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Advising on market-changing divestments September 25, 2018

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Strong signals: Maddocks advises on television broadcast services outsourcing October 10, 2018

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When being natural can be misleading: recent consideration of organic product claims October 15, 2018

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What’s the go with ambush marketing in Australia?

The 2016 Rio Olympics are already a distant memory as Australia prepares to host the 2018 Commonwealth Games. However, the Australian Olympic Committee’s (AOC) continuing legal battle with Telstra over their ‘Go to Rio’ campaign highlights the impact ambush marketing has on these major sporting events and the difficulties in regulating against it. While we are waiting for the latest decision in the Full Court appeal between the AOC and Telstra, this article examines different laws that attempt to prohibit ambush marketing and the approach currently taken by the courts in dealing with it.
Ambush marketing

Ambush marketing is an increasingly common practice of advertising a brand’s products or services by piggybacking off public events without purchasing the rights to do so as an official sponsor of that event. This practice has evolved from early unsophisticated methods, such as asking audience members to hold up advertising signs during an event, to more complex commercial relationships, such as sponsoring a broadcaster of an event (as was the case in AOC v Telstra). The issue with ambush marketing is that it allows brands to obtain advertising benefits from an event, without paying the event holder for those benefits. This type of strategy undermines official sponsors of the event, and the value of their sponsorship, putting at risk the ability of such events to sell sponsorships and obtain funding.

Restrictions on ambush marketing

In Australia, there are a number of laws that are relevant to, or restrict the practice of, ambush marketing, including:

  • sections 18 and 29 of the Australian Consumer Law (contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (ACL)
  • the claim of passing off
  • laws protecting intellectual property rights.

Specific legislation also exists to prohibit ambush marketing at major sporting events, including:

  • Olympic Insignia Protection Act 1987 (Cth) (Olympic Act)
  • Major Sporting Events (Indicia and Images) Protection Act 2014 (Major Events Act).

The Olympic Act prohibits the unlicensed use of symbols and phrases associated with Olympics (known as ‘protected Olympic expressions’) in advertising in a manner that would suggest to a reasonable person that the brand is a sponsor of certain Olympic bodies, an Australian Olympic team or an Olympic Games. The Major Events Act covers a number of major sporting events, including the upcoming Commonwealth Games.

AOC v Telstra

This recent example of the challenges faced by businesses in stopping ambush marketing involved various advertising conducted by Telstra in the lead up to the 2016 Rio Olympic Games. At issue in the dispute was an agreement between Telstra and the Seven Network (as the sole broadcaster of the Olympics in Australia) that:

  • Telstra would sponsor Seven’s broadcast of the Olympics
  • Seven would create a mobile app called ‘Olympics on 7’
  • Telstra customers would be given premium access to the app for free and Telstra could promote this access to its customers.

While Telstra had previously been an official sponsor to the Australian Olympic team, it was not a sponsor of the Rio Olympics (rather, its competitor, Optus, was an official sponsor).

Telstra subsequently released an advertising campaign that included television advertisements, print catalogues, in-store posters and other digital media, advertising watching the Olympics on the ‘Olympics on 7’ app. Telstra’s television advertisements included the song “I go to Rio” and footage of people participating in sports and watching sporting events on their mobile phones.  The brief given to Telstra’s marketing team suggested that even though Telstra could not promote that it had any official association with the Olympics, it could still stand out from the official Olympic sponsors (including Optus) by exploiting its association with Seven to ‘own an association’ with the Rio Olympics.

The AOC alleged that this conduct was misleading and deceptive (contravening sections 18 and 29 of the ACL) and an unlawful use of protected Olympic expressions for commercial purposes (contravening section 36 of the Olympic Act).

Federal Court Decision

The Court found that while Telstra “may well have succeeded in, fostering some sort of connection or association between the Rio Olympic Games and the Telstra ‘brand’”, it did not contravene the ACL or the Olympic Act.

At the trial, it was not disputed that Telstra used in its Campaign the expressions ‘Olympics’ and ‘Olympic Games’, which are protected under the Olympics Act. As such, the question for the Court was whether those words, in the context in which they appeared, suggested to a reasonable person that Telstra sponsored the Rio Olympics or an Olympic body. Ultimately, the Court held that Telstra’s advertisements did not suggest to the reasonable person that Telstra was a sponsor of an Olympic body and that, while the underlying theme of the advertisements and certain phrases used by Telstra created uncertainty as to the nature of Telstra’s connection with the app and the Olympic broadcast, this was not enough to breach the Act.

With respect to the allegations of misleading or deceptive conduct, the Court applied the following principles:

  • an advertisement will breach the ACL and be misleading and deceptive if it is likely to lead its audience into incorrectly believing that the advertiser is a sponsor of an event, or has some association with that event. Such an advertisement will not be misleading and deceptive if it only causes confusion as to who are the event’s sponsors or correctly conveys that a brand has a relationship with one of the event’s sponsors.
  • A disclaimer may remedy an otherwise misleading or deceptive advertisement, if the disclaimer acts to reverse or erase the misleading statement.
  • While intention to mislead is not a requirement under the ACL, proof of intention may make a finding of misleading and deceptive conduct more likely.

As such, the question for the Court was whether Telstra’s advertisements and overall Campaign merely represented that Telstra was a sponsor of Seven or whether they represented that Telstra had some sort of sponsorship arrangement or affiliation with the Rio Olympics, an Olympic body or the Olympic Movement generally. The Court found that while some early advertisements may have been ‘borderline’, none of its advertisements conveyed the representation that Telstra was associated with an Olympic body. Relevantly, none of the advertisements showed any Olympic symbols, teams, or athletes, and any references to the Olympics were in the context of Seven’s Olympics broadcast. Further, subsequent versions of those advertisements contained clear disclaimers, such as “Telstra is not an official sponsor of the Olympics…”, which the Court held were “sufficient to erase or reverse any impression that Telstra did sponsor an Olympic body”. Finally, while Telstra was found by the Court to have intentionally attempted to foster a connection with the Olympics, this wasn’t sufficient to render the conduct unlawful.

Appeal

Unsurprisingly, the AOC appealed the original decision on a number of grounds. The appeal was heard on 27 February 2017, however, the Full Federal Court is yet to hand down its judgement. The approach of the Full Court to its analysis of Telstra’s conduct and the different standards to be applied, will provide some useful guidance for businesses in the lead up to the Commonwealth Games. If the Full Court finds in favour of the AOC, this is likely to limit the ability for companies to engage in ambush marketing, particularly by sponsoring broadcasters of major sporting events.

The 2016 Rio Olympics are already a distant memory as Australia prepares to host the 2018 Commonwealth Games. However, the Australian Olympic Committee’s (AOC) continuing legal battle with Telstra over their ‘Go to Rio’ campaign highlights the impact ambush marketing has on these major sporting events and the difficulties in regulating against it. While we are waiting for the latest decision in the Full Court appeal between the AOC and Telstra, this article examines different laws that attempt to prohibit ambush marketing and the approach currently taken by the courts in dealing with it.
Ambush marketing

Ambush marketing is an increasingly common practice of advertising a brand’s products or services by piggybacking off public events without purchasing the rights to do so as an official sponsor of that event. This practice has evolved from early unsophisticated methods, such as asking audience members to hold up advertising signs during an event, to more complex commercial relationships, such as sponsoring a broadcaster of an event (as was the case in AOC v Telstra). The issue with ambush marketing is that it allows brands to obtain advertising benefits from an event, without paying the event holder for those benefits. This type of strategy undermines official sponsors of the event, and the value of their sponsorship, putting at risk the ability of such events to sell sponsorships and obtain funding.

Restrictions on ambush marketing

In Australia, there are a number of laws that are relevant to, or restrict the practice of, ambush marketing, including:

  • sections 18 and 29 of the Australian Consumer Law (contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (ACL)
  • the claim of passing off
  • laws protecting intellectual property rights.

Specific legislation also exists to prohibit ambush marketing at major sporting events, including:

  • Olympic Insignia Protection Act 1987 (Cth) (Olympic Act)
  • Major Sporting Events (Indicia and Images) Protection Act 2014 (Major Events Act).

The Olympic Act prohibits the unlicensed use of symbols and phrases associated with Olympics (known as ‘protected Olympic expressions’) in advertising in a manner that would suggest to a reasonable person that the brand is a sponsor of certain Olympic bodies, an Australian Olympic team or an Olympic Games. The Major Events Act covers a number of major sporting events, including the upcoming Commonwealth Games.

AOC v Telstra

This recent example of the challenges faced by businesses in stopping ambush marketing involved various advertising conducted by Telstra in the lead up to the 2016 Rio Olympic Games. At issue in the dispute was an agreement between Telstra and the Seven Network (as the sole broadcaster of the Olympics in Australia) that:

  • Telstra would sponsor Seven’s broadcast of the Olympics
  • Seven would create a mobile app called ‘Olympics on 7’
  • Telstra customers would be given premium access to the app for free and Telstra could promote this access to its customers.

While Telstra had previously been an official sponsor to the Australian Olympic team, it was not a sponsor of the Rio Olympics (rather, its competitor, Optus, was an official sponsor).

Telstra subsequently released an advertising campaign that included television advertisements, print catalogues, in-store posters and other digital media, advertising watching the Olympics on the ‘Olympics on 7’ app. Telstra’s television advertisements included the song “I go to Rio” and footage of people participating in sports and watching sporting events on their mobile phones.  The brief given to Telstra’s marketing team suggested that even though Telstra could not promote that it had any official association with the Olympics, it could still stand out from the official Olympic sponsors (including Optus) by exploiting its association with Seven to ‘own an association’ with the Rio Olympics.

The AOC alleged that this conduct was misleading and deceptive (contravening sections 18 and 29 of the ACL) and an unlawful use of protected Olympic expressions for commercial purposes (contravening section 36 of the Olympic Act).

Federal Court Decision

The Court found that while Telstra “may well have succeeded in, fostering some sort of connection or association between the Rio Olympic Games and the Telstra ‘brand’”, it did not contravene the ACL or the Olympic Act.

At the trial, it was not disputed that Telstra used in its Campaign the expressions ‘Olympics’ and ‘Olympic Games’, which are protected under the Olympics Act. As such, the question for the Court was whether those words, in the context in which they appeared, suggested to a reasonable person that Telstra sponsored the Rio Olympics or an Olympic body. Ultimately, the Court held that Telstra’s advertisements did not suggest to the reasonable person that Telstra was a sponsor of an Olympic body and that, while the underlying theme of the advertisements and certain phrases used by Telstra created uncertainty as to the nature of Telstra’s connection with the app and the Olympic broadcast, this was not enough to breach the Act.

With respect to the allegations of misleading or deceptive conduct, the Court applied the following principles:

  • an advertisement will breach the ACL and be misleading and deceptive if it is likely to lead its audience into incorrectly believing that the advertiser is a sponsor of an event, or has some association with that event. Such an advertisement will not be misleading and deceptive if it only causes confusion as to who are the event’s sponsors or correctly conveys that a brand has a relationship with one of the event’s sponsors.
  • A disclaimer may remedy an otherwise misleading or deceptive advertisement, if the disclaimer acts to reverse or erase the misleading statement.
  • While intention to mislead is not a requirement under the ACL, proof of intention may make a finding of misleading and deceptive conduct more likely.

As such, the question for the Court was whether Telstra’s advertisements and overall Campaign merely represented that Telstra was a sponsor of Seven or whether they represented that Telstra had some sort of sponsorship arrangement or affiliation with the Rio Olympics, an Olympic body or the Olympic Movement generally. The Court found that while some early advertisements may have been ‘borderline’, none of its advertisements conveyed the representation that Telstra was associated with an Olympic body. Relevantly, none of the advertisements showed any Olympic symbols, teams, or athletes, and any references to the Olympics were in the context of Seven’s Olympics broadcast. Further, subsequent versions of those advertisements contained clear disclaimers, such as “Telstra is not an official sponsor of the Olympics…”, which the Court held were “sufficient to erase or reverse any impression that Telstra did sponsor an Olympic body”. Finally, while Telstra was found by the Court to have intentionally attempted to foster a connection with the Olympics, this wasn’t sufficient to render the conduct unlawful.

Appeal

Unsurprisingly, the AOC appealed the original decision on a number of grounds. The appeal was heard on 27 February 2017, however, the Full Federal Court is yet to hand down its judgement. The approach of the Full Court to its analysis of Telstra’s conduct and the different standards to be applied, will provide some useful guidance for businesses in the lead up to the Commonwealth Games. If the Full Court finds in favour of the AOC, this is likely to limit the ability for companies to engage in ambush marketing, particularly by sponsoring broadcasters of major sporting events.