Why football players and managers should own their own trade marks

Published 08 July 2016 | Authored by: Charles Maurice, Tom Collins

In the midst of contract negotiations to bring Jose Mourinho to Old Trafford, it was reported1 (and remains for all to see on the register of trade marks held by the UKIPO2) that Chelsea Football Club, Mourinho’s former employer, owned a number of registered trade marks for ‘Mourinho’, ‘Jose Mourinho’ and his signature. The trade marks covered a variety of goods and services ranging from dressing gowns to after-shave lotions. According to the same reports, this unusual situation delayed the appointment of Mourinho as Manchester United Manager and sends out some important messages about intellectual property and brand control within the sports industry.

 

TRADE MARKS IN THE SPORTS INDUSTRY

A registered trade mark is a valuable asset, giving the proprietor an exclusive right to exploit the mark in relation to the goods and services for which it is registered (Section 9(1) Trade Marks Act 1994 (“TMA”)). For this reason, a number of high-profile athletes have personally registered their names as trade marks to take advantage of the licensing opportunities and ability to prevent unauthorised use. Notable examples include Lionel Messi (EU006353131), Nico Rosberg (EU004920807) and Serbian tennis superstar Novak Djokovic (EU014003727).

Beyond the traditional name trade marks, some sporting icons have been a little more creative with their registrations.A trade mark for Fred Perry’s signature has been registered since as early as 1965 (UK00000875071), and other sports stars such as Michael Schumacher (EU001022797) have since followed suit. John McEnroe’s famous catch phrase “you cannot be serious” was also registered with the US Trade Mark Office until September 2014 (US Registration No. 3379565) and many will remember Gareth Bale’s audacious attempt to trade mark his ‘eleven of hearts’ goal celebration, which attracted significant media attention.3 This was registered in July 2013 (UK00002657917), but the Welsh forward subsequently gave up his rights to this trade mark in November 2013 for reasons unbeknown.4

 

THIRD PARTY OWNERSHIP

Issues regarding third party ownership/investment (TPO/TPI) of footballers’ rights are by no means novel. In 2006, Carlos Tevez and Javier Mascherano signed for West Ham United and it subsequently transpired that the transfer and registration-related “economic rights” of the Argentinian duo were owned by a third party through offshore companies run by Iranian businessman, Kia Joorabchian.5

Whilst TPO/TPI of economic rights has since been banned by FIFA6 and the Premier League7 (as subsequently strengthened by the Third Party Interest in Players Regulations 2015-16 implemented by The FA), Mourinho’s example demonstrates that third parties can still own and exploit trade marks and other image rights for players and managers, albeit in this case Chelsea FC moving from employer to ‘third party’ status once Mourinho ceased to be Chelsea’s manager. This type of third party ownership remains outside the scope of the current prohibitions on influence and economic rights.

Third parties continue to be able to hold any such registrations despite this being a type of third party interest in the relevant individual’s affairs, and the distinction with the TPO prohibitions presumably lies in the difference between what falls within the scope of the player or manager’s football employment and what simply represents their external commercial affairs.8 What falls within and outside the scope of employment in a sporting context is certainly not a new issue (particularly from a tax standpoint), but in this context it might reasonably be assumed that the transfer and registration-related economic rights (e.g. Tevez and Mascherano territory) are certainly football employment related, whilst the ability for the same player to exploit their own trade marks sits outside of the scope of the same player’s football employment. Perhaps the distinction is a moot point, but the fact remains that unconnected third parties can and frequently do retain ownership over a player or manager’s trade marks and exploit the same for commercial gain – this appears to be distinct from third party gains received from TPO/TPI.

To illustrate how these trade mark ownership anomalies arise, it is worth turning to some practical examples:

Chelsea’s Filing Strategy

The situation that has unravelled with the Mourinho trade marks is certainly unusual, but it is not the first time the club has taken the initiative to register marks for a high-profile player or manager. In June 2009, less than two weeks after the announcement that Carlo Ancelotti was to take over the hot seat at Stamford Bridge, Chelsea filed a EUTM for the word ‘Ancelotti’ in relation to a variety of clothing items and other goods (EU008361032). Chelsea deployed a similar tactic after breaking the British transfer record to sign striker Fernando Torres for £50m in 2011, filing registrations for ‘Torres’ and ‘Fernando Torres’ with the UK IPO (UK00002575323 and UK00002575320). Even the name of Chelsea’s billionaire owner, Roman Abramovich, has been registered as a trade mark by the club in respect of beers and alcoholic beverages (UK00002349828).

It is unclear to what extent Chelsea has actually exploited these marks, and some may query the prevalence of Ancelotti-branded ‘lingerie and hosiery’ in the Chelsea club shop (covered by the registration!). Some of the marks might, therefore, be vulnerable to a revocation challenge (either in whole or in part) on the grounds of non-use.9 Nevertheless, the advantages of Chelsea’s filing strategy should not be completely overlooked, and the London club will no doubt have benefitted financially from holding the keys to the Mourinho marks.

“The Normal One”

Whilst Mourinho is the self-proclaimed “Special One”, Liverpool Manager Jürgen Klopp famously described himself as “The Normal One” when he was appointed in October last year and Liverpool FC took the initiative to register this as a EUTM in May 2016 (EU014695092). Should Klopp move on to pastures new, in the absence of agreed contractual terms, any new club looking to brand merchandise with this slogan could risk infringing Liverpool’s trade mark.

Cristiano Ronaldo

An interesting case study on third party brand ownership concerns one of the most decorated players in the modern game, Cristiano Ronaldo. A series of trade marks for ‘Cristiano Ronaldo’ and similar permutations are owned by Eden Parfums Limited for a variety of colognes and cosmetic products. One would expect Cristiano to benefit from this arrangement financially and to have appropriate contractual protection in place with Eden Parfums, perhaps involving the assignment of the trade marks in the event of a falling out between the parties.

In 2015, it was reported that Ronaldo also agreed a six-year image rights deal with Media Mint, a company run by Valencia FC owner Peter Lim.10 As a result, it appears that Media Mint is the legal owner of Ronaldo’s ‘image rights’ (however the parties decided to define the concept), except those relating to Real Madrid. As to the attraction in this type of deal from a player’s perspective, the answer appears to lie in the receipt of a considerable upfront payment, along with increased brand exposure in new markets (e.g. Asia) and a partnership with an entity best placed from an expertise perspective to exploit the relevant rights.

Brand Management Companies

A more common scenario whereby a sports star may not personally own trade marks for their own name is where these are registered by brand management companies, often due to the lower rate of tax.11 This structure is used by many athletes including Tiger Woods (ETW Corp), Lewis Hamilton (Lewis Hamilton Motorsport) and Kevin Pietersen (Kevin Pietersen Limited). These types of companies are however being scrutinised by tax authorities in several jurisdictions, especially in the UK and Spain.12

 

SOLUTION TO THE TRADE MARK TROUBLE?

The primary options that would have been available to Manchester United to resolve the trade mark complication would have been:

  1. To take a licence from Chelsea in exchange for paying a licence fee;
  2. Request an assignment of the marks, either directly to Manchester United or to Jose Mourinho;
  3. Not to sell Mourinho merchandise covered by the trade marks (and sacrifice a significant revenue stream); or
  4. Challenge the validity of Chelsea’s trade mark registrations (discussed above).

The details of the deal struck between the Premier League heavyweights have not been released, so one can only speculate as to what was agreed. The ideal scenario from Mourinho’s perspective would have been to obtain a direct assignment of the marks, enabling him to retain control and licence out the right to use his marks to the different clubs he manages. Since the first ‘Mourinho’ marks were registered by Chelsea, Jose has managed Inter Milan and Real Madrid and both footballing giants seemingly found ways to placate the trade mark issue. It is likely that these clubs would have negotiated a short-term license for the trade marks, lasting for the duration of Mourinho’s tenure with appropriate post-termination provisions.

 

OPPOSING THIRD PARTY MARKS

It seems that in this instance Mourinho consented to the registration of the trade marks by his former employer. However, in instances where no consent has been given by the individual, there are mechanisms available for such individuals to challenge third party applications – or to invalidate registrations that have already been granted. This includes applications made in bad faith,13 particularly where there is an obvious attempt to take reputational advantage.

A third party mark may also be opposed on the basis of rights in passing off if the individual concerned can demonstrate the requisite goodwill.14 The day after Andy Murray lifted the Wimbledon crown, an unconnected third party filed trade marks for “Andy Murray Wimbledon Winner” and “Andy Murray Tennis Champion(UK00003012938). These applications were subsequently refused, but serve as a reminder to sports personalities that there is always someone willing to try and capitalise on sporting success.

A mark could also be challenged on the grounds that the public is likely to be deceived as to the origin of the goods.15 Much will depend on the circumstances and the contractual arrangements in place, and the CJEU’s decision in Elizabeth Emanuel,16 the designer of Princess Diana’s wedding dress, illustrates that even if the individual is not personally involved in the relevant business, this will not necessarily make the mark deceptive.

 

THE ‘OWN NAME’ DEFENCE AND RELATED ISSUES

A trade mark will not be infringed by the use by a person of his own name, provided such use is in accordance with honest practices.17 Accordingly, if Chelsea decided to sue Jose Mourinho personally for using his name in respect of goods covered by the registrations (admittedly an unlikely scenario), he might be able to escape liability on this basis. The post-termination provisions in Chelsea’s Service Agreement with Mourinho may of course deal with his ability to use the relevant marks in any event.

A slightly more unprecedented theory is whether this own name defence would technically extend as far as extinguishing Mourinho’s liability for commercially exploiting his signature on goods covered by Chelsea’s trade mark registration. This would of course not prevent him from using his signature in day to day business life (such as signing contracts or cheques), but it is feasible that Mourinho would sign merchandise such as football shirts in the course of trade. Interestingly, however, Chelsea’s registration does not include “image carrier” goods in Class 16 such as posters and photographs (EU004853545), so if Mourinho was to sign such goods in a commercial capacity this would not be caught.

A similar situation arose when Alex Ferguson applied to register his name in 2005. Whilst the UK Trade Mark Registry did not object to the former Manchester United Manager’s application in respect of most of the goods listed, it refused to allow registration for certain Class 16 goods including photographs, posters and other image-bearing printed matter.18 The basis for this decision was that the sign “ALEX FERGUSON” lacked distinctive character, as the general public would not distinguish Sir Alex’s image-carrying goods from those sold by other traders. In many ways, Sir Alex was the victim of his own fame and success, as the widespread use of his name on such goods made it difficult to obtain trade mark protection. Former Chelsea and West Ham star Joe Cole managed to overcome these issues by registering his name in relation to posters and similar products in 1999, before becoming a household name (UK0002176765B).

 

SPONSORSHIP CONFLICTS

 

The Mourinho trade mark issues simply serve to highlight how the transfer process for high profile players and managers needs to be given appropriate thought. This also applies to sponsorship conflicts more generally, and it stands to reason that a player or manager previously employed by a club’s competitors will also have sponsor arrangements with brands that compete or may compete with those brands to which the relevant hiring club is affiliated – how these arrangements interact with each other requires some careful thought and it is often for the lawyers to ensure that a realistic compromise can be reached (see here for a blog post written by the author on this subject more generally).

To continue with Mr Mourinho as a case in point, he has been the brand ambassador for Jaguar for several years, and was the first ‘customer’ to take a delivery of the new F-Type. As has been reported,19 assuming this association will continue moving forwards, it may well pose a potential conflict of interest with United’s seven-year sponsorship deal with Chevrolet. The same may well also apply to Mourinho’s deals with Hublot, the Swiss watchmaker and Paraside Co (a South Korean casino operation), which would appear, on the face of them, to conflict with United arrangements with American watch company Bulova and South Korean casino Donaco International. That Hublot themselves used to sponsor Manchester United is particularly ironic, and highlights the nature of the sponsor merry-go-round and the curious idea that a sponsor and club can part company, only to be re-united through association with an individual player or manager (but, unfortunately for each party involved, this time without control over brand usage or any payments being made).

As reports note, it appears that a contractual solution was found to address this, and perhaps indeed this was through limiting Mourinho’s ability to sign new deals during the course of his employment with Manchester United. This would perhaps be in addition to distinguishing between activity carried out by Mourinho whilst on official club duty and those activities undertaken in his own private capacity.

This would mirror the usual position taken in respect of players’ sponsorship deals. As has been analysed before in this forum, the interaction between a player’s own sponsor arrangements and those of the club for whom they play is enshrined in the standard form player contract, with the general theory being that, bar certain reserved items of player clothing (e.g. boots), a player is obliged to wear official club clothing (including sponsor logos) whilst on official club business, but is free to fulfil their own commercial arrangements outside of this. The major sporting brands have largely operated an uneasy stand-off over this distinction, however this general position does leave room for imaginative disruptive marketing techniques, and it is easy to see how the transfer of a high-profile player from one brand-affiliated flagship club to another may cause tensions between brands as a side-effect.

 

COMMENT

Other sports clubs may now follow Chelsea’s lead and seek to register marks on behalf of their prized assets. However, with players and managers constantly on the move, it is likely to be in the interests of the sports star to register in their own name (or brand management company) and then licence such marks to the club for the duration of their engagement, with appropriate post-termination provisions.

In an industry where exploitation of image rights carries such significant value, sports stars should think carefully, and at the very least ensure robust contractual protection is in place, before relinquishing control of trade mark registrations.

This episode also highlights how a player or manager’s external commercial interests may play a part in any contract negotiation. It seems easy to see how a club might be more flexible with an individual considered to be a prized asset (be that player or manager), but this approach means that all stakeholders will need to be very clear around the boundaries of each commercial deal and what that looks like in practice (e.g. will a club have a veto right over use of certain images?). This inevitably requires careful drafting and appropriate engagement.

 

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About the Author

Charles Maurice

Charles Maurice

Charlie is a senior associate at Stevens & Bolton LLP and specialises in the sports, media and entertainment sectors. Charlie advises on a wide range of sporting issues and has particular experience in the motor racing and football industries. 

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Tom Collins

Tom Collins

Tom is an Associate in the IP team at Stevens & Bolton LLP and advises on a wide range of intellectual property matters, including brand protection disputes, copyright and designs, IP licensing and defamation and reputation management. Tom joined the firm as a trainee in September 2013 and completed the Post Graduate Diploma in Intellectual Property Law upon qualification. 

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