Mitigating Legal Risks and Staying Compliant While Running a Successful Online Contest

MITIGATING RISKS AND STAYING
COMPLIANT WHILE RUNNING A
SUCCESSFUL ONLINE CONTEST

Bill Hearn, Counsel, Davis LLP

Darren Kirkwood, Legal Counsel, Maple Leaf Sports & Entertainment Ltd.

Managing Legal Risks in Running Online Contests
The Canadian Institute
Toronto, June 21 – 22, 2012

Overview
• All Contests (i.e., Offline, Online and Mobile/Text) –
Canadian Law & Practice – Compliance Concerns

• Criminal Code

• Competition Act

• Quebec’s special contest laws

• Contests for kids & teens

• Contests involving special products – e.g., liquor & NHL tickets

2

Overview
• Online Contests - Special Risks to Mitigate

• Competition Bureau’s Information Bulletin on Application
of Competition Act to the Internet and compliance risk

• User generated content (UGC) & intellectual property (IP)
and trade defamation/commercial disparagement risk

• Personal information (PI) and privacy law risk

3

Overview
• Online Contests - Special Risks to Mitigate

• Canada’s new anti-spam law (CASL) & refer-a-friend risk

• Cheaters - hacked PIN code & voter fraud risk

• Global contests and local law compliance risk

4

Overview
• Contests on Social Media Platforms –
Special Considerations

• Facebook

• Twitter

5

Overview

• How To Manage Contest Risks

• Wrap Up

6

Not Covering in Presentation
• Contests on Mobile/Text Platforms –
Special Considerations
• Quick response (QR) codes
• Near field communication (NFC) tags
• Canadian Wireless Telecommunications Association
(CWTA) Canadian Common Short Code Application
Guidelines

7

The Starting Point
• Primary objectives are usually to sell products and
services, build brand/customer awareness, drive traffic
to stores/events/websites/platforms, develop consumer
databases …

• Creative is King!

• But don’t give short shrift to legal compliance

8

The Stakes are High

• United States: Pepsi – “Play
for a Billion Dollars”
Sweepstakes

9

The Concepts are Varied
• Canada: Win a Baby*
• Fertility treatment procedure prize
(ARV $35K)

* Baby may not be exactly as shown.

10

The Contests Are Engaging
Mercedes-Benz Drive and Seek Mobile App Game

http://www.youtube.com/watch?v=HLbwWO3pDZo

11

.
Canadian Law & Practice for All Contests

12

Contests and the Criminal Code
The Skill-Testing Question (STQ)

• Sections 206(1)(a) to (d) prohibit
schemes for disposing of property by
“any mode of chance”
• Supreme Court of Canada has
clarified that only games of “pure
chance” are prohibited
• A proper STQ converts a game of
pure chance into a game of mixed
chance and skill
• 4-step (multi-operation) grade-6 level
math question is usually sufficient
skill test for adults

13

STQ Must be Reasonable and Fairly Asked -
Ranger v. Herbert A. Watts Ltd., Ontario High Court, 1970
• Contest sponsor has duties:
• to ask “reasonable” STQ
• to ensure the test is conducted with “essential fairness” to contestant
to include at least
• reasonable advance notice
• prior communication of the rules for the test
• a means whereby contest judge can discover contestant is in reasonable
condition to engage in test
• conducting the test fairly in the circumstances

14

STQ Being Answered Correctly, on Time and Without Assistance
• Unclear whether placing the math STQ on entry form is acceptable but likely okay if
completed immediately and placed in ballot box at place where it was obtained –
this works for traditional in-store paper entry form contest
• If math STQ to be included as part of online entry process, consider imposing time
restrictions and advising entrant not to use the assistance of other people or
calculators because there is case law that the question is not a skill test if the
entrant has as much assistance as desired and there is no time restriction
• Entrant should certify that they have complied with the contest rules
• Consider providing flexibility in contest rules for “2nd chance STQ”

15

The Skill Chance Continuum: Games of Skill vs. Games of Chance
Guess # of Bridge
Games of beans in a jar (1968)
Pure Skill (1884) Throwing Deposit $
dimes in Different
dishes/cups cigars
(1979) (1903)
Answer math
STQ
Est. # of Bottle
(1984)
votes in Knock-Over
election (1974)
(1904)

Darts
(1980) Crane
Estimate Time Game
Barrel travels Book with (2002)
(1949) Lottery ticket and
STQ (1995)
Temperature
Questions
Estimate
where
(1932)
Draw and answers
Limited Time obvious given
Mechanical Trivia Game STQ (1968)
Vending (1989) (1958)
Machine
(1931) Potato Peeling Skill Puzzle
Contest Board
(1954) (1938)

Est. # of railway
Passengers Turkey Shoot Video
(1928) (1902) Lottery Games of
(1998) Pure Chance

16

How Ontario courts recently defined “game of pure skill” –
R. v. Balance Group International Trading Ltd., Ontario CA, 2002

• The crane game is a game “of mixed skill and chance with an overwhelming degree of chance
and merely a dash of skill” - conviction upheld, $50 fine – criminal record, costs, 2 years in court

• Average player simply could not exercise sufficient skill to compensate for the other
elements of the game that were wholly beyond the power of the player to influence
• The ability of the player to control the crane’s lateral movement gave the appearance of an
element of skill … but there were too may other variables far more important than the
positioning of the crane that would overcome what little skill the operator might bring to the
game
• Just because some elements of the game are out of the control of the player does not
make the game one of mixed chance and skill … but it is not a game of pure skill where
virtually all of the elements of the game are out of the control of the player
• This was not a case where there were some unpredictable elements that might
occasionally defeat the player’s skill, but the systematic resort to chance

17

“No Purchase Necessary”

• Section 206(1)(f) makes it an offence to:
dispose of any goods, wares or merchandise by any game of
chance or any game of mixed chance and skill in which the
contestant or competitor pays money or other valuable consideration

18

Charging a Fee to Play/Forcing a Purchase?

• Fees can be charged where:
• The contest is one of “pure skill” – e.g., a juried photo contest or dance
competition
• The prize is not “goods, wares or merchandise”

19

No Purchase/Consideration Necessary?

• Does a free website contest involve a “purchase/consideration” requirement in the form of Internet access fees?
 Probably “no” as free Internet access and free email addresses are so widely available in Canada

• Do text message fees constitute a “purchase/consideration” requirement?
 It depends Possibly “no” based on fee being nominal and paid to 3rd party mobile services
provider (akin to postage stamp for mail-in AMOE). But US case law has held that premium text
fees for entering contests (where entrants are charged a fee in addition to the standard text
message fee) are payments

• No Canadian case law on these questions so risk averse contest sponsors often still include free mail-in AMOE.
But generally accepted that purchase of stamp is not offside – largely because of minimal cost and that payment
is not made to contest sponsor; can be argued that same approach should apply to online and text entries

20

No Purchase/Consideration Necessary?

• A contest open to spectators at a particular event (e.g., a hockey game)
where payment is required to enter does not run afoul the no-purchase
requirement provided the contest is not promoted outside the event.
That`s because payment for the game ticket was not made in order to
enter the contest

• Likewise, a contest open to AMEX card holders where a fee is required for
the card does not run afoul the no-purchase requirement provided the
eligible entrants are limited to those who had cards prior to the contest
start date. Again, that`s because the purchase of the card would not have
been made in order to enter the contest

21

What constitutes “other consideration”?

• Contestant giving up something of value to them, – e.g., their personal
information or that of their friends and family (if used other than to
administer the contest), their time and/or opinions through a “substantial
effort” (e.g., to complete a lengthy survey, study product information, sit
through a sales pitch/product demonstration, navigate through a website)

• Arguably, the consideration need not be of value to sponsor, but if it is,
then even more difficult for sponsor to contend it is not consideration –
e.g., 50-word essay requirement in AMOE should not be on a topic that the
sponsor intends to use for market research or future advertising

22

The “equal integrity principle” and the free AMOE

• “Equal integrity” refers to notion that all entrants should be treated equally

• Term appears in no reported Canadian case but prominent in many US
judgements –especially those dealing with online contests where online
participants enjoyed a distinct advantage over their off-line counterparts

• Problems may arise when an advantage – in the form of a superior method
of entry or better odds – is associated with a purchase or provision of other
consideration

23

The “equal integrity principle” and the free AMOE –
R. v. Brennan, Alberta Provincial Court, 1995 and Court of Appeal, 1996

• Case considered legality of contest promoting sale of book of poetry
• While a single ticket for the contest was available without purchase upon request,
the trial judge found that there was a “reluctance” to give free tickets; everything was
geared to the giving of five tickets on the purchase of the book
• As a result, the “no purchase” method provided no defence and accused was found
guilty of violating section 206(1)(f)
• Court of Appeal, orally and without reasons, set aside the conviction
• The trial court decision suggests that the free AMOE may lose its efficacy if
disparities in treatment become too glaring
• Contest sponsors should still attempt, where possible, to minimize disparities in
treatment between paying and non-paying entrants

24

• Penalty
• Indictable offence punishable
by imprisonment for a term
not exceeding two years

or

• Summary conviction offence
punishable by a fine not
exceeding $25,000

25

Contests and the Competition Act
• Full Contest Rules -
Adequate and Fair Disclosure, s. 74.06
• Number and approximate value of prizes
• Area to which prizes relate (i.e., any regional allocation)
• Any fact within the knowledge of the contest sponsor that
materially affects chances of winning (such as mechanics
of contest and odds of winning)

26

• Contest Rules -
Adequate and Fair Disclosure, s. 74.06
• Disclosure must be made:
• In a reasonably conspicuous manner
• Before the potential entrant is inconvenienced in some
way or has committed to the contest or products being
promoted by the contest

27

• Short List Disclosure of Contest Rules (“Mini-Rules”)
• number & ARV of prizes
• regional allocation of prizes, if any
• chances of winning and any other fact that materially affects chances
of winning
• requirement to answer correctly STQ
• date contest closes
• no purchase necessary
• place where full contest rules available (at POS or online…can’t just
be inside product “box”)

28

• Mini-Rules Disclosure in Ads:
• Packaging
• Point-of-Sale
• Billboards
• Newspaper
• TV
• Radio
• Internet
• Wireless devices

29

• Mini-Rules Disclosure in Ads:
• Competition Bureau’s position on disclosure and fine
print:
• Must be large enough to be clearly visible and readable without resort to
unusual means (e.g., magnifying glass)
• Should never be smaller than 7 point font This is 7 point font.

• On TV/radio should be comprehendible in one normal viewing/listening –
e.g., sponsor can’t rely on possibility that potential entrant will view/hear
the advertisement many times or being able to record and “freeze frame” it
to have the time necessary to understand the disclosure.
• But this position may not make sense when the ad is shown only online and can
be easily paused by the viewer

30

Mini-Rules on Packaging for Offline Contest

31

Sample Mini-Rules in Advertising for Online Contest

Mini Rules

* NO PURCHASE NECESSARY. Closes May 25/12
at 11:59:59 pm ET. Full rules (including details of
qualifying transactions/no purchase entry and
complete prize description) at cibc.com. Open to
legal residents of Canada (age of majority). One (1)
grand prize available, consisting of a trip to London,
England to attend the London 2012 Olympic Games
(ARV: $19,000 CAD). Odds depend on number of
eligible entries. Skill-testing question required.

32

Sample Mini-Rules in Advertising for Online Contest

Mini-Rules

* No purchase necessary. Contest runs from
12:00:00 a.m. EDT on May 1, 2012 to 11:59:59
p.m. EST on January 31, 2013. Contest is
open to individuals who reside in Canada, are
over the age of majority in their province or
territory of residence, who are active epost
users, and who have subscribed to at least two
epost mailer bills throughout the previous 60
days. There are a total of 9 prizes available to
be won, each with a value of CAD $1,000.
There will be one prize draw per month during
the contest period. Odds of winning depend on
number of entries received. Selected entrants
must answer a mathematical skill testing
question and sign a release. Full contest rules
are available at epost.ca/constestrules.

33

Sample Mini-Rules in Advertising Contest on Facebook

Mini-Rules

•No purchase necessary. For full rules and how to
enter, visit www.facebook.com/infiniticanada. Contest
closes 03:00:00 pm EDT on June 29, 2012. One (1)
Grand Prize available to be won, consisting of a
$2,000.00 (CDN) RBC ® Visa Gift Card. The odds of
winning the Grand Prize depend on the total number of
eligible entries received during the Contest Period.
Must be a resident of Canada and be age of majority.
Correct answer to mathematical skill testing question
required.

34

Sample Mini-Rules in Advertising Online Contests

Mini-Rules

* No purchase necessary. Odds of winning depend upon
the number of eligible entries received, text charges may
apply, limit one (1) entry per entrant, per person, per
contest period, total of four (4) prizes available each
consisting of 5 $100 Tim cards* representing the
equivalent of one 14 oz coffee per day for 364 days
approximate value $600 per prize, prizes awarded in the
currency of the country in which the winner is ordinarily
resident, correctly answered skill-testing question
required for Canadian winners. Contest closes June 3,
2012. Complete contest rules available at
telltimhortons.com or at participating restaurants ©Tim
Hortons, 2012.

35

• Deceptive Prize Notices, s. 53
• It is a criminal offence for a person, in promoting a
business interest or the supply of a product, to send a
notice (by regular or electronic mail) giving the general
impression that the recipient has won, will win, or will on
doing a particular act win, a prize and if the recipient is
asked to pay money or incur a cost

36

• No offence if recipient actually wins the prize and the
person sending the notice:
• Makes adequate disclosure of full contest rules
• Distributes prize without unreasonable delay
• Selects participants and distributes prizes randomly or on
basis of participants’ skill

37

• Offence and punishment -
• On conviction on indictment, to a fine in the discretion of the court
and/or to jail for a term up to 14 years
• On summary conviction, to a fine up to $200,000 and/or jail for a
term up to one year
• Officers and directors in a position to direct or influence the
policies of company regarding deceptive notice may be liable
• Due diligence defence exists – if person shows they exercised
due diligence to prevent commission of offence.

38

• False and Misleading Advertising Generally
• Both civil (s.74.01) and criminal (s.52) provisions
• Contest and related advertising can’t be deceptive in a
material respect
• Criminal provision applies where deceptive representation
made “knowingly or recklessly”
• No requirement that anyone actually be deceived

39

• Recent Competition Bureau Enforcement Activity
• 2009 Consent Agreement with Elkhorn Ranch & Resort
• Bureau investigation concluded Elkhorn had
• run contests in 2006 and 2007 without fair disclosure of
accurate odds of winning and without ensuring winners were
selected on a random basis
• given the misleading impression that the grand prize was a
brand new SUV when the prize, if awarded, was only a one or
two-year lease of an SUV with stringent conditions

40

• Recent Competition Bureau Enforcement Activity
• 2009 Consent Agreement with Elkhorn Ranch & Resort
• Elkhorn agreed to pay $170,000 for running misleading
contests
• Bureau press release stated:
“When consumers enter a contest, they should have a
reasonable chance of winning based on clear rules … If
businesses run bogus contests to attract customers, they
compromise the trust of consumers and hurt competition by
gaining an unfair advantage over competitors operating
legitimate contests”

41

• Administrative Monetary
Penalties (AMPs)
• Individuals:
• Up to $750,000 for the first
offence
• Up to $1,000,000 for
subsequent offences
• Corporations:
• Up to $10,000,000 for the
first offence
• Up to $15,000,000 for
subsequent offences

42

• Competition Tribunal may:
• Order restitution to victims of deceptive marketing
practices
• Freeze assets of accused business and prevent disposal
of property before finding

• Interim order likely where accused is not a sizable and
reputable business

43

• Consumers (as individuals and, of greater concern, as a
class may seek substantial damages in private court
actions) alleging that the deceptive element of contest is
a criminal offence under the Competition Act

• Even if only small compensatory damages for deceived
contest entrant, punitive damages claim can be
substantial

44

• See Richard v. Time Inc., Supreme Court of Canada, 2012
> In context of Quebec Consumer Protection Act, compensatory
damages of only $1,000 but punitive damages of $15,000
($100,000 awarded at trial); also plaintiff awarded costs on
solicitor-client basis so total value of judgement in $350K range;
Time also had its own legal costs

• Also costs to contest sponsor’s business and brand with loss of
consumer trust and bad PR associated with deceptive advertising

45

• Competition Bureau’s Program of Binding Written
Opinions
• $1,000 fee
• 2 weeks for “simple” contests
• 6 weeks for “complex” contests

46

Contests and Quebec
• See Charter of French Language, Rules respecting publicity contests,
and Consumer Protection Act
• Additional Requirements - Generally
• All materials for Quebec residents must be in French
• Notice of the contest, together with the applicable duties, a copy of the
contest rules, and the text of any advertisement used in the contest
must be filed in advance with the Régie (where prizes exceed $100)
• Duties based on the value of prizes available to Quebec residents
must be paid in advance
• The contest rules must contain certain prescribed information
• In certain cases, a security bond with the Régie may be required
• Specific contest advertising requirements apply

47

Contests and Quebec
• French Translation
• Régie does not require French translation for rules of contest held
exclusively online
• French translation only required if contest sponsor is advertising in
Quebec or making entry forms (other than online entry forms) available
in Quebec
• Therefore possible to “register” with Régie without filing a French
translation of such rules
• That said, the Office of the French Language (which administers the
Charter of the French Language) still requires French translation

48

Contests and Quebec
• Filing Thresholds
• If total prize pool is $100 or less or contest for contest sponsor’s
employees only:
• No need to file with Régie
• No need to abide by Régie’s rules
• No need to insert “Régie clause” into the rules
• If total prize pool is over $100 but under $2,000.01:
• First contest notice thirty days before contest launch (except if
prize pool is under $1,000, then file 5 days before launch)
• Pay duty upon filing notice
• No need to file contest rules or advertisements
• No need to submit report after contest completed

49

Contests and Quebec
• Filing Thresholds
• If total prize pool is $2,000.01 or more:
• File notice with Régie 30 days before contest launch
• Pay duty on filing notice
• File contest rules and advertisements with Régie 10 days before
contest launch
• Complete and file with Régie written report with name, address
and date of awarding the prize for each winner of a prize of $100
or more and verify whether all prizes have been delivered within
60 days of date winner is named

50

Contests and Quebec
• Duties for Prizes

• If Quebec is part of contest area within Canada, then duty is 3% of
value of all prizes
• If Quebec is part of contest area that includes jurisdictions outside
Canada, then duty is only 0.5% of value of all prizes
• If prizes specifically allocated to Quebec, then duty is 10% of value of
those prizes

51

Contests and Quebec
• Security for Prizes
• A security bond must be filed with the Régie in the prescribed form if:
• the value of prizes offered specifically to Quebec residents is over
$5K or
• the total value of all prizes (where Quebec is only part of the
contest region) is $20K or more
• The Régie will send the bond form if applicable once the sponsor has
filed the notice

52

Contests and Quebec
• Contest Rules
• Many requirements are similar to those under federal
Competition Act but some differences – e.g.,
• Must state the place, date and precise time prize winners will be
named and the nature of skill testing question
• Must state that sponsor and employees, agents etc. … and
persons with whom they are domiciled are ineligible
• Must contain the following clause:
Any litigation respecting the conduct or organization of a publicity
contest may be submitted to the Régie des alcools, des courses et
des jeux for a ruling. Any litigation respecting the awarding of a
prize may be submitted to the Régie only for the purpose of
helping the parties reach a settlement.

53

Contests and Quebec
• Special Contest Advertising Requirements
• These include that all Quebec contest advertising must:
• state the number, value and description of all prizes offered, or
state that only one prize is available (if that`s the case), or specify
the range of value (i.e., the smallest and the largest) of the prizes
• state the nature of the STQ that an entrant must satisfy to claim a
prize
• not indicate that a person may win a prize when in fact all entrants
receive the same prize – this is just a giveaway, not a contest

54

Contests and Quebec
• Implications for Contest Sponsors

• Quebec residents are sometimes excluded from Canadian contests
because of the additional costs and constraints of complying with
Quebec’s special contest laws

• Sponsor should be prepared to explain “why” to disgruntled
Quebeckers – Note: BMO often excludes Quebec residents

55

Contests and Quebec
• Eligibility Restriction in “Global” Contest –
Sponsor based in Canada with Offices Around the World
“Residents of the following jurisdictions are excluded from participating
in the contest: Cuba, Iran, Syria, Libya, Myannar (formerly Burma),
North Korea, Quebec and Sudan”

• This could and should have been phrased differently – e.g., In Canada …
Elsewhere …

56

Contest for Kids & Teens
Generally

• Quebec prohibits advertising to children under 13
• Advertising Standards Canada (ASC) has rules in its Canadian Code
of Advertising Standards on advertising to children
• Canadian Association of Broadcasters (CAB) has rules in its
Broadcast Code for Advertising to Children (e.g., in ads the product
must receive at least equal emphasis to contest)
• CBC has guidelines for advertising to children under 12

57

Contests for Kids & Teens
• No equivalent to US Children’s Online Privacy Protection Act (COPPA)
and “verifiable parental consent” requirement

• Do have Canadian Marketing Association (CMA) Guidelines for Marketing
to Children and Teenagers

• Special considerations for protecting privacy of children under 13
years and teenagers

58

• CMA Guidelines – Kids Under 13
• A marketer may collect personal information (PI) - defined as
“information about an identifiable individual” - from kids under 13
without obtaining parent’s express consent only if the marketer:
• collects and uses only PI needed to determine winner
• does not transfer PI to any 3rd party
• deals only with winner’s parent at end of contest
• does not retain PI after contest ends

59

• CMA Guidelines – Kids Over 13 & Under 16
• A marketer may

• collect, use or disclose to 3rd party PI with express consent of
parent
• collect and use contact information (CI) with teenager’s express
consent – CI is defined as a subset of PI considered “non-
sensitive” and refers solely to an individual’s name, home address,
e-mail address and/or telephone numbers
• Disclose PI to 3rd party with express consent of parent

.

60

Contests for Kids and Teens
• CMA Guidelines – Teenagers Over 16 & Under Age
of Majority

• A marketer may collect, use or disclose to 3rd party all PI (including CI)
with teenager’s express consent

.

61

Contests involving special products – e.g., liquor

• Most provinces/territories have special rules and approval processes
administered by the applicable liquor regulatory authority for contests
involving liquor

• In Ontario, see AGCO’s Liquor Advertising Guidelines

.

62

Contests involving special products – e.g., liquor
• AGCO’s Liquor Advertising Guidelines

• Apply to liquor licensees and manufacturers

• Liquor may not form part of prize package (subject to certain
exceptions)

• An individual shall not be required to have at any time purchased or
consumed the liquor product in order to participate in or qualify for a
contest - e.g., a qualifying question cannot be about the taste qualities
of the liquor product

• But it may be about the packaging if this information could be
gained easily without the purchase of the liquor product

.
63

Contests involving special products – e.g., NHL tickets
• Should get permission from at least team, which must manage its IP,
sponsorships, category exclusivity arrangements, etc.

• If playoffs, will likely need permission from NHL – a must if referring to
“Stanley Cup”

• If done with appropriate permissions (and payment of fees) can use team
and NHL names, logos, trade-marks etc.

• If not, run some risk of claims for passing off, interference with contractual
relations, and trade-mark & copyright infringement
.

64

National Hockey League vs. Pepsi-Cola Canada Ltd., BCCA, 1996

• Contest sponsors may be tempted to rely on approach taken by Pepsi that
withstood judicial scrutiny in this case where NHL sued Pepsi for implying a
connection to the NHL by advertising during broadcasts of Hockey Night in Canada

• NHL had granted Coca-Cola Ltd. the right to be the “official soft drink of the NHL”

• NHL alleged Pepsi commercials caused confusion and sued Pepsi for passing off,
trade-mark infringement and interference with contractual relations (even though the
Pepsi commercials, among other things, didn’t use team or NHL logos or trade-
marks and contained a disclaimer that the contest was not associated with NHL or
any of its member teams)

.

65


• Court rejected NHL’s claims on basis that:
• there was no misrepresentation (so no passing off)
• there was no trade-mark use (so no trade-mark infringement)
• the NHL’s contract with Coke couldn’t allow them to prohibit lawful
Pepsi ads (so no wrongful interference with contractual relations)

• Case did not consider issue of NHL’s possible copyright in league’s
schedule

.

66

Contests involving special products – e.g. NHL tickets

• But, since this case and for many years now, the conditions on the back of
an NHL ticket (a revocable license to attend game) void ticket if used
without permission as a prize in a contest. This condition appears on that
back of tickets for most professional sports teams – e.g., Leafs, Raptors,
TFC, Blue Jays

.

67

Contests involving special products – e.g. NHL tickets
TICKET BACK Ts & Cs

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 WARMUP
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 Maple Leaf Sports & Entertainment Ltd. ("MLSE"). Holder assumes all risks of personal injury and all
other hazards related to the event for which ticket is issued, whether occurring prior to, during or after the event including specifically but
not exclusively danger of injury by hockey pucks, sticks and other equipment, by spectators or players, or by thrown objects. Holder
agrees that MLSE, the arena, the NHL, the member clubs of the NHL, NHL Enterprises, L.P., the NHLPA and current and former
players, and each of their affiliates, parents, related entities, owners, governors, officers, directors, partners, principals, employees and
agents are expressly released by Holder from any claims arising from or relating to such causes or otherwise occurring at or in
connection with event. Holder grants permission to the NHL (and its designees and agents) and MLSE to utilize the Holder's image,
likeness, actions and statements in any live or recorded audio, video, or photographic display or other transmission, exhibition,
publication or reproduction made of, or at, the event (or activities carried on in connection therewith) in any medium or context without
further authorization or compensation. Holder further agrees to abide by policies of MLSE, NHL, its member clubs, the arena and the
instructions of arena personnel or shall be subject to revocation of the license created by ticket without refund. Any non-editorial or
commercial use of any NHL or NHL club mark is prohibited without prior written approval of NHL. Any unauthorized transmission,
picture or other depiction or description of any game action, game information or other arena activity is prohibited without prior written
approval of NHL and MLSE.
The Holder and the Holder's belongings may be searched upon entry into the arena, and the Holder consents to such
searches and waives any related claims that might arise against the NHL and MLSE. If the Holder elects not to consent
to these searches, the Holder will be denied entry into the arena.

68

ONLINE CONTESTS
Same General Canadian Contest Laws & Practice
Apply Whether Contest Online, Mobile/Text or Offline

69

OnLine Contests – Even “RRRoll Up” Now Has An Online Element

70

Online Contests – Competition Bureau’s Guidance

• See Bureau’s Information Bulletin on Application of Competition Act to
Internet
• Required Disclosures – Basic Rules
• In contests designed to promote a product or business interest,
adequate and fair disclosure must be made of certain information,
including facts which materially affect the chance of winning
• This information must be displayed in such a way that it is likely to
be read, which depends in part on the format and design of the
website, Facebook page, etc.

71


• A notice of a contest should not require readers to take an active
step, such as sending an e-mail or placing a phone call to receive
the required information
• Bureau does not consider clicking on a clearly labelled hyperlink to
be an “active step” – i.e., the “one-click-away” rule of thumb
• In instances where the information is so critical that it is an integral
part of the representation, it may not be appropriate to use a hyperlink
to a separate page
• In these cases, it should be possible to read the representation and
the required disclosure at the same time

72


• Contest rules should be placed so that entrant does not have to
negotiate a complicated website, purchase additional software, or
visit an additional site to find the relevant information

73


• Online Disclosure of Contest Mini-Rules and Full Rules
• Where contest website has full rules accessible via hyperlink (i.e.,
no “active step” required, just one-click away), probably don’t
need to disclose mini-rules
• Still, as a “gold standard”, the mini-rules could appear prominently
on the contest home page or at least be visible when a visitor
hovers their cursor over the “Contest Rules” button
• The full rules need not appear directly on the contest home page
but must be accessible via a single click on the “Contest Rules”
button.

74


• Liability for Internet Representations
• The deceptive marketing practices provisions of Competition Act attribute
liability to the person who has caused the representation to be made – i.e.,
the person who makes or permits it to be made

• In online environment, Bureau will consider the respective roles of the
various parties involved in an advertisement including the web page/app
designers (who help create the representations), the web hosts (who own
or operate the services from which the representations are disseminated),
the service providers (who provide access to the Internet) and, of course,
the businesses (on whose behalf the representations are made and
disseminated)

75


• Liability for Internet Representations

• A determination of who should bear responsibility is made on a case-by-
case basis

• One guiding principle the Bureau considers is the nature and degree of
control that the person who makes the representation exercises over the
content

76

Online Contests and UGC Risk
Main Concerns
• Sponsors should use website terms of use, contest rules, entry forms
and guides, and sponsor’s administration of contest to protect 3rd party
copyrights, trade-marks and goodwill and thereby reduce risks of 3rd
party claims for:

• IP infringement (e.g., radio, TV, posters in background, logos on
clothing, etc.)

• trade defamation/commercial disparagement – i.e., don’t
encourage entrants to bash your competitors

77

Main Concerns
• Get rep & warranty and indemnity from entrant that submission is
original and does not infringe any 3rd party IP rights
• Get IP rights from all participants in UGC (i.e., if video, remember both
sides of camera), not just entrant
• Ideally, if practical, get proper assignment of copyright in content
submitted by entrant
• Note – This still requires a signed hardcopy under current
Canadian copyright law

78

Main Concerns
• Where getting signed hard copy not practical, get non-exclusive
licence of copyright online via click-through agreement or other means
– no signed hard copy statutory requirement
• Should also get waiver of moral rights
• Consider limiting participants to age of majority (or at least get parent
to sign assignment/license, release and declaration forms where
minors participate), as minors can’t sign legally binding agreements

79

Main Concerns

• Rules and associated contest documents must prohibit use of 3rd
party materials (or at least “unauthorized use” – sponsor may obtain
permission to use certain 3rd party IP – e.g., select songs – for
entrants to use in their submissions)

• Should establish and follow “community standards” (CS) and “take
down” policy for infringing, defamatory, pornographic, misleading or
otherwise inappropriate UGC

• At outset of contest, sponsor should provide entrants with a detailed
user-friendly guide on how to make their video – what’s acceptable &
what’s not

80

Main Concerns
• Through moderators, sponsor should screen UGC for 3rd party IP
material before posting and provide simple, accessible mechanism for
public to flag offending material

• Again, entries that violate the prohibition on using 3rd party materials or
otherwise violating CS must be removed and disqualified by sponsor

81

The “Quiznos vs. Subway TV Challenge”, 2006
• Contestants were invited to submit videos proclaiming that “Quiznos
was better than Subway”
• The contest rules expressly prohibited deceptive statements and gave
Quiznos the authority to review and exclude contest entries containing
inappropriate content but
• Quiznos used the domain name “meatnomeat.com” (arguably a literal
falsity because it implied that Subway sandwiches contained no meat)
• The 4 sample videos created by Quiznos to shape the contestant entries
arguably contained deceptive claims implying that Subway sandwiches
had no meat or less meat than Quiznos sandwiches

82

Selected UGC from 2006 Quiznos Contest
“The Mr. Sandwich Championships”

http://www.youtube.com/watch?feature=endscreen&v=ZIHvSSw6lbA&NR=1

“Subway Sucks”

http://www.youtube.com/watch?NR=1&v=ZrKqRVXPkVs&feature=fvwp

“The Quiznos-Subway Song”

http://www.youtube.com/watch?v=EpOsTcFz_oQ&feature=results_main&playnext=1&list=PLC59C3A
3E72F4E607

83

Quiznos’ “Quiznos vs. Subway TV Challenge”, 2006

• Shortly after the launch of video contest, Subway sued Quiznos for
deceptive advertising and court battle ensued that eventually settled in
2010

• Should caution online advertisers to be mindful of risks associated with
soliciting UGC especially regarding liability for deceptive advertising
and particularly with regard to solicitation of video content for a contest

• Sponsor can mitigate risks by giving proper direction by way of
submission requirements, examples, judging criteria and contest rules

84

Personal Information (PI) and Privacy Risk
Canadian Privacy Laws –
PIPEDA and Its Provincial Counterparts
• Informed consent is required for a contest sponsor’s collection, use
and disclosure of an entrant’s PI
• Special privacy law concerns in online environment given huge
amount of PI that can be collected and the ease with which it can be
cross-referenced, used and shared
• Even with entrant’s informed consent, must limit collection, use and
disclosure of PI to purposes that a reasonable person would consider
appropriate in the circumstances

85

• PI may be used only for purpose for which it has been collected
• No need for contest sponsor to get entrants’ express consent to collect
& use PI solely to administer the contest (as such consent can
reasonably be implied from act of entering contest)
• Any other purpose (e.g., newsletter distribution, secondary marketing,
consumer research etc.) should be specified in the PI & privacy
consent clause in the contest rules and contest entry form/mechanism

86

• Refer-a-friend contests can raise tricky privacy issues
• The Privacy Commissioner of Canada has said that organizations that
actively solicit non-users’ email addresses from users with the
intention of using them for their own purposes must take some
responsibility for obtaining consent of the non-users
• For refer-a-friend contests, this statement suggests that the contest
sponsor should make sure entrants know that they must not disclose
their friend’s email address unless they know the friend personally and
the friend would want to get an e-vite to enter the contest

87

• If more than one email will be sent to the friend (for example, reminder
emails) that information must be disclosed to the user so that the user
can consider whether that use of their friend’s email address would be
appropriate
• This information should also be disclosed to the friend (in the initial
email that is sent to them)
• If the friend objects to the use of their email address, they should be
given a simple way of opting out of further communications (in effect,
withdrawing their implied consent)

88

• The contest sponsor will not have consent to send the friend any
further communications (again, other than possibly one reminder
email) to enter the contest, until the recipient takes a positive step and
enters the contest

• Until such a positive step has been taken, the contest sponsor must
keep the friend’s email address separate from the database for contest
entrants

89

CASL and Refer-A-Friend Risk
• CASL now likely not to be in force until at least Q1 2013

• CONSENT – CASL prohibits sending a commercial electronic message
(CEM) to an electronic address of persons who have not provided express
or implied consent

90


• Implied consent is permitted only where

• there is an existing business or non-business relationship between
sender and recipient

• the recipient has conspicuously published their address or has
disclosed it to sender and
• has not indicated they don’t want to receive CEMs and
• the message is relevant to recipient’s business

91


• PRESCRIBED INFORMATION – CEMs must contain prescribed
information identifying the sender as well as an unsubscribe mechanism

92

• CASL will have an impact on refer-a-friend contests in that CASL does not
apply to a CEM sent “by or on behalf of an individual to another individual
with whom they have a personal or family relationship”

• The definitions of “family relationship” and “personal relationship” in the
draft CASL Regs have raised concerns among marketers and legal
commentators

93

• The “family relationship” definition is straight forward and intuitive enough –
although it has an obvious typo in it that will likely be corrected in the final
CASL Regs – i.e., individuals connected by blood, marriage, common law
partnership and* adoption

* The “and” should be an “or”

• Interestingly, “blood relationship” is limited to children, siblings, parents,
grandparents or collateral descendants of a common grandparent

• In other words, a person could send an unsolicited CEM to their aunt but could
not send such a message to their great aunt or second cousin without possibly
running afoul the proposed CASL Regs

94

• The “personal relationship” definition has been criticized as being too
technical and limited and out-of-step with the way people communicate
today. It requires that, regarding the recipient, the sender must

• have had an “in person” meeting
• have had a “two-way communication” within the last two years
• not be in a commercial relationship

95

• The “personal relationship” requirements have caused some
commentators to muse whether
• the meeting must be “physically” in person (i.e., face-to-face) or
whether a virtual in-person meeting - e.g., through Skype or video
conference - qualifies under the exception
• the “two-way communication” must have occurred at a time other than
the “in-person meeting” (presumably this is the case as the definition
says “and”)
• the personal relationship definition includes “friends” who you have
never met in person but with whom you have communicated for years
by snail mail (i.e., the traditional long distance pen pal), telephone and
email, and are “friends on Facebook”

96

• These definitions of family and personal relationships will require online
marketers to alter some of their refer-a-friend contests because contest
sponsors cannot incite individuals to forward marketing messages to
persons who do not fall under these definitions
• CASL s. 9 prohibits inducing a breach of the consent requirements in
CASL s. 6
• It is therefore incumbent on the contest sponsor to clarify for entrants that
they should only give the names and personal email addresses of persons
who meet the prescribed definitions under the CASL Regs

97

• The contest sponsor should not incite the entrant to send a CEM to all of
their friends on Facebook as this would most likely include individuals who
fall outside the permitted classes under the CASL Regs
• Other suggestions to reduce CASL refer-a-friend compliance risk include:
• include the name of the person who caused the referral to be sent in
the message
• use any “friend” address to send only one referral message (and
possibly one follow-up reminder message), unless they provide
consent for further messages
• Moreover, there is a defense under CASL (in ss. 33(1) and 46(2)) that
permits anyone accused of a violation to establish they exercised “due
diligence” to prevent the offence

98

Cheaters - Hacked PIN Code Risk
• Without more, weak alphanumeric PIN codes on product packages
awarding instant prizes can be fairly easily broken

• Hackers set up a computer program to enter codes until the winning PINs
are hit

• Clearly the contest rules should disqualify such cheaters

99

Cheaters - Hacked PIN Code Risk
• Some technological ways to make the PIN codes stronger and thus less
susceptible to hacking include

• make the alphanumeric code case sensitive and at least 10 strokes
long
• insert a CAPTCHA (that is revised often) so the PINs cannot be
entered robotically
• require registration of personal information before person enters code

100

Cheaters - Voter Fraud Risk
• Mass voting fraud may take many forms including entrants (and
often their friends or bribed strangers)

• Nasty Stuff
• setting up multiple email accounts to vote repeatedly
• voting repeatedly by resetting their IP address (by unplugging their
modems or using unsecured Wi-Fi networks)
• hiring private companies to recruit votes

• Really Nasty Stuff
• voting repeatedly from the same IP address for competitors … to get
competitors disqualified

101

• “How-To Guides” for voter fraud readily available online

102

Voter Fraud – On-line Guides

http://www.matctimes.com/toons/how-to-hack-online-polls-
1.2337140

http://www.contestmob.com/blog/100-ideas-on-how-to-get-
votes-for-online-voting-contests/

103

Voter Fraud – Also Very Prevalent
ESPN’s College GameDay Contest – April 2012

http://www.cornnation.com/2012/4/25/2976080/espn-college-gameday-contest-
halted-after-massive-ballot-box-stuffing

104

Voter Fraud – Not to Be Ignored
The Ontario Tourism Marketing Partnership Contest, 2011

http://www.contestmob.com/blog/voting-contest-sponsor-turns-a-blind-eye-to-
cheating/

105

• How to Manage
• Contest rules must prohibit systematic voting from same
computer/IP address, automated voting and voter bribing
• Consider including voting limits – i.e., one vote per address
• As with mitigating hacked PIN risk
• Include CAPTCHA
• Require registration of personal information
• Deploy technology to detect voter fraud and disqualify
entrants engaged in it

106

• How to Manage
• If leader board, use bar graphs to show relative position of
entrants (not specific number of votes)
• During contest period, scrub votes for voter fraud daily in evening
and re-set true vote tallies daily in the morning
• During final stage of contest (e.g., last 2 days in 4 week contest
period), take down the public vote tally (may lose some of the buzz
around the contest but may reduce risks of derailing contest with
last minute voter fraud)

107

• How to Manage

• Consider multi-stage process for selecting winner

• Initial stages - public votes determine who advances

• Final stages – using objective criteria, contest sponsor’s
judges select winner from finalists as voted by public

108

Global Contests and Local Law Risks
• Since Internet is global, sponsor must specify eligibility, otherwise contest may be
seen as open to everyone

• Moreover, sponsor may unwittingly violate laws in foreign jurisdictions that require
contests to be pre-registered for a fee paid to the local contest regulatory body (as is
required in Quebec). In the US, these jurisdictions include Florida, New York and
Rhode Island

• Further, there are several jurisdictions in the US that have extensive and not
necessarily harmonized registration, disclosure and other requirements for contests
– i.e., may therefore want to exclude residents from these jurisdictions (as is
sometimes done with Quebec residents)

• Also the Canadian contest law STQ requirement is foreign to US law – in fact, can’t
have STQ for US contestants

109


• Other jurisdictions that have special contest rules include the UK,
Australia, France, Germany and Turkey

• Takeaway - Sponsor should not “go global on a wing and a prayer” .

• If contest to include many jurisdictions around the world, then sponsor
must determine where contest to be run and should obtain legal
clearance/registrations (if applicable) in each jurisdiction
• Should also specify time zone which applies to any deadlines
established by the rules

110


• If only Canadian residents eligible, then include prominently on the contest
home page and in the contest rules disclaimer along following lines: THIS
CONTEST IS OPEN TO CANADIAN RESIDENTS ONLY AND IS
GOVERNED BY CANADIAN LAW

111

Contests on Facebook – Special Considerations

112


• Facebook Terms and Policies (last revised June 8, 2012)

• Statement of Rights and Responsibilities

• “You must follow our Promotions Guidelines and all applicable
laws if you publicize or offer any contest, giveaway or
sweepstakes (“promotion”) on Facebook” – s. 3(9)

• “Your ads will comply with our Advertising Guidelines” – s. 11(4)

113



• Facebook Pages Terms – Promotions: General
• Puts onus on sponsor for lawful operation of contest

• Refers specifically to sponsor’s obligations to comply with all
requirements for contest rules, age and residency restrictions, prizing,
registering and obtaining necessary regulatory approvals

• Urges you to consult an expert

114



• Facebook Pages Terms – Promotions: Specifics
• Contests on Facebook must be administered within Apps on
Facebook.com, either on a Canvas Page or a Page App

• Contests must include the following
• A complete release of Facebook by each entrant or participant
• Acknowledgement that the contest is in no way sponsored, endorsed or
administered by, or associated with, Facebook
• Disclosure that the participant is providing information to the sponsor and
not to Facebook

115



• You must not condition registration or entry upon the user taking any
action using Facebook features or functionality other than liking a
Page, checking in to a Place, or connecting to your app. For example,
you must not condition registration or entry upon the user liking a Wall
post, or commenting or uploading a photo on a Wall

• You must not use Facebook features or functionality, such as a Like
button, as a voting mechanism for a contest

116



• You must not notify winners through Facebook, such as through
Facebook messages, chat, or posts on profiles (timelines) or Pages

• We reserve the right to reject or remove Pages for any reason.
These terms are subject to change at any time

117

Contests on Twitter – Special Considerations

118

• Twitter Terms of Service and Twitter Rules
(last updated May 17, 2012)

• Like Facebook’s constantly evolving
• But not as detailed as Facebook’s
• Has established guidelines for contests hosted by sponsors through
their Twitter profile

119

• Guidelines for Contests on Twitter – General

• Contests on Twitter may offer prizes for doing various things including
(a) tweeting a particular update, (b) for following a particular user, or
(c) for posting updates with a specific hashtag

• Guidelines are intended to help ensure sponsor doesn’t ask anyone to
violate any of Twitter’s rules or guidelines

120

• Guidelines for Contests on Twitter – Specifics

• Discourage the creation of multiple accounts
• If users make lots of accounts to enter a contest more than once, they’re
liable to get all of their accounts suspended
• Contest rules must state that anyone found to use multiple accounts to
enter will be ineligible

• Discourage posting the same tweet repeatedly
• Posting duplicate, or near duplicate, updates or links is a violation of the
Twitter Rules and jeopardizes search quality
• Don’t say “whoever retweets this the most wins”
• Contest rules should state that multiple entries in a single day will not be
accepted

121

• Guidelines for Contests on Twitter - Specifics
• Ask users to include an @reply to you in their update so you can see
all the entries
• This allows you to see all contestants in your Mentions timeline when it
comes to picking a winner
• Just doing a public search may not show every single update, and some
contestants may be filtered from search for quality

• Encourage the use of topics relevant to the contest
• You should have users include relevant hashtag topics along with the
updates (like #contest or #your company name).
• Hashtag topics need to be relevant to the update. Encouraging users to
add your hashtag to totally unrelated updates might cause them to violate
the Twitter Rules

122

Managing Contest Risks
• Various Means

• Promotional Partnership Agreements (e.g., dealing with items such
as contest administration, ownership of advertising material, protection
of privacy and use of contest databases)
• Risk Management Processes and Products (e.g., risk awareness,
communication, tracking and audit, prize security and insurance, draw
adjudication, winner validation)

123

• Various Means

• Winners Declaration and Release (e.g., confirms in writing that
winner has complied with contest rules, releases contest sponsor from
liability associated with prize, confirms contest sponsor’s right to
publicize winner’s information)
• Contest Rules (not just to comply with “adequate and fair” disclosure
requirements mandated by contest law, but also to provide contractual
protections for contest sponsor vis-à-vis contest entrants and winners)

124

• Contest Rules – Contractual Protections

• All decisions of sponsor/independent judging organization are final and
binding
• Sponsor reserves right to cancel or modify contest if it determines that
contest can’t be run as originally planned or if fairness or integrity of
contest compromised
• Sponsor may substitute prizes of equal value if original prizes can’t be
awarded

125

• Contest Rules – Contractual Protections
• If there are more potential winners than contemplated in contest rules,
then there will be a draw amongst all eligible prize claimants after
contest close date to award correct number of prizes (so-called “Kraft
clause”)
• Other key clauses for rules include: glitch disclaimer (i.e., sponsor not
responsible for damages and that contest may be cancelled/modified),
eligibility (age and residency requirements); privacy consents (reiterate
in entry form); and liability and publicity releases and indemnities
(reiterate in winner’s declaration and release)

126

Wrap-Up
• Avoid common hazards
• Address regulatory concerns
• Address contractual concerns
• Skipping legal advice may be false economy

127

Thank You
Bill Hearn – bhearn@davis.ca 416.369.5298

Darren Kirkwood – darren.kirkwood@mlse.com 416.815.6094

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.

Doc. 11667106.1

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Mitigating Legal Risks and Staying Compliant While Running a Successful Online Contest

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