Running Away from the Standard in Pro Runner Sponsorships

Early last week, I alerted my husband to an intellectual property issue that arose within the track and field community. He writes a column on sports law for a pretty amazing publication, and for months I have been begging him to write about legal issues as they have come up in the running world.  He told me to run with this idea and then he would see if it turned in to something that might make sense for him to write about.  So I did.  And it became the article that follows.  Like most articles, it evolved from my initial plan for it; and the focus is far less legal and far more centered around the unique business decisions made by a Seattle-based women’s running brand.  So now, instead, the article appears here…

For the low income-generating discipline often regarded as the red-headed stepchild of American professional sports, some very interesting sports law issues seem to be taking place within the world of track and field.

Many of these issues apparently stem from the changing role of sponsorships within the community, and Oiselle, a Seattle-based performance apparel brand for women, is often found at the helm. Founded in 2007 by Sally Bergesen (a former sub-professional distance runner and design industry professional), Oiselle has gained traction in the women’s running community by harnessing social media outlets such as Twitter, and altering the traditional model of pro-athlete sponsorship deals in order to secure sponsorships with some of the biggest names in women’s running.

Lauren Fleshman, two-time U.S. Outdoor 5,000 meter champion, joined Oiselle at the start of 2013 and Kara Goucher, a two-time Olympian, signed with Oiselle earlier this year. Both Ms. Fleshman and Ms. Goucher were previously Nike-sponsored athletes. They now each hold a stake in Oiselle, making them long-term partners with the company, and not merely sponsored athletes. Their duties even include designing running gear for the brand, and it is indisputable that their affiliations have led to a rapid growth of sales for the small company.

When Ms. Goucher came on board with Oiselle earlier this year, she did so in an apparel-only arrangement, and subsequently secured a separate footwear sponsorship from Sketchers. This is a departure for Sketchers from the traditional model where elite runners ordinarily obtain both footwear and apparel from the same brand. Indeed, Meb Keflezighi, winner of the 2014 Boston Marathon, runs for Sketchers – which is primarily regarded as a footwear brand – and his sponsored race kit includes apparel. Goucher’s alternative arrangement was publicized in a May 5th Runner’s World article.

Bergesen, who is also the CEO of Oiselle, was apparently involved in the negotiations with Sketchers, and the deal is said to provide that Ms. Goucher will appear in Sketchers marketing materials wearing Oiselle apparel which will bear the logos of both brands. However, what Ms. Bergesen fails to understand is that implicit in the use of multiple logos on athletic gear is that a partnership has been formed between the different brands, and perhaps that the partnership is greater than merely a co-sponsorship relationship for a single athlete. Will it give the impression that Oiselle designs apparel for Sketchers, or that Sketchers is now in the business of designing women’s running apparel, emblazoned with a bird logo commonly associated with Oiselle? Maybe. And therein lies the legal issue that Ms. Bergesen repeatedly skirts. Manipulation of apparel logos could result in consumer confusion as to the source of the products in question. The Runner’s World article did not indicate what Ms. Goucher will wear in competition.

Bergesen was also very outspoken regarding Rule 40 of the Olympic Charter, otherwise known as the “blackout”, around the time of the 2012 Olympics. Rule 40 bars Olympic athletes and other participants from appearing in advertisements or promotions for any of their sponsors around the time of the Olympic Games. Rule 40 waivers, however, are granted to official Olympics sponsors, such as Nike. Rule 40 is said to exist as a limitation on advertising or promotion using competing athletes so as to prevent an implied association with the Olympic Games. The IOC also imposes additional guidelines with respect to use of social media and logo-bearing apparel, equipment and accessories. The rationale for the Rule has its roots in amateurism. Bergesen believes that such restrictions hold athletes back from certain financial opportunities because “why would you as a company spend money to sponsor an athlete that gets minimal media coverage until the Olympics? AND at said Olympics they can’t wear your gear, talk about your gear and you can’t talk about them?”

This type of thinking undoubtedly gave rise to the events of this last weekend, when on May 25th Ms. Bergesen shared an Instagram photo of the U.S. women’s 4 x 1500-meter team that finished second at the IAAF World Relays Championships in the Bahamas, setting a new U.S. record in the event.  The photo had been doctored to remove Nike logos from most of the women’s gear and replaced instead with the logos of each athlete’s actual sponsors.  Included in the team was Kate Grace, an Oiselle-sponsored athlete.

Nike, a long-time partner of USA Track & Field (USATF) which is the National Governing Body for track and field and distance running in the U.S., has recently extended its partnership with USATF through 2040.  As USATF National Team Sponsor, Nike serves as USATF’s official sponsor and exclusive footwear and apparel licensee, and as the official outfitter of Team USA, meaning that all U.S. track and field athletes wear Nike apparel in international competition, regardless of who each individual athlete’s sponsors might be. This prevents other brands from gaining exposure for their wares in international competition and bars athletes from promoting the brands which have supported them through the training that enabled them to complete on the international stage.

Many within the running community have expressed concern about whether their relationship with USATF gives Nike too much control over the future of the sport, particularly following a controversy that arose earlier this year at the men’s and women’s 3000-meter races at the USA Indoor Championships with respect to the disqualification and subsequent reinstatement of a non-Nike athlete (a Nike athlete was disqualified in the men’s 3000-meter race). A final report has not yet been issued by USATF with regard to that controversy. Immediately following the disqualifications, a number of professional track and field and distance runners took to social media to express their dismay with USATF and their relationship with Nike.  Included among them were Ms. Bergesen and Ms. Fleshman.

Following Ms. Bergesen’s placement of the doctored photo on Instagram, USATF issued a prompt response in the form of a “cease-and-desist” letter, ordering Oiselle to immediately remove the photo from Instagram. The letter, written by Norman Wain, USATF’s General Counsel, alleges that the posting of the doctored photo constituted an act of unfair competition and false advertising on the part of Oiselle. Specifically, it provides that, “[t]he removal and replacement of the Nike Swoosh, especially in the context of a promotional piece, misleads consumers to believe that the USATF team is sponsored by these other brands and not by Nike. Oiselle’s display of these doctored photographs not only damages Nike…but also diminishes the value of USATF’s sponsorship and licensing relationships.”

The letter cites Section 43(a) of the Lanham Act which sets forth the basis for civil claims for trademark infringement based upon likelihood of confusion, as well as for unfair competition and false advertising.

Bergesen, who did not respond to questions regarding whether she was advised by legal counsel on the matter, removed the photo from Instagram and posted the “cease-and-desist” letter to her Tumblr account, along with “apologies for any confusion we may have created by the post.”

It is difficult to say what USATF’s reaction might have been had Ms. Bergesen instead posted the photo with the Nike logos on the uniforms unaltered but with the names of each pro athelete’s sponsors placed below their image. Even more tenuous is whether, for Ms. Bergesen, it would have had the same effect. Objectively, it appears that in posting the doctored photo, Ms. Bergesen was making a strong political statement about the future of the sport and the current standard in track and field athlete sponsorships.

Still, it cannot be denied that Ms. Bergesen is a visionary in the sport. Oiselle’s business model and its chief officer pose a venerable threat to the standard sponsorship model long followed in the world of elite running in the U.S. Bergesen’s goals are clearly to improve opportunities for small and developing brands to sponsor elite athletes, and thus enable those athletes to have additional income-generating opportunities through their promotion – and even partnership – with those brands. Her goals are clear, but to achieve them she must learn not to run afoul of other brands’ intellectual property rights. From a legal perspective, intellectual property is branding at its core.

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