France: Controlled opening and recent case-law regarding remote gaming operators EIG, 24th September 2008 Thibault Verbiest, Partner, Ulys

Controlled opening and recent case-law regarding remote gaming operators France is currently opening its online gaming market Criminal prosecutions against remote gambling operators have been frozen Recent case-law indicates that the bone of contention could be moving from article 49 based actions towards actions based on the infringement of intellectual property rights and unfair trade practices (“commercial parasitism”)

France: brief reminder of the opening process July 2007: PMU vs. Zeturf: Groundbreaking decision from the French supreme court.  Is the barrier to free provision of services justified and necessary ?  Questions proportionality of the blanket prohibition. Courts must check if the MS of origin protects consumers. October 2007: France starts to negotiate with the European Commission after 2 nd stage of infringement procedure is launched. March 2008: Durieux report published. April 2008: the French government announces the opening of the online gaming market.

France: brief reminder of the opening process Durieux report: towards a “controlled opening” Mission: reflect on how to reorganise the gambling sector and its regulatory framework. Recommendations:  No mutual recognition of other EU operators.  Opening of the market for all games except slot machines (too addictive)  Setting up a licensing system.  Maintaining the current taxation system

France: brief reminder of the opening process Calendar: Draft proposal to be submitted to the European Commission before presentation to the parliament in the fall 2008 European Commission unlikely to accept a system which does not recognizes licenses from other MS Lobbying from operators to obtain a transitory regime before the new legislation is passed in the second half of Payment Ban Decree (delinquency Act):  EU Commission said no since it is contrary to EC Treaty…to be continued. France currently holds the presidency of the EU Prosecutions: in principle no more prosecutions of EU gambling operators. However, recent case-law indicates that the bone of contention could be moving towards intellectual property law and trade law

Recent case-law in the field of the infringement of property rights & unfair practices 3 cases in the space of 6 months relating to remote gaming and trade mark infringements + unfair practices (trade law) Shows the legal difficulties posed by the use of registered trade marks (club names) by remote gaming operators Framework: civil actions brought by sports clubs (Juventus & PSG) and competition organizers (FFT) against remote gambling operators on the basis of IP law (infringement of trade mark) and commercial law (unfair practices, so called commercial parasitism)

Recent case-law in the field of the infringement of property rights & unfair practices I- Trade mark infringement argument Article L of the intellectual property code grants exclusive rights to trade mark holders = property right ► third parties are not entitled to use the trade mark without the consent of the holder = otherwise infringement of trade mark ► third parties may have to pay a fee to the TM holder in order to obtain a user’s licence

Recent case-law in the field of the infringement of property rights & unfair practices However, article L713-6 states that registration of a mark shall not prevent use of the same sign or a similar sign as the necessary reference to state the intended purpose of the product or service, in particular as an accessory or spare part, provided no confusion exists as to their origin. Where such use infringes his rights, the owner of the registration may require that it be limited or prohibited

Recent case-law in the field of the infringement of property rights & unfair practices Paris District Court, 30 January 2008, Juventus vs Unibet & William Hill: “The use of a mark under article L713-6 is an exception to the exclusivity conferred by the mark and must be restricted to the uses that are strictly necessary for the purpose of online sports betting” The Paris District Court considered that sports betting operator was using the Juventus mark for advertising purposes and thus infringed its rights

Recent case-law in the field of the infringement of property rights & unfair practices Paris District Court, 30 May 2008, French Tennis Federation (FFT) vs. Unibet and Expekt.com + Paris District Court, 17 June 2008, PSG vs. Bwin & Unibet : no trade mark infringement► judge considered that the reference to the mark was necessary as required by article L713-6 Consequence: diverging decisions by the same court

Recent case-law in the field of the infringement of property rights & unfair practices II- Unfair practices argument Argument invoked by the FFT and the PSG in addition to the trade mark infringement argument Legal basis: “commercial parasitism”, i.e., the fact of profiting from a third party’s efforts and investments without contributing oneself financially to these efforts. ► In the FFT case, the designation of the French Open tournament was aimed at encouraging consumers to bet on the Australian Open: judges considered that this demonstrated the operator’s wish to promote its activities by unnecessarily referring to the French Open and thus constituted an act of commercial parasitism ► In the PSG case, the judges considered that the PSG had failed to establish that remote betting operators saw an increase in their revenues as a result of announcing on their sites the matches in which the PSG participated and dismissed the claim.

Recent case-law in the field of the infringement of property rights & unfair practices Conclusion Lack of legal certainty as to the scope of remote gambling operators’ right to cite the mark of sports club & competition organizers Sports federation are lobbying the government in order to obtain that remote gambling operators pay them a fee in order to use their names Government has indicated it would examine the matter but it is not clear yet what will happen Most recent decision (PSG case) is a victory for remote gambling operators Can be advocated that the future law on remote gambling expressly authorizes the right for operators to cite the name of sports clubs on which they offer bets

Thank you for your attention! Thibault Verbiest, partner, ULYS