IPR: The propeller of the sports industry

Emergence as an “Industry”

Today, sports-linked entertainment has turned into a different industry altogether, which is the most sort after by upcoming generations, considering the monetary benefits and the fame involved. With the passage of time, sports management has undergone a transformation and emerged as a systematic, organized, and a commercial industry, which has been employing a number of people and continues to upgrade the level of entertainment. The national, as well as international sports governing authorities, aim to exploit sports for reaping maximum profits. The recent formats of investor-owned franchises in various sports leagues have led to the commodification of sports and sports players. Issues plaguing the sports entertainment industry today have more to deal with intellectual jabs as opposed to the ‘mortal combats’ of yore.

Intellectual Property & it’s application

When one proceeds to learn about intellectual property, the most common answer as to the meaning of the term ‘intellectual property’ would be ‘intangible property’ or ‘intangible creation of human intellect’[1]. However, one may demur and say that intellectual property is actually tangible since the end result or its application can definitely be felt when reduced to a tangible format. In either of the stances, the fact remains that such property is capable of being protected by dedicated statutes. In a quick brief-up, intellectual property includes copyrights, trademarks, patents, and designs which are eligible for protection by dedicated governing statutes. The sports industry consists of multiple components viz. the venue, organizers, players, support personnel, etc. These components have, since antiquity, been a part of the sports industry. However, with gaining popularity and hefty commercial involvement, the role of intellectual property in the sports domain has been that of a propeller. Tracing back the trail of sports industry, one would not quite discover any artistic involvement or fiscal investment. This is when sports were purely recreational in purpose. Over a period of time, more creativity started being appended to the industry which changed the global outlook towards sports. With the advent of various sports leagues, the concept of ‘franchises’ came to be recognized. Furthermore, these franchises started being identified due to the artistic elements that each introduced to the sport, from team logos to slogans to a theme music, etc. Every artistic ingredient introduced, paved way for application of various intellectual properties in the sports industry. To cite an illustration, ‘Mumbai Indians’, the cricket franchise team which plays in the Indian Premier League (IPL), can be very well identified by the anthem song “Duniya Hila Denge Hum” and the ‘razor’ logo – [2]. The said anthem consists of lyrical and musical works which happen to be the subject matter of copyright protection. On the other hand, the team logo can be protected under the copyright laws as an artistic work, as well as a trademark under the trademark laws. In most cases, the ownership of such intellectual property vests with the owners of the franchises. As in the case of ‘Mumbai Indians’, the promoter company ‘Indiawin Sports Private Limited’ is the owner of all the intellectual properties associated with the said franchise team. Thus, any unauthorized usage of such intellectual properties of the respective owner would result in appropriate legal repercussions. Also, there are several instances where a specific sporting gear or equipment would catch one’s eye owing to its unique design and style. Protecting such uniqueness of the design and style prevents unauthorized multiplicity of the products. In major sporting events, it is often a trend to advertise and promote the event through broadcasting of pre-recorded short video clips which would feature various players, background audio clips as well as the official mascots. The creative elements in such works are indeed eligible for a copyright protection[3]. Thus, we see that intellectual property is capable of having wide and far ranging application in the sports industry.

Interplay between Commerce and IPR

Knowing the applicability of intellectual property laws in the sports industry is indeed important. However, it is even more important to know the rationale behind securing such rights pertaining to various intellectual properties, as every legislation is enacted for a specific purpose. Just like the Indian Penal Code in India was enacted for the purpose of providing penal provisions for punishing the offenders, similarly, various laws around intellectual property have a common purpose, which is to secure exclusive monetary exploitation of the work created by the first creator of such works, or the rights holder of such works. Besides monetary exploitation, it also enables the person to gain recognition in the society for his creativity; after all, not everything boils down to money. This dual characteristic further motivates people to be more creative. It would not be wrong to state that some economics is involved at almost every stage of a tournament or similar events. Keeping the economic perspective limited to intellectual property in action, the creators of intellectual property usually happen to assign their rights to the team-franchisors, as stated earlier. They part ways with their rights to officially use them in their name ever after. The franchise owners pay considerable amounts for securing these rights. As a result, there is a transfer of ownership of the intellectual property. These rights that re acquired may be used for effective branding and marketing strategies by the franchise owners, as well as the event organizers. Further, the merchandise industry associated with sports generates significant revenue. There exists a craze among fans to purchase merchandise associated with their favorite sports teams or franchises. However, imprinting the team names or logos on merchandises should not be thought of as a cake walk. Using the team logos or other intellectual property by the merchandise producing or marketing organization requires acquisition of these rights. It is quite justified since it is the intellectual property on that product which accelerates or creates demand for the said products. A unique spin to the merchandising industry is in the form of theme-based cafés and restaurants. Such places create an appealing impression as a result of the décor, or to be precise, the trade dress adopted which attracts more fans-cum-customers. The ‘Manchester United Café Bar’ for example is one such food joint which uses the red and black colored theme just like the team jersey of ‘Manchester United’. It also keeps certain number of footballs to make it look more glorified. However, at several points, the café uses the registered intellectual properties of the team franchise[4]. Needless to say, adequate authorizations/licenses must be secured in order to utilize the features of the trade dress. Another avenue to commercially exploit the intellectual property in the sports industry has been through licensing the rights to e-sports and digital gaming companies. These games, based on real-life sports leagues include graphics of the team names, logos, theme music, player images, etc. to provide an authentic feel and experience to the gamer while playing. In this regard, it is interesting to know that ‘EA Sports’, the digital gaming company earned over $1 billion in revenue from the football fantasy game ‘FIFA Ultimate Team’ in the year 2020[5]. Realizing the true potential of intellectual property, EA Sports decided to extend its licensing contract with La Liga until 2030, allowing the gaming company to retain exclusive rights to the premium soccer league for its flagship football franchise “FIFA”[6]. Thus, a systematic and well-devised strategy to monetize the rights can prove to be beneficial in the long run. Before negotiating the rights, it is important to refer the relevant assignment and licensing regulations of the applicable jurisdictions[7]. These are the two of the most common routes that owners of the IP rights take to reap monetary benefits. Where assignment relates to permanently giving away the rights to the other party, licensing refers to giving the rights for a definite period of time. In the former case, there is transfer of ownership of rights while in latter, there is transfer of rights and not the ownership. To conclude the segment of interplay between commerce and intellectual property rights, it can be said that both are interdependent on each other as exclusion of either elements would dilute and complicate the transactions.

IPR issues under Sports Law

Disputes, as in any usual transactions, arise either due to ambiguity amongst the parties, ignorance of laws or due to malfeasance on their part. In any case, it leads to stoppage or disturbance of routine business of the parties concerned. Disputes due to ambiguity may arise due to incomplete and inefficient documentation between the parties. It may so happen that the assignment or licensing agreements do not provide for complete range of rights assigned or do not provide the tenure or the jurisdiction to which the rights concerned may be subject or restricted to. To discuss disputes due to ambiguity, it is pertinent to refer the case between the world tennis champion “Roger Federer” and the global sports multinational- “Nike”. Nike had designed and retained the ownership of the trademark in the logo ‘RF’ which became tantamount to the champion’s name. However, Federer terminated his sponsorship contract with Nike and signed another sponsorship deal with the Japanese clothing company named Uniqlo. Even post termination of the former deal, Federer continued to use sportswear with embossed ‘RF’ logo. This made a strong case for Nike to proceed legally for preventing the said infringement by Federer. Looking at the legal corners, the agreement would have strictly prohibited the use of the said trademark upon termination of the deal. Thus, Nike reserved the right to commercially exploit the logo which was popularized by Federer’s personality and stardom[8].

In a case regarding malfeasance involved in infringement of intellectual property dispute, the Board of Control for Cricket in India (BCCI) won a trademark case against Grace India Sports Pvt. Ltd (GISPL). The BCCI had filed a suit against GISPL for using its registered trademark – ‘IPL’ to promote and organize tournaments, similar to the IPL, for junior cricketers aged between fourteen to eighteen years.[9]. The latter was also allegedly using a deceptively similar domain name ‘ www.ijplt20.com’ to ride upon the BCCI’s goodwill. The High Court of Bombay passed an order in the favor of BCCI by permanently restraining GISPL from using any deceptively similar trademarks thereafter.

In relation to infringement due to ignorance of law, there arose a situation where the Indian Performing Rights Society (IPRS) served a notice to the BCCI for failure to procure the license to play the tunes registered under the society. As per the Indian copyright regime, unless exempted by the statute, one needs to procure appropriate licenses for utilization of the concerned works. It seemed that the organizers failed to procure the license beforehand. The legal notice was also served upon Encompass Events Pvt. Ltd., a company which was organizing the opening ceremony of the IPL tournament. However, the license fee was paid by the organizers before the event, post which they secured a valid license[10]. Though ignorance or carelessness would have cost the organizers a hefty sum as a penalty, they were nevertheless saved from the legal consequences. These instances are pint-sized portion of violations of intellectual property in the sports industry.

A developing issue, which has been sustaining for a while is that of counterfeit products which cause unaccountable revenue loss to the rights holders. Along with several other Asian countries, India is one of the emerging producers of counterfeit products. Several metro cities like Delhi, Mumbai, Kolkata, Bengaluru, and Chennai are known for market spots which thrive on counterfeit products, where replicas of reputed brands are available at throw away prices[11]. One is unlikely to be surprised to find a street vendor selling a Mumbai Indian jersey or a Man U key ring for dirt cheap prices without so much as a disclaimer indicating that the products are counterfeits. The issue has scaled up further with the advent of e-commerce. As per reports produced by ‘NEWS 18’, more than 60% of the sports goods available online are counterfeit[12]. This ultimately results in exorbitant loss of revenue to the rightful owners of the concerned intellectual properties.

Remedies

IP Prosecution: IP prosecution refers to filing applications with the concerned IPR office to avail legit protection of one’s intellectual property. In other words, IP prosecution is nothing but registration of intellectual properties in accordance with the procedure established by the relevant legislation. Registered owners of intellectual properties have an edge while enforcing their rights in the court of law. Thus, it is advisable in most of the cases to get one’s intellectual property duly registered.

Law Suit: In case the owner of the intellectual property intends to contest a law suit, the same can be proceeded with a suit for infringement or passing off. Where infringement refers to violation/duplication of registered intellectual property, passing off (a common law remedy) connotes violation/duplication of an unregistered intellectual property. It is important to claim appropriate monetary damages from the wrongdoer, as well as pray for an injunction (whether temporary or permanent) in a law suit[13]. Depending upon the facts and circumstances, the court may or may not award the relief so prayed. However, if one doesn’t pray for the desired relief, the court may not grant it, even if the affected party maybe legally entitled to avail the same.

Cease and Desist (C&D) Notices: As the name suggests, such a notice is a warning to the infringer to refrain from further violating the true owner’s IP rights. In certain cases, the affected party may not be willing to contest a law suit, owing to time and financial constraints. In such cases, an effective C&D notice may serve the purpose of protecting one’s IP rights. However, whether to serve a C&D notice or to contest a law suit is a matter of strategy which must be analyzed on a case to case basis[14].

Enforcement Raids: Similar to the raids conducted by the Income Tax department, IP enforcement raids serve an identical purpose of entering the business premises of the alleged infringer and searching for the duplicate or counterfeit products. However, one cannot enter any suspicious location without due authorization as it would amount an offence of trespass. For this purpose, it is important to carry out a preliminary investigation to determine the intensity of alleged infringement. Thereafter, the party may approach the court to seek an order for appointment of a local commissioner, who shall carry out the raid and submit its report to the court[15].

Review and Negotiation of Contracts: The assignment and licensing contracts must be thoroughly vetted, preferably by a lawyer, to avoid any disputes arising out of ambiguity of the terms and conditions. It may so be the case that certain clauses of a contract may be interrelated and thus, have a chain effect, which the party(ies) wouldn’t realize until its breach. Any breach of such terms and conditions may result in burdensome monetary damages. Thus, contracts must be reviewed and negotiated effectively prior to signing. Further, an alternative dispute resolution (ADR) clause may be added in the contract to settle the disputes amicably if possible.

Education and Awareness: Lack of education and awareness is the main factor contributing to violation of IP rights. People maybe unaware of what intellectual property rights are and what amounts to its violation as well as the consequences attached to it. Thus, it becomes important to indulge in frequent advertisements containing the fact that any unauthorized use of IP shall result in civil and/or criminal consequences. Copyright and trademark caution notices must be given in news papers as well as in the form of a pop-up page on one’s website. This shall send a message to the public that the owner of the IP is aware and vigilant about its rights and shall reduce, if not completely deter the acts of violation of IP rights of the concerned party.

[1] Intellectual property, Wikipedia (2020), https://en.wikipedia.org/wiki/Intellectual_property#cite_note-1

[2]Mumbai Indians, Wikipedia(2020), https://en.wikipedia.org/wiki/Mumbai_Indians#Team_Name,_motto _and_logo_design

[3] Roshan Gopalakrishna & Shibumi Raje, How sports rights holders protect against IP infringements in India: Part 1 – overview of IP laws LawInSport (2016), https://www.lawinsport.com/topics/intellectual-property-law/item/how-sports-rights-holders-protect-against-ip-infringements-in-india-part-1-overview-of-ip-laws?category_id=124

[4] Ravi Krishnan, Lounge Review | Manchester United Cafe Bar, Mumbai, LIVEMINT, February 12, 2010, https://www.livemint.com/Leisure/cXo9FYoDdMGBqwSNF43MiN/Lounge-Review–Manchester-United-Cafe-Bar-Mumbai.html.

[5] https://www.sportbible.com/football/gaming-news-the-figures-behind-ea-sports-net-revenue-from-ultimate-team-20200521#:~:text=According%20to%20their%20recent%20financial,revenue%20total%20of%20%241.37%20billion.

[6] https://www.reuters.com/article/us-electronic-arts-la-liga-idUSKBN23V1QE

[7] Rakesh Prabhu & Ramya Kumar, Assigning & Licensing IPR In India – Intellectual Property – India Mondaq (2009), https://www.mondaq.com/india/trademark/87398/assigning-licensing-ipr-in-india

[8] Graeme Alder, Roger Federer vs Nike: A legal view on the ‘RF’ logo dispute SportsPro (2018), https://www.sportspromedia.com/opinion/roger-federer-vs-nike-rf-logo-legal-view

[9] Sunil Baghel, BCCI wins IPL trademark infringement case Mumbai Mirror (2018), https://mumbaimirror.indiatimes.com/mumbai/other/bcci-wins-ipl-trademark-infringement-case/articleshow/62893433.cms

[10] Anubha Sinha, SpicyIP tidbit: IPL receives notice from IPRS, pays up for playing music at the Opening ceremony SpicyIP (2015), https://spicyip.com/2015/04/spicyip-tidbit-ipl-receives-notice-from-iprs-pays-up.html

[11] https://www.wionews.com/opinions/india-is-emerging-as-an-important-producer-of-counterfeit-goods-212263

[12] https://www.news18.com/news/india/nearly-60-of-sports-goods-40-of-apparel-products-available-online-are-fake-1615763.html