1.02 Legal issues in SEM
OBJECTIVE AUNFAIR TRADE PRACTICES
Discuss legal issues associated with
marketing products.
 Certain products are protected from reproduction
or use unless permission is granted by the owner.
Intellectual property:
is a person’s property that results from a
person’s original creative thought, as
patents, copyright material, and
trademarks.
INTELLECTUAL PROPERTY
 Protecting intellectual property is important
because:
 Substantial profit is a reflection of a good idea.
 Businesses who originate an idea and protect it
usually maximize profits.
PATENTS
 Patents are granted for an
invention or an improvement
on a product.
 Patents are granted for a
limited period of time.
Trademarks and service marks
 A word, phrase, symbol, or design that identifies and
distinguishes the company from others.
 Granted legal protection through the United States
Patent and Trademark Office.
COPYRIGHTS
 Copyrights are granted to creators
of:
 Literary works (novels, poems,
newspapers).
 Artistic works (photography,
paintings).
 Broadcasts (television, radio,
Internet).
 Films.
 Original musical composition.
Discuss legal issues associated with
marketing products. (cont..)
 Collective marks trademark or service mark used
by the members of a group or organization to
identify themselves as members.
 Most sports and entertainment companies need to
retain legal counsel to navigate and protect their
company.
 Teams or leagues such as the NFL, NBA, and
Duke University own their logos.
TRADEMARK PROPERTIES
 Sport/Event organizations use
their trademarks to make money
from licensed product sales
THE LANHAM ACT
A. Outlines procedures for trademark application and
registration
 B. Defines trademark infringement is an
unfair, anticompetitive trade practice.
 In other words using a trademark without
authorization.
THE LANHAM ACT
Legal action against trademark
violators
a) Prosecution in court
b) Injunction—court order that stops
infringing activities until a trial begins
c) Fines/imprisonment
SHERMAN ANTITRUST ACT
The Sherman Antitrust Act of 1890
a. Passed by Congress in response to a small
number of companies controlling a great
deal of the economic power in the U.S.
b. Based on Congress’ constitutional power to
regulate interstate commerce
SHERMAN ANTITRUST ACT
c. Makes illegal any action restricting free
trade and competition
 d. Prevents monopolies (conditions in which a
market is controlled by one supplier and there are no
substitute goods or services readily available)
 e. Updated a few times during the 1900s, but
basically unchanged
SHERMAN ANTITRUST ACT
 MLB is exempt from the Sherman Antitrust Act
because of a 1922 U.S. Supreme Court Ruling
because baseball teams were local operations
Although baseball is now interstate and even global, the
exemption still exists.
 d. Modern effects:
 1) Franchises cannot relocate without the approval of Major
League Baseball, although teams in other professional sport
leagues can move at will.
SHERMAN ANTITRUST ACT
 2) Baseball owners can’t sue the league for blocking
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relocation since antitrust laws
do not apply.
3) MLB can contract (eliminate) teams from the
league.
4) MLB has total control over all minor league
affiliates.
5) Unique situation for sport marketers working in
baseball because they may have
to market teams in cities that have lost interest
SPORTS BROADCASTING ACT
SPORTS BROADCASTING ACT
 Sports Broadcasting Act of 1961
allows Pro Sport teams to have contracts with
networks for national broadcasting rights.
 Example: In 2011, the NFL made a nine-year
extensions to its broadcast television packages with
Fox, NBC and CBS for $27 Billion.
SPORTS BROADCASTING ACT
 Over the years, the courts have interpreted this law to
include a league’s right to “black out” games in certain
territories.
 Blackout : no sell out home game - a
league blocks the broadcast of a certain
game in a certain territory.
 In March of 2015 NFL owners voted 31-1 to
end TV blackouts
Right of publicity
and right of privacy
RIGHT OF PUBLICITY AND RIGHT OF PRIVACY
Celebrities’ images—very valuable
a. Great commercial worth
b. Many individuals are considered their own personal
brand.
1) Justin Bieber
2) Danica Patrick
3) David Beckham
4) Katy Perry
RIGHT OF PUBLICITY AND RIGHT OF PRIVACY
State laws and many court cases have established a
person’s right to protect his/her name and likeness.
A. If someone feels that his/her identity is being
misappropriated, that person can take legal action.
B. Two types of laws meant to prevent identity
misappropriation
What is Publicity?
 Type of promotion that relies on public relations
effect of a news story carried usually free by mass
media.
 The main objective of publicity is not sales
promotion, but creation of an image through
editorial or 'independent source' commentary.
R I G H T OF PUBLICITY
a) Financially protects a person from the
unauthorized use of his/her name and likeness
for financial gain
c) Gives individuals the exclusive right to their
identities for commercial use
d) Example—Only LeBron James himself has the right
to decide to endorse a certain product or license his
name to a company.
RIGHT OF PRIVACY
a) Meant to mentally/emotionally protect a person
when seclusion (isolation) has been intruded upon
c) When given an unreasonable amount of publicity
d) When placed in a false light
e) Example—celebrities suing tabloid newspapers for
harassing them or making up lies about them
Jennifer Lawrence
Actress Jennifer Lawrence
on paparazzi harassing her:
“I knew the paparazzi were going to be a reality in
my life. . . . But I didn’t know that I would feel
anxiety every time I open my front door, or that
being chased by 10 men you don’t know, or being
surrounded, feels invasive and makes me feel scared
and gets my adrenaline going every day.”
Jennifer Lawrence
She further stated:
“You can say, `This (invasion of privacy) is part of my
job and this is going to be a reality of my life,” but what
you don’t expect is how your body and how your
emotions are going to react to it.”
“Nobody wants to help us because it seems like, you
know, `Shut up, millionaires!” (Zupkus, 2014)
RIGHT OF PUBLICITY AND RIGHT OF PRIVACY
Acceptable to use a celebrity’s
identity:
a. In a book
b. On a television news show
c. In a newspaper
d. In a magazine
RIGHT OF PUBLICITY AND RIGHT OF PRIVACY
e. But sport/event marketers must learn where to draw
the line between freedom of expression and violations
of right of privacy and right of publicity.
f. Important to obtain written consent and provide
payment to the celebrity before using his/her image to
benefit your organization
OBJECTIVE B:
RISK MANAGEMENT
Risk management in sport/event
marketing
 Loss prevention—a function of risk
management that focuses on planning and
security procedures to avoid fraud, theft, or
injury
 Sport/Event marketers are concerned with
security because they want to sell a favorable
image of the team.
TICKETS
1) Counterfeit tickets
a) Sometimes ticket forgers may try to enter an event
with fake tickets.
b) More often, situations occur when unsuspecting
fans purchase counterfeit tickets from scalpers.
c) This is an issue of fraud.
TICKETS
d) The best ways to combat ticket forgery:
i. Teams and leagues educate fans on how to
distinguish real tickets from fake.
ii. Teams and leagues discourage fans from buying
tickets from any sources other than official ticket
outlets.
TICKETING
 Ticket brokers are registered businesses that
legally buy and sell tickets to a variety of
entertainment events and guarantee ticket
authenticity.
 Ticketmaster
 Ticket Tree
 Fango Movie Tickets
 Ticket Scalping is the act of reselling tickets for
admission to events
TICKETS
 The best way to avoid buying counterfeit
tickets to a game/event is to purchase them at
official ticket outlets.
 The popularity of online auction sites made
ticket resale harder to regulate
INSURANCE
Marketers minimize risk by making sure they
carry adequate insurance as required by state
law.
 Prize indemnity insurance protects sport/event
organizations or sponsors from loss of income due to
contest awards
INSURANCE
Protects sport organizations or sponsors from loss of
income due to contest awards
a) $50,000 hole-in-one golf contest
b) Shooting a puck from center ice through a tiny
opening in the goal for a brand-new car
3) Teams/Sponsors take out insurance policies to
cover the slim chance that a person will actually win.
4) If it happens, the insurance policy covers the
liability so the team or sponsor doesn’t take a major
hit.
OBJECTIVE B:
CONTRACT LAW
IN SEM
COLLECTIVE
BARGAINING
UNFORTUNATELY, IN COLLECTIVE
BARGAINING ONE PARTY OR THE OTHER TOO
OFTEN TRIES TO GAIN AN ADVANTAGE - A
BARGAIN, LIKE BUYING SOMETHING IN A
STORE FOR LESS THAN IT IS WORTH.
-CHARLES E. WILSON
FORMER GE PRESIDENT
the National Labor
Relations Act gave all
U.S. workers the right to
organize into unions to
collectively bargain and
strike.
 In 1935,
COLLECTIVE BARGAINING
 Employees joining together as a single unit to
negotiate with management is known as
Collective Bargaining
 Gives players the right to organize, use the agent of
choice and protect themselves.
 Free Agency- is an athletes' ability to
renegotiate his/her contract and to move
from team to team
What do Entertainers and Athletes Want?
 Also includes:
A
minimum salary
 Player’s rights
 Medical disability insurance
 Labor rules
 Length of contract
 Restrictions of certain activities or behaviors.
 Rules for agents
 Player and team travel
PLAYERS’ ASSOCIATIONS
 In the 1970s, athletes in the major leagues
began forming unions called players’
associations
 They help aid athletes in issues such as salaries,
contracts, and profit sharing.
 The sports’ leagues represent the owners and
managers and their goals = control costs.
STRIKE! STRIKE! STRIKE!
 When negotiations between a players’ union and the
owners’ organization cannot be reached, the players
might vote to determine if they should go on strike.
 This leads to no revenue being generated, employees
not working, and a decrease in consumer spending.