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Stormy waters

16 June 14

Points to be aware of in the commercial exploitation of sporting brands and events, a key feature of modern sport

by Jamie Watt

The global sports marketplace has never been more dynamic than it is at present. Competition and participation crosses borders, and fan loyalty is a key driver of club and sportsperson value and commoditisation. IP rights remain as a core backbone to many commercial activities, including sponsorship, broadcasting and merchandising.

Complexity is ever present, and on the increase, as internet and mobile communication advances foster the creation and adoption of new technologies for rights exploitation. This perfect storm of dynamism, growth, technology and internationalisation creates some key challenges for the legal practitioner, in seeking to safeguard their client’s position.

Establishment of rights is key. Retaining an in-depth understanding of the law relating to registered trademarks and brands is important, not just of those circumstances where infringement is clear, but also how the law applies to more complex and unusual matters.

Keeping on top

A good working knowledge of recent case law, including Interflora Inc v Marks and Spencer plc [2013] EWHC 1291 (Ch) (keyword abuse), L’Oréal SA v Bellure NV [2010] EWCA Civ 535 (post-sale confusion), Och-Ziff Management Europe Ltd v OCH Capital LLP [2010] EWHC 2599 (Ch) (initial interest confusion), Fenty v Arcadia Group Brands Ltd (t/a Topshop) [2013] EWHC 2310 (Ch) (false endorsement), and Lush v Amazon [2014] EWHC 181 (Ch) (search engine abuse) is essential.

A strong approach to brand monitoring is fundamental, from domain name infringement, through third party trademark registrations, to content. Given the volume of information and material available, it is vital to be strategic. Understanding the marketplaces within which a sports client operates, and their risk profile and value system, is crucial in enabling cost effective service provision.

Effective use of prior right registration mechanisms relevant to “sunrise” periods, coupled with a strong registered trademark strategy, is key to preventing domain name misuse. Where domain names have been lost to third parties, expedient action is to be recommended to avoid claims of acquiescence in response to challenge.

The recent decision in Google Spain SL, Google Inc v Agencia Española de Protección de Datos (C-131/12) (13 May 2014), albeit a data protection case, adds additional means by which online brand and reputation management may be executed.

Wider issues

The practitioner must also retain a good understanding of customs mechanisms. Retaining counterfeit product at market entry points can be a highly effective brand management solution, not least because import documentation can facilitate traceability of the supply chains of infringing product. Identifying routes to market is a key weapon in allowing effective countermeasures to be undertaken, from point of sale, through wholesale, to manufacturer.

Understanding the supply chain is also of crucial importance to the non-contentious practitioner, who must create and implement contracts for manufacture, transit, distribution and consumer sale which are fit for purpose.

Fundamental elements within such contracts include quality control, rights of audit, payment provisions (and how they may be utilised to ensure supplier incentivisation and adherence), and “reputational” provisions, such as those which address workplace standards and employee treatment.

On a wider level, one must also consider how brand management interacts with other concerns, particularly in the context of a multinational enterprise – which entity within the group holds (or should hold) IP rights, what local registration requirements apply, and what are the transfer pricing consequences. In the context of sport, such matters are becoming more prominent, not least as a result of the creation of such facilities such as Guernsey’s image rights registry (see the Image Rights (Bailiwick of Guernsey) Ordinance, 2012), where one of the earliest registrations related to a football club.

Emerging markets also require attention. China’s recent revisals to its trade mark law, raising compensation limits, facilitating investigation, addressing malicious registrations and reinforcing protection for well known marks, backed with key Supreme Court decisions, reinforce the growing attractiveness of the jurisdiction, not only for its commercial potential but also as a viable marketplace within which IP rights can be effectively employed. When assisting clients in entering new markets, and dealing with local IP disputes, one must of course never forget to pay proper attention to local law, not least as to how it relates to procedural matters of enforcing foreign judgments and the limitations on taking direct local action.

Jamie Watt, partner, Harper Macleod LLP

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