Year-long dispute between Danske Spil A/S and Ladbrokes Betting & Gaming Ltd. ended in a draw

Date 19 jan. 2012
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On 6 January 2012, the Danish Supreme Court, finally made a ruling in the case between Danske Spil A/S (hereafter “Danske Spil”) and Ladbrokes Betting & Gaming Ltd. (hereafter “Ladbrokes”), and found that both parties had overstepped the limits of the Danish Marketing Practices Act in connection with two marketing campaigns in 2007 and 2008.

 

The case in brief

 

Danske Spil, owned 80% by the Danish State, which - at the time in question - was the only company with a license to provide bookmaking and lottery games in Denmark, launched an image campaign in the second half of 2007 which included cinema ads, TV-ads and advertisements in general. The advertisements stated e.g.:


“.. And now we are called Danske Spil (Danish gaming). Not Philippine Gaming, Italian Gaming, or any other type of gaming.

… and it’s not just a name – but a system allowing millions of DKK to change hands every day, without ending up in the wrong pockets (…)”


Ladbrokes, an English gaming company, which provides internet bookmaking and a number of other types of gaming in more than 200 countries, also carried out a marketing campaign in Denmark from May 2008 until September 2008 with the slogan:


“Danish gaming (Danske Spil) English odds”


Among other things, Ladbrokes placed big billboard adverts in Copenhagen with the text:


“What is Ladbrokes?

Danish Gaming (Danske Spil)

Same gaming/Same security

English odds

Bigger Prizes/Better service”.


Danske Spil claimed that the Ladbrokes advert was contrary to the rules in the Danish Marketing Practices Act concerning best marketing practise and it constituted misleading and defamatory advertising, comparative advertising and was a violation of Danske Spils’ right to a distinctive mark and trademark.


Ladbrokes, apart from pleading not guilty, claimed that Danske Spil’ adverts were contrary to the rules of the Danish Marketing Practices Act concerning best marketing practise and the adverts were misleading, defamatory and comparative. Furthermore, they claimed that the adverts were contrary to Art. 56 of the Treaty on the functioning of the European Union regarding the free movement of services because Danske Spil with the adverts encouraged the consumers to buy Danish services at the expense of services from foreign companies.


The legal Framwork


The Danish Marketing Practises Act is the road traffic act for businessmen. The Act intends to provide companies with legal protection against disloyal competition and to provide the consumers with legal protection against misleading advertising and other reprehensive business practices.


The Danish Marketing Practises Act contains a general ban on actions violating best trading practices (Section 1). The ban, called the omnibus clause, may be applied independently or as a supplement to the other provisions of the law. Among the other provisions of the law is a ban on using false, misleading or otherwise improper statements which may mislead competitors or consumers or influence the demand (Section 3). Furthermore, the law contains a number of conditions to be fulfilled if the business uses comparative advertising, including the fact that the advertisement must not discredit the competitors and may only be used on products with the exact same description (Section 5).


Furthermore, the Danish Marketing Practises Act contains a ban on using distinctive marks to which the business is not entitled or which may be confused with other distinctive marks (Section18). The Provision supplements the protections according to Section 4 of the Danish Trademarks Act as it is not a condition to be covered by Section 18 of the Danish Marketing Practises Act that the distinctive mark is protected under any other law e.g. the Danish Trademarks Act.


The Supreme Court’s decision

 

The Supreme Court found that, that in 2008 “Danske Spil” was incorporated as a trademark regardless of the fact that no formal registration had taken place. However, the Supreme Court did not find that Ladbrokes use of “Danske Spil”, as a part of their slogan, constituted an improper exploitation of the reputation and goodwill attached to Danske Spil. Therefore, the use of “Danske Spil” did not constitute a violation of Section 18 of the Danish Marketing Practises Act or Section 4 of the Danish Trademarks Act.


However, the Supreme Court found that a part of the marketing campaign was comparative advertising. Expressions as “better service, same security, same type of gaming and bigger prizes” are subjective statements which cannot be verified. Furthermore, since it is not proved that Ladbrokes provides the same type of gaming as Danske Spil or pay out bigger prizes than Danske Spil, Ladbrokes was found guilty of not having observed the comparative advertising rules .


As regards Danske Spil’s image campaign, the Supreme Court found that Danske Spil through the campaign tried to give the consumer the impression that foreign providers of gaming, unlike Danske Spil, cheat the players and use mafia-style methods. Therefore, the Supreme Court found that Danske Spil’s campaign was misleading, discrediting and contrary to best trading practices.


However, the Supreme Court did not find any reason to assume that the Danske Spil’s advertising constitutes a violation of the rules on free movement of services within the European Union.


On the basis of the above, the Supreme Court decided that neither of the parties had suffered a loss larger than the other party and thus none of the parties were imposed to pay remuneration or damages to the other party.


Consequences of the ruling

 

The ruling confirms that, in principle, it is legal for companies to use comparative advertising as long as it is used in an objective and loyal way. In this specific case, the conditions were not observed since the Supreme Court found that both parties had made assertions giving the consumers the wrong impression about the competitor's business.


If a company wants to carry out a marketing campaign in which products are compared with the competitor's, it is extremely important that the comparison in no way is misleading or is discrediting the competitor.


Furthermore, comparison of services is only allowed when the services have the same purpose or fulfil the same needs. Crucial to this is whether the two services are replaceable alternatives.


Particularly when dealing with companies providing gaming services, it should be emphasised that the provisions of the Danish Marketing Practices Act are supplemented by Section 36 of the Danish Gaming Act. Apart from having to comply with the rules of the Danish Gaming Act, companies provinding gaming services also have to comply with the general rules of the Danish Marketing Practises Act.


It is thus recommendable for a company contemplating launching a marketing campaign to thoroughly scrutinize the elements of the campaign with their legal adviser in order to secure that the campaign complies with the provisions of the Danish Gaming Act and the Danish Marketing Practises Acts.



If you have any questions or require additional information on the decision, please contact Partner Claus Molbech Bendtsen (cmb@mwblaw.dk) or Senior Associate Pernille Nørkær (pno@mwblaw.dk).


The above does not constitute legal counseling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis for decisions or considerations.