Online betting: court cancels trademarks of past monopoly beneficiary

In recent years, the fierce competition among the various actors in the online betting industry has seen many trademark disputes come before the French courts. Following several disputes between online bookmakers and sporting events organisers (Unibet International Ltd v Federation Française de Tennis, 2009) or sports clubs (Juventus FC SpA v Unibet, 2009 and Paris-Saint-Germain Football v Internet Opportunity Entertainment Ltd, 2010) regarding the use of their names to offer betting services, the Paris Court of First Instance has now been faced with a new kind of trademark dispute involving past beneficiaries of the state-regulated monopoly and new private operators.

In Pari Mutuel Urbain (PMU) v Unibet (23rd November 2010) the Paris court issued an important decision regarding trademark law in the context of the liberalisation of online betting and gambling in France. Following a 2006 ruling from the European Commission, the French state-regulated monopoly on betting and gambling was said to be incompatible with Article 49 of the EC Treaty, which guarantees the free movement of services. As a result, on 12th May 2010 the Law on Online Betting and Gambling (2010-476) was promulgated to open up the market for three categories of online services in France: horseracing betting, sports betting and gambling.

In PMU v Unibet the Paris Court of First Instance was faced with a dispute between PMU, which was previously the only party in a state-regulated monopoly on horseracing betting services, and two of the major new players on the market, Antigua and Unibet. Shortly before the liberalisation of the market, PMU, then in a horse-betting monopoly, decided to register several trademarks which identified its betting services. The names given to these betting services (“Simple”, “Couplé”, “Trio”, “Tiercé”, “Quarté+”, “Quinté+”, “2sur4" and “Multi”) and registered as French trademarks were not created by PMU, but rather were the names given to different kinds of bet by the government decrees which authorised PMU to create such bets on horse races.

Following the promulgation of the Law on Online Betting and Gambling, PMU was faced with several actual or future competitors on the horseracing betting market since many companies offered or intended to offer such services online. However, PMU continued to benefit from a state-regulated monopoly on physical horse betting.

On the liberalisation of the French online bookmaking market, Unibet and Antigua decided to offer the same bets as PMU and to use the same names to identify these bets. As a consequence, PMU considered that these new bookmakers were making unlawful use of its trademarks to identify their offers and brought a claim for trademark infringement, unfair competition and parasitism against Unibet and Antigua. 

As a counterclaim, the two online betting companies requested that PMU's trademarks be cancelled on the following grounds:

• The trademarks were registered in bad faith since they were registered in a context of the liberalisation of the online betting market to prevent new entrants from using the names of the horse bets. The two companies underlined the fact that PMU did not create the bets, nor did it create the names of the bets, and that it could not ignore the use by Unibet or by other operators before the filing.
• The trademarks were devoid of any distinctive character since they:
  • Consisted of the necessary, customary and generic terms to designate horse betting.
  • Designated a particular type of horse betting decreed by the French government and are registered for goods and services related to horse betting.
  • Denoted an essential characteristic of the bookmaking activity (ie, the type of horse betting).

The Paris Court of First Instance rejected PMU's claims of trademark infringement and ruled in favour of the online bookmakers. The court cancelled PMU's trademarks since it considered that each trademark constituted the name of a type of bet which had been determined by a government decree in accordance with the previously existing regulation on horse racing. The court noted in the decrees, each bet was defined precisely and the names contained therein had an educational purpose in aiding bettors to understand immediately the purpose of the proposed bet.

The judges considered that by registering names which were necessary to describe a type of bet in the knowledge that online betting would be opened up to competition, PMU attempted to maintain a monopoly, thereby depriving any potential competitors of using names that were essential to their activity. By behaving in this way, PMU had diverted trademark law from its ordinary purpose in order to maintain an anti-competitive advantage. 

The Paris court cancelled the trademarks on the grounds of fraud, since they could not be cancelled under the IP Code. Although Article 712-6 of the code specifically enables victims of fraud to claim ownership of a trademark through legal proceedings, there is no provision enabling the cancellation of a trademark. However, the court considered that the article was a mere application of the larger theory of fraud, under which the courts may penalise and consider void any legal act committed with the mere intention of fraud. Therefore, no specific text was required in order to cancel the fraudulent trademarks.

Although Unibet and Antigua were successful in regard to the trademark law issues, the two companies were found liable for parasitism by the court.

PMU claimed that Antigua and Unibet were using the same range of bets as its own, the same colour code, the same rules and the same ranks and reports, as well as offering 5% higher gains, thereby committing acts of unfair competition and parasitism.

The court rejected most of these claims, but found that the mere use of the same range of colours used by PMU in order to individualise each type of horse bet allowed the companies to identify the different betting services immediately, thereby providing them with a competitive advantage by making their websites more accessible. Therefore, the companies were considered to have committed acts of parasitism to the detriment of PMU; they were ordered to pay €50,000 in damages to PMU and prohibited from using the colours in the future.

This decision comes in the wake of numerous disputes between sports trademark owners and online bookmakers in recent years. As a result, online betting activity is becoming a considerable source of French trademark case law.