THE USE OF COMPETING MARKS IN A CORPORATE SPONSORED EVENT

An image is not a mere trademark, design, slogan or an easily remembered picture. It is a studiously crafted personality profile of an individual, institution, corporation, product or service. -Daniel J. Boorstin

A great trademark is appropriate, dynamic, distinctive, memorable and unique. – Primo Angeli

Suppliers and especially manufacturers have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands. – Peter Drucker

Every advertisement should be thought of as a contribution to the complex symbol which is the brand image. -David Ogilvy

If you ever have the good fortune to create a great advertising campaign, you will soon see another agency steal it. This is irritating, but don’t let it worry you; nobody has ever built a brand by imitating somebody else’s advertising. -David Ogilvy

BRIEF BACKGROUND ON THE INTELLECTUAL PROPERTY RIGHTS IN THE PHILIPPINES

It is a State policy of the Philippine government to protect and promote intellectual property rights which was enshrined both in the 1973 Constitution and in the 1987 Constitution. The 1973 Constitution provides that “the exclusive right to inventions, writings and artistic creations shall be secured to inventors, authors, and artists for a limited period” while the 1987 Constitution explicitly mandates that the State shall protect intellectual property.

The Philippines became a member of the World Intellectual Property Organization [WIPO] in 1980 and became a signatory to a number of significant multilateral international agreements and treaties for the protection and promotion of intellectual property rights.

The first laws protecting intellectual property rights were enacted in the Philippines in 1947, to wit:

1.  Republic Act No. 165 otherwise known as “An Act Creating a Patent Office, Prescribing its Powers and Duties, Regulating the Issuance of Patents and Appropriating Funds Therefor”.

2.  Republic Act No. 166 otherwise known as “An Act to Provide for the Registration and Protection of Trade Marks, Trade Names and Service Marks, Defining Unfair Competition and False Marking and Providing Remedies Against the Same, and for other Purposes”.

Additional laws were subsequently enacted and issuances promulgated to further promote and protect intellectual property rights, to wit:

1.  Republic Act No. 422 transferring the examination of copyright applications to the Bureau of Public Libraries.

2.  Republic Act No. 623 regulating the use of duly stamped or marked bottles, boxes, casks, kegs, barrels, and other similar containers;  providing, in the case of foreign applicants, for reciprocity and recognition of their priority rights; establishing, in the case of trademarks, principal and supplemental as well as interference proceedings; extending protection of utility models and industrial designs under the patent system; and providing, in the case of trademark registration, for reciprocity arrangement with other countries.

3.  Republic Act No. 5434 providing for a uniform procedure for appeals from the decision of quasi-judicial officers including the Director of Patents.

4.  Administrative Order No. 94 [November 20, 1967] creating a committee to review the Philippine patent system and recommend amendatory laws to further upgrade it.

5.  Presidential Decree No. 721 creating the Legal Services Division and the Research and Information Division in the Philippine Patent Office. Subsequently, major reorganization of the various Divisions was made in the 1980’s.  The General Organic Chemistry Division and the Chemical Technology Division were merged to form the Chemical Division.  The Mechanical-Electrical Division was merged with the Mechanical, Design, Utility Model Division and Electrical Division to form the Mechanical and Electrical Examining Division.

6.  Presidential Decree No. 1263 amending Republic Acts Nos. 165 and 166, granting authority to the Philippine Patent Office to increase its fees and to spend a portion of its income for priority projects; exempting indigent inventors who filed their application for patent through the Philippine Inventor’s Commission from all fees charged by the Philippine Patent Office; and shortening the period for the grant of a compulsory license from one hundred eighty [180] days to one hundred twenty [120] days from the date the petition is filed in cases where the compulsory license applied for is on a patented product or process involving  any project approved by the Board of Investments [BOI].

7.  Executive Order No. 133 [February 27, 1987] merging the Philippine Patent Office with the then Technology Transfer Board thereby creating the Bureau of Patents, Trademarks and Technology Transfer  [BPTTT].

8.  Executive Order No. 60 was issued in 1993 creating the Inter-Agency Committee on Intellectual Property Rights [IAC-IPR] under the Office of the President of the Philippines.

9.  Department Administrative Orders Nos. 5 and 6 introduced amendments to the Rules of Practice in Patent and Trademark Cases and the Rules of Procedures of the Technology Transfer Registry effective on March 15, 1993.

10.  Republic Act No. 8293 otherwise known as the Intellectual Property Code of the Philippines was enacted and signed into law in 1997.  It took effect on January 1, 1998. 

The policies of the State on intellectual property rights, as stated in Section 2 of Republic Act No. 8293, are as follows:

The State recognizes that an effective intellectual and industrial property system is vital to the development of domestic and creative activity, facilitates transfer of technology, attracts foreign investments, and ensures market access for our products. It shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such periods as provided in this Act.

The use of intellectual property bears a social function. To this end, the State shall promote the diffusion of knowledge and information for the promotion of national development and progress and the common good.

It is also the policy of the State to streamline administrative procedures of registering patents, trademarks and copyright, to liberalize the registration on the transfer of technology, and to enhance the enforcement of intellectual property rights in the Philippines.”

OTHER SIGNIFICANT DEVELOPMENTS OF INTELLECTUAL PROPERTY RIGHTS IN THE PHILIPPINES

On March  8, 1988, the first issue of the BPTTT Official  Gazette was launched.

In 1992, the Philippine Association of Certified Patent Agents [PACPA] was incorporated, thereby recognizing and promoting the patent agent profession in the Philippines.

In the same year, the CD-ROM Version of the bibliographic data of registered Philippine patents was introduced.

In 1993, the Kantor-Navarro Agreement was signed as a result of the negotiations between the Philippines and the United States for the purpose of delisting the Philippines from the Priority Watch List of Countries covered by the Super 301 List under the United States Trade Act.

In October of the same year, the Philippine component of the EC-ASEAN Programme on Patents and Trademarks was officially launched thereby strengthening the capability of Industrial Property Offices in ASEAN to administer their respective patents and trademarks systems and to further facilitate the exchange of patent information among ASEAN members. Under this program, a Patent Documentation Center was established in Cebu in 1994.

In 1994, the patent and trademark search and examination procedures were modernized through the assistance of the European Commission.  Made available were 2 CD-ROM work stations and a complete set of ESPACE CD-ROM containing the abstracts, first page and full text of the applications filed from 1988 to 1994 with the European Patent Office.

In 1995, special courts were designated by the Philippine Supreme Court to hear cases involving intellectual property rights.

HISTORY OF INTELLECTUAL PROPERTY RIGHTS IN THE PHILIPPINES

On October 26, 1888, Queen Ma. Cristina of Spain promulgated a trademark law for the Philippines which was based on registration. Thus, trademarks rights belong to the person who was to register it first. On March 6, 1903,  the Philippine Commission passed  Act No. 666 or the Trademark and Trade Name Law of the Philippine Islands. It abandoned the registration system under the 1888 trademark law. Instead, Act 666 provided actual use of the mark as the basis of acquiring ownership and exclusive rights to the mark. In 1946, Republic Act 166 took effect, repealing Act 666. R.A. 166 retained the first-to-use system of trademark ownership.

On September 27, 1965, the Philippines adhered to the Lisbon Act of the Paris Convention for the Protection of Industrial Property (“Paris Convention”). Nationals of each of the member countries are assured of certain minimum international protection of their industrial property.

In 1995, the Philippines adhered to the Agreement establishing the World Trade Organization (“WTO”). Members to this Agreement “desire to reduce distortions and impediments to international trade, taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade.” Members have agreed to adhere to minimum standards of protection set by several Conventions, including the Paris Convention (1967), as revised in Stockholm on July 14, 1967.

On January 1, 1998, Republic Act 8293, known as the Intellectual Property Code of the Philippines, took effect, repealing R.A. 166. To comply with the minimum requirements of the WTO, the Intellectual Property Code adopted several provisions of the WTO TRIPs Agreement. 1

INTRODUCTION

Trademark is defined under R.A. No. 8293, the Intellectual Property Code of the Philippines, as “any visible sign capable of distinguishing goods.” The functions of a trademark are:

1. to point out distinctly the origin or ownership of the goods to which it is affixed;

2. to secure to him, who has been instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill;

3. to assure the public that they are procuring the genuine article;

4. to prevent fraud and imposition; and

5. to protect the manufacturer against substitution and sale of an inferior and different article as his product.

Trademarks function as an indication of origin or ownership of the articles to which they are attached; as a guarantee that those articles come up to a certain standard of quality; and an advertisement of the articles they symbolize.

HYPOTHETICAL SITUATION

In a sponsored sporting event, e.g. FIBA, if Brand A sponsored the event, and a non-sponsor brand, Brand X, gives out tickets to such event, with the recipients of such tickets are expected to wear shirts of Brand X for brand exposure.

THE LIBERAL APPROACH

In a narrow sense, ambush marketing refers to the direct efforts of one party to weaken or attack a competitor’s official association with a sports organization acquired through the payment of sponsorship fees. In a broader sense, rather than such direct and intentional misrepresentation, ambush marketing refers to a company’s attempt to capitalize on the goodwill, reputation, and popularity of a particular event by creating an association without the authorization or consent of the necessary parties. Some popular indirect ambush techniques include buying commercial time prior to and during event broadcasts, sponsoring the broadcasts of events rather than directly sponsoring the event, sponsoring individual teams and athletes, and using sporting events tickets in consumer giveaways, sweepstakes, or contests.2

Simply stated, ambush marketing is a smart business practice although critics  treat it as “parasite marketing,” claiming that companies are deliberately looking for ways to sabotage their rivals’ sponsorship of major events despite protests from sponsors and event organizers.

In reality, ambush marketing provides a positive free market force. By revealing to official sponsors and event organizers the true extent of exclusivity that any sponsor may reasonably expect to enjoy, ambushers in effect help quantify the true market value of Olympic sponsorship while participating in the marketing blitz in a manner they deem most cost effective for their company. As it becomes clear to potential sponsors of future Olympic Games that event organizers will not be able to stop all ambush marketing efforts, this should be a factor that is accounted for in determining the fees to be paid for official sponsorship. Some opine that the threat of ambush marketing could absolutely destroy the ability of event organizers to conduct successful Olympic Games if ambush marketing deters large multinational corporations from being official sponsors. However, the appeal to large corporations of the world-wide exposure that results from sponsorship of the Olympic Games will never be diminished by market imperfections such as ambushers to the point of threatening the budgets of event organizers. Resultantly, ambush marketing practice inspires organizers to be more vigilant against intellectual property violators, and promotes the awareness of intellectual property rights worldwide—a paramount concern to all intellectual property owners.3

In the instant scenario, Brand X simply committed ambush marketing, which is legally permissible, considering that  the manner to which it competed with Brand A did not involve counterfeiting or the illegal use of trademarks, tradenames, or symbols. Brand X simply developed a creative advertising campaign inside the event, never use the event logo, trademark or tradename, and capitalize by association with the event without paying for “official sponsor” status. When effectively employed, ambush marketing is not illegal per se and is therefore difficult for official sponsor to deal with.

The same scenario occurred in Athens during the 2004 Olympics wherein the Greeks and the International Olympic Committee strictly regulated the event to the extent that the spectators therein were refused admission until they discarded food or drinks made by companies that were not official sponsors.  In other words, only those fans who have with them foods and drinks of an official sponsor were allowed to enter the Olympic complex. Such kind of regulation was successfully implemented because the Olympic staff was trained to check for t-shirts, hats, and bags displaying the unwelcome logos of non-sponsors.  In case the  spectators wear merchandise from the official sponsors’ rivals, they were required to wear their shirts inside out or were denied admission to the venue.  This was done to ensure that televiewers would only see the products of the official sponsor. 

In the above-scenario, it is apparent that the management of the Olympic venue played an important role in protecting the interest of the official sponsor. 

In the instant scenario, the protection of Brand A’s interest would have been ensured had the management of the sports venue exercised its prerogative of refusing admission to spectators who would display the products of Brand X.  Indeed, Brand A spent a lot of money just to be the official sponsor of a major sports event in exchange for the popularity of its products.  In return, the sports organizer should protect the interest of its official sponsor. In case Brand X succeeds in its strategy, the blame should be on the sports organizer and not on Brand X considering that the latter merely purchased tickets for the sports event.  Being the owner of the tickets bought, Brand X has the right to dispose the same regardless if those tickets are made complimentary and there is nothing wrong if spectators opted to watch the sports event by simply wearing products of Brand X inside the venue instead of paying for the tickets.

CONCLUSION

The liberalization of global trade served as a gateway of many opportunities to our entrepreneurs.  However,  it is important to note that one must be able to adapt to the challenges of today’s business competition.  Otherwise, one  will surely lose in today’s highly competitive business climate.

It goes without saying that competition in the business world is never easy, for a number of reasons.  Other business enterprises use far more superior technology and enjoy government support and grants.  It is in this context that small entrepreneurs need to rely on creativity and innovation. 

The law therefore seeks to serve as a motivational tool to all those who wish to compete in the quest to create new and better products, or to lower cost of producing existing products and services. 

2 Jason K. Schmitz, Ambush Marketing: The Off-Field Competition at the Olympic Games, 3 Nw. J. Tech. & Intell. Prop. 203 (2005). http://scholarlycommons.law.northwestern.edu/njtip/vol3/iss2/6

3 Id.

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One thought on “THE USE OF COMPETING MARKS IN A CORPORATE SPONSORED EVENT

  1. Pingback: Students’ Take: Contacts viz RA 10173, Competing advertising in sponsored events, and Direction of Copyright Reform | Berne Guerrero

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