Vodafone exposes hole in Net rights

Vodafone is unlikely to be the last sponsor to fall foul of Web and WAP rights contracts, as new technology rewrites the rulebook.

Vodafone’s record-breaking &£30m “commercial alliance” with Manchester United may be one of the first high profile deals to come unstuck over digital media rights, but it is unlikely to be the last.

Kingfisher-owned VCI, which already holds the club’s exclusive publishing and video rights, is challenging Vodafone’s plans to use Web and wireless application protocol (WAP) phone technology to keep in touch with Man Utd fans. VCI is four years into a ten-year deal, which it believes covers all publishing, and the company is understood to be seeking compensation.

The Web strategy is a major part of Vodafone’s deal. UK chief executive Peter Bamford said at the time of the announcement: “This alliance takes Vodafone from being a mobile phone company to a mobile multimedia company, bringing the Internet, e-commerce and moving images to thousands of people.”

Of course, there have been many disputes over sponsorship and exclusivity in the past. This summer’s Olympics has been plagued by rows for months, with the Sydney Organising Committee for the Olympic Games (SOCOG) facing a barrage of complaints from top sponsors unhappy at their treatment.

The most high profile dispute has been with Reebok, which pulled out of the Games after discovering that officials were being kitted out by a local clothing company. Reebok, which now faces legal action from the SOCOG – and has filed a counter lawsuit – has been replaced by Nike.

But how can such a high-profile deal, struck between the world’s largest mobile phone operator and the most successful football club become derailed by such a simple error?

One sports marketing insider, who works extensively on rights and licensing deals, says: “It is amazing. These contracts are usually studied meticulously by banks of lawyers. It’s not just a case of signing the first piece of paper that is put in front of you.”

However, legal observers are not at all surprised. One says: “Vodafone probably wasn’t aware that the club already had an exclusive publishing deal. Even Man Utd may not have realised that its contract with VCI covered all publishing.”

And many point to the advent of digital and Internet technology as a potentially explosive area, because it is creating a whole new rulebook.

Morag Macdonald, intellectual property partner at law firm Bird & Bird, says: “These disputes go on all the time, but rarely come out in the open. Often companies go into deals believing they have secured the rights, only to discover when they study the finer details that another business holds the contract.”

Macdonald says one of the big problems is that the lure of the Internet is attracting more and more companies which have little or no experience of publishing and copyright issues.

“Digital and electronic rights are tripping up a lot of businesses, because they are new to the game. Most writers have years of experience in dealing with copyright and intellectual property rights – but even they can get caught out,” she says.

She cites a recent case when a national newspaper sent out new contracts to its freelance journalists, which included the clause that the paper would retain the electronic copyright of all articles. She says that a third of all contributors signed it and sent it back within days – without even realising the implications.

“If writers and journalists can’t work it out – what hope do newcomers to the sector have?” she says, adding the warning that “contracts can be very expensive to get out of”.

And things are likely to get even more complicated with the rapid pace of technological change.

Charlie Swan, partner of media law firm Simkins Partnership, says: “Four years ago, the Internet was in the equivalent of the Stone Age. Any rights deal signed then would probably not even have mentioned the Net. Now we have a situation where new products and services are coming on stream almost weekly.

“Six months ago, no one had even heard of WAP phones, let alone their broadcast potential. But they are likely to be superseded before they are launched.

“There is a danger that any publishing contract signed for electronic or digital rights could be out of date within a year.”

The Vodafone dispute should trigger intense activity as companies take a much closer look at the small print of their contracts. But, inevitably, there’ll only be one winner in this game – and that will be the lawyers.

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