Cirque du Soleil, developer of innovative theatrical productions, to be sold for $1.5 billion

"Cirque7" by Stuart Seeger from San Antonio, Texas, USA - Nouvelle Experience Finale 1994. Licensed under CC BY 2.0 via Wikimedia Commons

“Cirque7” by Stuart Seeger. Licensed under CC BY 2.0 via Wikimedia Commons.

Every year, thousands of high school seniors across America give their parents a minor cardiac event by uttering the words, “I think I want to study theater in college.” There’s a commonly held notion that economic success and the professional pursuit of live performance are mutually exclusive. Although stagework might never be a stable job, the upcoming sale of Cirque du Soleil from founder Guy Laliberté to a group led by TPG Capital of Forth Worth, TX, for $1.5 billion should put to rest the idea that there’s no money in theater.

The live performances developed by Cirque du Soleil are very innovative and often involve the incorporation of audio and visual technologies into a show. Research and development has been very important to the creation of the 33 productions that the company has staged since its founding in 1982. As Forbes points out, Cirque du Soleil enjoys a culture of innovation supported by a vast team of global talent scouts and media archival researchers. Employing performers from over 50 different countries also helps to develop a positive artistic tension and creative frictions that allow for innovative theatrical ideas to emerge.

This willingness to innovate has been incredibly valuable over the years for Cirque du Soleil, the world’s largest theatrical producer according to a circus industry analysis report published by En Piste, Canada’s national circus arts network. Laliberté, himself a street performer, formed the theater company with fellow street performer Daniel Gauthier and the help of a $1 million grant from the Canadian government for performance work developed for the 450th anniversary of Jacques Cartier’s discovery of Canada. It’s pretty incredible that this company, founded by street performers and boosted with millions of dollars worth of public investment, has successfully transitioned into a private venture that generates $620 million in revenue every single year, as of En Piste’s November 2007 study. The current net worth of Guy Laliberté is estimated by Forbes to be $1.89 billion, an incredible amount of self-made wealth for a former street performer.

Cirque du Soleil currently operates 19 shows worldwide. Some of these, like Varekai and Quidam, tour cities in North America or across the globe. The theatrical production company has also developed long-running performances for Las Vegas (O, Zumanity) and Walt Disney World Resort (La Nouba). The 2007 En Piste study pegged Cirque du Soleil’s employment numbers at 3,800, including 1,000 artists, but The Wall Street Journal reported that the company had more than 4,000 employees as of this April. Forbes reports that the company annually entertains an audience totalling 15 million and has performed for more than 150 million people since its founding.

Cirque du Soleil doesn’t hold any patents but intellectual property is very important to the company. A quick search of the online trademark database provided by the U.S. Patent and Trademark Office shows us that Cirque du Soleil is listed on a total of 47 trademarks, 45 of which are still live. These trademarks provide important protections to the theatrical production company which it can enforce to protect its competitive advantage in the market. For example, U.S. Trademark No. 76977578, protects the typed drawing design for the Varekai mark for Cirque du Soleil when it appears on pre-recorded digital video discs featuring music, drama or variety entertainment, necklaces, souvenir programs, clothing apparel, Christmas tree decorations as well as the conception, production and presentation of theatrical performances featuring acrobatic arts, comical acts and dance set to music. Although that trademark has been renewed, Cirque du Soleil may want to work on renewing U.S. Trademark No. 86255291, a standard character mark that protects Joyà, another Cirque production. This trademark protects the appearance of Joyà on entertainment services including multimedia theatrical productions, dinner theater shows and online information services. According to USPTO’s Trademark Status & Document Retrieval (TSDR) database, this trademark will expire on May 25th if Cirque du Soleil doesn’t renew during the six-month period after the notice of allowance (NOA) was issued for this mark. Then again, Joyà is a dinner theater event permanently stationed in Playa del Carmen, Mexico, so the company may not feel it to be that important to protect its U.S. trademarks for that particular show.

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In the future, Cirque du Soleil is a company that may want to consider obtaining patent protections to strengthen its position in response to legal battles over patent infringement. A June 2014 lawsuit filed by FilmOn TV, doing business as Hologram USA, against Cirque du Soleil for hologram technology utilized in Michael Jackson: One, the theatrical production in residence at the Mandalay Bay Theatre in Las Vegas, operated by MGM Resorts. FilmOn claims that a three-dimensional hologram of Michael Jackson displayed at the show’s climactic moments violates two patents it holds and argues that Cirque du Soleil is practicing the technology without a valid moving imageslicense. One of the patents at issue is U.S. Patent No. 5865519, titled Device for Displaying Moving Images in the Background of a Stage. Issued in February 1999 to Uwe Maass of Overath, Germany, the patent claims an apparatus for representing moving images in the background of a stage through the use of an image source, a reflective floor surface and a transparent smooth foil extending between the floor and ceiling of the stage. The apparatus operates on the same physical principle that allows the reflection of a dashboard item to pepper's ghostappear on the windshield of a car relative to the driver’s line of vision; an image is projected onto the floor reflective surface and appears in the transparent smooth foil, which serves as the windshield in this optical effect. U.S. Patent No. 7883212, titled Projection Apparatus and Method for Pepper’s Ghost Illusion, claims an image projection apparatus with a partially transparent screen retained by a frame and inclined at an angle with respect to a light projector. The technology projects an image which is reflected from the screen so that it appears behind the screen. The patent was assigned in February 2011 to co-inventors Ian O’Connell and James Rock of Musion Systems Limited in London.

underwater performanceAlthough we could not identify any patents held by Cirque du Soleil, we did come across a two very interesting patented technologies which have been used in past shows from the company. We were incredibly piqued by the innovation described by U.S. Patent No. 6418670, titled Method of Underwater Theatrical Performance Using Variations of Lighting, Bubbles, Colored Fluids and Colored Gas, Wherein the Rear Stage or Proscenium Acts are Played Simultaneously with the Underwater Act. The invention comprises an auditorium, lighting facilities and a stage appearing as a container holding a liquid medium within which a theatrical performance is played, enhancing the entertainment quality of the performance. The system also has a means for providing air to a performer so that he or she can inhale during the performance in a way that is imperceptible to the audience. As the other references section of this patent indicates, this technology has been utilized in Cirque du Soleil’s O, playing at the Bellagio Theatre in Las Vegas. This patent issued in July 2002 and lists four assignees but only one inventor: Alexandr Vasilievich Kuranov of Saint Petersburg, Russia. Other assignees include Boris Anatolievich Azhimov of Zaporozhye, Ukraine; Igor Yakovlevich Mekibel of Kiryat Ono, Israel; and Nicolai controlling post-recoveryAnatolievich Ostrovsky of Moscow, Russia. An inflatable system for recovering flying craft used in indoor performances is outlined within U.S. Patent No. 7798445, entitled Systems and Methods for Recovering and Controlling Post-Recovery Motion of Unmanned Aircraft. The aircraft recovery system claimed here has an inflatable portion with a generally vertical orientation, a landing pocket in the inflatable portion which is configured to receive the fuselage of an aircraft and a guidance system for guiding aircraft toward the landing pocket. The references section of this patent points out a similar system for catching Cirque du Soleil performers from heights of up to 70 feet. This patent issued to Insitu, Inc. of Bingen, WA, in September 2010.

The upcoming sale of Cirque du Soleil will allow Laliberté to remain as a creative advisor to the organization and minority investor Mitch Garber, CEO of Caesers Interactive Entertainment, will take over as chairman of the company. Another minority stakeholder in the purchasing group is the Fosun Capital Group, based in China. It’s believed that the sale will enable Cirque du Soleil to open operations in China, although that would likely require the development of performances suited to regional tastes. A 2012 Cirque production in Macau, a major gambling center, closed early because of poor attendance. As we’ve noted in other posts on IPWatchdog, it will be interesting to see how Chinese rules regarding foreign intellectual property will affect Cirque’s trademark rights in that market. The international headquarters for the company will remain in Montreal, Canada. Here in America, Cirque will be partnering with NBC to co-produce a live broadcast of The Wiz; the production will move soon thereafter to Broadway.

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