Ambush marketing: traders beware!

By Miriam Stiel
Competition, Consumer & Regulatory Cyber Data & Privacy Disputes & Investigations Healthcare Intellectual Property Patents & Trade Marks

In brief

Everyone knows the famous adage that 'the enemy of my enemy is my friend'. But can the friend of my friend be my enemy? In the context of ambush marketing, the answer can be yes. Associate Julia Kovarsky explains.

What is ambush marketing?

Ambush marketing is a tactic used by a trader to associate themselves with an event or other trader without having any legitimate rights to such an association. By drawing a connection in the consumers' minds between themselves and (for instance) an event, a trader can capitalise on the brand value of the event without paying for official sponsorship. A common example of ambush marketing is the sale of branded merchandise outside a venue where an event is being held, where this merchandise has been produced without the consent of the event organiser. For the organiser, this cuts into their own ability to profit from merchandising and it devalues the sponsorship rights of the official sponsor.

What's happened?

While the practice of ambush marketing is sometimes associated with small operators of dubious character, it is also used as a tactic by big businesses. However, ambush marketing does not necessarily involve illegality. Sometimes it is about skating as close to the line as possible, without actually crossing it. Think Holden's Big Red Blimp at the 2006 AFL Grand Final, Bavaria beer at the 2010 FIFA World Cup, and Stella at the 2011 US Open, among others.

A recent example of an ambush marketing-style campaign is Telstra's 'Rio' themed advertising during the lead -up to the 2016 Olympic Games in Rio de Janeiro. Telstra had previously been the official sponsor of the Australia Olympic Committee (AOC), but in 2016 this role went to Optus. Telstra instead entered into a sponsorship agreement with Channel 7 (the official broadcaster of the Rio Olympics in Australia), which made it the 'official technology partner' of the official broadcasting partner of the Rio Olympic Games. Telstra then ran a campaign focused on Australians watching the coverage of the 2016 Olympics on their Telstra devices, and featured Peter Allen's well-known song 'I Go To Rio' in its television advertisements. The AOC naturally took issue with this, and commenced proceedings in the Federal Court alleging that Telstra had breached the Olympic Insignia Protection Act 1987 (Cth) (OIPA) and engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law (ACL) by suggesting a sponsorship-like connection between Telstra and the AOC or the Olympic Games. Telstra defended the proceedings on the basis that it was in fact just promoting its role as the official technology partner of Channel 7's coverage of the Olympic Games. Despite a finding by the primary judge that some of Telstra's advertisements were borderline', his Honour found against the AOC on both the OIPA and ACL claims, concluding that consumers would understand Telstra's advertisements to be promoting its sponsorship of Channel 7's Olympic Games coverage, rather than sponsorship of the Games or AOC. While acknowledging that reasonable minds may differ, the Full Court did not overturn the primary judge's decision on appeal.

Could this set a dangerous precedent? Would ordinary consumers necessarily be aware of the multiple layers of commercial arrangements if they saw an advertisement for the official grass sponsor of the official dairy farmer of the official milk sponsor of the AFL? (The milk sponsorship was a real thing, by the way).

What next?

Live sport is one of the few things Australians watch as it happens, meaning there are plenty of opportunities to have your business or product seen (both at the stadium and during the TV coverage). With the Rugby League World Cup just finished, the Ashes Tour starting, and the FIFA World Cup in Russia and the Winter Olympics in South Korea just around the corner, big sporting events could mean big business. Based on the Federal Court's latest decision, it would be wise to make sure that the sponsor of a sponsor (a friend of your friend) does not end up cutting your grass. Followings these tips for protecting against ambush marketing is a good start:

  • register your trade marks, as an important step in brand protection generally;
  • ensure tight controls in your sponsorship agreements, avoiding the 'sponsor of a sponsor' scenario as far as possible; and
  • be vigilant in checking what is happening in the market both in the lead-up to and during your event.