This piece is Part 1 of a two-part blog series on Intellectual property in the gaming landscape. Part 1 of this series will essentially explore the impact of new technologies on the Intellectual property landscape in the gaming industry. While Part 2, will dwell on India’s regulatory mechanism in the gaming and IPR industry and deal with the issue of jurisdictional issues in the enforcement of rights in this industry while discussing some reforms.
Gone are the days when the only game we used to play was Bouncy Ball on our mom’s Nokia mobile. In the current era, games have evolved from simple entertainment to a thriving industry that captivates millions of players worldwide and this industry is breaking records by the day. The emergence of Smartphones and gadgets like Tablets has already revolutionized the gaming industry. According to Statista, the global mobile gaming market was valued at $197.11 billion in 2022 and is projected to reach $217.06 billion by the end of 2023. With technological advancements and the advent of the internet, many new technologies like that of Augmented Reality (AR), Virtual Reality (VR), Metaverse, Non-fungible Tokens (NFTs), and User-generated Content (UGC) have emerged. These new technologies have not only taken the game industry to another new level of growth and opportunities but also pose increasing challenges in the enforcement of the current Intellectual property regime in this industry.
This piece discusses the role of intellectual property (IP) law in protecting the innovative and creative elements of video games, addressing issues such as ownership, contractual agreements, infringement disputes, and the role it plays in protecting the interests of game developers and stakeholders amidst the surge in new technologies.
Impact of New Technologies
Technologies like AR, VR, NFTs, UGC, and the concept of the Metaverse have brought about new dimensions in the gaming experience. AR overlays digital elements onto the real world, enhancing the player’s perception of reality. VR immerses players in a fully virtual environment, providing an unparalleled level of immersion. The concept of the Metaverse takes virtual reality to the next level by creating a connected universe where multiple virtual worlds coexist. It offers a seamless integration of digital and real-world experiences, allowing players to interact with each other and explore a vast digital ecosystem. Users can create and earn money through games using non-fungible tokens and in-game tokens. While the use of this blockchain technology has also led to cases involving crypto scams in games, they have also had equal complications with respect to IP. Further, in terms of User-generated Content (UGC), players are increasingly creating and sharing their own game modifications, levels, and other creative content. This blurs the line between professional developers and players as creators, raising questions about ownership and the use of copyrighted materials within UGC.
These advancements have opened up new creative possibilities for game developers. The ability to create more realistic landscapes, characters, and interactive experiences has fuelled the imagination of developers, resulting in captivating and immersive games but equally challenging challenges.
Intellectual Property in Video Games
Developing a video game involves a multitude of creative elements that fall under the purview of intellectual property laws. These elements include game technologies, applications, cultural artifacts, artistic work, landscapes, architectural structures, characters, costumes, props, and background music.
Game technologies and applications may be protected through patents, which grant exclusive rights to the underlying technology or innovation. Artistic works, such as character designs, landscapes, and architectural structures, may be protected by copyright law. Trademarks can protect logos, character names, and other distinctive features associated with a game, ensuring brand recognition, and preventing confusion among consumers.
Further, video game developers possess both economic and moral rights granted by intellectual property law. Economic rights enable developers to control the commercial aspects of their creations, such as distribution, licensing, and monetization, allowing them to generate revenue and recover development costs. Moral rights grant developers the right to be recognized as original creators and protect the integrity of their work. These rights ensure that developers’ games are not modified or distorted without permission, safeguarding their reputation and the artistic integrity of the game.
IP Clauses in Contractual and Commissioned Works
Game developers may engage in contractual or commissioned works, where the ownership of the game lies with the party commissioning the work. In such cases, intellectual property clauses become crucial in defining the rights and obligations of both parties. Contracts between developers and publishers or clients typically outline the ownership and usage rights of the game’s intellectual property. These agreements specify how the game can be distributed, whether exclusivity is granted, and how royalties and revenue sharing will be handled. Negotiations regarding IP ownership and usage rights are essential to ensure clarity and avoid future disputes.
IP protection in Metaverse and Blockchain technology in games
The metaverse is an immersive online experience that combines virtual reality and augmented reality technologies. It offers vast opportunities for creativity and innovation. Within the metaverse, non-fungible tokens (NFTs) have gained significant popularity. NFTs are unique digital assets that can represent ownership of virtual items, artwork, or other forms of digital content. They enable creators and users to buy, sell, and trade virtual goods with verified proof of authenticity and ownership. However, the rise of NFTs in the metaverse has also brought forth intellectual property (IP) challenges. Issues such as copyright infringement, trademark disputes, and unauthorized use of digital content have emerged. To address these concerns, smart contracts have been utilized.[1] Smart contracts are self-executing agreements coded on blockchain platforms that automatically enforce predefined terms and conditions. In the context of the metaverse, smart contracts can be used to establish and enforce IP rights, ensuring proper attribution, licensing, and protection of digital assets. They provide transparency, traceability, and efficiency in managing IP issues within the metaverse ecosystem.
User-Generated Content and IP Rights
The rise of user-generated content (UGC) platforms and communities within the gaming industry poses unique challenges for intellectual property law. This is particularly relevant with respect to the metaverse and NFTs. Players are increasingly creating and sharing their own game modifications, levels, and other creative content. This blurs the line between professional developers and players as creators, raising questions about ownership[2] and the use of copyrighted materials within UGC. One of the primary concerns when allowing user-generated content (UGC) in your own product is the risk of infringing upon the intellectual property (IP) rights of others. This occurs when players combine IP-protected content from various video games. A notable case took place in March 2020 when Nintendo compelled Sony to remove UGC featuring Nintendo’s well-known character Mario from the Sony-published video game Dreams. Considering the vast amount of UGC being created, it is practically unfeasible for developers to obtain permission for every piece of UGC. Therefore, the industry can expect to encounter many similar cases in the future. Platforms and developers need to establish clear guidelines and terms of service regarding user-generated content to address issues such as copyright infringement, fair use, and the potential commercial exploitation of UGC. Balancing the rights of creators and the freedom of players to express their creativity is crucial to foster a collaborative and inclusive gaming environment.
Avoiding Infringement Disputes
Game developers must be cautious to avoid substantial resemblance to others’ creations, as this can lead to intellectual property infringement disputes. Conducting thorough research, implementing robust internal processes, and seeking legal advice can help developers navigate potential infringement issues and protect their intellectual property. By showing prior art searches and staying informed about existing patents, copyrights, and trademarks, developers can identify potential conflicts early in the development process. Implementing internal procedures and guidelines can help ensure that the game’s content does not infringe on the rights of others.
IP infringement is also very prevalent in the gaming industry through the use of piracy. For instance, in a case involving the popular game franchise Nintendo, a federal court in Los Angeles ruled that ROM Websites distribution of ROM files, which enable playing games through emulator programs, infringed numerous Nintendo copyrights and constituted trademark infringement. There exist a number of cases that acknowledge the IP rights in the gaming industry and the jurisprudence is ever-evolving.
Determining Infringement
Infringement in video games can happen with intellectual property across all spectrums – patent, trademark, and copyright. There are various thresholds used to determine whether a particular act would count as an infringement or not.
Patents protect novel inventions, processes, and functionalities that are new, useful, and non-obvious. In the gaming industry, patent protection may apply to innovative game mechanics, gameplay features, virtual reality technologies, or blockchain-based systems that offer unique gaming experiences. The doctrine of equivalents may be used to determine whether a particular process is infringing someone else’s patent. It considers whether the accused product or process performs substantially the same function in substantially the same way to achieve substantially the same result as the patented invention, even if there are minor differences in the elements.
Similarly, trademarks are essential for protecting brand identities, logos, slogans, and other distinctive signs associated with games in the Metaverse. Trademark protection helps prevent others from using similar marks that could cause confusion among consumers or dilute the original brand’s reputation. In this context, two tests can be considered to determine infringement. The Likelihood of Confusion Test assesses whether the accused mark is likely to cause confusion among consumers regarding the source, affiliation, or sponsorship of the goods or services. Factors such as the similarity of the marks, the nature of the goods or services, the trade channels, and consumer perception are considered. Further, the Consumer Perception Test examines how the relevant consumer perceives the marks. It evaluates the overall impression created by the marks, including their visual, aural, and conceptual similarities. The test aims to determine whether there is a likelihood of confusion among consumers.
Lastly, the concept of fair use, which allows limited use of copyrighted materials without permission, is particularly relevant in the context of video games. Developers often incorporate elements of existing works, such as references, parodies, and homages, into their games to enhance the player experience. However, determining the boundaries of fair use in the gaming industry can be complex. Courts have recognized that transformative works, which add significant creative elements and commentary to existing works, may be protected under fair use. This provides flexibility for developers to draw inspiration from other games, movies, and popular culture while avoiding copyright infringement.
However, the application of all these tests in the gaming industry requires a case-by-case analysis, considering factors such as the purpose and nature of the use of an IP, the amount of copyrighted material used, and the potential market impact while also considering various jurisdictional approaches to these doctrines. Since the gaming industry is becoming increasingly global, it is paramount to address different jurisdictional approaches to safeguarding IP in this industry.
The next part of this two-part series will discuss the protection of intellectual property (IP) for games in the Indian context. It covers the copyrightability of video games, the potential protection under trademark and patents acts, inter-jurisdictional challenges in the gaming industry, and the complexities of IP enforcement in virtual cases while also emphasizing the need for international standardization and collaborative approaches to safeguard IP rights in the gaming industry.
[1] Ifeanyi E Okonkwo, NFT, copyright and intellectual property commercialization, International Journal of Law and Information Technology, Volume 29, Issue 4, Winter 2021, Pages 296–304, https://doi.org/10.1093/ijlit/eaab010.
[2] Greg Lastowka, User-Generated Content and Virtual Worlds, 10 VAND. J. ENT. & TECH. L. 893 (2008), https://scholarship.law.vanderbilt.edu/jetlaw/vol10/iss4/4/.
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