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RWY on BFM : SPORTS LAW #3 - MONEY IN OLYMPICS

Behind the glamour and glory of competing at the Olympics lies an inadequate financial infrastructure to support athletes. A majority of the 11,000 Olympians will count themselves lucky just for not being financially broke when the Games end. One interesting development on track and field is that athletes without sponsors, or who are prohibited by their sponsors from wearing a competing brand, will be covering up their shoes logo. Sports lawyers Richard Wee and Lesley Lim are here to talk about money in Olympics and the practice of ambush marketing.

(Taken from :
 http://www.bfm.my/richard-wee-lesley-lim-sports-law-03-money-in-olympics.html)

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Image Rights: Feeding the Hungry Sponsors

Image Rights: Feeding the Hungry Sponsors

         

Sports has evolved from an extra co-curricular activity to a booming industry over the last 50 years. The sports industry generates large funding and financial turnovers which creates a financial market on its own. In the middle of this entire gigantic industry remains the soul of sports, which is the athlete. In competitive sports, every athlete carries the goodwill and brand of that sport. Speaking of brands, it is common to read about athletes creating and maintaining their image rights. This concept of image rights is very much part of that earlier-mentioned sports industry above. Some athletes gain much financial income from their respective image rights.

On the other hand, an increasing number of corporate companies have come to realize the potential of being associated or connected to the sports industry. Major brands like Coca Cola, McDonald’s and Samsung have constantly invested in sports sponsorship to ensure that their brand is seen to be connected to sports brands. This hunger that corporations have to link up with sports has become a driving force for the creation of a win-win situation for both parties. In all of this, sports lawyers have a unique role in bridging the gap between these demanding corporations and their desired sports.

In Malaysia, the concept of image rights and its use in the sports industry is a foreign topic, an income-inducing opportunity unseized by many local athletes. However, with the rampant growth of globalization, a failure to properly manage one’s image would significantly hamper the individual’s ability to take control of possible additional income. It is especially relevant to sports athletes who have been granted celebrity status which may be used as a gauge of the athlete’s worth in the market. An example would be Datuk Lee Chong Wei.^[1] His income is based mainly on his competition winnings but he also earns lucrative income by controlling the use of his image in endorsement deals with the likes of ‘100 Plus’ and ‘Yonex’.

In order to get a clearer definition of image rights in the sports industry, a panoramic comparison of image rights in the United Kingdom (UK) and the United States (US) has to be made. In the UK, there is no specific statutory provision for a right to one’s image, nor has it been expressly adjudicated within common law.^[2] However, image rights is interlinked with the law in regards to intellectual property rights that protects creations. There are two aspects to the protection of image rights, which are to protect a person's right to privacy and a person's ability to commercially promote oneself. ^[3]

Prior to the US case of Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc.2,^[4] the right to privacy first protected individuals against the unauthorized use of their likeness for commercial purpose. It was developed in the Haelan^[5] case where it formed the basis for the right of publicity.^[6] This right provides that every individual has full control over the commercial use of their identity which includes their name, voice, signature and photograph. It aims to prevent unauthorized and uncompensated exploitation of an individual's image. Because of this, US is deemed to be the forerunning country for protecting an individual's image rights. However, the First Amendment to the US Constitution limits the right to publicity^[7] in an attempt to form a balance between the aforementioned right and the right to freedom of expression. This is considered to be a necessary amendment to prevent infringing the freedom of press. 

How are Image Rights Protected?

As there is no specific law for image rights, intellectual property law aids in protecting an athlete's image rights through various means, for example: through the law related to trademarks and passing off.

Trademarks are recognizable insignias or words used to identify and differentiate a particular product from another, also indicating its source. Trademarks are registered to allow legal action to be taken if the trademarked brand is used without permission. In relation to image rights, athletes can register their name or their signature as trademarks. This however does not include their image. An example would be the world renown footballer, Paul 'Gazza' Gascoigne who trademarked his nickname 'Gazza', bringing about the Gazzamania fandom. These trademarks are protected under various trademark laws like the US Lanham Act and the UK Trade Marks Act 1994.

Another means of protection is through the law of passing off. Where trademarking is a precautionary measure, the law of passing off is a post-conflict step. As celebrities, it is common for an athlete’s image to be used in endorsement deals. An unauthorized use of the celebrity's image to endorse a product is considered passing off. It must be proven (1) that at that point in time, the individual had a significant amount of goodwill or reputation and (2) that a significant amount of the general population would mistake the false endorsement as a genuine endorsement by the celebrity. The athlete will then be entitled to compensation under the law of passing off. 

The Role of Lawyers in Marketing Image Rights

Malaysia applies similar law to that of UK whereby an athlete’s image rights are protected via trademarking their name. In addition to trademarks for individual athletes, sports teams like the JDT Football Team or the KLBC Badminton Team may take steps to register the team brand. This is where sports lawyers with intellectual property knowledge enter the picture.

Once the brand names are registered, it is encumbered upon relevant characters or teams to promote the brand commercially. Co-branding efforts or selling of the brand to corporate organizations are examples of commercializing an athlete’s image rights. Sports lawyers are involved in each stage of trademarking and marketing the said brand whereby they may also act as marketing advisors cum publicity agents.

Despite being a relatively uncommon field of practice in Malaysia, sports law is in great demand in Western countries. Sports lawyers draft and formalize commercial contracts between parties, ensuring the athlete is legally protected. In this modern age where having a significant presence on social media would greatly enhance the athlete’s brand, it is the sports lawyer’s duty to advise the athlete how to manage social media sites and the content that appears on their page. They filter the content to be posted on the site and advise the athlete on politically correct means of managing conflict. In terms of marketing efforts, a commercial post is planned and timed by the lawyer for maximum impact.

The commercial benefits of controlling one’s image is evident when analyzing football giants, Manchester United. Their nickname ‘The Red Devils’ has received much global recognition from corporations and fans alike. The strategic marketing of that name is a significant factor as to why they are ranked No. 1 on Forbes 2016 list of the World’s Most Valuable Sports Teams with a gross value of $1.86 billion.^[8] The commercial team together with the sports lawyers of Manchester United have successfully developed their brand and image rights, forming beneficial commercial partnerships with a diverse group of elite brands (ie. Nike and Adidas). The ever-growing desire of certain corporate companies to be associated with successful sports clubs as mentioned earlier above, drives this economic pursuit for sponsorship through the image rights of the club, the team and/or the athlete. 

In summary, the driving force behind a successful union between the corporate and sports sector is actually the demand potential sponsors generate by their need to be constantly fed. The relationship between the sectors has become so congruent that the absence of one would greatly impact the commercial wealth of the other. In order to satisfy this ever-growing hunger, image rights in the sports industry have to be properly created, registered and commercialized. Nonetheless, despite the hunger of sponsors, the many commercial opportunities they seek would be non-existent if it were not for the sport itself and the role the athlete plays. The centerpiece of the sports industry has always been and will always be the winning goal shot in by the athlete, the winning point scored at the final buzzer, fulfilling their principal intent of achieving victory. The spirit and soul of sports shall always remain paramount.

By Richard Wee & Samuella Kong

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^[1] Jeffri Cheong, “Is your Image worth anything?” <http://www.skrine.com/is-your-image-worth-anything> accessed 7 July 2016

^[2] InBrief.co.uk, “Is there a Right to Protect your image under UK Law” <http://www.inbrief.co.uk/human-rights/image-rights/> accessed 7 July 2016

^[3] “Is there a Right to Protect your image under UK Law” by InBrief.co.uk <http://www.inbrief.co.uk/human-rights/image-rights/> accessed 7 July 2016

^[4] 202 F.2d 866 (1953)

^[5] 202 F.2d 866 (1953)

^[6] Luca Ferrari and Stella Riberti, “Comparing How Image Rights Laws Apply to Sport in the US, UK and Europe” (British Association for Sport and Law, 22 December 2015) < http://www.lawinsport.com/articles/item/comparing-how-image-rights-laws-apply-to-sport-in-the-us-uk-and-europe> accessed 7 July 2016

^[7] Luca Ferrari and Stella Riberti, “Comparing How Image Rights Laws Apply to Sport in the US, UK and Europe” (British Association for Sport and Law, 22 December 2015) <http://www.lawinsport.com/articles/item/comparing-how-image-rights-laws-apply-to-sport-in-the-us-uk-and-europe> accessed 7 July 2016

^[8] Forbes, “The World’s Most Valuable Sports Teams” <http://www.forbes.com/pictures/mli45fdhk/no-1-manchester-united/#6e5d6c9e2270> accessed 7 July 2016

Construction Law Department @RWY

Over the years, RWY had the opportunity to assist a few clients on matters related to construction. With the support of Messrs Steve Chan, a Construction Consultant, RWY are able to offer services for this are of Construction Law; which includes claims via Arbitration and under the Construction Industry Payment Adjudication Act 2012 (CIPAA). 

For a perusal of some of our earlier articles related to CIPAA, here is the link. 

Don't hesitate to contact us for any assistance. 

A Grand Slam : The Sports Law Association of Malaysia

Recently our Richard Wee was interviewed by Lee Shih, of The Malaysian Lawyer. Below is the said interview; usage permitted by The Malaysian Lawyer. 

https://themalaysianlawyer.com/2016/07/18/a-grand-slam/

A Grand Slam: The Sports Law Association of Malaysia

18 July 2016The Malaysian Lawyer

The Malaysian Lawyer interviewed Richard Wee, sports lawyer and Deputy President of the Sports Law Association of Malaysia. We wanted to find out more about the area of sports law and of this new association. There are lots of exciting plans for the future and it looks like the development of sports law can only skyrocket.

First of all, congratulations on being elected as Deputy President of the Pro-Tem committee of the Sports Law Association of Malaysia (SLAM).

Can you share with us what factors led to the formation of SLAM?

Thank you for your warm wishes. It is indeed a great honour to be elected by my fellow peers to lead SLAM as deputy president. We hope to create a platform for interested parties to explore the frontiers of sports law in Malaysia. Under Datuk Dr Sundra Rajoo’s leadership, I am confident that the objectives of SLAM, particularly the aspiration that one day Malaysia becomes the sports law hub of this region, will be a reality.

As you may be aware, Messrs Richard Wee and Yip (RWY) host and organise on an annual basis a Sports Law Conference since 2013. The said conference is a rostrum to generate discussions and exchange views about sports law. It was our fervent hope that the series of conferences will be the impetus to have more lawyers embracing sports law and offering services to the sports industry. To a large extent, that aim has succeeded, to the point that the sports law fraternity began to entertain the idea of a dedicated society to cater for the interest of sports lawyers.

So, at the last conference in 2015, the idea and suggestion to form SLAM was first mooted and that idea was warmly received by the delegates. The Minister of Youth and Sports, YB Khairy Jamaluddin, and President of the Olympic Council of Malaysia (OCM), Tunku Imran, who were both in attendance at that said conference, also voiced their optimism with the proposed association.

Carrying the spirit of that support, RWY with the leadership of KLRCA charted and planned the creation of SLAM.

On the 4th of July 2016, over 20 people attended the first Pro-tem meeting. It was a historical meeting as members of the Malaysian Bar and the legal fraternity were on the verge of forming a dedicated association to advance the interest and development of sports law. This has never been done before. At the same Pro-tem, the following Office Bearers were elected.

Some of the Pro-Tem members of SLAM

Pro-tem Committee 2016:-
President : Datuk Sundra Rajoo
Deputy President : Richard Wee
Secretary : Lesley Lim
Treasurer : Dan Raj

Committee Members :-
Dr Jady, Brian Song, Peter-Douglas Ling, Michelle Sunita, Farez Jinnah.

What are the next steps that the association will be taking and how does one join the association?

The constitution with other relevant documents will be submitted to the Registrar of Societies (ROS) and hopefully in a few months time, SLAM will be duly registered and we can start executing our plans.

Thereafter, SLAM will invite members of the Bar, individuals and corporations involved and related to the sports industry, academicians and athletes to apply for membership. The membership is subjected to an application process which will be led by the Secretary of SLAM.

What are some of the future activities and events that SLAM may organise?

SLAM has a few proposed plans and they are listed below:-

a. Development of sports law
We hope to encourage more law schools to offer the subject of sports law in their respective programs. We also hope to work with the Malaysian Bar to encourage more lawyers to take up sports law and as mentioned above, to offer relevant services for sports. To that end, we have already reached out to a few tertiary education centres to hold forums and seminars at their respective institutions. The forums and seminars will probably encourage some law students to pick up this area of law. As for the Malaysian Bar, once SLAM is registered, the association may hold dialogues and meetings with the Bar particularly with the Continuing Professional Development (CPD) department to hold the relevant seminars.

b. Research and materials
Like any other area of law, legal reviews, journals and reports are necessary. SLAM wishes to create its own Sports Law Journal and Dr. Jady mentioned above, is appointed to lead the editorial team for this project. Articles and commentaries will be welcomed not just by members of the Bar but other interested parties too.

c. Conferences, seminars and trainings
SLAM intends to organize its own annual Sports Law Conference and will supplement the said annual conference with a series of seminars and trainings. Speakers from all over Malaysia and the world will be invited. For the foreseeable future, most of the activities will be based in Kuala Lumpur but eventually, we hope to expand to other major cities in Malaysia.

RWY’s upcoming Sports Law Conference

d. Outreach and network
SLAM will reach out to other like associations all over the world. We also hope to be the center of a South East Asian sports law. In time, we hope to build a strong and firm network for our members to utilize and be part of. As mentioned above, we aspire to be the sports law hub of our region and this process will help us achieve that.

These are just some preliminary plans that we have. Perhaps in time, the plans may be tweaked or changed and further proposals may be added.

What is the state of sports law in Malaysia presently?

At the moment, the awareness of sports law in Malaysia is fairly low. Many lawyers may not realise that sports law has its own jurisprudence, rules and regulations and its own conventions. There is much to do to not only create the awareness about sports law, but to advance and improve the standard of sports law in Malaysia. Sports law is an international area of law. Technically any Malaysia sports lawyer may advise a European or American athlete for matters ranging from sports image to social media. For example, why can’t one of us be David Beckham’s lawyer? So, the potential of sports law in Malaysia is huge.

Specifically, how are sporting disputes presently resolved in Malaysia? What changes are in store for these laws?

Currently, sports disputes are regulated by the respective sports associations. Parties involved in the dispute may also refer the matter to the courts. For associations which have adopted the Court of Arbitration of Sports (CAS) as the ultimate body to resolve disputes, the dispute of that association may be referred to CAS.

However, there is a specific legislation referred to as the Sports Development Act 1997. In Section 24, the dispute of the association may be referred to the Minister of Sports. The minister, on the other hand, may refer to a Sports Advisory Panel to advise him of the next course of action. It is rather unique that sports disputes in Malaysia may be settled by a minister instead of an arbitrator or a judge.

There are plans to create a National Dispute Resolution Body for Sports, perhaps with KLRCA as the center. Recently in May 2014, CAS and KLRCA entered into a Memorandum of Understanding which effectively appointed KLRCA as a centre to host and hear sports disputes in this region. I am made to understand a few cases have been heard in KLRCA. SLAM will be at the forefront of this area as the association intends to assist the relevant party to formulate a practical dispute resolution system for sports.

To hear more from Richard Wee, you can tune in to the BFM podcasts where he shared on Sports Law – Image Rights, and Brexit and the Premier League. RWY will also be hosting its 4th Sports Law Conference in December 2016. The Malaysia Lawyer’s Lee Shih will be a speaker at this conference. 

Sport Law Conference 2016 by RWY || Play By The Rules

RWY is pleased to announce that we will host the 4th RWY Sports Law Conference 2016 on the 8th December 2016; at Kuala Lumpur Regional Centre of Arbitration's building. We have chosen the theme 'PLAY BY THE RULES' to highlight the importance of Rules & Regulations in the play of Sports. 

Speakers from FIFA, KLRCA, Football Association of Malaysia, COBRA, the Stadium Board of Malaysia, ADAMAS and Blackstone Chambers from London have indicated their confirmation. Topics range from Sports Doping, the Dispute Resolution for Sports & talks about emerging Sports.  

More information will be released soon. In the meantime, do contact lesley@rwy.com.my to register a place. 

RWY on BFM : SPORTS LAW #2 - BREXIT & THE PREMIER LEAGUE (13 July 2016)

As the international community gradually come to terms with the economical and political consequences of Britain choosing to leave the European Union, we ask sports lawyers Richard Wee and Lesley Lim about how Brexit will affect the English Premier League, the most successful football league in the world in terms of viewership and revenue.

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RWY on BFM : SPORTS LAW #1 - IMAGE RIGHTS (7 June 2016)

Jose Mourinho’s appointment as Manchester United’s manager last week was reportedly held up by negotiations over his image rights, which belongs to Chelsea Football Club since 2005. What are image rights and how does it affect an athlete or sports professional like Mourinho? Helping us to understand how income is made beyond the sports arena are lawyers Richard Wee and Lesley Lim.

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Sports, Integrity and Corrupt Practices

Last December 2015, the football federation for North America, better known as CONCACAF initiated a Court action in the United States of America, to reclaim millions of dollars purported to have lost through a “kick-back” scheme orchestrated by their former office bearers. Jeffery Webb, former president of CONCACAF was convicted for money laundering while Enrique Sanz who as of December was not charged yet, were both instrumental in the engagement of a travel agency called Cartan Tours. It was alleged that more than $40 million were steered towards Cartan Tours purportedly for travel services of CONCACAF  staffs. This suit will be closely watched as it is the first of many expected from the recent FIFA scandal.

As a matter of fact, claims by sports organisations against corrupt practices are not uncommon. For example, in Ross River Ltd v Cambridge City Football Club Ltd [2007] EWHC 2115 (Ch), the Court decided that in a situation where contract succeed based on a secret payment or bribe received by an agent or representative, the principal will have his right to rescission.

That CONCACAF expose’ is unfortunately, a series of embarrasing explosive news in the world of football. FIFA’s former President Sepp Blatter himself is facing investigations for misuse of funds. The recent news where Michel Platini was banned from all football activity for a total of eight years due to a corruption investigation highlights the need for integrity in Sports. It is reported that Platini had accepted an unauthorised payment from the-then FIFA president, Sepp Blatter who is also currently banned. The exact words used by the ethics committee are “Mr Platini failed to act with complete credibility and integrity, showing awareness of the importance of his duties and concomitant obligations and responsibilities.”

Nonetheless the efforts by CONCACAF warrants a review of the position of law in Malaysia. In the local context of Malaysia, how would such corruption cases in Sports be dealt with? Can an ala-CONCACAF kind of action be taken by a sports organisation in Malaysian Courts? What would the cause of action be?

Trust Laws is the obvious cause of action with reference to Tracing and Constructive Trust. We would however suggest that there are elements of sports law which has to be taken into account too.

In an action under the Law of Trusts, we will draw strength from the case of Attorney General of Hong Kong v Reid [1993] 3 WLR 1143. Anthony Reid was the Crown Counsel of the Hong Kong Government. Reid had taken bribes and amongst his ‘investment’ from this corrupt income, were properties purchased in New Zealand. Apart from the eight years of imprisonment imposed on him, the Court also ordered him to pay a total of HK$12.4 million, being the total value of his assets alleged to have been acquired from the bribes. Reid, holding pubic office and carrying the trust of the Government in prosecution matters, was deemed to be a fiduciary by the Court.

It is generally known that a fiduciary that receives any unauthorised profit out of his duty towards his principal would hold the property or profit on trust for the respective principal or rather, the victim. It was held that the moment Reid breach his duties in return for the bribe; he immediately owed the Government of Hong Kong a fiduciary duty.

However, the principle from the case of Lister v Stubbs (1890) 45 Ch D 1 would automatically convert Anthony Reid into a debtor to the Crown for the bribe money he obtained. Is Reid a debtor or a fiduciary?  Interestingly the Privy Council in Reid’s case, overturn Lister v Stubbs.

Briefly, Stubbs was appointed by his master, the firm Lister & Co to buy goods from Varley & Co. Stubbs subsequently accepted bribes and invested in properties apart from other investments. Alongside the bribe money, the plaintiff in that case also sought to claim for the properties in which Stubbs invested in. Unfortunately for the plaintiff in Stubb’s case, the Court was of the view that the relationship between the plaintiff and the defendant was more of a debtor and creditor relationship. The Court could not agree that trust existed in such a situation. The Court observed that the beneficiary should not be entitled to a proprietary right simply because it is not their legal right to receive more than what is necessary in trust. Most importantly, the beneficiary may not have suffered any financial loss due to the bribery.

  The Privy Council, in overturning Stubbs, applied Constructive Trusts on  Reid's properties in New Zealand and effectively permitted the AG (Hong Kong) to forfeit the assets which Reid had purchased with the bribe money mentioned above. The thrust of the Privy Council decision stems from the position it took, that Reid is in fact a fiduciary when acting for the Hong Kong government.

In Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, Lord Justice Millett held that there are two situations that may result in constructive trust; by operation of law and in cases where the Defendant is implicated in fraud. In most cases, it would fall under the latter category. For example, constructive trust will arise where unauthorised profit is made out of the party’s fiduciary position or even, in situations where a contract has been entered into by or on behalf of the fiduciary as a consequence of fraud.

Furthermore in El Ajou v Dollar Land Holdings Plc [1994] 2 All ER 685 it was held that when a party receives money or trust property because they breached their duty towards their fiduciary, they will hold the money or property in trust.

Should the CONCACAF-like corrupt case occurs in Malaysian Sports Organisations, cases like AG (HK) v Reid would be apllicable. However, what is crucial here in terms of sports law, is the requirement of integrity in sports. Most sports organisations enforce the element of integrity very strongly. One example is the ASEAN Football Confederation (AFC) whereby a dedicated team is formed to maintain and enforce integrity in Asian football. That team oversees and investigates any suspicion of breach of integrity which includes match fixing, kickbacks and corrupt practices. A few footballers and sports officials have fallen foul of this integrity code by AFC and has either been suspended or permanently banned from football. It seems that integrity is no more a mere punch line of sports politics but it is in fact becoming essential to maintain the sanctity of sports.

If corrupt practises goes on in Sports, be it on the field or the boardroom of the organisation; the reputation of Sports would be dented. There is no doubt that integrity plays an extremely important role in sports. Participants, spectators, sponsors as well as the public and media will often judge a sports organisation based on the level of integrity they portray to have.

Therefore, if integrity in sports is constantly enforced and if corrupt practices/kickbacks are weeded out, actions taken by CONCACAF may not be necessary anymore. The sports integrity movement in recent years is a positive preventive step to prevent corrupt practices in sports.

In addition to all the above discussion, it is submitted that more steps ought to be taken in order to eliminate all possible corrupt practices. Basic steps like advertising or promoting ethics in sports, issuing anti-corruption measures, setting stricter in-house rules, getting the Governmental bodies to work closely with sports organisations or even allow media to spread awareness. Considering the fact that the media are often the “eyes and ears of the public” and with such transparency available, it would be beneficial to sportsmen, the public and the government.

The future of good clean sports should start with powerful integrity mechanism in all sports organisation. Once the mechanism is effectively enforced, sports organisations will severely minimize the CONCACAF debacle and FIFA scandal. Recourse to law and activation of cases such as Reid’s case ought to be the last resort for any sports organisation. In time, sports must learn to clean itself and develop its own internal rule of law to weed out corrupt practices.

Richard Wee

Janessa Kok