As the first metropolitan area Super Bowl quickly approaches, the National Football League (NFL) legal team will be busy enforcing its trademark of the two most magic marketing words in sports and advertising. And they are not Big Game.
But while the public and some advertisers may not understand the reasons, Steven Smith, a partner with Bryan Cave LLP, says the league does not have any choice legally. "There's a legal term known as 'waiver,' which basically says it can't waive enforcement," Smith said. So really, the NFL is forced to make sure that nobody uses their trademarked term "Super Bowl" in advertisements unless they have paid for that right.
A classic example occurred in 2007 leading up to Super Bowl XLI between the Indianapolis Colts and the Chicago Bears when the NFL sent a cease and desist letter to an Indiana church group that had advertised its party with an intent to charge admission. The letter led to several other church groups around the country to stop similar activities, the exact effect the NFL was seeking.
When contacted about lawsuits brought by the NFL, league spokesman Brian McCarthy said, "As you can imagine, we annually send dozens of cease and desist letters to companies that we believe are infringing on the NFL's marks, including the Super Bowl. But we would rather not disclose which companies. The Super Bowl is one of the most recognizable events and brands in the world. We take great strides to protect the goodwill we have generated over the previous 47 years."
Smith explained, "If they know about the Indiana church and they don't do anything, then the next time a case like this is brought against them, there would be nothing they could do because it would be looked at as selective enforcement and they would waive their rights to enforce their trademark."
Already, some local officials in New Jersey are confused about the NFL's rights, finding out they weren't allowed to use the words "Super Bowl" or any other phrase or logo that might imply they were officially sanctioned by the NFL. Others were disappointed by the lack of financial backing or sponsorship connections and the heavy transportation security restrictions that will hurt the pre-game business of local taverns and restaurants.
Montclair councilman Rich McMahon told NJ.com, "It's an ironic thing: they encourage us to throw, in essence, a huge Super Bowl party, and they don't allow us to use the words. We have had to make it essentially a 'Montclair-winter-festival-that-happens-to-coincide-with-that-big-game-whose-name-we-can't-tell-you' event."
Advertisers will also be looking to capture their piece of the Super Bowl pie, even if they didn't pay to sit at the table. With New York City just a few short miles away, this game will probably be more susceptible to the phenomenon known as ambush marketing than any previous one. Ambush marketing is a technique in which advertisers work to connect their product with a particular event in the minds of potential customers, without having to pay sponsorship expenses for the event.
As important as going after Super Bowl parties, the NFL must go after advertisers who engage in this practice. "The key is how do the sponsors feel because they're paying a lot of money," Smith said. "It's a disaster if they do not renew because they think they've been undercut by another advertiser. The sponsor has to feel that the NFL stands up for us against ambush marketing and that they walk away with great value from sponsoring the event," he added.
At the same time, the NFL also has to strike a balance, Smith said. "They have to be realistic. They can never stop everything. The problem with ambush marketing is they can never be every place at every time. Some of it is going to slip through," said Smith.
Working in "gray areas"
Advertisers are skilled in knowing how to avoid legal action. "There are a lot of clever marketers out there who work in the gray areas," Smith said. "They'll say 'enter our sweepstakes and win a trip to New York' during the first weekend in February without ever using the term Super Bowl."
The Olympics have also been targets of ambush marketing. Although Visa (NYSE:V), McDonald's (NYSE:MCD) and Adidas paid $155 million for its official London 2012 sponsorship, Nike (NYSE:NKE) was viewed as a winner through its "find your greatness spots" in which it featured athletes from several other Londons (London, Ohio; London, Norway; and Little London, Jamaica, for example). Many of the athletes were wearing the neon-yellow Nike Volt shoe just like 41 Olympic medalists were.
"The most recent example was most people thought Subway was an official Olympic sponsor in 2012 but, in fact, it was not," Smith said. "What it did was sign a contract with (U.S. gold medal swimmer) Michael Phelps individually. I have no idea what they paid Phelps but it was well worth it."
Rewards outweigh the risks
The only real risk for entities such as the NFL and the Olympics in enforcing its intellectual property rights is bad press or public outrage. "But that will go away and people will forget about it. The alternative is they may lose millions in sponsorship money, so it's the right decision on their part," Smith explained.
It's always possible that they could be perceived as too heavy-handed in their approach, but Smith said "we're a long way from that with the NFL."
Fool contributor David Lariviere has no position in any stocks mentioned. The Motley Fool recommends McDonald's, Nike, and Visa. The Motley Fool owns shares of McDonald's, Nike, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.