Ambush marketing in Russia: theory and practice16 December 2015
Russia has always been famous for its grand achievements in sports and entertainment. In 2014, Russia successfully hosted the Winter Olympic Games and Paralympic Games in the city of Sochi and took the first place in the all-round standings. In 2018, Russia is going to welcome the FIFA World Cup, which will involve 32 national football teams from around the globe.
When it comes to the question of sports and entertainment, many domestic and foreign businesses will clearly understand that sponsorship and marketing of an individual, a team and/or the event in general will be the most lucrative source of income. So, they are prepared to invest big money into the sphere of promotion to become the official event sponsors and conduct different commercial/advertising campaigns. But, what about their competitors or rivals? Will they be playing under the same rules in this arena? The question remains open.
What is ambush marketing?
Ambush marketing is a type of marketing behaviour practised for the purpose of taking certain advantages and commercial benefits of the profile of an individual, team or event without any licence, partnership or sponsorship. Usually, ambush marketing occurs at sporting events and tends to be quite an efficient tool for brand owners that are seeking to give the overall impression to consumers that they are somehow licensed or sponsored by the authorised committees of such events. Ambush marketing can be a deliberate or non-deliberate attempt to create unjustified commercial association with a sporting event.
Ambush marketing is not a recent phenomenon. In the past, it consisted mainly of giving away promotional items or free trips to different events. However, many campaigns which are practised nowadays by ambush marketers to suggest sponsorship or partnership involvement have become more refined. These may include, inter alia, sponsoring individual participants of an event, purchasing TV and radio slots during the event, launching ‘hot’ commercials and adverts right before the event, and placing billboards displaying the ambushed business name or brand at some locations near the sites of the event.
Various examples of ambush marketing campaigns have been seen at the Olympic Games, FIFA World Cup, Wimbledon Championships, and the Ryder Cup. Specifically, at the 1984 Olympics in Los Angeles one company purchased extensive advertising during TV broadcasts of the games, while another company built huge murals near Los Angeles Coliseum displaying its brand and several sportspeople wearing sports clothes with the brand.
At the 1994 Lillehammer Winter Olympics American Express released TV commercials featuring a strap line hitting its direct competitor Visa. At the 1996 Atlanta Olympics, another company handed out its branded flags for fans to wave at cameras. The same company also bought up all the outdoor poster sites in Atlanta and even set up its own village next to the official Olympic sponsors’ village. At the Winter Olympics in Salt Lake City in 2002, another company sponsored most of the ice hockey teams without sponsoring the games themselves. In 2005, event organisers at Wimbledon prevented spectators from carrying into the Wimbledon grounds bottles of water branded with Palmolive advertising that were given to them for free at the entrance. At the 2006 World Cup, FIFA officials forced Dutch spectators to remove their orange lederhosen advertising a beer brand, leaving them to watch the match in their underwear. This attempt was repeated at the 2010 World Cup, when the beer company arranged for 36 photogenic women to enter one of the matches wearing branded orange mini-dresses. The betting chain, Paddy Power, was forced to remove a 270ft unofficial promotional sign from just outside the boundary of Celtic Manor Golf Course in Wales during the 2010 Ryder Cup1.
How does Russian law treat these kinds of activities from the legal perspective? Russian laws do not contain any legal definition of ambush marketing, nor do they provide express provisions prohibiting such practice. At the same time, there are quite a few pieces of international and national legislation allowing lawyers and practitioners to deal with this issue. Below is a summary of relevant laws and regulations that may be applied.
IP protection and enforcement are primarily governed by the Civil Code of the Russian Federation (part IV) (Law no. 230-FZ) dated December 18, 2006 (as amended), which became effective in 2008. According to the fundamental provisions of this code, the exploitation of copyright, designs, trademarks and other forms of IP must be approved by the respective IP owner. Unauthorised use of IP, unless such use is regarded as ‘fair’ by the law or ‘lawful’ under the doctrine of exhaustion of IP rights, is not allowed. Failure to comply with these basic principles of IP protection can lead to administrative, civil and criminal liabilities as well as sanctions.
In most practical situations, ambush marketing campaigns do not involve pure exploitation of third parties’ copyright, designs, trademarks or other forms of IP. Ambush marketers simply refer to their own brands, designs, products and technologies, or the events in general, doing this in a rather creative and ingenious manner. Therefore, the issue of ambush marketing will be generally analysed and examined from the position of possible IP infringement as well as other legal angles, such as those related to advertising, competition, and sports legislation (where applicable).
The Federal Law of the Russian Federation (Law no. 38-FZ) ‘On Advertising’ dated March 13, 2006 (as amended) is the main piece of legislation for the advertising sector in Russia. According to article 5(1) of the referenced law, every advertisement must be fair and authentic. False advertising, including of the IP rights and official symbols of state or international organisations, is not allowed. Unfair advertising, including the placement of adverts that tarnish the goodwill or reputation of the competitor and/or the placement of adverts which represent the act of unfair competition, is also prohibited and may be enforced in accordance with the provisions of the law. In practice, ambush marketing campaigns will be reviewed not only from the advertising perspective, but from the standpoint of competition as well.
Article 10bis(2) of the Paris Convention dated March 20, 1883 (as amended) reads that any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition. In particular, the following shall be prohibited under the rules of the Paris Convention:
- All acts that create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities of a competitor;
- False allegations in the course of trade that discredit the establishment, the goods, or the industrial or commercial activities of a competitor; and
- Indications or allegations the use of which in the course of trade is liable to mislead the public over the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity of the goods.
Russia is a signatory to the Paris Convention, so the above provisions will usually be applied against ambush marketers.
In addition, Federal Law of the Russian Federation (Law No. 135-FZ) ‘On the Protection of Competition’ (the ‘Competition Law’) dated July 26, 2006 (as amended) bolsters the protection against unfair competition in Russia. According to articles 14.4 to 14.6 of the Competition Law, misleading consumers over the nature, method and place of manufacture, consumer characteristics, quality and quantity of goods, or the manufacturer of goods is not allowed. The sale, exchange or other marketing of goods, if they are the results of intellectual activity (eg, copyright) or have been illegally used, are also prohibited.
In most practical cases, unauthorised marketing is dealt with in Russia merely through the described forms of protection against bad-faith market participants, where the claimant will have to prove that:
- It has established goodwill or reputation over its business image or brand (as applicable);
- It has suffered or is likely to suffer damage; and
- The respondent (ie, marketer) has made a misrepresentation which has led to confusion among consumers, or the respondent has marketed the goods bearing unlawfully affixed IP (eg, marks, names or logos).
Also, in certain cases, ambiguous behaviour of ambush marketers will be analysed from the position of unfair competition in conjunction with standard IP infringement and unfair advertising.
Unfair competition is prosecuted by the Federal Antimonopoly Service (FAS)2 and its territorial divisions in Russia that are empowered to make on-site checks, issue binding orders and resort to fines in the event of breach of the Competition Law and other laws (eg, the Advertising Law).
The issues related to the Sochi Winter Olympic Games and Paralympic Games, including any kind of marketing, are currently not of practical significance, since the games were actually held and closed in 2014. At the same time, the general provisions of law related to the Olympic Games are still effective and may be applied accordingly.
Specifically, Federal Law of the Russian Federation (Law No. 310-FZ) ‘On the organisation and holding of the XXII Winter Olympic Games and XI Winter Paralympic Games of 2014 in the city of Sochi, on the development of the city of Sochi as a mountain climate health resort, and on amending certain legislative acts of the Russian Federation’(the ‘Olympics Law’) dated December 1, 2007 (as amended) has consolidated the general provisions on IP enforcement, advertising law and protection against unfair competition.
According to article 7(2) of the Olympics Law, if the use of the Olympic and/or Paralympic symbols (such as Олимпийский, Олимпиада, Сочи 2014, Olympic, Olympian, Olympiad, Olympic Winter Games, Olympic Games, Sochi 2014, Паралимпийский, Паралимпиада, Paralympic, Paralympian, Paralympiad, Paralympic Winter Games, Paralympic Games, and words and phrases derived from these, the Olympic symbol, fire, torch, flag, hymn, device, as well as the emblems, symbols and similar signs of the Olympic and Paralympic Games) for designation of legal entities and individual entrepreneurs, manufactured products, works done, services provided by them (in company names, trade names, trademarks, service marks, appellations of origin), as elements of domain names and otherwise, creates the impression that the respective entities are involved in the Olympic and Paralympic Games, they are allowed only on execution of an agreement with the International Olympic Committee (IOC) or organisations which have been authorised by it.
Further, according to article 8(1) of the Olympics Law, the following shall be considered as unfair competition and may be therefore prosecuted under the Competition Law and other related legislation:
- The sale, exchange and other marketing of goods, if the Olympic and/or Paralympic symbols have been illegally used; and
- Misleading consumers, including creating a false impression of the connection (association) between the manufacturer/advertiser with the Olympic and/or Paralympic goods, including in the capacity of a sponsor.
The actions of sponsors, partners and licensees that are bound by the relevant agreements with the IOC, International Paralympic Committee or Organising Committee of Sochi 2014 shall not be treated as unfair competition.
Finally, according to article 6 of the Olympics Law, an advertisement that contains non-authentic information on the connection (association) between an advertiser with the Olympic and Paralympic Games, including in the capacity of a sponsor, as well as on the approval by the IOC, International Paralympic Committee, Russian Olympic Committee, Russian Paralympic Committee or Organising Committee of Sochi 2014 of the advertised product characteristics, shall be deemed false advertising.
Some of the above rules were successfully tested in practice during the period of the Sochi Olympic Games. As a result, many ambush marketers were held liable for infringement, and quite a few situations turned into case law.
At the same time, there were some unexpected and amusing instances which ended quite peacefully. One of these was a case3 involving cigarette lighter brand Zippo. As a prelude to the Olympics in Sochi there was an Olympic torch relay where famous sportspeople and other personalities carried the torch from one city to another. On one of these occasions a gust of wind unexpectedly extinguished the fire of the relay runner. The relay was protected by guards, so one of them saved the situation by quickly re-lighting the torch. By chance, he held out a Zippo lighter and the trademark was caught by a TV camera. Zippo immediately seized on the opportunity and launched a campaign with a slogan called “Zippo saves Olympics” (#ZippoSavesOlympics).
The importance of the accident was accentuated by previous statements of the organisers, which had declared that the torches were so reliable that they could stay alight under water. The case ended peacefully after talks between Olympics officials with Zippo. The case, however, stayed in the memory of the Russian people.
According to one media report4, Red Bull ‘won gold’ for the best ambush marketing campaign in Sochi as it was actively placing its brand on sports apparel, even though the company was not an official sponsor.
Case law and court practice
As follows from the following cases, in a majority of situations Russian courts have decided against companies and ambush marketers by bringing them to justice and enjoining them from committing further activities using the relevant provisions of the Russian law.
- In the Abrau-Durso case (ref: А32-20249/2008-19/322-32АЖ) considered in 2009, the Russian Commercial Court found, on the basis of the complaint of the territorial division of FAS, Russian company Abrau-Durso liable for selling and advertising bottles of Champagne bearing certain elements of Olympic symbols and the name Sochi 2014 without any authorisation or licence from the Russian Olympic Committee (or other Olympics officials);
- In the Bank of Moscow case (ref: КА-А40/13879-09), also considered in 2009, the Russian management company affiliated with the Bank of Moscow was fined ₽7 million ($111,000) by the Commercial Court for offering and advertising the open unit investment fund called Olympic Avenue–Sochi 2014 all over Russia without any authorisation or licence from the Russian Olympic Committee (or other Olympics officials);
- In the Chevrolet Olympic White case (ref: А40-105222/11-144-932) resolved in 2012, the Commercial Court enjoined the Russian subsidiary of General Motors from selling and advertising Chevrolet-branded cars painted all over in the ‘Olympic White’ colour without any authorisation or licence from the Russian Olympic Committee (or other Olympics officials) and fined the company ₽23 million; and
- In the Olympic Plaza case (ref: А27-3978/2014) resolved in 2015, the Russian IP Court held on the basis of a complaint by the territorial division of FAS that the Russian company Olympic Plaza was liable for displaying and advertising a trade centre and hotel bearing the name Olympic Plaza without any authorisation or licence from the Russian Olympic Committee or other Olympics officials.
In yet another case related to bad faith trademark registration (ref: СИП-363/2013), the Russian IP Court held: “The activities of the owner of trademark ‘Vasheron’ contradict the provisions of article 10bis of the Paris Convention as well as general requirements associated with honesty, reasonableness and fairness, because they lead to ‘parasitic’ competition representing the use of commercial value of the other person’s trade identity and business reputation for the purposes of inviting the public attention to marketed goods and/or services.”
There is also an alternative court practice towards the issue. For example, in the Tekhnograd case (ref: A56-37558/2010) resolved in 2011, the Commercial Court disagreed with the territorial division of FAS, which had claimed that the images of goods sold and advertised by the Russian company Tekhnograd were arranged in a way so as to create an impression of the official symbol of the 2010 Vancouver Winter Olympic Games. The court held that FAS failed to prove a likelihood of confusion among the respective consumers and therefore denied that there was an association between Tekhnograd and the official organiser of the Vancouver games.
Ambush marketing may have certain damaging effects. Not only does it affect the ambushed sponsors, but it may also affect the integrity of the sporting event and the official organisers, who are playing fair. In the end, the whole entertainment process may be undermined.
Russian laws and practice do not stop in the face of sophisticated ambush marketing campaigns and continue to develop all the time. A lot of associated legal preparations have been made by the government and practitioners for the upcoming World Cup. The Federal Law of the Russian Federation (Law No. 108-FZ) ‘On preparation and holding in the Russian Federation of 2018 FIFA World Cup, 2017 FIFA Confederations Cup and on amending certain legislative acts of the Russian Federation’ (the ‘World Cup Law’) dated June 7, 2013 has gone into force in Russia.
Article 20 of the World Cup Law, which was designed to secure fair competition in the course of the event, recognises the following activities as unfair competition:
- Sale, exchange or other marketing of goods, works or services, if the official symbols of the sport event, or identical or confusingly similar signs, or altered symbols of the sport event, are used;
- Any type of marketing (including promotion of goods, works, services) for the purpose of creating an association with FIFA and/or relevant events by use of the symbol of the sport event or otherwise (without permission from FIFA);
- Misrepresentation of consumers, including through creating a false impression of or connection (association) with FIFA or relevant events in the capacity of a sponsor, partner, assistant, co-organiser, agent, licensee, official supplier of goods, works, services or other capacity;
- Misrepresentation of consumers, including by creating a false impression of the approval, recommendation or certification by FIFA and/or the Organising Committee of Russia 2018 of goods, works, services, as well as of the connection of such goods, works or services with FIFA or relevant events;
- Preparation and/or holding for commercial purposes of mass events creating a false impression of them, as well as financing, including by way of sponsor assistance, of such events (without the official written permission of FIFA);
- Conducting, without the official written permission of FIFA, relevant events, or advertising and promotion campaigns, obtaining sponsorship aid, including if such activities are aimed at a target audience, including the owners of tickets and other documents granting the right to enter the premises of relevant events; and
- Use of tickets and other documents granting the right to enter the premises of relevant events for advertising purposes and for sweepstakes, contests, games, bets, advertising campaigns as well as inclusion of prices of tickets and other documents granting the right to enter the premises of relevant events into the list of tourist-related services, hospitality-related or other services (without the official written permission of FIFA).
Given that Russian law attaches much importance to fair play during the FIFA 2018 World Cup and other sporting events to be held in the future, all advertisers and companies wishing to promote their goods and services should pay special attention to respecting the rules introduced. Of course, Russian lawyers and practitioners should be of immediate legal assistance where necessary.