The next issue in our series of blog posts about the Olympics considers “Rule 40,” which can get both advertisers and athletes into trouble. We think Rule 40 deserves a gold medal for generating buzz in the advertising world, and a silver for generating confusion.
Rule 40 restricts participants in the Olympic Games (i.e., competitors, coaches, trainers, and officials) from allowing their “person, name, picture or sports performances to be used for advertising during the Olympic Games.” The advertising blackout period for the Rio 2016 Olympics is from July 27th through August 28th, which is from 9 days prior to the Opening Ceremony until 3 days after the Closing Ceremony.
As discussed in our previous blog post titled Golden Rules: Wrestling with the Use of Trademarks, the International Olympic Committee (IOC) is the body that governs the Olympic movement around the world, and the United States Olympic Committee (USOC) is the organization in charge of all things “Olympic” in the United States. Rule 40 exists in the Olympic Charter, which is essentially the IOC’s constitution, and it applies to Olympic participants from all over the world. Each country’s Olympic authority (e.g., the USOC in the United States and the Chinese Olympic Committee in China) is responsible for implementing, interpreting, and investigating potential violations of Rule 40. Advertisers that want to depict athletes from the United States and from abroad must, therefore, consult the requirements of the USOC and of the Olympic authority in each country represented in their advertising. A Rule 40 violation could result in sanctions for the athlete that range from fines to disqualification from the Games.
Note that, technically, it is the Olympic participant (e.g., the athlete) who must comply with Rule 40, not the advertiser. Advertisers may face legal risk nonetheless because athlete endorsement contracts with brands typically contain provisions that require advertisers to ensure compliance with Rule 40. This makes it possible for athletes to hold advertisers accountable (which could include immediate termination of the endorsement agreement and indemnification of the athlete for all damages incurred by the athlete) if the advertising that features the athlete does not comply with Rule 40. Advertisers may also violate the Ted Stevens Act when using an Olympic participant in advertising, if, as discussed in our blog post titled Golden Rules: Lowering the Uneven Bars on the Likelihood of Confusion, they use that participant in a way that tends to falsely suggest a connection between the advertiser and the Olympics. In addition to legal risk, an advertiser that contributes to a Rule 40 violation could face reputational risk if, for example, a beloved Team USA athlete were disqualified from competing because of an advertiser’s badly timed campaign featuring that athlete.
Rule 40 covers all marketing tactics, including social media posts. So, unless otherwise specifically authorized by the USOC for the applicable marketing tactic, an otherwise innocent congratulatory tweet by a brand directed at a triumphant athlete could subject both the brand and the athlete to unwanted risk.
Rule 40 has generated extra buzz this year because the IOC updated its Rule 40 guidance in 2015 to allow Olympic participants more flexibility to be featured in so-called “generic advertising.” This change, as implemented by the USOC in its participant advertising guidance published in October 2015, enables non-Olympic sponsors to use current Team USA participants in “generic advertising” during the blackout period if the following conditions are met: (i) there is no association with the Rio Games or Olympic trademarks in the advertising; (ii) the campaign was submitted to the USOC 6 months in advance of the start of the applicable blackout period (i.e., January 27, 2016 for the Olympic Games and March 1, 2016 for the Paralympic Games) and the USOC has approved it and granted a waiver; and (iii) the advertising started running no later than 4 months in advance of the applicable blackout period (i.e., March 27, 2016 for the Olympic Games and May 1, 2016 for the Paralympic Games). Additionally, if the advertising features Olympic participants from other countries, the submission for the waiver must include approvals from the relevant Olympic authorities in such other countries.
At this point, both deadlines have passed, so advertisers with campaigns that include current Olympic participants, but do not have a waiver should follow LeBron James’ lead and steer clear of the Games (though, notably, James’ sponsors are welcome to keep using him since he passed on Rio).
The Rio 2016 Opening Ceremonies do not start for another 9 days, but the Rule 40 blackout period starts today!