Advertising and sponsorship in Europe European Gambling Briefing 9 May 2007 Thibault Verbiest Partner ULYS

Advertising and sponsorship in Europe Overview Legal framework for gambling advertising and sponsorship in the EU; Legal framework in Germany, Belgium, France; Specific sponsorship & IP issues

EU Legal framework No EU regulatory instrument on gambling advertising and sponsorship Gambling excluded from - the E-commerce Directive - the directive on services in the internal market Gambling prohibited in most MS Consequence: advertising and sponsorship restricted in most Member States EU level Article 43 & 49 EC Treaty ECJ case-law: Lindman, Gambelli, Placanica

EU Legal framework ECJ case-law limits possibility for Member States to restrict the free movement of gambling services across the EU to the statistical proof by the Member States of a « consistent gaming policy » (Lindman, Gambelli, Placanica), i.e., MS may not prohibit the advertising of gambling services by foreign private operators where they themselves incite their consumers to play through intensive marketing campaigns by their monopolies (e.g., Française des Jeux) Constant ECJ case law: National legislation which prohibits the pursuit of activities related to gaming and bets, in particular bets on sport events, without a licence or a police authorization issued by the Member State concerned, constitutes a restriction on the freedom of establishment and the freedom to provide services

EU Legal framework Member states are free to set the objectives of their policy on betting and gaming BUT the restrictive measures that they impose must : - be exceptional or justified for reasons of overriding general interest (consumer protection) - be proportionate with regard to the reasons adduced, i.e., reflect a « consistent and systematic policy » (Gambelli, Placanica: criminal penalties are disproportionate to achievement of aim (Gambelli, Placanica) - be applied without discrimination

EU Legal framework European Commission Ongoing infringement procedures on grounds of restrictive gaming legislation ( article 49), mostly related to sports betting restrictions (Germany, Italy, Sweden, Denmark, Finland, the Netherlands, France, Austria and Hungary) De facto deregulation process taking place in several MS: Germany, Belgium Toughening of sanctions against advertisers in France

EU legal framework: Germany Germany: Constitutional court decided that sports betting monopoly contrary to constitution since does not effectively prevent addiction: lack of consistent gaming policy (Gambelli) intensive advertising campaign from ODDSET Review of monopoly in accordance with EU law : deadline December 2007 Draft treaty on new monopoly contrary to EU law Likely opening of the market by 2008

EU legal framework: Belgium Current regime :patchwork of legislation 2002 Act: National lottery monopoly may organise lotteries, games of chance, betting and contests online 1999 Act: Games of Chance subject to licence by Gaming Commission 1963 Act on sports betting : licence system on competitions and betting concerning sport events results granted by the Sport Ministers of the Belgian Communities (only pool betting) Fixed-odd betting not regulated but liable for taxation Horse betting subject to authorization by Ministry of Finance No licence available for internet gaming: prohibition SMS games authorized only in the framework of a complete television program

EU legal framework: Belgium Who can advertise in Belgium? Remote gaming operators not authorized to promote services Under article 64 of the 1999 Act only Belgian licensed games of chance may be promoted in Belgium, whether in French or in another language; Under the 1963 Act, advertising or promoting activities on sports betting is punishable if the promoter does not have the required betting license on those sports activities. Article 23, 10° of the 1991 Act clearly forbids publicity, which can give a consumer a hope or a certainty that he has won or can win by coincidence a product, a service or any other benefit. However, advertising of fixed odd betting not punished Concrete risks of prosecution low

EU legal framework: Belgium Draft proposal on games of chance Initially presented to the House of Representatives on 7 December 2006 Draft bill inserted in the 2006 Finance Act in order for it to come under an emergency procedure Adoption was scheduled end 2006 Withdrawal due to lobby by the National lottery and the Belgian casino grouping Then examined by the House under normal bicameral procedure Adoption was scheduled end of February but now suspended Time of adoption unknown

EU legal framework: Belgium Draft bill on games of chance All bets subject to the new law and to the extended competence of the Gaming Commission Possibility for EU gaming operators to apply for a reliability certificate with the Gaming Commission to operate games of chance and sports bets via the internet Consequence: holders of certificate would be entitled to advertise, the others would be more likely subject to prosecution in view of extended competence of gaming board

EU legal framework: France Transitional period until 5 September 2007 Current regime Advertising of prohibited lotteries and sports betting sanctioned by a light 4500 fine: 1836 Act on lotteries Advertising of other games of chance, and horse betting punished by rules governing criminal complicity: max three years imprisonment term and a fine (same as for author)

EU legal framework: France Only authorized operators may advertise and conclude sponsoring agreements: FDJ & PMU Discriminatory situation betw national operators and foreign operators Test casinos may advertise international poker tournaments held on their premises during the event

EU legal framework: France New regime from 5 September 2007 onwards : bill on prevention of delinquency Fines against anyone which advertises by any means whatsoever an unauthorized gaming house, gaming circle, sports betting and horse betting = euros fines + the possibility for courts to multiply this fine by four times the amount invested in the advertising expenses Not yet into force: current rules still apply But principle of retroactivity of more favourable criminal law provisions: rules governing criminal complicity for unauthorized games of chance and horse betting to be replaced retroactively by the new regime

EU legal framework: France Whos at risk? Those who advertise through physical presence in France or conclude sponsorship agreements in the field of sports betting, including horse betting: domain of monopolies (FDJ & PMU) recently : French CSA wrote to Canal +, Eurosport, Direct 8, Jet concerning promotion of online games Online advertising seems less risky Precedent: BWin arrests following sponsorship agreement with FC Monaco Football clubs required by government to stop entering into sponsorship agreements with sports betting companies

EU legal framework: France Placanica case : Member State may not apply a criminal penalty for failure to complete an administrative formality where such completion has been refused or rendered impossible by the Member State concerned, in breach of Community law. Consequence: criminal penalties imposed in case of gambling advertising contrary to EC law: France likely to be in breach of EC law no consistent gaming policy Ongoing Commission infringement proceedings against France on grounds of restrictive sports betting regulations: France likely to modify legislation in the mid term Victory of Sarkozy might open up market

EU legal framework: Sponsorship I.Definition and characteristics of the sponsorship II.Sponsorship and gambling : specific issues 1. Other legal uses of emblems / signs / trademarks and names of the sport event 2. What about the case where the sports event does not take place or the sportsman cannot participate ? (ex : UNIBET)

EU Legal framework: sponsorship I.Definition= a business relationship between a provider of funds, resources or services and an individual, event or organization which offers in return rights and association that may be used for commercial advantage in return for the sponsorship investment The organizer of the event grants to the sponsor intellectual property rights, e.g, use of the trade marks The organizer of the event grants to the sponsor the right to associate to the sport event This could be done with advertising, promotion, etc…

EU Legal framework: sponsorship & IP II.Specific issues: other legal uses of trade marks / signs/ emblems … a. Issue What about the use of the name of the sport event by other firms than official sponsors and licensees ? b.Principle : a third party cannot use a trade mark « in the course of trade » Advertising is covered by the « course of trade » c.Exceptions : right of information and use of a trade mark with descriptive aim

EU legal framework: sponsorship & IP Right of information The right of information may limit the monopoly of a trade mark Information is not restricted to the media trademark can be used by a third if this use is made with descriptive aim, in its usual sense Use of a sign with descriptive aim a use « as a trade mark » Legal dispositions : - Article 17 TRIPs - Article 6 Harmonization Directive

EU legal framework: sponsorship & IP Article 17 TRIPS Members may provide limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties.

EU legal framework: sponsorship & IP Article 6 of Directive n°89/104 : limitation of the effects of a trade mark The trademark shall not entitle the proprietor to prohibit a third party from using, in the course of trade : (b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;

EU legal framework: sponsorship & IP ECJ « Hölterhoff » case : The proprietor of a trade mark cannot rely on his exclusive right where a third party, in the course of commercial negotiations, reveals the origin of goods which he has produced himself and uses the sign in question solely to denote the particular characteristics of the goods he is offering for sale so that there can be no question of the trade mark used being perceived as a sign indicative of the undertaking of origin

EU legal framework: sponsorship & IP French case-law Case « Tour de France » v/ «Tour voile » Court of Appeal, Paris, 28 march 2001 (« Gemka production » v/ « Tour de France ») a trademark can be used by a third when it is realized with the aim to identify the sport event per se, in its usual sense

EU legal framework: sponsorship & IP Specific examples: Using of the name of a sportive event in his usual sense, with descriptive aim : a sportive broadcasting which announce the results of sport events a stock investment company which has to quote the company to which it refers MrBookmaker/Unibet cases

EU Legal framework: sponsorship & IP II.Specific issues: case where the sportsman of the team does not participate in the sport event « Unibet » case : team banned by the FFC and the ASO from participating in French races Sponsorship agreements generally preview clauses to prevent this case, regarding to the sponsorship fee: «The contractual parties shall support each other to the best of their abilities and shall take all reasonable measures to fend off any possible procedures against the advertising measures, which are the subject of this Contract » Agreements generally preview that in such case the contract is terminated + that the fees are reduced

Conclusion Advertising & sponsorship subject to various degrees of restrictions due to restrictive gaming legislation and IP rights De facto de regulation taking place might open the way to more lenient rules on gambling advertising and sponsorship

Thank you for your attention