Tribunal dismisses adidas' unfair trade practice complaint against Nike

India

In adidas India Marketing Pvt Ltd v Nike India Pvt Ltd (UTPE No 95 of 2007 and CA No 45 of 2007), the Competition Appellate Tribunal (COMPAT) has held that the sale by Nike India Pvt Ltd of T-shirts bearing the name of famous cricketer Sachin Tendulkar under a sponsorship contract with the Board of Control for Cricket in India (BCCI) did not amount to an unfair trade practice in relation to adidas India Marketing Pvt Ltd’s brand endorsement contract with Sachin.

(This case was not an appeal under the (Indian) Competition Act 2002, but was transferred to the COMPAT under the erstwhile regime of the Monopolies and Restrictive Trade Practices Act 1969 (MRTPA). Unfair trade practices are no longer covered by the new competition/anti-trust regime in India.)

                                             

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The issue arose when Nike started manufacturing and selling T-shirts bearing Sachin’s name after entering into an agreement with the BCCI for the sponsorship and supply of footwear and apparel, among other things. Prior to this agreement, adidas had already entered into a brand endorsement contract with Sachin. adidas, among other things, contended that:

  1. Nike’s use of Sachin’s personal attributes amounted to a breach of adidas’ agreement with Sachin and an unfair trade practice under the MRTPA;
  2. A clear distinction had been maintained in the BCCI-Nike agreement between the BCCI/team uniform and players' personal attributes to prevent Nike from using the agreement for personal endorsement;
  3. The BCCI cannot interfere with Sachin’s right to endorse products of his choice under his name under Section 35 of the Trademarks Act 1999; and
  4. Nike was passing itself/its products off as being affiliated or associated with Sachin.

In response, Nike and the BCCI contended that:

  1. The dispute was purely contractual/commercial and, therefore, had to be adjudicated by a Civil Court and not COMPAT;
  2. Nike’s T-shirts only evoked Sachin as a member of the Indian cricket team, and not on individual basis;
  3. Team-oriented sports apparel is in the public interest and does not imply sponsorship/approval by any individual;
  4. The BCCI has the right to use players’ attributes in the context of the performance of their duties as members of the BCCI team to promote cricket;
  5. Nike had acted on the BCCI’s representation that BCCI has not violated the rights of any person; and
  6. adidas’ parent/group companies in other parts of the world had sold T-shirts with players’ personal attributes through rights obtained from teams or federations.

After hearing the parties, COMPAT dismissed adidas’ complaint on the following grounds:

  1. adidas did not have locus to file the complaint in its individual capacity as it is not part of a consumer or trade association, as required under the MRTPA;
  2. Nike had not violated the adidas-Sachin agreement as it was not a party to the agreement;
  3. No evidence had been adduced to prove that an unfair trade practice had been used or that any prejudice had been caused to the public interest; and
  4. The adidas-Sachin agreement made an exception in favour of use of any product by Sachin as a member of the national or state team.

With the rise in professional sporting leagues in India (eg, the Indian Premier League and the Indian Super League), several players have attained celebrity status. This has led to a race among companies to sign brand endorsement contracts with sports celebrities. After signing such contracts, the celebrities have in fact become brands/trademarks that are associated with a particular product sold by a company, especially when the term of the contract is long. Interesting situations can arise when such contracts expire and the celebrities sign up with competitors - especially as there is no specific statute in India which protects publicity rights.

Adheesh Nargolkar and Shailendra Bhandare, Khaitan & Co, Mumbai

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