A Bird In Hand Is Worth Several In The (Am) Bush!

By Mohit Kapoor & Ajay Shaw, DSK Legal

Originally published in the Corporate Counsel section of the Economic Times

Introduction

Amidst the hype surrounding the 2003 ICC World Cup, there were some off-field events that caught the attention of the world, in particular the entanglement between the ICC, the organizers of the event, and the players. All participants were required to sign a contract, barring them from advertising products that competed with those of the official sponsors. In India, a country where cricket is a religion, the issue assumed special significance. With the largest number of cricket lovers in the world, India also comprises a significant consumer base for multinationals worldwide.

The ICC's target for the event was to generate corporate sponsorship amounting to US $550 million from commercial rights agreements relating to the tournament and subsequent events up to 2007. The ICC justified its contractual restrictions by stating that manufacturers and dealers of products that compete with official sponsors would seek to capitalize on the publicity generated by the event by associating themselves with it. They were concerned that corporate houses would not sponsor the event due to "ambush marketing" by rival companies.

What is Ambush Marketing?

In the absence of any statutory definition, 'Ambush marketing', also referred to as 'Parasitic Marketing', has been broadly defined by authors as "the unauthorised association of an organisation with the marketing of a particular event whereby they gain benefit of the marketing rights of that event without having to pay the license fee applicable in order to be associated with the event."

In such a case, a company attempts to weaken or dilute its competitors' position as the "official" sponsor of a highly publicized international event through aggressive brand promotions and advertising campaigns during the event. This is intended to divert public attention and cause confusion about which company/brand holds official sponsorship rights to it.

Historically, companies have tried to outdo their competitors at international sporting events. The more controversial among these have been:

Coke was the official sponsor of the 1996 Cricket World Cup hosted in the Indian subcontinent. Pepsi exploited the opportunity with its 'Nothing official about it' advertisement featuring celebrity cricketers.

(b) At the 1994 Lillehammer Winter Olympics, Norway, Visa paid approximately US $40...