What Does IP Really Mean? And How Does It Affect EVERYTHING Esports?

Once upon a time, it was the stuff of childhood dreams to play video games professionally. That dream is now a reality…but as with most dreams, the issues and complexities that accompany the dream’s realization are many…and growing. The rise of Esports over the past decade has made it possible for avid gamers to profit from an industry that has traditionally viewed them as simply the target audience for its products.

The statistics are staggering. In 2013, tickets to the League of Legends’ World Championship event at Staples Center sold out within two hours of going on sale. In 2016, the global esports fan base was 270 million, while today it is approaching 450 million with an annual income closing in on 1 billion dollars. The 2018 International Dota 2 Championship offered an $11 million title purse ($25 million total prize pool).  And more recently, this prize pool announcement from Epic Games.  By 2020, esports viewership in the U.S is poised to eclipse every sport but the NFL.   

As the esports industry continues to rapidly grow, associated intellectual property issues are becoming more numerous and more complex.  That’s because the Esport – the video game itself – is subject to intellectual property protection.

Look at it this way…

In most “traditional” professional sports, leagues own and license their own intellectual property – like when a team sells the broadcast rights to their games.  While leagues vary in how they exercise control over the content created from the sport, they do not OWN the sport itself.

In esports, however, the SPORT itself gives rise to intellectual property issues – because someone owns it.  This difference has widespread implications. It also significantly impacts the relationships within the ‘ECEsports Stakeholder Relationship Diamond’.

So what is IP…really?

NOTE: Around the world, countries codify their IP law through legal statute (I will be using Canada as my example).  While the penalties and consequences of these laws differ, the basic principles and concepts of IP law generally apply in any location that has held a major Esport event.

The government of Canada defines Intellectual Property (IP) as the legal right to ideas, inventions and creations in the industrial, scientific, literary and artistic fields. It includes symbols, names, images, designs and models used in business. While not every country’s IP law is exactly the same, they are very similar across all common law countries (and across the world many of the basic ideas, regardless of where hold true). Ultimately, these laws protecting IP provide incentives for owners and developers to invest in the creation and dissemination of new IP in the marketplace.   

The Canadian Intellectual Property Office (CIPO) grants or registers ownership for 6 types of IP.

For the purposes of this blog, I’ll only be referring to 2 – as they currently have the most direct impact on the Esports industry and the relationships within the ECE Stakeholder Relationship Diamond. These two are Trademarks and Copyright.

Trademarks (as defined by CIPO)

Refers to words, sounds, designs (alone or in combination) used to distinguish the goods and services of one person or organization from those of others in the marketplace. ‘Trademarking’ (i.e. Registration) protects the trademark from misuse and gives the owner exclusive rights to use it, in association with goods/services for which the trademark is registered, throughout Canada for renewable 15-year periods.

Game Developers have been trademarking their products since the first video game was created. The logos for League of Legends, Overwatch, Fortnite and the like are all recognized and registered trademarks.  Esport athletes could similarly benefit from the protection of trademarks. Their name and reputation around any given game should be protected. It is their professional position, their platform, their personal value proposition.

Copyrights (as defined by CIPO)

Refers to the creators’ sole right to produce, reproduce, publish or perform an original literary, artistic, dramatic or musical work (including computer programs) for a limited term. It also applies to performances, sound recordings and communication signals. Copyright generally lasts for the life of the author, the remainder of the calendar year in which the author dies, and 40 years following the end of that calendar year.

Copyrights are designed to protect all the interests, including economic, of a creator’s work, by securing the creator’s exclusive right to perform, copy and sell their creation.  Video games and their underlying code are eligible for copyright protection. The creators, or “Developers”, these games are legally entitled, through copyright, to perform, copy and sell all the audio and visual content of those games.

What this all means is that Developers can limit how a video game is used in online video, streaming gameplay, at in-person tournaments and many other potential platforms or uses. Any individual engaging in those actions without the appropriate permission from the Developer could be in danger of committing copyright infringement.

So how do Developers do it?

The usual method by which a Developer authorizes others to use their IP is the use of an End User License Agreement (“EULA”) (i.e. That thing you always have to click “yes” to when you buy and download a new game).  The EULA is the Developer giving the buyer the ‘license’ to play the game and share it with friends.  These licenses also typically give the developer the ability to revoke that license whenever they see fit.

These licenses can vary widely from developer to Developer, product to product and industry to industry and are typically driven by the concerns of the involved parties. As a result, they can be very unpredictable and subject to change.

Regardless of the reason, licensing gives the Developer an immense degree of control in regard to how their game is used.  The esports implication is that, aside from some sort of agreement between the Developer and the specific user, (third party organizer, content creator/athlete, Esport organization etc), Developers maintain the ability to shut down Esport content and competitions – whether it be huge franchised leagues* or small independent events – whenever they want. Blizzard shutting down Heroes of the Storm is a shining example of such control.

*The caveat here is that in franchised leagues (think the NALCS or OWL), it’s not clear if there is some agreement between the franchise owners and game Developer that would prohibit the developer from shutting the league down.  Alternatively – in franchised league situations – you could view the Developer and franchisors as having one collective goal (i.e. if the League is not profitable both parties would want the same thing).

So, what about all those streamers and content creators playing games on Twitch or YouTube?

Developers have adopted policies that now allow individuals to use their recorded gameplay in their streaming content.  These new policies provide for potential “user-generated content” (“UGC”).

Epic Games’ Fan Content Policy provides a good example of how Developers are viewing user creations. This is directly from their website:

FAN CONTENT POLICY

Everyone at Epic Games is extremely honoured by the interest shown by our fans in our games and our company, and we think it’s cool that you want to create artwork, websites, and other stuff based on our intellectual property. At the same time, we spend a lot of time, thought, and money creating our intellectual property and need to protect it.

In most cases, using our games, artwork, videos, music, characters, logos, and other intellectual property (“Epic IP”) without our permission is illegal and a violation of our rights.  So we created this Policy to explain what you may do regarding your Fan Content. In this Policy, “Fan Content” means (i) your fan art (such as artwork, photographs, videos, and other materials) that is based on the Epic IP; and (ii) your Epic IP-related personal, non-commercial websites and apps that are freely accessible to the public.

Epic does establish that individuals creating UGC (i.e. streamers) are able to monetize and receive payment:

Section 1 – General Rules

1.4 Fan Content must have no commercial (i.e. monetary) objective. As an exception to this, fans are permitted to monetize web videos (such as YouTube) with advertisements, so long as those videos otherwise meet the requirements of this Policy.

BUT the excitement should be short-lived because of the beautiful clause contained in the next section. What it means is that Epic can tell you to stop making UGC for whatever reason they deem appropriate.

1.5 Epic, in its sole discretion, can revoke your permission to create Fan Content at any time and for any reason.

So what all of that means is Content creators and streamers can use their recorded gameplay, create the content we all want to see and make a living while doing so, but it also means that content is subject to the Developer’s will.

In short, Developers are continuing to push the boundaries of their ownership rights, found in copyright law, to extend their control over their game AND the content it produces.  The current legal system, with respect to intellectual property, has created a scenario for Developers to have a wide grip on the world of esports

What does all this mean? Where is all this going? How much control is too much?

As the digital age marches on and its implications and applications embed themselves into the circuit boards of our culture, the issue of IP is becoming an issue of control…with a level of complexity never anticipated when the laws surrounding it were written. As it pertains to esports, the ultimate question is…how much control does a Game Developer currently have over their game(s) and how will the maturation of the Esport industry affect that? Should they be able to shut down tournaments on a whim? Is a tournament about the game or about the athlete playing the game…or both? Where is the distinction? Where is the line? Is it actually an EVENT where people come to watch the players or personalities and not the game itself?  

As a quickly growing part of the digital age, esports is finding its way into more and more segments of our culture. In order for esports to continue its meteoric rise and remain a success, balance within the ECEsports Diamond needs to be found.  Understanding the needs and desires of Developers AND athletes will lead to equitable compensation, fair representation and continued growth for both parties. And that’s a win for all of us.

 

Thanks for reading my blog. The above content is not legal advice but observation about the esports industry. If you have any questions or comments or would like to schedule me to speak at your event, head over to my website www.ecesports.gg