Posts Tagged: Contract

Please Don’t Endorse Our Product Anymore: The Morals Clause Edition

Unless you’ve Rip Van Winkled for the past month, lost your television/iPhone/iPad, or simply given up on international competitive athletics to instead focus on the Cubbies’ chase for an elusive World Series Crown, you know that US Olympic Swimmer Ryan Lochte’s “over exaggeration” will cost him over $1 million in endorsement deals. While his contracts with these brands are secret, we can suppose that he’s out because a morals clause was in his contracts.    

A “morals clause” is standard in any endorsement contract. The Court of Appeals for the Second Circuit has said: “Morals clauses have long been held valid and enforceable.” Nader v. ABC Television, Inc., 150 F. App’x 54, 56 (2d Cir. 2005). The seminal case that triggered morals clauses in the entertain industry was that of Roscoe Arbuckle (better known by the improper body-shaming sobriquet “Fatty”), who in 1921 after inking a 3-year/3-million contract with Paramount was arrested on rape and murder charges. While his contract did not have a morals clause, Universal Pictures soon made sure that their talent contracts did. Soon after, moral clauses were often used – and upheld – in the 1950s by Hollywood studios to fire suspected communists. More recently, the issue of moral clauses was raised with Tiger Woods, Charlie Sheen and boxer Manny Pacquiao who lost his lucrative deal with Nike. Nike had also previously broken ties with athletes Lance Armstrong, Ray Rice, Adrian Peterson and Oscar Pistorius for their morally-challenging conduct. (more…)

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Competitive Video Gambling: The Secret Hobby Going on in Your Basement

Competitive video gaming is a somewhat recent attraction for (mostly) young adult boys and (mostly) men who think they are young adult boys. I’ve even seen my young adult son watch YouTube videos of other people playing video games. (Don’t shame me as a parent.) Competitive video gambling is what happens when people decide to bet on the outcome of others playing video games. Class actions are what happen when the unlucky gamblers decide to sue.

Recently, one of these gamblers brought a putative class action against the publisher and developer of the video game Counter Strike: Global Offensive (or in vid game talk, CS:GO) claiming that the game allowed for illegal gambling, the “contract” he entered into with the developer was invalid, and of course, he should get restitution for his losses.

In my real simple terms, gathered from the Complaint, CS:GO matches are streamed live on websites like Twitch; user accounts can be linked to third-party (international) websites; and players can purchase “skins” which can be used like casino chips to place bets on the games. (more…)

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Cause Marketing Lessons from the Wounded Warrior Project Scandal

Your company just made a major announcement that it is partnering with a charity that you now find is involved in a scandal. What can you do?

The recent ousting of The Wounded Warriors Project CEO and COO amid allegations of lavish spending on travel, conferences and public relations requires a company to examine their cause marketing campaigns. While there is no need to throw the baby out with the bath water – recent studies still confirm that consumers, and in particular Millennials, strongly support buying from companies associated with a cause* — picking the right charity is critical.

*For example, according to the 2015 Cone Communications Millennial CSR Study, “More than nine-in-10 Millennials would switch brands to one associated with a cause (91% vs. 85% U.S. average).” (more…)

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What You Need to Know About Commercial Co-Ventures

Commercial co-ventures are a form of cause-related marketing that have proliferated in recent years. Commercial co-ventures between a company and a charity not only help charitable causes, but also tend to increase a company’s bottom line. Indeed, market studies have shown that most people will opt to purchase a product associated with a charitable cause over a competitor’s product. Commercial co-ventures are highly regulated, so carefully planning and must be taken to avoid any legal pitfalls.

What is a commercial co-venture?

Generally, a commercial co-venture is a charitable sales campaign where a brand advertises to the consumer that the brand will donate a portion of the purchase price to charity. (more…)

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