Harnessing IP to develop the Mexican playing field

Sports law may be relatively new in Mexico, but legal controversies, doping issues and even electoral disputes are providing the few sports law experts in the country with a ripe field for professional development.

In the last decade, Mexican sports federations, authorities, clubs and professional athletes from less popular sports have slowly—and on several occasions, painfully—recognised the need for sports law experts to represent and protect their interests.

Recent stories of success in sports such as rowing or cycling have pushed the respective sports federations to seek professional assistance to cope with the new legal responsibilities arising from slightly bigger state funds and enhanced scrutiny from athletes, the public and international sports authorities.

In a country of 112 million inhabitants eager for stories of sports heroes, success in sports other than soccer has been quite unusual, exposing the athletes and their sports federations to a wider audience, and to legal issues for which most federations are not yet fully prepared.

Massive public exposure attracts the attention of companies from every field of industry, interested in associating their brands and products with the inherent values of the sport, the federation and the struggle and effort of the athlete to reach his or her goals.

“lookIng for aDDItIonal revenue SourceS anD MeanS to generate value froM eventS, aSSocIatIonS, clubS anD athleteS, the MeXIcan cyclIng feDeratIon haS recently applIeD for traDeMark regIStratIon.”

Intellectual property is not a familiar topic to athletes, sports federations or associations in Mexico. More often than not, organisations’ budgets are stretched thin to meet the needs of their competitors, specialised staff, facilities, travel accommodation and miscellaneous expenses, leaving other ‘non-essentials’ out of the equation.

It is fairly common to find sports federations whose trademark is not yet registered before the Mexican Institute of Industrial Property, not to mention their major events and competitions.

Nonetheless, sports federations, associations, clubs and athletes alike are beginning to acknowledge the true potential of their IP and are taking important steps towards generating value through licensing, sponsoring and telecommunication deals.

Likewise, major sportswear and equipment suppliers are turning their attention to a wide range of sports that have hitherto been neglected by the public. After all, with a huge market available for business, major sporting events taking place in Mexico and successful athletes developing into top Pan-American and, possibly, Olympic contenders, several companies are seeking to make the most of the opportunity.

As a consequence, Mexico has experienced a surge in athletic apparel and sporting goods bearing the trademarks for different sports federations. The negotiation of sponsorship deals for sports events is becoming widespread for less mainstream sports, even those that do not have a federation to represent them, such as paintball.

The case of the Mexican Cycling Federation illustrates that the management of Mexican sports federations are beginning to take serious steps towards protecting their IP assets and are actively seeking to generate additional value and revenue.

Keeping the wheels spinning

Mexico has a long tradition in cycling. The Mexican Cycling Federation comprises cycling associations from almost every state of the country, as well as associations from universities and other institutions. The sport is widespread among people of all ages and social backgrounds; every association and some third parties hold major events and racing competitions to promote cycling in Mexico and to select state representatives for national competitions.

Every event or race has to be sanctioned by the Mexican Cycling Federation which, in turn, may offer financial support and, in all cases, technical assistance. However, it is up to the association or the interested third party to organise and cover all expenses related to the event. In most cases, the expenditures are covered by the association, the federation and the support of donors or eventual sponsors (usually without a written agreement).

National events are the responsibility of the federation, which by law has the obligation to promote and assist in the development of its discipline in Mexico. As a consequence, the federation has to take care of everything from food, lodging, government permits and rental of adequate facilities, referees, technical and administrative staff and prizes.

Looking for additional revenue sources and means to generate value from events, associations, clubs and athletes, the Mexican Cycling Federation has recently applied for trademark registration. In 2012, the goal is to reach sponsorship deals for all the major national events of the season, as well as licensing agreements with sportswear and equipment suppliers.

While we cannot deny that the generation of value from IP assets in Mexico is a common practice for mainstream sports such as football, baseball, car racing and some others, the majority of sports are just beginning to develop their potential.

The Mexican Cycling Federation is aiming to implement IP protection policies to its members, helping them to develop their trademarks and generating revenue to cover their expenses. The rationale is simple: strong trademarks and events will gather larger audiences, which in turn will appeal to both athletes and sponsors to make even bigger events with better organisation, competitors, facilities and staff, generating additional revenue for future projects and growth.

As a consequence, the federation is carefully analysing, from a commercial standpoint, the impact of its major events and races, developing in the process strong trademarks for each race and event. The protection of the trademarks for those events will be of the utmost importance, as well as the negotiation of licensing deals and sponsorship agreements.

The task at hand is not simple; drafting a licensing or a sponsorship agreement in Mexico is a complex and highly specialised task. Without adequate counselling, the agreement may be sufficient from an IP point of view, but issues that may arise at arbitration and/or litigation should also be carefully considered.

It should also be noted that every sports association has a particular set of rules which have to be in line with the bylaws of its federation. However, the associations are free to develop those bylaws into more specific regulations and, when the bylaws do not address particular issues, the association is entitled to deal with them as it sees fit.

Therefore, the drafting of licensing and sponsorship agreements requires expertise and specialisation of individuals with experience in both IP and sports law in Mexico.

Third party events

The Mexican legal framework in sports law allows third parties to hold events and/or races for lucrative purposes. However, all sporting events must obtain the approval of the corresponding sports federation, since the federation is legally considered as the highest technical authority in its respective sport.

“Due to the lack of protection of its IP assets, the federation is commonly faced with the sale of unauthorised and low-quality goods by third parties not even related to the event.”

While several federations are beginning to register their respective trademarks, the sanctioning of sporting events and/or races organised by third parties almost always includes the use of the federation’s logo by the organising party, usually without a licence agreement or even terms of use. Consequently, is not uncommon to find the logo of a federation being used indiscriminately by the organising committee in merchandise, souvenirs and in general.

Moreover, due to the lack of control and protection of its IP assets, the federation is commonly faced with the sale of unauthorised and low-quality goods by third parties not even related to the event, resulting in discredit for the federation, the organising party and the event itself.

Slowly, the federations are realising that their trademarks and the appropriate licensing of their IP assets constitute a new source of revenue they can use to fulfil their goals. More authorisations for an event or race are now issued with addendums including formal licensing agreements for the use of the federation’s logo, effectively seizing an opportunity to participate in the revenue generated by the event.

Separately, federations and third party organisers are negotiating licensing agreements with apparel and sports accessories companies. While the negotiations are usually made with local enterprises, the size of the audience and public exposure of the events is now attracting national, and even international, companies to participate as either licensees or sponsors.

For example, one of the biggest national events in cycling, The Telmex Tour, is being organised by a major telecommunications company in Mexico, La Vuelta. This is an example of coordination between the Mexican Cycling Federation and a third party organiser, with licensing agreements as the backbone of the event.

The future

Mexico has 84 sports federations, several of which require only a small push in the right direction to achieve their goals. The rest are on their way and will soon emerge as real driving forces in their own sport.

We have experienced first-hand that managers in the sports federations are discovering the true potential of their IP assets; they are getting used to protecting their trademarks, events, athletes and are actively looking for additional revenue sources and growth prospects.

In a field full of business opportunities, IP is seen by Mexican sports federations as a great tool for development and growth. Trademark registration, protection and anti-counterfeiting measures are being implemented to attract business partners, licensees and sponsors.

The Mexican market is big, diverse and eager to support its athletes and sports idols, who all have the potential to attract new talent to their respective sports and new members to a growing fan base.

Mexico is not yet able to provide every sports federation with a budget sufficient to fulfil the needs of its athletes and to offer opportunities for its youth to practise other sports. However, federations are beginning to discover new growth opportunities to achieve sustainability by harnessing the potential of their IP.