purchased is up for grabs.

This article looks at several examples of ambush marketers seizing opportunities that are “up for grabs” as well as the corresponding legal strategies employed by event organizers and official sponsors to combat such activities. Overall, despite the best efforts of the various event organizers and official sponsors, ambush marketing cases are rarely actionable. Careful ambush marketers avoid using the trademarks, trade names, copyrights or other exclusive intellectual property rights associated with a given sponsored event, making it difficult to successfully assert infringement claims.

Sponsoring Media Coverage of an Event

In 1984 the International Olympic Committee (“IOC”) granted exclusive sponsorship rights in the film category to Fuji, but did so without also locking up related broadcast rights. As a result, rival film company Kodak was able to step in and sponsor the ABC television broadcasts of the Olympics, seizing upon an ancillary promotional opportunity that did not otherwise cause a breach in the agreement between the IOC and Fuji.

In a reversal of roles at the 1988 Olympics, the IOC granted official film sponsor status to Kodak, but left the door open and Fuji stepped in to aggressively sponsor the U.S. swimming team. In theory, Kodak could have paid a greater sponsorship fee to obtain total exclusivity among all Olympic events and teams, which the IOC could then have enforced through its rules and network of sponsorship agreements.

The IOC, the NCAA, NHL, NBA, NFL and other such organizations take a much more comprehensive view these days of the range of possible sponsorship (official or ambush) opportunities surrounding a given event. Their rules and agreements are more carefully drafted to foreclose possible ambush opportunities.

Careful drafting worked in favor of MasterCard in MasterCard International Inc. v. Sprint Communications Co., 30 U.S.P.Q.2d 1963 (S.D.N.Y. 1994). The credit card company succeeded in obtaining an injunction to prevent Sprint from distributing more than 100,000 telephone calling cards bearing the “World Cup '94″ trademark. ISL Football gave MasterCard (as an “Official Sponsor”) the exclusive right to place the “World Cup” mark on “[a]ll card based payment and account access devices … ” ISL Football also gave rights to local organizing committees (“ LOCs”) to contract with corporations to serve as “Official Partners” and to use the “World Cup” marks. However, the agreements between ISL Football and the LOCs specifically provided that ” … the OFFICIAL PARTNERS shall not have the right to use the MARKS on any card-based payment and account access devices … ” and further, that “ LOC shall not grant … rights to OFFICIAL PARTNERS … which infringe upon the rights of OFFICIAL SPONSORS … ” Id. at 1964.

Sprint became an Official Partner and the exclusive telecommunications carrier of the 1994 World Cup, with the right to use the “World Cup” marks. Sprint proceeded to distribute more than 100,000 telephone calling cards bearing the “World Cup” mark. MasterCard sued, requesting a preliminary injunction premised upon violation of Section 43(a) of the Lanham Act, 15 U.S.C. Section 1125(a). MasterCard alleged that Sprint's use of the “World Cup” marks on calling cards infringed upon its exclusive rights to use the “World Cup” marks with “card-based payment and account access devices,” and constituted false advertising under Section 43(a). The court agreed:

Here, Sprint wishes to use the World Cup marks to convey to the world the false impression that its use of the marks on calling cards is officially sanctioned by the World Cup Organization. Clearly, that is not the case, and MasterCard, which has the exclusive right to use the mark for such purposes, is entitled to enjoin this deceptive use. Id. at 1966.

Themed Advertising and Promotions

A common ambush strategy involves creating an advertising campaign or promotion that expresses a theme associated with the target event, without ever referring to the event by using official marks, names or other proprietary indicia. For example, in one of only a handful of fully adjudicated cases in this area over the last 20 years, the NHL sued Pepsi-Cola Canada Ltd. in Canada when Pepsi ran a promotion titled “The Diet Pepsi $4,000,000 Pro Hockey Playoff Pool.” NHL v. Pepsi-Cola Canada, Ltd, 92 D.L.R.4th 349 (B.C. 1992). Although the NHL granted exclusive soft drink sponsorship rights to Coca-Cola, they did not include the exclusive right to advertise soft drinks during televised broadcasts of NHL games. Pepsi secured the right to advertise during televised “Hockey Night in Canada” games and used its commercials to promote a hockey playoff pool contest. Pepsi did not use NHL or team trademarks, but instead referred to the city names associated with each NHL team. The NHL argued that Pepsi's actions constituted passing off and interference with the NHL's business relationship with Coca-Cola. However, the court held that Pepsi's published disclaimers were sufficient to alleviate any consumer confusion, and that nothing in the agreement between the NHL and Coca-Cola obligated Pepsi as a third party to refrain from advertising in a manner which, ” … although aggressive, is not, by the law of Canada, unlawful.” Id. at 369

Another common tactic is to use event tickets as prizes in sweepstakes or other ambush promotions. In the only known litigation in this area, in 2001 the NCAA sued Coors Brewing Company in federal and then state court in Indiana for using NCAA game tickets as prizes in a sweepstakes promotion that would enable winners to attend the men's “Final Four” basketball games. Specifically, the NCAA alleged that Coors breached the terms of the revocable ticket license that appears on the back of NCAA tickets and in ticket application forms, and engaged in unfair competition. Coors admitted that the tickets were revocable licenses, but vigorously challenged the NCAA's ability to sue for breach of a revocable license. Instead, Coors argued that the NCAA's remedy was to revoke the tickets of the sweepstakes winners, something that the NCAA argued was in effect a “no-win remedy” because even if the NCAA could identify the winners among 45,000 ticket holders, it would suffer materially adverse publicity for ejecting them. The novel question of whether one can sue for breach of a revocable license remains unresolved, as the case settled on a confidential basis in May 2003 with Coors agreeing to pay an undisclosed amount to the NCAA.

Sponsoring a Simultaneous Event

Major events like the Olympics, Major League Baseball's “All-Star” games, and the NFL's “Super Bowl” championship games generate scores of parties and related events in the host cities before, during and after the main event. Ambush marketers frequently host simultaneous events, both to present their messages to event attendees, and to secure occasional media coverage. For example, during the 1996 Olympic Games in Atlanta, thirsty sports fans walking back and forth from downtown Atlanta to the Olympic stadium were tempted to stop in a large tented beer garden hosted by the German brewer Warsteiner Beer. At the same time, Miller Brewing hosted a well-attended 18-day series of pop music concerts in Atlanta. Official beer sponsor Budweiser was perhaps understandably upset.

Ambush marketers also buy up local billboards, arrange to hang banners and signs on buildings, dispatch mobile billboard trucks and planes towing banners, and flood the area around an event with people handing out leaflets, coupons or samples, or people wearing clothing or carrying products, signs or accessories bearing the ambusher's marks.

The event organizers fight back by barring athletes, fans and workers from displaying non-sponsor marks on clothing or accessories, or carrying non-sponsor products at events or in event venues. Event organizers also attempt to secure exclusive rights in available local advertising media and space. Finally, event organizers pressure host cities to pass and enforce ordinances banning many of the above activities. For example, the city of Detroit, which recently hosted the 2005 MLB “All-Star” game and will host “Super Bowl XL” in February 2006, was asked to amend its existing 1999 ambush-thwarting ordinance to create a 1-mile “no-ad” zone around its stadiums. Ultimately, the no-ad zone (which does not apply to the NFL or MLB or their official sponsors) was not extended so far, and in a “push back” from local businesses, the revised ordinance relaxes certain prohibitions on displaying signs.

Conclusion

Ambush marketing remains a legally viable marketing strategy despite the efforts and increasing sophistication of event organizers and official sponsors. Would-be ambush marketers need to be aware of and avoid using event trademarks, trade names or other proprietary indicia. Properly worded and placed disclaimers can help to alleviate any confusion. Ambush marketers also need to be aware of applicable laws at the local, state and national level that regulate advertising activities. Finally, it is important for ambush marketers to understand what contract rights exist with respect to the target event, and in the words of Jerry Wexler, what rights are “up for grabs.”

“Ambush marketing,” a term coined by Jerry Wexler, manager of global marketing efforts for American Express in the 1980s, refers to the marketing activities of companies that manage to associate themselves, or their products or services, with high-profile events without paying to become an “official sponsor.” Wexler lucidly describes an ambush marketer's motivations in the 2002 “IEG Sponsorship Report” published by IEG, Inc.:

Given the escalating price of major sponsorships, it is hardly surprising that some companies willingly pass on the opportunity to sponsor and search instead for ways to compete in the sponsored space without bearing the onerous costs and the heavy burden of the scandals and other misadventures often associated with large, modern sponsored properties.

The point is that sponsors do not buy the rights to all avenues leading to the public's awareness of a given property, and more importantly, do not buy the rights to the thematic space in which the purchased property is usually the only one resident. In other words, all else other than that which is specifically purchased is up for grabs.

This article looks at several examples of ambush marketers seizing opportunities that are “up for grabs” as well as the corresponding legal strategies employed by event organizers and official sponsors to combat such activities. Overall, despite the best efforts of the various event organizers and official sponsors, ambush marketing cases are rarely actionable. Careful ambush marketers avoid using the trademarks, trade names, copyrights or other exclusive intellectual property rights associated with a given sponsored event, making it difficult to successfully assert infringement claims.

Sponsoring Media Coverage of an Event

In 1984 the International Olympic Committee (“IOC”) granted exclusive sponsorship rights in the film category to Fuji, but did so without also locking up related broadcast rights. As a result, rival film company Kodak was able to step in and sponsor the ABC television broadcasts of the Olympics, seizing upon an ancillary promotional opportunity that did not otherwise cause a breach in the agreement between the IOC and Fuji.

In a reversal of roles at the 1988 Olympics, the IOC granted official film sponsor status to Kodak, but left the door open and Fuji stepped in to aggressively sponsor the U.S. swimming team. In theory, Kodak could have paid a greater sponsorship fee to obtain total exclusivity among all Olympic events and teams, which the IOC could then have enforced through its rules and network of sponsorship agreements.

The IOC, the NCAA, NHL, NBA, NFL and other such organizations take a much more comprehensive view these days of the range of possible sponsorship (official or ambush) opportunities surrounding a given event. Their rules and agreements are more carefully drafted to foreclose possible ambush opportunities.

Careful drafting worked in favor of MasterCard in MasterCard International Inc. v. Sprint Communications Co., 30 U.S.P.Q.2d 1963 (S.D.N.Y. 1994). The credit card company succeeded in obtaining an injunction to prevent Sprint from distributing more than 100,000 telephone calling cards bearing the “World Cup '94″ trademark. ISL Football gave MasterCard (as an “Official Sponsor”) the exclusive right to place the “World Cup” mark on “[a]ll card based payment and account access devices … ” ISL Football also gave rights to local organizing committees (“ LOCs”) to contract with corporations to serve as “Official Partners” and to use the “World Cup” marks. However, the agreements between ISL Football and the LOCs specifically provided that ” … the OFFICIAL PARTNERS shall not have the right to use the MARKS on any card-based payment and account access devices … ” and further, that “ LOC shall not grant … rights to OFFICIAL PARTNERS … which infringe upon the rights of OFFICIAL SPONSORS … ” Id. at 1964.

Sprint became an Official Partner and the exclusive telecommunications carrier of the 1994 World Cup, with the right to use the “World Cup” marks. Sprint proceeded to distribute more than 100,000 telephone calling cards bearing the “World Cup” mark. MasterCard sued, requesting a preliminary injunction premised upon violation of Section 43(a) of the Lanham Act, 15 U.S.C. Section 1125(a). MasterCard alleged that Sprint's use of the “World Cup” marks on calling cards infringed upon its exclusive rights to use the “World Cup” marks with “card-based payment and account access devices,” and constituted false advertising under Section 43(a). The court agreed:

Here, Sprint wishes to use the World Cup marks to convey to the world the false impression that its use of the marks on calling cards is officially sanctioned by the World Cup Organization. Clearly, that is not the case, and MasterCard, which has the exclusive right to use the mark for such purposes, is entitled to enjoin this deceptive use. Id. at 1966.

Themed Advertising and Promotions

A common ambush strategy involves creating an advertising campaign or promotion that expresses a theme associated with the target event, without ever referring to the event by using official marks, names or other proprietary indicia. For example, in one of only a handful of fully adjudicated cases in this area over the last 20 years, the NHL sued Pepsi-Cola Canada Ltd. in Canada when Pepsi ran a promotion titled “The Diet Pepsi $4,000,000 Pro Hockey Playoff Pool.” NHL v. Pepsi-Cola Canada, Ltd , 92 D.L.R.4th 349 (B.C. 1992). Although the NHL granted exclusive soft drink sponsorship rights to Coca-Cola, they did not include the exclusive right to advertise soft drinks during televised broadcasts of NHL games. Pepsi secured the right to advertise during televised “Hockey Night in Canada” games and used its commercials to promote a hockey playoff pool contest. Pepsi did not use NHL or team trademarks, but instead referred to the city names associated with each NHL team. The NHL argued that Pepsi's actions constituted passing off and interference with the NHL's business relationship with Coca-Cola. However, the court held that Pepsi's published disclaimers were sufficient to alleviate any consumer confusion, and that nothing in the agreement between the NHL and Coca-Cola obligated Pepsi as a third party to refrain from advertising in a manner which, ” … although aggressive, is not, by the law of Canada, unlawful.” Id. at 369

Another common tactic is to use event tickets as prizes in sweepstakes or other ambush promotions. In the only known litigation in this area, in 2001 the NCAA sued Coors Brewing Company in federal and then state court in Indiana for using NCAA game tickets as prizes in a sweepstakes promotion that would enable winners to attend the men's “Final Four” basketball games. Specifically, the NCAA alleged that Coors breached the terms of the revocable ticket license that appears on the back of NCAA tickets and in ticket application forms, and engaged in unfair competition. Coors admitted that the tickets were revocable licenses, but vigorously challenged the NCAA's ability to sue for breach of a revocable license. Instead, Coors argued that the NCAA's remedy was to revoke the tickets of the sweepstakes winners, something that the NCAA argued was in effect a “no-win remedy” because even if the NCAA could identify the winners among 45,000 ticket holders, it would suffer materially adverse publicity for ejecting them. The novel question of whether one can sue for breach of a revocable license remains unresolved, as the case settled on a confidential basis in May 2003 with Coors agreeing to pay an undisclosed amount to the NCAA.

Sponsoring a Simultaneous Event

Major events like the Olympics, Major League Baseball's “All-Star” games, and the NFL's “Super Bowl” championship games generate scores of parties and related events in the host cities before, during and after the main event. Ambush marketers frequently host simultaneous events, both to present their messages to event attendees, and to secure occasional media coverage. For example, during the 1996 Olympic Games in Atlanta, thirsty sports fans walking back and forth from downtown Atlanta to the Olympic stadium were tempted to stop in a large tented beer garden hosted by the German brewer Warsteiner Beer. At the same time, Miller Brewing hosted a well-attended 18-day series of pop music concerts in Atlanta. Official beer sponsor Budweiser was perhaps understandably upset.

Ambush marketers also buy up local billboards, arrange to hang banners and signs on buildings, dispatch mobile billboard trucks and planes towing banners, and flood the area around an event with people handing out leaflets, coupons or samples, or people wearing clothing or carrying products, signs or accessories bearing the ambusher's marks.

The event organizers fight back by barring athletes, fans and workers from displaying non-sponsor marks on clothing or accessories, or carrying non-sponsor products at events or in event venues. Event organizers also attempt to secure exclusive rights in available local advertising media and space. Finally, event organizers pressure host cities to pass and enforce ordinances banning many of the above activities. For example, the city of Detroit, which recently hosted the 2005 MLB “All-Star” game and will host “Super Bowl XL” in February 2006, was asked to amend its existing 1999 ambush-thwarting ordinance to create a 1-mile “no-ad” zone around its stadiums. Ultimately, the no-ad zone (which does not apply to the NFL or MLB or their official sponsors) was not extended so far, and in a “push back” from local businesses, the revised ordinance relaxes certain prohibitions on displaying signs.

Conclusion

Ambush marketing remains a legally viable marketing strategy despite the efforts and increasing sophistication of event organizers and official sponsors. Would-be ambush marketers need to be aware of and avoid using event trademarks, trade names or other proprietary indicia. Properly worded and placed disclaimers can help to alleviate any confusion. Ambush marketers also need to be aware of applicable laws at the local, state and national level that regulate advertising activities. Finally, it is important for ambush marketers to understand what contract rights exist with respect to the target event, and in the words of Jerry Wexler, what rights are “up for grabs.”