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Ambush Marketing and How It Leads to Trademark Infringement

Can a non-sponsor of an event promote a certain product in such event? This is a legal issue which often does not receive the attention it deserves in third world countries like the Philippines. After all, when faced with major problems like poverty, lack of education, coupled with recurrent anomalies in the government, who would be thinking about depriving a struggling Juan[i] of his livelihood? But just as much as adapting to global standards has played a key role in making the country conducive to foreign investors, it is equally important to know about this concept which has slowly gained worldwide acceptance over the years.

This paper aims to discuss how ambush marketing can lead to trademark infringement by providing the applicable laws, the instances which lead to the promulgation of such rules and the good that these measures seek to promote.

For the orderly flow of the discussion, we shall address the following subtopics:

  1. What is ambush marketing?
  2. What is trademark infringement?
  3. How does ambush marketing lead to trademark infringement?
  4. What are the pertinent laws on the matter?
  5. What are the remedies that an injured party can avail of?
  6. Are there remedies accorded to trademark owners who do not have the benefit of trademark registration or whose applications for registration are still pending?

What is Ambush Marketing?

In the quest to minimize marketing costs and boost sales, business owners have resorted to various strategies without having to contract for expensive advertising services. While some have kept it subtle with schemes like instituting a rewards system for returning customers and offering discounts to those who buy in bulk, others have taken it to the next level of free-riding in unsponsored events. This is commonly referred to as ambush marketing.

Ambush marketing is a concept popularized in past sports events such as the FIFA World Cup and Olympic Games where advertisers used marketing techniques to connect their product with a particular event in the minds of potential customers, without having to pay sponsorship expenses for the event.[ii]

The following are some of the most popular ambush marketing stunts done in international sports events which paved the way to the evolution of laws pertaining to ambush marketing and trademarks. While the viewing public find these ploys to be humorous, it is no joke how these tactics thrive from unfair competition, abuse of rights, unjust enrichment and false representations.

  1. Dubbed as the king of ambush marketing, Nike seems to be faring well in making opportunism as a craft. When Reebok was the official sponsor of the 1996 Olympics, Nike somehow managed to steal the limelight when Michael Johnson struck a pose with his Nike soccer shoes (painted in gold) hung his on his neck together with his gold medal. The image was so iconic that according to Charlie Minato of the Business insider, “you would probably remember Michael Johnson’s gold shoes more than Reebok’s official sponsorship”.  Nike also put a gigantic billboard in the city and distributed merchandise to people on their way to the stadium. Back in the 1992 Olympics, Nike had its players cover up the Reebok logos in their tracksuits with American flags and conducted their own press conference with their players. [iii]
  2. In the 2010 FIFA World Cup, Kulula, a  South African airline launched a print ad that says: “Unofficial National Carrier of the ‘You-Know-What'” accompanied by images suggestive of the soccer sport. After being reprimanded by the organizers of FIFA and being threatened with a lawsuit for  violating the rules, the airline staged a mockery of the rules by publishing another ad, this time saying: “Not next year, not last year, but somewhere in between”. The whole bout went out of proportion when Kulula went on to announce giving free seats to any person named Sepp Blatter, the name of the head of FIFA. When a namesake of the FIFA head popped out, they published another ad saying: “It’s official. Sepp Blatter flies with us.”[iv]
  3. During a match between Denmark and Netherlands, some 36 girls wearing orange mini-dresses were escorted out of the stadium for purportedly promoting Bavaria Beer, which was not an official sponsor of the FIFA World Cup in 2010. [v] Two of the girls were arrested on charges of organising “unlawful commercial activities”, along with a former footballer who was found to have provided the tickets for these girls, said tickets being meant only to supposed families and friends and not to third parties. The circumstances of this gimmickry is rather unique in that it sparked debates as to what constitutes branding when all that the girls wore were orange mini-dresses with a small Bavaria brand name at the back. It was later found out that the stunt was actually meticulously orchestrated when they got the girls do “organized stripping” to catch media attention (not that the outfits were not striking enough), wearing a dress previously worn by a top model in an advertisement for Bavaria Beer.
  4. In the Euro 2008 football tournament, Heneiken gave green extendible hats to Dutch buyers of the beer to wear at the event. When extended, the hat transforms into a bullhorn showing the name Heneiken. While some of the hats were confiscated at the gate, most of the bearers of the hat know pretty well how to get past through inspection and orchestrated a synchronized chanting which earned them some media coverage.
  5. In a twist of fate, it was Heineken who was outwitted by Stella Artois when the latter spread out for 15 ads at the Long Island Rail Road station near the Billie Jean King National Tennis Center during the 2011 US Open (tennis). This made it appear that it was Stella Artois sponsoring the event, when in fact the official beer was Heineken.
  6. In the 2008 Olympics in Beijing, China, Li Ning (iconic Chinese athlete) lit the torch at the Opening Ceremonies by running around the rim of the stadium while tethered. Adidas was official sponsor but it was later found out by spectators that he owns a shoe company with the same name (which is well known in China).

It is undeniably amazing how far one’s imagination can go in order to save from the expenses of sponsorship.  When survival instincts and trade competition kick in, not even the most restricting laws will shut them down. In this time of evolving standards of Intellectual Property Rights Protection and resizing the confines of Freedom of Expression and Free Enterprise, one may find it entertaining how they come up with the silliest ways of going around the rules and play ignorant when caught in the act.

But humorous as it may seem, these stunts and gimmickry are costing our business industry billions of dollars worldwide. There seems to be a disconnect between the abuse of rights and the need to protect intellectual property of business owners who pay millions for exclusivity only to be hijacked by ambush marketers.

What is Trademark Infringement?

RA 8293, otherwise known as the Intellectual Property Code (IP Code) of the Philippines, defines trademark infringement as the use without consent of the trademark owner of any “reproduction, counterfeit, copy or colorable limitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or Identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable limitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services.”[vi]

Section 147 of the IP Code provides exclusive right to the owner of the trademark to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs or containers for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed

To seek recourse against trademark infringement, it is thus necessary that a trademark owner must have first registered his trademark with the Intellectual Property Office (IPO) of the Philippines.

How does ambush marketing lead to trademark infringement?

By having these sports events (for example) registered as trademarks, they become a brand in themselves, protected by the IP Code. Thus, by making it appear that their brands and products are associated or affiliated with a major event or an athlete as a sponsor, ambush marketers commit trademark infringement of the rights of events as a brand in themselves. They cause “confusion as to sponsorship” – that is, as to affiliation, connection, or association of the goods or services of a person to another as to its origin, sponsorship, or approval.

Suppose the Philippine National Football Team yearly hosts a “Philippine National Soccer Tournament”, which is a registered trademark in the country, anyone who sells souvenirs of such event without the authority of the Philippine National Football Team and not being an official sponsor thereof, will be liable for trademark infringement under the IP Code.

What are the pertinent laws on the matter?

As of date, the laws regulating ambush marketing in regard to trademark infringement in the Philippines are the following:

  1. Art. II, Section 17 of the 1987 Constitution of the Philippines[vii] – The State decrees that sports should be prioritized, among others, to foster patriotism and nationalism, accelerate social progress, and promote total human liberation and development.
  2. Art. XIV, Section 19.2 of the 1987 Constitution of the Philippines[viii] – requires educational institutions to undertake regular sports activities throughout the country in cooperation with athletic clubs and other sectors.
  3. Article 19-21 of the New Civil Code of the Philippines (NCC)[ix] – sets the framework for human relations to avoid abuse of rights
  4. Article 22, NCC[x] – seeks to protect against unjust enrichment
  5. Article 28, NCC[xi] – provides for the rights of an aggrieved party in cases of unfair competition
  6. Article 110 of RA 7394[xii] –makes it unlawful for any person to use any false, deceptive or misleading advertisement by Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer products or services.
  7. Section 155 of RA 8293[xiii] – provides the remedies against trademark infringement
  8. Section 168 of RA 8293[xiv] – provides for the remedies of a trademark owner, even if unregistered or with a pending application for registration, against unfair competition
  9. Section 169 of RA 8293[xv] – makes one liable for false description or representation

Be that as it may, law suits of trademark infringement arising from ambush marketing are scarce, if not unprecedented in the country.  It would probably be safe to say that it would be ironic for the government, being the host of the biggest national sports event (Palarong Pambansa), to go against its own people who try to make a living by selling souvenir items or promoting other merchandise and services in connection to said event.

On the other hand, private event organizers are given their free hand promulgate their own stringent rules to honour their contract of exclusive representation with their official sponsors, as well as their very own rights to retain sponsorships which is the very lifeblood of these events.

What are the remedies that an injured party can avail of?

Section 156 of the IP Code provides that the owner of a registered mark may recover damages from any person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based upon the amount of gross sales of the defendant or the value of the services in connection with which the mark or trade name was used in the infringement of the rights of the complaining party.

On application of the complainant, the court may impound during the pendency of the action, sales invoices and other documents evidencing sales.

In cases where actual intent to mislead the public or to defraud the complainant is shown, in the discretion of the court, the damages may be doubled. The complainant, upon proper showing, may also be granted injunction.

A criminal penalty of imprisonment form two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (50,000) to Two hundred thousand pesos (200,000), shall further be imposed on persons found guilty of committing any of the acts mentioned in sections 155 and 168 of the Intellectual Property Code (IP Code) of the Philippines.

Are there remedies accorded to trademark owners who do not have the benefit of trademark registration or whose applications for registration are still pending?

Yes, the Intellectual Property Code of the Philippines provides a work-around to extend protection even to trademark owners who do not have the benefit of trademark registration or whose applications for registration are still pending.

The law provides that a person who has identified in the mind of the public the goods he

manufactures or deals in, his business or services from those of others, whether or not a registered mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights.[xvi] Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.[xvii]

Conclusion

Indeed, one of the major reasons as to what made the Philippines a haven for foreign investors and business outsource processes is our natural ability to adapt to change. The international standards on advertising, events sponsorship and intellectual property are evolving to create a more conducive environment for business and growth. While it is logical that event organizers in the Philippines could hardly take it against the small business operators whose greater concern circles around feeding an empty stomach, it cannot be ignored that the rights of event organizers, their sponsors and athletes are worth protecting too. To allow the proliferation of ambush marketers at the expense of the event organizers and their sponsors would defeat the very purpose of the law against unjust enrichment, intellectual property protection and unfair competition. The government must promulgate laws that will balance the interests of event organizers and their sponsors against third parties to enable a sustainable milieu of events sponsorships. If other countries have stepped up to achieve this end, there should be no reason why the Philippines cannot do the same.


[i] Juan – a name that denotes the ordinary Filipino man

[ii] What is ambush marketing? Business Dictionary. Viewed August 26, 2013. http://www.businessdictionary.com/definition/ambush-marketing.html

[iii] Minato, Charlie. Ingenious Ambush Campaigns From Nike, Samsung and BMW Make Official Sponsorships Look Like A Waste. Business Insider. June 14, 2012 viewed August 26, 2013. http://www.businessinsider.com/best-ambush-marketing-campaigns-2012-6?op=1

[iv] Ibid.

[v] Kelly, Jon. How ambush marketing ambushed sport. BBC News Magazine. 08:30 June 17, 2012 viewed August 26, 2013. http://news.bbc.co.uk/2/hi/8743881.stm

[vi] Esso Standard Eastern v. CA, G.R. No. L-29971, Aug. 31, 1982

[vii] Art. II, Section 17 of the 1987 Constitution of the Philippines. The State shall give priority to education, science and technology, arts, culture, and sports to foster patriotism and nationalism, accelerate social progress, and promote total human liberation and development.

[viii] Art. XIV, Section 19 of the 1987 Constitution of the Philippines

1.   The State shall promote physical education and encourage sports programs, league competitions, and amateur sports, including training for international competitions, to foster self-discipline, teamwork, and excellence for the development of a healthy and alert citizenry.

2.   All educational institutions shall undertake regular sports activities throughout the country in cooperation with athletic clubs and other sectors.

[ix] Article 19, NCC. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

Article 20, NCC. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

Article 21. Any person who wilfully causes loss or injury to another in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

[x] Article 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

[xi] Article 28, NCC. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage.

[xii] Article 110, RA 7394. False, Deceptive And Misleading Advertisement – it shall be unlawful for any false, deceptive or misleading advertisement by Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for the purpose of inducing of which is likely to induce directly or indirectly the purchase of consumer products or services.

[xiii] Section 155, RA 8293. Remedies; Infringement. – Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A. No 166a)

[xiv] Section 168, RA 8293. Unfair Competition, Rights, Regulation and Remedies. – 168.1. A person who has identified in the mind of the public the goods he manufactures or deals in, his business or services from those of others, whether or not a registered mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights.

168.2. Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the services of another who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another.

[xv] Section 169, RA 8293. False Designations of Origin; False Description or Representation. – 169.1. Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which:

(a) Is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person; or

(b) In commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable to a civil action for damages and injunction provided in Sections 156 and 157 of this Act by any person who believes that he or she is or is likely to be damaged by such act.

[xvi] Section 168.1, RA 8293. Unfair Competition, Rights, Regulation and Remedies.

[xvii] Section 168.2, RA 8293. Unfair Competition, Rights, Regulation and Remedies.

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