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AI in business: how to manage the risks?

AI in business: how to manage the risks?

What effect chat technology (ChatGPT, Bard and others) will have on businesses and workplaces.

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  • Naming rights agreements: coming soon to an arena near you!

    Although the more nostalgic among us were recently celebrating the announcement of a third film (and sequel) of In a galaxy near you (Dans une galaxie près de chez vous), a sci-fi series on Quebec TV, sports fans might be disappointed if the arena near them ever ends up being renamed. In the first instalment of our series of articles on sports law, we examined various issues surrounding team branding. We would now like to focus on the naming of stadiums, arenas and our favourite sports venues, which often feature corporate names or trademarks. In a press release dated August 15, 2023, the Montreal Canadiens announced that their training centre, previously known as the Bell Sports Complex, would be renamed the CN Sports Complex. The reasons for this change have to do with naming rights agreements. These agreements stem from a “marriage of values” for commercial purposes between two brands that share a number of clearly defined objectives. In this article, we will answer two fundamental questions: how do these agreements work and what are the objectives? Defining a naming rights agreement A naming rights agreement is a contract between a company and an operator or owner of a venue, building, event or facility. Under such agreements, a company obtains the exclusive right to name a venue, building, event or facility by making royalty payments or providing other benefits. This enhances the company’s visibility because its name or brand is now associated with the venue, building, event or facility. In return, the owning or operating entity is paid a royalty that helps to support its activities or boost its profitability. Naming rights agreements are commonly used for naming stadiums, arenas and sporting events. It should be noted that naming rights agreements are different from sponsorship agreements. A sponsorship agreement is another type of arrangement under which a company can obtain visibility associated with an event. For example, the Royal Bank of Canada entered into a sponsorship agreement with the Montreal Canadiens to display its logo on the team’s jerseys. One of the main differences between sponsorship agreements and naming rights agreements is their duration. A sponsorship agreement has a shorter term (usually 3 to 5 years), whereas a naming rights agreement may run from 5 to 20 years, sometimes longer. An ever-growing market Underscoring the importance of naming rights agreements, over 90% of the teams in North America’s five largest professional sports leagues have signed one: In Europe, the most popular sport by far is soccer. The status of naming rights agreements in European soccer is not comparable to the North American situation, but everything indicates that their popularity will continue to rise in the coming years: What are the primary objectives of naming rights agreements? Although most North American sports teams have entered into naming rights agreements, the frequency with which stadiums or sports venues are renamed remains low due to the long-term nature of these arrangements. Companies are prepared to invest considerable sums in these agreements. There are various reasons for this, including the desire to partner with an organization that shares certain values, or to reap the benefits of a unique financial tool, or to consolidate business interests or gain a foothold in a given market. In 2017, the Air Canada Centre, which hosts the Toronto Maple Leafs (NHL) as well as the Toronto Raptors (NBA), was renamed the Scotiabank Arena. Under this agreement, Scotiabank will reportedly pay $40 million annually over 20 years to maintain the new name. At the time, this was a record amount. But the new (publicly disclosed) record is now held by the Crypto.com Arena, formerly known as the Staples Center, home to two NBA teams (LA Lakers and LA Clippers), together with the LA Kings (NHL). In 2021, Crypto.com agreed to pay approximately $50 million annually for 20 years. In addition to the recent CN Sports Complex name change, Uniprix Stadium,which hosts the Omnium National Bank tennis tournament, became IGA Stadium back in 2018. When the IGA Stadium agreement was concluded, Eugène Lapierre, Senior Vice-President at Tennis Canada, offered this assessment: “IGA attaches a good deal of importance to healthy eating, while for our part, we’re working hard to develop tennis in Canada. Our objectives are in sync.”1 Similarly, France Margaret Bélanger, President, Sports and Entertainment of Groupe CH, confirmed this marriage of values between the Montreal Canadiens and CN: “CN is not only a world leader in transportation, but also an iconic Canadian company which, like the Canadiens, has been based in Montreal for over a century.”2 It is clear that these companies were carefully selected on the basis of “common ground”, which implies a sharing of values between them and the operators of the IGA Stadium and the CN Sports Complex. Choosing the right partner: a key strategic issue Choosing the right company whose name or brand will be publicly displayed is essential. An owner or operator will want to avoid any association with a company whose identity is incompatible or whose values are not in alignment. Several examples of dubious partnership choices spring to mind: The Chicago White Sox’s baseball stadium changed its name from U.S. Cellular Field to Guaranteed Rate Field in 2016. This change sparked controversy, drawing ridicule from the public. The problem was that the White Sox are a high-profile brand, known throughout the sports world and enjoying immense prestige. In contrast, Guaranteed Rate was a local company, unknown to many baseball fans, and was simply unable to bear the weight of a storied franchise such as the White Sox. The social networks lit up at the time, adding to Guaranteed Rate’s visibility. The company certainly achieved its objective of “getting its name out there”! Away from the sports realm, another relevant example is the Toronto Transit Commission (TTC), which operates that city’s mass transit system. In April 2023, the TTC announced that it wanted to look into the possibility of selling the rights to name train or subway stations – an idea that it had initially announced in 2011. The outcry was immediate: “This will turn the TTC into a joke”, said Rami Tabello, a representative of the Toronto Public Space Initiative. “It's going to turn our civic identity and put a price tag on it. We need to say that our city is not for sale.”3 Just imagine the conductor’s announcement: “Next stop, Pepsi Station”! Structuring a naming rights agreement Although the parties to naming rights agreements are free to negotiate their own terms and conditions, certain provisions should be included to ensure a good long-term relationship. A naming rights agreement should be comprehensive and detailed enough to enable both parties to “uncouple” quickly and easily if a disturbing or controversial event occurs that could have an adverse impact on their brand image or reputation. As a general rule, such agreements include a termination clause in case one party defaults or is in breach of contract. It is therefore important to clearly identify what constitutes a default or a breach of contract. Along with the digital boards, certain spaces on the ice of hockey rinks or advertising on helmets, crests or jerseys, the rights stemming from a naming agreement are valuable assets that can be monetized by means of various financial instruments. Not only can these agreements be monetized as soon as they are signed, but they can also be transferred for a consideration to a third party, such as an alternative investor. Hence the importance of ensuring that naming rights agreements are flexible and transferable, thereby facilitating third-party transfers and monetization. As an additional type of financial instrument, naming rights agreements provide immediate access to cash flows. Intellectual property and trademark rights: what precautions should be taken? Naming rights agreements often facilitate the creation of new intellectual property linked to the joint use of brands. According to trademark law, the owner of a brand must, and is generally assumed to, exercise control over the products and services associated with the brand. In addition, when a new form of use extends to new services stemming from a naming rights agreement, it is advisable to verify whether the brand’s trademarking is sufficient or should be extended. Here is another point to consider: when the naming rights agreement expires, the chosen partner must not have permanently acquired rights to the brand. These agreements, therefore, must carefully circumscribe property rights as well as the terms and conditions governing intellectual property. It is also important to outline the civil liability arising from use of the brand. Considerations include compensating the brand owner for the partner’s use of the brand and, conversely, compensating the partner in the event that the brand infringes third-party-owned intellectual property. In any event, the brand owner cannot stand idly by if the user goes beyond what is permitted in the agreement (this would amount to breach of contract). North America and Europe: two different realities Naming rights agreements generate significant revenues for sports teams. A team unable to find the right partner may find itself at a disadvantage vis-à-vis other competitors in its league or even compared to other sports. This is the daunting reality facing a number of European soccer clubs, which are having a harder time finding partner companies for naming rights agreements than sports teams are in North America. One British example involves London-based Tottenham Hotspur, which has been unable to find a co-contractor to enter into a naming rights agreement for its new stadium since 2019. The team is now in serious financial difficulty and is attempting to host events other than soccer (concerts, boxing, NFL games, etc.) to make up for its revenue shortfall. In Europe, naming rights agreements are not as widespread as they are in North America. This is primarily due to the fans’ reaction. In Europe, soccer boasts a tradition-steeped history: fans tend to be opposed to change or to the idea of “selling” an iconic stadium to a company. On the other side of the Atlantic, marketing icons are often linked to companies that have signed naming rights agreements. To understand this phenomenon, consider the city of Pittsburgh and the Steelers’ football stadium, which was named Heinz Field for over 20 years under an agreement involving (unsurprisingly) the Heinz company. The stadium was also home to two gigantic Heinz ketchup bottles mounted atop the scoreboard: Image 1: Heinz ketchup bottles atop the Heinz Field scoreboard. The Heinz agreement expired and the facility was renamed Acrisure Stadium in July 2022; the ketchup bottles were removed. Steelers fans were soon calling for the ketchup bottles to be brought back—in their eyes, the gigantic bottles were an emblem of the team. Art Rooney II, the team’s legendary owner, acceded to the fans’ demands earlier this year: one of the bottles was reinstalled above a gate outside the stadium. Image 2: Some fans were outraged when the Heinz ketchup bottles were removed from Acrisure Stadium. Image 3: One of the ketchup bottles was reinstalled above Gate C outside the stadium. It should be noted that the Heinz company was founded in Pittsburgh in 1869 by Henry J. Heinz; it is still headquartered there. In Pittsburgh, the Heinz family is both emblematic and iconic. For local residents, Heinz is much more than a brand of ketchup or a food processing company: it is a key part of their history and culture, interwoven with the social fabric. The Heinz ketchup bottles towering over the football stadium were not just a marketing ploy; they were also a cherished symbol for the community and the city of Pittsburgh. Conclusion Unbeknownst to many of us, the impacts of naming rights agreements can be felt discreetly in our day-to-day lives. In addition to being a vehicle for conveying emotions and exerting an influence on our experience of certain events and places, these agreements drive our emotional attachment to certain sports properties. Pierre Durocher, Le stadium Jarry change de nom, Le Journal de Montréal, April 16, 2018 (https://www.journaldemontreal.com/2018/04/16/le-stadium-uniprix-devient-le-stadium-iga). Montreal Canadiens, Montreal Canadiens' practice facility to be named CN Sports Complex, media release, August 15, 2023 (https://www.nhl.com/canadiens/news/montreal-canadiens-practice-facility-to-be-named-cn-sports-complex-345595466). CBC News, TTC deal opens door to station naming rights, July 6, 2011 (https://www.cbc.ca/news/canada/toronto/ttc-deal-opens-door-to-station-naming-rights-1.1023460).

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  • Payroll deductions: what employers need to know about changes to provincial income tax rates

    On March 21, 2023, during his traditional budget speech, the Minister of Finance of Québec announced that Quebecers will benefit from a general reduction in personal income taxes starting in 2023. The effect will be a reduction in the tax rates that apply to the first two taxable income brackets of the personal income tax table. In addition to having a positive impact on Quebecers’ disposable income, the tax cut will also have repercussions on source deduction rates applied to certain payments and remuneration. The fixed rates used for provincial income tax source deductions on lump-sum payments have been changed. Employers will therefore have to adjust their calculations for such payments. This will be the case, for example, where sums are paid as retiring allowances, as is frequently the case in the settlement of certain employment termination agreements. Previously, the rate used to calculate provincial income tax source deductions on a retiring allowance payment was 15% for amounts up to $5,000, and 20% for payments over $5,000. The income tax deductions on such payments made after June 30, 2023, is now 14% for amounts up to $5,000, and 19% for payments over $5,000. Table of provincial and federal income tax source deduction rates for lump-sum payments, effective July 1, 2023, by amount of lump-sum payment (e.g. retiring allowance): $5,000 or less Provincial tax rate 14% Federal tax rate 5% Over $5,000 up to $15,000 Provincial tax rate 19% Federal tax rate 10% Over $15,000 Provincial tax rate 19% Federal tax rate 15% Although it may seem trivial, this review of provincial income tax source deduction rates has far-reaching implications, given that these are often used by parties especially in the negotiation of employment termination agreements. Human resources and payroll professionals must use the new income tax source deductions in their employment termination negotiations to ensure that they are tax compliant. A positive outcome of these rates is that employees will now have more disposable income after tax for the same amount paid by their employer. Such a measure could make reaching an agreement easier in the context of tough negotiations. As an employer, it is essential that you update your payroll systems and processes to correctly reflect the new income tax rates and ensure tax compliance. Our team of labour law and tax professionals is available to answer your questions about this change and help you make informed decisions that will benefit your business.

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  1. Lavery's expertise recognized by Chambers Canada 2024

    We are pleased to announce that Lavery has once again been recognized in the 2024 edition of Chambers Canada in the following sectors: Corporate/Commercial (Québec, Band 1, Highly Regarded) Employment and Labour (Québec, Band 2) Energy and Natural Resources: Mining (Nationwide, Band 3) Intellectual Property (Nationwide, Band 4) These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery’s professionals. Five lawyers have been recognized as leaders in their respective areas of practice in the 2023 edition of the Chambers Canada guide. Areas of expertise in which they are recognized: René Branchaud : Energy and Natural Resources: Mining (Nationwide, Band 5) Nicolas Gagnon : Construction (Nationwide, Band 3) Marie-Hélène Jolicoeur : Employment and Labour (Québec, Up and Coming) Guy Lavoie : Employment and Labour (Québec, Band 2) Sébastien Vézina : Energy and Natural Resources: Mining (Nationwide, Band 5) Since 1990, Chambers and Partners' ranks the best law firms and lawyers across 200 jurisdictions throughout the world. The lawyers and law firms profiled in Chambers Canada are selected following through a rigorous process of research and interviews with a broad spectrum of lawyers and their clients. The final selection is based on clearly defined criteria such as the quality of client service, legal expertise, and commercial astuteness. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.

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  2. Energy: Lexpert Recognizes Two Partners as Leading Lawyers in Canada

    On September 25, 2023, Lexpert recognized the expertise of two of our partners in its 2023 Lexpert Special Edition: Energy. René Branchaud and Edith Jacques now rank among Canada’s leaders in the area of energy. René Branchaud practises in the fields of securities, mergers and acquisitions, as well as corporate law. With more than thirty years’ experience, he advises companies on matters such as incorporation and organization, the drafting of shareholder agreements, private placements, public issues, going public, dispositions, and takeovers. Edith Jacques is a partner in Montréal's Business law group. She specializes in mergers and acquisitions, commercial law, as well as international law and acts as business and strategic consultant to mid- and large-size companies. She plays an active role in companies in the manufacturing and energy sectors. These recognitions are further demonstration of the expertise and quality of legal services René and Edith. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.  

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  3. Lavery hires nine new legal professionals

    Quebec City office William Bolduc William will be joining the administrative law team at Lavery’s Quebec City office in September 2023. Although he is an administrative law generalist, most of his mandates involve municipal law. William also has a keen interest in constitutional law. “Municipal law is exciting, but highly complex due to its legislative corpus. During my internship, Lavery’s administrative law team gave me consistent support and guidance as a junior professional. I am proud to have an opportunity to join this dynamic team and to bring the benefits of my own experience.” Marianne Duboy Marianne Duboy specializes in civil and commercial litigation and construction law. She joined the Lavery team as a student back in 2021. She completed her bachelor of law degree at Laval University. During her studies, Marianne was involved as a volunteer researcher at Laval University’s Legal Information Office. She also served as a research assistant for Prof. Daniel Gardner. “I decided to begin my career at Lavery because of the team with which I developed and grew over the past two years. That gave me an opportunity to exceed in personal as well as professional terms.” Émilie Grignon Émilie is a member of our Business Law group. She joined the Lavery team as a student back in 2021. “I decided to join Lavery after the team welcomed me with such open arms. This allowed me to develop both personally and professionally by giving me greater autonomy, as well as the chance to pursue excellence as a jurist.” Montreal office : Sophie Crevier Sophie Crevier is member of the Litigation and Conflict Resolution group and practices primarily in the areas of civil and commercial litigation. During her studies, she worked as a research assistant at the University of Montreal’s Cyberjustice Laboratory, where she contributed to the development of projects designed to promote access to justice using high-tech tools. “For me, Lavery offers a welcoming environment, where the focus is on collaboration and where our colleagues and mentors care deeply about our professional success. It’s no surprise that I would want to begin my legal career there.” Renaud G. Murphy Renaud is a member of our Business Law group and mainly practices in the area of financing, particularly venture capital and equity financing. Prior to his legal training, Renaud completed a bachelor’s degree in business administration. He has more than 10 years of sales experience, primarily in the telecommunications sector. “As soon as I was hired at Lavery, I was granted trust. I am pleased to be starting out as a lawyer in an environment that fosters autonomy, rigour and the pursuit of excellence.” Jennifer Younes Jennifer joins our Litigation and Conflict Resolution group. " Choosing Lavery was for me a way of choosing a team that would support me, while ensuring that I had access to the resources I needed to develop professionally.  So I continue my journey at Lavery, now as a lawyer, with the certainty of being surrounded by dedicated mentors fostering a stimulating, collaborative and collegial work environment." Sherbrooke office: Arianne Arguin Arianne is member of our Business Law group. She primarily practices in the areas of transactional law and commercial law, where she supports our partners and experienced members working primarily on cases involving commercial transactions, such as corporate restructurings and business sales/acquisitions. She also works on cases involving the incorporation of the legal practice involving various professionals. Prior to joining the firm, she honed her legal knowledge and skills in the legal department of the public health and social services network. “As soon as I started at Lavery, I realized that collaboration is a core value of the firm. As a member of the Lavery team, I have the opportunity to develop my skills each day by working closely with a range of professionals who pool their strengths and expertise to offer an unparalleled level of service to each client.” Marianne Fortier Marianne is member of our Litigation and Conflict Resolution group. “At Lavery, I am spoiled insofar as I can rub shoulders with experienced legal professionals who are so generous with their time and experience. The team members’ approach is very humane and collaborative. When I began working for the firm, I was involved in a variety of mandates before I knew it. That gave me a chance to develop my professional skills.” Marie-Pier Landry Marie-Pier Landry is member of the Litigation and Conflict Resolution group. She joined the Lavery team as a student back in 2021. “I am delighted to be joining a team characterized by its excellence, sense of daring and entrepreneurship. I am convinced that Lavery will enable me to thrive professionally. I am looking forward to contributing to the firm’s success!”

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  4. Lavery welcomes a new partner to the Business Law group

    Lavery is very pleased to welcome Marc-André Godin as a partner in the Business Law group at our Montreal office, more specifically as a member of our Real Estate Law team. Mr. Godin’s main areas of practice include real estate, investments, commercial leasing, procurement and general commercial law. Over the course of his career, Mr. Godin has worked for various private companies and law firms. He has also been involved in a number of major transactions, including due diligence mandates with environmental, commercial and real estate components. Mr. Godin previously served as an in-house legal advisor to institutional clients, as well as to a real estate venture capital fund. He also worked as a legal advisor to a federal Crown corporation and a national commercial brokerage firm, supporting their needs in the areas of commercial and real estate law. Mr. Godin is deeply committed to the well-being of Quebec’s youth. Since 2014, he has served as director of donations and sponsorships for Let’s Bond, a group of young professionals organizing benefit events for the Jeunes en Tête Foundation and the Douglas Institute Foundation. “I am eagerly looking forward to joining the Lavery team, whose reputation for excellence extends across Quebec as well as internationally. Thanks to its multi-disciplinary nature and in-house collaboration, the firm helps companies doing business in Quebec to realize their ambitions, whether that means achieving growth, managing risks, optimizing assets or protecting and defending their interests. The core values upheld by the firm’s members convinced me to pursue my career here,” said Mr. Godin.

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