An analysis of IP rights in Japanese sports business – Part 1

Published 27 January 2014 | Authored by: Takuya Yamazaki

In this two part series Takuya Yamazaki provides an analysis of intellectual property rights in Japanese sports business with a focus on infringement cases of ‘broadcasting rights’ and ‘sponsorship rights’.

The sports business or industry is often known and described as a rights business. However, in Japan's intellectual property ("IP") rights laws there exists no unique protection for important sports business related rights such as 'broadcasting rights' and 'sponsorship rights'. Moreover, sports events themselves, which bring massive value to the sports industry, are not even afforded IP protection.

There is, therefore, a discrepancy between the 'object of the business transaction' in the sports industry and the 'object to be protected' under IP rights, which poses a big challenge for the protection of 'rights' in the industry.

As these rights are not afforded direct protection there is a risk that these can be easily taken advantage of, for a 'free ride', by third parties. This article, with a focus on the infringement cases of both 'broadcasting rights' and 'sponsorship rights', shall investigate the 'misdirection play' of the application of Japanese IP rights in the sports business.

 

The mismatch between Japan's sports business and IP rights laws

The appeal of sports law

In recent years the number of books in the so-called academic field of 'sports law' has been increasing not just in Europe and America but also in Japan.

The author of this paper has also had many opportunities to give 'sports law' lectures and classes at various law schools and universities. However, this academic field of 'sports law' is a research subject of 'law' applied to the sports world (including to the sports business); it is rarely a subject that directly researches statutory laws such as 'patent law' or 'copyright law'. Rather, it is often said that it is a research subject that considers 'how and in what manner' existing statutory laws and legal theories apply to the sports world.

The American sports law scholar Professor Ray Yasser has expressed the appeal of this sports law as, "the beauty of the misdirection or trick play."1

For example, there have been attempts to apply existing 'IP rights laws' to cases not envisaged by those laws through taking a broad interpretation to bring about IP rights protection. Conversely, there have also been attempts to deny the application of pertinent laws that are regularly applied, even to sports settings, through making exceptions in interpretation such as the 'specificity of sport'. These are examples of 'misdirection plays'.

In this way, regarding the discussion on how existing laws are applicable or not to various cases and business within sports, the appeal of 'sports law' exists through shedding new light on the nature and legislative intent of such laws. In common with this, the discussion about whether 'IP rights laws' are applicable or not within the sports business to a variety of cases and contracts, also provides new perspective on the nature and legislative intent of 'IP rights laws'.

The problem

Global sports events like the Olympics and the FIFA World Cup, give rise to 'rights' - such as broadcasting and sponsorship rights – which are traded for large sums of money. However these 'rights' are not 'IP rights' like patents or copyrights.

This is a significant and unique problem for the sports business, which differs from other entertainment businesses. For example, in the movie industry, for example, a film itself receives direct 'copyright' protection and various types of business and contracts, including screenings and broadcasts of the film, are administered based on this 'copyright'.

Nevertheless, in the sports industry, however, there are various 'rights' (for instance, broadcasting rights: the right to broadcast sports games live, in real time) that are not afforded sui generis (i.e. specific and unique) statutory protection. More to the point, 'sports matches' are not the object of protection by IP rights.

 

The specific rights

In this way, the intangible assets with a certain economic value that are traded in the sports business are not necessarily the 'object to be protected' by statutory law, either as intangible property rights or IP rights. Thus, this disconnect between the 'object of the business transaction' in the sports business and the 'object to be protected' under IP rights laws illustrates the problem for sports business.

Popular 'sports matches' can bring about not only the value of the ticket or the match broadcast, but also the brand value of the relevant parties therein (e.g. sport governing bodies, players and clubs), which in turn produces a revenue for that brand.

In the sports business (the sports entertainment business with a focus on sports matches) there are four main revenue streams:

  • (1) event hosting revenue;
  • (2) broadcasting rights revenue;
  • (3) sponsorship revenue; and
  • (4) merchandising revenue.

Out of these, point (3) sponsorship revenue and (4) merchandising revenue embody the brand value (popularity) for the relevant parties in the 'sports match' which is itself derived from the value (popularity) of the 'sports match'. Brands can easily be afforded statutory legal protection (e.g. as prescribed under laws including Japan's Trademark Act and Unfair Competition Prevention Act [UCPA] which both aim to protect brands).

However, for the revenue streams that derive from the 'content' of the sports matches [namely point (1) event hosting revenue and (2) broadcasting rights revenue] cannot be afforded protection by such laws.

It is often said that sports provides 'unscripted drama', and for that reason, a 'sports match' is not defined as a 'work' (copyrightable subject matter) under Japan's Copyright Act, so it cannot be protected by copyright law. Article 2(1)(i) of the Copyright Act stipulates:

"'Work' means a production in which thoughts or sentiments are expressed in a creative way and which falls within the literary, scientific, artistic or musical domain."

Moreover, an athlete's/player's performance itself does not receive protection as a 'performance' by neighbouring rights under the same law. Article 2(1)(iii) of the Copyright Act stipulates:

"'Performance' means the [theatrical] acting, dancing, musical performances, singing, reciting, declaiming or performing in other ways of a work, including similar acts which do not involve the performance of a work but which have the nature of public entertainment."

Also in sports, skills or techniques such as a baseball batter's form or a football player's free kick style are not regarded as patentable subject matter. The subject for a patent right is an 'invention', which requires "the creation of technical ideas utilising the laws of nature."

'Personal skill' is defined by the Japan Patent Office in its 'Examination Guidelines for Patent and Utility Models in Japan'2 as:

"'Personal skill' which is acquired through personal experience and cannot be shared with others as a knowledge due to lack of objectivity."

Thus, such 'sports skills' are not afforded protection as patent rights.

 

The legal status of "hosting rights" and "broadcasting rights"

The legal nature of these rights ultimately derives from the ownership of the venue where the sports match is hosted. The owner/facility manager of the venue can effectively determine which parties can and cannot enter the venue. Therefore the said rights are acquired through the acts of either granting or not granting licences/consent for companies to bring their equipment (including cameras) to the venue to transmit the match. These rights are not 'intangible property' like 'IP rights' but rather rights that are concerned with 'tangible property'. There is also an argument that the grounds for 'broadcasting rights' can be claimed based on players' image rights when they play in sports matches. However, in the most recent Supreme Court of Japan judgment on the matter, the court asserted that an infringement of image rights (publicity rights) can only occur in cases where the purpose of the image use is mostly to harness the powers of the image to attract customers3. For example:

  1. use of the images themselves independently as commercial products which are subject to an appreciation;
  2. attaching the images on commercial products in order to distinguish such products from others; and
  3. using the images as an advertisement for commercial products.

In the sports industry, 'hosting rights' and 'broadcasting rights' are a source of big money deals and are important 'rights' for the industry. However, due to the legal nature of these rights deriving from the ownership of the sports venue, it is difficult for the owner/facility manager to oppose acts by people who use the intangible property part of the 'sports match' in a form that does not violate the ownership rights.

The truth of the matter is that in Japan these rights are very fragile because there is no sui generis statutory protection regime for them as IP rights. For the broadcasters that invest massive sums in acquiring the broadcasting rights for sports events, the problem arises that they cannot suitably take legal action against conduct that is detrimental to the economic value of their investments. In fact, by extension, this leads to the result that the value of such rights will be diminished, which will cause a negative impact on the rights seller – the host of the sports event. In Japan the sports business is relatively young and it was not envisaged that IP rights laws would exist in the business. (In 2011 the 'Basic Act on Sports' came into force in Japan, however, even here there is no particular reference to IP rights laws in sports.)

Therefore, business in relation to the valuable sports contents which the sports event (sports match) host/organiser creates, is carried out amidst threats from third parties in the form of 'unauthorised/fraudulent use', 'parasitism' and 'free-riding'.

Let us consider an extreme example such as when an ultra-high performance camera is used to film and broadcast the match from an aerial position a long way from the stadium. This cannot be classified as entering the stadium without authorisation to film the match, and it also cannot be said that this act violates the ownership rights. Hence, for this, no legal recourse can be sought based on the ownership rights.

Furthermore, where professional baseball games are transmitted in text form almost ball-for-ball, real time over the internet it cannot be classified as violating the ownership rights; so, no legal recourse can be sought based on the ownership rights.

In relation to this point there has been the Talksport case in Great Britain4 and the Sportstrax judgment in America5. However, in Japan there are still no legal judgments on this.

In the second part of this two-part series on IP rights in Japan, Takuya Yamasaki analyses the legal measures that can be taken to protect sports rights holders in Japan with a focus on infringement cases of 'broadcasting rights' and 'sponsorship rights'.

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About the Author

Takuya Yamazaki

Takuya Yamazaki

Takuya, a Japanese Attorney-at-Law, is the founder and Managing Partner of Field-R Law Offices, a niche sports and entertainment legal practice based in Tokyo.

Takuya has vast legal and business experience in sports both in Japan and internationally. He is a member of the FIFA Dispute Resolution Chamber, a position held since 2009. In 2016 he became the Chairman of FIFPro Division Asia/Oceania.

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