Center for Advanced Study & Research on Intellectual Property

 

CASRIP Newsletter - Summer 2008, Volume 15, Issue 2

Olympic Games and Intellectual Property: China’s chance to tell the world more…

by Kuan-Hua, Wang[1]

I. INTRODUCTION 3
II. OLYMPIC ORGANIZATIONS 5
A. THE INTERNATIONAL OLYMPIC COMMITTEE (IOC) 5
B. THE NATIONAL OLYMPIC COMMITTEE (NOC) AND THE CHINESE OLYMPIC COMMITTEE (COC) 6
C. THE ORGANIZING COMMITTEE OF OLYMPIC GAMES (OCOG) AND THE BEIJING ORGANIZING COMMITTEE FOR THE OLYMPIC GAMES (BOCOG) 6
III. OLYMPIC SYMBOL PROTECTION 7
A. WHO OWNS THE OLYMPIC SYMBOLS? 7
1. Nairobi Treaty on the International Protection of the Olympic 8
Symbol 8
2. Olympic Charter 8
3. The Regulations on Protection of Olympic Symbols 9
B. WHAT DO OLYMPIC SYMBOLS INCLUDE? 9
C. FUWA 10
1. What is Fuwa? 10
2. The Ownership of Fuwa 11
3. How does BOCOG protect Fuwa? 12
3.1 Registration 12
3.2 Licensing 12
3.3 Enforcement and Fines 14
IV. AMBUSH MARKETING 14
A. WHAT IS “AMBUSH MARKETING“ ? 15
B. SPONSORSHIP BACKGROUND IN OLYMPICS 15
C. DIFFERENT LEVELS OF SPONSORSHIP 16
1. The Olympic Partner Program (TOP sponsors) 16
2. The Suppliers 17
D. AMBUSHING MARKETING CASES 17
E. WHAT IS CHINA’S STRATEGY AND AGAINST AMBUSH MARKETING? 18
V.CHINA’S EFFORTS, CHALLENGES, AND SOLUTIONS 20
A. CHINA’S EFFORTS 20
1. The Legislation of Various Regulatory Documents 21
2. Education 23
2.1 Olympic Education Program 23
2.2 The Official Website of Beijing 2008 Olympic games 23
2.3 Mass Media 24
3. Enforcement 24
B. CHINA’S CHALLENGES 25
1. Confucian Values and Intellectual Property 26
2. Enforcement Problems 26
3. Counterfeiting Problems 28
C. SOLUTIONS 29
1. The Olympic Symbols Protection 29
1.1 Identify the scope of the symbols more clearly and educate the 29
public about IP value 29
1.2 Official Marks 30
1.3 Greater Coordination and More Legislation 31
2. Ambush marketing 32
VI. CONCLUSION 34

I. INTRODUCTION

We have heard about China's reputation for pirated goods and its poor reputation for intellectual property (“IP”) enforcement for decades, but interestingly, hosting the 2008 Olympics, China has become one of the stakeholders of the Olympic intellectual property rights (“Olympic IPR”). Suddenly Olympic IPR has become a big deal in China. It is beneficial to China itself to protect IP because the Olympic IP represents valuable property, which is always the primary source of income from the Games. The Olympic IPR attached to the emblem, motto and mascots of the Olympic Games are the core properties of the Olympic Games. These items are critical to the development of Olympic spirit and brand image, as well as to the success of Olympic marketing activities.

At the same time, strong IP protection is beneficial to generate a legal environment and a favorable market for attracting foreign investment in China. When Olympic officials awarded China the 2008 Summer Games, they hoped the Beijing Games could spark dramatic change in China’s politics, human rights, law, and intellectual property protections. Chinese officials also keep working to convince the public that the Games will bring improvements to China. This situation creates a good opportunity to analyze whether China has protected the Olympic IPR well and whether it has transformed the world’s image of China and created a more positive global opinion of its IP protection during preparation for the 2008 Summer Games.

This article will follow the path the Chinese government has taken to improve its intellectual property protection for the Olympic Games, with a focus on Olympic symbol protection and ambush marketing. The article highlights the challenges China is facing in implementing its new IP policy, including how Confucian values influence the Chinese IP protection point of view, counterfeiting problems and poor enforcement issues. These shortcomings continue to frustrate the efforts of IP rights holders trying to protect their IP in China.

Following this Introduction, Section II explains the organizational structure of the Olympic Games and illustrates the law-related functions of the various entities. Section III focuses on Olympic symbol protection, including legal protection for Fuwa, the mascots of the 2008 Summer Olympics. Section IV identifies the legal issues surrounding ambush marketing and how China and other countries have addressed this issue at the Games. Section V focuses on legislation related to Chinese IPR protection and addresses some implementation difficulties and potential solutions. This article concludes in Section VI that there is still a big gap between government policy and day-to-day reality in China. The Olympic IP protection work that has been completed is just a starting point from which an effective Chinese IP protection framework can be built.

II. OLYMPIC ORGANIZATIONS

Because the Olympic Charter grants different rights to different committees such as the International Olympic Committee (IOC), the National Olympic Committee (NOC) and the Organizing Committee of Olympic Games (OCOG), this section will introduce a brief background of the international and the local Olympic organizing committees. In addition, a number of contractual documents regulate the Olympic Games such as the Olympic Charter, the Host City Contract, and the related Olympic regulations established by the hosting government.

A. International Olympic Committee (IOC)

The goal of the Olympic Games is to “contribute to building a peaceful and better world by educating youth through sport practiced without discrimination of any kind and in the Olympic spirit, which requires mutual understanding with a spirit of friendship, solidarity and fair-play.”[2] The IOC, a non-governmental, non-profit organization, is the supreme authority of the Olympic Movement.[3] The Executive Board of the IOC assumes many of the legislative functions of the organization and is responsible for enacting all regulations necessary for the full implementation of the Olympic Charter. The Executive Board is assisted in its administrative function by several commissions, including the Sport and Law Commission, which was created in 1996 to provide a forum for discussion of current legal issues generally affecting the different organizations comprising the Olympic Movement, including the IOC, the International Federations and the National Olympic Committees.[4] IOC owns all rights concerning the Olympic symbol, the Olympic flag, the Olympic motto and the Olympic anthem.[5]

B. National Olympic Committee (NOC) and Chinese Olympic Committee (COC)

A National Olympic Committee (NOC) is then established in the host country. The National Olympic Committee (NOC) propagates the fundamental principles of Olympianism at a national level within the framework of sports activity.[6] The NOC’s job is enforcing its exclusive use rights to the Olympic marks and symbols and enhancing its ability to attract the corporate sponsors, suppliers, and licensees necessary to finance the Olympics.

At the next level, the Chinese Olympic Committee (COC) represents China in handling international affairs related to the Olympic Movement. It is the sole representative of the country's Olympic Movement in its relations with the IOC and other international sports organizations, as well as all NOCs.

C. Organizing Committee of Olympic Games (OCOG) and Beijing Organizing Committee for the Olympic Games (BOCOG)

The OCOG must comply with the Olympic Charter and the Host City Contract entered into between the IOC, the NOC, the host city and the instructions of the IOC Executive Board. The Beijing Organizing Committee (BOCOG) was established on December 13, 2001, five months after Beijing won the right to host the 2008 Olympic Games. The BOCOG currently consists of 26 departments responsible for numerous Games functions ranging from venue planning to legal affirs.[7]

III. OLYMPIC SYMBOL PROTECTION

Countries today are not only competing for gold medals at the Olympics, but also for bigger and better merchandising and licensing options. According to the “Olympic Marketing Fact File, 2008 Edition,” a financial report published by the IOC, the Olympic Games generated a total of more than $4 billion in revenue between 2001 and 2004. The major portion of the Games financing comes from marketing the Olympic symbols.[8] Therefore, the games' rosy prospect of profitability encourages the host country to put more effort into protection of the Olympic intellectual property rights.

A. Who owns the Olympic Symbols?

Cross-referencing the Nairobi Treaty on the International Protection of the Olympic Symbol against the Olympic Charter shows that the IOC retains exclusive ownership of the Olympic Symbols.

1. Nairobi Treaty on International Protection of Olympic Symbol

The IOC attempted to gain legal protection on an international level for the Olympic symbol through the Nairobi Treaty on the International Protection of the Olympic Symbol (“Nairobi Treaty”). According to Article 3 in Nairobi Treaty, the IOC owns the rights to the Olympics trademark and the host country and the city are authorized by the IOC to use the Olympic symbol in that country. Article 3 states “the obligation provided for in Article 1 may be considered as suspended by any State party to this Treaty during any period during which there is no agreement enforced between the IOC and the NOC of the said State concerning the conditions under which the IOC will grant authorizations for the use of the Olympic symbol in that State and concerning the part of the said NOC in any revenue that the IOC obtains for granting the said authorizations.”[9] Accordingly, the IOC has the exclusive ownership of the Olympic Symbols. The NOC is then able to enforce its exclusive use rights to the Olympic symbols and the NOC coordinates corporate sponsors, suppliers, and licensees to finance the Olympics.

2. Olympic Charter

The founding document of the Olympic Movement is the Olympic Charter, which addresses the legal status of the IOC, the role of the International Federations and the NOCs, Olympic flag, emblems, motto and flame, among other things. The city and the NOC undertake to abide by the Olympic Charter, in particular, Bylaw to Rules 7-14 regulates the legal protection, license fee distribution, use and creation of Olympic marks.[10] Regarding the protection, Section 1 of the bylaw to Rules 7-14 states that “the IOC may take all appropriate steps to obtain the legal protection for itself, on both a national and international basis, of the rights over the Olympic Games and over any Olympic property.”[11] As to the creation of the Olympic Marks, it says “An Olympic emblem may be created by an NOC or an OCOG subject to the approval of the IOC.’’[12]

3. The Regulations on Protection of Olympic Symbols

The State Council of China and the Beijing Municipality have promulgated the Regulations for Protection of Olympic Symbols (“the Regulations on Protection of Olympic Symbols”), effective April 1, 2002. These Regulations were formulated to strengthen the protection of Olympic Symbols, protecting the lawful rights and interests of the owners of the Olympic Symbols, and ensuring the dignity of the Olympic Movement.

B. What do Olympic symbols include?

According to the Regulations on the Protection of Olympic Symbols which is promulgated

by the State Council of the People’s Republic of China, Article 2 gives a more expansive range for Olympic Symbols, rather than simply the five rings referred to in the Olympic Charter.[13] The Regulations on the Protection of Olympic Symbols identify that the “Olympic Symbols” include any words, signs, emblem, and the mascot, as well as databases and statistics relating to the Olympic Games.[14]

C. FUWA

1. What is Fuwa?

Since the invention of the Olympic mascot more than 36 years ago, the mascot has been given the honorable role of representing the culture and history of the host city.[15] This summer the mascots, also known as the five "Fuwa", have been designed to express the playful, child-like qualities of five little friends.[16] Each has its own name and represents one of China's most popular animals. Beibei is the Fish; Jingjing, the Panda; Huanhuan, the Olympic flame; Yingying, the Tibetan Antelope and Nini, the Swallow. When you see the names together: Bei Jing Huan Ying Ni, you read: "Welcome to Beijing."[17]

The Fuwa will surely help generate revenue for China, as host cities get to keep between 10–15 percent of the royalties, helping to offset the cost of hosting the games, which is thought to have cost China an estimated $38 billion dollars. The mascot of the Sydney and Athens Olympics generated profits in excess of $100 million dollars and $200 million dollars respectively.[18] Experts estimate that Beijing could reap a profit of more than $300 million dollars through the sales of Olympic mascot-related products. To meet this goal, the BOCOG has been expanding the licensing program and plans to open more merchandise stores across China and overseas.[19]

2. The Ownership of Fuwa

According to the Regulations on the Protection of Olympic Symbols, promulgated by the State Council of the People’s Republic of China, Article 3 states that “For the purpose of these Regulations, "right holders of Olympic symbols" refers to the International Olympic Committee, the Chinese Olympic Committee and the Beijing Organizing Committee for the Games of the XXIX Olympiad. The division of rights among the IOC, the COC and the BOC for the Games of the XXIX Olympiad shall be determined in accordance with the Olympic Charter and the Host City Contract for the Games of the XXIX Olympiad in the Year 2008.”[20] Therefore, the IOC, COC, and the BOCOG are generally the right holders of Olympic symbols. However, they may be decided and negotiated in the ‘Olympic Charter’ and ‘the Host City Contract’.

In light of the relevant provisions of the ‘Olympic Charter’ and the ‘Host City Contract’ as executed between the IOC and the City of Beijing and the COC:

All rights to any and all Olympic properties, as well as all rights to the use thereof, belong exclusively to the IOC; All proprietary rights, including copyright, in all graphic, visual artistic and intellectual works or creations developed by or on behalf of or for the use of the City’s candidature committee, the City, the NOC or the OCOG with respect to the Games shall vest in and remain in the ownership of the IOC.[21]

In addition, BOCOG is responsible for ensuring the assignment of the relevant Olympic IPR to IOC after the Games before January, 1st 2009.[22]

In conclusion, the ownership of Fuwa ultimately belongs to the IOC. However, the host city and the BOCOG are authorized to use and to license the rights to licensees during the Games. In light of the Olympic Charter and the Host City Contract, the use of the Olympic marks, including Fuwa, by BOCOG must be finalized by January 1, 2009.[23]

3. How does BOCOG protect Fuwa?

3.1 Registration

After passing the Measures on the Record-filing and Administration of Olympic Symbols, the BOCOG applied for the registration of trademarks for the relevant Olympic symbols (including the emblem and Fuwa for Beijing 2008 Olympic Games) in Mainland China, Hong Kong, Macao and other countries around the World.[24] This enables authorities to conduct enforcement work more efficiently.[25]

3.2 Licensing

In light of Article 8 in the Regulations on the Protection of Olympic Symbols, “anyone who is to use Olympic symbols for commercial purposes with the authorization of their right holders shall conclude a license contract with such holders.”[26] It also states who can authorize what kind of symbols as follows:

(a) anyone who is to use the Olympic symbols set forth in Item (1) or (2) of Article 2 of these Regulations shall conclude a contract with the IOC and institutions authorized or approved by it; (b) anyone who is to use the Olympic symbols set forth in Item (3) of Article 2 of these Regulations shall conclude a contract with the COC; (c) anyone who is to use the Olympic symbols set forth in Item (4), (5) or (6) of Article 2 of these Regulations shall, before December 31, 2008, conclude a contract with BOCOG.[27]

In FUWA’s case, it applies to Item (5) of Article 2.[28] Therefore, any commercial use of Fuwa requires the consent through the license with the BOCOG.

There are three different Olympic Marketing Programs. Under the Licensing Program, the BOCOG authorizes companies to produce, manufacture and sell products with the official Beijing Olympic emblem, mascot and trademark. Licensees pay a royalty fee, but are not entitled to the rights and benefits of Sponsors and Suppliers and may not use the Olympic emblem in their marketing activities. The three Olympic Marketing Programs are: (1) Organizing Committees Programs which license companies to create souvenirs relating to the Games; (2) NOCOG Programs which license companies to create team-specific souvenirs for their own country. By participating in these programs, licensees will have the right to use NOC or national Olympic team marks and images; and (3) IOC Programs which operate a limited worldwide licensing program in certain categories such as film, video games and other multimedia opportunities. IOC programs authorize the rights to use the Olympic marks, themes, and designs to produce souvenirs items in the name of the Olympic Games, to be sold to the public. Therefore, anyone intending to use or produce FUWA commercially must enter into a contract with BOCOG under one of these programs before December 31, 2008.

3.3 Enforcement and Fines

Any use of the Olympic Symbols without consent constitutes infringment of the rights holders’ exclusive rights.[29] According to Articles 6 and 10 of the Regulations on Protection of Olympic Symbols,[30] if an entity engages in activities that infringe the rights of the Olmypic Symbols, the rights holders can bring an action in the People’s Court, or submit the dispute to the administrative department for industry and commerce (AIC). The AIC, the primary enforcement agency, which has broad authority for protecting the Olympic Symbols in China, has the power to confiscate products, seize funds and levy fines.[31] The AIC may also bring a civil action before the People’s Court or initiate criminal prosecution.

Furthermore, under Article 12 of the Olympic Symbols Regulations,[32] the General Administration of Customs (GAC) is authorized to enforce the Olympic Symbols Regulations related to goods being imported and exported. For those people who sell or produce goods infringing the rights of Olympic symbols, Article 13 describes how to determine the amount of compensation.[33]

IV. AMBUSH MARKETING

When the Olympic Games are coming, many companies try to benefit from the Games without paying the requisite sponsorship fee. This causes damage to the Games and its sponsors. The following section introduces ambush marketing, why it happens, and how China is addressing it.

A. What is “ambush marketing“?

Ambush marketing is “[a] planned effort (campaign) by an organization to associate itself indirectly with an event in order to gain at least some of the recognition and benefits that is associated with being an official sponsor.”[34] Companies pay sponsorship fees to become the exclusive and official sponsor of an event in the Games. Other companies cannot then be the sponsor of that event and find alternative ways to promote themselves in association with the event without paying the sponsorship fee.

B. Sponsorship Background in Olympics

The Olympic Games are the most effective international corporate marketing platform in the world. The Games usually attract the whole world’s attention, so Olympic sponsors profit from the marketing of the Olympic goodwill. Olympic Sponsorship is a relationship between the Olympic Movement and commercial organizations, intended to generate support for the Olympic Movement and the Olympic Games. Sponsorship contributes 40 percent of Olympic marketing revenue.[35] Each level of sponsorship entitles companies to different marketing rights in various regions, category exclusivity and the use of designated Olympic images and trademarks. The Olympic Movement then works to protect the rights of sponsors.[36]

C. Different Levels of Sponsorship

There are two tiers of sponsors in the Olympics: the Olympic partners and the Olympic suppliers.

1. The Olympic Partner Program (TOP sponsors)

The Olympic Partner (TOP) sponsors are permitted to develop marketing programs with various Olympic organizations, use all Olympic imagery, and place appropriate Olympic designations on products. They are also given hospitality opportunities; direct advertising and promotional opportunities; and concession, franchise, and product sale and showcase opportunities. For example, in the 2008 Olympics, the 12 TOP sponsors include the Coca-Cola Company, Johnson & Johnson, Eastman Kodak, McDonald’s, Atos Origin, GE, Lenovo Group, Manulife Financial, The Swatch Group Ltd., Matsushita Electric Industrial Co. Ltd., Samsung , and Visa International etc.[37]

The threshold for becoming a TOP sponsor has been rising over the years. The package for the Sydney Games in 2000 was around $40 million for a four-year sponsorship. Now the rights for the Beijing Games are set at about $65 million. Therefore, each sponsor has paid about $65 million to associate with the Olympic Games and none want unofficial advertisers stealing their marketing interests.[38]

2. The Suppliers

The second tier of corporate Olympic sponsorship is the suppliers, who typically contribute goods and services that support the IOC, but usually do not provide direct support for the staging of the Games. Suppliers are granted more limited marketing and intellectual property rights than the TOP sponsors.

D. Ambushing Marketing Cases

Some popular ambush techniques are:

  1. Buying commercial time or billboard advertisements during the event without using the Olympic symbol or words, but intending to confuse consumers to think that the ambushing companies are the sponsors.[39] The most notable example of this occurred at the 1996 Olympic Games in Atlanta, when the sportswear company Nike avoided paying the $50 million sponsorship fee, successfully mounting a marketing campaign by plastering the city in billboards and leasing a parking garage near Centennial Park to promote its athletes and peddle its products.

  2. Sponsoring the broadcasts of events rather than directly sponsoring the event.[40]

  3. Sponsoring individual teams and athletes.[41] In 1992, Nike sponsored news conferences with the U.S. basketball team. Michael Jordan accepted the gold medal for basketball and covered up his Reebok logo (Reebok was the sponsor in that year).

  4. Using event tickets in consumer giveaways, sweepstakes, or contests.[42]

E. What is China’s strategy against ambush marketing?

Most global sponsors are using the 2008 Games as a driver for an increased presence in the Chinese market. On the other hand, for local companies, the Olympics create a sense of national pride and many local enterprises profit from the nationalistic glow. For example, Li Ning, a patriotic company, uses the power of Chinese pride well. Li Ning is also a famous ambush marketing player in the Summer Olympics in Beijing.

Li Ning Co., so-called the Nike of China, is China's leading athletic-wear company. It was founded by the Chinese Olympic gymnastics champion Li Ning, and it is sponsoring the National Sports TV Channel, CCTV, Chinese Central Television. In other words, the famous sportscasters of China's biggest and most influential television station will wear Li Ning-branded clothing and shoes during the Beijing Olympic Games this summer even though Li-Ning lost its sponsorship bid for the 2008 Olympics to international rival Adidas, which paid a sponsorship ticket worth more than Li-Ning's entire annual marketing budget.

In fact, Li Ning is often mistakenly thought of as an Olympic sponsor because of its aggressive ambush marketing approach. In the latest market survey from Paris-based market research survey company Ipsos Group, 70.9 percent of respondents believed Li Ning was an Olympic sponsor, while only 65.7 percent thought Adidas was. Adidas, who has paid $200 million to sponsor the Olympic Games, is unhappy about this. Although Beijing has vowed to be tough on so-called ambush marketing techniques, we still have not found the Chinese government warning the Li Ning Co. in any way to date. This is a great opportunity to see whether China will make a clear decision to deal with the situation to protect the Olympic sponsors’ benefit in the next two months.

Another recent example is the KFC marketing campaign in China that says "I Love Beijing." This KFC campaign encourages citizens to vote for the neighborhood that best captures the spirit of 2008. They can't mention the games directly but have found a unique way to capitalize on the fervor.

Another good ambush example is the Mengniu Dairy Corporation, which has been stopped by a written warning from the BOCOG. Mengniu Dairy Corporation is not an Olympic sponsor, but it runs sports-themed ads, such as the slogan, “Drink more milk and play more sports – everyone will be his own health champion.” The Regulations on Protection of Olympic Symbols address this indirect infringement under item (6) of Article 5.

“For the purpose of these Regulations, "use for commercial purposes" means the use of Olympic symbols for profit-making purposes in the following ways: 1) The use of Olympic symbols in goods, packages or containers of goods or trade documents of good; 2) The use of Olympic symbols in services; 3) The use of Olympic symbols in advertising, commercial exhibition, profit-making performance and other commercial activities; 4) Selling, importing or exporting goods bearing Olympic symbols; 5) Manufacturing or selling Olympic symbols; 6) Other acts that might mislead people to think there are sponsorship or other supporting relations between the doers and the right holders of Olympic symbols.”[43]

It states the implied commercial purposes as ambush marketing while item (6) of Article 5 ensures that no company creates a false or unauthorized association with the Olympics Games. Other ambush marketing conduct that does not use any Olympic-related symbols may be regulated in the General Principles of the Civil Law and Anti-Unfair Competition Law.

V. CHINA’S EFFORTS, CHALLENGES, AND SOLUTIONS

A. China’s Efforts

Some people say that developing countries are unlikely to enforce IP rights until they themselves develop substantial income from their own intellectual property and have a vested interest in protecting IP rights. Even though an IP management and protection system has been established and developed in China for two decades, which is in accordance with both international rules and domestic circumstances, you can walk around malls in parts of China such as Silk Street Market in Beijing and buy all kinds of pirated software, music, movies, and purses. It seems a little ironic.

Now that China is hosting the 2008 Olympics, suddenly Olympic IPR is a big deal. As a result, China has done a lot of work in the legislation of various regulatory documents relevant to Olympic IPR and has taken other initiatives to protect Olympic IP.[44] For example, as one of the Olympic symbol holders, the Beijing Organizing Committee for the 2008 Olympiad placed several Olympic symbols on record with the State Administration of Industry and Commerce (SAIC). Besides Olympic IPR registration and record-filing, China has made an enormous effort to educate the public about infringing conduct.

1. The Legislation of Various Regulatory Documents

The State Council and the Beijing Municipality have promulgated some IP policies and regulations, such as the Regulations on Protection of Olympic Symbols (“the Olympic Symbols Regulations”) and the Provisions for Protection of Olympic Intellectual Property Rights of the Beijing Municipality (“Olympic IPR Provisions”). To implement these laws and regulations, the State Administration for Industry and Commerce (“AIC”) and the General Administration for Customs of the People’s Republic of China (“GAC”) promulgated a series of procedures and announcements, to strengthen the protection of Olympic IPR through enforcement. For example, State Administration for Industry and Commerce, Patent Bureau, relevant matters concerning thorough implementation of the Olympic Symbols Regulations, Measures on the Record-filing and Administration of Olympic Symbols, and Relevant Measures on Effective Implementation of the Custom's Protection on Olympic Symbols.[45]

The Regulations on Protection of Olympic Symbols provide three kinds of rights for the Rights-holders: (a) the exclusive rights to use the Olympic Symbols: the right holders of Olympic symbols enjoy the exclusive rights of Olympic symbols;[46] (b) the license rights: anyone who is to use Olympic symbols for commercial purpose with the authorization of the rights-holders shall conclude a license contract with rights-holders;[47] and (c) the exclusive rights to use the Olympic Smybols for “commercial” purpose: “use for commercial purposes” includes using in goods, service, advertising, selling or manufacturing purposes.[48]

Any use of the Olympic Symbols without consent constitutes infringment of the rights holders’ exclusive rights.[49] According to Articles 6 and 10 of the Regulations on Protection of Olympic Symbols, if an entity engages in activities that infringe the rights of the Olmypic Symbols, the rights holders can bring an action in the People’s Court, or submit the dispute to the administrative department for industry and commerce (AIC).[50] The AIC, the primary enforcement agency which has broad authority for protecting the Olympic Symbols in China, has the power to confiscate the products, seize funds and levy fines. The AIC may also bring a civil action before the People’s Court or initiate criminal prosecution.[51]

After passing the “Measures on the Record-filing and Administration of Olympic Symbols,” the BOCOG has applied for the registration of trademark for developing design, copyright and special mark for the relevant Olympic symbols (including the emblem and Fuwa for Beijing 2008 Olympic Games) in Mainland China, Hong Kong, Macao and other countries around the World. This enables authorities to conduct enforcement work more efficiently.

2. Education

2.1 Olympic Education Program

The Olympic education program, launched by the BOCOG with China’s Education Ministry and the NOC, is reaching 400 million children by integrating Olympic education into the curriculum of more than 400,000 schools. Teachers are passing on the Olympic values of excellence, friendship and respect, while textbooks highlight the history of the Olympic Games, Olympic sports and the Olympic Movement’s contribution to international peace and friendship.[52]

2.2 The Official Website of Beijing 2008 Olympic games

The BOCOG welcomes active public involvement with the Olympic Games in many ways. The BOCOG website contains a “Frequently Asked Questions” page that answers questions such as “What is a Trademark?” and “What is Ambush Marketing?”[53] Moreover, the Supervision Committee of the Beijing Olympic Games within the BOCOG encourages the entire society to fight against infringing conduct to strengthen the public monitoring, improve the preparations for the Beijing Olympic Games, and create and maintain a healthy market environment.[54]

2.3 Mass Media

The BOCOG has also released to the media information and stories about the protection of Olympic marks that appeared in newspapers and on television. In addition, the BOCOG has publicized legal actions filed alleging trademark and copyright infringement of the Olympic symbols.

3. Enforcement

The BOCOG is cooperating with relevant PRC authorities responsible for industry and commerce, customs, and trademarks to jointly battle against infringing conduct. In particular, the local administrations for industry and commerce plan to regulate the market through measures such as specialized inspection. Customs will confiscate imported or exported cargo infringing Olympic IPR and impose penalties on the corresponding consignor and consignee according to law.

At the press conference on June 12, 2007, Li Dongsheng, Deputy Director of State Administration for Industry and Commerce (SAIC), briefed the press on the efforts of SAIC in protection of exclusive rights of trademark.[55] In regard to strengthening protection for Olympic Symbols, Li Dongsheng said:

The AICs at all levels across the country seriously performed their duties according to the law in Olympic Symbols, License recording of Olympic Symbols, registrations of Olympic-related trademarks and special marks, and protection for Olympic symbols. All work mentioned above effectively helped to enhance the protection for Olympic symbols, to standardize the use of Olympic symbols, and safeguard the interests and rights of the Olympic symbol owners.[56]

Furthermore,

The Trademark Office of SAIC has completed the recording of 69 Olympic symbols and 7 registrations of special marks before July, 2007. According to statistics, the AICs have dealt with 1,128 Olympic symbol-related infringement cases from 2004 to 2006, in which the concerned damages amount to 14,890,000 RMB, fines 8,380,000 RMB, and 7 suspects involved in 2 cases were transferred to the judicial authorities for criminal liabilities. In 2006, the AICs further intensified their campaigns to crack down on infringement of Olympic symbols. Altogether 428 cases were dealt with, which is a 45 percent increase from 2005.[57]

BOCOG also remains in constant communication with the relevant entities, including those enterprises licensed to use Olympic IPR, and urges the licensees to not infringe the legitimate rights and interests of other parties when they are making authorized use of Olympic IPR.

B. China’s Challenges

“Much of what we took for granted in our system and had grown to assume to be human nature was not nature at all, but culture.” Alan Greenspan has said. The impact of cultural beliefs should not be underestimated when talking about IP protection work in developing countries.

1. Confucian Values and Intellectual Property

Cultural difference sometimes can be treated as a potential cause for extensive piracy and counterfeiting in China.[58] Some commentators have analyzed China’s piracy problems and attributed these problems to the Confucian underpinnings of Chinese culture. Confucianism has shaped the Chinese people's views over tens of centuries. The Confucian doctrine emphasizes the importance of sharing intellectual products with society. In fact, it is considered dishonorable for a learned person to make profits by creating works. Contrasting with Western individualism, the Chinese did not develop a concept of individual rights. In contrast, economic-driven considerations have played a determinative role in the development of IP protection in Europe and later in the United States.[59]

However, Confucianism is not the sole reason for China’s lack of IP enforcement. The China’s socialist economic system and the other policy issues must be also considered as well in the economic development history perspective.

2. Enforcement Problems

China’s IP laws have been in substantial compliance with international standards for several years, but enforcement has remained a problem. The arrival of the Olympic Games has forced China to establish the groundwork for effective IPR protection. According to the Regulations on the Protection of Olympic Symbols, Olympic symbols are also protected according to provisions of the Copyright Law of the People’s Republic of China, the Trademark Law of the People’s Republic of China and the Regulations on Administration of Special Symbols.[60] However, the statistics on seizures of Chinese-origin counterfeit goods at the U.S. border indicate that additional efforts are needed to stop infringing products. In China, IP rights-holders carry a heavy burden for protecting their intellectual property.[61] China’s laws require proof of illegal sales for criminal action, and they base penalties on a percentage of illegal sales. As a result, companies must provide customs officials with precise information. Intellectual property rights holders also are required to post bonds to cover the risk of counterclaims in the event that a court finds the detained goods are not counterfeit. The procedures and amounts are unreasonably burdensome.

In addition, sometimes “the administrative bodies also have conflicts of interests. For example, the State Administration for Industry and Commerce (SAIC) can conduct raids, investigate violations, impose fines, and close factories.”[62] Because its main role is to promote economic development and sometimes counterfeiting is a huge industry in some provinces, however, it often will not protect the IP rights of rights-holders very well.[63]

3. Counterfeiting Problems

China has tried to curtail piracy by issuing specific regulations for the Olympic Games, such as the Regulations on the Protection of Olympic Symbols and the Provisions for Protection of Olympic Intellectual Property Rights of Beijing Municipality, to prevent piracy of its logo and mascot symbols for the 2008 Summer Games in the market, including the Silk Street Market, the world’s most notorious market for counterfeit goods in Beijing.

However, much of the counterfeiting and piracy is still occurring notwithstanding an apparent lower incidence in the infringement of Olympic-related merchandise.[64] According to the 2008 Special 301 Review, “a January 2007 industry survey of the market reportedly showed that counterfeiting has worsened, with apparent violations in 65 percent of all outlets. [65] China remains on the Priority Watch List, a top intellectual property enforcement and trade-related aspects of intellectual property rights (TRIPS) compliance priority for the United States.[66] Recent industry reports indicate that counterfeiting at Silk Street Market remains at critical levels.”[67] Thus, despite legislative efforts, occurrences of counterfeiting are still at incredibly high amounts.

C. Solutions

China must combine aspects of law, morality, administrative power, public opinion, and commercial strategy to successfully protect the interests of sponsoring enterprises and intellectual property rights of the Olympic Games. However, it is difficult to tell whether the efforts are truly effective. According to the 2008 Special 301 Review and the U.S. Customs’ statistics, the reports point out that there is still a big gap between government policy and day to day reality in China. The PRC regulatory environment is still developing, and IP rights remain difficult to enforce. After researching China’s efforts, here are some recommendations to help China improve Olympic IP protection.

1. The Olympic Symbols Protection

1.1 Identify the scope of the symbols more clearly and educate the

public about IP value

Although China is launching the Olympic Education Program reaching 400 million children in schools, the excitement generated by the Olympics gives China an opportunity to inform and educate the public not only about protecting Olympic symbols in particular but also IP in general. In addition, it is very important and basic work to raise public awareness of which subjects should be protected during the Olympics games. The public may not understand the Regulations on Protection of Olympic Symbols very well. Therefore, the government should clearly inform the public of “the specific scope” of the Olympic Symbols in an easier way.

Moreover, IPR is still a new concept in China and many entrepreneurs lack IPR knowledge, resulting in enterprises’ low levels of innovation. Further, enterprises may be prone to unintentional IPR infringement, since they do not have IPR awareness. Therefore, China should continue and increase efforts to educate local government leaders and the public on the value of intellectual property in economic development.

Intellectual Property enforcement training for law enforcement officials, including customs officers, police, and prosecutors, should also be emphasized more by the government. China should invest money on more high-tech equipment so Chinese customs can be more effective. This includes the purchase of a centralized computer system to enable customs officials to track the activities of counterfeiters and pirates around the country. In conclusion, education, including education of enforcement officials, is a crucial pre-condition for controlling the sharp rise in counterfeit products and raising public awareness of the importance of IP protection.

1.2 Official Marks

Since the Regulations on Protection of Olympic Symbols are not strong and efficient enough to protect the important Olympic symbols, China can take further action to protect the Olympic symbols by means of registering Official Marks. Official Marks are not currently a part of China’s trademark law. Official Marks do not identify origin of goods and services, but rather identify goods and services themselves. They are not subject to the same standards of trademarks registration, such as descriptiveness and non-distinctiveness and, once notice of their adoption is published by the Registrar, the Public Authority can prevent a third party from using or registering the Official Mark, or a confusingly similar mark, for any goods or services in connection with which the third party had not previously been using the mark. Unlike a standard trademark, which covers only a protected phrase or symbol in a specific market or use, an Official Mark is protected for any and all uses. Moreover, Official Marks enjoy more administrative benefits such as more efficient and stronger enforcement than standard trademarks. Thus, not only will the Olympic symbols get stricter protection, but also the legal system for official trademark protection in China can be improved as a result of the Beijing 2008 Olympics.

1.3 Greater Coordination and More Legislation

Because China is too large and it lacks legislation concerning the central-local “separation and balance,” the problem of central-local conflict of laws is increasing in China. Sometimes the local authorities do not follow the central governments’ policy and do not cooperate with central governments. To promote greater coordination between the central government and local authorities, China should open more complaint centers. More information on relevant local laws and regulations should be published. The government should provide greater access to information regarding regional IPR protection and enforcement activities as well as better databases.

Applying a variety of efficient and effective administrative procedures is a much better approach than filing a lawsuit to protect Olympic IPR since it often takes a long time to file a lawsuit. Although the State Council and the Beijing Municipality have promulgated many Olympic IP policies and regulations, the Chinese government should develop Regulations on Protection of Olympic Symbols or other related Olympic IP laws at higher levels to strengthen the power of enforcement. Moreover, the Chinese government should introduce more specific legislation protecting intellectual property besides the Olympic Symbols such as Official Marks Law. The legislation should include criminal penalties and a variety of other court orders.

2. Ambush marketing

There is no clear standard to define “ambush marking” in China. In other words, the AIC (Administrative Department for Industry and Commerce) and the GAC (General Administration of Customs) are likely to be confused and have too much discretion when enforcing the Olympic Symbols Regulations. There is only one article in the Regulations on Protection of Olympic Symbols which prevents ambush marketing. It only applies to the situations where people use Olympic-related symbols to do ambush marketing. It does not apply to ambush marketing for situations that do not involve the Olympic symbols. The BOCOG must work harder to pass legislation aimed at stopping anyone except official sponsors from advertising in the city. In the Athens 2004 Olympics, for example, strict regulations by the Greeks and the IOC demanded that spectators at the Olympics could be refused admission to events unless they discarded foods or drinks made by companies that were not official sponsors.[68]

The Chinese government may also develop stricter laws to prevent ambush marketing giving them authority over advertising and marketing both inside and outside stadiums. For example, it can be stipulated that Olympic staff should check for t-shirts, hats, and bags displaying advertising for non-sponsors. Those spectators who appear to be wearing clothes from the sponsors' rivals could be required to wear a different T-shirt supplied by the sponsors to cover the rivals’ marks before getting into the stadiums.

VI. Conclusion

“On July 13, 2001, the International Olympic Committee awarded the Games to Beijing, to an uproar of dissent. Critics said China's record of human rights abuses should have excluded it from consideration. But Olympic officials wanted to give China a chance to change, while the world watched. By two votes, Beijing beat out Toronto for the 2008 Games.” Juliet Macur of The New York Times said.[69]

After seven years and billions of dollars spent on preparation, China has opened its gates to the future through the 2008 Beijing Olympics. By launching the new Olympic logo and their friendly mascots, Fuwa, the city is inviting people around the world to join with their culture and share their joy at hosting the games. In August, a spotlight will shine brightly on the 1.3 billion people living in this emerging global power. Peter Ueberroth, the United States Olympic Committee chairman, said all the question marks surrounding the Beijing Games will disappear once the Opening Ceremony begins the event on Aug. 8.

However, the IP protection work for China is still at early stage. The question marks will not disappear until the Chinese government has solved all the related problems. There is broad acknowledgment that even if good laws are in place, they are often poorly enforced. In order to strengthen national and regional IP protection and to make the enforcement of intellectual property rights more efficient and effective, decision-makers in China need to be made aware of the requirement to allocate additional human and financial resources toward educational and enforcement work. Greater coordination between the central government and local authorities is also very important for China. In addition, China should establish stricter and more specific regulations on Olympic IP protections, such as the legal system for Official Marks and the specific regulations on anti-ambush marking. Most importantly, China should continue and increase their efforts to educate local government leaders and the public on the value of intellectual property in economic development.

One marketing expert in China commented, “The Beijing Olympics will not be about sport, it will be about creating a super brand called 'China,' and the brand essence is progress.” China will need to work harder to achieve that progress and to keep the “post-Olympics” intellectual property rights work going strong.

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Last updated 4/27/2012