Doing battle on and off the pitch

A review of IP disputes in Brazil during the FIFA World Cup and the lessons learnt.

When German midfielder Mario Götze controlled the ball on his chest and volleyed it into the net to score a spectacular goal against Argentina in extra time, the world witnessed the final act in a phenomenally successful Fédération Internationale de Football Association (FIFA) World Cup. For one month, fans from all over the world gathered in Brazil to support their national teams and celebrate their passion for football.

While 32 nations vied for the trophy and the world’s best football players showed off their skills, a fierce dispute was also raging off the pitch – a dispute relating to intellectual property, exclusive marketing rights and million-dollar sponsorship deals.

The players in this legal/commercial dispute are well known. The first is FIFA, the world governing body of football, which has turned the FIFA World Cup into the world’s most successful sporting event. FIFA has several official partners and sponsors, which have made significant investments for the right to associate their products and services with such a high-profile event.

The second is the Brazilian Football Confederation (CBF), the entity which owns the IP and marketing rights related to the Brazilian football team. Like FIFA, the CBF manages a robust sponsorship programme and controls a highly valuable asset: the only team which has won the FIFA World Cup five times and which was playing at home this time round.

On the opposing side are non-sponsoring companies – entities that have no contractual relationship with either FIFA or the CBF, but did not want to miss out on the party and tried to associate their products and trademarks with the FIFA World Cup or the Brazilian team.

This article provides an overview of this off-pitch dispute. It first outlines the Brazilian legal framework, and in particular the legislation which was specifically enacted for the FIFA World Cup. It goes on to elaborate on the enforcement measures which were taken during the event and concludes with an analysis which we hope will contribute to the debate concerning the protection of intellectual property and marketing rights related to major sporting events.

Legal framework and special legislation

As a condition to host the FIFA World Cup, the Brazilian government guaranteed to FIFA that it would enact specific legislation regulating the intellectual property and marketing rights related to the event.

After several rounds of discussions, in 2012 the Brazilian Congress passed the General World Cup Act (12.663/12), which regulated several aspects of the FIFA World Cup. More specifically, the statute:

  • defined ‘ambush marketing’ and declared this practice both a civil wrong and a criminal offence;
  • established restricted commercial areas around the stadiums and along their access routes;
  • granted special protection to the trademarks and official symbols relating to the FIFA World Cup and the FIFA Confederations Cup;
  • established a fast-track procedure at the Brazilian Patent and Trademark Office for FIFA’s trademark applications and other related applications;
  • prohibited several advertising activities targeted at the events; and
  • regulated the broadcasting rights related to the events and the use of images for non-commercial purposes.

Insofar as ambush marketing is concerned, the statute defined and prohibited ambush marketing both by association and by intrusion.

Ambush marketing ‘by association’ was defined as the “advertising of marks, goods or services…by means of a direct or indirect association with the official events or symbols …leading consumers to believe that such marks, goods or services are approved, authorized or endorsed by FIFA”.

Ambush marketing ‘by intrusion’ was defined as the “exhibition of marks, goods, services or the performance of any promotional activity…in a manner to attract by any means the public attention at the sites of the official events, with the purpose of obtaining an economic or marketing advantage”.

The statute also granted FIFA and its sponsors exclusive rights to advertise their trademarks, goods and services and conduct promotional activities in and around the official competition sites and along their main access routes. The boundaries of the restricted areas were set at a maximum distance of two kilometres.

These provisions served as powerful tool to prevent non-sponsoring companies from associating themselves with the event.

By prohibiting unauthorised association with the event, the statute created a tort which is not included in traditional IP laws, especially when no IP infringement is involved. Unsurprisingly, this provision was very important in preventing non-sponsoring companies from free riding on the goodwill developed around the FIFA World Cup.

The General World Cup Act extended the protection which the Brazilian IP Statute affords to famous marks to FIFA, granting its marks highly renowned status and thus protecting them in all classes of goods and services. This special protection forestalled any possible argument by prospective infringers that FIFA’s marks were not registered in a specific class in which infringement was taking place.

The General World Cup Act also confirmed the provisions of the IP Statute and declared the reproduction, imitation or modification of FIFA’s trademarks to be a civil wrong and a criminal offence. Finally, the act qualified as illegal the import, export, sale, offer for sale, distribution, hiding or storage of any goods bearing a reproduction or imitation of a FIFA trademark.

The CBF also had some interesting weapons in its arsenal. Although the ambush marketing and famous marks provisions of the special statute did not extend to it, the CBF could rely on a powerful provision in the Sports-Related Issues Act (9.615/98) – the so-called ‘Pelé Act’. This provision creates a sui generis right and grants sports administration entities such as the CBF and FIFA exclusive rights to use and commercially exploit their symbols and names in any class of goods and services, regardless of the existence of a formal registration.

The CBF has argued that the term ‘symbols’ in the act should be interpreted broadly to include not only its official crest, but also the trade dress of the Brazilian team strip. This has substantially expanded the scope of its protection, enabling it to combat the reproduction, imitation or adulteration of Brazilian team strips and their unauthorised commercial use.

Further, whenever the CBF discovered that a company engaged in ambush marketing was a direct competitor of an official sponsor, it successfully relied on unfair competition and unjust enrichment laws to prevent aunauthorised associations with the Brazilian team.

Off the pitch an unprecedented anti-ambush marketing enforcement programme helped to build up a substantial body of case law

Enforcement of rights

Between the FIFA Confederations Cup and the FIFA World Cup, FIFA reportedly dealt with hundreds of IP infringement and ambush marketing cases in Brazil.

Under specific border regulations in some Brazilian states, FIFA brought several civil infringement suits to prevent the distribution of counterfeit products on the Brazilian market. It also brought criminal suits against companies that were distributing counterfeit goods.

Likewise, the CBF adopted an aggressive enforcement strategy during this period, sending more than 100 cease and desist letters and launching five infringement suits in relation to ambush marketing alone.

This flurry of activity resulted in comprehensive enforcement programmes and helped to build up a substantial body of ambush marketing case law.

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Fifa’s 27-page guidance document on the use of its official marks was designed to prevent companies from unintentionally infringing

Ambush marketing

Brazil’s ambush marketing policy aims to protect the investments of official sponsors by preventing non-sponsoring companies from engaging in unauthorised marketing activities that create an association with the event or with the team.

In practice, however, determining the scope and the boundaries of these rights is not that simple. Several cases have involved a high degree of subjectivity. Further, while the investments of official sponsors should be protected, a reasonable balance must also be struck with other legitimate interests.

A review of one ambush marketing decision prior to the 2014 FIFA World Cup provides useful insight in this regard. In 2009 the CBF challenged an advertising campaign in which a beverage company hired former players of the Brazilian team and showed them in a changing room preparing for a match, wearing a similar strip to the Brazilian team. Although there was no use of the CBF’s official crest, the CBF filed suit contending that the defendant’s ad was illegal since it created a fraudulent connection between the beverage company and the Brazilian team. The CBF relied on the Sports-Related Issues Act to protect the trade dress of its strip, as well as on unfair competition and unjust enrichment principles.

The beverage company argued that there was no infringement of any IP right and that the strip displayed in the ad was unlikely to be confused or deceptively associated with the Brazilian team. The company also accused the CBF of attempting to appropriate the colours yellow and green – something which is not allowed, since these are the colours of the Brazilian flag.

The CBF prevailed at all instances. In affirming the trial court decision, the Court of Appeals of Rio de Janeiro pointed out that “the aired commercial with the former players clearly leads consumers to believe it is the Brazilian Team. The Defendant’s argument that the color of the shorts is green, while the Brazilian Team’s is blue, is immaterial and does not eliminate the infringement because the challenged ad achieved its goal: showing the Brazilian Team drinking the beverage and being victorious”.

Subsequently, the Superior Court of Justice – Brazil’s highest court for non-constitutional matters – upheld the ruling. The court rejected the argument that CBF was trying to appropriate the colours yellow and green, and emphasised that “the case is not about the misappropriation of national symbols, but about their use in a context which unequivocally creates a connection with the Brazilian Team, whose marketing rights belong to CBF”.

The ruling is important because it allows the CBF to tackle not only precise reproductions of its symbols, but also possible imitations. The ruling also stresses the importance of observing the overall context of an ad to determine whether that context creates a fraudulent association.

Finally, thus far this is the only ambush marketing case to be decided by the Superior Court of Justice, which has significant authority over the lower courts in Brazil.

In a similar case tried during the FIFA Confederations Cup, the CBF brought an infringement suit against a watch company that aired a commercial featuring the five former captains of the Brazilian teams which previously won the FIFA World Cup.

The players were wearing official Brazil jerseys, but the CBF crest had been removed. The trial court granted the preliminary injunction requested by the CBF and ordered the defendant to stop airing the ad, pointing out that “courts should prevent ambush marketing and the unauthorized use of the Brazilian Team’s jerseys”. The parties then reached a settlement agreement and the suit was dropped.

During the FIFA World Cup, the CBF also detected several infringements involving the imitation of CBF symbols on t-shirts and other clothing accessories. In one of these cases, a casualwear company was selling t-shirts with an imitation of the CBF’s former crest as part of a promotion where the discount offered was proportionate to the number of goals that the Brazilian team scored in each match: 10% for one goal, 20% for two goals and so on.

The CBF brought an infringement lawsuit against the company and the trial court granted the preliminary injunction suspending the sale of the t-shirts and the promotion. In its decision granting the preliminary injunctive relief, the trial judge emphasised that “the World Cup in Brazil entails substantial investments in licensing and sponsorship deals from CBF’s partners”, and that “the use of the challenged crest and the promotion leaves no doubt about the Defendant’s intention to associate its goods to the Brazilian Team”. Subsequently, the parties also reached a settlement agreement and terminated the proceedings.

The CBF also tackled several other promotions which referred to, and relied on the performance of, the Brazilian team.

In one, a large car manufacturer offered to extend the warranty on its cars from five to six years if Brazil won the title. The promotion was advertised with the slogan: “Because we trust in our quality. Because we trust in Brazil.” In another, a television retailer offered a second television for free in the event of a Brazilian victory. In both cases the CBF served the companies with cease and desist letters and they agreed to end or revise their promotions so as to eliminate any association with the Brazilian team.

FIFA has also taken a proactive approach to defending the interests of its commercial partners. In numerous cases it tackled practices which involved no direct infringement of IP rights, but where the overall context of the campaign could lead consumers to believe that the company had some kind of commercial connection with either FIFA or the FIFA World Cup. The provisions of the General World Cup Act prohibiting ambush marketing were very important in this respect.

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FIFA participated in many different retention cases conducted ex officio by Brazilian Customs, targeting products infringing the Fuleco mascot and the WORLD CUP 2014, BRASIL 2014 and WORLD CUP marks

Border enforcement

According to the IP Statute and the Customs Regulation (Decree Law 6.759/2009), the customs authorities, either ex officio or at the request of an interested party, may seize any product that violates IP rights.

When compared to those of other IP owners, FIFA’s border enforcement initiatives have proved effective. FIFA participated in many different retention cases conducted ex officio by Brazilian Customs at the ports of Santos, Itajai, Manaus, Itaguai, Guarulhos Airport and the dry port of Sao Paulo. Thousands of infringing products were seized. Mostly, those products involved infringement of the Fuleco mascot and the WORLD CUP 2014, BRASIL 2014 and WORLD CUP trademarks.

These cases were the results of numerous training sessions organised by FIFA between 2013 and 2014, in which its in-house counsel presented customs officials with all necessary materials and guidelines allowing them to identify counterfeit products entering in Brazil.

All ex officio retentions conducted by Customs during this period involving the infringement of FIFA trademarks were grounded on Article 198 of the Industrial Property Law (9279/96), which provides that “customs authorities, ex officio or at the request of an interested party, may seize, at the time of checking, any products carrying falsified, altered or imitated marks or a false indication of source”.

The exact terms of Article 198 were reproduced in Article 605 of the Customs Regulation.

Meanwhile, Customs also conducted ex officio retentions for copyright violations in accordance with the rules set forth in Article 610 of the Customs Regulation, which provides that the retention of products is “applied, as appropriate, to imports and exports of goods with evidence of copyright violation”.

Moreover, as a supplementary rule, Article 692 of the Customs Regulation provides for the destruction of products which are imported in breach of specific legislation (Law 9,279/96).

FIFA retentions were also based on:

  • the rules set out in Article 51(4) of the Agreement on Trade-Related Aspects of Intellectual Property Rights, approved by Legislative Decree 30/1994 and enacted by Decree 1,355/1994, which allows right holders to request the suspension of imports of merchandise that violates their IP rights;
  • Normative Instruction 1,169 of June 30 2011, which provides that suspicious merchandise may be confiscated; and
  • Article 31 of the General World Cup Act, which provides for the criminal prosecution of importers of illegal merchandise.

Brazilian Customs does not maintain a centralised IP rights database allowing rights holders to record their IP rights. In addition, there is no standard procedure throughout the country for the seizure of goods at the border. However, even with these two fundamental shortcomings, FIFA was able to secure effective border protection in Brazil.

Police raids

Police raids were another remedy used by FIFA to seize illegal products on the market. Many raids were conducted between the FIFA Confederations Cup and the FIFA World Cup across Brazil, resulting in the seizure of thousands of counterfeit products involving violation of the IP rights of FIFA.

All ex officio raids conducted by state police authorities during this period involving the infringement of FIFA trademarks were grounded on Articles 189 and 190 of the IP Statute, which provide that a crime is committed when someone: “i) reproduces a registered mark without the authorisation of the registrant, or imitates it; ii) alters the registered mark of a third party already applied to a product placed on the market; iii) imports, exports, sells, offers or exhibits for sale, hides or maintains in stock a product branded with an illicitly, wholly or partially, reproduced or imitated mark of a third party or a product from his industry or commerce, held in a vessel, container or package carrying a legitimate mark of a third party”.

FIFA also cited Articles 30 and 31 as grounds for ex officio police raids. Article 30 prohibits the “reproduction, imitation, falsification and unduly modification of any Official Symbols owned by FIFA”. Article 31 prohibits the “import, export, trade, distribution, offer and exhibition for sale, hiding or maintaining in stock Official Symbols or products resulting from reproduction, imitation, falsification or unauthorized modification of Official Symbols for trading or advertising purposes”.

By prohibiting unauthorised association with the event, the statute created a tort which is not included in traditional IP laws

Conclusion

It is clear that today, the battles in the FIFA World Cup are no longer restricted to the pitch. While the players score goals and fans celebrate in the stands, legal teams are on alert to protect the rights of official sponsors and ensure fair play outside the stadiums.

Without doubt, the Brazilian legislative framework provided FIFA with powerful tools to act against ambush marketing and other illegal activities related to the event. FIFA relied heavily on the special legislation and managed to protect its intellectual property and the commercial interests of its partners.

This is also true of the CBF. While the Brazilian team may have failed to secure its coveted sixth title, off the pitch an unprecedented anti-ambush marketing enforcement programme netted superb results for both the CBF and its sponsors. This helped to build up a substantial body of case law, which should assist in preventing ambush marketing and other free riding practices.

Overall, the experience may provide useful guidance for any country which intends to host a major sporting event in the future.

Jose Henrique Vasi Werner ([email protected]) and Gustavo Piva de Andrade ([email protected]) are partners at Dannemann Siemsen Advogados

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