Germany's highest court bans ads for virtual items in online game – reasons for judgment available, but not final

The highest German civil court, the Federal Court of Justice (Bundesgerichtshof; "BGH"), has ordered Gameforge as the operator of the online fantasy game "Runes of Magic" to cease using certain language to advertise additional online content available for purchase. The contested wording included the sentence "Seize the advantageous opportunity and add that certain something to your armour & weapons". The plaintiff was a consumer watchdog organisation.

The BGH considered the language a direct exhortation to children to purchase the items, which is prohibited by unfair commercial practices legislation in the European Union.

The decision (docket no.: I ZR 34/12) was handed down and first reported in the summer, but the reasons were not provided until late December 2013. As it was a default judgment, it is not yet final and is being challenged by the operator of the game. And indeed, the decision is contradictory and not convincing.

What is it all about?

The games provider advertised on an online message board associated with the game, under the heading „Die Pimp-Woche“ (Literally, “the pimping week” – the English term “to pimp” is sometimes used in contemporary German in its slang meaning as “to embellish” or “to enhance”):

“Thousands of dangers are waiting for you and your character in the wide world of Taborea. Without the proper preparation, the next corner you round in that dungeon could be your last. This week again you have the opportunity to vamp up your character. Seize the advantageous opportunity and add that certain something to your armour & weapons. From Monday […] through Friday […], you have the opportunity of upgrading your character.”

The portion “upgrading your character” was linked to the item shop in which registered users could purchase virtual items for the game.

The court’s decision

The BGH saw this language as an illegal direct exhortation to children to buy the relevant items. The BGH’s position that the ad targeted children is essentially based on the following analysis:

The language of the ad made it clear that the invitation to make a purchase also targeted children because it addresses the audience with the German informal “you” (the German language has different words and grammatical constructions for “formal” and “informal” address, the latter being commonly used for family, close friends and children) and the use of words like “pimp” and “vamp up”, which it considers typical for children’s speech. The court also refers to "anglicisms", implicitly relying on the use of the English terms "pimp" and "dungeon" in the ad, which it considers typical of children's speech.

With its decision, the BGH takes a position opposite both lower courts that have heard the case: The Regional Court of Berlin had dismissed the claim based on the argument that the advertisement did not concern a specific product, which would be required for an “exhortation to purchase”. The Higher Regional Court had agreed with this analysis and rejected the appeal.

Legal background

The BGH allowed a further appeal and found the advertisement to be an illegal commercial practice under German Unfair Competition legislation. The law is based on the EU Unfair Commercial Practices Directive (Directive 2005/29/EC of May 11, 2005), which means that similar statutes exist throughout the European Union. Therefore this decision could also influence the interpretation of the laws in other European jurisdictions.

Under this legislation, it is an illegal commercial practice to include in an advertisement a direct exhortation to children to buy advertised products or services or persuade their parents to do so.

The term “Child” is not defined either in the Germanstatute or in the EU directive. It is not entirely clear if it refers to all minors, or only minors below the age of 14 years. However, it appears that the majority legal opinion, based on other EU legislation, is that the cut-off age is 14 years. In its decision, the BGH brushes aside this problem and states that the ad in any event targets minors under the age of 14 because it uses the informal "you", typical children's vocabulary, and "common anglicisms".

The reasons for judgment are contradictory insofar as they also explicitly say that the use of the informal "you" nowadays is not uncommon in ads addressing adults; the same is obviously true of English language words and advertising claims and slogans. This leaves only the allegedly "typical" children's speech – but the court's reasons are very vague on what words precisely it considers to fall into this category, making the decision ultimately unconvincing and unhelpful.

Under the EU directive, an "exhortation to buy" must include the characteristics of the product and the price. In this case, the advertised items were not even specifically identified. However, the BGH considers that the hyperlink to the online store is sufficient, as consumers were used to the mechanism of clicking links to retrieve additional information on websites. The court therefore saw the ad and the online store site it linked to (and which obviously stated product characteristics and prices) as one unit.

Game over for Freemium offers?

After the decision was initially reported, many commentators took the position that this BGH verdict threatened the entire “free-to-play” model in Germany. As the last few months have shown, we are not there yet. However, the written reasons for judgment have not significantly clarified the law with regards to permissible advertising.

It is important to note that the decision is only a default judgment, and the operator of the game is challenging it – now that it actually knows the precise reasons. This right of objection enables the game operator to make further legal submissions and obliges the court to review its decision.

It is by no means excluded that the BGH changes its stance during the objection procedure or that it asks the ECJ for a common interpretation of the directive.

What does the decision mean for Freemium offers, children’s games and children’s apps?

It can be expected that consumer watchdog groups and potentially also competitors will take an even closer look at advertising language in or with regards to online games. Furthermore, challenges to terms and conditions and privacy policies have been on consumer watchdogs’ agendas for quite some time now. This does not only apply to browser and client based games, but also to mobile apps.

Game operators active in the EU, and particularly in Germany, should therefore closely monitor the further legal developments in this area. As a consequence of the BGH decision, even greater care should be exercised in making advertising language legally compliant. Direct purchase invitations to children should be strictly avoided. Therefore, while the invitation “Get this sword for only 2.99 Euros!” is a no-go, a wording like “Wouldn’t it be great to enhance your weapons?” should be less problematic.

Checklist:

A more detailled analysis of the decision is available here: http://bit.ly/1lPrLTV

co-author: Felix Hilgert, LL.M., Osborne Clarke