The fans had arrived at the stadium wearing bright orange lederhosen with lion’s tails, in honor of Holland’s national color and mascot. The old-fashioned garments were a nod to Germany, the 2006 World Cup’s host and the birthplace of lederhosen. The problem: The lederhosen were also a promotional item, their chest straps emblazoned with a logo for Bavaria beer. The beer company had sold the lederhosen for €7.95 on its Web site, and packaged them inside 12-packs of beer sold at Dutch supermarkets. The fans had decided to wear them to the match. Bavaria NV, based in Lieshout, Netherlands, may be Holland’s second-largest brewer, but it’s not a World Cup sponsor. In FIFA’s eyes, that turned the lederhosen-clad horde into ambush marketers, free-riding on the World Cup’s massive advertising power.

"That’s crazy," says Bavaria chairman Peer Swinkels. "I would agree with FIFA if we were standing in front of the stadium handing them out. But what we did was not ambush marketing. We were selling these [lederhosen] in supermarkets far from the stadium." FIFA didn’t see it that way. Each World Cup ticket is a contract with rules inscribed on the back, including: "All promotional items of whatever nature are prohibited and may not be brought into the Stadium if [FIFA’s Organizing Committee] reasonably believes that any such items may be used for display purposes within the Stadium."

Swinkels was not alone in calling FIFA crazy. At times during this year’s World Cup, it seemed like all of Germany was lambasting the Zurich-based organization. The critics even made it to the German Supreme Court. At press time the court had issued a preliminary decision finding several of FIFA’s trademarks generic.

The lederhosen incident was just a small part of FIFA’s Rights Protection Programme, a massive effort to protect the sanctity of its sponsorship contracts. The contracts are by far FIFA’s largest source of World Cup revenue, bringing in almost €700 million. Fifteen companies each paid about €40 million to be official World Cup partners, and another six paid €13 million for the title of official supplier, earning rights only within Germany [see above for a list of official partners]. For their money, sponsors get a huge marketing boost: An estimated cumulative audience of 32.5 billion in 200 countries watched the 2006 World Cup on television and other media like the Internet, according to Infront Sports & Media AG, which tracks viewership for FIFA. Almost 72 million viewers in Germany, Italy, and France alone watched Italy beat France in the July 9 final, says Infront’s communications manager, Jörg Polzer. More than 3 million spectators watched the games in person, and by the start of the elimination round on June 26, more than 13 million had gathered in the giant-screen viewing areas set up around Germany. Sponsors had the privilege of selling products within the stadium during matches and promoting themselves via signs surrounding the field, visible to all those viewers. However, only the 15 partners can market themselves around the world as Official Partners of FIFA, using the 420-odd phrases and words that FIFA has registered as trademarks in various languages in 120 countries. These marks include World Cup 2006, Germany 2006, and Football 2006.

"[FIFA] knows that how well they are able to block ambushers affects how much companies are willing to pay," says Frank Hellwig, senior associate general counsel for Anheuser-Busch Companies, Inc., a FIFA World Cup sponsor since 1986. The St. Louis—based brewer signed on as a 2006 sponsor long before it learned that the World Cup would be in Germany, a country that doesn’t even consider Budweiser a beer: Since it’s made with rice, Bud doesn’t qualify under Germany’s Beer Purity Law of 1516. A trio of middle-aged German men exiting the England-Paraguay match in Frankfurt simply sneered, "Ja, American beer," when asked what they thought of the beverage selection. Worse, Anheuser-Busch has been barred from using the name Budweiser in Germany, where the Czech brewer Budjovick Budvar, n.p., holds the Budweiser trademark. At the World Cup, Budweiser was sold as "Anheuser-Busch Bud."

Still, Anheuser-Busch says that sponsorship was worth it. "We don’t want to insult the host country, but the World Cup is really world. The [marketing] value is really in the 70 countries" where Budweiser is sold, says Tony Ponturo, the company’s vice president for global marketing.

FIFA certainly did everything it could to protect Budweiser and its other sponsors. Before the world’s largest sporting event even began on June 9, FIFA had filed more than 1,200 trademark cases in 65 countries. By June 29, the figure had soared to 2,890 cases in 81 countries, 89 of which led to court cases and 167 to customs cases. The organization forced each of the stadiums in Germany’s 12 host cities to scrub themselves of any corporate moniker. Munich’s landmark Allianz Arena, for instance, became plain old FIFA World Cup Stadium, Munich. The organization also sent more than 150 letters to individuals and small companies in Germany, including local bakers and

T-shirt shops, advising them to stop selling football-themed items, says Martin Stopper, an in-house lawyer for FIFA’s marketing group in Munich.

Stopper has been with FIFA just 18 months, but he’s consulted with individual football teams and leagues for years. He understands that fans love the tournament, but says, "[The World Cup] is not like Christmas. What do you have to pay to hold Christmas? Nothing. It [is] celebrated and paid for by everyone." The World Cup came with a €1.1 billion price tag this year; the German government paid about a quarter of it. FIFA covered the rest, Stopper says.

At the World Cup games, FIFA had the area surrounding the stadiums declared a clean zone, where no marketing activity at all could take place. And groups of about ten–three from FIFA, one from the local organizing committees, and the rest volunteers–patrolled the zones looking for marketing activity, and notifying the police of violations.

Away from the tournament, FIFA did its own detective work. Sponsors, distributors, and consumers also pitched in, filling out complaint forms if they believed they spotted violations. Trademark lawyer Christian Rassmann of Lorenz Seidler Gossel in Munich has represented FIFA on German trademark issues for over a decade. Rassmann says that FIFA’s team evaluated each complaint, then gathered FIFA’s in-house and outside counsel for a conference call. (In the U.S., FIFA turns to Alston & Bird. In England, Hammonds, Olswang, and solo practitioner David J. Gill; in France, solo Richard Buchel.) If they agreed there was a trademark violation, the lawyers filed for an injunction. Speaking from his experiences in Germany, Rassmann says he can usually get a decision within 24 hours, with penalties up to €250,000 per infringement if the violator does not comply.

The enforcement machine is efficient, but it is not always friendly. In the weeks before the tournament, some World Cup ticket holders were asking FIFA some seemingly comical questions: Is it okay to drive a car to the stadium if it’s not made by Hyundai [an official sponsor]? Is it okay to wear clothes emblazoned with nonsponsor logos to the games? There was such a barrage of queries that FIFA posted marketing FAQs on its Web site in late 2005. To both questions, FIFA assured readers that they could drive any car or wear any clothes they wanted. (Apparently, the lederhosen exception was not mentioned.)

The legal tactics that FIFA uses to protect sponsors are often at odds with the goal of marketing–getting people to like you and buy your products. Ambush marketers play upon that tension. For example, during the 1996 Cricket World Cup tournament, where The Coca-Cola Company was a sponsor, PepsiCo Inc., ran ads mock-boasting their nonsponsor status with a tag line: "Nothing official about it." Because Pepsi was blatant about its nonsponsor status, the campaign was not considered illegal ambush marketing.

"[There] is a gray area around ambush marketing. [Companies] can do some things to associate legally without violating trademarks," says London-based sports trademark lawyer David Becker of Collyer-Bristow. Becker wrote The Essential Legal Guide to Events, and works with Nike, Inc., to ensure that its activities remain safely on the non—ambush marketing side of things. Nike caught flak at the 1996 Olympic games in Atlanta by setting up a Nike village next door to the official Olympic village.

Ambush marketing’s gray area got considerably grayer this year after FIFA lost a trademark suit it had brought against Ferrero Deutschland GmbH, the German division of Italian chocolate manufacturer Ferrero S.p.A. The company is best known in the United States for its hazelnut spread, Nutella.

For the World Cup, Ferrero planned on placing German player photos inside its candy bars. The company has been sponsoring the German national football team for 28 years, and has used similar promotions throughout that time. In 2003, Ferrero learned that FIFA had begun filing trademark applications for World Cup—related phrases like WM2006 ("WM" stands for Weltmeisterschaft, German for World Cup) and Fußball (German for football). Ferrero wanted to use those terms in its promotion. The company asked the German Patent and Trademark Office to cancel FIFA’s trademarks, arguing that they were simply descriptions of events and not marks indicating the events’ origination.

FIFA didn’t learn of Ferrero’s marketing plans until 2005. At that point, Ferrero, acting on the behest of the German Football Association, approached FIFA in an attempt to work out a compromise, says Jürgen Kicker, Ferrero’s ironically named outside counsel at Clifford Chance in Frankfurt. But as soon as FIFA realized what Ferrero was planning, it pounced. While cancellation proceedings were still pending, FIFA sued Ferrero for trademark infringement in German civil court. FIFA asked for, and received, an immediate injunction against Ferrero’s candy bars–even though they weren’t supposed to hit store shelves until later that year.

FIFA’s luck didn’t last. In April 2006, Germany’s highest court issued a statement agreeing with Ferrero that FIFA’s marks are generic. At press time in mid-July a final ruling, complete with the legal reasoning behind the decision, had not yet been issued.

FIFA acted proactively because Ferrero is a "known ambusher," says Rassmann. He refers to a 2005 survey conducted by an East German university that showed that most fans believed (incorrectly) that Ferrero was an official licensee of the 2004 European Cup, a continental football tournament. He’d witnessed Ferrero’s sticker campaign during previous football tournaments. "We knew they’d do it again," he says.

Ferrero might have won the battle, but FIFA won the war. Regardless of the German court’s decision, FIFA’s European Community-registered trademarks are still valid. Rassmann boasts that he got preliminary injunctions against five T-shirt and lanyard makers for using "WM 2006," one against a T-shirt maker using "FIFA World Cup," and another against a lanyard maker using "Germany 2006," all right after the German Supreme Court declared these same marks generic.

Stopper says that trademark and unfair competition laws have been sufficient to protect FIFA’s rights in Germany. Things will be different for the next two World Cups, for which six sponsors will each pay up to an estimated $350 million. The host of the 2010 games, South Africa, passed the Trade Practices Amendment Act of 2001 and the Merchandise Marks Amendment Act of 2002, criminalizing ambush marketing. These laws will be essential for FIFA, says Boris Uphoff, of McDermott Will & Emery in Munich, because FIFA won’t have the European Community trademarks to fall back on, as it did in 2006.

Ambush marketing bans like South Africa’s are more effective than event-specific laws, says Rassmann, because they have broader application and can act as precedents for other events. That said, the International Olympic Committee has pursued a different strategy, using host city status as a carrot to persuade governments to pass laws protecting certain phrases like "London," "2012," and "gold," rather than risking the kind of trademark fights that FIFA has found itself in. Uphoff, who represents a FIFA national-level sponsor he refused to name, says such specific laws are "not necessary and definitely should not be done in a free country. We have freedom of speech."

Freedom of speech, perhaps, but not freedom of attire.