Opposing sides set for battle as Olympic Bill hits the Lords

The row over the Olympics Bill, and specifically the new IP rights it contains, will take a step forward tomorrow (31 January) when it reaches the grand committee stage in the House of Lords.

In case you missed it, last summer's joy at the UK's Olympics bid victory soon turned to dismay, at least among potential sponsors, when details of the new right emerged. Words used together such as 'gold', 'summer' and '2012' were, they claimed, to be banned in an effort to combat ambush marketing. Any unauthorised usage would lead to heavy fines.

Writing in today's issue of The Lawyer (page 18), the legal director of the Institute of Practitioners in Advertising (IPA), Marina Palomba, claims the proposed new protection "grossly extends UK law" and is "far beyond any legislation introduced anywhere in the world". As Palomba also says, the new right also reverses the normal presumption of innocence.

This aspect of the bill is the most controversial and already, six and a half years before the Games begin and before the legislation has even been passed, it appears to have caught its first victim. Last week, the London Organising Committee for the Olympic Games (Locog), the body charged with delivering the Olympics, wrote to Kent Sports Council to quiz it on its use of the Olympic rings symbol to promote the county ahead of the Games. The war on unauthorised usage had begun.

The Kent case, which is likely to result in little more than a conversation between the two parties over the council's usage rather than Locog looking to set a precedent with full-scale litigation, is unusual because Kent is not a commercial enterprise. What the more ferocious row between potential sponsors and Locog centres on is the conflict between the ability of Locog to raise funds for the Games and the freedom of commercial expression among businesses.

The arguments are likely to continue long after tomorrow's hearing, but unlike BCCI, this one can't rumble on for years. It's time-critical. Locog is already looking to sign up at least one top-tier sponsor this year, but the value of that sponsorship is dependent on the protection any advertiser is likely to receive. If Locog can't guarantee exclusivity, why should anyone pay top dollar? As Harbottle & Lewis partner Bob Mitchell puts it: "This is the Olympics and the major potential sponsors will all be considering their options. Everyone wants to be involved, but they want to know where they stand."

There is still time for amendments, although any changes are unlikely to go far enough to appease the highly vociferous advertising lobby groups that have labelled the new rights "draconian".

Underpinning the dispute is the debate as to whether new legislation is needed at all. "The UK already has sufficient IP law," says Sam Hollis of athletes1 Legal. "It has some of the world's strongest legislation; we just needed to extend existing laws."

In the UK, on top of the laws of copyright, trademark and passing off, Olympic marks are protected under the Olympic Symbols (Protection) Act 1995. This prevents unauthorised use of the five-ring symbol, the Olympic motto and the word 'Olympics'. "What it doesn't do is prevent ambush marketing," says David Brooks of Taylor Wessing. "As part of London's bid they were required by the IOC [International Olympic Committee] to put legislation in place that would protect the value of the Games."

The new right that will be created by the bill, the London Olympic Association Right (LOAR), should fulfil that role. It gives official sponsors the right of association with the Games and gives Games officials the right to stop any unauthorised person making an association with them. The row over the reversal of the burden of proof has arisen because any unauthorised user will be automatically judged to be infringing.

Browne Jacobson IP partner Declan Cushley, speaking at the time of the bill's first appearance last year, said it would "substantially impair" advertisers' freedom of commercial speech, as advertisers have always been free to make reference in their adverts to topical news and current issues.

Lawyers in the sponsorship camp believe the legislation has been specifically designed to make it as easy as possible for Locog to raise the funds it needs to stage the Games. "This is a revenue-generating exercise," says one.

Of the funding needed to stage the Games, some £500m or more is to come from corporate sponsorship. The rest will come from the Lotto (£1.5bn) and council tax (£625m).

Locog commercial and legal director Charlie Wijeratna is adamant that the measures are necessary and in line with other Games. Locog's line is that the bill introduces an evidential reversal, not a presumption of guilt.

"The whole row over the use of words like 'gold' and 'summer' has been blown out of all proportion," says Wijeratna. "The new right does not create a blanket prohibition on using words such as 'gold', 'summer' and '2012'. This is a complex issue and people need to understand the whole context and we'll help them do so. Our approach is to educate, not litigate."

Wijeratna is obviously passionate about his role and the success of the games, as well as the legacy that he believes they will have for the UK and British sport. He says that, of the anticipated £100m surplus the fundraising will create, 80 per cent will go back to UK sport. The level of funding ambush marketers contribute to UK sport is, he says, not one penny. "If we don't get this legislation through, the Games will suffer and sport will suffer," he warned.

The IPA's Palomba, however, rebuffs this claim. "The argument that if these laws are not introduced there will not be enough revenue and therefore the Games will be a failure is simply bullying," she says. "People are scrambling for sponsorship."

Wijeratna maintains that, in order to win the Games, the British bidding team had to "look the IOC in the eye" and agree to be the best partner it could. "This bill is partly about fulfilling that," he says.

It's no surprise that Bird & Bird, which this month was added to the list of firms advising Locog, supports the legislation. As partner Felicity Reeve puts it: "If we want a successful Games we need to protect the source of revenues, and that's what the legislation is doing."

The Olympic Delivery Authority, which will build the infrastructure for the Games, cannot come into operation until the bill receives Royal Assent. While no one doubts the bill will be passed in some form, the ability of Locog to raise money through selling the sponsorship rights is dependent on its passage. And the clock is ticking.