Stuart Freen is a JD candidate at Osgoode Hall Law School.

Vancouver-based yoga sportswear company Lululemon introduced a new line of national-flag themed clothing late last month, just in time for the 2010 Olympics. The new line of sweatshirts, tuques, and t-shirts features the colours of Canada, the United States, Germany and Sweden and is cheekily titled the “Cool Sporting Event That Takes Place in British Columbia Between 2009 & 2011 Edition.” Though clearly intended to cash in on the upcoming Olympics, VANOC has signaled that it does not intend to pursue legal action against Lululemon. VANOC did, however, condemn the new line as disappointing and poor sportsmanship. It appears that through some clever maneuvering Lululemon has successfully slipped through the “ambush marketing” provisions of the Olympic and Paralympic Marks Act [OPMA].

Ambush marketing refers to the practice of non-official sponsors of large events creating associations between themselves and the event through clever marketing (much to the chagrin of official sponsors who shell out big bucks for those exclusive rights). Unlike traditional common law "passing off" cases where a manufacturer confuses and misleads consumers as to the source of its goods, with ambush marketing the ambusher trades under their own name but creates confusion as to whether they are associated with the event or not. For the 2010 games the Hudson’s Bay Company is the official clothing sponsor and has the contract to design, market, and sell all the official Canadian Olympic gear.

The leading case on ambush marketing in Canada is NHL v. Pepsi (1992), 92 D.L.R. (4th) 349, 42 C.P.R. (3d) 390 (B.C.S.C.), aff'd (1995), 122 D.L.R. (4th) 412, 59 C.P.R. (3d) 216 (B.C.C.A.). The NHL had signed an exclusive marketing deal with Coca-Cola where Coke would be the sole soft-drink sponsor for the Stanley Cup Playoffs. However, through a bit of maneuvering Pepsi secured TV ad space during the playoffs and launched its own playoff hockey-themed advertising campaign (featuring Don Cherry, no less). The BC Superior Court held that Pepsi had not committed a passing off, nor had it committed various other economic torts. The court noted that Pepsi had included a disclaimer in all of the ads, and that the NHL was in some sense the author of its own misfortune when it failed to tightly control its TV advertising. It appears therefore that ambush marketing of this sort is not typically illegal in Canada.

But that’s not the end of the story so far as Olympic merchandising goes. In 2007 Parliament passed the OPMA, an act which grants a kind of “super official mark” status to the Olympic marks, providing greater protection than even what is offered for Government of Canada marks. The OPMA was covered previously in a March 2009 Ipilogue post, as well as in University of Ottawa law Professor Teresa Scassa’s 2008 article “Faster, Higher, Stronger: The Protection of Olympic and Paralympic Marks Leading up to Vancouver 2010” (available with QuickLaw account). The strong IP protection in the OPMA was essentially part of the deal Canada made with the IOC when Vancouver was awarded the Olympics, and all the other recent Olympic countries have enacted similar legislation.

Section 4(1)(b) of the OPMA (the ambush marketing provision) makes it illegal to mislead the public into believing that a business association exists between a non-sponsor company and the Olympics. It is possible that VANOC could use this section to get an injunction against Lululemon, but they evidently have decided not to go this route. Perhaps this is because Lululemon’s carefully drafted clothing line avoids using any of the Olympic marks, and through its smart alecky branding the company actually implies that it is not an official sponsor. Or, perhaps VANOC just wants to avoid the bad publicity of a lawsuit against a well-known Canadian company.

The whole situation raises some questions about what the Olympics are really about and whether they are really the boon for local businesses that they are made out to be. The Olympics have been criticized in recent years for being less about sporting excellence and more about being a massive marketing cash-grab. Smaller Canadian companies and certainly local Vancouver businesses have no chance at being official Olympic sponsors, and the IOC seemingly would like to see them completely shut out, with the profits instead flowing to the big-ticket advertisers like Coke, McDonalds, and GE. Though certainly not a mom and pop operation, Lululemon is nevertheless a Vancouver-based clothing company, and it doesn’t seem unreasonable to me that they and other Vancouver retailers should be able to capitalize on the massive “cool sporting event” that will shortly be gripping their city.