What startups can learn from Telstra’s win over the Olympic Committee.

As a tech start-up, you have probably thought about how you can raise your profile by partnering with relevant organisations through sponsorship and other commercial arrangements.  Forging a partnership with the perfect partner is often all that is required to springboard a start-up, whether by way of an “anchor client”, though becoming an “official partner” or otherwise.

Having an anchor client can often provide your startup with a consistent income and create reputational goodwill for your firm that can attract more clients, particularly if your anchor client is influential in their industry. In addition, becoming an “official partner” of another firm can be an effective tool for promoting your goods or services, and can help establish or augment your business within the industry.

As good as this sounds, there are certain issues that startups need to be aware of before forging a partnership. These “partnerships” often cost a lot of money to implement and are highly valuable, so they should be properly documented. Documentation can ensure that:

  • the precise nature of the commercial relationship is beyond doubt
  • it is clear whether a partner is an official sponsor or not
  • how long the partnership opportunity will operate
  • what rights and obligations vest in each partner under the arrangement.

Often all that is required to clarify those matters is a short document formalising the commercial relationship. Failing to put in place the correct documentation, including any applicable disclaimers, can destroy a partnership, so it is important for startups to consider getting advice from professionals before entering into any type of partnership arrangement.

One recent example of a case in which a partnership arrangement turned sour is Australian Olympic Committee, Inc. v Telstra Corporation Limited, which was decided on 29 July 2016. In this case, the Australian Olympic Committee alleged that Telstra had engaged in ‘ambush marketing’ by associating their products and services with the 2016 Summer Olympic Games even though they were not an official sponsor, and that this was misleading and deceptive conduct in breach of the Australian Consumer Law.  

This allegation arose out of a number of Telstra print, electronic and television promotions and advertisements themed around the 2016 Summer Olympic Games, which included Telstra authentication landing pages through which Telstra subscribers could sign up for premium access to Seven’s Olympics on 7 app, and website videos with written messages branding Telstra as “Official Technology Partner of Seven’s Olympic Games Coverage”.

In a win for Telstra, the Court found that while there could be no doubt that Telstra, in their marketing strategy, capitalised on and exploited the Olympic Games, Telstra did so by promoting its sponsorship arrangement with Seven in relation to Seven’s Olympic broadcast and therefore did not breach the law.

While startups might be emboldened by Telstra’s ability to push the envelope as far as it could in this case, the case should serve as a reminder that when advertising and marketing, whether by way of landing pages, apps, social media or otherwise, engaging in strategies such as ambush marketing can result in costly legal action and attract negative publicity that can be difficult to shake.  

Therefore, any type of partnership agreement should be examined thoroughly by a legal professional before it is agreed to, to help avoid a potentially advantageous partnership resulting in a costly dispute.

Alan Arnott is a technology lawyer with qualifications in computer science and law. He has significant experience advising hi-tech companies and is the founder of Arnotts Technology Lawyers and DocuStream®.

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