National Video Games Day 12 September 2020 – Eat, Sleep, IP, Repeat!

National Video Games Day is dedicated to recalling this defining part of our culture and sharing it with our fellow gamers, new and old alike. While video games might seem like play, industry statistics reflect their growth and popularity with wildly successful games releases such as Grand Theft Auto 5 in 2013 earning more than $US800 million and selling more than 11 million copies worldwide within 24 hours. Today, the global video games market is estimated to top $90 billion by the end of this year.  The recent rise of esports where organised multiplayer video game competitions are held and broadcast with participants ranging from professional players, game developers and sponsors to celebrities and influencers playing either individually or as teams has also opened up video games to a whole new audience and level of popularity. Revenue from esports alone is estimated to top US$1 billion annually and is growing. What may be surprising is that myriad intellectual property (IP) rights, and in particular copyright, underpin the continuing success of the video gaming industry.

To celebrate National Video Games Day, Senior Associate Louise Brunero from Solubility discusses the vital role that IP plays in the video game industry and also provides some tips and proactive IP strategy advice for established developers and emerging entrants in video game development.

Key takeaways

• There is no one overarching IP right which protects video games. Various elements of a video game may attract IP protection via copyright, trade secrets, trade marks, patents and designs.
• Having a proactive IP strategy to secure appropriate IP rights early can be essential to success.
• Where there is joint authorship, each author’s contribution should be clearly and contemporaneously identified. 
• Game development companies should have clear and strong IP and confidentiality agreements in place with all employee game developers to ensure assignment of IP rights to the employer and to prevent disclosure of any trade secrets.
• Where an employee changes employer, both the employee and the new employer should take care to avoid infringing copyright or confidential information of the any previous employer.
• The anonymous nature of the online environment can create additional (and costly) challenges when asserting rights against alleged infringers.
• Commencing infringement proceedings should be a strategic business decision and not a given.  Acquiring an unauthorised but popular gaming enhancement or modification may be more cost effective and ultimately successful with the consumer base.
• The rise of esports and popularity of, and market for character and associated game merchandising reinforces the importance of game developers remaining open to new opportunities to reach consumers and having strong IP to maximise revenue growth beyond video game sales per se.

Video games – where technology, creativity and IP rights collide

Video games draw on both the worlds of technology and creativity more than any other creative industry.  Game development combines multiple art forms (characters, scripts, soundtrack, graphics and more), with a computer program (software) and specific hardware (such as games consoles including the Microsoft Xbox, Sony PlayStation, Nintendo GameCube, and Nintendo Wii). 

However, there is no one overarching IP right which protects video games. Various elements of a video game may attract IP protection if certain criteria are satisfied, making video games complex works of authorship. Therefore, being aware of available IP protections and having a proactive IP strategy to secure appropriate rights early is essential to the success of a developer’s enterprise and to avoid a potential loss of rights.

Copyright is generally the IP right of greatest importance, with copyright in video games possibly attaching to the following elements:

• the game characters
• scripts, dialogue, game storyline and narration
• soundtrack and sound effects
• choreographies i.e. for move or play sequences
• visual effects or game appearance including game maps, base layouts, buildings, and structures
• source code for the computer programs driving the games.

What is Copyright and when does it arise?

The Copyright Act 1968 (Cth) governs copyright in Australia. Copyright is automatic and for ‘works’ exists for the lifetime of the author, plus 70 years.  For subject matter ‘other than works’ such as a sound recording or film, copyright lasts for 70 years from the year of first publication.

While Copyright does not require registration for protection to be granted, for copyright to subsist in a ‘work’ or subject matter ‘other than works’ it must meet each of these criteria.

• The work must be a type of work that attracts copyright, with literary, musical and artistic ‘works’ and subject matter ‘other than works’ such as sound recordings and films being relevant to video games.
• The work must be recorded in a material form i.e. the work is not just an idea or a concept, it must have been recorded in a physical way such as being documented for a source code, written down for a game script or storyline, sketched on paper for a game character, etc.
• The work must be original i.e. it is attributable to the author’s skill and labour, and not copied.
• The work must be substantial enough to be protected.

The general rule is that the game developer/person who fixes the work in a physical form, as the author of the work, is the owner of the copyright.  However, the following exceptions exist.

• Employers generally own copyright in copyright material created by an employee in the course of  employment, unless the employment contract states otherwise.  This means a game company may own the copyright in works developed by employee game developers.
• Other contractual agreements can deal with copyright ownership or assign ownership from the creator to another person.  For an assignment to be valid, it must in writing and signed by the copyright owner.

Idea vs. expression of an idea

Copyright protects the expression of an idea but not the idea or concept itself.  Two important consequences follow:

1. the work must be fixed in material form to have protection; and
2. copyright does not prevent someone developing a similar idea expressed in a different way.

Travelling back to 2009, the hugely popular Angry Birds and lesser known Crush the Castle which was released eight months prior are examples of the same gaming concept expressed differently.  Both games feature an artillery-style game where the player must launch items to knock down walls in order to damage soft targets.  However, Angry Birds used a more appealing visual theme with cute animal characters (birds with ‘angry eyebrows’ and egg-stealing green pigs) as opposed to bombs launched at royalty and other castle-dwelling folk.

Joint owners of copyright

Video games are frequently a product of a collaboration of more than one person.  However, where each contribution can be separated from the other (e.g. the literary work in the script can be separated from the literary work in the source code or the artistic work in the character design), then each author will only own the copyright in their own separate work.

A “work of joint authorship” will generally only arise where each author’s contribution cannot be separated from that of the other.  This can occur where multiple persons work on one aspect of a video game design such as development of a particular aspect of source code. Where this occurs the joint owners own the entire copyright as tenants in common (and in equal shares, unless agreed otherwise) and consent from each author must be obtained before the  copyright is exploited (including for  receiving any financial benefits), assigned or licensed. 

There is no limit to how many joint owners there may be in a copyright work.  However, keeping track and documenting contributions from multiple authors can pose challenges, especially for employers.  In the recent Federal Court decision University of Sydney v ObjectiVision Pty Limited [2019] FCA 1625, a computer program source code was held to be a work of joint authorship with contributions from at least nine employee authors (for a full discussion of the ObjectiVision decision please see our case note here). However, the Court found there was insufficient evidence that seven of the nine authors had assigned their copyright to the employer.  Accordingly, the employer’s claim of copyright ownership in the source code failed as it was not able to establish ownership of the contributions from all the authors. 

Tips for “works of joint authorship”

• Where there is joint authorship, each author’s contribution should be clearly and contemporaneously identified. 
• Where IP is assigned by an agreement, the assignee should ensure that all joint authors validly assign their copyright. 

What rights does a copyright owner have?

Copyright in Australia is not a single right but rather a bundle of rights. The exclusive rights reserved to the copyright owner differ according to the type of work protected. The following table shows certain acts a copyright owner has the exclusive right to do, or authorise others to do.

Work	Reproduce, Publish, Communicate	Perform, Adapt
Literary	Y	Y
Dramatic	Y	Y
Musical	Y	Y
Artistic	Y	N

The following exclusive rights are granted for subject matter other than works.

Sound recording – the exclusive right to:

• make a copy of the sound recording;
• to cause the recording to be heard in public;
• to communicate the recording to the public; and
• to enter into a commercial rental arrangement in respect of the recording.

Film – the exclusive right to:

• make a copy of the film;
• cause the film to be seen and heard in public; and
• communicate the film to the public.

Adaption right and U.S. copyright law ‘derivate right’

Adaptions of a successful copyright work (aka derivate works) are a particularly lucrative business for game developers.  In the United States the copyright owner has the exclusive right to create a derivate work. In Australia, copyright owners can rely on the relatively narrow ‘adaptation right’ (which does not apply to artistic works). For literary, dramatic and musical works that are themselves an adaptation, copyright owners of the adapted work can also reproduce, publish, perform and communicate those adaptations.

If a developer wishes to create a new work on the basis of an existing copyrighted work, it must first secure the appropriate licences from the copyright holder to make an adaption or derivate work.  An example of a derivative work is Doom the movie which is a derivative work from Doom the video game.  A derivate work can also go the other way, e.g. the multimedia franchise, Tomb Raider, also known as Lara Croft: Tomb Raider between 2001 and 2007, originated with an action-adventure video game series and there are now multi derivate works such as film adaptions (i.e. Lara Croft: Tomb Raider released in 2001 featuring Angelina Jolie as Lara Croft), comics and novels. Each derivate work requires a licence from the copyright holder, but once created becomes eligible for copyright protection in its own right.

Video gaming and some unique issues surrounding copyright infringement

Many gamers adopt an online alias or persona.  This can present unique challenges for game developers wishing to enforce their copyright.  Significant spend on computer forensic specialists and/or investigators may be needed to go behind an online persona to identify the alleged infringer so that infringement proceedings can be pursued in the courts.

There are plenty of industry examples of cross-fertilisation of gaming ideas and instances where game developers actively encouraged modification of their games by the gaming community.  Video games such as Warcraft 3 spawned modifications which later became highly successful video games in their own right, such as League of Legends and Defence of the Ancients.

However, emerging developers seeking to leverage off popular gaming concepts or characters, should not assume that a failure by a gaming company to sue over what appears to be a game ‘knockoff’ is indicative of an implicit consent for open use by other developers, or an aversion to pursuing infringement proceedings. What might appear to be a clear game ‘knockoff’ on the surface may in fact result from an existing relationship between game developers, such as in the case of highly popular Chinese mobile game King of Glory, which has very striking similarities with top PC game League of Legends, and was created by Tencent, owner of the creators of League of Legends, Riot Games.

The emergence of a game ‘knockoff’ may create an opportunity for a relationship with the creators of the original game.  While such a strategy can be risky (and potentially costly) for emerging developers it can also be lucrative if successful.  The hugely successful Ms. Pac-Man sequel to Pac-Man did not begin as an official sequel and nor was it borne from an existing relationship.

Two students from Michigan Institute of Technology developed an enhancement kit for the original Pac-Man cabinet called Crazy Otto.  As Midway, the North American distributors for Pac-Man prepared to sue, they noticed that the game was good, introducing new mazes and new characters, etc.  With delays in the official Pac-Man creators providing a sequel, Midway thought laterally.  Instead of pursing infringement proceedings or providing consent for the Crazy Otto kit to be released, Midway purchased Crazy Otto and rebranded with Pac-Man characters, launching Ms. Pac-Man in 1982.

Tip for developers considering infringement proceedings

• Commencing infringement proceedings should be a strategic business decision and not a given.  Acquiring an unauthorised but popular gaming enhancement or modification (and rebranding if necessary) may be more cost effective and successful.

Unexpected IP issues in the development of video games

Unexpected IP issues can also arise in the development of video games.

Take-Two Interactive Software received copyright infringement claims when it released NBA 2K16  featuring, and reproducing distinctive tattoos of, marquee NBA players including LeBron James, Kobe Bryant and DeAndre Jordan. Tattoo parlour Solid Oak Sketches sued the game makers for reproducing the player’s tattoos in the video game, claiming to have licences over several of the players’ tattoo designs.  Solid Oak sought more than US$1.1 million for a licence to use the tattoo designs in the video game.  This action has similarities with the well-publicised proceedings commenced in 2011 by Mike Tyson’s tattoo artist against Warner Bros. Entertainment Inc. over the appearance of Mike Tyson’s famous face tattoo on Ed Helms’ character ‘Stu the dentist’ in The Hangover II. (You can read more on copyright issues in tattoos and the Mike Tyson tattoo case in Part II of our Everyday IP post for National Tattoo Day earlier this year).

A New York federal judge recently gave the video game maker a reprieve, ruling that the display of the tattoos was de minimus and that an implied licence was granted for their use.  In her decision rejecting the infringement of copyright claim, Judge Swain stated that “the Tattoos are indistinguishable during gameplay and they do not feature in any of the game’s marketing materials.”  While the matter appears to be resolved for Take-Two Interactive, other instances of use of a tattoo in a video game without permission of the copyright holder could amount to a copyright infringement (such as where the tattoos are prominently displayed, readily recognisable or featured in marketing materials).

Of note, since the NBA 2K16 action was filed, the National Football League Players Association has sought to minimise the same risk and has warned players to seek copyright assignments, licences or waivers from tattoo artists to guard against lawsuits in the event images of the tattoos are used, intentionally or not, in advertisements, video games and other media.

Use of tattoos in any video game development and potential copyright infringement claims remains an issue of which game developers should be aware.

Additional opportunities beyond the gaming world and the rise of esports

The rise of esports introduces traditional sporting game concepts such as broadcasting rights, advertising rights, sponsorship, and merchandising to the video gaming world.  Each relies heavily on IP rights and reinforces the importance of strong IP to ensure and maximise revenue growth.  Character merchandising and micro-transactions around a strong IP brand are the biggest revenue generating aspects, rather than video game sales per se.

Tip for game developers

• Game developers should remain open to new opportunities to reach consumers beyond the gaming market.
• The rise of esports and popularity of, and market for character and associated game merchandising reinforces the importance of having strong IP to maximise revenue growth beyond video game sales per se.

Trade Secrets

Copyright protects the expression of ideas but not the idea or concept itself.  However, if you have an idea for a game the law of confidential information, also known as trade secrets, may protect the idea while it remains secret.

Stringent non-disclosure agreements, coupled with a strategy of limited disclosure to employees (or preferably part disclosure of elements to a number of employees, with no single employee holding complete information on the idea) can protect that idea until it is either reduced to a material form and protected by copyright  or other IP rights are sought. 

Taking active precautions to protect a trade secret is essential.  Businesses must also be prepared to act swiftly and decisively to shut down any leak.  Action can be taken against employees who reveal the secret idea or a competitor who poaches a former employee and launches a suspiciously familiar video game concept, and damages or an account of profit awarded, which can be significant. 

Trade secrets do not, however, protect against independent development.  If a competitor were to create a video game that coincidentally happened to be the same as your ‘secret’ idea (i.e. a battle royale style game with a military theme), that competitor cannot be stopped from launching their game.  In such circumstances, trade mark registration (and a strong brand presence) could be particularly valuable as the competitor could not sell their game as a “Developer X” game.  Also, succeeding in a defence of independent creation can be difficult.

Trade Marks

Trade Marks are names, words, logos, shapes, colours, aspects of packaging, scents, or combinations of these which distinguish goods or services of one person from those of another. Trade marks which are merely descriptive of the goods and services, while often attractive to brand owners as they immediately tell customers something about the product (e.g. a particular gaming feature), may be difficult to register.  The strongest trade mark protection will come from marks which are invented or have no connection to the service or product. A unique mark will not only be registerable, but less likely to infringe the rights of third parties.  “Nintendo” is a perfect example of a unique mark having no obvious connection to video games.  While it has been claimed to mean ‘leave luck to heaven’, there are no records to validate this claim and this in any event would not be considered to be descriptive of video games.

There is also a significant market in purchasing parts and accessories for video game apparatus and props from video games such as Thor’s hammer from Liquid Entertainment game Thor: God of Thunder.  Having a strong brand presence and use of trade marks can help consumers identify authentic licensed products from unauthorised products and counterfeits.

The recent rise of esports and the associated character merchandising and micro-transactions reinforces the importance of having strong IP to maximise revenue growth beyond video game sales per se.

Patents

Australian law does not yet seem settled on whether computer programs and software code may be protected as patentable inventions.  The Full Federal Court in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 upheld the primary Judge’s finding that a computer-implemented invention for displaying information was not patentable subject matter as it used a generic computer implementation.  More recently, the Full Federal Court in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, held that computer-implemented inventions are not patentable if the claimed invention is merely using a computer in its basic, ordinary, or generic functions.  However, it seems that inventions remain patentable where there is a tangible technical output produced by ingenuity in the use of a computer, or an algorithm implemented on a computer.

Despite the unsettled position in Australian patent law on patentability of computer programs and software, there are a number of observations about Patents and the Australian Patent system worth noting. 

A patent grants exclusive rights for 20 years, and independent creation is no defence to patent infringement.  However in return for the patent grant, the inventor must disclose the invention during the application stage.  After 20 years the invention is available for anyone, including competitors, to use.  Also, patents are costly and must be applied, and paid, for on a country-by-country basis, and can take several years to be granted, and can be very costly to enforce.  However, they do protect a functional inventive concept (which may be useful in a number of games), rather than just the expression of the idea within a game itself. 

If the useful commercial life of the inventive aspect is likely to exceed, say. 10-15 years, then it may be worthwhile to seek patent protection.

However, different IP rights such as copyright (with a longer protection period and the ability to keep the source code confidential) coupled with a strong brand presence and continued refreshing, may be a more attractive IP strategy for game developers.

In the United States, patents have been granted to protect various aspects of video games.  In 2003, video game developer Sega filed a lawsuit against Fox Interactive, Electronic Arts, and Radical Entertainment, claiming that their video game The Simpsons: Road Rage was a patent infringement of Sega’s own Crazy Taxi. Notably, Sega’s U.S. Patent No. 6,200,138 claims included in-game hovering arrows showing which direction to go to reach the destination.

Sega reportedly asked the court for an injunction to stop the sale of Road Rage and for lost profits. However, the parties settled for an undisclosed amount soon after the case was filed.

Designs

Design registration is another way that game developers can help make their product stand out from the competition. Design registration can be used to protect new and distinctive visual features of shape, configuration (3D), pattern or ornamentation (2D), as applied to the specified article (such as a game console or game controller).  New and distinctive designs have the advantage of being an attractive and readily recognisable gaming option for the customer and may also enhance the overall ergonomics of the gaming experience.  They can also be updated regularly to require repeat purchases.

• New means it must not be identical to any design published anywhere in the world or publicly used in Australia.
• Distinctive means it must not be substantially similar in overall impression to any design published anywhere in the world or publicly used in Australia.

In practice, this means you need to keep your design secret before you register it. 

Unlike copyright, design rights are not automatic.  The designer must formally apply for, and be granted, protection under the Designs Act 2003 (Cth), or each corresponding regime in any other jurisdiction where protection is sought.  The application must also specify the article(s) in respect of which the design is sought to be registered (e.g. game console, game controller or portable electronic device).  Design registration requires payment of fees, an examination by the issuing authority (IP Australia or corresponding office) and lasts for up to 10 years. Five years after the application has been filed, the registration can be renewed for a further five years by paying a single renewal fee.

A registered design gives the owner exclusive rights to stop others from making or selling specified articles to which the new and distinctive visual features of the design have been applied.  The registration will not stop others from applying those features to other articles.

Want further information?

In October 2019, the Australian Copyright Council published a comprehensive free information sheet on Games & Copyright covering elements of board games, card games and computer games which are covered by copyright law. A link to the PDF can be found here. 

The Arts Law Centre of Australia is a community legal centre which provides a number of legal advice services to artists and arts organisations. Published in 2014 and updated in 2016, the Arts Law Centre provides a free information sheet on Game Design and Development and for a modest cost, also provides a sample Game Development Services Agreement for use when a game developer or game development company is developing a game and wishes to engage a third party contractor such as an animator, programmer or graphic artist.  Solubility staff have been on the Arts Law Centre’s volunteer advice panel for over 15 years and have provided advice to dozens of artists.

Although almost 6 years old, the World Intellectual Property Organization’s 2014 publication Mastering the Game: Business and Legal Issues for Video Game Developers provides comprehensive information about IP rights in video games and proactive strategy advice to secure the IP rights for distribution and use. Of particular relevance, Chapters 3 addresses the role of IP in the video game industry and Chapter 4 discusses licensing IP for games. The remaining chapters address in practical terms, the range of legal and business issues facing developers at various stages of the process of taking a concept and developing it into a marketable gaming product. The publication also underlines the importance of negotiating contracts to define who owns the IP rights in a work.

If you would like legal assistance with game development, such as IP assignments, licences, distribution agreements, etc or wish to know more about IP rights in video games please get in touch with our team at Solubility.

You can also follow Solubility and me on LinkedIn and Solubility on twitter. We look forward to seeing you again for some more Everyday IP.

Solubility fun facts:  Favourite video game

Louise – I recently had the joy of sharing my Game & Watch Nintendos from my childhood with my 6 year old son.  They did not fail to captivate a new generation!  Photo by the author

Jeff – No contest here – Donkey Kong!  I’m also old enough to have had, clocked and long ago sadly misplaced Game & Watch “Egg”.  Image via www.mariowiki.com

Lexi – PS2 SSX Tricky!!!  Image source: www.fullyretro.com

Trinity – Frogger.  Image via Wikipedia

Last, but not least… For those of you in Melbourne missing your favourite coffee spot during Stage 4 COVID19 restrictions, perhaps checking out the latest 2020 release Necrobarista from local Aussie game development studio Route 59 will entice… See here and here for a review.

Cover image: Fall Guys Ultimate Knockout, Mediatronic Games Image source: store.steampowered.com