1. 

   andre louw says:

   Mar 12, 2012 at 8:48 pm

   Dear Prof Dean

   I read with interest your recent posting on IP law and sports on this website.
   I am writing just to stress the fact that, while you refer to FIFA’s rights protection efforts for its 2010 event by stating that ‘the example of FIFA and the 2010 World Cup should be salutary and its intellectual property rights protection campaign should be used as a template’, readers should note that such rights protection campaigns by FIFA and other event organizers are not uncontroversial, not by a long shot. While I know that you were, personally, closely involved in FIFA’s local IP and litigation strategy, those outside the loop have voiced valid concerns in recent years about the ways in which such event organizers (and FIFA is a prominent example) have tried to enforce their sometimes dubious rights, and in dubious ways.
   You refer to the Metcash judgment as strong authority for recognition of FIFA’s rights under passing off. With all due respect to the learned judge in that matter, I would not cite it as an example for my students of a clearly reasoned judgment in law which properly canvassed both sides’ arguments. I am also more interested in what happened in FIFA’s case against Executive African Trading (Mr. Grant Abrahamse’s firm), which case I understand was withdrawn at the 11th hour and that FIFA obtained an order for both parties to pay their own costs, thereby leaving the defendant with the mark of Cain as an ‘ambush marketer’ and a huge legal bill – while FIFA failed to prove any case against him beyond vilifying him in the media.
   On a related note it is also interesting that FIFA apparently chose to pursue legal action regarding its 2010 World Cup IP rights only against such small fry defendants – one wonders whether it ever considered taking legal action against deep-pocket potential defendant Nike with its phenomenally successful (and huge) Write the Future campaign during the event?
   The issues are all again receiving public attention with the London Games around the corner, where (as you’ll know) quite harsh laws are in place to combat ambushing. I hope that readers will consider that holding SA up as a ‘template’ for the protection of powerful event organisers’ IP might be just a little short-sighted. Our country’s anti-ambushing laws are viewed by many as the most strict (I would say draconian) in the world; I hope that especially law students who are being schooled in law and the importance of social justice will realize that things may not be as straightforward as having the most powerful organizations (with blue chip multinational corporate partners) always triumph at the possible, and potentially significant, cost of the greater public good in hosting such international mega-events.
   For anyone who may be interested, my book on these matters, Ambush Marketing and the Mega-Event Monopoly (How laws are abused to protect commercial rights to major sporting events) will be published by Asser Press of The Hague in May 2012.

   Thank you

   Andre Louw
   School of Law
   University of KwaZulu-Natal

2. 

   Owen Dean says:

   Mar 13, 2012 at 5:46 pm

   I am aware that FIFA’s anti-ambush marketing campaign was not without controversy. However, as the person responsible for, and executing, that campaign I am of the view that much of the criticism and controversy was due to ignorance of the facts and a lack of understanding of the strategy and issues involved. I have written an article in regard to that strategy and in particular the Metcash case, under the title “Ambushing the ambush marketers” and this article is scheduled to be published in the SA Journal of Mercantile Law shortly. In short the Metcash case was brought as a so-called “test case” and was part of a strategy to obtain a judicial interpretation of section 15A of the Merchandise Marks Act at an early stage with a view to strengthening FIFA’s hand in dealing with the anticipated flood of ambush marketing incidents. The case, whatever its academic merits, was in practice very successful in that regard.

   During my career as an attorney, I brought several test cases. The objective of a test case is to obtain a judicial interpretation of an uncertain point of law. In a test case the financial value of the dispute and the parties involved are largely unimportant. However, I must say that I always sought to bring a test case against the most prominent and important defendant possible because the status of the defendant can highten the effect of a test case. On the other hand often the choice of defendants is limited because it can be greatly influenced by who is conducting the contentious activities at a given time and who decides to dig in his heels and contest a claim and not concede it or be unwilling to defend it.

   FIFA decided at a very early stage to bring a test case on the interpretation of section 15A of the Merchandise Marks Act, the principal provision of our law capable of curtailing ambush marketing. It was considered necessary to demonstrate FIFA’s capabilities under the law and it intentions right at the outset. This provision was introduced into our law, and was considered to be warranted by Parliament, in 2003. Contrary to popular opinion, FIFA had nothing to do with the introduction of this principle into our law. FIFA merely sought to use the law as it found it to its greatest effect. There had been no judicial interpretation of the section and legal opinion was divided on its effect. Letters of demand were sent to the first crop of ambush marketers that were encountered. Some of the recipients capitulated immediately, while others did not. The latter group included Eastwood Tavern, Metcash and Executive African Trading. In the absence of higher profile candidates, it was decided to launch civil court proceedings against these three parties with a view of taking at least one of the cases through to a conclusion as the desired test case. If it had been up to me, I would like to have brought the test case against a party like SA Breweries but they never gave us the opportunity and we had to work with the cases that were available to us at that stage. The precise identity of the candidate parties was at that stage of little relevance. What was important was someone who was prepared to defend an ambush marketing claim based on section 15A.

   The case against Eastwood Tavern proceeded the quickest but then they capitulated at the eleventh hour and the case was settled without our obtaining the required test case judgment. Next in line was the case against Metcash and it was taken through to the final conclusion and the favourable judgment that we were seeking was obtained. While the judgment was perhaps not a model of academic brilliance, it achieved the desired result and gave FIFA the favourable interpretation of section 15A that it sought. The judgment was thereafter used as an example in all future claims that were made against potential ambush marketers. As a test case, the Metcash case achieved all its objectives admirably. In a pragmatic sense the judgment was an extremely important one with important implications and consequences. This significance of the judgment appears to have been overlooked by many commentators. Most parties against whom FIFA subsequently made claims capitulated on the strength of the judgment in the Metcash case. Such is the effect of successful test cases.

   In the meantime the case against Executive African Trading crept along at a snail’s pace. This was largely due to the attitude of the respondent’s lawyers who adopted the tactic of raising incessant ridiculous procedural points (this is how the court ultimately regarded them). There were a number of interlocutory hearings, all of which were won by FIFA, and costs orders were granted in FIFA’s favour. The respondent, a non-trading close corporation, pleaded poverty but nevertheless soldiered on with its obstructive approach. Eventually the matter was set down for hearing on the merits. By, this time the World Cup tournament had been and gone and the case had become of completely academic value only. Due to the litigious attitude of the respondent there was always the prospect of further meaningless appeals. FIFA was faced with the prospect of incurring yet further legal costs in pursuing meaningless litigation and in all likelihood not being able to recover costs awarded to it. In these circumstances FIFA decided to dispose of the litigation in the most expeditious and effective manner and entered into the settlement described in the comment above. For what it is worth, the judge hearing the case gave a clear indication that, in the event that the case had been taken through to its final determination, FIFA would have been successful on the merits.

   I challenge the comment that FIFA sought to enforce “dubious rights”. There was no single instance of the court rejecting, or even criticising, any claim brought by FIFA. On the contrary, FIFA’s interpretation of our laws was invariably upheld by the court. On what basis can it then be said that FIFA attempted to enforce dubious rights? FIFA did no more, and no less, than exercise and enforce the rights afforded to it and anyone else by South African law. If the quarrel is with the law per se, that is a different matter for which the blame cannot be visited on FIFA.

   FIFA has been maligned for picking on small parties against whom to conduct litigation. This is an unfair and unwarranted comment. The fact of the matter was that, as much as we would have liked to take on a high profile opponent (from a professional point of view this was devoutly to be wished by me and the others involved), there was no such candidate available at the relevant time when the strategy of a test case was adopted. Of course, later FIFA took on Bavaria Breweries, an old adversary from the 2006 World Cup and having the highest profile, and effectively won the day. Once the test case had been won, there was really no need in practice to bring any further cases. The anti-ambush marketing campaign was very successful on the whole, particularly by comparison to the 2006 World Cup in Germany. The incidence of ambush marketing at the 2010 World Cup was remarkably low and much lower than had been anticipated. This is probably due largely to the effectiveness of South African law and the strategy adopted by FIFA in its anti-ambush marketing campaign. And you know what? Non-sponsoring marketers survived and flourished. The world continued to go round. Marketers simply found and practised lawful forms of promoting their goods and services. The 2010 World Cup was a resounding success from every perspective, including from a lawful marketing one. It goes to show what marketers can do when they put their minds to it and decide to make unlawful activities off limits.

   Legislation is only draconian when there is a determination to thwart its aims and when viewed from the perspective of the potential wrongdoer. The real issue is whether a country’s policy of protecting the investment of the organisers of major international sporting events in order to secure the right to stage hyper events is right or wrong. If the former, then effective legislation to achieve the policy objective is a boon, not a blight.

3. 

   andre louw says:

   Mar 13, 2012 at 9:09 pm

   Thank you, Prof Dean, for that detailed and informative response. Not having been as intimately involved with the relevant litigation and strategies I can, of course, not comment on much of what you mention. I, for example, do not know whether FIFA ever considered action against Nike at the time of the event in respect of their high profile campaign that I mentioned. Being an expert on s 15A of the MMA as you are I would suggest that you would agree that its campaign probably fell foul of that provision (I do not agree with that provision and do not think it should form part of our law, but am convinced that in its current form on the statute book it might have provided FIFA with a remedy if it had the will to pursue such legal action). Nike, of course, has been a ‘serial ambusher’ of events and has raised the ire of the Olympic movement on various occasions, although it is also interesting that all the moral outrage over such despicable conduct was not enough to prevent the Olympics organisers from courting Nike to become an official sponsor on occasion in the past when it seemed that it was stuck for sponsorship revenues. As an outsider (who may be unduly cynical, I’ll admit) I am sometimes struck by the apparent hypocrisy of these powerful event organisers, and I am not the only one. I am sure you are aware of the ‘Fick Fufa’ campaign organised by a local artist at the time of the 2010 event (not the only civic opposition to FIFA at the time), aimed at criticism of FIFA’s rampant commercialism and aggressive rights protection efforts. This is not a dig at you sir (I respect you as one of this country’s leading IP authors, academics and practitioners), but I believe that, as an outsider I am not beholden to a fee-paying client, and as an academic I feel obliged to express my disbelief at an organisation such as FIFA’s response – buttressed, at least ostensibly, by law – to Kulula’s clever parody of FIFA’s aggressiveness in protecting its commercial interests.

   I understand the value of a test case, of course. I do find it interesting, however, that you admit that the judgment appeared to be very light on law, and yet it is held up as something for our legal system to be proud of, namely a victory for a powerful commercial entity which may have significant implications for civil liberties such as freedom of (commercial) speech, while not constituting a shining example of a well-reasoned judgment.

   In respect of the Executive African Trading case I agree that there were many procedural arguments raised by the respondent. Not having been involved in the litigation (although I saw some of the papers filed) I can’t express an informed opinion on the merits of FIFA’s action. What I did find interesting, however, was the apparent lack of substance of FIFA’s passing off claim. I will be the first to admit that I am not an eminent expert on the law of passing off, but I personally found the following in one of FIFA’s supporting affidavits rather surprising:
   ‘[W]hen in due course [FIFA] grants a license for the manufacture of key holders, such key holders will be of a similar nature and effect to the articles depicted in [the Respondent’s allegedly] offending designs. When such key holders are produced and sold with the permission of [FIFA], the public will correctly connect them in the course of trade with [FIFA].’
   FIFA, of course (to the best of my knowledge), have never produced 2010 World Cup key holders. I know that our courts do not require a common field of activity, for one, but the above claims seem to push the boundaries of the action a bit in the circumstances.

   As a prominent IP lawyer you will be aware that there has in recent years been a significant backlash, all over the world and from various quarters, againt the ways in which some IP holders enforce their rights, especially large multinational corporations. While understanding the practical value of a successful test case, I just wonder whether, at the very least, the PR could not be better handled to avoid the perception of ‘David vs. Goliath’ battles and the abuse of power against those less well equipped to put up a real fight. For me such tactics may easily cross the line of unconscionable conduct and be reminiscent of what is known in the USA as the use of ‘strike suits’ and cease-and-desist’ letters to cow potential infringers who may, in fact, not be infringing at all. These have a very definite chilling effect. I’m sure FIFA is well aware of that, which is why it send these letter out by the thousands (according to reports). There might be something disingenuous in saying that ‘Some of the recipients [of letters of demand] capitulated immediately, while others did not’ – if the interpretation of the law which purports to back up such letters which go out to persons who will never see the inside of a courtroom is shaky, by your own admission, then is it not possible that the use of such letters may be viewed by some as being somewhat reprehensible? You characterise the effects of the Metcash case as follows: ‘Most parties against whom FIFA subsequently made claims capitulated on the strength of the judgment in the Metcash case. Such is the effect of successful test cases.’ At the same time you admit that this case was ‘perhaps not a model of academic brilliance’. I hope you will understand why I won’t hold this case up to my students as an example of how to practice or develop the law, and that I am less impressed by the ‘capitulation’ of those targets of letters of demand.

   You also state the following:
   ‘There was no single instance of the court rejecting, or even criticising, any claim brought by FIFA. On the contrary, FIFA’s interpretation of our laws was invariably upheld by the court. On what basis can it then be said that FIFA attempted to enforce dubious rights? FIFA did no more, and no less, than exercise and enforce the rights afforded to it and anyone else by South African law.’
   Those first two sentences I would suggest should be read with the aforementioned admission that the Metcash ‘test case’ was perhaps not a ‘model of academic brilliance’. As an academic I feel honour-bound to inform my students in instances where the law needs to change.

   When considering the power relationships involved, I agree that FIFA had nothing to do with the 2003 amendments to the MMA, and that the advice to them to use such existing legislation was good legal advice. I just think it bears mentioning that this does not mean that FIFA, just like the Olympic movement and other international sports governing bodies, does not engage in putting pressure on legislatures in their future host nations (lobbying is not a strong enough word) to pass special laws to protect the commercial rights to their events. If I’m not mistaken FIFA has been doing this in Brazil for the 2014 event since the time of the Confederations Cup in 2009, before the World Cup had even been staged in SA.
   Finally, I respectfully cannot agree with your claim that legislation is only draconian when there is a determination to thwart its aims and when viewed from the perspective of the potential wrongdoer. We come from a dark past of draconian laws, and I think many would disagree with such a sentiment. Especially when one considers the loaded language – am I a ‘wrongdoer’ if the law is, in fact, draconian?

   Effective legislation to protect the investment that comes with a mega-event is indeed a boon, if one accepts that such investment is real and actually benefits the citizens of the host nation. You must admit that this last has also been questioned by many.

4. 

   Owen Dean says:

   Mar 14, 2012 at 10:45 am

   I have read Andre Louw’s rejoinder and I will comment briefly on some of the points that he has raised.

   My view of the Metcash judgment is that it is undoubtedly correct and gives a good sound interpretation of Section 15A. It therefore makes a positive contribution to the law. My qualification is that it is a pity that it is somewhat perfunctory on the reasons for reaching the (correct) decision and therefore, from a jurisprudential point of view, it is perhaps somewhat lacking. My earlier comment about the judgment should be understood in this light. This does not, however, from a practical point of view detract from its value or effectiveness and from the role that it played in FIFA’s campaign. There was nothing untoward in FIFA relying on this judgment to support its cause, as it did. Any sensible rights holder would have done the same in similar circumstances.

   As is well known, in the Capital Estates case, the leading case on the law of passing-off in this country, the claimant operated the HOLIDAY INN chain of hotels and successfully claimed passing-off against the operator of a shopping centre, a business which the claimant had never ever operated. FIFA licensed a diverse range of goods and had licensed key rings for the 2006 World Cup in Germany. In around 2007 when the case against Executive African Trading was launched, it was quite possible that FIFA would license key rings for the South African event. At all events, as I mentioned previously, the judge hearing the Executive African Trading case gave a clear indication that FIFA’s cause of action was good and that they would have been successful on the merits. He thus apparently was of the view that keyrings bearing indicia suggestive of the World Cup would have been likely to have been connected in the course of trade with FIFA. The judge’s sentiments in this regard appear from the transcript of the hearing.

   The use of the tallest building in Johannesburg by Nike as an advertising bill board featuring soccer (not World Cup) images was in my personal view a marginal case in terms of section 15A. FIFA decided not to take legal action against Nike. I am not aware what legal, business or other considerations influenced its decision. From my personal professional legal perspective it was not an unsound decision.

   It is apparent that Andre Louw and I approach the question of ambush marketing from the opposite departure points. This ideological divergence makes it unlikely that he and I will ever agree on the substance and interpretation of legal issues concerning it.

5. 

   andre louw says:

   Mar 14, 2012 at 7:18 pm

   I agree, and will leave it there.

Comments are closed.