1. The Need to Know Legalities of
Marketing Sponsorships
Oliver Gleeson, SDI Marketing
Bill Hearn, Davis LLP
Jolan Storch, Canadian Olympic Committee
The Canadian Institute’s
19th Annual Advertising & Marketing Law Conference
January 24, 2013, Toronto

2. Overview
• Key elements of sponsorship agreements - Bill
• Ambush marketing and sponsorship activation - Jolan
• Negotiation of sponsorship agreements - Oliver
• Case studies
• Q&A
2

3. Key Elements of Sponsorship Agreements
• What’s the nature of the sponsorship?
• Who is the rights holder (sponsee)?
• What are the sponsorship rights?
• Exclusivity and carve-outs
• Licensing and protecting IP
3

4. Key Elements of Sponsorship Agreements
• Payment of fees and other consideration
• Commercial Considerations
• Representations and warranties (e.g., morals clauses)
• Term, termination and options to renew
• Cancellation and postponement
• Dispute resolution
4

5. What’s the nature of the sponsorship?
• Five basic categories of sponsorship agreements
• Events - e.g., Rogers Cup
• Venues - e.g., Air Canada Centre
• Organizations - e.g., NHL
• Individuals - e.g., athletes
• Product Placements - e.g., in movies and TV shows
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6. What’s the nature of the sponsorship?
Event Sponsorship
• One-off events
• Typically less expensive and lower risk
• A good way to “test the waters” in developing a long term strategy
• Recurring and long term events
• Greater expense and risk
• Risk can be mitigated with effective payment, termination, force
majeure, and insurance provisions
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7. What’s the nature of the sponsorship?
Venue Sponsorship
• Title Identification
• Automatic association with every event held at the venue
• Potential Drawbacks
• High cost (e.g., $US16M/year for MetLife Stadium; $US300M over 32
years for Reliant Stadium & Astrodome; $CA20 million over 30 years for
Air Canada Centre - presumably, “ACC” not what Air Canada had in mind)
• Potential for negative publicity associated with the venue
• Other Considerations
• Sponsor should be aware of events typically held at venue and any
superseding rights of others
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8. What’s the nature of the sponsorship?
Sponsorship of Organizations
• Leagues, teams, playoffs, tournaments, associations, charities
Sponsorship of Individuals
• Risk of scandals creating a negative association with brand:
• Examples - Michael Phelps (marijuana), Lance Armstrong (doping)
• Mitigate risks with “morals clauses”
• Triggering events (e.g., criminal behaviour or even an allegation of it)
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9. What’s the nature of the sponsorship?
Product Placements
• Presumably, most companies would like to have their products
shown in movies and TV shows (especially without payment)
unless the placement is detrimental to the brand
• For instance, the creepy villain who uses their branded tablet
computer to stalk their victims/amass their followers online
• Clearly, this is “off message” and may tarnish the tablet’s brand
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10. What’s the nature of the sponsorship?
Product Placements
• Two scenarios: Unauthorized and Authorized
• Two main issues
• If unauthorized, how should brand owner respond?
• If authorized, how should interests (often competing) of sponsor
(usually seeking effective product placement and protection of
brand image) and producer (usually seeking to maintain
creative control) be reconciled?
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11. What’s the nature of the sponsorship?
Unauthorized Product Placements
• What might brand owner do if placement is unauthorized and negative?
• Get thick-skinned, forego legal response, try to keep PR response light?
• E.g., Jaguar plot line in Mad Men, IKEA store in 30 Rock
• Forego legal response but rebuke strongly in PR response?
• E.g., Budweiser beer in movie Flight starring Denzel Washington
• Sue?
• E.g., Slip ‘n Slide in movie Dickie Roberts: Former Child Star - Wham-O Inc.’s US
court case against Paramount Pictures dismissed in 2004
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12. What’s the nature of the sponsorship?
Authorized Product Placements
• Why would a film/TV producer go to the trouble of getting permission from
the brand owner to give it “free publicity” in a movie/show? Two main
reasons:
• Reducing Production Costs - Get access to free props
• Mitigating Legal Risks - Often the producer must get the brand owner’s consent
to satisfy the producer’s insurer - i.e., reduce the risks of having to defend
against lawsuits and ensure coverage
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13. What’s the nature of the sponsorship?
Authorized Product Placements
• When the placement is authorized, what can the brand owner do to protect
its interests?
• Specify “Placement” Rights in Writing - Helps sponsor get what it is paying for
in terms of appropriate quality and amount of product exposure
• Agree In Advance on Control Sponsor Has Over Brand Image - If it is not
possible for sponsor to get approval and ultimate veto rights, then sponsor
should at least seek (a) the right to be consulted, (b) an obligation on the
producer to use its best efforts to resolve the sponsor’s concerns over
insufficient/inappropriate brand exposure and (c) the right to require its trade-
marks and logos to be blurred out to protect brand image
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14. Who is the rights holder (sponsee)?
Key Considerations
• Identify the rights holder
• Verify that it has the authority to grant the desired rights
• Ensure that any required third party consents are obtained
• Obtain appropriate reps and warranties
Examples of Third Party Consent Requirements
• Sponsorship rights granted by sports teams may be subject to superseding
league rules or collective bargaining agreements
• Performers may be restricted from performing certain songs or portraying
certain characters without permissions
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15. What are the sponsorship rights?
Key Considerations
• Almost anything can be sponsored. Seek solutions that align with
marketing objectives, and don’t be afraid to be creative!
• Definition of rights can be a tedious exercise. They must be thought
out carefully and drafted precisely
• Common drafting technique - to accommodate detail, incorporate
rights as a schedule to the main agreement
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16. What are the sponsorship rights?
Sample Clause
• Subject to the terms and conditions of this Agreement, and subject to the
performance of the Sponsor of all of its obligations under this Agreement, the
Sponsee will provide to the Sponsor during the Term the advertising, promotion, and
sponsorship rights specifically set out in Schedule “A” (the “Promotional Rights”) to
be exercised solely in connection with the products and services in the Category.
Examples of required specificity
• Size of ad displays (to the millimeter)
• How long rotating signage is displayed for and when (in seconds)
• Placement of product (including exact positioning of product, amount of time product
is featured, how many mentions/uses are made of the product, etc.)
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17. What are the sponsorship rights?
A variety of sponsorship rights can be bargained for
• Advertising (title sponsorship, use of trade-marks in advertising,
pass-through rights for sponsor’s partners)
• Merchandising (affixing trade-marks to product)
• Product supply to league/team/athlete and/or at venue/event
• Broadcasting (right to use footage, right to time slots, etc.)
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18. What are the sponsorship rights?
A variety of sponsorship rights can be bargained for
• Others
• Perks, such as free tickets and special access
• Product displays and product placement
• Public appearances by the sponsee or its employees
• Having a special kiosk at events to display products
• Holding contests featuring the sponsee (e.g., tickets to event)
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19. Exclusivity and Carve Outs
• Exclusivity clauses tend to be among the most heavily negotiated
clauses in sponsorship agreements
• Main interest of the sponsor
• Maximize value of sponsorship rights by
• Preventing competitor advertising in the space
• Preventing overcrowding in the space generally
• Main interest of the sponsee
• Accommodate existing sponsorship arrangements
• Maintain flexibility to accommodate potential new arrangements
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20. Exclusivity and Carve Outs
Key Terms
• “Exclusive”
• “Non-exclusive”
• “Sole”
Important Considerations
• Types of products/services covered and carve outs
• Duration
• Geographic and spatial limitations
• Temporal limitations
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21. Exclusivity and Carve Outs
Typical Structure of Exclusivity Clauses
• General grant of exclusivity + carve outs
Example
The Sponsee hereby grants to the Sponsor the exclusive right to use the
Sponsee’s trade-marks in connection with the advertisement of products in
the Category. For the purposes of this Agreement, the term “Category”
means and is limited to the following products: TVs, home audio, home
appliances, notebook computers, and mobile phones. For greater
certainty, the Category excludes uninstalled countertop appliances,
computer software, computer hardware (other than notebook computers),
mobile phone accessories, and any associated services.”
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22. Licensing and Protecting IP
• Sponsorship agreements commonly allow the parties to use each
other’s trade-marks to associate themselves with one another -
e.g., Coca-Cola and the Olympics
• Key considerations for protecting IP
• Maintaining distinctiveness of trade-marks
• Dealing with newly created IP
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23. Licensing and Protecting IP
Maintaining Distinctiveness of Trade-marks
• Failure to do this could mean trade-mark registration gets
expunged
• Appropriate licensing provisions are necessary
• Licensor must exercise control over use of trade-mark
• Examples
• Restrictions on how and where a trade-mark can be used
• Font, size, and colour specifications
• Final approval rights for any use of trade-marks reserved by the licensor
Licensor must then diligently police use of trade-marks
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24. Licensing and Protecting IP
Dealing With Newly Created IP
• Sponsorship agreement should determine who owns rights to
newly created IP in order to prevent later disputes
• Examples of new IP
• Websites
• Advertisements
• Composite trade-marks
Other Considerations
• Indemnities
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25. Payment of Fees and Other Consideration
• Many ways to address payment of fees, including
• Lump sum payments
• Periodic or milestone payments
• Contributions in kind
• Any combination of above
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26. Payment of Fees and Other Consideration
Lump Sum Payments
• Benefit to the sponsee; may be acceptable in simpler agreements
Periodic/Milestone Payments
• Can tie the sponsee to specific performance milestones
• Reduces risk to sponsor, especially in longer term sponsorships
• Examples of milestones
• Minimum attendance levels
• Success fees (for athletes)
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27. Payment of Fees and Other Consideration
Contributions in Kind
• Sponsor may provide products/services in lieu of cash payments
• Potential for win-win scenario
• Sponsor reduces direct costs + may gain more exposure
• Sponsee acquires needed products or services at a reduced price
• Examples
• Electronics manufacturer provides digital displays to an event
• Sponsor provides training equipment/facilities to athlete
• Note: Additional considerations when providing product (e.g., who bears
risk of damage, who keeps product after event, etc.)
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28. Commercial Considerations
Reps and Warranties
• Some common provisions include
• Sponsee has obtained or will obtain all regulatory approvals and all agreements, rights,
licenses, representations, and warranties necessary in order to carry out its obligations
• Sponsee has not entered and will not enter into any agreements of any kind that would
conflict with the rights granted to the sponsor
• Sponsee has the legal ability to grant all rights associated with the agreement, including the
use of names, trade-marks, logos, etc., with no further authorization or action necessary by
the sponsor
• Neither the event or the exercise of its rights under this Agreement by the sponsor will
infringe upon the intellectual property of any party
• Other warranties may stipulate standards of morality, cleanliness,
security, etc
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29. Commercial Considerations
Term, Termination, and Options to Renew
• Term
• Consider extending beyond end of event
• Termination
• Address different possibilities (bankruptcy, force majeure, bad
publicity, etc.) and the remedies that may be appropriate in the
circumstances (rebate of fees paid, etc.)
• Options to Renew
• May only be possible in shorter term agreements. If not possible,
consider an option to renew, possibly combined with an exclusive
renegotiation period
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30. Dispute Resolution
• Some Considerations for DR Process to First Require Exhaustion of
Alternatives to Litigation in First Instance
• Keeps private the resolution of disputes (not made public/aired in open court)
• Allows for flexible process to manage wide range of issues that can (and
probably will) arise in long-term business relationship
• Respects aspiration that sponsor and sponsee are “partners” in the business of
co-promoting and building each other’s brands
• May facilitate speedier resolution of disputes than litigation alone
• May contain and make more certain legal and other dispute resolution costs
(e.g., management effort and time)
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31. Dispute Resolution
• Process
• Negotiation - structured and escalated
• Mediation
• Arbitration
• Litigation - last resort
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32. Key Elements of Sponsorship Agreement - Panel
• Rights of first refusal and negotiation -
• Labatt v. NHL - example and litigation
RENEWAL OPTION - Before entering into negotiations with a third party for sponsorship rights with respect to the
Canadian Territory within the Category for the period beginning immediately after expiration of the License Term,
the NHLECos shall deliver to LABATT a written proposal for the renewal of this Agreement on or before October 1,
2006. Thereafter, LABATT will have the exclusive first right to negotiate the terms of a renewal of this Agreement
for a period of sixty days … If, during such sixty-day period, LABATT and the NHLECos are unable to agree on the
terms of such renewal, LABATT will, within fifteen days after the end of such sixty day period, offer to the NHLECos
a proposal to which LABATT would be willing to agree. The NHLECos will then have ten days to accept or reject
LABATT’s counteroffer, after which time, if the NHLECos reject LABATT’s counteroffer, the NHLECos will be free to
negotiate the rights and benefits relating to the renewal with any third party; provided that the NHLECos will not
offer any third party terms more favourable to such third party than those in LABATT’s counteroffer without providing
LABATT the opportunity to accept such an offer within a ten-day period.
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33. AMBUSH MARKETING &
SPONSORSHIP ACTIVATION

34. LONDON 2012
https://cot.box.com/s/r5m7l8obvprbg4

35. CANADIAN OLYMPIC TEAM
MISSION VISION POSITION
To lead the achievement of To make Canada a world The COC is the best-in-class
the Canadian Olympic leader in sport, inspired by NOC providing support for
Team’s podium success and the passion and performance athletes to perform at their
to advance the Olympic of the Canadian Olympic highest level and inspiring
values in Canada Team fans who are passionate
about amateur sports

36. OUR PARTNERS’ BEST PARTNER
OUR VISION: To be the best corporate marketing partner with a
reputation for quality, unparalleled service and delivering tangible
results.
OUR GOAL: To deliver best in class results for their business according
to their objectives, contributing to the bottom-line profitability of their
organization.
The
The STRENGTH The QUALITY
PERFORMANCE
of our brand of our people
of our athletes

37. OUR STRATEGIES
1. LEVERAGING AND
NEGOTIATING WITH A
SPONSOR
2. LEGALITIES SURROUNDING
SPONSORSHIP ACTIVATION
3. AMBUSH MARKETING
PRT

38. DOMESTIC PARTNERS

39. LEVERAGING
AND
NEGOTIATING
WITH A SPONSOR
A. Beyond cash, what else can you ask for if you’ve
hit the cash limit?
B. Trading off legal obligations
C. The power of a strong brand
D. Arbitration vs. Litigation
E. Big Money = Expectations for Ambush Protection

40. LEGALITIES
SURROUNDING
SPONSORSHIP
ACTIVATION
A. Devil in the details
B. Graphics Standards Manual
C. Brand Protection Guidelines
D. It’s more than Intellectual Property!

41. AMBUSH
MARKETING
• Tactic whereby advertisers associate themselves with
an event/marketing property without securing
official rights (no consideration, no contract, no
relationship)
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42. AMBUSH 2012
• Total of 84 cases of Ambush
Marketing in 2012 leading up to
and during the London Games
• Cases ranged from posing minimal
commercial harm to major
infringements taken over by legal
counsel

43. AMBUSH CASES
IN 2012
43

44. AMBUSH RATING SCALE

45. COMMON TRENDS
DURING LONDON
2012 GAMES
• Congratulatory Tweets and Facebook posts and contests
• Use of Symbols of London – Torch and Medal imagery, Tower
Bridge, Big Ben, etc.
• Use of “Olympics”, “Summer Games” in promotions

46. OLD NAVY
• Considered to be a major
• infringement
• Unauthorized sale of Olympic T-
Shirts in Canadian Old Navy Stores
• Variety of registered trade marks were
reprinted and sold
• Case is currently in progress

47. BENJAMIN MOORE
• Considered to be a major infringement
• Facebook contest occurred during
London 2012 Olympic Games
• “Everytime your country wins a medal
during the Summer 2012 games we’ll
draw a winner to receive two gallons of
Benjamin Moore paint.”
• “Grand Prize: 2 winners will be chosen
during Closing Ceremony to receive an
iPad 3 loaded with Benjamin Moore
colour tools”

48. ANTICIPATIONS
FOR 2014
• High level of Ambush Marketing
• Russian imagery to start flooding advertisements
• Increase in online activity and contesting largely due to
time zone limitations
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49. Ambush Marketing & Sponsorship Activation:
Case Study
• Budweiser Playoff Payoff Contest - Spring 2012
• Background to contest
• Nature of contest
• Ambush marketing?
• Dispute with NHL
• Resolution? A cautionary tale?
49

50. Case Study – Playoff Payoff
Background
• In early 2011, Molson muscles out Labatt and becomes the new official
beer sponsor of the NHL for North America, dealing a heavy blow to Labatt
(a 7-year, $375M deal)
“The NHL and the access it provides to Labatt ... is the single greatest
opportunity to grow Labatt’s share in Canada … There is no other
substitute for this national access to these consumers. The nexus of sports
/ heritage / emotional / tradition in hockey has no other Canadian
comparable.”
- Kyle Norrington, Mkting Director of Budweiser and regional brands for Labatt in Canada
50

51. Case Study – Playoff Payoff
Labatt Strikes Back
• Bud’s Big Game Commercial - Winter 2012
http://www.youtube.com/watch?v=y0qZYqdsYAg&list=UUJ36B8tFFZG8sHaLjAxS7zQ
• Bud’s Playoff Payoff - Spring 2012
http://www.youtube.com/watch?v=M9HaXYb1hBU
• Bud’s Deal with CBC’s Hockey Night in Canada - January 2013
• Multi-year contract to get Bud brand on CBC’s Coach’s Corner with Ron
MacLean and Don Cherry
51

52. 52

53. Case Study – Playoff Payoff
Nature of the Contest
• Labatt launched the Budweiser Playoff Payoff contest,
coinciding with the NHL playoffs
• The Prize = “Hockey Tickets for Life!”
• The winner would get tickets to 20 home games a year
for 50 years for the Canadian team of his or her choice
• At least one implication
• Drink Budweiser and you could win NHL tickets
53

54. Case Study – Playoff Payoff
Ambush Marketing?
• Labatt never explicitly promised tickets
• Labatt never referenced any specific teams or leagues.
• Advertising never made use of NHL trade-marks
• Any associations with the NHL and the Stanley Cup
Playoffs were specifically disclaimed
54

55. Case Study – Playoff Payoff
Ambush Marketing?
Disclaimer in Contest Advertising
Budweiser is not an official sponsor of the NHL. The Playoff Payoff is not
licensed by, sponsored by, or otherwise associated with the National
Hockey League or its member teams.
55

56. Case Study – Playoff Payoff
Dispute With the NHL
• NHL released the following statement:
• “We want our fans to know that the NHL has no affiliation with that
promotion, and we can offer no assurances to our fans that the desired
tickets will be available to the winner.”
• See terms and conditions on back of NHL ticket
56

57. Case Study – Playoff Payoff
Dispute With the NHL
• Excerpt from Typical Ts&Cs on Back of Ticket to NHL Game
IMPORTANT! PLEASE READ. WARNING! DESPITE ENHANCED SPECTATOR SHIELDING MEASURES,
PUCKS STILL MAY FLY INTO THE SPECTATOR AREA. SERIOUS INJURY CAN OCCUR. STAY ALERT AT
ALL TIMES INCLUDING DURING WARM-UP AND AFTER PLAY STOPS. IF STRUCK, IMMEDIATELY ASK
USHER FOR DIRECTIONS TO MEDICAL STATION. The Holder, on behalf of the Holder and minor
accompanying the Holder (individually and collectively, the "Holder"), is admitted on condition and by using this
ticket and entering the arena, agrees to be bound by all of the terms of this ticket license. The arena is a
strictly enforced smoke-free environment. Bottles, coolers and containers of any kind are not allowed into the
arena and may be confiscated. Tickets obtained from unauthorized sources may be lost, stolen or
counterfeit and may not be honored. Tickets cannot be replaced if lost, stolen or destroyed. This ticket is a
revocable license which may be withdrawn and admission refused at any time upon refunding Holder the
printed purchase price. This license will automatically terminate if any term is breached. Ticket may not be
offered for resale in any manner which would violate any law or regulation. Ticket may not be used for any
form of commercial or trade purposes, including, but not limited to, advertising, promotions, contests or
sweepstakes without the express written consent of [NHL Team Name]. (“TEAM) …
57

58. Case Study – Playoff Payoff
Dispute With the NHL
• Prize Description in Contest Rules
There is one Grand Prize available to be won, consisting of two regular season tickets for twenty
games per year, for fifty years, for a Canadian hockey team’s games held in Canada in that
Canadian team’s city of the winner’s choice … approximate retail value … between $35,000
and $350,000. The approximate retail value will vary depending on the city selected. Location
of seats will vary by game and by venue … If the Contest Sponsor is unable to secure tickets on
the winner’s behalf to the winner’s city of choice, the Contest Sponsor will substitute a prize of
equal value or cash. Winner may have the option of a single cash payment in the amount of
$250,000 in lieu of the Grand Prize as described above.
58

59. Case Study – Playoff Payoff
Resolution? A Cautionary Tale?
59

60. NEGOTIATING SPONSORSHIPS
• Sponsorship
Strategy
• Properties
• Development
• Execution

61. OLIVER GLEESON
CORPORATE COUNSEL, SDIMKTG

62. CONTRIBUTION TO PANEL
• Unique Perspective
• Man in the Middle –
“Go Go Go vs. No No No”
• Black and White (Grey)
• Increase your value
to your clients
or corporate
marketing
colleagues

63. STARTING POINT
UNDERSTANDING OBJECTIVES
• Pre-Fundamentals
• Know the Story – “Cup of Coffee”; “Have a Beer”
• “Spirit of the Agreement”
• Good Faith
• Risk Management

64. MIGHT DOES NOT ALWAYS MAKE RIGHT
• Leverage key in negotiations
• “Maxing” Leverage not always in best interest of your client
Pro Con
Protect Your Clients May be “offside” with
intentions of parties
Responsible to your Clients Deal may not get done
Squeeze the Juice Reputation Tainted – yours or
your client

65. WALKING THE “GREY LINE”
PLAYING FAST AND LOOSE
- ROAD HOCKEY TO CONQUER CANCER

66. WALKING THE “GREY LINE”
PLAYING FAST AND LOOSE
• Sponsor Activations
• Promotions and Contests
• Activating before Agreements signed
• Understand what’s truly important

67. Questions
67

68. Bill Hearn, Davis LLP
bhearn@davis.ca
416.369.5298
68

69. JOLAN B. STORCH
General Counsel
and
Business
Development
Advisor
jstorch@olympic.ca
416.324.4127

70. Oliver Gleeson
VP Business Development
& Corporate Counsel
ogleeson@sdimarketing.com
416.640.8858

71. Thank You
Disclaimer: This presentation contains general information only and does not constitute legal advice.
Qualified legal counsel should be consulted to assess the application of laws to specific facts.
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