Club Badges, Trademark Infringement & Charitable Organisations

Image source: http://www.logodesignlove.com/wp-content/uploads/2011/11/trademark-monogram.jpg

Intellectual property is one of the most important income streams for sport clubs as the sector becomes increasingly more and more commercialised. IP rights are vigorously protected to safeguard not only the club but also fan-exploitation.

Whilst club designs may fall into the copyright domain, trade marks are also used for logos/badges/names etc as they are an enforceable right that do not expire after a set term of years and derive from the actual 'use' of the mark. If the owner continues to use the registered mark, the right will last forever.

What is a trade mark?

Trade marks are known as a 'badge of origin' and can have great economic value to it's holders.

A trade mark is defined as being 'any sign capable of being represented graphically and which is capable of distinguishing the goods or services of one undertaking from those of other undertakings.'

Trade marks can take a number of forms including logos, badges, phrases and distinctive patterns & designs, such as the five golden rings associated with the Olympics.

The registration of a trade mark provides the owner with an enforceable property right regarding improper use. Any infringement of a trade mark allows the owner to claim compensation from the infringer (e.g. the profits earned from the selling of goods) and request an injunction prohibiting them from further use of the trade mark, along with handing over any counterfeit goods.

Brand owners are encouraged to trade mark their logos, designs, catchphrases etc as soon as possible and certainly once popularity begins to take hold and it earns the nature of a distinctive character.

What is the purpose of a trademark?

The purpose of a trade mark is to allow the consumer to associate the origin of a product or service, without any possibility of confusion. Its use provides the consumer with a guarantee of its association. It prevents others from exploiting the reputation and commercial success of the owner by using the trade mark without the owner's consent.

Owners of trade marks are usually provided with two specific forms of protection -

(1) prohibition of unauthorised copies of the owner's trade marks from being produced and marketed on goods and;

(2) attempts to confuse consumers by the use of a design similar to a registered trade mark or by using a registered trade mark on goods similar to those currently being produced by the owner, are prohibited.

What constitutes an infringement?

Under Section 10(1) of the Trade Marks Act 1994 and Art 5(1)(a) Directive on the Legal Protection of Trade Marks, a person infringes a registered trademark if he uses in the course of trade, a sign which is identical with the registered mark in relation to goods or services, which are identical with those for which it is registered.

**Any such infringement must actually use the mark, within the UK, and in the course of trade**

Further when determining any possible infringements, the paramount consideration should centre around any possible consumer confusion that may arise, as a result of the mark being used without authorisation. For example, could the consumer mistakenly believe that the goods or services is connected to the mark owner by the display of a registered trade mark or could the goods be associated with another brand, in error, as a result of inclusion of a registered trade mark. 

Defences to trade mark infringement

The Trade Mark Act 1994 establishes a number of defences to trade mark infringement but it may be sensible, in some circumstances, to simply agree to not use the mark again as establishing a defence could be very costly.

Section 11(2)(a) Trade Marks Act 1994 and Art. 6(1) Directive on the Legal Protection of Trade Marks states that a registered trade mark is not infringed by:

1) The use by a person of his own name and address;

2) The use of indications concerning the kind, quality, intended purpose value, geographical origin, 
     the time of production of goods or rendering of services, or other characteristics of goods or                services;

3) The use of the trade mark where it is necessary to indicate the intended purpose of a product or           service provided the use is in accordance with honest practices in industrial or commercial matters.

IP Dispute - Arsenal FC Badge & Fan Allegiance
Source: http://www.arsenal.com/assets/_files/scaled/696x392/jan_13/gun__1358428400_shirt_badge.jpg

Arsenal won their trade mark dispute in the early 2000s (which rumbled on over a few years) against an unofficial merchandise dealer who was selling unauthorised fan products, in particular scarves, bearing the logos and emblems of Arsenal Football Club, all of which were registered trade marks. The dealer was selling the goods under a disclaimer which read that they were unlicensed and he, thus, argued that he was not using the club's emblems in a 'trade mark sense'.

There was a debate as to whether there was any infringement of the trade marks at all, on the basis that the imprints and pictures were for decorative purposes only and implied no affiliation with the football club. It was argued that the club emblems were not 'badges of origin', as described by the Act but instead an interpretation of support, loyalty and fan affiliation with the club. 

Upon considering all the facts, however, the European Court of Justice ruled in favour of Arsenal Football Club. It held that such uses are only to be regarded as a trade mark infringement if it impairs the interest of the trade mark holder with respect to the functions of the trade mark. Under the circumstances, the use of the signs and logos identical to the trade marks in question was capable of endangering the guarantee of origin and therefore, the main function of the trade mark. Whether the trade mark was used in a way where it was regarded as an expression of support or fan affiliation had no bearing when determining its decision, according to the Court. The main issue was whether the use of the mark had the potential to create confusion for the consumer as to whether there was a material link between the items and the club (as it cannot be said that every consumer is aware of the disclaimer at the time of purchase).

Any such use of a mark, by a third party, that goes unchecked and is not used in a descriptive sense, is likely to damage the main function of the mark as the proprietor can no longer guarantee the origin. As discussed above, this applied in the Arsenal case regardless of fan affiliation.

Charitable organisations - Do they operate in the course of trade?
Source: http://d.ibtimes.co.uk/en/full/1371720/food-bank.jpg

As discussed, one of the criteria to have a valid claim for trade mark infringement is for there to be the use, of a registered mark, in the course of trade.

'In the course of trade' is most certainly open to interpretation but can generally be defined as any non-private activity which has an economic benefit, whether that be an immediate benefit or within the economic intercourse of one's business.

On 17 December 2016, Heart of Midlothian FC released a statement advising that it had come to their attention that an organisation called Edinburgh Helping Hands had been using the club's badge and name in relation to a food bank collection. The statement went on to confirm that the use of the badge and name was completely unauthorised and the organised event, being held prior to a club fixture, was not in association with the club. It concluded by stating that it was concerned that some fans may possibly be misled into thinking that it was an official event. The notion that some fans may be confused in thinking it was an official event is quite plausible given that the club was involved in an official food bank collection, less than a month earlier, through its official charity, The Big Hearts Community Trust. The latest food bank collection was initiated by Hearts fans who enlisted the aid of Helping Hands to assist with the organisation of the event etc. Helping Hands response can be found here.

However, confusion of fans alone is not enough to satisfy infringement. Is the badge being used in the course of trade, as set out in legislation?

It is difficult to say as there is still much academic debate on the subject and any cases dealing with the question have usually involved commercial businesses and activities. Determining whether use 'in the course of trade' has occurred where the user provides goods or services for charitable, philanthropic, not-for profit purposes, will turn on a case-by-case basis.

It could be the case that a not-for-profit organisation may still derive some kind of monetary benefit through the use of a registered trade mark. Such an example may be in the form of monetary donations that allow them to continue with their activities. Any such activity that is performed under a sign that contains the registered trade mark, and encourages donations as a result, may be enough to form a commercial basis for the use being carried out in the course of trade.

In the event that 'trade' can be established, Heart of Midlothian may also be able to claim that because they have their own official charity that is licensed to use the marks (which was also involved in a different food bank collection), any such infringement may undermine official fundraising activities and additionally, boost the official users of the mark unfairly.

It is unlikely that the football club will pursue the matter any further than a cease and desist letter but the scenario certainly throws up an interesting question, regarding charities.

It should be noted that in terms of negative PR received for pursuing charities, holders of IP rights must protect from all infringements otherwise if they do not, the trademarks could run the risk of lapse.

However, ultimately the answer to the question will depend on the individual scenario, the organisation, their activities and the type of trading they carry out, if any.

Other trade mark disputes in Sport


Source: http://fardamento.netshoes.net/BR/LNetshoes/production/20160617/SPONSOR/20160617SPONSOR0829223.png

As you are most likely aware, Nike International produces sports goods which it sells under the registered trade mark, 'Nike'. This trade mark is registered in Switzerland. In 1985, Nike International was contacted by a Spanish company called, Campomar, (who has 'Nike' registered in Spain, as a trade mark, since 1984) who notified Nike International of its intention to produce a sporting perfume line under the name 'Nike', the sale of which would be handled by Quarz AG. Campomar asked if Nike International would be interested in partnering on the project but Nike declined.

In 1993, Quarz began the launch of 'Nike Sport Fragrance' cosmetics line in Switzerland and contacted Nike again about co-operation. Nike ruled out any co-operation and stated that it would not tolerate the use of it's trade mark, 'Nike'. 

An injunction was sought under Article 15 of the Trademark Act 1993 (Switzerland). Under this provision, extra protections are afforded to 'famous trademarks' whereby the owner of a 'famous trade mark' can prevent its use by others not only with respect to specific classes of goods but also for every kind of goods or services, if such a use endangers the distinctiveness of the trademark or exploits or impairs its reputation. 

The Court held that the majority of persons pursuing sports are aware of Nike International's trade mark. It is one of the most demanded brands and one of the three most famous sport brands, globally. It enjoys excellent market reputation and it's advertising effect (which did not become famous by itself) does not only relate to sporting goods but other goods too. Although Campomar also holds the rights to the trademark 'Nike' that has existed for decades, in Spain, this is not likely to be known to the public in Switzerland. The Court also noted that Campomar was not disputing the fame that Nike International's trade mark enjoyed. 

The Court concluded that it was obvious that Campomar would profit from the reputation of Nike International's trade mark when selling the perfume aimed at sporting individuals. The idea of 'sport' could easily be transferred to a perfume line whose marketing also underlined the character of sporting activity. Given that, if Campomar were allowed to use the trade mark, they would benefit from Nike International's advertising success and that is exactly what Article 15 aims to prevent.

The Adidas/Barcelona IP Dispute

FC Barcelona have found themselves locked in a trade mark dispute with German sportswear brand, adidas, after the sportswear giant opposed FC Barcelona's trade mark application with the US Patent and Trade Mark Office (USPTO).

Adidas claims the trade mark that FC Barcelona has applied to register, and which consists of a square containing seven vertical stripes (the 1st, 3rd, 5th and 7th stripes from the left are blue and the 2nd, 4th, and 6th are garnet), is very similar to their famous 3 stripe mark (remember the protections afforded to trademark owners, discussed above, can include similar designs).

FC Barcelona registered the trade mark in May 2015. When a trade mark is registered and the application has been considered, notice is then intimated in an official gazette - this allows possible interested parties, such as adidas, the opportunity to pitch up and oppose the trade mark on the basis that their own trade mark is similar and allowing the registration to proceed could cause confusion and in turn, potentially damage the opposing brand's reputation.

In their opposition, Adidas states the following:-

"The Three-Stripe adidas trade mark [Three-Stripe Mark] is well known and famous and has been for many years. It is particularly well known among professional soccer players, fans and consumers of soccer apparel ... Since introducing the Three-Stripe Mark (in 1952), adidas has spent millions of dollars promoting the mark and products bearing the mark.  As a result of adidas's extensive use and promotion of the Three-Stripe Mark, adidas has built up and now owns extremely valuable goodwill that is symbolised by the mark. The purchasing public has come to associate the Three-Stripe Mark with adidas."

FC Barcelona's seven-stripe mark is registered for use on a wide range of goods and services including flags, placards, clothing, stationery, footwear, headwear and sporting equipment. Adidas alleges that the trade mark is strikingly similar to their 'Three-Strip Mark' both in appearance and commercial impression. Given that, they consider that FC Barcelona's mark is:

 "likely to cause confusion, deception, or mistake as to the affiliation, connection, or association of FC Barcelona with adidas, or the origin, sponsorship, or approval of [its] goods by adidas ... Consumers familiar with the footwear and apparel long associated with adidas' Three Stripe Mark are likely to assume that the goods in Class 25 (footwear and apparel) and Class 28 (sporting goods/equipment) offered under FC Barcelona's trademark originate from the same source, or that they are affiliated, connected, or associated with adidas ... any defect, objection, or fault found with FC Barcelona's products marketed under the FC Barcelona trademark necessarily would reflect on an seriously injure adidas's reputation."

As such, Adidas have asked the USPTO to reject FC Barcelona's application to register the seven-stripe trade mark, citing its similarities to it's own already established mark. However, this is not the first time that adidas has taken on a heavyweight brand, in relation to trade mark infringements. It has previously won cases against Marc Jacobs (4 stripes mark), Forever 21 (3-stripes), Sears Department Stores and Skechers (for selling similar designed footwear). 

What is interesting about the Barcelona case, is that the kit partnership that Barcelona has is with Nike, arguably adidas' biggest competitor - especially when fighting it out for deals in the global football market. For example, Nike has just recently concluded a record-breaking kit deal with Chelsea FC - the previous Chelsea kit deal was with adidas ... You do the maths!

This case is ongoing and has yet to be concluded but it will be interesting to see what the USPTO decides.

As you can see, due to the increased commercialisation of sport, IP rights remain an important and contentious issue. Trade mark infringements are not the easiest to pursue and copyright breaches may be easier to take action, if done so without permission (but that is for another post). However, holders of IP should be aware of their rights of enforcement whilst third parties who take the decision to use club emblems & other marks should obtain permission first of all and avoid any use until such permission has been given, to avoid any legal arguments, at a later date.

IMPORTANT: This post is not intended to be a legal briefing, it is not intended to be a statement of the law and no action should be taken in reliance on it without specific legal advice.

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