Court gives guidance on online marketing

Summary

The High Court has ruled that the owner of a football fans’ website who contracted to send marketing emails and SMS messages on behalf of a sponsor to “opted-in” recipients failed to satisfy its obligations by sending emails to individuals whose details had been bought in from an unrelated third party.

This case is useful in that it provides guidance on the meaning of the terms “opted-in” and “targeted” in the online marketing industry. It also considered how far an individual’s consent to receive direct marketing extends when that individual’s data is bought in by third parties.

Facts

Givemefootball Ltd hosts the Professional Footballers’ Association (PFA) website which runs the PFA Fans Awards, in which football fans vote online for their favourite players. Playup Interactive Entertainment (UK) Pty Ltd operates an interactive gaming business that allows betting on sporting events via mobile phones or the internet for a share of a prize pool.

Playup agreed to sponsor the PFA Fans Awards and entered into a sponsorship agreement with Givemefootball. In return for the sponsorship fee, Givemefootball agreed to provide Playup with certain “targeted marketing opportunities and benefits” on a sole and exclusive basis. Among other things, Givemefootball agreed to send the following marketing communications on behalf of Playup:

• Monthly marketing emails to “at least one million (1,000,000) opted-in recipients who are contained in databases owned or controlled by Givemefootball”.
• Bi-monthly marketing SMS messages to the “Mobile Devices of at least two hundred and fifty thousand (250,000) opted-in recipients who are contained in databases owned or controlled by Givemefootball”.

Givemefootball also represented and warranted that its data subjects had “provided the Givemefootball with prior notifications of their consent to receiving direct marketing from Playup”.

When Playup discovered that a large proportion of Givemefootball’s database of “opted-in recipients” had been bought in from a third party, it terminated the Agreement, claiming damages for breach of contract and certain repayments. Givemefootball denied any breach and counterclaimed for the balance of the sponsorship fee.

In order to rule on the dispute, the judge had to deal with the following questions of interpretation:

• Whether the references to “opted-in recipients” in the Agreement referred only to data subjects who had opted-in to receiving marketing communications via the PFA website, or whether it could also refer to data subjects with known sporting interests who had opted-in on unrelated third-party websites to receiving marketing from other companies.
• Whether the warranty from Givemefootball that its data subjects had given it their consent to receiving direct marketing from Playup required that the data subjects’ consents must be given specifically to Givemefootball and must relate to direct marketing from Playup, or whether it was sufficient that data subjects had given their consent to a class of which Givemefootball is a member to receiving direct marketing from a class of which Playup is a member.
• Whether the obligation to send SMS messages to the mobile devices of at least 250,000 opted-in recipients required Givemefootball to verify that such SMS messages were being sent to numbers connected to mobile devices (as opposed to any numbers supplied by opted-in recipients), and whether this obligation implied a promise that such messages would actually be delivered.

Decision

The Court decided in favour of Playups, deciding that Givemefootball had substantially failed to deliver the promised numbers of email and SMS messages to opted-in recipients, and that this amounted to a breach of contract entitling Playup to terminate the agreement.

In reaching his decision on the meaning of the Agreement, the judge took into account the terms of a sponsorship proposal that was presented to Playup by Givemefootball during the negotiation of the Agreement.

Opted-in recipients

The judge found that buying in data did not meet the contractual obligation to supply “opted-in recipients”. Although the Agreement was not specific about what a recipient must have opted-in to, the judge concluded that it must mean that a recipient had opted-in via the PFA website. In coming to this conclusion, the judge decided that:

• The essential purpose of the Agreement was to give Playup access to commercial opportunities associated with the PFA Fans Awards, and this was inconsistent with buying in third party data.
• Commercially, a message sent to someone who had previously dealt with Givemefootball would be more likely to get a positive response than a message sent to someone whose details had been bought in.
• References in the Agreement to databases which were “owned or controlled” by Givemefootball were the result of careful drafting, not allusions to bought-in details.
• The sponsorship rights were expressed to be given on a sole and exclusive basis and, unless Givemefootball had purchased the bought-in data on an exclusive basis, such data could be freely licensed elsewhere by the relevant owner.
• The sponsorship proposal promised that the opted-in email database would increase by “20,000” per month. Use of bought-in data would render this claim meaningless.

Givemefootball had also argued that the reference in the Agreement to providing Playup with “targeted marketing opportunities” could be satisfied by sending marketing to data subjects who were known to have sporting interests. The judge rejected this argument, holding that there was nothing in the commercial context of the Agreement which indicated that this was what was contemplated by the parties. There was a fundamental difference between the “avid football fans” who opted-in to the PFA website and members of the public who happened to say that they were football fans or sports interests fans. Playup had agreed to pay a substantial sponsorship fee to Givemefootball in return for access to avid football fans. If it had wanted to gain the benefit of a marketing campaign that was directed at individuals who were not avid football fans, it could have done so more cheaply and on more favourable terms, for instance, through a Google campaign. Givemefootball’s interpretation of “targeted” would render any anticipated added value from Givemefootball’s marketing campaigns worthless.

Data subject consent

The judge considered the most natural meaning of Givemefootball’s warranty that data subjects had provided Givemefootball with prior consent to receiving direct marketing from Playup was that they had:

• Provided consent to Givemefootball.
• Consented to receive direct marketing from Playup or from a class of which Playup is a member.

It was reasonable to read “consent to receiving direct marketing from Playup” as “consent to receiving direct marketing from a class of which Playup is a member”. It is common for companies to obtain consent to receive direct marketing “from us and our clients” or “from us or our business partners”.

It was not however reasonable, in relation to data subjects whose data had been bought-in by Givemefootball, to read “provided Givemefootball with prior consent” as “provided prior consent to a class of which Givemefootball is a member”. This was because it was not reasonable to consider that Givemefootball was in the contemplation of such data subjects and therefore, in these circumstances, Givemefootball could not be considered to have received consent from data subjects of bought-in data. Accordingly, Givemefootball was in breach of its warranty in relation to bought-in data subjects.

Sending of SMS messages

The judge ruled that the words “sent to Mobile Devices of at least 250,000 opted in recipients” in the Agreement did not mean that Givemefootball had to guarantee the delivery of any SMS message sent. On the other hand, Givemefootball did have to ensure the messages were sent to actual mobile devices, and not to landlines or other numbers.

Comment

The case does not introduce any new legal concepts. However, it considerations of how far an individual’s consent to receive direct marketing extends when that individual’s data are sold on to third parties have practical implications for the online marketing industry. It also provides useful guidance on the meaning of the terms “opted-in” and “targeted”, that:

• Unless specifically agreed in advance with the supplier, it is generally not possible to have exclusive use of bought-in data.
• Bought-in data may not be appropriate for use in targeted marketing campaigns or when data mining. (Playup Interactive Entertainment (UK) Pty Ltd v Givemefootball Ltd [2011] EWHC 1980 (Comm))