Sports and Entertainment

Overview

The sports and entertainment industries exist within changing environments that are driven primarily by the emergence and rapid deployment of new technologies, the challenges associated with negotiating contentious transactions and hot-button issues, the adoption of best practices in governance, the commercialization and protection of intellectual assets, and cybersecurity.

Count on seasoned professionals for legal advice

We understand the challenges affecting sports teams, professional and amateur leagues, sports facilities, agencies and event promoters and can assist you with:

  • Development and financing of your commercial projects
  • Day-to-day business operations
  • Mergers and acquisitions
  • Governance strategies
  • Protection and promotion of your innovations
  • Investigation report on behavior, suspected misconduct or resulting from complaints from whistleblowers
  • Your growth

If you work in the sports industry as an agent, an owner, a member of a sports team or an athlete, you can count on our expertise to help you in:

  • The negotiation, management and drafting of your contracts
  • The preservation of your brand image in advertising contracts and sponsorship agreements
  • Marketing, promotion as well as public and media relations

If you are looking for a comprehensive service and advice that’s fully adapted to the reality of your industry to help you grow and achieve your ambitions, our Sports and Entertainment Team can provide you with the following services:

  • Investment and financing
  • Mergers and acquisitions
  • Tax optimization
  • Contract negotiation
  • Protection from potential litigation and representation in court
  • Protection of your intellectual property
  • Issue management for marketing and promotion
  • Regulatory and disciplinary matters

Representative mandates

The organizations and individuals who trust us

Below is a non-exhaustive list of the types of mandates that our team handles.

Associations/leagues/teams/agents

  • Represented a group led by the Molson brothers in the acquisition of the Montreal Canadiens
  • Represented an investor group in the acquisition of the Montreal Alouettes, a Canadian Football League team
  • Represented hockey promoters in the prospective acquisition of a National Hockey League (NHL) hockey team
  • Represented the Los Angeles Kings Hockey Club L.P. and AEG Facilities Canada ULC in their respective registrations with the Registry of Lobbyists
  • Represented Pat Brisson and J.P. Barry, two leading hockey agents, in the acquisition of IMG’s hockey player representation business and the negotiation of a strategic partnership agreement with Creative Artists Agency (CAA)
  • Represented the Quebec Major Junior Hockey League in updating its legal and governance structure, including the creation and establishment of a new organization under the Canada Not-for-profit Corporations Act, the review of its governance structure and the drafting of its new articles and by-laws
  • Represented the Ligue de développement du hockey M18 AAA du Québec in updating its legal and governance structure, reviewing its governance structure and updating its articles and by-laws

Sports professionals

  • Represented Marc Bergevin in his appointment as Executive Vice President and General Manager of the Montreal Canadiens
  • Represented coaches in their appointments as head or assistant coaches of professional hockey teams, including Guy Boucher, Jacques Martin and Martin Raymond
  • Represented Luc Robitaille, President of the Los Angeles Kings hockey club, in speaking engagements
  • Represented Benoît Robert and his partners in the sale of American Hockey Group, LLC (AHG), the parent company of the United States Hockey League team the Omaha Lancers, under which the AHG members’ interests were sold to Crossbar Down, LLC, a corporation in Nebraska
  • Represented track and field athlete and Olympian Bruny Surin in advertising contracts, brand portfolio management and sponsorship agreements
  • Represented track and field athlete and Olympian Bruny Surin in a dispute with Puma North America Inc. and Puma Canada Inc. for unlawful use of trademarks and public image
  • Represented athlete and Olympic diver Jennifer Abel in advertising contracts and sponsorship agreements
  • Represented Daniel Brière in the acquisition of an interest in the Blainville-Boisbriand Armada hockey team, a member of the Quebec Major Junior Hockey League
  • Represented a lender in connection with a corporate loan to the Val-d’Or Foreurs hockey team, a member of the Quebec Major Junior Hockey League
  • Represented a group of investors made up of commentators and current and former NHL players in connection with the proposed acquisition and relocation of a Quebec Major Junior Hockey League club

Entertainment

  • Represented the Cirque du Soleil special committee of senior lenders in connection with the purchase of Cirque du Soleil through a $1.2 billion credit bid under the Companies’ Creditors Arrangement Act
  • Represented independent children’s content company DHX Media Ltd. in its corporate finance activities
  • Represented 01 Studio Inc. in the negotiation of equity financing and a licensing and distribution agreement for a video game in China and the Asia-Pacific region with Skymoons Technology Inc. and its affiliates
  • Represented online luxury goods retailer Atallah Group Inc. (operating as SSense) in connection with services for manufacturing a product and licensing arrangements
  • Represented Les Productions O’Gleman Diaz Inc. in the distribution, publication and licensing of its feature television show, magazines and books entitled Cuisine futée, parents pressés
  • Represented contemporary visual artist Michel de Broin in a claim for copyright infringement
  1. IT services dispute: the Supreme Court considers the non-liability clause

    In IT service contracts, it is common to find non-liability clauses protecting companies that provide software and professional IT system implementation or integration services. Issue In Dispute Is such a contractual non-liability clause valid under Quebec civil law where a fundamental obligation is breached? In 6362222 Canada inc. v. Prelco inc., recently rendered, the Supreme Court of Canada ruled that the non-liability clause in question was freely negotiated between the parties and resulted from compromises made by both sides. It therefore had to be respected. The respondent “Prelco” mandated the appellant “Créatech” to supply software and provide services to implement an integrated management system, the purpose of which was to manage and track all operational services information found in a large number of databases. Further to the many recurring problems during the system implementation, Prelco decided to end its contractual relationship with Créatech and hired another company to render the system operational. Prelco then claimed damages from Créatech, while Créatech filed a counterclaim for the unpaid balance for the project from Prelco. This began a long legal battle, which ended in the Supreme Court. In its decision, the Supreme Court treated various arguments which, according to Prelco, would have precluded the application of the non-liability clause. The Court dismissed these arguments. Reaffirmation Of The Primacy Of Freedom Of Contract The Supreme Court of Canada held that the Civil Code is set out in such a way as to provide for parties’ freedom to contract and to strike a balance between the notion of public order and the principle of freedom of contract. In considering the applicable legal principles, the judges noted however that the principle of respect for the contractual will of the parties does have exceptions, for example in cases of gross negligence or intentional fault, where economic forces are unbalanced ( such as a contract between a merchant and a consumer), where adhesion contracts and other types of contracts, such as nominate contracts mentioned in the Civil Code are involved, or where exclusions cover liability for body or moral injury.  Conclusion From this decision, it appears beneficial for IT service providers or other service providers to choose to be governed by the Quebec regime in contracts where the parties negotiate a clause limiting or excluding liability.

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  2. Studios and designers: How to protect the intellectual property of your video games?

    Behind every video game, there is intellectual property (IP) which is worth protecting to optimize monetisation of the game. As discussed in Studios and designers: Are you sure that you own the intellectual property rights to your video games, the first step for studios and designers is to make sure that they own all IP rights on the video game. The next step is to identify what type of IP protection is available between trademarks, copyrights and patents and then put in place an IP strategy to protect these assets in Canada and abroad. Below is a summary of the types of protection to consider to fully protect a video game. Trademarks The name of a video game is a valuable asset, with a potential to become internationally famous. Just think about Call of Duty, Fortnite, Minecraft and Assassin’s Creed or, for the more nostalgic, classic games such as Super Mario. Pokémon and Pacman. Trademarks have this power to evoke unique and captivating experience in the gaming world. In this industry, experience shows that a video game may become an instant international success, since it is an online market with powerful gaming influencers. For this reason, being proactive with trademark protection is key. What does it mean? First, clearance searches should be made as soon as you decide on the name of your game, in the most important markets where you anticipate sales. The idea here is to make sure that your brand is not conflicting with other marks so that you may use it and register it in your main market. Once the mark is cleared, you may then proceed with filing. Here again, the earlier the better as trademark protection is, in most countries, granted to the first-to-file. Filing before your project becomes public is therefore strongly recommend. As for the scope of the application, it should of course cover the game itself but also potential merchandising goods, either because it is part of the business plan to monetize the brand, or as a defensive strategy. Apart from the main brand, other aspects of the game may qualify as trademarks and be protectable. For instance, a sound or sequence of sounds associated with starting a console or a game could potentially be registered as trademarks. The names and image of characters in a game may also be protected, especially for merchandising goods.  In short, for studios and designers involved in the video game industry, trademark registration is key to getting the most value out of a video game. This begins with a well-orchestrated protection strategy to minimize risk of conflicts and to build a solid and valuable brand. Copyrights A video game is a mix of literary, artistic and musical works which are protected by copyright, including computer program behind a game’s architecture is also explicitly protected by law.1 The protection offered by the Copyright Act (“CA”) applies as soon as a work is created, without the need for registration. This protection extends to the 176 member countries of the Berne Convention. Although the protection of a work by copyright is automatic, copyright owners may register their right with the Canadian Intellectual Property Office (“CIPO”) at any time. In particular, registration makes it easier to prove ownership of the right in the event of a dispute in that it creates the presumption that the person named in the registration owns the copyright. Copyright protection applies to the entirety of the game, as well as to its various components. Any infringement of these rights by a third party may give rise to a copyright infringement claim if the work or a substantial part of it is copied, unless a defense such as fair dealing is applicable. In this respect, the following activities may qualify as fair dealing: research and private study, education, parody as well as criticism or review and news reporting. Is video game live streaming copyright infringement? In recent years, the phenomenon of video game live streaming has really taken off. Video gamers film or record their computer screens and broadcast them on platforms such as YouTube and Twitch to show their characters, strategies and tactics for completing certain levels of a game. Some live streaming video gamers, who make this their living, have achieved celebrity status and have thousands of followers. Is live streaming a video game without express permission copyright infringement? The courts have yet to rule on whether live streaming games online constitutes a copyright infringement to communicate the work to the public by telecommunication under section 3(1)(f) of the Act. Faced with this widely popular trend, some studios accept this practice because positive reviews from such gamers can boost game sales. Others criticize the fact that they profit from video games without copyright owners receiving any compensation. Chances are that live streaming is not the highest priority of the video industry who is more concerned by the illegal downloads and counterfeits, which may explain why the courts have not yet had the opportunity to rule on video game live streaming. Patents Patents protect the functional aspects of an invention. The owner of a patent may prevent anyone from making, using or commercializing the patented innovation from the date the patent is obtained. Three aspects are taken into consideration before granting a patent:2 Novelty – The invention must be different or be innovative compared to anything that has been done before, anywhere in the world. Utility – The invention must have a useful function and economic value. Inventiveness – The invention must not be obvious to a person skilled in the field. In Canada, it is not possible to patent an abstract idea, but it is possible to patent the physical embodiment of that idea, provided that it meets the criteria of novelty, utility and inventiveness. Canadian patents in the video game industry Patents obtained in the video game industry mainly relate to consoles, controllers, headsets and other gaming accessories. The video game industry has proved to be innovative with the development of inventions that are both fun and useful. In 2012, Nike patented an invention to encourage physical activity among video game players.3 The patent describes a device placed in a gamer’s shoe when the gamer is physically active and connected to a video game. The energy spent by the gamer gives energy to the virtual character. Once the character’s energy is depleted, the gamer must engage in physical activity again. Are game play mechanics patentable? Certain aspects of a video game are less easy to patent, in particular the game play mechanics, which are a distinctive aspect from the standpoint of gamers when choosing a video game. The game play mechanics consists in the virtual experience of a video game: character movement, the interaction of the player with the game, the way the player moves through the levels of the game, etc. Unique and well-developed game play mechanics can be a great asset for a developer wanting to market new versions of a game. Gamers will go back to a familiar game to get immersed in a new experience. This makes patenting such an experience appealing for a studio. Given that game play mechanics are developed using computer code, it might seem that even if the criteria of novelty, utility and inventiveness were met, this type of invention could not be physically embodied and thus could not be patented. To be patented, game play mechanics must have a physical component in addition to the code itself. Consider a patent describing a video game in which a gamer’s heartbeat is integrated into the game,4 which is a good illustration of physical embodiment. Such transposition of a gamer’s vital signs is done physically through a heart monitor worn by the gamer and connected to the game. As all these aspects were described in the invention, this type of inventive game play mechanics was considered patentable. In the United States, the criteria for patents are similar to those in Canada, meaning that abstract game play mechanics would have to be linked to a physical aspect in order to be patentable.   Conclusion Implementing an IP protection strategy prior to launching a video game can prevent conflicts, increase the value of assets and strongly position a company in the market to maximize profits. Copyright Act, section 2. “A guide to patents,” Canadian Intellectual Property Office, Government of Canada, 2020-02-24. Patent No. 2,596,041, issued February 9, 2006. Patent No. 2,208,932, issued June 26, 1997.

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  3. Studios and designers: Are you sure that you own the intellectual property rights to your video games?

    The year 2020 will have been difficult for the vast majority of industries, and in particular for the arts, entertainment and recreation industry. The video game industry, however, is growing in leaps and bounds. For example, Nintendo and PlayStation have each set record sales for their games released in 2020, including Animal Crossing:New Horizons and The Last of UsPart II. Over the past few decades, the number of video game players has never stopped increasing.  The year 2020 will surely be no exception, especially considering the COVID-19 pandemic.  Playing a video game is not only a way to have fun: it is also a way to stay connected with a community that shares the same interests. The world of video games is so popular that the Government of Canada teamed up with the Entertainment Software Association of Canada (“ESAC”) to launch the #CrushCOVID campaign, using ESAC’s and its members’ social media platforms to share mobilization and awareness messages about public health measures. The video game industry is an economic powerhouse in Canada. According to the latest ESAC report, the industry contributed an estimated $4.5 billion to Canada’s GDP in 2019 — up 20% from 20171 — and these figures will likely continue to rise. This video game boom has a decisive impact on the value of companies innovating in this field. A number of recent transactions illustrate this. For instance, last September, Microsoft acquired Bethesda Softworks, one of the largest video game publishers, for US$7.5 billion. Microsoft also bought the Swedish company Mojang Studios, which designed the legendary game Minecraft, for US$2.5 billion in 2014. Closer to home in Montreal, Beat Games was bought by Facebook following the launch of its virtual reality game, Beat Saber, while Typhoon Studios was bought by Google. A successful video game may be lucrative in various ways, between the sale of video games themselves and merchandising goods, such as clothing and accessories, figurines, as well as game-inspired TV series with giants such as Netflix, Amazon Prime, HBO and Hulu, which are always on the lookout for hit TV series. Protecting its intellectual property (“IP”) on a video game is key to monetize all investment put into the development of a game. Doing so is even more crucial in the context where video game commercialization knows no borders, and a game can become an international success overnight. In short, any company should ask itself the following questions before launching its video game, to better position itself in relation to potential investors, licensees or partners, as well as competitors and counterfeiters: Does my company own all of the IP rights on the video game? What kind of IP protection applies and where should IP be protected? Let’s look at the first question. Does my company own all of the IP rights on the video game? Designing a video game usually involves a team of creators, including ideators, programmers, writers, visual and sound effects designers. All these people contribute to the creation of the work that is the video game and the underlying IP. For instance, Ubisoft worked with muralists and graphic designers for its recent game, Watch Dogs: Legion. They designed nearly 300 works to create a post-Brexit urban London. The initiative earned Ubisoft praise even before the game’s release last October.2 Depending on their contribution to the game’s design and their status as employees or consultants, these creators may qualify as authors. As such, they may be considered co-owners of the copyright on the video game. Generally, the copyrights developed by employees in the course of their employment belong to the employer,3 while a consultant remains the owner of the copyrights, unless otherwise agreed upon in writing. Thus, a company behind a video game must make sure that its consultants assigns their IP rights to ensure that it retains full ownership of the copyright. What happens if a consultant has not assigned the copyrights to the company? Can the consultant claim co-ownership of the entire game, or are the consultant’s rights limited to the part he created, such as specific drawings, or music for a particular scene? This is an important question which may have an impact on profit sharing. In Seggie c. Roofdog Games Inc.,4the Superior Court held that a person (non-employee) whose contribution to a game is minimal cannot be considered as a co-author of the entire video game, insofar as: The contribution is limited to a few images; These images are distinguishable from the rest of the work; and The parties had no common intention of creating a collaborative work. Seggie was therefore denied the compensation of 25% of the profits generated by the game that he had claimed. However, the court recognized that Seggie held a copyright on the works he specifically created and which were incorporated into the game, and granted him a compensation of $10,000. Incidentally, this compensation is in our opinion arguable, given that Seggie had agreed to work pro bono for his friend. This decision shows how important it is to have a copyright assignment signed by any person contributing to the conception of a work, regardless of the extent of their involvement. Waiver of moral rights In addition to the assignment of copyrights, the company owning a video game should also ensure that the authors sign a waiver of their moral rights, so as not to limit the potential to modify the game or to associate it with another product or a cause. Indeed, the authors of a work have moral rights that enable them to oppose the use of their work in connection with another product or a cause, service or institution to the prejudice of their honour or reputation. An example would be the use of music or a character from a video game to promote a cause or product, or a television series derived from the game whose script could potentially harm the author’s reputation. To make sure you have plenty of leeway to exploit the commercial potential of the game, a waiver of moral rights should be signed by any employee and consultant involved in the creation of the video game. Conclusion Launching a video game requires a huge investment in terms of resources, time and creativity. In order to develop an effective protection strategy, the first step is to make sure that you own all rights. Then, you are in a position to fully protect and enjoy your IP rights. The next article in this series will discuss the significance and application of these IP rights—i.e., trademarks, copyrights and patents—to the video game industry. “The Canadian Video Game Industry 2019,” Entertainment Software Association of Canada, November 2019, [online]. CLÉMENT, Éric, “Le talent montréalais en vedette dans un nouveau jeu d’Ubisoft,” published in La Presse+, October 21, 2020, edition. Copyright Act, subsection 13(3). Seggie c. Roofdog Games Inc., 2015 QCCS 6462.

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  1. Sébastien Vézina participated in the 2022 Memorial Cup site selection committee

    On September 22, the Canadian Hockey League (CHL) announced Saint John as the host city for the 2022 Memorial Cup. At the CHL’s request, Sébastien Vézina, partner in the Business Law group, sat on the selection committee tasked with analyzing the cities’ applications to host the tournament alongside: Dan MacKenzie, President, CHL Colin Campbell, Senior Executive Vice President of Hockey Operations, NHL Nathalie Cook, Vice President, TSN/RDS at Bell Media Nancy Orr, Chief Judge of the Provincial Court of Prince Edward Island Sébastien Vézina is a partner in Lavery Lawyers’ Business Law group and has extensive experience in the sports and entertainment industry. He provides business and regulatory advice to sports teams, players, agents, owners, senior managers, sponsors, agencies, event promoters, team members and athletes. He frequently assists league operators and team owners with strategic issues relating to their governance.

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  2. Lavery facilitates a partnership between Soccer Québec and the Montreal Impact

    On January 16, Soccer Québec and the Montreal Impact announced a partnership to boost the popularity and quality of Quebec soccer. Lavery had the opportunity to support Soccer Québec in reaching this agreement, which is the first in Canada between a professional soccer club and a provincial sporting federation. The main subject of this agreement is the long-term acquisition of Soccer Québec’s commercial and marketing rights by the Montreal club until the FIFA World Cup in 2026 in North America. This will allow Soccer Québec and the Impact to join forces to promote and support the continued growth of soccer in the province. The Lavery sports law team that counselled Soccer Québec was made up of Sébastien Vézina and Andrée-Anne Perras-Fortin. Click here to learn more.

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  3. Lavery contributes to the international expansion of the entertainment industry

    On December 2, Montreux Comedy and Groupe Juste pour rire (JPR) announced the establishment of an alliance between the two organizations. The aim of this historic collaboration between the two largest French-language comedy festivals in the world is to create original products and content on both sides of the Atlantic and to enable the co-production and co-promotion of an international French-language gala in Montréal and in Montreux, Switzerland. Lavery advised and represented Montreux Comedy in the drafting and negotiation of the agreement for this bold project, particularly on aspects related to the creation of content for digital and traditional broadcasting platforms. Sébastien Vézina, a partner in the Business Law group, handled the negotiations to reach the agreement, with the support of Andrée-Anne Perras-Fortin, a lawyer in the same group. "Lavery is proud to have contributed to finalizing the collaboration between two major players in the entertainment industry in Quebec and abroad. In a context where this industry is taking a major digital shift, this collaboration will increase the positioning and availability of French-language content on the market," says Sébastien Vézina.

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