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Intellectual Property Rights in Sports

Author: Ishani Pradhan / Sportia Law intern: 2023

This article is written by Ishani Pradhan, a law graduate with a masters degree in Sports Law from Escuela Universitaria Real Madrid, Universidad Europea. This article describes in detail the application of Intellectual Property Rights in Sports and the importance it has on the development of the sporting industry.

Intellectual Property Rights (IPRs) play a significant role in the sports industry, with each type of IP - trademarks, copyright, industrial designs or patents - forming an integral part of the commercial sporting world. Patents foster technological advancements in sporting equipment, while trademarks and industrial designs contribute to establishing unique identities associated with events, logos, sportspersons and teams. Copyright generates revenues required for broadcasters to invest heavily in broadcasting sports events globally. IPRs offer protection from potential disputes. Popular sports have developed international sporting events boasting enormous fan followings. This provides organizers with massive marketing potential and enables them to capitalize on variousIPRs created by these franchises for advertising purposes, as well as merchandising and licensing ventures which generates brand equity and reputation, in turn ultimately leading to substantial profits. Even individuals or sport teams have started creating their brands complete with logos and taglines all trademarked commercially used so as to obtain benefits, therein further highlighting how significantly commercialized this industry has become over recent years.

This article primarily centers on the multifaceted benefits of Intellectual Property (IP) protection in the sporting industry. Not only does it safeguard the rights and interests of diverse stakeholders, but IP protection helps in upholding the value of brands, generates revenue, shields athletes, ensures exclusivity for official sponsors, regulates content distribution, fosters innovation, offers legal remedies, attracts investment, and preserves the integrity of the game. Consequently, it plays a pivotal role in sustaining the business and competitive aspects of the sports industry.

‍I. Some key aspects of Intellectual Property in Sports:

Trademarks and branding

Trademarks can be used to generate revenue streams to cover the costs of organizing sports events.They are essential marketing tools that allow businesses to differentiate themselves from competitors. Sports clubs like Real Madrid, Manchester United, and many other clubs leverage their brand name and fans' loyalty to augment club revenues through sponsorship deals and new digital media and content prospects. Sports sponsorship agreements hinge on trademark rights while also providing considerable monetary benefits. The Olympic Games demonstrate how valuable sports sponsorships can be, with partnerships generating over 30% of total Olympic earnings. Sporting institutions use their trademarks alongside other IP rights via licensing arrangements granted to third parties which produce merchandise like apparel, and other accessories including footwear amongst others. Top athletes have joined in on leveraging personal brands built around their success stories towards generating significant endorsement contract revenue courtesy major sportswear or related corporations.

Copyrights and broadcasting

Sports rely on broadcasters to engage fans and attract sponsors. Broadcasters pay for exclusive rights to broadcast top sports events live, which has become the primary source of revenue for most organizations. Digital media has allowed broadcasters to offer various formats across multiple platforms, but this has also led to an increase in signal piracy. Revenue from television broadcasts at the Tokyo 2020 Olympic Games made up $3.1 billion that year. Royalties earned by broadcasters enable them to invest in technology infrastructure for high-quality broadcasts reaching millions of viewers worldwide and giving fans a better experience.

‍Patentsand inventions

Technology has always had an important role to play in the sports industry, but the rise of digital technologies has improved technological development like never before. Novel technologies protected by patents (or as trade secrets) are taking the sports industry to a bigger reach globally.These technologies are transforming the sports experience from the training camp to the sports stadium to our living room, and are opening the way for new sports such as e-sport and drone racing to emerge. In today's world, with globalization, sports technology is experiencing huge growth.

Sophisticated information and communication technologies are now widely available in smart sports equipment, allowing athletes at all levels to track and evaluate their performance while identifying areas for improvement. Innovative materials have revolutionized the design of sports shoes and protective gear, reducing the risk of injury among athletes and other sports personnel at all times. Millions of dollars are being invested in innovative technologies within sports stadiums around the world to offer fans a rich blend of physical and digital experiences. High-grade Wi-Fi networks allow fans to remain connected while taking advantage of mobile apps offering a wide range of services for an enjoyable fan experience. Exciting new ways for fans worldwide to enjoy their favorite sports have emerged through innovative technological developments transforming the fan experience.

‍AmbushMarketing

Ambush marketing is a strategy used by companies to promote their products or brands by associating themselves with teams, leagues, or events without paying for sponsorship privileges. This can involve tactics such as flying branded flyers around sporting venues, distributing free merchandise at events, displaying ads wishing teams good luck, and using event tickets as prizes. One example of this occurred during the 2012 Olympics when Beats, the US business, founded by rapper Dr. Dre and music executive Jimmy Lovine, distributed special edition headphones to athletes for which the athletes were not paid. They distributed the headphones for free for them to endorse it. Some athletes wore the headphones while they were seen during the competition, providing valuable airtime coverage. There were a lot of tweets by athletes appreciating the product and the company achieved this without any sponsorship deal.‍

Personality Rights

Professional athletes possess unique images and their personalities represent their distinct intellectual property. The identities of these individuals, including their names and likenesses, are frequently utilized for commercial branding and sponsorship agreements. As such, it is crucial that athletes maintain a positive public image in order to attract lucrative sponsorship deals while simultaneously allowing sporting organizations or clubs to promote merchandise utilizing the athlete's good personality and image.

‍Domainnames and websites

Domain names are important for protecting the intellectual property rights associated with sports. With the increase in online dissemination of information and broadcasting of sporting events, there has been a rise in market share for branding and value creation. However, cyber squatter stake advantage of the confusion surrounding domain names. Sponsors conduct online competitions, sell tickets online, and offer merchandise through various portals available on the internet to engage the public and build brand recognition. Registering multiple domain names has become vital in safeguarding sports enthusiasts, fans, merchandise buyers, and those seeking information from committing errors that lead to deviation of traffic towards unauthorized websites hosted by cyber squatters. Domain names help build brand image while performing search engine optimization which ultimately leads to better visibility on search engines such as Google or Bing amongst others.

Sponsorships and Licensing

Sports organizations can increase their income by licensing patents, trademarks, and copyrights while retaining ownership.Trademark licenses allow producers to use trademarked ideas while maintaining quality. Technology licenses relate to equipment-related ideas and can increase revenue for companies. Sponsorship offers marketing opportunities for companies during major sporting events such as FIFA World Cup or IPL. Sponsors gain brand association and media interaction opportunities depending on their level of sponsorship and the event.‍

Trade Secrets

Sports generate a considerable amount of confidential information that serves as a vital component for competitive advantage and value generation. Sports teams accumulate exclusive data in the form of statistical analysis, scouting reports, dietary regimes, physiological metrics, and psychological assessment methodologies, with the aim of gaining a potential competitive advantage over their opponents. Sporting equipment often incorporates undisclosed new compounds and materials to enhance athletes' performance. Enterprises allocate significant resources towards extensive focus groups to identify the best combination of features and designs that make their products more appealing and marketable.  

II. Sports and Technology

Sports entities are progressively allocating resources towards novel technology in order to elevate the fan experience for people worldwide. Through wireless devices, supporters can now receive instantaneous updates directly at their fingertips. These updates encompass a wide range of information such as scores, player statistics, and significant moments within the game, providing fans with constant awareness about all aspects of the match including live notifications for pivotal events of the match like goals, fouls or injuries. Additional features enable fans to access comprehensive profiles of players which include individual stats, performance history and achievements; furthermore they can follow multiple games simultaneously thanks to multitasking capabilities.

Due to technology, the fan experience of watching a match has been made interactive and immersive. Fans are no longer limited to their seats; they can now actively engage in the game, even from the comfort of their own abode. The implementation of Virtual Reality (VR) and Augmented Reality (AR) technologies have enabled fans to encounter the game from diverse perspectives as if they were physically present at the event. Additionally, fans can connect with other supporters via social media platforms where they share thoughts, opinions and emotions in real-time. Moreover, fans can participate in live polls, trivia quizzes and interactive games related to sports that further elevate their overall engagement with the sport. Sports Innovation Lab, a technology-focused services firm, reported that UEFA, Fox and Facebook joined forces in 2017 to stream the UEFA Champions League on their respective platforms. This collaboration resulted in an impressive number of interactions from over 34 million Facebook users who engaged with the Champions League approximately 98 million times. Moreover, during 2018, Olympic Broadcast Service partnered with Intel to capture more than fifty hours of sports footage using virtual reality technology.

The incorporation of novel technology and innovative measures to enhance the fan experience and elevate the sports industry to unprecedented heights in terms of global reach and profitability makes its important for the safeguarding of intellectual property rights against infringement. As cutting-edge technologies continue to be integrated into the world of sports, it is vital that these advancements are shielded from any unauthorized exploitation.

III. IP related disputes in Sports

Numerous legal complications may arise within the sports industry, such as trademark infringement, brand exploitation, mislabeling, bad faith misuse, utilization of a sports personality's name without permission or compensation for licensing fees and royalties. Copyright violations may also occur concerning copyrighted merchandise, sporting equipment, logo artwork, broadcasting sans license and piracy in audio-visual recordings.

Lesser known organisations often attempt to leverage the reputation of larger brands by counterfeiting their products. This frequently results in confusion among consumers, who are unable to distinguish between genuine and fake items, leading to significant profits for counterfeiters. Furthermore, these imitations are typically sold at lower prices than authentic goods, which further fuels demand as people desire branded merchandise without paying exorbitant fees. Consumers may unknowingly purchase these counterfeit products under the mistaken belief that they are genuine and reputable brands.

Additionally, promotional material scan infringe upon copyrights if utilized improperly alongside software usage without proper authorization or royalty payment.Design infringement can also transpire through unauthorized use for promotion of other goods while utilizing patented technology without owner approval constitutes further issues. These matters have potential to damage goodwill and lead to unfair trade practices resulting in commercial disputes. This ultimately causes significant financial losses that contradict the primary purpose of exploring the commercial aspect present within the sports industry.

Nike Jumpman Logo dispute

In March 2019, the Supreme Court declined to hear an appeal ofNike's successful dismissal of a copyright infringement lawsuit filed by photographer Jacobus Rentmeester against

Nike's Jordan Brand Jumpman Logo, ending a four-year legal battle. Rentmeester sued Nike for copyright infringement, alleging that the NikePhoto and the Jumpman Logo infringe the Rentmeester Photo after thirty years since it was taken. The district court agreed with Nike that there was no substantial similarity between the two photos by citing various differences in the two photos such as the differences in the mood, appearance of Mr. Jordan, setting and background, color of the sky, lighting, shadow, and depiction of the sun, and the appearance of the basketball hoops.

The Ninth Circuit affirmed the district court but clarified some aspects of the law. The Ninth Circuit found that Rentmeester's photo "is undoubtedly entitled to broad rather than thin protection" in light of the great range of creative choices that were made and depicted in the photograph. However, in determining whether the Nike Photograph was substantially similar to the Rentmeester Photograph, the court concluded: by stating that "the works at issue here are as a matter of law are not substantially similar." And by declining to hear the case, the Supreme Court upheld Nike's victory by ensuring that the dispute would remain resolved in their favor based on the Ninth Circuit's reasoning.

Adidas v. Thom Browne trademark case

Adidas has appealed the unfavorable decision made in January 2023regarding its trademark dispute with fashion designer Thom Browne. Adidas is known for taking action against brands it believes use a stripe motif similar to its three-stripe trademark. The dispute with Thom Browne began in 2007 when Adidas complained about the use of the three-stripe motif on a high-end sports jacket. Thom Browne settled and changed the design to four horizontal bars. However, he came back onto Adidas's radar when he filed an application for his Grosgrain Signature mark in 2018. Adidas claimed that Thom Brown intentionally used assimilar trademark benefiting from Adidas's "widespread fame and tremendous public recognition "resulting in customer confusion which led close to a $8 million damages claim by Adidas. Thom Browne successfully argued that because they were non-competitors, with significantly different price points, their customers would not confuse the products' origin or source; thus, they did not compete directly against each other. In closing arguments during trial, Thom Browne's team stated pointedly that "Adidas does not own stripes". The defendant relied heavily on the operation of both brands within non-competing markets; hence consumers could easily differentiate between them.

Triumphing over Adidas, Thom Browne was found not liable for TradeMark Infringement paving way for dismissal of the case without paying any damages. 

IV. Resolving IP disputes in Sports

To protect intellectual property (IP) in sports, legal and contractual agreements must be established. This includes safeguarding the interests of stakeholders and their financial investments. Proper monitoring should be conducted to prevent the misuse of trademarks, domain names, personality rights, patents and copyrights among others. Relevant registrations and licenses should be obtained before releasing IP into the public domain within the sports industry. An effective strategy for intellectual property rights (IPRs) should be implemented concerning patents, trademarks, designs, domain names as well as media and broadcasting rights. Whenever unauthorized use is detected; appropriate legal remedies under law ought to be taken which can come in various forms such as civil remedy or administrative action depending on jurisdictional circumstances- cease-and-desist notices or filing suits for infringement are some examples of available legal means.‍

Concluding Remarks

The sports industry is a global enterprise that generates employment opportunities and sustains the livelihoods of individuals working for broadcasters, manufacturers, advertisers, and other related industries worldwide. The commercialization of sports incentivizes businesses and individuals to pursue innovation and brand development through intellectual property(IP) protection. The popularity of specific sports leads to the growth of connected industries and technologies. There is also a powerful interdependence between individual players, their teams, respective leagues, branding agencies as well as sporting goods and sportswear companies. Trademark laws safeguard fans' deep connection with teams, clubs, players as well as merchandise associated with them. Intellectual Property Rights laws are indispensable within the sports industry since media companies often pay colossal amounts for exclusive broadcasting rights during sporting events. Sports associations invest massive sums into organizing high-profile events; hence IP protection becomes crucial not only for their interests but also those of sports person participating therein.

The violation of intellectual property rights can result in harm to reputation and significant financial losses, ultimately hindering the advancement of the sports industry as a whole. Hence, safeguarding and enforcing IPRs within the realm of sports is vital for cultivating a prosperous commercial environment for all related industries.

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Playing by New Rules: FIFA's Attempt to Redefine Football Agency

‍Author: Rahil Sharan / Sportia Law intern: 2023

FIFA's recent release of the new FIFA Football Agent Regulations (FFAR) in early January 2023 introduced significant changes impacting various stakeholders in the football community, including agents, lawyers, players, managers, and national associations. One of the notable adjustments is the commission cap, which now limits agents to 6% of a player's annual remuneration when representing both the player and the buying club. This cap is a decrease from the earlier range of 3%-10% which was commonly accepted amongst agents, players and clubs. When representing only one party, agents face a cap of 3%. However, a more lenient 10% cap is reserved for players earning $200k or less annually. Additionally, agents working with selling clubs can receive up to 10% of the transfer fee.Critics of this change have labeled it as anti-competitive, wondering why similar restrictions haven't been imposed across the industry, and anticipate legal challenges.

Further, in terms of payment structure, clubs can no longer pay agents for player services, mandating players to settle these fees directly with their agents. This paradigm shift might prompt clubs to recalibrate player salaries or face potential legal quandaries. Agents are also required to undergo a stringent licensing examination, with the risk of losing representation contracts and future commissions for those who fail. The timing of these exams has drawn criticism, with established agents concerned about potential consequences. All representation agreements post-FFAR must adhere to the new regulations by October 1, 2023, leading to potential contract modifications and concerns over transaction delays. In its attempt to ensure agents don't exploit loopholes, FIFA has expanded its purview to regulate commercial deals. Agents must now disclose to FIFA any agreement related to "Other Services "within two weeks, with stringent penalties awaiting violators.

Regarding transparency, FIFA intends to unveil transaction details involving football agents, including service fee amounts. This decision has sparked debates about the sensitivity of such data and potential conflicts with data protection laws.

Since March 2023, various European legal challenges against the FFAR have surfaced, especially regarding the agent commission caps. A German court questioned the FFAR's compatibility with EU competition rules, redirecting it to the EU Court of Justice (CJEU). In the interim, FIFA has retroactively suspended the FFAR for all transactions connected to the German market since May 24, 2023. The suspension encompasses any transaction involving a party linked to Germany, affecting all participants in the deal irrespective of their residence.

Conversely, a Dutch court dismissed a similar case filed by the European Football Agents Association (EFAA), deeming it not urgent. Meanwhile, the EFFA and Pro Agent contended that FIFA lacked the authority to regulate their profession as they weren't FIFA members and argued against the service fee cap and the mandatory agent exam. This disagreement highlighted a preliminary ruling in Germany, which deferred the decision on FIFA's agent regulations to the European Court of Justice (ECJ). The Netherlands Central Court's decision is contingent on the ECJ's ruling.

Contrastingly, Dortmund's District Court inGermany has issued an injunction against specific FFAR provisions, promptingFIFA to appeal. Several agencies, including CAA Base, Wasserman, Stellar, andARETÉ, began arbitration proceedings against the National Football AgentRegulations (NFAR) concerning English domestic transfers. In July 2023, the Court of Arbitration for Sport (CAS) predominantly sided with FIFA. This verdict, coupled with potential variations in FFAR applications in countries like France and Italy due to national laws, adds layers of complexity.

Given these developments, both FIFA and football agencies are navigating treacherous waters. An impending decision froman English FA Rule K arbitration could prompt FIFA to extend similar processes to England. With the CJEU's anticipated decision on the horizon, the outcome will be crucial for all involved parties, potentially sending shockwaves through the football agent community.

The Football Association's introduction ofFIFA's new agent regulations has been postponed. These global changes encompass agents representing family members, multiple parties in a deal, capped agent fees, and a mandatory licensing exam. The delay occurred after significant British agencies challenged the new regulations. A verdict is expected by the end of November 2023.

Leading sports lawyer, Dan Chapman, commented on the situation, highlighting the impracticality of imposing regulations unseen by UK football agents and criticized the untimely delay announcement.According to Chapman, the ongoing industry dispute is complex, and FIFA's roll-out approach to the new agency regime resulted in global litigation and confusion. While England-based agents resist the new rules, similar challenges are being faced elsewhere. EFAA's challenge was unsuccessful in the Netherlands, but a temporary injunction was granted in Germany, pending an ECJ ruling.

PROFAA contended that the FFAR violated various national and EU laws, encompassing breaches of Swiss competition law,Italian, and French laws, the Major League Soccer collective bargaining agreement, and multiple EU regulations. While PROFAA's claims were largely dismissed, the core EU competition law analysis by the CAS panel in this case warrants close scrutiny.

The Court of Arbitration for Sport upheld FIFA's position, rejecting PROFAA's assertion that the regulations infringed upon competition and EU laws. This ruling solidified FIFA's legitimate authority to regulate football agents' services, adding a further layer of complexity to the ongoing debates surrounding the new regulations.

This examination of the FFAR raises a central inquiry: do these regulations infringe upon established competition and data protection laws? Before we probe further, it's important to emphasize the essential role many of these regulations play within the FFAR. They set the foundation for maintaining professionalism and ethical decorum in football agency and aim to achieve consistent standards globally among football agents.However, our analysis indicates that FIFA might have exceeded its authority, inadvertently placing a heavier load on the football agency sector, especially the smaller and mid-sized entities.

In particular, certain sections of the FFAR appear to clash with Swiss Competition Law and the Treaty on the Functioning of the European Union. Notable concerns arise from the initiation of a commission cap, variances within these cap limits, and curbs placed on representational freedom. As currently defined, these rules seem to hinder competition, both in intent and outcome, lacking alignment with FIFA's primary objectives.

Equally concerning is Article 19 of the FFAR, which seems to collide with the General Data Protection Regulation. It compromises an individual's core rights to privacy and confidentiality by revealing the identities of clients managed by football agents and detailed insights into their transactions, down to the exact service fee figures.

Adding to this, the prerequisites specified in Article 5(1)(c)(i) present an unnecessary and unjustifiable obstruction for those seeking entry into the profession, restricting the autonomy of football agents in their professional pursuits.

One must also highlight an apparent misdirection in the rules we've dissected here. Instead of curbing the exorbitant financial gains of top-tier football agents, these guidelines may inadvertently hamper the smaller football agencies. This may result in agents representing lower-salaried players having to dilute the quality of their services. The crux of the issue? The smaller agents might be compelled to represent more clients to balance out the revenue loss brought on by the commission restrictions.

It wouldn't be surprising if the European Courts resonate with these findings. Yet, FIFA seems unwavering in their belief that these regulations are aptly proportional to meet their objectives. This brings forth an imperative: FIFA must rethink its strategy. It's essential for them to engage in meaningful discussions with football agents and find solutions that are fair and beneficial for everyone in the football ecosystem.The road ahead should be paved with collaboration and empathy, ensuring the football agency sector remains both lawful and ethical.

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Date: 15 November 2023

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