Trademarks: Online gaming operators vs. sports organisations

Online gambling operators have recently been at the centre of two court cases, one in France and one in Belgium. Both cases concern trade mark law, an area harmonised by European Community

In the most recent case, opposing the French Tennis Federation v. Ladbrokes, Betfair and Bwin, the tribunal of Liège (Belgium) ruled in favour of online bookmakers, judging that the use of the French Open name on their websites did not qualify as an act of unlawful parasitism.

In an earlier decision (3e Chambre,Tribunal de Grande Instance de Paris, 30.01.08), the Tribunal de Grande Instance of Paris, considered that Unibet’s use of the name “Juventus” in order to promote its online sport betting activities constituted an act of counterfeiting.

Unlike gambling policy, where general principles of EC law on the free movement of services apply, trademark law is harmonised by EC legislation. Directive n°89/104 (“the Directive”) provides the regulatory regime legal for trademarks framework in the 27 Member States. In this context, how can the different interpretations of similar facts be explained?

Trade mark law grant owners of a sign or mark an exclusive right to it. This exclusive right creates an exception to the economic freedoms guaranteed by the E.C. treaty (“the Treaty”), including the free provision of services. Hence, whenever judges assess facts in light of trademark law they need to consider and weigh in the balance two opposite values: the individual and limited protection of trademark owners and the general EU wide freedom to trade.

In the two decisions, the national judges applied the same techniques, with the same legal criteria, but they arrived at different conclusions. Indeed These are the first such cases concerning online gaming operators. The present case law illustrates, once again, the challenges that online economic operators pose to the traditional legal analysis.

After a brief analysis of the national ruling they will be placed in their broader legal context.

A trade mark aims to protect both its owner and consumers. For consumers, trademarks “guarantee the origin of the product bearing the sign to the consumer or final user, allowing him/her to distinguish, without any likelihood of confusion, this product from those of a different origin” .

A trademark also grants an exclusive right to its owner when putting products into circulation for the first time. Competitors or individuals cannot to take advantage of the status and reputation of the trade mark by marketing their own products under the protected trade mark .

Article 6 of the Directive sets limits to trademark rights, to ensure the respect of free competition within the Single market. One may use a protected trademark as long as it is necessary to indicate the intended purpose of a product and is consitent with honest commercial practice .

The Belgian decision

The Fédération Française de Tennis (“FFT”) had lodged a complaint before the Tribunal de première instance of Liège, requesting that Betfair, Ladbrokes and Bwin cease offering betting services on the French Open and the French Master Series to Belgian citizens. The FFT claimed that offering these services induced for example, for players to act corruptly for financial advantages and that the use of the name “French open” harmed its legitimate interests. The FFT accused the three operators of economic parasitism, exploiting the name, reputation and renown of the French Open.

Belgian law does not define or punish economic parasitism as such. The judges turned instead to case law and academic works, which consider that parasitism is “any behaviour where an operator benefits unduly and directly from another operator’s substantial efforts or investment without equivalent efforts or investment”.

The Liège court dismissed this argument considering that the defendants did not use the name “French Open” in a promotional way. Indeed, it was considered that the “mere mention of the event’s name was necessary information to the [operators’]online betting activity” which could not therefore “be considered as an act of parasitism since its sole purpose was to entitle the player identify which sport evenst to place a bet on”.

The French decision

The Juventus Footballclub brought a claim before the Tribunal de Grande Instance of Paris against Unibet Ltd (“Mr Bookmaker.com Ltd) for trade mark infringement. The online betting operator was charged with acts of counterfeiting for mentioning the protected football club name on its website. The French court considered that Unibet, by using the Juventus brand in slogans or commentaries looking to promote their online betting activities, had committed acts of counterfeiting” .

The court recognised that Unibet was entitled to use trade marks to identify the matches where players could place their bets. However, judges considered that the use of the Juventus brand by Unibet was not merely “necessary” but that it was also a way to promote its own business activity. Unibet was therefore taking an unfair advantage from the fame and prestige of the famous Italian club.

It is not clear whether Unibet has decided to appeal this decision.

The European Court of Justice position on trademarks

Where an area of law has been harmonised, national courts may interpret, autonomously the law, in the light of the Treaty and the Directive in question itself. Therefore there should be less room for divergent interpretations. However, the European court of Justice (“ECJ”) remains the ultimate and supreme judge of EU law.

The ECJ has previously defined the limits of article 5 and 6 of the Directive in the Gillette case : “the lawfulness of the use of the trademark [under the 88 Directive] depends on whether that use is necessary to indicate the intended purpose of a product”. The use of a trademark is deemed necessary, “where such use in practice constitutes the only means of providing the public with comprehensible and complete information on that intended purpose, in order to preserve the undistorted system of competition in the market for that product.”

The use of a trade mark will be deemed contrary to honest practice in industrial and commercial matters when:

• Third party creates the impression that there is a commercial connection between it and the trade mark owner;

• It affects the value of the trade mark by taking unfair advantage of its distinctive character or repute;

• It casts discredit or denigration on that mark.

The ECJ has clearly established the principle that when an operator wishes to claim the benefit of article 6 of the Directive (restrictions to trademark exclusive right), a trade mark should be used in an informative purpose or in a purely descriptive way .

Analysis

In both the French and the Belgian cases, gambling operators used trademarks for the purpose to providing services to the public. The information was meant to help customers identify the sports event on which they could place bet.

The Belgian court referred to this informative purpose as its basis for ruling in favour of the online betting operators. It considered that the exclusive rights granted by trade mark owners cannot prohibit its necessary and honest use for an informative purpose. The analysis appears closer to the ECJ position.

On the contrary, the French court seemed to have adopted a less liberal approach, considering the mere use of a protected name is likely to be a prohibited use. This position has not been consistently adopted by French courts which have previously been more moderate in their rulings. This is the first time that such an infringement has been held to have been committed on an online gaming operator.

Until very recently, the French monopolies and the French authorities have led aggressive campaigns against online operators. Could the French decision be the result of such bad press? Indeed, the main claims were that online gambling brings corruption, and does not financially contribute to the development of the sports events that they exploit.

This judgment could indeed show the reluctance of the French establishment to admit online gambling as a decent economic activity. Will this case remain isolated? The forthcoming French online gambling legislation may bring an answer to this question.