The Intransigence of the Olympic Committees
Let us recall, as a preamble, that the various national federations and, above all, the different Olympic committees are extremely protective of intellectual properties related to the Olympic Games.
Even the Prime Hydration brand, a remarkable success that has revolutionized the energy drink market (over $1.2 billion in revenue in its second year of operation — already more than 10% of Red Bull’s beverage revenue, which has been established in the market for several decades), backed by two American celebrities (Logan Paul and KSI), has not escaped this scrutiny.
Recently, the United States Olympic & Paralympic Committee sued the startup for the unauthorized use of the terms “Olympic,” “Olympian,” “Team USA,” and “Going for Gold,” which are registered slogans by the committee and reserved for its official partner, The Coca-Cola Company.
Even seemingly common terms are protected. What can be done?
To What Extent Is It Possible to Communicate About the Olympic Games Without Being an Official Partner?
In French law, “ambush marketing” (or guerrilla marketing) refers to an advertising practice whereby a company seeks to associate its name or products with a media event without being an official sponsor.
This strategy aims to capitalize on the event’s visibility without paying sponsorship fees. It can manifest in various ways, such as:
- Proximity advertising: Placing advertisements around the event venue;
- Diverted advertising: Using symbols, colors, or expressions associated with the event without explicitly mentioning it;
- Parallel events: Organizing activities or events on the sidelines of the main event to attract media and participant attention.
In France, this practice is prohibited by several laws, including:
- The Intellectual Property Code, which protects trademarks, logos, and other event identity elements;
- The Consumer Code, which prohibits false and misleading advertising;
- Specific regulations for sporting events: For example, major sporting competitions like the Olympic Games or the FIFA World Cup have strict rules to protect their official sponsors.
Given the global dimension of the Olympic event, the IOC relies on national committees to represent, develop, promote, and protect the Olympic event in each country.
The Nairobi Treaty, adopted in 1981 and ratified by around fifty states within the framework of the World Intellectual Property Organization, provides for the commitment of member states to ensure the protection of Olympic symbols.
In France, the National Olympic and Sports Committee (CNOSF) is the IOC’s representative. Each NOC is responsible in its country for complying with the Olympic Charter rules and must take all necessary measures to control the illicit use of Olympic properties.
Each NOC is thus the guarantor of the protection of Olympic properties on its territory, regardless of whether the Games take place in another country (Olympic Charter, Fundamental Principles of Olympism, Chapter 1).
The CNOSF derives its rights from the Olympic Charter and French law, which grants protection to Olympic properties via the Sports Code.
According to Article L. 141-5, the CNOSF is the owner of national Olympic emblems and the custodian, for the IOC, of the emblems, flag, motto, symbol, Olympic anthem, logo, mascot, slogan, posters of the Games, “Paris 2024,” the terms “Olympic Games,” “Olympism,” “Olympiad,” the initials “JO,” and the terms “Olympic” and “Olympian.”
The CNOSF has the authority to prohibit unauthorized use, including imitations. The exceptions provided by this text are very limited and mainly concern the use of terms related to Olympism in their ordinary sense, provided that this use is not promotional or commercial. Similar provisions exist regarding Paralympic properties.
Although ambush marketing may resemble a simple advertising strategy, jurisprudence qualifies it as a fault that can be sanctioned both under the Sports Code and Article 1240 of the Civil Code.
Thus, the Judicial Court has ruled that ambush marketing consists of behavior “demonstrating an evident desire to align with communication operations involving references to Olympic symbols by economic operators who have been authorized to do so in exchange for a financial investment, intending to attract the attention of the consumer whose attention is potentially drawn by the media coverage of the events, which constitutes acts of parasitism” (TJ Paris, 3rd ch., 2nd sect., April 19, 2019, n° 18/00264).
Moreover, if ambush marketing involves the unauthorized use of a sign protected by the Intellectual Property Code, it then takes the form of an act of counterfeiting which, in addition to being a civil fault, also constitutes a criminal offense.
Finally, we remind you that, as with all acts of parasitic competition, damages based on the undue gain obtained by the offender can be sought in court not only by the rights holders but also by the injured competitors of the offender.
The adverse effects of ambush marketing on sponsorship effectiveness can be exacerbated by several contextual factors. Indeed:
- The respective notoriety of the brands: The intrusion of a brand engaged in an ambush marketing strategy is all the more detrimental to the official sponsor if it enjoys superior or comparable notoriety. This direct competitive dynamic can eclipse the legitimate sponsor’s visibility.
- The maturity of the partnership: Recent partnerships are particularly vulnerable to ambush marketing. Indeed, the newer the association between the sponsor’s brand and the event, the less ingrained it is in the public’s perception. The intrusion of a third party can weaken a still fragile bond.
- The strategic importance of the event: When the event constitutes a central pillar of the sponsor’s communication strategy, the impact of ambush marketing is multiplied. Any damage to the brand’s visibility at this event is likely to have significant consequences in terms of image and reputation.
- The periodicity of the event: One-time events are prime grounds for ambush marketing practices. Media concentration and public attention are maximized over a short period, making opportunities for intrusion more numerous and effective.
Becoming an Official Partner: How to Draft a Sponsorship Agreement?
Therefore, it is even more important to conduct official communication, framed by a sponsorship contract. It is important to know the main clauses of a sponsorship contract.
The heart of the sponsorship contract lies in the precise definition of the rights granted to the sponsor. These rights, generally described in the contract’s subject matter, must be detailed in a specific clause specifying their nature, media, conditions of exploitation, and duration.
- Exclusivity: The issue of exclusivity, which is crucial, must be clearly defined by sector of activity or product category. It can be extended (title sponsor, jersey sponsor) and generally takes the form of a prohibition for the sponsored entity to grant similar rights to third parties. A post-exclusivity clause can be considered but must be time-limited.
- Exploitation of image and distinctive signs: The sponsor may exploit label rights, the name, and the logo of the sponsored entity, subject to the latter’s prior approval.
- Access rights: The sponsor may benefit from VIP access during events and dedicated spaces for commercial operations.
The sponsor undertakes to pay a remuneration, usually fixed and staggered, which may be supplemented by bonuses linked to results or media exposure. Payment in kind is possible, subject to invoicing and VAT.
For its part, the sponsored entity undertakes not to infringe on the exclusivity granted to the sponsor. It must also ensure the sponsor’s visibility on various media and participate in public relations operations defined in the contract. Finally, the sponsored entity undertakes to avoid any behavior that could harm the sponsor’s image.
In Case of Dispute: How to Enforce a Sponsorship Agreement?
Despite all the above clarifications, signed contracts may not be (properly) respected. It is then up to the sponsored entity to assert its rights before the competent courts.
To do so, their legal counsel will need to characterize and document all breaches or poor executions of the sponsorship contract.
Once the fault is established, it will be necessary to quantify the economic damage suffered due to the (unlawful) termination of a sponsorship contract.
Primarily, these damages concern the official products specifically created under the sponsorship contract, which have become unsellable.
Technically, it is necessary to calculate a missed gain corresponding to the difference between the variable cost margin that the company would have achieved if it had been able to sell the official products and the margin (usually negative) actually achieved.
However, for an event of the magnitude of the Games, the main damage lies in the lost opportunity to benefit from better sales of all the company’s products due to the increased visibility that sponsorship should have provided.
To do this, econometric techniques must be implemented to estimate an “Olympic Games effect” based on the sales and profits observed in competing companies (but which benefited from the visibility conferred by the Games).
Once this effect is determined, it is possible to reconstruct the turnover the aggrieved company would have achieved thanks to the visibility obtained during the Games and to deduce a loss by comparing it with the turnover actually achieved by the latter.
Moreover, if the unlawful termination is particularly publicized or virulent, it may cause image damage to the aggrieved company.
