London Olympics Act 2006

Businesses in Wales hoping to capitalise on the revenue opportunities of the 2012 Olympics should tread carefully as new legislation may prove a trap for the unwary.

A matter of months after London secured the 2012 Olympics, the Government has pushed through the legislation needed to satisfy the IOC’s requirements set out in the host city contract in relation to the hosting of the games.

A key element of the contract is the requirement for a number of controls over brand protection and ticket touting in order that all the venues are ‘clean’ before and during the event. This means that no advertising or propaganda is to be placed either within or in the vicinity of Olympic venues (including air space) without being an official sponsor. The new legislation is designed to achieve these aims.

The requirement for legislation this stringent has only been a feature of the Olympic Games since the advertising events of the 1996 Atlanta games. In what is regarded either as a disaster or a stroke of genius, Nike declined to pay what they claimed to be the inordinately expensive official sponsorship fees and instead embarked on a campaign of ‘ambush marketing’. They hired billboards in the vicinity of the events and supplied spectators with products bearing their logo which received high profile TV coverage from within the venues themselves. The official sponsor, Adidas, was understandably outraged at the undermining of the value of their official status.

Given that sponsorship is key to the funding of the games, 35% of the operating budget for 2012 of £2 billion is expected to be raised through commercial sponsors, the IOC has since been determined to take all steps necessary to prevent a repeat performance.

The Olympic Symbol etc. (Protection) Act 1995 created a right similar to a trade mark called the ‘Olympic association right’. Infringement occurs where the Olympic symbol, motto or word ‘Olympic’ or similar words are used ‘in the course of trade’ without the consent of the proprietor of the right, the British Olympic Association (BOA). However the IOC has taken the view that this legislation is insufficient to protect the value of commercial rights in a host country.

The new London Olympic Games and Paralympic Games Act 2006, which received Royal Assent on 30 March 2006, cements into legislation the IOC’s requirements and goes much further than the 1995 Act in protecting the position of official sponsors against unauthorised use of words and images associated with the 2012 games. In particular, the Act introduces a new right, the ‘London Olympics association right’, which will be infringed by the use of words or images in a manner likely to suggest an association between the games and goods or services being provided by an unauthorised entity.

Whether or not an association has been created between the games and an unauthorised business will be a question of fact in each particular case. However some guidance is provided by the provision of two lists which a court may take into account when considering whether an association has been created.

If a List One word is used in a business context in conjunction with another list one or any list two words, it is likely to infringe unless the context is wholly unrelated to the games. The rules are strict and businesses will need to be very careful not to create an association. In fact any combination of words, images or marks that creates the likelihood of consumers associating the product with the games will be infringing the new right.

The result of these restrictions could potentially stretch much further than just ensuring that the venues and surrounding areas are ‘clean’. The London Organising Committee for the Olympic Games (Locog), which has responsibility for enforcing the legislation, has published guidance as to what it views as falling foul of the Act. For example, a pub advert stating ‘X Brand Brewery – Watch the Olympics live here’ will infringe if used without Locog’s authorisation, no matter how far away from the Olympic venues the pub is situated.

A defence is available for those using the ‘forbidden’ combinations of words solely in accordance with honest commercial and industrial practices. For example, a bus company providing transport to and from the Games would be unable to describe its business services without using such phrases as ‘Olympics 2012’.

The approach that Locog is taking to these restrictions is to emphasize the importance of sponsorship to the funding of the games, and the central issue of brand protection to the securing of sponsors. However, there are many that oppose the new legislation, saying it goes too far and will result in countless businesses not being able to benefit from the games at all. The argument is that although income for the games through big business sponsorship will be protected, it will be at the cost of much revenue into the economy as a whole through lost advertising and merchandising opportunities. Only time will tell to what extent, if any, these fears will be realised.

Companies that undertake ambush marketing respond to stringent restrictions such as these by becoming ever more creative in their attempts to outwit them. For example, at the World Cup recently, supporters were refused entry for wearing orange trousers bearing the logo of a Dutch brewer. Rather than miss the match, they took off the trousers and attended in their underwear. At the next match the brewery were seen handing out orange boxer shorts bearing their logo. This is an extreme example of the lengths companies will go to gain advertising exposure. It will be interesting to see to what lengths UK business will go to circumvent the new legislation in 2012.