The only case to directly address the contours of ambush marketing is NHL v. Pepsi-Cola Canada Ltd. This case arose out of a Pepsi advertising campaign during the Spring of 1990 called the "Diet Pepsi $4,000,000 Pro Hockey Playoff Pool." This campaign was centered around the National Hockey League (NHL) play off games and the Stanley Cup, but Pepsi was neither an NHL sponsor, nor did it use any NHL official logos.
National Hockey League Services (NHLS), the licensing arm of the NHL, entered into an agreement with Coca-Cola Ltd. (Coke) as an official sponsor of the NHL for approximately $2.6 million in the Spring of 1989. Coke obtained the rights to use NHL symbols for its promotional programs in Canada and the United States.
Through this agreement, however, Coke did not obtain "any right to advertise during the broadcast in Canada of any televised NHL games." The NHL, not the NHLS, controlled such television rights and it sold them to Molson Breweries of Canada Ltd. (Molson) in 1988 for a five-year period.
By contract with Molson, the Canadian Broadcasting Corporation (CBC) televises what is called Hockey Night in Canada (HNIC), which includes at least one NHL game every Saturday night during the regular season, many of the post- season playoff games and the final Stanley Cup playoff games. Molson sold Pepsi the "right to be the exclusive advertiser of soft drinks during the broadcast of all 'Hockey Night in Canada' games.
In bringing its cause of action, the NHL argued that the Pepsi contest, particularly the television commercials, conveyed a false impression to the public that the NHL, in some form, approved or was associated with the contest. Because there was no breach of the agreement between the NHL and Coke, the NHL sought to establish that Pepsi had interfered with that business relationship. Conversely, Pepsi argued that the contest was "an aggressive but legitimate marketing campaign."
In deciding the issue, the court first described the tort of passing-off as a misrepresentation that "one's business is that of the plaintiff, or connected with that of the plaintiff in any way likely to cause damage." The court then enumerated the elements of the tort of passing off. Applying these elements to the case, the court concluded that there is "nothing that would constitute direct interference by the defendant with the due performance of the NHLS's contractual relationship with Coke."
The court continued, stating that although "the NHLS-Coke agreement obligates NHLS, so far as it is able, to protect the rights of Coke from 'Parasitic marketing,"' such an obligation cannot impose a duty upon a third party to refrain from advertising in a manner which, "although aggressive, is not, by the law of Canada, unlawful."
Thus, the court found that Pepsi was not in violation of Coke's contract nor did its aggressive advertising campaign amount to the tort of passing-off under Canadian law or infringe on registered trademarks. To date, this has been the only judicial decision directly addressing the question of ambush marketing. Because this is a Canadian case, it is not at all certain that its rationale will be adopted by American courts.
However, it is an understatement to say that this decision supports those seeking to ambush, because it widely opens the doors for ambushers so long as trademark and tradename infringement is not a part of the campaign.
A possible method of attacking the practice of Parasitic marketing in the United States may be found in a false advertising claim under section 43(a) of the Lanham Act.
The elements of a prima facie case for an injunction under section 43(a) are that the defendant:
(1) Uses a false or misleading
(a) Description of fact or
(b) Representation of fact;
(2) In interstate commerce
(3) And in connection with goods or services;
(4) In commercial advertising or promotion;
(5) When the description or representation misrepresents the nature,
qualities, or geographic origin of
(a) The defendant's goods, services or commercial activities or
(b) The goods, services or commercial activities of another person;
(6) And plaintiff has been or is likely to be damaged by these acts.
Thus, under this statute, all a plaintiff need prove, in addition to the above-listed elements, is likelihood of damage, because the Lanham Act was designed to protect consumers as well as businesses from the effects of false advertising.
While there is no American case on point, at least one scholar argues that ambush advertising which creates a misleading impression of official sponsorship can trigger a violation of section 43(a).
During the Sydney Olympics in 2000 the Sydney 2000 Act was passed to protect the sponsors.
National Hockey League Services (NHLS), the licensing arm of the NHL, entered into an agreement with Coca-Cola Ltd. (Coke) as an official sponsor of the NHL for approximately $2.6 million in the Spring of 1989. Coke obtained the rights to use NHL symbols for its promotional programs in Canada and the United States.
Through this agreement, however, Coke did not obtain "any right to advertise during the broadcast in Canada of any televised NHL games." The NHL, not the NHLS, controlled such television rights and it sold them to Molson Breweries of Canada Ltd. (Molson) in 1988 for a five-year period.
By contract with Molson, the Canadian Broadcasting Corporation (CBC) televises what is called Hockey Night in Canada (HNIC), which includes at least one NHL game every Saturday night during the regular season, many of the post- season playoff games and the final Stanley Cup playoff games. Molson sold Pepsi the "right to be the exclusive advertiser of soft drinks during the broadcast of all 'Hockey Night in Canada' games.
In bringing its cause of action, the NHL argued that the Pepsi contest, particularly the television commercials, conveyed a false impression to the public that the NHL, in some form, approved or was associated with the contest. Because there was no breach of the agreement between the NHL and Coke, the NHL sought to establish that Pepsi had interfered with that business relationship. Conversely, Pepsi argued that the contest was "an aggressive but legitimate marketing campaign."
In deciding the issue, the court first described the tort of passing-off as a misrepresentation that "one's business is that of the plaintiff, or connected with that of the plaintiff in any way likely to cause damage." The court then enumerated the elements of the tort of passing off. Applying these elements to the case, the court concluded that there is "nothing that would constitute direct interference by the defendant with the due performance of the NHLS's contractual relationship with Coke."
The court continued, stating that although "the NHLS-Coke agreement obligates NHLS, so far as it is able, to protect the rights of Coke from 'Parasitic marketing,"' such an obligation cannot impose a duty upon a third party to refrain from advertising in a manner which, "although aggressive, is not, by the law of Canada, unlawful."
Thus, the court found that Pepsi was not in violation of Coke's contract nor did its aggressive advertising campaign amount to the tort of passing-off under Canadian law or infringe on registered trademarks. To date, this has been the only judicial decision directly addressing the question of ambush marketing. Because this is a Canadian case, it is not at all certain that its rationale will be adopted by American courts.
However, it is an understatement to say that this decision supports those seeking to ambush, because it widely opens the doors for ambushers so long as trademark and tradename infringement is not a part of the campaign.
A possible method of attacking the practice of Parasitic marketing in the United States may be found in a false advertising claim under section 43(a) of the Lanham Act.
The elements of a prima facie case for an injunction under section 43(a) are that the defendant:
(1) Uses a false or misleading
(a) Description of fact or
(b) Representation of fact;
(2) In interstate commerce
(3) And in connection with goods or services;
(4) In commercial advertising or promotion;
(5) When the description or representation misrepresents the nature,
qualities, or geographic origin of
(a) The defendant's goods, services or commercial activities or
(b) The goods, services or commercial activities of another person;
(6) And plaintiff has been or is likely to be damaged by these acts.
Thus, under this statute, all a plaintiff need prove, in addition to the above-listed elements, is likelihood of damage, because the Lanham Act was designed to protect consumers as well as businesses from the effects of false advertising.
While there is no American case on point, at least one scholar argues that ambush advertising which creates a misleading impression of official sponsorship can trigger a violation of section 43(a).
During the Sydney Olympics in 2000 the Sydney 2000 Act was passed to protect the sponsors.