McGuireWoods recently represented an international online gambling operator in a trademark infringement case brought before the Court of First Instance of Paris by the group Pari Mutuel Urbain (PMU), which until recently had held a monopoly in France on gambling on horse racing.
Gambling on horse racing in France has been strictly regulated for more than a century, with each type of bet being named and defined by a series of ministerial orders and decrees dating from as far back as 1887. The names and payout terms of these various bets are used throughout the horse racing industry in France to identify such bets and have become generic terms in the French language. One example is the "trio," which consists of selecting three horses in a same race without giving their order of arrival and is payable if the three selected horses occupy the first three places in the race, irrespective of their order of arrival. Other names of bets include the simple, the couple, the quarté+, the quinté, the 2sur4 and the multi, with each name also attempting to immediately indicate to the gambler the nature of the bet being offered. The various bets are also associated with their own color in any form of visual representation. For example, the trio is always represented in an orange title block and the quarté+ is in dark blue. These names and types of bets, offered in the context of a monopoly run by the PMU in France, have therefore become, over time, the general terms in France for such bets.
By the law No. 2010-476 of May 12, 2010, the online betting part of PMU's monopoly on gambling on horse racing in France was opened to competition. Prior to this date and since 2001, PMU had registered the various names of bets as French written trademarks and semi-figurative trademarks. In order to offer online bets on French horse racing, the firm’s client, on its websites, had used the same names (and colors) and conditions of bets as offered by PMU, but with a 5 percent higher payout. PMU claimed this was an infringement of its trademarks, unfair competition and free-riding and took legal action in May 2009.
In its judgment dated Nov. 23, 2010, the Court of First Instance of Paris agreed with the client's argument that PMU had fraudulently registered the names of the bets as trademarks, since the registration as trademarks had been made with the intention of depriving competitors of a mark that was necessary for their business, in an attempt to ensure a monopoly preventing any potential competitor from using the names for operating the relevant types of bets and thus causing prejudice to any competitor by means of an illegitimate legal obstacle, thereby depriving the trademarks of their proper purpose. The court therefore decided to declare as invalid PMU's registration of the names of the bets as written and semi-figurative trademarks, and consequently to dismiss its claim for infringement of such trademarks. The court also dismissed PMU's claim of unfair competition, but did hold that the client's use of the colors associated with each bet constituted free-riding and ordered it to pay modest damages on this count.