1 February 2010Trademarks

Top marks: Fifa's campaign against 2010 World Cup infringement

On June 11, a billion people will watch as the first soccer World Cup to be held in Africa kicks off. But while Mexico and South Africa will be focused solely on winning the opening game, for FIFA, the tournament organiser and soccer world’s governing body, there are other concerns.

The World Cup is big business. FIFA’s corporate partners include Adidas, Coca Cola, Visa, Sony, McDonald’s and Emirates, to name a few. They all have substantial stakes in ensuring they receive the best possible publicity from the event and, having paid FIFA for the privilege, will not be pleased to find other companies freeriding on the event’s profile.

As FIFA puts it: “FIFA rights holders will only invest in the 2010 FIFA World Cup if they are provided with this exclusivity for the use of the marks. If anyone could use the official marks for free and create an association with the 2010 FIFA World Cup, there would be no reason to become a FIFA rights holder.”

Given that the 2006 World Cup in Germany cost about €500 million to organise, FIFA can ill-afford to lose revenue. So, the argument goes, no IP protection would mean no sponsorship, which would mean no funding, which would mean no World Cup. FIFA has historically pursued an aggressive policy in defending its rights. The organisation has enjoyed the support of the various host nations in this struggle.

Indeed, one of the conditions that a country bidding to host the event must fulfil is guaranteeing certain levels of IP protection.South Africa’s government has obliged by designating the World Cup a ‘protected event’. This means that for the duration of the protection, no one may take advantage of trademarks or give the impression of a commercial association with the World Cup without prior permission from FIFA.

It is not just run-of-the-mill trademark infringement that companies need to be careful of. Under its protected status, the World Cup benefits from the provisions of Section 15A of the Merchandise Marks Act, which provides that: “No person may use a trade mark...in a manner which is calculated to achieve publicity for that trade mark and thereby achieve special promotional benefit [without authorisation].”

This means that companies may not even use their own, non-infringing trademarks for the protected period if they intend to derive “special promotional benefit”. Of course, the country itself has every reason to hope the tournament is a success. Hotels will be fully booked, bars will be full, and restaurants, transport services, nightclubs and shops can all expect a bumper few months, irrespective of whether they have a commercial association with FIFA.

Indeed, the organiser is happy to acknowledge other companies’ right to make money because of the event: “[T]here are many ways an entity can benefit from the 2010 FIFA World Cup without using the marks or commercially associating itself with it,” FIFA says. “The opportunities range from becoming a service provider or supplier to benefiting from the overall economic impact of the FIFA World Cup.”

It seems straightforward, and certainly South Africa’s government should know about this sort of event. In 1995, it hosted the Rugby World Cup, which South Africa won, while in 2003, it co-hosted cricket’s premier tournament. Last year, it hosted soccer’s Confederations Cup.

But things aren’t always as simple as they seem. A handful of cases have already gained publicity in the country, as companies and courts try to find out exactly where they stand. FIFA’s trademarks are broad, arguably descriptive and in fairly common use in the media.

"It's not just run-of-the-mill trademark infringement that companies need to be careful of."

Marks such as ‘South Africa 2010’, ‘Soccer World Cup’ and ‘World Cup South Africa’ could easily be infringed by companies that aren’t aware of their obligations and haven’t taken the proper legal advice. Companies may accidentally find themselves infringing the marks, or they may deliberately sail close to the wind in order to gain some benefit from the event. Either way, FIFA takes a dim view of unauthorised use.

Herman Blignault, partner at Spoor & Fisher in Pretoria, has advised FIFA in relation to its trademarks for the World Cup. “FIFA has a vigilant approach in the way they deal with these cases,” he says. “If there is an unauthorised party, they won’t hesitate to approach the courts. It is expected of them to have this approach.”

To date, FIFA has brought several cases against businesses for ambush marketing and trademark infringement. Most have been settled, and just one has resulted in a reasoned court decision. Metcash, a large wholesaler and retailer of fast-moving consumer goods, released a line of lollipops under the ‘Astor 2010 Pops’ mark, in conjunction with the South African flag and pictures of soccer balls.

FIFA alleged that this amounted to unfair competition, as Metcash intended its product to be associated with the World Cup without permission. It also alleged passing-off and trademark infringement, though neither of those claims were argued in court, after FIFA chose to focus its argument on Section 15A.

Despite Metcash’s argument that its activity was protected by the freedom of trade provisions outlined in the constitution, the court backed FIFA, ordering Metcash to pay costs and cease the conduct. Kelly Thompson, partner at Adams & Adams in Pretoria, worked on the case for FIFA.

“The court found that Metcash’s conduct clearly fell within the ambit of Section 15A [of the Merchandise Marks Act],” she says. “FIFA certainly doesn’t have a monopoly on 2010. It was the combination of these numerals with the other elements that was problematic. Indeed, FIFA encourages people to organise generic football promotions, but the court found that, in this case, the facts were clear.”

Deon Bouwer, partner at Bouwers Inc, who represented Metcash in the case, disagrees. He remarks that though the client accepted and complied with the judgment in full, in his opinion, the judge “gave too wide an interpretation” of Section 15A and, specifically, the “special promotional benefit” requirement. The effect of this is “tantamount to an absolute prohibition” on marketing around the event.

On FIFA’s enforcement policy leading up to the 2010 World Cup, Bouwer says that, in his opinion, FIFA has been rather heavy-handed in its approach towards businesses that merely wish to benefit, in a legitimate manner and without using the FIFA trademarks, from the event. The extensive protection afforded by legislation, such as the Merchandise Marks Act, has assisted FIFA in the process, he continues.

FIFA brought the Metcash case as a civil matter, but the Merchandise Marks Act also contains criminal provisions. So far, there haven’t been any criminal cases related to ambush marketing for the World Cup, but that may change as the tournament draws nearer.

Because court proceedings (even applications for interim injunctions) are time-consuming, ambush marketing, counterfeiting and trademark infringement may all be better handled by the police once the tournament starts. Clearly, a delay of even a week waiting for an injunction during the tournament could be extremely damaging to FIFA and its partners.

What’s more, the sanctions outlined under the criminal provisions of the act should send a pretty clear signal to anyone hoping to make a fast buck on the back of the tournament. Offenders face fines of up to R5,000 (€470) and a prison sentence of up to three years. If that doesn’t get people thinking, nothing will.

FIFA confirms that it is “working hard in creating good on-site protection during the event”. There will be rights protection teams at all World Cup venues and “any ambush marketing activities will be spotted and handled immediately, with the co-operation of the local law enforcement authorities,” it says.

And it is not just large companies that need to be aware of their responsibilities. FIFA has shown that it won’t discriminate when it thinks someone is taking advantage. Eastwoods Tavern, a bar and restaurant located near Pretoria’s Loftus Versfeld stadium, which is a World Cup venue, put the words ‘World Cup 2010’ on the outside of the tavern without permission. It also put up banners featuring the flags of participating countries.

"There are no hard and fast rules on what will be acceptable and what won't."

Despite a request from FIFA to remove the signage, Eastwoods Tavern kept the material up. FIFA took it to court for trademark infringement, passing-off and unfair competition. The case was eventually resolved when the court granted FIFA’s requests for relief and the signs were removed, though Eastwoods didn’t argue the case.

While some commentators complained that FIFA was throwing its weight around against a company it knew didn’t have the resources to fight back effectively, others pointed out that Eastwoods was given ample opportunity to remove the material without going to court, but refused.

André van der Merwe, director at DM Kisch, says that FIFA has used “quite a heavy hand” in dealing with IP infringements. “In the Eastwoods Tavern case, you have to ask, ‘what do sports bars really do?’ They generally attract custom by screening sporting events. Eastwoods Tavern would not have been deriving special promotional benefit, and they’re not depriving FIFA, or its sponsors, of any income.

"In fact, they are arguably helping FIFA by promoting soccer generally and, more particularly, the World Cup event,” he says. He adds that the case is different from the one against Metcash, “because they were selling a commodity. FIFA or one of its sponsors might want to sell confectionery or something similar. That case is therefore more easily justified.”

FIFA is adamant that it is not a bully: “FIFA takes into consideration the size and nature of the infringer, and we always prefer an amicable approach, especially in cases where small local businesses are concerned. Before a case is forwarded to local counsel, we always try to contact the infringer directly, explaining the IP rules and FIFA’s rights, and kindly asking for the infringement to be stopped.”

It further explains: “Of the small number of cases in which FIFA has been forced to initiate formal legal proceedings, all but one have involved companies that can be considered large commercial enterprises.

"The only case where FIFA has initiated legal proceedings against a small company or individual was in the matter of a cancellation of a design registration. Unlike other countries, the laws of South Africa do not provide for such invalidation actions to be heard at the local patent office—the High Court is the only forum to hear such cases.”

So, if FIFA prefers to settle cases amicably, and companies don’t want to go to court for infringement, how best to let everyone know where the line is? Well, FIFA has produced a document outlining what it sees as some of the dos and don’ts for companies in danger of infringement. Though not a legal document, its Public Information Sheet should give a good idea of the kinds of usage FIFA believes are problematic.

Companies that feel the need to check their position by referring to that document should also take legal counsel, simply because there are no hard and fast rules on what will be acceptable and what won’t. Blignault of Spoor & Fisher sums it up: “What it boils down to is that you have to check the trademarks. No one owns the numeral ‘2010’, no one owns ‘football’, and no one owns ‘South Africa’. But in combination, you are treading on dangerous territory.”

So, if you think you might be in trouble, you probably are.

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