Game On – Ambush Marketing in Greater China

Official sponsors typically invest significant cash and in-kind support to fund sports events, in exchange for certain commercial rights. These commercial rights may include naming rights (e.g. Official Partner), branding and signage rights around the event area and merchandising or co-branding opportunities. Official sponsors are often granted exclusivity in a specific category so that there is only one brand sponsor in each industry category (e.g. beer, credit card, airline). With the global reach of major sports events though broadcasting and the internet, official sponsors gain significant cross-border market exposure through sponsorship arrangements.

At the same time, for brands that are not official sponsors, there are lurking risks around ambush marketing. We break down below what is meant by “ambush marketing”, and discuss the legal landscape around such issues in Hong Kong and Mainland China.

There is no official definition or concept of ambush marketing in Hong Kong or Mainland China. Generally, ambush marketing is a branding strategy executed with the aim of associating a company (directly or indirectly) with a particular event or venue without an official sponsorship relationship with the event organiser or venue. It is often seen in popular sports events where non-sponsoring brands “ambushed” the sponsoring brands by certain marketing events that “steal the thunder” of the sponsoring brands.

Ambush marketing activities could range from advertisements directly naming the event or using event signage to social media interactions with certain hashtags. These activities may create an impression of association whilst riding on the buzz created by a particular event.

In addition to ambush marketing by association, ambush marketing can also take place by intrusion. This happens when a brand that is not an official sponsor advertises at or in the vicinity of the event venue. This could, for example, involve hiring “flashmobs” to wear clothing associated with the brand at the event, distributing free product samples around the event area or buying and posting advertisements at the nearby train station.

Hong Kong does not have any specific legislation on ambush marketing, nor has there been any reported court case on this issue. In Hong Kong, ambush marketing does not automatically pose legal risk, and the facts of each case will need to be analysed under existing laws (in particular, intellectual property laws).

For ambush marketing to be considered risky in Hong Kong, it would typically need to constitute one or more of the following:

• IP infringement. A non-sponsor may use the event signage, mascot designs or copyright material (such as promotional materials or event footage) of the event organiser or other rights owner. If a non-sponsor uses the Hong Kong registered trade marks, Hong Kong registered designs or copyright works of an event organiser/rights owner in its marketing without authorisation, this may constitute trade mark / design / copyright infringement under the corresponding legislation.

On the other hand, comparative advertising may potentially be a defence to trade mark infringement. The Trade Marks Ordinance permits a trader to use a third party’s registered trade mark for the purpose of identifying goods/services of that company, provided that the use of the trade mark is “in accordance with honest practices in industrial or commercial matters”. Whether and to what extent this defence is applicable involves a fact-sensitive analysis.

• Passing off. If, through its marketing, a non-sponsor misrepresents or misleads the public into believing that it is associated with the event or licensed by or otherwise connected with the event organiser/rights owner, there may be passing off under the common law.

Three elements need to be established for a claim in passing off, namely: (a) the plaintiff enjoys goodwill in its goods or services; (b) the defendant has made a representation that misleads or is likely to mislead the public into believing that its goods or services are those of, or connected with the plaintiff; and (c) the plaintiff has suffered or is likely to suffer damage as a result of the misrepresentation. As an action based on passing off is not predicated upon the use of a third party trade mark, this is often a common cause of action against ambush marketers associating themselves with an event.

• False trade description. Where a non-sponsor’s marketing misleads consumers into believing that it is an official sponsor/partner/supplier of an event, this may constitute a false trade description offence. Under the Trade Descriptions Ordinance, it is a criminal offence for a trader to apply a false or misleading trade description to any goods or services, or supply or offer to supply any such goods or services. These offences carry a maximum penalty of HK$500,000 and imprisonment for 5 years. Complaints of this nature can be made to the Hong Kong Customs and Excise Department. That said, the criminal standard of proof is higher and the prosecution must prove the defendant’s guilt beyond reasonable doubt.

• Defamation. If a non-sponsor makes a false statement that harms the reputation of the event organiser/rights owner/competitor sponsor, they may claim defamation. That said, defamation is arguably less relevant in the context of ambush marketing where third party references to or associations with an event are usually aimed at riding on the buzz created by an event, rather than harming anyone’s reputation.

In the context of major sporting events, the Beijing 2008 Olympics illustrated the ambush marketing risk when a sportswear brand whose namesake founder lit the Olympic flame, despite not being an official sponsor, was incorrectly identified by consumers as an official sponsor.

However, similar to Hong Kong, Mainland China does not currently have specific legislation targeting ambush marketing. The legal risk of the non-sponsoring party is mainly generated by IP infringement, free-riding and violating of the general principle of good faith and market fairness, which are primarily regulated under the Trademark, Copyright and Patent Laws, the Anti-Unfair Competition Law (“AUCL”) and the Advertising Law, supplemented by other related laws and administrative regulations.

• IP infringement

Similar to Hong Kong, unauthorised use of a registered trademark, logo, design or of copyrighted materials of the event or the exclusive sponsor may constitute infringement under the Trademark Law, Copyright Law or Patent Law (for design patents in particular).

In addition to that, it is worth mentioning that China has issued special regulations protecting the name, logo, mascot etc., of special events, including

• Administrative Regulations for Special Symbols issued in 1996 protecting “symbols as titles and abbreviations, emblems and articles of auspiciousness, which are composed of words and designs and used in national or international cultural, sports, scientific research or other social and public welfare activities held with the approval of the State Council”. Under this regulation, the event organizer can seek special registration of the symbols with CNIPA (in addition to the usual trademark registration, where applicable). Such registration usually takes 2-3 months on a smooth basis, and the first registration period is 4 years, subject to renewal.
• Regulation on the Protection of World Expo Logo Marks issued in 2004 protecting “the names, logos, flags, mascots, expo songs, subject terms, slogans of World Expo 2010, Shanghai China” etc.; and
• The Regulation on the Protection of Olympic Symbols issued in 2002. According to the most recent 2018 version of the regulation, it protects the symbols of International Olympic Committee, such as five interlaced rings, the Olympic flag, the Olympic motto, the Olympic emblem and the Olympic anthem etc., as well as the symbols of the Chinese Olympic Committee, including but not limited to name, abbreviation, mascots, anthem, torch modelling, slogan, “Name of the Host City + Year of the Olympic Games” etc.

The unauthorised commercial use of the protected items under the above regulations is subject to civil liability, administrative liability and even criminal liabilities.

On the trademark prosecution front, an interesting illustration of the above legislation was that in connection with the Beijing 2022 Winter Olympics and Paralympics, the China National Intellectual Property Administration (CNIPA) proactively rejected no less than 1,270 trademark applications, including those for mascot names such as “Bing Dwen Dwen” (冰墩墩) and athlete names such as “Gu Ailing” (谷爱凌), and also declared 43 registered marks invalid.

• Under the AUCL: 

The AUCL is another major law prohibiting activities of “free-riding” or “reaping without sowing” providing protection of a broader scope of rights, such as trade name, domain name, trade dress, etc. for the purpose of fair competition.

• a. Confusion-based unfair competition (AUCL Article 7). Article 7 prohibits operators from using without authorisation another party’s business name, trade name, social media account name, domain name, or other commercial identifier that has a certain degree of market influence, so as to mislead consumers into believing there is a connection with that party. This provision typically serves as the core legislative basis for such cases, and courts have applied it to capture a range of free-riding tactics including the adoption of confusingly similar film titles, the use of well-known programme names on unrelated products, and the unauthorised use of another platform’s brand name in promotional materials.

  b. False or misleading commercial promotion (AUCL Article 9). Where ambush marketing involves deceptive commercial claims, for instance, falsely stating or implying an affiliation with a particular event, celebrity or entertainment property, e.g. the Olympics, such conduct may also be actionable as 虚假宣传 (false or misleading advertising) under AUCL Article 9. Courts have invoked this provision in cases where promotional materials falsely claimed a licensing or film sequel relationship that did not exist.

  c. General “fallback” clause (AUCL Article 2). For novel fact patterns not clearly covered by Articles 7 or 9, courts have at times relied on Article 2, which requires all operators to observe the principles of good faith and recognised commercial ethics. Article 2 may function as a fallback, catch-all basis for finding unfair competition where the conduct violates fundamental principles of fair dealing, and has been particularly important in internet-related free-riding cases, such as browser plug-in parasitism, traffic diversion, and AI-generated content manipulation, where more specific provisions may not have anticipated the conduct in question.
• The Advertising Law includes similar clauses as AUCL prohibiting false or misleading advertising (Advertising Law Article 4), andadvertising activities that violate the principles of good faith and fair competition (Advertising Law Article 5). Moreover, the Advertising Law prohibiting advertisements that disparage the goods or services of other producers or operators (Advertising Law Article 13) which can be relevant when there is comparative advertising/marketing.

As between the legal landscapes in Hong Kong and Mainland China, Mainland China has more layers of legislation and regulations which touch on various aspects of this topic, especially regulations for the protection of special symbols for national and international events. In particular, on the one hand the AUCL’s clauses grant Mainland courts greater flexibility to address novel forms of competitive misconduct (especially internet activities), and on the other hand, the CNIPA’s power to reject bad-faith trade mark applications upon filing provides an additional layer of proactive enforcement.

• Official sponsors may tackle ambush marketing through contractual controls in sponsorship agreements, for example, by designating “clean zones” and requiring event organisers to take action against ambush marketing. However, ambush marketing remains a grey area in Hong Kong and Mainland China and event organisers/rights owners have to rely on a patchwork of different laws to target ambush marketing.
• For businesses looking to steer clear of ambush marketing issues, they should carefully review any marketing campaign containing direct or indirect references to sports events. While generic allusions to sports events may not pose significant legal risk in Hong Kong and Mainland China, it is important to holistically review a campaign to ensure that the overall context and impression of the campaign is not misleading.
• To better enforce their rights and protect the interests of official sponsors, event organisers should also consider proactively securing trade marks and design registrations for key identifiers and creative elements for the event in Hong Kong and Mainland China. For Mainland China, additional options include copyright registration and the unique registration channel for special symbols. Where needed, event organisers should also monitor for and oppose bad-faith trade mark filings to reduce the risk of, and enforce against, unauthorised use by third parties.

Authored by PJ Kaur, Stefaan Meuwissen, Grace Guo and Eugene Low.