Animal Crossing: New Horizons Shows Us A New Approach To EULAs and TOS

Within a few minutes of starting Animal Crossing: New Horizons, I thought this month’s blog post would be about Tom Nook’s financial crimes. However, I discovered something even more interesting (and less claimed by internet memes) in the game: the way the designers worked legally significant content about the game into the game.

 

Unlocking the EULA Comprehension Achievement

In the game Animal Crossing: New Horizons, the player guides a character through the process of settling a deserted island and transforming into… well, approximately whatever the player desires, but the game guides it somewhat in the direction of a small tropical real estate development and/or vacation getaway spot. In the process of building, landscaping, exploring, and creating, players can visit the Islands of other players (friends or strangers), either through local or online connections.

In the context of the game, these visits are done by taking a character to an airport on the island and making travel arrangements with the NPC behind the ticket counter. This NPC (a Dodo bird named Orville, employed by the Island’s sole airline, Dodo AirLines) explains the details of the travel arrangements in a carefully and specifically-worded way that analogizes device connectivity to airline travel. For example, Orville presents the option to open or close the island’s airport to incoming flights—a decision that translates to making the player’s device available for connection with other devices.

The result is that the substance of explaining that using the game feature of visiting islands will connect devices and may result in unpredictable game play experiences is actually explained in the game. It is explained one sentence at a time, by a cartoon bird; it is not presented buried somewhere in a massive legal document that is consistently ignored and forgotten. This is a completely new approach to thinking about how to help players understand EULAs and TOS agreements. This is presenting the meaning of a document with every effort bent toward comprehension and understanding.

 

A New Recipe

This multiplayer feature has the potential for good fun, but it also involves some potential risks and concerns, particularly for a game intended to be suitable for players of all ages. Nintendo was clearly aware of the potential for misuse of player interaction, and they wanted all players, even (or especially) younger players, to be meaningfully informed about player interactions.

What deserves the most applause here is that Nintendo wanted actual comprehension on the part of the player. Nintendo diverged from the approach almost every other game has taken for the last 20 or 30 years. Plenty of games include a pop-up of a 5,000 word EULA and TOS agreement somewhere in the installation process, and it is easily ignored and forgotten. Most developers and publishers consider that “good enough”; they either don’t think it’s possible to do better, or they don’t really care that much if something bad happens that was disclaimed somewhere in that wall of dense legal text.

This isn’t easy to do, and I don’t know if every game could do it, but there’s no question that a lot of games could make some effort in this direction. Most modern games could be clearer about the technological and/or legal consequences of using certain features in a game. Perhaps the core of succeeding in this endeavour is to imagine the player as a friend that the developers want to help, and not as an adversary that the developers want to con.

 

Designing for Comprehension

Maybe it’s pure self-interest, or maybe it’s a genuine care about the customer, but Nintendo wanted to explore another method of communicating concerns about device connectivity to the player. Nintendo could have gone with the easier route. They could have put all of the device connection options in a game menu. Instead, Nintendo recognized that they could make both the technical and legal dimensions of this a party of the game itself. They could have a character in the game explain what is happening and what the consequences will be. Perhaps most impressively, they managed to do it without trivializing the player’s decisions or oversimplifying them. By making 3-4 sentences of a legal document a part of the game play experience, Nintendo increased actual comprehension and awareness of the risks at least a hundred-fold.

Maybe all of this started with just one sincere question at a brainstorming session early on in development: “Hey- what if we wanted the player to ACTUALLY UNDERSTAND the technical and legal jargon we usually just throw in the click-wrap pop-ups that everyone ignores?”

Show You All the Moves Like… Fatal1ty? Doublelift? Trick2G? Flash? MadLife?

Could you trademark behaviors of a professional esports player?

I came across an interesting question online a while ago (from Ryan Fairchild): “If an esports player did some recognizable set of actions at the beginning of each match, and fans could recognize who the player was just from those actions, could the player eventually claim inherent distinctiveness and claim trademark rights in those actions?”

My opinion is that it would be very difficult to get trademark protection for such “signature moves” in esports—but it would be very interesting to try.

1) What does a trademark need? Can this idea of “signature moves” meet the minimum requirements?

A trademark has to be connected to some good or service in commerce. It would be novel to present streaming and esports as the good or service, but not out of the question. You probably wouldn’t be able to stop other people from doing the same move, but you might be able to sue someone for using the signature moves if it makes people confused about the identity of the player and the impostor profits from it. (That’s not exactly the statutory requirement, but it’s the most favorable set of conditions for someone trying to sue in this case.)

Another important requirement is that the signature moves not have functionality. Optimized pathing, strategically advantageous positioning, etc. are all likely to be out of the question. Trademarks, generally speaking, cannot have a functional purpose. If something functional were protected by trademark, it could prevent people from using or accessing that functionality. Trademarks last indefinitely, provided that they remain in use in commerce and the registration is renewed, so any functionality would be protected indefinitely. Patents are the category of IP that is meant to handle functional subject matter, and patents have the shortest lifespan of the four primary categories of IP (about 21 years, depending on the patent type).

 

2) How does trademark law intersect with identity?

Trademarks are usually about brands, which have usually been associated entire companies. Trying to tie a trademark to an individual is somewhat more tricky, but not unheard of.

After popularizing a pose of kneeling and placing a closed hand against his forehead, athlete Tim Tebow registered his trademark in 2012, (but he apparently decided not to renew it, so it is now cancelled under Section 8—see trademark Reg. No. 4263370). From the perspective of trademark law, there was no confusion about whether someone else doing the Tebow-ing move was, in fact, Tim Tebow . The question was whether merchandise referencing the move was affiliated with or authorized by Tim Tebow. So, a signature move, by itself, really doesn’t qualify for trademark protection – whether it’s on the football field or on a screen depicting a football field. But Tebow’s main concern in getting his trademark had more to do with preserving some measure of authenticity. Because it was a deeply personal matter for him, he was trying to use trademarks to protect something about his identity, reputation, and public persona. It’s not the primary role of trademark law to offer that kind of protection, but there might be a way to make that work.

Fortnite cases drew a line about the copyright protections around dances- particularly length (and, even though the courts and copyright office didn’t say it, let’s say “complexity”). I still hypothesize that trademark protection had more potential, though it would require “building a brand” around the dance. For example, “The Carlton” is a dance actually known by the name of the character who performed it on a long-running tv series, and the performance of it generally evokes that character. In contrast, “flossing” doesn’t really evoke… backpack kid? Or whomstever?

 

3) Is the persona of the player/athlete a character? (Or Does it depend on a philosophical reconciliation of identities?)

There aren’t a lot of federal laws protection one’s right to public persona or right to likeness. But California and New York have a lot of celebrities, who tend to be the most frequently involved in cases about right to likeness.

So, here’s where the thinking gets experimental: What if we think about the persona of the esports player or streamer as both the mechanism by which monetization occurs, and as the likeness subject to protection? There is probably an entire thesis’ worth of content in unpacking the splitting and merging of identities, but I think that there could be cases where the identity of the streamer/player could be sufficiently closely connected with commerce to satisfy the requirements of the USPTO. This might be the best case for the necessary connection between “a good or service in commerce” and the “signature moves” that an esports player might be looking to protect by trademark. I don’t know how the USPTO might react to streaming as a good or service in commerce, but I think there is enough evidence to draw upon to present a sufficiently persuasive case for the point that streaming and esports meet the threshold of interstate commerce.

 

Conclusion

As far as I can tell, the real challenge to getting trademark protection for a signature move in esports is monetizing it in a way that satisfies the requirements for a trademark. I think the association and the distinctiveness are comparatively small challenges. There might be something to the idea of a special emote that only the members of a particular esports organization have—and then any use of it might reasonably be presumed to be an authorized use, which would help make the case for an esports organization preventing the unauthorized use of the emote.

My Borderlands 3 DLC Idea: Claptrap Files for a 1201 Triennial Review Exception Hearing

I. Story Of a Lonely Robot

In the Borderlands series, a megacorporation (“Hyperion”) made a product-line of 3-ft tall, one-wheeled robots: the CL4P-TP Steward Bot. In the very first moments of the first game, the player is introduced to one such unit, who introduces himself as “Claptrap.” This robot became the face of the game (the way Teemo became the face of League of Legends, despite over 100 other characters to choose from), and “Clappy” has been a major feature of Borderlands 2 and 3 (often as comic relief). In one DLC add-on for Borderlands 1, Hyperion reprogrammed Clappy to lead a revolution (“The Robolution”) to kill enemies of Hyperion, but the effort backfired and Clappy also fought against Hyperion. The incident led Hyperion to discontinue the product line and destroy all existing models—however, Clappy survived the extinction event. A decade later, as the sole survivor of his species, Clappy undertakes the task of building a companion; he asks the player to find and salvage parts from CL4P-TP units found in the course of the game’s adventures. There’s just one obvious, glaring question:

Is Clappy violating section 1201 of the DMCA with this quest?

17 USC 1201 generally prohibits getting around the technological measures on a device to use it in some way outside of the intended user experience. It’s actually a lot more intricate than that; there are a lot of exceptions to the prohibition, and there is a cycle of reviews (to be held every three years, the fancy word for which is “triennial”) built into the statute.

 

II. Analysis of 1201 (a)(1)(A) Violation

Is Clappy “circumventing a technological measure”? It is reasonable to presume so, given the context of the story. We know that Clappy was built as a Hyperion robot, and accordingly has information and ability to bypass Hyperion technological measures. In a DLC episode for Borderlands 1, Clappy wages an open, violent revolution against the Hyperion corporation, which could be reasonably interpreted to indicate that Clappy is no longer an employee of Hyperion. Furthermore, in Borderlands 2, a software upgrade for Clappy is illegally obtained and installed in Clappy. Clappy’s situation is therefore like that of a former employee who has the knowledge to circumvent technological measures but no longer has the authority to do so.

Is Clappy accessing a work that would be protected by copyright law? Computer software is generally subject to copyright (though some exceptions apply).  If Hyperion were able to get a copyright registration on the CL4P-TP software, they would likely have a strong case against Clappy for violating section 1201 of the DMCA.  Clappy’s best defense would likely be to argue that the software at issue is not subject to copyright, because that would stop the case before it even got started. However, that argument seems unlikely to work because the software is almost certainly subject to copyright.

Nothing else in the statute is relevant to Claptrap’s case. His project is not subject to (g) encryption research exception or (d) library/non-profit/education research. Clappy is arguably a government entity (if the Crimson Raiders are a government entity), but he is not acting pursuant to an investigation, so (e) is not relevant. A CL4P-TP is not an analog device, so that also makes paragraph (k) irrelevant. Paragraph (i) is not relevant because (i)(B) requires the absence of a conspicuous disclosure of the gathering of personal information—it is reasonable to assume that Hyperion has made very conspicuous disclosure about the wanton invasion of privacy that the CL4P-TP unit perpetrates. Paragraph (j) exception for security testing does not apply. There might be a dedicated robot to prevent minors from accessing material on the internet (the Borderlands 2 Captain Scarlett DLC did feature a robot obsessed with censorship and copyright enforcement, but that robot was distinctly not of the CL4P-TP product line). The only other paragraph that might be relevant is (f), which allows for reverse engineering to allow for interoperability. The game does not provide enough details to be certain as to the nature and extent of Clappy’s circumventing of the CL4P-TP parts the player brings back to him, but I think it’s safe to presume it goes beyond the exemptions allowed in part (f) of the statute.

 

 

III. Hyperion Abandonment: Claptrap’s Issue

Another argument for Clappy’s defense is that Hyperion abandoned their claim to any rights in the CL4P-TP unit after the ill-fated Robolution and subsequent discontinuation of the product. This would be an interesting case for a few reasons. First, copyright abandonment is a largely untested area of law. Whispers of abandonment (or “orphan works“) almost always involve a defunct company or a confusing acquisition of a company in which it is unclear who holds the claim to the copyrighted material.

The abandonment argument highlights some of the meaningful differences between copyright and trademark protections. There was a trademark case in which a broadcast network had stopped the production of an entertainment program, but continued to claim rights in that trademark. Crucially, trademark does not have a fixed time limit (copyright does) and trademark is explicitly connected to an actual use in commerce (copyright does not require a use in commerce). This is why abandonment in copyright is a very different situation from abandonment of a trademark. The fact that Hyperion stopped making or selling CL4P-TP units would likely affect the trademark, but not the copyright related to the product.

Perhaps the ultimate test for copyright abandonment is whether a company takes action against an alleged infringer. In some non-legal sense, the copyright is “abandoned” when no one fights against the infringement of the work. But in more accurate legal terms, a copyright is abandoned when no one is in a position to fight against the infringement of the work. Discontinuing the CL4P-TP Steward Bot product, scrapping existing stock, and ceasing service on existing products might be taken as strong evidence of trademark abandonment—but not of copyright abandonment.

Because robots of this sort are still new, it’s not entirely clear how patent law might apply. Indeed, it’s currently unclear just how patent law is meant to fit with software, so the layers of technology involved in a CL4P-TP unit are something well beyond the contemplation of the current configurations of US intellectual property law.

Fun fact I learned while doing research for this post: Robot Patent does not have to do with what we currently think of as either patents or robots.

 

IV. Clappy, the Exceptional CL4P-TP?

Could Clappy seek an exception during a triennial review, as provided in (a)(1)(c)?

Given the five factors listed in (a)(1)(C), (i)-(v), Clappy has a reasonable chance of having his case approved as an exception. It’s unclear how he would fare as to (i), but he wins on (ii) as a matter of preservation; (iii) doesn’t particularly apply unless someone wants to do research on CL4P-TP units; (iv) is an interesting point that ties back to the abandonment question, but to the extent the Hyperion is not interested in making more CL4P-TP units, there is no market impact (and only making 1 copy for non-commercial use is a negligible market impact anyway). Finally, the discretionary factor, (v), is up to the Librarian of Congress to determine whether Clappy’s project is an appropriate exception to this section of the DMCA. The circumstance of being the sole survivor of a species seeking companionship is a likely cause for such an exception.

 

V. Final Thought: Is the Player Violating 1201 by Helping Clappy?

The player doesn’t provide specific means of violating 1201 (a)(1). The primary concern for the player is that 1201 (a)(2) and 1201 (b)(1) both prohibit devices whose purpose in the circumvention of technological measures which protect copyrighted material. But the player doesn’t provide such a device; the player just gets the CL4P-TP parts themselves. This is effectively like dumpster diving for old cell phones or laptops. That, by itself, isn’t a violation of 1201— which makes sense because there are uses for those objects that don’t involve the data stored on those objects. That said, there might be a contributory infringement claim under a different statute, as (c)(2) explicitly clarifies that 1201 leaves infringement claims open to the possibility of contributory infringement.

 

 

Trying Their Luck With Loot Boxes, Betting on Microtransactions

Almost exactly three years ago, I explored the question of whether loot boxes might be considered gambling (under a specific federal statute). Despite my analysis, the controversy has not abated. Either my earlier writing was insufficient, or I am not the final authority on all US law. Or both. In any case, I am revisiting this topic.

We have a long history of kids buying an unknown, unidentified, or concealed thing and not calling it gambling: baseball cards, gashapon machines, Kinder Eggs, mystery figurines etc. We also have an established tradition of letting children play games of chance for the opportunity to gain rewards at carnivals and arcades. But stories of kids bankrupting their parents to buy baseball cards are… rare. People have ruined their lives in pursuit of many things (one psychologist admitted to having an addiction to collecting classical music). However, there seems to be an ample stock of stories of people meeting financial hardship after engaging in microtransactions of video games.

Societies make laws and institutions to mitigate the extent to which people can harm themselves and each other. Do the practices of the video game industry cause the kinds of harms that run afoul of these laws and institutions when they make it easy for a customer to bring about self-ruin (and extend that ruin to others)?

 

I. Definitions

I will define the following terms based on my understanding and experience:

Loot Box:  In-game items, conditions, or abilities available to a player, initially concealed from players when obtained. These can be given to players by the game (often for completing particular objectives) or they may be purchased, either with in-game currency or legal tender (“real world money”).

Microtransaction: The option to translate legal tender (“real world money”) for objects or conditions in the game. Although these are often near a $5 price point, it is not uncommon to see options for $30 for a single item, and many games provide bundled options for over $50 or $100. The implied predatory tactic at work in this mechanic is “nickel-and-diming” the customer: the company wants the player to perform repeated small transactions so that the player does not recognize the aggregate amount spent, and therefore spend more than the player would if the player were presented with that aggregate amount.

Pay-To-Win: The design of a game to be unreasonably difficult without the use of microtransactions. This is often combined with games with very low or no cost to play the game, then a significant escalation in game difficulty. Notably, the game does not cease to function, nor become unplayable from a programming perspective.

Cosmetic: An item, feature, ability, or condition in a game which does not affect the mechanics of the game, or the mathematics that calculates the success of the player in the game (or the ability of the player to progress in the game). Some microtransactions are argued to be less predatory because the possible outcomes are cosmetic, and the lack of an impact on game mechanics precludes an assertion of pay-to-win design.

Shareware: The business decision for a company to provide a substantial portion of a game free of charge, often to generate awareness and word-of-mouth advertising. The company expects that the success and appeal of the free portion of the game will lead customers to purchase the full game.

Demo: A small portion of a game available for customers to sample the general style, art, user interface, and gameplay experience, typically for free. In the last 10 years, it has been more common for demos to be available only by watching others (often employees of the company) play the game. Some recent demos have been criticized for misrepresenting the game they purport to demonstrate.

 

II. The Controversy

The largest looming question is whether loot boxes constitute gambling. This question has the biggest legal ramifications, particularly because many of these games and transactions are available to (if not also marketed towards) minors, for whom gambling is illegal.

The second biggest legal question is whether the practices surrounding these microtransactions (advertising, communications, implementation, functionality, etc.) comport with relevant laws and regulations, particularly those set forth and enforced by the Federal Trade Commission (FTC).

Another important question is whether these practices are ethical, dangerous, predatory, fair, or are otherwise positive for the entertainment software industry, developers, publishes, and customers.

 

III. The Analysis

Issue One: Is it gambling?

I still find my previous analysis on the gambling question relevant. However, I don’t know how it would be received by a court or administrative agency. Under my analysis, the issue turns on whether the contents of the loot box are determined before or after the transaction is made. I think the strength of this analysis is that it help to delineate between the purchasing of unknown items available to minors (e.g., baseball cards, Kinder Eggs, etc.) and conventionally understood gambling (sporting events, slot machines, blackjack, etc.) I think the weakness of my analysis is twofold: 1) it may be too technical for some adjudicating bodies to appreciate, and 2) it fails to address the unsavory impacts of loot boxes and microtransactions.

It has become popular to declare loot boxes to be a form of gambling (and some games aren’t exactly shying away from that accusation or the image).  However, I am still unconvinced that any purchase of an unknown item falls under the legal definition of gambling. It may be true that it can be called “gambling” in a cultural sense, but this uses the term to mean “any taking of risk or a confronting of uncertainty.” This use of the term is unsatisfying because it also describes going to a new restaurant (and hoping the food is good) or ordering a shirt online (and hoping it fits well).

I have not yet heard a persuasive explanation that distinguishes buying a pack of Magic: The Gathering cards at my local game store from buying a pack of Hearthstone cards in Blizzard’s digital store. There might be an important distinction. There might not be one. Maybe the purchase of sealed packs of trading cards (Pokemon, YuGiOh, MTG, etc.) needs to be restricted. Maybe Disney needs to put the “mystery figurine” boxes in the “Adults Only” section of stores at Disneyland. However, if the sales of concealed items to minors are permissible, it isn’t clear why purchasing concealed outcome in a game’s loot box is necessarily legally different, in and of itself.

 

 

Issue Two: Is it unfair or deceptive?

The FTC has sometimes found a great deal of latitude in its statutory jurisdiction over “unfair and deceptive trade practices.” The task before the FTC is to determine whether the entirety of the game and microtransactions are designed in a way that is unfair or deceptive to the customer. There is a snag, however: the terms “unfair” and “deceptive” are not clearly defined. Even a sciolistic understanding of advertising in the US shows that there is a lot of distance between an advertisement and the reality of a good or service. The FTC has the responsibility to determine when advertising and marketing tactics (which are frequently adversarial, treating the customer either as a target or an enemy) become unacceptable in the eyes of the law.

Any evidence of companies’ deliberate efforts to obfuscate the amounts spent is likely to earn umbrage from the FTC. I’m fairly confident that the FTC will be displeased with implementation of microtransactions by many companies, and not just because they have addressed a similar issue already.

I’m less certain as to how the FTC would react to the concept of loot boxes. The FTC would examine the implementation of the loot boxes—not just the mere concept of them. The recent decision by several game platforms to require disclosures regarding the probabilities of outcomes for loot boxes will probably please the FTC, because the FTC likes it when useful, relevant, complete information is put in the hands of the consumer. However, some companies are not even putting truthful information in the hands of the consumers. Additionally, the FTC would still take seriously the claims that companies rely on the same tactics as those used by casinos, and the same psychology behind gambling addiction to advance their products. The many stories about the disastrous effects of these strategies on people’s lives would also hold significant weight in the judgment of the FTC.

I think it is likely that the FTC would find some practices by some companies to be unfair or deceptive. Crucially, this would almost certainly lead to a new promulgation of guidelines (and maybe codified regulations) that detail specific requirements for game developers who wish to implement microtransactions, loot boxes, or similar structures.

 

 

Issue Three: Is it good for the industry?

Ostensibly, these strategies have been good for the bottom line of some major companies. But let’s reflect on a very different business strategy. In 1993, Doom was the most popular game of its era and genre, and the developers gave away 1/3 of it for free, as shareware. That is an astonishing truth. It was free and the developers encouraged the unregulated sharing and spreading of it. This is a complete reversal of the current marketing strategies in the video game industry. In every way, this is the opposite of a loot box. And the bottom line did just fine: the developers still made enough money to buy ostentatious sports cars and the company survives to this day. I think there is a lesson for developers from the successful marketing of Doom: Make a game so good that people are happy to play it.

Sure, shareware didn’t always work. Apogee could have been the poster child for shareware. Now Apogee games are the poster child for orphan works. But in fairness: not every loot box game turns a profit, either.

It really goes without saying that loot boxes and microtransactions are designed to make more money for the companies that make and publish the games. I suspect they have been profitable strategies up to this point. However, if you have to spend one hundred million to defend your company’s strategy for making seventy million, that strategy isn’t so good for the bottom line—and that’s not to mention the impact of the negative public image of being perceived as predatory or dishonest.

 

 

IV. CONCLUSION: Maybe Legal, Likely Unethical, Definitely Unnecessary

Loot boxes and microtransactions may very well be legal—but that doesn’t mean that they’re “good” in any sense of the word. There are urban legends of drugs that are so addictive that dealers give away the first dose for free, because they know that the user will immediately become addicted and begin paying. They lower the barrier so that more people will ultimately become customers.

There are two options for developers who crave financial eminence: make a game so good that people want to play it, or make a game so addictive that people struggle to stop playing it. The two games may look similar, but the core functions are opposites. One is a positive experience that works to enhance the player’s life. The other is an effort to remove autonomy and destroy the player’s life. One is giving. The other is taking.

How Pirates Change Games (It’s Usually Not An Improvement)

Sea Of Thieves: It’s Not Called “Sea of Cool Guys” – Mike Krahulik

Sea Of Thieves is a game where people who want to be pirates can be pirates. Some players really, really  get into the role. Every online game community has experienced some trolling and griefing; there are always players who invent their own game, though it’s always the same game, in which the objective is to make other players unhappy. The developers of Sea of Thieves specifically designed space for that kind of player—unlike other games which seek to curtail negative behavior and ban players who ruin a good time for others. In a game about pirates, wanton aggression has a place.

 

When You’re a Professional Pirate…

It took me a while to understand how copyright infringement (and counterfeiting) came to be called by the same term that was previously reserved for attacking a ship, killing the crew, and stealing their stuff. The two crimes don’t really look similar: copying a digital file rarely involves a cutlass or a flintlock pistol, taking barrels of rum or chests of gold, and typically doesn’t involve boats at all (except when moving a lot of counterfeit goods internationally, I guess).

I think the term makes more sense from the perspective of the owners of the rights. Pirates of the 15th-19th centuries were hard to find, hard to predict, and hard to pursue. Sometimes their attacks wouldn’t be noticed for months, as it was hard to get good cell phone reception in the mid-Atlantic in the 1600’s. So, when music, movies, books, and games started getting copied and distributed, and rights owners struggled to identify who was doing it, where they were, or what they might do next, as they completely disrupted the industry’s ability to sell and distribute their wares, I imagine pirates came to mind.

 

Countermeasures

Media industries reacted to piracy differently, as best fit the particular medium. The music industry moved away from physical goods and into the digital marketplace. The iTunes Music Store was, in many ways, like the P2P networks that had threatened the industry, except that Apple was the only one seeding and they charged for each song.

The video game industry took a different approach. After a short-lived effort to encrypt physical copies, the industry moved to a digital distribution system. This was easy enough, and platforms like Steam and the Play Station Store were already moving the industry in this direction. The next move, however, was for the internet to start shaping the way games were played: online gaming became increasingly popular, and developers and publishers realized that it was easier to keep track digital copies if devices had to connect to the company’s servers. It was a natural fit: the games already involved internet connection, so it wasn’t much more work to have the serves check to see if players had authentic copies of the games. Because the game required player to be always online, this method became known as Always-On DRM. When it worked well, it was something that honest players would never notice or think about. But it didn’t always work so well.

Rebellion

The new system worked well for some games. Other games… well, suffered. Sometimes, the online connection requirement was obviously completely artificial and frustrated players because the setup made no sense. This exacerbated problems in cases of poor execution: when a server couldn’t connect, it was even more frustrating when the server wasn’t necessary for the game experience. Even today, not everyone has a consistent, stable, high-speed internet connection (especially in the US). Many players just wanted a simple, single-player experience, and Always-On DRM interfered with that. The method created an environment that only allowed players to play when the company was able to facilitate it; if the server was down, or the connection was slow, the game was unplayable. This upset people who paid for a leisure product and then found out they could not use it at their leisure. By increasing friction and fuelling resentment against the game industry, some game companies suffered as they tried to implement Always-On DRM. The artificial inclusion of Always-On DRM to the reboot of the incredibly popular and successful video game SimCity is credited with its failure (notably, the execution of the Always-On DRM was sub-par, as the server was frequently down or buggy).

 

Pirate By Design

Sea of Thieves found success as a game by embracing a certain attitude that the rest of the industry had been fighting for decades. The developers made a space for people who want to undermine the work of others. So far, it’s been an interesting experiment that I can only predict will culminate in the coagulation of that particular kind of trolling, griefing player. I see it as a kind of prison in which the inmates believe they are at a theme park. Maybe the game will eventually give us some kind of data about trolls who revel in ruining the joy of others. Maybe it will teach us something about pirates.

There is already a lesson about piracy for video games. In the early 90s, piracy was built into the business model of some companies. They called it “shareware,” and the idea was that people would copy and distribute a portion of a game. The developer hoped that this would serve as a sort of advertising, and people who enjoyed the shareware portion of the game would then purchase the full game. In 1993-4, idSoftware proved that this model was feasible with one of the most popular games of the 90s: Doom was distributed widely as a shareware product and the company made enough profit for the head programmer and the lead level designer to each purchase a high-end sports car. This year, idSoftware released Rage 2; unsurprisingly, the new parent company, ZeniMax, did not opt for a shareware distribution model. The video game industry has changed over the last 30 years. It takes a special combination of product, customer, and ecosystem for it to be a smart choice to give away a third of your product for free—but it’s not an impossible dream.

Today, piracy remains a problem for the video game industry, but new legal challenges (some with more legitimate basis than others) have proven more urgent: legislation of loot boxes, esports contracts, prosumer sponsorship deals and disclosures, copyright infringement within the game, and copyright infringement for streaming and video uploads.

Maybe that’s the best reason to keep the term “piracy” for copyright infringement that involves copying the entire work and distributing for consumption as a counterfeit or inauthentic product: there are so many ways copyright can be involved in a video game in the current digital ecosystem, have different terms for the different infringements is nice.

In Which I Use Multiple Materials To Write About Separating Separability

Crafting and Separability

Crafting became the must-have feature in a video game after Minecraft’s astounding success. Since this game mechanic became the bandwagon that no studio could NOT jump on, games varied the complexity, the modularity, and the reversibility of the crafting. (They also varied the intuitiveness of the system, but that’s a different complaint.)

In some games, players can get either raw materials or modular pieces back by deconstructing items that they have crafted: Diablo 3 (random chances for raw materials when salvaging items), Fallout 4 (gives modular pieces rather than raw materials), Elder Scrolls Online, Fortnite (weapons, but not buildings), Destiny 2 (arguably, this deconstruction is functionally more like selling it), Borderlands: Pre-Sequel (the grinder will turn a trio of items into an item of equal or greater value, with random chances for quality).

In other games, players do not have the opportunity to recover resources after crafting an item (though frustrated players have created game mods to allow deconstruction): Minecraft, Darkmoon (the Sword of Talon cannot be unmade), Skyrim, Warframe, Don’t Starve, Stardew Valley, Dragon Age: Inquisition (in Single Player you can remove addons; you can deconstruct in multiplayer), Dead Rising, Terraria.

For video games, the decision to allow players to salvage or reuse item parts is about game balance. When crafting an item includes a random chance of an additional benefit, game designers are aware of the possibility for players to deconstruct and reconstruct until they get the additional benefit they want. When the crafted item does not bring new benefits, game designers still have to evaluate the way that players will obtain resources.

There is another concern about balance when courts examine the possibility to conceptually deconstruct an object into the raw materials of function and aesthetic. Courts must be careful to afford the correct category of intellectual property protection based on the nature of the subject matter seeking legal protection. Unfortunately, determining function vs aesthetic is controversial at best, and it can sometimes feel more like a game with an RNG element added to item deconstruction.

 

Star Athletica v. Varsity Brands

In 2017, the Supreme Court ruled on a dispute between two companies that make cheerleading outfits. The court did not rule about whether a copyright infringement actually happened in this case. Instead, the court sent the case back to a lower court to decide that—but the court sent the case back along with a new rule about copyright protections. The new rule is that if a part of something can be “perceived” as art that would qualify for copyright protection, then the whole thing can be protected by copyright:

“an artistic feature of the design of a useful article is eligible for copyright protection if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work either on its own or in some other medium if imagined separately from the useful article.”

“Useful articles” are generally not protectable by copyright (they should instead usually be subject to patents, which work very differently from copyright protection).

Before this ruling, many lower courts had created (often similar) tests to evaluate the aesthetic elements of a larger object or article. One effect of this ruling is that it forges, out of the raw materials of many separability tests, one single separability test for all US courts.

 

Is Star Athletica compatible with 17 USC 9?

In the 1980s, computer hardware manufacturers were concerned about getting the right kind of protection for computer chips for the new micro processors that were becoming popular. More specifically, they were concerned about protecting a very specific piece of the chip production process: the photomask (aka mask work). The mask work is the 3-D blueprint and stencil for the manufacture of a silicon microchip.

The concern was that patents would either not apply or not give adequate protection (as far as I was able to find in research, this fear was never put to the test in courts, and I remain unpersuaded that the mask works would not qualify for either a design or a utility patent). However, the functional nature of the photomask device (as a key part of a manufacturing process) precluded it from copyright and trademark protection. The computer industry successfully lobbied congress, and a new section was added to chapter 17 of the United States Code. Despite the fact that the title of chapter 17 is simply “Copyrights,” section 9 is distinctly unlike the copyright protections described in other sections: it protects a specific, functional category of objects (mask works), offers a different length of protection, and prescribes different statutory damages for infringement.

Generally speaking, the law tries to avoid redundancy and overlap. Does Star Athletica decision create some kind of redundancy or overlap with 17 USC 9? Star Athletica allows for functional articles to be subject to copyright if there is an aesthetic element found in the functional article. The court does not carefully explain whether an aesthetic element must be, in itself, not functional (nor is the term “functional” defined). There is no overlap if Mask Works lack an aesthetic element—despite the fact that they look like art in themselves, there is probably no element of the Mask Work which is not functional, which may preclude the possibility of an aesthetic element. Inasmuch the Star Athletica decision should be read as not creating redundancy or overlap with existing statutes, this decision must be interpreted as a ruling that there are no aesthetic elements that are separable from the mask work that would be subject to copyright protection.

Separating Hard Cases of Inseparability: Ribbon Racks

Measuring Star Athletica against 17 USC 9 is important because of the difficult cases in Intellectual Property where functionality and aesthetics are not clearly distinct. Function and aesthetic are often broad cues for which type of protection a thing may be subject to receive (or prohibit from receiving). A seminal example is “ribbon rack” bicycle racks: the ubiquitous bicycle racks that take the form of an undulating metal ribbon were the subject of a copyright lawsuit (as well as trademark). The SDNY court ruled that:

“While the RIBBON Rack may be worthy of admiration for its aesthetic qualities alone, it remains nonetheless the product of industrial design. Form and function are inextricably intertwined in the rack, its ultimate design being as much the result of utilitarian pressures as aesthetic choices. . . . Thus there remains no artistic element of the RIBBON Rack that can be identified as separate and ‘capable of existing independently, of, the utilitarian aspects of the article.’”

The dissent in the case felt that this thinking entirely destroyed any hope of conceptual separability. This disagreement draws out the challenging questions: whether, when, and how aesthetic elements can be distinguished or delineated or extracted from a functional article.

 

Star Athletica In the Context of the Intellectual Property Landscape

Design Patents cover the non-functional ornamental elements of an invention. The Star Athletica case might expand copyright closer to design patent territory. Most cases will be able to still separate the two, mostly on the basis of subject-matter and/or whether the subject was issued a copyright registration or a design patent. Nevertheless, I predict that either (1) there will be a case to settle an argument between the USPTO and the Library of Congress as to who ought to have jurisdiction over a specific subject-matter, or (2) a case will have to decide on something that could conceivably be claimed by either, and a court will need to effectively adjust either Star Athletica or a patent statute in order to make a coherent ruling.

The Star Athletica decision demonstrates that intellectual property is both unified and divided by questions over functionality and aesthetic: IP is unified by these questions because no other area of law is so focused on this philosophical point; IP is divided by the answer to this question because different categories of IP will apply based on the functional or aesthetic nature of the object or article under question. At the same time that more academics and attorneys are pushing for less use of the term “intellectual property,” cases like Star Athletica and Converse v ITC push patents, trademarks, and copyright analysis closer together, focusing on two common questions: What is functional and what is aesthetic? How do we separate them when both are present?

 

Inseparable Bundle of Distinct Intellectual Properties

There is an ongoing push to separate the pieces of Intellectual Property Law (copyright, trademark, patent, and trade secret). Some attorneys and academics want people to stop using the term “intellectual property” entirely, citing confusion for both the public and the courts.

One of the core arguments is that “intellectual property” can be broken into more fine, discrete elements (copyright, patent, trademark, and trade secret). However, each of these categories can be broken into subcategories, areas, and elements. One author recently wrote that a discussion on fair use has nothing to do with patent law. However, a discussion on fair use of academic papers also has nothing to do with ephemeral recordings, royalties for mechanical licenses, or protection for mask works (which are explicitly not subject to copyright but are still included in chapter 17 of the USC). The mere fact that a broad category can be understood as made up of smaller categories is not sufficient reason to entirely reject the notion of the broader category… But this issue should be fully addressed separately, in a different blog post.

Conclusion

In a game with crafting, the designers have established a method for deconstruction or they have decided not to include such a method. A player can either have the expectation of deconstructing an item, or the player knows that item crafting will permanently destroy the materials used (except in Elder Scrolls Online, when some items just don’t show up for deconstruction and no one knows why except that it’s a Bethesda game). In cases of intellectual property, the courts may or may not find that an object or article can be conceptually separated into functional and aesthetic elements. However, when the court does find that such separability is possible, Star Athletica will guide the court’s evaluation of the separated elements.

 

 

 

 

 

 

 

The Scare of Abandonware

It’s nice to have law in a society to bring a sense of predictability. Clear and organized laws allow us to understand the consequences of our actions. Knowing the law lets us make choices based on the expected outcomes. However, there are a few areas of law where outcomes are not so obvious. Abandonware is an interesting case of 21st century law. Copyright law simply doesn’t outline what to do when a company publishes a game and then closes its doors. It’s scary for cautious lawyers to discuss because of that uncertainty. As always, this blog post is NOT legal advice– in fact, it’s mostly about why giving legal advice about abandonware is difficult.

How Games Get Abandoned

Abandonware isn’t entirely limited to software, but the differences in technology and industry norms and structure make it a far larger problem for software than any other media. It’s no surprise that book, radio, television, film, or music industries ever needed a statute on abandoned works.

When game studios close, they are often bought by other, larger studios- or at least their IP assets are. However, sometimes the IP of a studio doesn’t get purchased – it just gets abandoned. Copyrights in the US last at least 70 years. Although courts have ruled that not every work has a recognized owner at the time of creation, courts have not definitively addressed the issue of abandoned works. (It is possible to officially declare a work abandoned and part of the public domain, but this is not automatic for IP that is simply left behind by a defunct company.)

Who Would Have The Right To Sue?

There are a few fundamentals that have to be in place for a case to even get seriously looked at by a judge. There must be an allegation of a violation of a law, for one thing. Additionally, the plaintiff must have “standing.” This means the plaintiff was harmed by the breaking of the law. A case must also be “ripe” (the allegation cannot be speculated or predicted to occur sometime later), and the case cannot be “moot” (resolving the case must make an actual difference to the injured party).

In the case of abandonware, could these fundamentals be met? Sometimes revenue is still given to developers whose companies have closed shop, but it’s unclear how often this is the case.  In most cases, it seems that no one can claim to be damaged by the unauthorized distribution of the software, because no one can claim they lost money as a result. Further, any case would be moot because ceasing the distribution would not make any difference to a non-existent competitor.

Despite the unlikely odds of an abandonware suit even getting to trial, distributing abandonware still feels a little risky for two reasons. First, unlike trademarks, copyrights are not contingent on use in commerce, and unlike abandoned property there is no law describing how to treat abandoned works. Second, it’s an unexplored area of law, which means that there isn’t precedent either to argue in court or to consider when advising a client.

Who Gets the Loot of the IP License When a Company Dies in the Dungeons?

Despite the murkiness, some abandonware cases seem clearer than others. Some games from the 80s and 90s seem well and truly abandoned. However, if a copyright is assigned to a corporation and that corporation then goes defunct or is bought, it’s sometimes unclear who owns the copyright.  Other games may carry a sort of tangential active ownership that could complicate a case. For an example of both of these complications, let’s consider a game from 1991 that featured a licensed IP to a game developer and a publisher (who are now both defunct): Eye of the Beholder.

Dungeons and Dragons was owned by TSR, Inc until that company went out of business and sold most of its D&D intellectual property assets to Wizards of the Coast (a company owned by the toy company Hasbro, Inc). Eye of the Beholder was a game made by Westwood Associates (bought by Electronic Arts and defunct since 2003), though the title screen clearly identifies it as an Advanced Dungeons and Dragons game. The game was published by Strategic Simulations, Inc (bought by Mindscape and defunct since at least 2011), who worked with TSR on dozens of licensed D&D games.

With Westwood and SSI now out of the picture, can Wizards of the Coast claim ownership in the use of their D&D mark in 30 year old games?  Wizards of the Coast would probably not prevail on a claim of direct ownership of these games. As far as I can tell, courts have not addressed a case in which a party bases a claim on IP that is inside another product. The closest cases involve the use of a person’s likeness in a game, but the plaintiffs don’t try to claim ownership over the entire product. It may be that the original license agreement puts the “D&D” IP out of the reach of claims by TSR, and therefore out of the reach of WotC.

Ideally, the licensing contract between TSR, Inc and Westwood Associates has a paragraph for just this kind of question (this is why it pays to draft contracts with the worst possibilities in mind- like your company going out of business). If a court faced the claim that WotC has a claim on the distribution and sales of games featuring D&D settings and characters, I suspect* it would rather dismiss the claim on the basis of laches rather than address the tangled mess of IP licensing claims.

Conclusion: We Can Know The Risks, If Not the Outcomes

Abandonware seems to be technically illegal, but it also seems to be nearly unenforceable. That’s an uncomfortable place to be. It’s a strange state, and there are hardly any appropriate analogies that would help explain it. The best analogy might be a comparison to an old game that, despite being technically functional, won’t run on a current operating system. Abandonware’s legal challenge might be best described by its technical challenge.

 

*There is always a small risk of a surprise in court: A court could create the principle that when a party does not exist to protect a licensed IP, the licensor may step in and act as owner of that IP for some limited purpose. Some would call that “legislating from the bench.” The judge would call it “meeting the demands of justice in the face of technological development.”