Sponsorship Agreement: Australia Olympic Committee v Telstra

The Fine Lines of Misleading and Deceptive Conduct: A case note on Australia Olympic Committee Inc. v Telstra Corporation Limited [2016] FCA 857

Last month, there were billions of people worldwide watching the Olympics. Understandably, many companies seek to associate themselves with the largest sporting event in the world. In Australia, the Australian Olympic Committee (AOC) has the exclusive rights to grant licences to those who wish to sponsor or partner with the Olympic Games for commercial purposes.

Shortly before the Olympics kicked off, the AOC made an urgent application to the Federal Court of Australia, alleging that advertisements from Telstra were misleading because they suggested that Telstra was a sponsor of the Olympics. In fact, Telstra had no official sponsorship agreement or association with the AOC or the International Olympic Committee (IOC).

This case highlights one of the many legal battles, which arises during the Olympics. In particular, it addresses the legality of ambush marketing, misleading and deceptive conduct, and the protection of sports sponsorship.

Misleading and Deceptive Conduct

The application of the ‘reasonable person test’ determines whether the conduct in question is likely to mislead or deceive the targeted audience. Reliance on the reasonable person test creates a very unstable barrier between successful self-promotion and landing in hot water for misleading conduct. Such blurry lines then open doors to opportunities and loopholes to dance around the legalities of the Australian Consumer Law (ACL).

For example, ambush marketing is a deliberate attempt by a business to associate themselves with a major event or brand without an official agreement of sponsorship. Ambush marketing has been a long-lived marketing strategy used by businesses to capitalise on the excitement of high profile events, without having to bear the financial burden of official sponsorship.

The question is whether Australian legislation offers protection to prevent ambush marketing.

What You Need to Know About the Telstra Case

Telstra was the technology partner of Seven Network for the Seven’s Olympic Games Coverage. Telstra customers were offered free access to Seven’s Olympic coverage through the “Olympics on 7” App.

Since 1992, Telstra had been an official sponsor of the Australia Olympic team. However, for the Rio Games, Telstra did not hold any official affiliation with the IOC, AOC or any other Olympic body. Instead, Telstra’s strategy was to connect its brand with the Olympics indirectly, by partnering with Seven.

As a result of Telstra’s partnership with Seven, Telstra straddled the delicate line of misleading and deceptive conduct – promoting its relationship with Seven without infringing the exclusive rights of the AOC.  

The Legal Issues

The AOC’s case against Telstra had two key elements:

1. Telstra breached section 36 of the Olympic Insignia Protection Act 1987 (Cth) (OIPA) by using protected Olympic expressions in promotional material for commercial purposes without obtaining a licence from the AOC; and
2. Telstra breached sections 18, 29(1)(g) and 29(1)(h) of the ACL by making misleading representations that Telstra had some arrangement of sponsorship, endorsement, affiliation or licencing agreement with the Olympics.

Collectively, these actions tiptoed around the legalities of ambush marketing.

The Telstra Promotions

The alleged unlawful conduct concerned 34 separate types of promotional and marketing communications, including television advertisements featuring Peter Allen’s song ‘I Go to Rio’ and various images of participants and viewers of sports events.

Some advertisements included the words ‘Official Technology Partner of Seven’s Olympic Games Coverage’, which was shown alongside ‘Olympics on 7’ and the Telstra logo.

The AOC claimed that these advertisements constituted a use of protected Olympic expression without a licence from the AOC, as the advertisements would lead viewers to believe that Telstra had an affiliation with the Olympic Games, the AOC or an associated Olympic body.

In an attempt to resolve the dispute with the AOC, later versions of these promotions and advertisements included a disclaimer that read ‘Telstra is not an official sponsor of the Olympic Games, any Olympic Committees or teams”.

Telstra is not an official sponsor of the Olympic Games, any Olympic Committees or teams.

However, this disclaimer was not enough to deter the AOC from taking Telstra to court.

The Decision

On 29 July 2016, the Federal Court held that Telstra had not breached section 36 of the OIPA or sections 18, 29(g) or 19(h) of the ACL.

1. The Olympic Insignia Protection Act

Section 36 of the OIPA provides that a person must not use a protected Olympic expression for commercial purposes without a licence from the AOC. Section 30 of the OIPA confirms that a protected Olympic expression is used for commercial purposes when it has been applied to goods or services for advertising or promotional purposes.

There was no dispute that Telstra applied Olympic expressions to promote Telstra services. Rather, the main issue in question was whether these advertisements would lead a reasonable viewer to believe that Telstra was a sponsor of the AOC or another Olympic body.

The Federal Court found that, while Telstra clearly intended to convey an association with the Olympics, there was no reference to the AOC, IOC or the Australian Olympic Team. Justice Wigney stated that the fact that Telstra intended to convey that they had a “sponsorship-like arrangement” with an Olympic body, intention was not a necessary element to prove breach of section 36 of the OIP Act (at [97]).

Rather, the advertisements ultimately conveyed a relationship between Telstra and Seven’s Olympic Games Coverage.

2. The Australian Consumer Law

The AOC claimed that Telstra had contravened the ACL by engaging in misleading or deceptive conduct in making false representation suggesting an association with the Olympic Games.

The consideration of this claim involved a slightly broader test than under the OIPA, requiring a determination of the overall impression conveyed by Telstra to a reasonable viewer.

However, this broader test did not bring any success to AOC’s claim. The Court held that the Telstra advertisements did not convey to a reasonable viewer that Telstra had a sponsorship or other similar agreement with the Olympics. Again, the Court confirmed that the overall impression of the advertisements would suggest to a reasonable person that Telstra was associated with Seven and Seven’s Olympic Games Coverage.

Therefore, Telstra’s advertisements were not found to be misleading or deceptive under the ACL.

Key Takeaways

The OIPA, and in more general circumstances, the ACL, provide some protection against ambush marketing and making false representations that may mislead or deceive viewers. While the AOC failed to rely on these laws to prevent Telstra’s marketing campaign, it does not deny the importance of carefully considering the nature and impact of advertising material.

More specifically, for those who are looking to reap the benefits of the popularity and excitement of events like the Olympics, make sure you have the rights and licenses to do so. In this case, Telstra was found not to have misled and deceived viewers – but a slight change in facts could easily have resulted in a different decision.

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If you have any questions on this case or legal issues surrounding the Australian Consumer Law, get in touch with LegalVision’s consumer lawyers on 1300 544 755.