Shaun White, Tony Hawk and Kelly Slater are household names. Snowboarding and freestyle skiing are Olympic events.
Extreme is now mainstream.
These days, so-called “action” sports have become big business, complete with corporate sponsorships, valuable intellectual property and highly protected trademark rights.
Not so coincidentally, a growing group of attorneys and law firms are catering to the legal needs of this unique industry, with many based in San Diego County.
“San Diego’s always seemed to be the center of health, fitness, leisure and sports,” said San Diego attorney Jim Cleary, an intellectual property partner with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. “And that role has grown tremendously. Look at all the industries located here. It’s a center for golf, biking, triathlons, ocean swimming, surfing, skateboarding and all outdoor sports.”
Cleary, an All-American swimmer at St. Augustine High School and a two-sport athlete at the Air Force Academy, has merged two of his favorite passions -- sports and law -- to carve out a practice advising action sports companies on their intellectual property.
One of the companies he works with is Aqualogix, an aquatic fitness and apparel company that he co-founded. He also is helping Slater, a nine-time pro surfing world champion, develop a new type of wave machine.
“I really enjoy talking to software engineers,” Cleary said. “But when you talk with someone who’s trying to go higher, faster, farther and is risking their neck, it’s a different discussion, and you can feed off that.
“Some of the science is mind blowing,” he added, referring to Slater’s wave machine.
Encinitas attorney Marco Gonzalez, a partner and co-founder of the Coast Law Group, has been practicing in the area of action sports for 13 years. As a former competitive surfer and snowboarder, he has special insight into the industry.
“The critical issue to action sports is barrier to entry,” Gonzalez said. “The industry is ruled by authenticity. The way you get that is through longevity and participation. When I meet a client and go surfing and see him at the beach, he knows my understanding of the industry is multi-faceted. When you have that authenticity, that’s how you get in.”
Gonzalez’s credentials helped the firm land Irvine’s La Jolla Group, one of the world’s top multi-brand apparel licensing companies with clients like O’Neill and Rusty clothing.
In addition to retailers, the Coast Law Group represents filmmakers, athletic companies and sunglass companies.
“We’re lucky enough to have a business model that allows us to represent the La Jolla Group,” Gonzalez said. “Because of our situation in Encinitas, on the beach, we have a lot of cachet.”
About a year ago, Luce, Forward, Hamilton & Scripps launched an action sports practice, formalizing work its attorneys had been doing for years.
“This is a very big business that maybe 25 years ago we might have said, ‘What is action sports?’” said Cordon Baesel, a special counsel for Luce Forward.
He said some estimates have the industry generating $3 billion to $5 billion in sales, mostly driven by clothing and apparel.
“The industry is mature enough and most companies are big enough that they’re very sophisticated,” Baesel said. “Their (legal) needs come in tune with much more sophisticated financing. (They’re) trying to acquire companies or have litigation. Because of their IP or product liability, frankly, they become targets.
“There’s been a fair amount of consolidation in the industry, and that’s led to more sophisticated and bigger issues. And you sort of need to think like a big company. You have to think of legal strategies and how it works together.”
On one level, the legal needs of action sports companies are no different that in any other industry.
“These problems are all the same, whether the client makes staplers or snowboards or clothing,” Baesel said. “They’ve still got supply issues, financing issues. Now the (action sports) business is big enough that the transactions are significant and the disputes are significant.”
And as Mintz Levin’s Cleary reasoned, “Any time there’s innovation, there’s a need to protect it. So I think IP plays a big role, not just from a patent standpoint, but from a brand development standpoint.”
Endorsement deals for action-sports athletes can be tricky, according to Becky Mendoza, an Encinitas attorney who operates her own firm dedicated to the industry, Action Sports Law Group. Each one is different, with some athletes getting paid in product.
Like most of the attorneys who practice in the industry, Mendoza’s also a participant.
“It’s a tight-knit community, and if you don’t have an in or a foot in the door, it’s very difficult to reach this demographic,” she said. “It’s a challenge to get people to trust you. It’s not so much of a challenge if you’re a fan or if you participate because they relate to you.
“Lawyers can be intimidating and kind of stuffy,” Mendoza said. “And in this industry it’s important to be the opposite of that.”
The Coast Law Group’s Gonzalez began by representing his friends who were seeking sponsorships or were beginning to launch a company. The practice grew out of that.
Baesel practice at Luce Forward started much the same way.
“It’s a relationship-driven industry,” he said.
Cleary said his practice doesn’t just involve filing patent applications for his clients, but acting as a trusted adviser and being a “partner in their adventure.”
He helps connect them to all their needs, from manufacturing and distribution to testing out their equipment.
“I’ll be their guinea pig,” he said.
Cleary said he didn’t see the recent economic downturn significantly affect the action sports industry.
“I think Americans, and the world at large, always seem to spend more money on health, fitness, sports and even leisure,” he said. “It seems like the quest for finding new ways to enjoy ourselves and thrill ourselves is always there.”