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June 11th, 2018
May/June Sports Industry News
Here's what's happening at the intersection of sports, marketing, and entertainment law as we head into Summer.
An Ambush in Russia
The world's most watched sporting event is only days away and marketers are readying activation for this year's FIFA World Cup in Russia - both official sponsors and non-sponsors. For non-sponsors seeking to associate themselves with the event, it's critical to understand the rules of the road as so-called "ambush marketing" laws vary. Like host nations of the past, Russia has also passed a law to address such activities: Federal Law of June 7, 2013 No. 108-FZ, which confirms that the existing offense of "unlawful trade" will be committed where any products or services are associated, directly or indirectly with FIFA or the World Cup without permission of FIFA. The law lists numerous triggers, including the use of a wide range of protected trademarks, conducting marketing that falsely suggests approval or certification by FIFA, and the use of tickets for marketing purposes. Violations could result in fines or even criminal liability. While this law does not extend to marketing campaigns in the United States, FIFA is able to use various trademark, copyright, and contract laws to enforce its rights here.
Non-sponsor marketers looking to stay on the right side of the line should consider the following:
1. Avoid using FIFA's official assets, which FIFA deems to include the following: (a) official event names such as FIFA, FIFA WORLD CUP, 2018 WORLD CUP; (b) frequently used nicknames, such as COPA 2018, MUNDIAL 2018, and MONDIAL 2018; (c) the official event emblems, trophies, mascot, and match ball; (d) the country or host city name and year, such as RUSSIA 2018 and MOSCOW 2018; and (e) the official typeface, posters, and designs for the Event.
2. Go generic. FIFA has specifically stated that "any generic football or country related images used without any of FIFA's Intellectual Property allow the public to support their teams without creating any unauthorized association" with the World Cup or FIFA.
3. Refrain from using too many World Cup-related but generic references. For example, prior to the 2014 World Cup in Brazil, FIFA issued a red card to travel company Decolar.com because its "Viva O Mundial" campaign allegedly misappropriated FIFA's rights when it featured the World Cup synonym "mundial," soccer ball artwork and the sale of travel packages to Brazilian cities that are hosting World Cup matches. The company, which never once mentioned the World Cup explicitly, was ordered to cease and desist immediately.
4. Be careful using national team or individual player references as well. These rights are not controlled by FIFA, but rights holders may bring similar claims - based on trademark, copyright, or right of publicity violations.
5. Finally, remember that these prohibitions apply to both traditional and social media. Tactics such as congratulatory Tweets, the use of FIFA-controlled terms as hashtags, and the use of imagery from the World Cup games in social posts could all pose problems for brands that do not have an affiliation with FIFA, a particular national team, or particular players.
All Bets Are On
In what is likely the most important decision for the sports industry in recent years (as we previously reviewed in depth), the Supreme Court struck down federal restrictions against sports betting by invalidating the Professional and Amateur Sports Protection Act of 1992 ("PASPA"). The Court's critical conclusion: "The legalization of sports gambling requires an im¬portant policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA regulate[s] state governments' regulation" of their citizens, New York, 505 U. S., at 166. The Constitution gives Congress no such power." As such, the majority of the Court found that while the federal government has the authority to regulate or prohibit sports betting, it did neither through PASPA.
The ruling opens the doors for States to approve and regulate sports betting, and in fact, the State of Delaware has already done so: on June 5, it launched the country's first full-scale sports betting operation outside of Nevada, drawing $322,135 on the first day.
Governing bodies, leagues, and teams have the right to use the names and images of athletes playing for those entities in marketing materials, typically as part of the collective team. Where an athlete has an endorsement with an advertiser that competes with the governing entity's sponsors, the athlete usually has the ability to prohibit the use of his or her name or image in the governing entity's competing marketing. These competing interests can lead to problems though.
For example, on the eve of the Egyptian national team's first entry into the World Cup since 1990, the Egyptian Football Association (the "FA") used the image of star striker Mohamed Salah on its official team plane - but in connection with sponsor WE telecom, among other sponsors. Salah, however, has an individual endorsement with Vodafone Egypt and was insulted that the FA would use his image without permission. The striker reportedly won his dispute with the FA, after "high level intervention" from the Egyptian government. This episode shows the delicate balance rights holders must strike between team rights and player rights when creating marketing materials.
In an interesting twist to the recent NCAA men's basketball scandal engulfing several schools, agents, and coaches, as well as sponsor adidas, Skechers USA sued the sportswear giant for false advertising and unfair competition under federal and California state law. The brand argued that adidas' alleged bribes to players cost Skechers USA and other footwear competitors who "play by the rules" a fair shot at having "trendsetting high school and college athletes seen in their products" and "unfairly bolster[ing] consumer perception of adidas' overall brand quality and image well beyond the basketball footwear market." While prosecutors have charged adidas executives with bribery and fraud, arguing that the federal government has been harmed as a result of federally subsidized schools admitting ineligible athletes, this suit raises the interesting question of whether a competing brand can be harmed based on the illicit activities of a rival.
Noted and Quoted.
Frankfurt Kurnit is honored to have been listed as a top firm for Advertising and Marketing, Media and Entertainment, and Copyright in the latest edition of The Legal 500.
The Ads Are Good Too
Yes, there will be numerous exciting games to be played over the next month...but don't just watch the World Cup action...also pay attention to those World Cup ads! Frankfurt Kurnit is proud to have assisted several clients with the production of World Cup ads.
Want to Learn More?
Christopher Chase will discuss Keys to Negotiating Sports Marketing Agreements at the upcoming ANA Members Only Conference on June 28 with Conal Berberich of NHL Enterprises.
Christopher Chase will moderate roundtables on Legal Issues in Sports Marketing and Media for Practical Law Institute on July 18. The roundtables will feature Tori Chami of American Express, Andy Latack of CAA Sports, Olivier Manigat of Heineken USA, and Clarence Nesbitt of Think450 / NBA Players Association.
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