In June 2008, the front pages of newspapers and magazines from coast to coast in Canada warned of an imminent danger.  Canadians were up in arms and the airwaves reflected their worry and concern.  An environmental threat? A natural disaster? A business crisis? No, the threat Canada faced was the potential loss of a jingle, a theme song for Canada's hockey broadcast, a song so well-known and so loved by Canadians that it is referred to as Canada's second national anthem.

Like any story involving Canada and its national pastime, hockey, tempers can be expected to run high.  But in this case, the threat to a Canadian icon can teach a cautionary tale to businesses in every arena about the proper management and evaluation of intellectual property interests, the necessity of recognizing the true value of intangible assets, and the importance of anticipating and managing marketing changes that may effect the value of copyright and other intellectual property interests.  Finally, as in many business stories, the management of relationships was a key element to this cautionary tale.

This tale revolves around two Canadian power players, the Canadian Broadcasting Corporation, a Crown corporation which is a public broadcaster in Canada, and its television program entitled  Hockey Night in Canada, which has itself been a national institution since 1952, remaining the most popular weekly sports program in Canada, averaging more than one million viewers every Saturday night.

Dolores Claman, a jingle writer, wrote a song in 1968 and entered into a competition held by an advertising company which was charged with looking for some music to become the theme song, for a couple of years at most, for Hockey Night in Canada.  When the jingle was originally written in 1968, none of the sponsors for the show liked the song.  However, it was chosen out of a group of four songs which were submitted in the competition.  With time, however, the jingle became one of Canada's most recognized tunes.

After writing the jingle, Ms. Claman allowed the song to be used for almost 25 years with no license fees being paid and no license agreement being entered into.  Had the CBC used its superior resources during that quarter of a century, it could easily have tied up the copyright rights during that period of time, particularly had it realized the increasing value represented by the intangible asset of the copyright in the song.  Ms. Claman finally began receiving royalties in the early 1990's after her accountant pointed out to her that she was missing out on potential income.  She entered into a licensing arrangement with the CBC which eventually paid her $500.00 every time the song was used by the CBC in association with the broadcasting of hockey games in Canada, the only right which was given to the CBC under the arrangement.

Any party taking a license in copyright should always be aware of the value of the copyright and should consider the risks in paying for only a narrow use license agreement.  Had the CBC recognized the potential for growth in non-traditional markets, they may have been able to negotiate a broader licensing agreement to capitalize on those opportunities.

The value of the copyright in the jingle was also significantly changed by market forces.  Ms. Claman's licensing agent licensed the tune to Bell Canada to be used for cell phone ringtones.  Since that time, the song has consistently been in the top five of all downloaded ringtones in Canada.  However, rather than recognizing and obtaining the rights to such uses, the CBC attempted to make Bell Canada guarantee hundreds of thousands of dollars worth of advertising to the CBC in return for its release of its potential rights to the ringtone.  This alleged attempted interference with the copyright holder with the licensing of the song in other areas is but one of the grounds relied upon by Ms. Claman in a lawsuit commenced in 2004 against the CBC.  The ringtones issue was clearly the last straw in a relationship which had been characterized by a seeming indifference on the part of the licensee.

Not only did the Hockey Night in Canada broadcast use the song on an unlicensed basis from 1970 to 1995, but when the license agreement terminated in 2002, the CBC continued to use the song without any license in place.  The CBC also allegedly substantially altered the musical arrangement of the song without any appropriate approval and in breach of the moral rights of the copyright holder.  The lawsuit also alleges that the License Agreement had been breached, since the broadcaster used the tune too often, since the license agreement stipulated that the song could only be used for Hockey Night in Canada broadcasts within Canada, but that the CBC had used the music on games shown in other countries, and for other programming.

The licsenor/licensee relationship was obviously coloured by this litigation, which had been allowed to remain unresolved since 2004.  This strain on the relationship between the two parties was an ill portent of what was to come.  The CBC and Ms. Claman's agents entered into over thirteen months of negotiations, but failed to reach a deal for an extension of the License Agreement.

After the CBC gave up on negotiations with Ms. Claman's licensing company, CBC executives announced that they would have a new competition to come up with a new theme song for Hockey Night in Canada broadcasts.  Immediately, 1,500 calls and emails were received by the CBC from angry viewers.  It was at this juncture that hockey fans, journalists, and ordinary Canadians began to make their views heard, exemplified by the following popular viewpoint: "It should be saved, it's part of our heritage".  In a dramatic shift, the CBC then announced that they wished to re-open talks with Ms. Claman with the help of a well-known sports lawyer acting as a mediator.  However, by that time it was too late.

On the CBC's end, the intrinsic value of the song was never truly realized until it was too late.  Scott Moore, the executive director of CBC sports is quoted as saying "What Hockey Night in Canada was really about is hockey, everything else is just window dressing".  This comment highlights the fact that the CBC did not view those few bars of music as carrying much goodwill or intrinsic value.  The CBC only belatedly reconsidered the value of the copyright in the song.

Seemingly overnight, with the announcement by the CBC that it had failed to reach an agreement with Ms. Claman and her agents, CBC's chief rival, the CTV, announced that it had purchased the rights to the song.

What is extremely telling about the importance of the management of the relationship between a copyright holder and a licensee is the following statement made by Ms. Claman following the sale of the copyright in the song to CTV.  "Throughout our negotiations, CTV displayed a tremendous amount of respect for my family and the song. "The Hockey Theme" means so much to Canadians, and we know it's in good hands with CTV".

After the acquisition, CTV announced that beginning in the fall of 2008 the song will now be heard on NHL broadcasts broadcast by CTV network, and that the song will also be used as part of its hockey coverage at the 2010 Olympic Winter Games.

While it remains to be seen whether Hockey Night in Canada will remain the Canadian institution which it has become and the new theme song will eventually become just as popular as the original, or whether Canadians will follow Canada's second national anthem over to CTV hockey broadcasts, this incident will surely go down in the annals of Canadian sports history.  Equally importantly, the incident series as a reminder of the care which must be taken by businesses in evaluating the value of their intangible assets, ensuring that they own outright any rights which they can own, and that with respect to rights which must be licensed from third parties, ensuring that those rights are securely licensed for all possible uses, and that the relationship between the licensor and the licensee is carefully managed and evaluated at all times.

- Nancy A. Miller  
Fogler, Rubinoff LLP