1.02 Legal issues in SEM

OBJECTIVE A- UNFAIR 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 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 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.CBS

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

RIGHT 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)(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

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 Collective Bargaining

Collective bargaining Gives players the right to organize, use the agent of choice and protect themselves. Collective bargaining agreements are agreements between players’ associations (or unions) and team ownership/management. Free Agency- is an athletes' ability to renegotiate his/her contract with their existing team or with another 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 The labor unions that represent athletes and function the same as unions in other industries. 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.

In 1935, the National Labor Relations Act gave all U.S. workers the right to organize into unions to collectively bargain and strike.

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.

More Contracts Exclusivity - Sponsors usually insist on being the only ones in their particular category of goods or services. For example, Coke and Pepsi would never sponsor the same event, nor would Nike and Reebok.

Option to renew and a right of first refusal The option to renew -allows the sponsor to extend the agreement after the contract expires. The right of first refusal - The event organizers will allow the sponsor the opportunity to renew before offering the contract to any other sponsors.

RIGHT OF PUBLICITY & PRIVACY LAWS Right of publicity protects a person from the unauthorized use of his/ her name and likeness for financial gain. The main difference between the two is that right of privacy is meant to mentally/emotionally protect a person, whereas right of publicity is meant to financially protect a person.

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