South Africa: Ambush Marketing Costly For Local Development

Last Updated: 20 September 2012
Article by Lauren Frizelle

Most Read Contributor in South Africa, September 2018

Companies that are not official sponsors of a commercial or sporting occasion may face legal proceedings if they attempt to leverage their brands off the event.

Furthermore, although ambush marketing stunts are often entertaining and well-received by the public, they can result in a loss of revenue for many projects and organisations that are dependent on commercial sponsorship for their survival, and may impact negatively on local and national development, particularly where an event's viability hinges on sponsorship.

This is according to Lauren Frizelle, Associate at ENS' IP Department, who says that ambush marketing is a fairly common occurrence, characterised by companies, that are not official sponsors of an event, trying to create an association between their brands and products and the event, often by using the name, logo or imagery of that event, She says that in spite of very dedicated efforts by London officials to prevent ambush marketing, a few enterprising marketers managed to surreptitiously solicit their brands to the world (although in some cases, it was debatable whether the person responsible even realised that they were infringing on the rights of official sponsors, or doing anything wrong). She says that many people do not realise the extent of the commercial damage that these kinds of infringements can have.

"Companies invest vast sums of money in sponsoring an event, team or individual. When ambush marketing occurs, it can impact detrimentally on the exposure generated for the official brand, the goodwill gained by the brand and the official sponsor, and may ultimately detract from the revenue received by the sponsor, who has invested resources in order to reap the benefits of his brand being associated with the event. This can lead to further loss of revenue for projects that are dependent on the sponsor, and may also spell the end of the event itself, as companies withdraw their sponsorship and potential sponsors shy away from the event," she explains.

Frizelle says that the ASA Sponsorship Code recognises that without sponsorship, many disciplines would face extreme difficulties and, possibly, extinction, and that various pieces of legislation exist to stem the tide of ambush marketing in its different forms. One such example is Section 15A of the Merchandise Marks Act, enacted to prevent non-sponsors from ambush marketing in ways that don't necessarily involve the use of the name, logo or imagery of a protected event, for example by selling their wares in close proximity to the event venue on the day of the event or days leading up to the event, or by having a plane with a branded banner fly over the stadium.

"According to the Merchandise Marks Act, it is unlawful for a non-sponsor to associate its brand with a protected event, or even allude to a protected event."

She cites the 2010 FIFA World Cup, which was declared a protected event. The host cities duly passed regulations to enforce the relevant legislation by creating exclusion zones outside the stadiums and along the major routes to prevent sellers from profiting from the event. Nonsponsors of the event were not permitted to promote or sell their goods in these zones.

"Although no further events have been declared protected events under the Merchandise Marks Act, the restrictions relating to the basic form of ambush marketing – using an event's branding or something similar – are unchanged," Frizelle says.

She explains that if an event's branding is registered as a trade mark and ambush marketing occurs through the use of the branding in connection with the ambush marketer's products there will be a trademark infringement. This does not mean that marketers can ambush unregistered trademarks, logos and so forth with impunity, however. "If an event's branding isn't registered but has become recognisable to the extent that people would assume that there is a sponsorship deal or some other business relationship between the company and the event, there will be 'passing off'. Passing-off is a form of unlawful competition which occurs where a company misrepresents his business or products as being those of another company, or associated with another company, when this is not the case..

She says that if any organisation, product or brand tries to affiliate itself with an event or activity without being an official sponsor of that event or activity, they are likely to find themselves in hot water.

"Ambush marketing is something that needs to be carefully considered, and any company that is thinking of employing this tactic should seek legal advice beforehand," Frizelle concludes.

Originally published in Adfocus, August 23, 2012

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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