Navigating The Legal Landscape Of E-Sports & Ip

ABSTRACT :

The meteoric rise of e-Sports presents both, immense opportunities and complex legal challenges in this industry. This article delves dives into the intricate legal framework of e-Sports along with exploring the multi-faceted world of intellectual property (IP) protection in relation to it. It examines key categories like copyright, trademarks, patents and trade secrets, thereby highlighting the importance of safeguarding both, the developer and the user-generated IP.

The article also covers the challenges like jurisdictional complexities, digital piracy, and the evolving landscape of personality rights. The researcher has also proposed strategies for building a sustainable future in e-Sports. The importance of legal expertise, technological solutions, industry collaboration, and continuous adaptation to the ever-changing legal landscape has been highlighted in depth and detail. The article thus underscores the vital role of IP protection, in ensuring it's long-term success and ethical development of the fast-growing e-Sports ecosystem.

INTRODUCTION :

The rise of the e-Sport industry has been exponential in the last few years. From niche tournaments like GTA speedrunning to multi-million dollar events like FNCS, the industry has captured the attention of millions of viewers worldwide and has sparked interest rapidly across multiple age groups. This surge in popularity has brought not only significant economic opportunities, but also introduced complex legal challenges in the hyper-connected world that we live in. One of the most crucial aspects for the continued success of e-Sports, lies in safeguarding it's intellectual property (hereinafter referred to as 'IP').

UNDERSTANDING THE IP ECOSYSTEM IN E-SPORTS :

Intellectual property encompasses within itself, a broad spectrum of legal rights that protect various creations and innovations. This often varies from one territory to another, thus creating a complex legal ecosystem in the international market. In the context of e-Sports, several key categories of IP play a vital role. They are encapsulated as under :

• COPYRIGHTS: They safeguard the creative expression embodied in games, encompassing elements such as visuals, sound effects, narrative content and even the underlying software code. Copyright protection is critical for developers to prevent unauthorized copying, distribution, or modification of their games by competitors or third parties.¹ Streamers along with content creators navigating the world of live broadcasts and derivative works need to be mindful about copyright limitations. Copyrights take a quite complex form in virtual gaming and e-Sports, since the jurisdictions in which the users lie are spread out across the globe.

• TRADEMARKS: Establishing brand identity and preventing consumer confusion in the competitive marketplace are paramount in e-Sports. Trademarks serve this purpose by protecting game titles, logos, team names and even the brands of virtual sponsors. Registering the trademark grants exclusive use to right holder(s) which enables them to take legal action/s against infringing parties who attempt to imitate their brand identity.² Trademarks become particularly vital since dummy platforms and malicious low-end brands often emerge in the virtual space to compete against big market players and infringe upon their logos, names, colour schemes, etc. to imitate the original developer with an aim to unlawfully gain profits. This is where Trademarks play quite an important role.

• PATENTS: While not as prevalent in the gaming industry, patents can be sought to shield innovative technologies or unique gameplay mechanics (UGM) that offer a distinct competitive advantage. This includes proprietary game engines, innovative virtual reality systems, and anti-cheat algorithms.³ Securing patents can strengthen a developer's market position and serve as valuable assets for licensing and enforcement purposes. Patents also include developing devices that simulate real-life sporting experiences, such as the Apple Vision Pro⁴ and Oculus Quest 2.⁵ Patents granted for such digital equipment in the virtual sports segment are gaining worldwide prominence. Thus, patents fundamentally distinguish and secure the IP of gaming companies who focus on innovation and fosters an environment for creating a brand equity.

• TRADE SECRETS: Classified and sensitive information that gives any venture a competitive edge falls under the umbrella of trade secrets. In the context of e-Sports, this encompasses the proprietary game code, internal design documents, player training strategies or unique business models that form the USP of gaming developers. Implementing robust security measures is critical to safeguarding trade secrets from theft, unauthorized access, or disclosure, especially in today's environment of heightened cybersecurity threats. Trade secrets are very crucial in this industry, since low end market entrants often imitate the existing big market players in terms of gaming experience and delivery the same services for a lesser fee to the users, thus eating into their profits. Trade secrets thus protect the "distinguishing factor" of novel e-Sport developers and help safeguard their IP.

CHALLENGES & EMERGING ISSUES :

Despite the undeniable importance of IP protection in e-Sports, the industry faces a multitude of legal and practical hurdles as follows :

1. COMPLEXITY REGARDING THE JURISDICTION :
   
   The global, diversified nature of the e-Sport industry faces a unique challenge of inconsistent IP laws, enforcement mechanisms and dispute resolution procedures across different countries and geographies. Navigating these complexities requires careful consideration of each local law of the land, strategically crafted forum selection clauses in contracts along with effective enforcement strategies that can be applied across various jurisdictions. This multiplicity of laws which keeps changing from one nation to another leads to high costs of legal drafting, fees, local compliance with hosting services etc. rather than a single, unified approach which could have been standardised across all nations.
   
   Each country has its own set of regulations governing copyrights, trademarks, patents and trade secrets, thereby leading to inconsistencies in protection and enforcement at all levels. For multinational e-Sport organizations, this means developing a comprehensive understanding of the legal landscape in each jurisdiction where they operate or distribute their content. For example, the UK being a country who frames it's IP laws liberally and has no severe restrictions at its operational level, an existing or a new market entrant in online gaming won't have much issue with compliance and getting started in that region. However, the same company will have to go through a lot of scrutiny and legal hassle while entering the Chinese market for the very same service. Hence, the choice of the forum for resolving IP disputes becomes critical in the international context.
   
   Effective enforcement of intellectual property rights across borders also poses significant challenges. International treaties such as the Berne Convention⁶ and the TRIPS Agreement⁷ provides a framework for cooperation and mutual recognition of IP rights. Although they have broadly been proven effective, on a micro level, varies limitations can be observed. Enforcement mechanisms vary in effectiveness from one jurisdiction to another. This calls for strategic planning and collaboration with local counsel(s) to tailor the enforcement strategies to the specific legal and cultural contexts of each individual jurisdiction.
   
   The jurisdictional complexity inherent in the global e-Sport industry⁸ highlights the importance of proactive legal planning and active deliberation. Without the same, this industry might face severe economic losses and its market potential might never be unleashed. In such a scenario, it becomes vital to understand and navigate the risks associated with cross-border operations. Along with this, ongoing collaboration and dialogue amongst industry participants, policymakers and legal experts can contribute to the development of viable solutions to IP protection, which is the only way to address the problem of jurisdictional complexity.

2. DIGITAL PIRACY AND COUNTERFEITING:
   
   The popularity of digital marketplaces and online distribution platforms has facilitated the proliferation of piracy and counterfeiting of gaming content.⁹ This leads to losing significant revenue and substantial dips in the profit margins for rights holders, along with diluting the brand value of the gaming company. This negatively affects innovation within the e-Sport industry. The ease of access to digital content on the internet has made it increasingly challenging for rights holders to protect their intellectual property from unauthorized distribution and reproduction.
   
   To address this issue, a multi-pronged approach is necessary, which encompasses technological solutions, legal enforcement actions and consumer awareness initiatives. Without this, it will become increasingly difficult for e-Sport industry to further grow in terms of geographical locations and users in the near future. Technological measures such as digital rights management (DRM)¹⁰ tools, along with enhanced encryption technologies are effective to mitigate unauthorized access to reproduction of copyrighted material. Bringing about robust anti-piracy measures within gaming platforms and installing security software tools can also deter would-be infringers, thereby protecting the integrity of the digital content. Combing these strategies with awareness creation will enable right holders to take legal action against such distributors, online marketplaces and individuals engaged in copyright infringement, or the sale of counterfeit goods.
   
   Consumer education initiatives are thus essential for promoting awareness and responsible digital consumption. Educating users about the ethical and legal implications of piracy, as well as the potential risks associated with downloading or streaming unauthorized content, can help foster a culture of respect for intellectual property rights. Hosting outreach campaigns, public awareness programs and partnerships with schools, universities, community organizations etc. will facilitate this goal.
   
   Combating digital piracy and counterfeiting in the gaming industry requires a concerted effort from all stakeholders, including but not limited to right holders, technology providers, law enforcement agencies and consumers. A comprehensive strategy that combines technological innovation, legal enforcement and education, will help the industry to effectively protect its intellectual property and preserve the integrity of digital content.

3. THE EVOLVING LANDSCAPE OF PERSONALITY RIGHTS:
   
   Integration of real-life personalities, voice recordings, personal brands within video games raises complex legal questions concerning the exploitation of celebrity and athlete rights. As the gaming industry continues to evolve immersive storytelling and interactive gaming experiences, the use of real-life likenesses has become increasingly prevalent.¹¹ However, this trend has also sparked a wave of litigation and legal disputes surrounding the unauthorized use of individuals' identities without their consent.
   
   The risks associated with personality rights litigation, requires a strategic approach to help combat the same. Developers and publishers must engage in careful negotiation of licensing agreements with individuals whose likeness or voice is incorporated into the video games. These agreements should outline the scope of rights granted, compensation arrangements and any limitations or restrictions on the use of the individual's image or persona. On the similar lines, obtaining informed consent from the individuals involved in the act is paramount to ensuring compliance with applicable laws and regulations. Signing release forms or waivers that clearly outline the purpose for which their personality or voice shall be used and the rights that they are granting to the developers or publishers become quintessential. Developers ought to be mindful of their privacy breach and take appropriate measures to protect their personal data along with sensitive information of their brand or any third party collaboration in that regard.
   
   Legal awareness about knowing the latest judgements is very critical to understand the changing landscape of this sector. As courts grapple with novel legal issues arising from the intersection of technology, entertainment and privacy rights, jurisdictional issues, developers must remain vigilant in their compliance efforts and adapt their practices accordingly.

STRATEGIES FOR SAFEGUARDING IP :

The continued success of e-Sports depends on a proactive approach to safeguarding its intellectual property. This safeguarding can be brought about by the suggested strategies :

• Engaging in qualified legal professionals shall prove to be invaluable in navigating the complexities of IP law and developing a comprehensive strategy for protecting various IP assets.

• Implementing robust technological solutions like anti-piracy measures, secure access controls, and data encryption can significantly deter unauthorized use and theft of IP.

• Industry-wide collaboration is essential to tackling piracy, counterfeiting, and other challenges. Sharing best practices, advocating for stronger enforcement measures, and educating stakeholders about responsible digital consumption are crucial steps to preserve and protect IP rights.

• The legal landscape surrounding IP is constantly evolving, especially with the emergence of new technologies and business models. Regularly monitoring legal developments and adapting strategies accordingly is essential for staying ahead of the curve.

RELEVANT CASE LAWS :

1. Blizzard Entertainment V. Valve Corporation: ¹²
   
   This case revolved around the ownership of the intellectual property rights of Defense of the Ancients (DotA)¹³ and its sequel, Dota 2.¹⁴ DotA was a ground-breaking mod created within Blizzard Entertainment's Warcraft III: Reign of Chaos¹⁵, which laid the foundation for the multiplayer online battle arena genre. After various developers contributed to development of DotA-Allstars, Valve hired key developers, including IceFrog and Guinsoo, and eventually acquired the rights of DotA from DotA-Allstars, LLC. Blizzard, seeking to develop its own multiplayer online battle arena titled Blizzard All-Stars¹⁶, acquired DotA-Allstars, LLC, and challenged Valve's ownership of the DotA intellectual property. This led to a lawsuit wherein, Blizzard contested Valve's right to use the Dota name commercially.
   
   The case was settled out of court in May 2012, with Valve retaining the right to use Dota commercially, while Blizzard retained the right for fans to use Dota non-commercially. Blizzard subsequently renamed its project as Heroes of the Storm. In 2014, Valve and Blizzard jointly took legal action against mobile developers Lilith and uCool for copyright infringement related to their games Dota Legends and Heroes Charge, respectively. The case involved arguments about copyright ownership and whether Valve and Blizzard's claims were void due to an alleged open-source copyright license assigned by Eul, one of DotA's creators. The case went to trial, where the jury ultimately sided with Valve and Blizzard.

2. Blizzard Entertainment, Inc. V. Bossland GmbH:¹⁷
   
   Blizzard Entertainment Inc. filed a lawsuit against Bossland GmbH and its managing director for unfair competition, trademark infringement, and copyright infringement related to the creation and distribution of bots, specifically "Honorbuddy" and "Gatherbuddy", designed for use in World of Warcraft (WoW). Blizzard argued that these bots violated WoW's terms of use and unfairly advantaged players, impacting game integrity and shortening subscription times. Blizzard's arguments included inducing breach of contract, sensitive interference with the game system, shortening subscription time, circumventing WoW's protection mechanisms, unauthorized use of WoW trademarks, and copyright infringement. Blizzard alleged that Bossland GmbH's actions violated both contractual agreements and copyright laws.
   
   However, Bossland GmbH countered Blizzard's claims, arguing that the bots did not breach WoW's terms of use, as the terms were not effectively incorporated into the contracts between Blizzard and players. Bossland GmbH contended that the bots did not significantly impact game integrity or shorten subscription times, nor did they bypass WoW's protection mechanisms. It also asserted that its use of WoW trademarks was descriptive and did not lead to confusion among consumers. In regards to copyright infringement, Bossland GmbH argued that it did not own nor possess copies of WoW on players' PCs and that any reproductions were made by Blizzard Entertainment Inc. itself.
   
   The court ultimately ruled that Bossland could not deduct most of the costs they incurred from their infringing profits. These costs were disallowed for two reasons:
   • First, since they weren't direct costs entirely caused by the infringement acts in the UK.
   • Second, they were considered as general overheads, expenses Bossland would have incurred regardless of the infringement, even without infringing the

3. Riot Games, Inc. V. Stefan Delgado Argote Et Al : ¹⁸
   
   In the present case, Riot Games sued League Sharp, a software that granted unfair advantages to a game called "League of Legends." Leagues Sharp allegedly offered features like accessing hidden information, automating gameplay, and accelerated progress, all for a monthly fee. This wasn't available to others who didn't pay the fee. This not only gave unfair advantage to those who purchased this service, but also allegedly harmed the game's community and even led to attacks on Riot's servers. Riot claimed League Sharp violated copyright and engaged in unfair competition.
   
   After a legal battle, League Sharp was shut down in the year 2017. It's creators were banned from the game, ordered to relinquish control of their websites, and fined a sum of $10 million.

CONCLUSION

The growth of e-Sports has brought a wave of excitement and economic opportunities, yet ensuring it's continued success and sustainability requires a strong commitment to preserve intellectual property. This can be accomplished by adopting an approach that combines enhanced legal measures, technological solutions and industry collaboration as mentioned in the suggested strategies. This legally tumultuous domain, which comes with its own set of unique legal issues, can mitigate the risks considerably and disputes can be easily resolved in the near future. Intricately vital aspects like design, graphics, sounds, background music, developer rights, distribution rights, piracy and copyright violations etc. are the domains in which the emerging challenges need to be resolved in order to make this multi-billion dollar industry robust and ensure its continuing growth. Thus, by implementing and incorporating the remedies suggested, would go a long way in ensuring a strong legal backing in the realm of e-Sports.

ADDITIONAL REFERENCES :

1. Kalra, Ansh, Leveling Up IPR Protection in Esports: An Analysis of Emerging Issues and Strategies (May 5, 2023). Available at SSRN: https://ssrn.com/abstract=4474254.

2. Venable LLP, IP and Advertising Considerations for Esports (2021), https://www.venable.com/insights/publications/2021/10/ip-and-advertising-considerations-for-esports (last visited Oct 25, 2021).

3. Andrea Rizzi and Francesco de Rugeriis, Esports: an overview of a new(ish) frontier in digital entertainment, WIPO (September 2022), https://www.wipo.int/wipo_magazine/en/2022/03/article_0003.html.

4. Holden, J.T., Kaburakis, A. and Rodenberg, R., 2017. The future is now: Esports policy considerations and potential litigation. J. Legal Aspects Sport, 27, p.46.

5. Dart Industries Inc. v Décor Corp Pty Ltd[1994] FSR 567.

6. Hollister Inc. v Medic Ostomy Supplies Ltd[2013] FSR 24.

7. OOO Abbott v Design and Display Ltd[2017] EWHC 932 (IPEC).

Footnotes

1 Leaffer, Marshall A., Understanding Copyright Law, 125 (Carolina Academic Press 7th ed. 2019).

2 Leaffer, Marshall A., Understanding Copyright Law, 89 (Carolina Academic Press 7th ed. 2019).

3 O'Donnell, Casey, Chapter 12 - Patented Creativity: Reflecting on Video Game Patents, in Video Games and Creativity, pp. 247-261 (2015).

4 Alexander Lee, As Apple's Vision Pro Headset Rolls Out, Brands and Game Developers Brace for Impact, DIGIDAY (February 2, 2024), https://digiday.com/marketing/as-apples-vision-pro-headset-rolls-out-brands-and-game-developers-brace-for-impact/.

5 Lloyd Coombes, Meta Quest 2 Review: Still the Perfect Gateway into Virtual Reality, LIVE SCIENCE (February 15, 2023), https://www.livescience.com/oculus-quest-2-review.

6 Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, as revised at Paris on July 24, 1971 and amended in 1979 S. Treaty Doc. No. 99-27 (1986)

7 Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 33 I.L.M. 81 (1994).

8 Leandro Toscano, Oscar Suarez, and Alexia Gkoritsa, Resolving Video Games and eSports Disputes: How Can WIPO's Alternative Dispute Resolution Options Help? WIPO MAGAZINE, May 2023, https://www.wipo.int/wipo_magazine_digital/en/2023/article_0018.html.

9 Wolf, M.J. ed., 2015. Video games around the world (pp. 1-16), Cambridge, MA: MIT Press.

10 Britannica, T. Editors of Encyclopaedia (2024, March 8), Digital Rights Management, Encyclopedia Britannica https://www.britannica.com/topic/digital-rights-management.

11 Herman, A., Coombe, R.J. and Kaye, L., 2020, Your second life?: Goodwill and the performativity of intellectual property in online digital gaming, Cultural studies (pp. 184-210), Taylor & Francis.

12 Blizzard Entertainment, Inc. and Valve Corporation v. Lilith Games (Shanghai) Co. Ltd. and uCool, Inc., Case No. 15-cv-04084-CRB, United States District Court for the Northern District of California (2018).

13 DotA, DotA 2, https://www.dota2.com/home (Accessed: 3^rd April 2024).

14 Supra note 5.

15 Warcraft III: Reforged, https://warcraft3.blizzard.com/ (Accessed: 12^th April 2024).

16 heroes of the storm (Formerly known as Blizzard All Stars), https://heroesofthestorm.blizzard.com

17 Blizzard Entertainment SAS & Anr v Bossland GmbH & Ors [2019] EWHC 1665 (Ch).

18 Riot Games, Inc. V. Stefan Delgado Argote Et Al, 2:16-cv-05871.

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