Up for the cup: ambush marketing in Brazil

After hosting the FIFA 2013 Confederations Cup this year, Brazil is now finalising preparations to host one of the world’s biggest sporting events, the FIFA 2014 World Cup. Expecting well over three billion viewers, event organisers and their official sponsors are increasingly concerned with attempts to draw the public’s attention towards any unofficial trademarks.

The Brazilian World Cup Law—Law No. 12.663—has introduced strict rules in order to protect rights holders from any unlawful marketing strategies, including ambush marketing.

As most readers will know, ambush marketing is “a practice whereby a person, often a competitor, intrudes upon public attention surrounding an event thereby deflecting attention towards itself and away from a sponsor”. In other words, a non-sponsor seeks to associate its image with the goodwill of an event, without paying sponsorship fees.

Over the years, marketers have proved to be extremely creative, exploiting the thin line between what is legal and illegal, and have consequently pushed organisers to the edge in order to protect their rights.

Based on the fact that more than 90 percent of the event’s revenue is directly related to advertising and the sale of sponsoring slots, event organisers were assured extensive protection over their rights during the World Cup in Brazil, which are based on IP and competition law rights and provisions. This is because allowing non-sponsors to ambush public attention through marketing strategies reduces the value of sponsorship and, consequently, reduces income, which puts the event at risk.

However, although the Brazilian World Cup Law aimed to empower event organisers to liquidate any possibility of undue association, its large scope of protection created a grey area when it established a broad definition of ambush marketing practices, which were also deemed as crimes, as seen below:

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Article 32: To promote trademarks, products or services aiming at obtaining economic advantages by means of direct or indirect association with the Events or the Official Symbols, not authorized by FIFA or a person indicated by the same, leading third parties to believe that such products or services are approved, authorized or endorsed by FIFA. Penalty: detention from three months to one year or a fine.

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Article 33: Exposing trademarks, businesses, establishments, products, services or promotional activities, not authorized by FIFA or a person indicated by the same, attracting in any way public attention to the occurrence of local events, aiming to obtain economic or advertising benefit. Penalty: detention from three months to one year or a fine.

In short, the law tends to prohibit any form of association, either directly or indirectly, with the World Cup and its official symbols.

Also, the following requirements were established in order for an unlawful ambush marketing practice to be recognised: (i) lack of consent or authorisation from the organisers; (ii) attempt to obtain undue economic or marketing advantage; and (iii) diverting consumers’ attention inducing them to believe that the trademark, business, product or service is in any way connected with the event.

It is noticeable that the World Cup Law has created an exceptionally large scope of protection against any unauthorised use of terms and elements that could be associated with the event. However, even event organisers agree that the extent of their rights cannot encompass all kinds of associations with the World Cup, since it also is considered to be a major cultural and social event. As such, merchandising items with general football terms or Brazil-related terms or even national colours do not necessarily represent an infringement.

Nevertheless, in view of this scenario, some of the World Cup Law’s provisions are now being contested, since the scope of its protection established very strict rules to safeguard the event organisers’ rights, which could bar non-sponsors to freely compete in the market during the event.

When weighing event organisers’ and sponsors’ rights, as assured by the World Cup Law, with the fundamental principles of the Brazilian Federal Constitution such as free enterprise and free competition, it is possible to find spaces in which marketers may be allowed to operate without their campaigns representing a violation of rights.

In this sense, unless marketers reproduce official symbols, trademarks, words, imagery, references or any other elements that undoubtedly create a link with the World Cup, an association by means of generic and common terms would theoretically be allowed, since these are non-proprietary and belong to the public domain. In any event, a case-by-case analysis will be required.

Regarding this issue, it is interesting to note an existing duality concerning the protection assured by the World Cup Law, especially regarding competition law. As mentioned, anti-ambush marketing provisions are based on unfair competition, as it is considered that non-sponsors would be taking advantage of the investments and efforts made by another person in order to gain financial, commercial or marketing benefit. However, if the protection against ambush marketing is proved to be abusive, it will represent an act against fair competition itself.

Accordingly, by preventing other parties from practising legitimate rights, such as the right to free enterprise and free competition, event organisers and official sponsors can be made liable for infringement of the economic order, when the market economy’s structure is affected.

That is to say that stringent ambush marketing rules may, if applied unreasonably, jeopardise free competition, granting event organisers the means to create a monopoly. Accordingly, while on one hand violation provoked by non-sponsors represents an act of unfair competition, on the other the abuse of these new laws and the right they create will infringe fundamental rights on which the economic order is based.

It is important to stress that event organisers and sponsors have legitimate rights to protect their investments against third parties that wish to take advantage of the event’s goodwill without having submitted any form of contribution.

However, considering that the World Cup is also a major cultural and social event, which justifies the massive public investment from the government, third party rights must be equally respected. Abusive anti-ambush marketing rules may negatively affect the market and not only damage non-sponsors, but the consumer public, who has the right to enjoy the conditions of a fair market.

The ambiguity concerning ambush marketing has yet to be analysed by Brazilian courts, and little discussion or study to this effect has been seen.

The fact is that it is still necessary to see how this plays out in Brazil. However, with massive sporting events coming to Brazil in the next few years, and considering that huge opportunities will be available, expectations are incredibly high and players should start to warm up before playing in the game.

Robert Daniel-Shores is a lawyer at Daniel Advogados. He can be contacted at:
robert.daniel-shores@daniel.adv.br