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Entertainment, Media & Sports Alert >> As Advertisers Head to Rio for the Olympics, a Changed Regulatory Landscape Awaits

July 12, 2016

The world’s greatest athletes will soon be on their way to Rio for the 2016 Olympic Games. Joining them will be many of the world’s largest advertisers and best-known brands. Some of these advertisers will be official Olympic sponsors, while many will not. Both sponsors and non-sponsors alike, however, will be facing a dramatically reconfigured marketing landscape, where the line defining ambush marketing has become increasingly blurred.

IOC and USOC Rule Changes
The International Olympic Committee (IOC) and corresponding national Olympic committees have long used regulations aimed at athletes as a principal tool to combat ambush marketing. Under Bylaw 3 to Rule 40 of the Olympic Charter, the IOC has historically prohibited Olympic athletes from appearing in advertising during the period surrounding the Games for any advertisers other than official Olympic sponsors. For the 2016 Games, the IOC, along with the United States Olympic Committee (USOC), have modified these rules to allow limited advertising by non-sponsors.

Under the updated Rule 40, advertisers who have sought waivers are able to continue running marketing programs during the traditional blackout period beginning nine days before the Opening Ceremony through three days after the Closing Ceremony. In order to receive a waiver, advertisers must have had the advertising campaign in-market no later than March 27, 2016 and must have submitted all creative materials and media plans to the USOC for approval prior to going to market.

This timing requirement has created many challenges for advertisers and athletes. Most U.S. athletes do not qualify for the Olympic team until late June or early July prior to that year’s Games. For lesser known athletes, the prospect of making the team is what makes them attractive to marketers, so many endorsement deals are not concluded until this time period. The requirement that advertising must be in-market by March would technically prohibit these athletes from taking advantage of the loosened rules.

Moreover, many advertisers have long-term endorsement agreements with athletes but are unsure whether the athletes will make or elect to participate on the Olympic team. This is particularly true for professional athletes such as basketball players, tennis players and golfers. These marketers must comply with the Rule 40 obligations, disclosing confidential marketing plans and creative materials, not knowing whether their signed athletes will be participating. Marketers affiliated with LeBron James, for example, would have been required to comply with the Rule 40 requirements since early this year until learning just recently that he elected not to participate on the 2016 Olympic team.

Nevertheless, the prospect of non-sponsors running extensive marketing campaigns during the heart of the Olympics creates significant uncertainty for official Olympic sponsors regarding the value and benefit of these multimillion-dollar sponsorships they have signed with the IOC and USOC.

Brazil Amends Olympic Act
In light of this changing landscape, host country Brazil is not relying solely on the IOC regulations to protect against ambush marketing. In 2009, Brazil enacted the Olympic Act, which provided customary protections for trademarks associated with the Olympic Games. In May 2016, Brazil enacted supplementary regulations aimed at combating ambush marketing more broadly. Modeled on Brazil’s regulations for the 2014 World Cup, these regulations expand the definition of the official symbols subject to protection, create an expedited review process by Brazil’s Industrial Property Office, provide a mechanism for coordinating with the Brazilian Network Information Center for purposes of evaluating proposed .br domain names, and create enhanced penalties, including imprisonment, for violators.

In particular, the updated regulations create a zone of exclusivity at the official locations of the events and in the surrounding areas, including all government buildings and facilities, such as airports. This restriction poses the biggest challenge to non-sponsors, theoretically limiting the ability to take advantage of the crowds at and near the venues. However, non-sponsors are not going away quietly. Though Under Armour is not an official Olympic sponsor, it has secured endorsement agreements with a reported 250 athletes and plans to rent a series of outdoor gyms along a stretch of beach in Rio to host fan workouts (and showcase its latest apparel and equipment).

Much like the ambush marketing that occurred in London during the 2012 Games, non-sponsors are expected to use every creative opportunity available to skirt Brazilian regulations at the 2016 Games, while Olympic sponsors and the Brazilian government engage in a game of rapid-fire whack-a-mole, attempting to protect their investments.

The Bottom Line

Official Olympic sponsors will need to closely monitor unofficial marketing activities in light of the relaxed Rule 40 standards and the updated Brazilian regulations, taking advantage of expedited procedures to fight ambush marketing in Brazil. Unofficial sponsors, on the other hand, will be able to take advantage of the new Rule 40 standards to utilize Olympic athlete endorsers without official sponsorships and will need to use caution to creatively implement marketing programs in Brazil without running afoul of recent regulations. Expect more tinkering with these regulations once the dust has settled in Rio in 2016.