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Presenting a live 90-minute webinar with interactive Q&A
Drafting Corporate Sponsorship Agreements for
Major Events, Marketing and Promotional Activities Negotiating Provisions on Scope, Exclusivity, Brand Visibility,
IP Rights, Indemnification, Termination and More
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
TUESDAY, SEPTEMBER 27, 2016
Peter J. Kinsella, Partner, Perkins Coie, Denver
Sarah Hartley, Bryan Cave, Denver
Roger R. Quiles, Esq., Staten Island, N.Y.
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FACTORS TO CONSIDER WHEN EVALUATING WHETHER TO ENTER INTO CORPORATE SPONSORSHIP
AGREEMENTS
By Roger Quiles, Esq.
www.RRQlaw.com
(917) 477-7942
DISCLAIMER
This slideshow is to be used for educational purposes only. The information contained herein does not constitute legal advice. You should not rely on the information contained in this slideshow without consulting your attorney first.
6
UNDERSTANDING THE BUSINESS OF SPONSORSHIPS
What business interests are involved in securing a sponsorship?
Key points
Brand Exposure
Activation
Exclusivity
Duration
These form the basis of your understanding of any sponsorship!
7
BRAND EXPOSURE
This is THE reason why companies enter into sponsorship agreements- visibility!
Brand Exposure = Intellectual Property Usage
Understanding the demographics
When the demographics of the sponsee’s and sponsor’s consumers align, potential for long term successful sponsorship
8
ACTIVATION
Activation is how a sponsor independently promotes its sponsorship to increase awareness about its brand
Consumer engagement is key
Understand the potential activation(s) as early as negotiations!
Additional liability concerns
Ensuring appropriate space/time for activation
9
EXCLUSIVITY
Is exclusivity essential for your company’s sponsorship?
Important to define the exclusive sponsorship category
If each sponsee is a pie, the category is a piece of the pie
Ex. Apparel can be subdivided into hats, jerseys, hoodies, etc.
Remember categories can overlap!
Ex. Soft drink providers who also make energy drinks
Is the proposed sponsorship category broad enough to meet your company’s exclusivity desires?
10
CONTRACT DURATION
Important to understand how committed your company is to the potential sponsorship
If any concerns, how can you build escape clauses around them?
Limit sponsee’s ability to exit
Longer duration + exclusivity = untouchable area for competition
Also, longer durations may allow sponsor to build a further connection with the sponsee’s consumers
11
TEAM SPONSORSHIPS
Several kinds of Team Sponsorships
Official sponsor
Naming rights
Sponsor branding on uniforms
Generally provides Sponsor access to:
Players
Team branding
Tickets/items/memorabilia for giveaways
12
EX. PHILADELPHIA 76ERS AND STUBHUB
First team in the four US major sports to sell on-jersey advertisement
Reportedly a three year deal valued at $5 million per year to commence in the 2017-2018 season
League regulations limit the size of such ads to 2.5 inches by 2.5 inches
Source: http://www.espn.com/nba/story/_/id/15559477/philadelphia-76ers-sell-first-nba-jersey-advertisement-stubhub
13
CONSIDERATIONS IN TEAM SPONSORSHIPS
What level of access to team personnel will your company have?
What restrictions are there on utilizing team branding?
What restrictions are there on utilizing your company’s branding in association with the team? (Like the NBA jersey ads)
What, if any, kickbacks are involved? (tickets, items, etc.)
Is the exclusive sponsorship category sufficient to close out competitors?
14
INDIVIDUAL SPONSORSHIPS
Quite different from business, event, or facility based sponsorships
Endorsements
Generally provides sponsor access to:
Product usage, both in-game and in day to day life
Social media promotion
Use of individual in advertising
BUT individuals may be subject to team and league regulations
15
EX. NFL PLAYERS AND BEATS BY DRE
Beats By Dre had entered into multiple sponsorship deals with NFL players to endorse its headphones
Players would regularly be seen pre and post game wearing the headphones
Upon NFL entering into exclusive deal with Bose, players wearing Beats became an issue
Players disallowed from publicly wearing the Beats headphones from 90 minutes prior to game to 90 minutes following the game
Sources: http://fortune.com/2015/01/13/beats-by-dre-banned-brands-nfl/; http://www.denverpost.com/2014/10/16/nfl-draws-fine-line-between-beats-bose-headphones/
16
CONSIDERATIONS IN INDIVIDUAL SPONSORSHIPS
What rules/regulations is the individual subject to?
Do the rules/regulations impact activation?
Are there limitations on the usage of the individual’s likeness rights?
Is the individual being paid in equity?
Ties the sponsor/sponsee much closer together
Valuation and termination issues
Used by startups to attract significant individuals that they otherwise couldn’t afford
17
FACILITY SPONSORSHIPS
The focus here is on naming rights:
To the facility itself
To areas/sections of the facility
To restaurants within the facility
Generally provides sponsor access to:
Ticketing for events
Branding for teams housed in the facility
In stadium signage
18
EX. LEVI’S STADIUM AND 49ERS
In 2014, the San Francisco 49ers entered into a sponsorship with Levi’s for the naming rights to their stadium
Deal reportedly worth $220 million over 11 years
At the time, this was the third largest naming rights deal for a stadium
Historical synergy- Levi’s was originally founded as a dry goods store for gold miners in the area, which the 49ers are named after
Sources: www.levisstadium.com; http://www.nfl.com/news/story/0ap1000000167936/article/levis-stadium-to-be-san-francisco-49ers-new-home
19
CONSIDERATIONS IN STADIUM SPONSORSHIPS
Naming rights deals for facilities are expensive and long term. Is such sustainable for your company?
What intellectual property rights does your company have access to?
What kind of activations would be substantial enough to justify the high price?
What’s your potential brand exposure?
20
DIGITAL SPONSORSHIPS
Several kinds of digital sponsorships for events: Naming rights
Official sponsor of online stream production
Official event sponsors
Generally grants sponsor access to: On stream brand placement- stationary or rotating
Promotion/signage at the location of the physical event
Web site ads
Social media promotion
Commercials during broadcast
In-chat promotions/giveaways
Event branding usage
21
EX. MLG CS:GO MAJOR CHAMPIONSHIP- COLUMBUS
Source: https://www.youtube.com/watch?v=0GK-uV2l_KE
22
CONSIDERATIONS IN DIGITAL SPONSORSHIPS
How will Sponsor branding be displayed, in general?
What specific sizes are available to display branding?
Are there limitations to in-chat promotion?
Are there limitations to event branding usage?
Is exclusivity limited to the online stream or does it apply to the physical event as well?
23
THANK YOU!
Roger Quiles, Esq.
www.RRQlaw.com
(917) 477-7942
24
Perkins Coie LLP
Drafting Corporate Sponsorship Agreements Strafford
September 27, 2016
Peter J. Kinsella, Partner
(303) 291-2328
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Disclaimer
26 Peter J. Kinsella 303-291-2300
This presentation is for educational purposes
only and does not constitute legal advice. If you
require legal advice, you should consult with
your attorney.
The information provided in this presentation
does not necessarily reflect the opinions of
Perkins Coie LLP, its clients or even the author
Perkins Coie LLP | PerkinsCoie.com
Common Sponsorship Agreement Contract Terms
27
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Potential Contracting Parties
28
• Team
• Arena
• Players
• Event Organizer
• Concessionaire
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -1
29
Exemplary License Clause:
Team hereby grants to Sponsor a limited license
during the Term to: (a) advertise and promote the
fact that Sponsor is an “official sponsor of the
________,” (b) use, reproduce and display the
Team Marks in connection with advertising and
promotion of Sponsor’s goods and services in the
Product and Services Category, and (c) promote
Sponsor’s sponsorship, subject to the terms and
conditions of use set forth herein.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -2
30
Exemplary Endorsement Grant Clause:
… to use, and display the Athlete Identification alone or
with other trademarks of Company, in all cases, on or
for the Products including, but not limited to, on Product
packaging and in any related advertising, promotional,
informational and other materials.
“Athlete Identification” means Athlete’s name, voice,
nickname, likeness, and anything else that identifies
Licensor, including, without limitation, photographic or
graphic representations of Licensor, Licensor’s
signature, and statements by Licensor
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -3
31
Exemplary Arena clause:
During the Term, Arena will provide Sponsor with
the elements set forth in Exhibit A (“Elements”).
Costs, including but not limited to signage
(collectively, “Content”) associated with the
production and execution of Elements, will be the
sole responsibility of Sponsor, except that Arena will
pay for fifty percent (50%) of construction costs of
the _____________.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -4
32
Exemplary Arena Elements
The restaurant located at [Arena Location] (“Restaurant”) will
be rebranded to [ ____ ] .
Sponsor Logo and Brand will be used with all references to
the Restaurant
Sponsor’s ketchup dispensers will be located throughout the
designated Restaurant. No third-party ketchup will be
served in the Arena.
Sponsor’s ketchup will be prominently featured in all
Restaurant menus
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -5
33
Display of Sponsor Products in Arena
Sponsor will be permitted to a display in the Arena
Sponsor promotional materials and/or products of a
mutually agreed upon size, type, quality, and final
configuration and consistent with the overall theme
of the facility and the permitted use by other
sponsors (but with due regard given to Sponsor’s
status as the primary sponsor of the Team).
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -6
34
Exemplary Hospitality Elements
One (1) Private Luxury Suite (“Suite”) for all pre-season,
regular season and playoff games played by the Team at
the Arena Center. (Note: Suite not available for other events)
Sponsor will pay for all additional costs associated with its
use of the Suite (i.e. food and beverage, catering, etc.)
Sponsor’s use of the Suite will be consistent with and
pursuant to the rights and obligations of “Licensee” (as that
term is defined in the Suite License Agreement). Sponsor will
adhere to all the terms of the Suite Agreement during the
Term and during its use of the Suite
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -7
35
Tickets / Passes
Team will provide Sponsor with a minimum of [ __ ]
tickets and VIP passes and parking passes for each
Game, which Sponsor may use at its sole
discretion.
Sponsor shall receive a total of two hundred (200)
tickets per game for preseason and regular season
Team home games at the Stadium. Location and
specific games shall be determined by Team in its
sole discretion in advance of each season.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -8
36
Exemplary Racing Team Sponsorship Elements
Team Assets. The location of the Sponsor Marks in connection
with the sponsorship of the Team, and all related Rider racing
apparel (“Rider Uniforms”), Racing Bikes, Rider helmets (“Rider
Helmets”), Rider shoes, gloves, and other racing apparel (“Rider
Accessories”), race day Crew apparel (“Crew Uniforms”), the
Team cars, haulers/transporters (“Team Transporters”), and all
related racing equipment of Team (collectively with Rider
Uniforms, Rider Helmets, Rider Accessories, Crew Uniforms, and
Team Transporters, the “Team Assets”) will be as set forth in
Exhibit __________; and in all cases, the Sponsor Marks will be
prominently placed and larger than any other sponsor brands,
logos or marks.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -9
37
Access to Team Facilities
Team will ensure that all Team facilities will be available to
Sponsor for [ ] Sponsor VIP tours, receptions, meetings, and
functions with reasonable advance notice, with Sponsor
paying the administrative and staffing costs and incidental
costs of any special requests in conjunction with such
functions, such as set up and cleanup costs, catering food
and beverage, any required equipment rentals, or the costs
of Team personnel which might be needed to service the
special functions after normal business hours
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -10
38
Exemplary Signage and Radio Elements
Virtual Signage: Half a period (10:00 minutes)
behind one (1) goal for all locally televised LA Kings
home games played at STAPLES Center
One (1) :30 Pre-Game Radio spot during all Game
broadcasts
One (1) :30 In-Game Radio spot during all Game
broadcasts
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -11
39
In Market Promotion
One (1) thirty (30) day promotion/sweepstakes to be run
during a mutually agreed upon period (during the Team’s
regular season) (“Promotion”)
• Team to support Promotion via internal marketing
• One (1) social media post per week (From either
Facebook, Twitter or Instagram) during the thirty (30) day
Promotion period
• One (1) :10 PA announcement (content to be approved by
Team), scoreboard logo and LED signage during two (2)
mutually agreed upon Games at the Arena during the
Promotion period
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -12
40
Play-offs
Unless otherwise explicitly stated herein, the
foregoing elements/rights provided hereunder are
for the regular season only. In the event the Team
qualifies for the playoffs, Sponsor shall be required,
subject to availability, to purchase such Elements at
the playoff rate card established therefore by the
Team. Payment for all playoff Elements shall be
due within thirty (30) days after the final game
played by the Team.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -13
41
Example Event Elements
Sponsor’s logo and a hyperlink to its official website will appear in the
sponsors section of the official Event website.
Sponsor will be entitled to one (1) promotional message related to its
Event sponsorship on each of the Event’s Facebook and Twitter pages,
content subject to Event’s prior written approval.
Sponsor logo and a hyperlink to its official website will appear in the
sponsors section of the official Event Facebook page.
Sponsor’s activation space at the Festival Event will be marked on the
Official Event map.
Sponsor’s logo will be included in all email blasts that include sponsors.
One (1) 4-color full page ad for Sponsor in the Event’s official guide
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -14
42
Players and Coaches
With the exception of certain group player licensing rights that
may be made available to Sponsor pursuant to the Team’s rights
under the [Player Agreement], Sponsor acknowledges that this
Agreement does not grant it any rights with respect to the name,
likeness, signature or other attributes of any player, coach, or
other employee of the Team. Sponsor shall be responsible for
securing whatever rights may be required for the use of such
names, likenesses, signatures or other attributes and may only do
so with the prior written consent of the Team. Sponsor represents
that it will not exercise the rights granted in this Agreement in any
manner that will imply Sponsor has obtained any such rights
without separate written authorization from the appropriate player,
coach or employee.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -15
43
SPONSOR’S USE OF PLAYER LIKENESS. Sponsor is granted the right
to use any Player Likeness, and with prior written approval from the
Licensor, each such use shall be subject to the following terms and
conditions:
A. Rule of Four. Subject to the collective bargaining agreement … any
use of Player Likenesses must include a minimum of four (4) athletes
used both equally and collectively (the “Rule of Four”). Under the Rule of
Four, Sponsor will have the right to use Player Likenesses provided that
the photograph(s), rendering, or video footage includes either: (i) a group
of four (4) or more Club players, in uniform, appearing together, or (ii) a
Player Likeness appearing with three (3) or more other Club Player
Likenesses, all in uniform, as part of a series, set, collectible or as part of
a sequential product (e.g., trading cards, posters, pins, etc.) all with equal
representation, in any given application.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -16
44
If fewer than four (4) Club players are used for any
promotional or advertising piece, Sponsor will be
responsible for securing the rights to use each
individual Player Likeness. Sponsor must provide
documentation to League confirming that it has
secured such rights.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -17
45
Appearances.
If Sponsor is entitled to Club player/mascot appearances or
participation in events or clinics as part of its Rights, such
appearances and participation is subject to player/mascot
availability, will not exceed ninety (90) minutes in duration
and will be conducted in accordance with the policies and
procedures established by Licensor. Licensor will determine
which player(s) appear(s) at the events or clinics. The
payment of all costs and expenses attributable thereto
(including, without limitation, reasonable travel expenses)
will be borne by Sponsor unless otherwise set forth in the
Term Sheet.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Grant of Rights / Scope / Activation -18
46
Pass-Through Rights to Third Parties.
If pre-approved in writing by Licensor, Sponsor may include
trade names, trademarks, service marks, logos, symbols, or
other copyrighted or proprietary identifiers of an approved
third party on or in connection with items or materials which
bear the Licensor Marks (“Pass-Through Rights”). In limited
circumstances in which the Licensor permits Pass-Through
Rights to a third party (e.g., if such third party is a distributor
or retailer of Sponsor’s products) then such Pass-Through
Rights must be exercised in accordance with the following
guidelines …
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Arena - Non-Signage Events
47
Team may determine in its sole discretion that
certain events at the Stadium from time to time,
including, but not limited to the Olympic Games,
Super Bowl, World Cup Soccer, NCAA
championships, college football bowl games,
college football championship games and other
events, may require that signage and advertising be
covered, obscured or temporarily removed during
the event or may prohibit signage or advertising for
any party other than a sponsor of the event itself.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Exclusivity
48
The rights granted to Sponsor herein are exclusive
to Sponsor within the Product and Services
Category with respect to [Arena / Marks /
Designation].
For use with closely related categories…
• For purposes of clarity, Team will not enter into a
sponsorship agreement / permit or authorize others to
use any of the Marks or a Designation party with
respect to _____________
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Exclusivity – Exceptions
49
The exclusivity granted in this Agreement is not intended to
apply to Temporary Advertising granted separately by teams
or promoters of other events.
“Temporary Advertising” means temporary advertising and
promotional rights within the [bowl / stage / performance /
seating areas] of the Arena and the fascia board ring or
LEDs (e.g., courtside scorer’s table, basket stanchions, chair
backs, ice resurfacing machines, dasherboards, scoreboard
identification and messages, fascia board ring messages
and advertising, public address system announcements,
game or event program advertising, and event related
promotions (e.g., event tee-shirts)).
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Use of Marks
50
Any such use of the Trademarks by Sponsor is: (i)
subject to prior approval by the Team, which
approval shall not be unreasonably withheld,
conditioned or delayed as to the form of such name
and logo, and (ii) must use the Team’s established
logo-type, trademark or service mark…
In no event will Sponsor have the right to use the
Trademarks outside of a _______ mile home radius
measured from the Arena without obtaining the prior
written approval of the Team and the League.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Approval Process
51
Sponsor will submit to the Team all advertising or
promotional materials involving any Team Marks at
least ten (10) business days prior to the production
of such materials. Sponsor need not receive
specific approval to release such advertising or
promotional materials to the public. However, the
Team will have the right, at any time during the ten
(10) day period, to object to any advertising or
promotional materials, and Sponsor will not use the
advertising or promotional material if the Team
objects to their use.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
IP Rights
52
Typical Clauses
1) Ownership acknowledgement
2) Notification of Infringement
3) Quality Standards
4) Marking requirements
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Subordination/Compliance
53
This Agreement and the rights granted to Sponsor
hereunder are subject to the review and prior written
approval of the League, and will in all respects be
subordinate to, and shall not prevent the issuance,
entering into, or amendment of, any of the following,
each as may be issued, entered into or amended from
time to time: (a) the constitution, bylaws, resolutions
and other rules, regulations, policies, directives, rulings
and/or orders of any applicable sport governing body,
and, (b) the rules, regulations, and/or policies of the
League, in each case as in effect on the date hereof
and as may be amended from time to time.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Force Majeure
54
Neither Party will be liable for failure to comply with any
of the terms or conditions of this Agreement when such
failure to comply has been caused by fire, war,
insurrection, labor disturbances, work stoppages,
terrorism, government restrictions, natural disasters,
weather, or acts of God beyond the reasonable control
of the parties, provided the Party so affected gives
prompt notice to the other. In the event of a suspension
or any obligation by reason of this Section which
extends beyond __ days, this Agreement will be tolled
or terminated at the discretion of Team.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Lost Games
55
If there is a Work Stoppage that results in the cancellation of
more than [x%] percent of the scheduled regular season
Games for a season (“Lost Game Threshold”), then the
consideration payable by Sponsor for the applicable season
may be reduced by an amount equal to the product of the
portion of such consideration allocated to rights granted
hereunder to Sponsor with respect to regular season Games
that are not received as a result of the Work Stoppage
multiplied by a fraction: (a) the numerator of which is the
number of such regular season Games which are canceled
as a result of a Work Stoppage, and (b) the denominator of
which is the total number of regular season Games
scheduled for such season (“Loss Game Value”).
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Work Stoppage
56
In the event that [an entire Season] is lost due to a Work
Stoppage, the parties may mutually agree to toll the
Agreement for such Season, and that Sponsor’s obligation to
pay the applicable consideration shall be tolled during such
year. In such case, the parties may extend the Term of the
Agreement for an additional year, by entering into a written
agreement no later than ninety (90) days following the date
that MLS announces the cancellation of the MLS League
season. In the event that the parties do not agree to toll the
Agreement, Sponsor may terminate the Agreement by …
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Make-Good Benefits
57
In the event that the Team is unable to provide any benefits
under this Agreement, then Sponsor is entitled to receive
“make good benefits” of a value comparable or greater than
the value of benefits to be provided as part of the
Sponsorship Rights that are not provided (the “Lost
Sponsorship Benefits”). The Parties will promptly meet to
determine make good benefits to be provided to compensate
for Lost Sponsorship Benefits. In the event that the Parties
are unable to agree on the make good benefits to be
provided, then the make good benefits will be determined
under the arbitration process set forth in Section 12.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Renewal Rights / Term / Termination
58
- A termination for convenience right is typically
difficult to obtain, except for a later term of a
multi-year agreement.
- If such a right is granted, it typically requires
significant advance notice.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Payment
59
Sponsor will pay the Team the amounts as set forth in
Exhibit A. In the event that the Team doesn’t receive any
payment from Sponsor on or before the applicable payment
due date, the Team may consider said failure to pay a
material breach, and may elect to charge Sponsor a late fee
of 1.5% per month of the payment then due and owing until it
is paid in full. If Sponsor fails to cure such default within five
(5) days of written notice, the Team may elect to terminate
this Agreement pursuant to Section 6.
The foregoing amounts are net of any commissions owing to
advertising agencies or other third parties and the Team has
no responsibility for the payment of any such commissions.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Value in Kind
60
Many sponsorship agreements may have a cash
and a value-in-kind component.
The value-in-kind is often provided pursuant to a
modified version of the Sponsors standard form or
the material clauses are incorporated into the
Sponsorship Agreement.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Morals Clause / Reverse Morals Clause
61
If either party hereto or any of its officers, directors, board
members, principals, employees, agents, or representatives
commits any act which, in the reasonable and good faith
opinion of the other party, would disparage or impair the
reputation and integrity of the other party hereto (including,
without limitation, being convicted of any felony or a crime
involving moral turpitude, ethical violations or any other act
of moral turpitude), the other party hereto shall have the right
to terminate this Agreement without liability to the other party
upon thirty (30) days written notice.
NOTE: Better to be specific than vague
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Morals Clause / Reverse Morals Clause - 2
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Company will have the right to terminate this Agreement for
any of the following reasons:
If the publicized (through national, responsible media)
alleged or actual conduct of Talent is illegal or otherwise
grossly offensive to generally accepted standards of
behavior (including, but not limited to, illicit drug use or public
intoxication) so as to lead Company to reasonably believe
that public association with Talent would tend to subject
Company to ridicule, contempt, controversy, embarrassment,
or scandal.
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Warranties
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• Typical formation, authorization and due
execution warranties
• Specific warranties concerning Sponsor’s
products and services (particularly if VIK is being
provided)
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Indemnity vs. Warranty
A breach of warranty can lead to a breach of
contract claim and termination of the Agreement.
An indemnity is typically used to provide
contractual protection in a manner that limits
breach of contract claims.
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Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Indemnity -- Scope of Obligation
What is covered?
• claims? allegations? final decisions?
• type of damages? finally awarded damages or as
costs are incurred? attorney fees?
• covered activities
• simply the existence of the product or software
• claims directed at the “use” of the product or software
• what type of intellectual property rights are covered?
• patents, copyrights, trademarks, trade secrets?
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Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Indemnification - 2
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Traditional exemplary indemnity clause
Vendor will indemnify, defend, and hold Customer, its
affiliates and their principals, agents and personnel
harmless against all costs, fees, expenses, damages
and liabilities (including attorneys’ fees and other
defense costs) suffered, incurred or awarded against
Customer as a result of any third party claim, suit or
dispute relating to or arising from:
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Indemnification - 3
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Defend and Pay Awarded Damages
Vendor will defend Customer against any third party
claim, action, proceeding or suit, and will pay for the
resulting costs and damages finally awarded
against Customer to such third party by a court of
competent jurisdiction or agreed to in settlement by
Vendor, arising from:
Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Limits on Liability - 1
• An agreement may attempt to limit or alter the measure of
damages available
• Different forms of limitations
• Limitations on the amount damages
• Limitations on the type of damages (i.e., consequential,
incidental, etc.)
• Limitations on other remedies (e.g., limit remedy to
repair, replace, re-performance)
• UCC governs most software transactions, but not pure
service agreements - applicability of unconscionability
and failure of essential purpose doctrines are less defined
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Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Limits on Liability - 2
Common Exceptions (may apply to limitation
amount and/or limitation on type of damages)
• Payment obligations
• Breach of confidentiality
• Improper use of IP
• Death
• Personal Injury
• Property Damage
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Perkins Coie LLP | PerkinsCoie.com Peter J. Kinsella 303/291-2328
Insurance
Commercial General Liability Insurance
Product liability insurance (especially if marks are
being used to promote goods and services)
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72 72
DISPUTE RESOLUTION FOR
SPONSORSHIP AGREEMENTS
Drafting Tips to Streamline Dispute Resolution Process
Sarah Hartley
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This presentation is for educational purposes only and
does not constitute legal advice. If you require legal
advice, you should consult with your attorney.
The information provided in this presentation does not
necessarily reflect the opinions of Bryan Cave, LLP, its
clients or even the author
DISCLAIMER
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• Be as clear and concise as possible in drafting to avoid
disputes over meaning
• Understand the parties’ respective goals and needs to
minimize chances one party will breach when agreement
doesn’t suit their needs
• Talk over issues both internally and with your
counterparty to make sure you understand the intent of
proposed langauge
AVOIDING DISPUTES – NEGOTIATION
TIPS
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• Parties breach though… so how do we minimize the
expense and inconvenience of a dispute?
• Include appropriate dispute resolution provisions
• Understand the pros and cons of different dispute
resolution mechanisms and applicable law
• Gauge appetite and budget for litigation
DISPUTE RESOLUTION
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• Make sure you specify the applicable law
• Choose applicable law wisely
– Home jurisdiction
– Jurisdiction with favorable law
• Sample
– Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Colorado.
CHOICE OF LAW
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• State or federal court
– Do you prefer federal court for IP related claims?
– State court may be preferable for other claims
• Arbitration
– Would you prefer arbitration for all claims related to the
sponsorship agreement?
VENUE
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PROS
• Confidentiality
• Procedures can be
crafted to parties’ needs
• Arguably faster
CONS
• Limited ability to appeal
decisions
• Discovery can be limited
• Hard to obtain third party
discovery, if needed
ARBITRATION
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SAMPLE DISPUTE RESOLUTION
PROVISION
– The parties agree that any breach of either party’s obligations regarding trademarks,
service marks or trade names and/or confidentiality could result in irreparable injury for
which there is no adequate remedy at law. Therefore, in the event of any breach or
threatened breach of a party’s obligations regarding trademarks, service marks or
trade names or confidentiality, the aggrieved party will be entitled to seek equitable
relief in addition to its other available legal remedies in a court of competent
jurisdiction. For the purposes of this Section only, the parties consent to venue in the
state courts of Colorado.
– In the event that disputes between the parties arising from or concerning in any
manner the subject matter of this Agreement, other than disputes arising from or
concerning trademarks, service marks or trade names and/or confidentiality, cannot
be resolved through good faith negotiation within thirty (30) days after notice of dispute
is provided to the other party, the parties will refer the dispute(s) to the American
Arbitration Association for resolution through binding arbitration by a single arbitrator
pursuant to the American Arbitration Association’s rules applicable to commercial
disputes. The arbitration will be held in Colorado.
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• Injunctive relief – Agree in advance that any breach of obligations as to IP or
confidentiality would cause irreparable injury
– Not dispositive, but is evidence that breach will cause irreparable harm
• Limitation of liability – Cap on damages
– Limit on punitive/consequential damages
– Mutuality
• Attorneys’ fees – To prevailing party
– Reasonableness
RELIEF
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• Agreement to alter/limit the measure of damages
available
• Can limit as to amount or type of damages, or available
remedies
• May include exceptions for particular issues, such as
payment obligations, breach of confidentiality, improper
use of IP, among others.
LIMITATION OF LIABILITY
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• Make sure language is as clear as possible and that the
parties have the same understanding of its meaning and
intent
• Merger clause (“entire agreement”)
– Authoritative agreement – supersedes prior oral representations
and writings
– Any modifications in writing to avoid confusion as to operative
terms
• Construction
– Construe against drafter vs. favor neither party
CONTRACT CONSTRUCTION
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• Understand your client’s needs and goals
• Understand your counterparty’s needs and goals
• Understand any outside constraints on your agreement
(e.g., IOC Rule 40 for Olympic-related sponsorships)
• Understand the consequences of a breach so as to craft
the most appropriate dispute resolution language for the
parties
TAKE-AWAYS