Watching Over Copyrights and Brands, Part II

You can protect a brand in a lot of ways. You can wave the law around like a sword, or hide behind it like a shield. Or you can not worry about using the law to your advantage and just make a product that others can’t top. One of the most fun things about law school was learning about all of the ways around the law – not breaking or circumventing it, but bridging over the gaps and cracks. Gaps and cracks happen most when the law hasn’t kept up with culture or technology, which is where I think the law is most exciting and interesting.

One of the most genius aspects of the overwhelming media hype-package of Overwatch is the way it manages concerns for copyright and trademark infringement. Blizzard achieved a level of branding and promotion that reduces their concerns for infringement. Overwatch is inimitable. That doesn’t make it invulnerable, but it might be the next best thing.

I. “Junk” from “Rats” Can’t Hurt the Bastion of the Marketplace

Even before I ever visited New York City, I knew that people sold cheap, counterfeit Rolexes on the streets. Having this explained to me as a child is also how I heard about Rolex, incidentally – and learned that it was different from Rolo. I always thought it was interesting that everyone knew about this black market for counterfeit goods, but no one seemed extremely worried. I think one reason for the lack of concern is that Rolex knows they won’t go out of business because of cheap knock-offs.

The best games, from the biggest studios­, have less to worry about when their IP is infringed or “heavily borrowed.” Dominating the games market is less about legal force than it is about marketing and loyalty. For one thing, Activision can’t claim copyright over the concept of a military-shooter and force other studios to not make games that compete with Call of Duty. So Activision makes Call of Duty a brand, because brands command loyalty. A given Call of Duty game may be worse in every respect to a competitor’s game, but fans will still choose the inferior product because of its franchise. (This is one of two reasons anyone rooted for the Cubs from 1945- 2015.) Blizzard created something powerful: a genuinely superior product that commands tremendous brand loyalty.

II. Just Palette-Swap For A New Game! Sounds Pharah- don’t you McRee?

Of course, just because no one can succeed in really ripping off Overwatch doesn’t mean people won’t try. League of Legends had this experience, also. Generally, game knockoffs like these are about as much of a concern as e-mails from dispossessed millionaire Nigerian princes. It’s a reprehensible practice that creates clutter and will accidentally trick some people, but they aren’t going to displace the original.

Companies can compete with Overwatch, but they can’t replace it. The entire experience is too complete and interconnected. No parasitic effort can trick a gamer into thinking they have the real deal, no one can deliver a superior version of the same experience, and no one pull more brand loyalty in online gaming.

III. Leaving your Trace[r] Mei Show that You’ve been a [Road]Hog, and You’ll Get No Mercy

Although Blizzard won’t feel the financial impact of the feeble efforts of clones, there are things that can still undermine the game. For example, a company could make an add-on that allows players to cheat at the game. Of course, a company called Bossland did exactly that. Rather than simply ban the players who use this add-on (per violations of EULA and ToS agreements), Blizzard has gone after the makers of the program – who are super proud of what they do.

I am a little bit surprised that they cite copyright infringement in their claim. This is interesting because it seems well outside the scope of traditional copyright law, but copyright law has been slowly evolving in the last decade. I think the technical details of how Bossland’s program interacts with Blizzard’s game could be essential to determining if applying copyright law is appropriate. After the recent ruling in Google v. Oracle, courts are more likely to find infringement just from making two programs talk. (The fair use defense that saved Google is not going to help Bossland.) In this case, it seems extremely likely that Bossland had to access and take (or manipulate) some of Blizzard’s code, which may be enough for infringement. But the ways that 3rd parties can interact with programs is still an interesting question for copyright law to resolve.

Regardless of the copyright claim, I think the other claims made by Blizzard are plenty strong enough to win, so I don’t think a court will end up going into detail about it.

Where Is The Fair Use? Where It Has Always Been.

Copyright law is not the most difficult area of law. Contracts, Torts, and Constitutional Law are massive categories that cover a lot of dense and complex content. However “easy” copyright might be, it is still an area of law with technicalities and layers of exceptions and conditions. Though copyright law doesn’t have the Rule Against Perpetuities or questions of Personal Jurisdiction, there are other complications: the triennial review process for 1201 research exceptions, or the federal preemption exemptions under the 1976 Copyright Act for pre-1972 recordings, for example.

Fair use is a sliver of copyright law that doesn’t seem complicated, but people can still get it wrong. In programming, brackets and semicolons matter if you want your program to run and not crash. In law, words and details matter if you want a favorable result. Being sloppy or lazy, generalizing broadly, or simplifying and condensing are all quick ways to lose in law. The fair use doctrine can feel easy for an educated adult to grasp, but there are important details in this tiny section of US law.

Fair Use Is Not Everywhere

Fair use is not a defense against the abuse of a copyright claim system. A huge part of the #WTFU discussion has been the complaint that takedown notices (or strikes) are issued by people who don’t have any claim to the copyright. This is a problem, but it is not a fair use problem. To use the fancy words: The copyright abuse of which most YouTube content contributors complain is a failure to meet the definitions in section 101, or to meet the cause of action available in section 501(b). Section 107 exceptions to copyright are not implicated. Therefore, there is no “fair use” claim.

Fair Use Is Not Pretending You Didn’t Do It

The true fair use part of #WTFU is that copyright holders issue strikes against critics who (arguably) deserve the protection of fair use. The unsatisfying answer is that this in accordance with the law. Section 107 of the United States Code is an exception to copyright infringement. Fair use is really a defense that says, “Yes, I am violating copyright, but I have an approved reason to do it.” Fair use admits copyright infringement. It does not replace copyright infringement. (The 9th Circuit in Lenz notwithstanding.)  In this case, the law is designed to defend accused infringers, not prevent the accusation.

Fair Use Is Not The Money Maker Yo’ Federal Statutes Gave Ya

Fair use is not meant to protect commercialized activity. Whether Nostalgia Critic is covered by fair use is an interesting question, because he’s “doing criticism,” but he’s also “doing entertainment” and monetizing (even if indirectly) the video. * Fair use is not a checklist that gets someone a total exemption from copyright infringement if any single box gets ticked. It is a balancing test, and all of the factors get considered. Balancing tests make for the least clear and predictable answers in law.

The Best Case For Fair Use On YouTube?

The strongest fair use argument is for “Let’s Play”-style content. Games are meant to be played. They are supposed to engage the decision-making faculties of the brain, in the same way that movies are meant to engage the sight and hearing of the audience. In an important way, filming someone playing a game is like hearing someone read a movie script. Not only is it transformative, but it changes the economic impact analysis. Uploading music or film to YouTube may well replace the original content, but I disagree that footage of someone else playing a game is a replacement for playing the game.** A court might not see things this way.

Situation Normal

The daily internet realities of copyright and trademark don’t match US law. The real problem is not that Google*** is failing to deliver on the legal promise of FAIR USE. The problem is that the law is more or less working as it’s written. There are questions to ask here, but I don’t think Google has those answers.

*There have always been book reviews written for profit, as well as parodies and commentaries of works. But not every case of journalism, parody, or fandom wins under a section 107 defense. And that’s why it’s a grey area- or at least more grey than people realize. It is clear that 17 USC 107 was never meant to support commercial entertainment enterprises, so it is a little off-kilter to hear people invoke it as essential to their livelihoods. However, it’s also clear that Title 17 of the USC was never meant to prohibit criticism or education.

**It is very important not to confuse “Let’s Play”-style content with eSports, because footage of someone else playing a game is a very good replacement for … that person playing that game.

***All of this ignores some relevant DMCA analysis and distinctions between US Federal Court and YouTube’s Content ID System.

The Long Road to an Ever-changing Future to Return Again to the Past: A 14th Century Solution to the 21st Century Digital Renaissance Problem of Law and Economics

This is my longest post yet, so I’ll give a tl;dr: Copyright law is immovable and unavoidable, and we keep talking about because things around it change constantly. Navigating copyright for the next century can’t look like successful navigation of the last century’s copyright- but it might look a lot like something from 7 centuries ago, and it might shift some of the focus from Copyright to its older sibling, Trademark.

 

I love the history of copyright because I can’t separate it from the history of technology. The core thrill of copyright law is the thrill of technological possibilities warping and toying with long-standing concepts of objects and economics.

It’s too bad I don’t have the graphic design tools to put a timeline up, with the legal progressions listed on one side and the technological milestones listed on the other side. But here’s a text version:

Laws and Philosophy:

The printing press was invented in 1440. Statute of Anne was passed in 1709.  Immanuel Kant wrote “On the Wrongfulness of the Unauthorized Publication of Books,” 1785. The US Constitution was written in 1787, with a clause establishing copyright as a federal law, followed by the copyright act of 1790. In 1831, 1909, 1962-74, 1976, and 1998, the US government passed modifications to US copyright law. Throughout the 20th century, photographs, moving pictures, radio broadcasts, phonographic records, videocassette tapes, and internet search caches are each brought face to face with copyright law.

Technologies:

1837 Samuel Morse sent the first telegraph message. In 1878, a moving picture of a horse at a gallop is recorded. Gugliemo Marconi transmitted radio signals 1.5 miles in 1895. In 1926, Kenjiro Takayanagi created the first television receiver; Philo Farnsworth worked on an improved television the following year in 1927-1928.  Raymond Tomlinson sent the first e-mail on ARPANET in 1971. Tim Berners-Lee published the first web page in 1991. Microsoft released Windows Media DRM software in 1999; Napster also launched in 1999. YouTube launched in 2006. In 2014, a monkey took a selfie.

In February of 2016, YouTube channels and personalities asked: #WTFU. (Which spurred me to write about copyright yet again.)

 

The Times are Always Changin’.

It’s a long history to arrive at such a contentious and unsettled point. Contract, torts, and property law are so much more settled and uncontroversial (particularly in the ways that affect average citizens in our daily lives). Why has copyright always been a recurring issue? Why does it seem to be getting less settled and stable, despite the increase in attention from jurists and scholars?

The problems are not going away because their two main causes aren’t going away. Technological progress isn’t going away. The drive of human creativity isn’t going away. But if we can move copyright law through the end of the 20th century, we might be able to reconcile law and art.

From the Ayssirian Tablet to Bob Dylan, human civilization has repeatedly confronted the distance between “old” and “new.” Generations are defined by the space between them that cannot be bridged. History bears out Marshall McLuhan’s observation that, particularly with regard to new technology, “we march backwards into the future.” But when we arrive in the future, we have to grapple with its residents and their customs and culture. There are always “The New Kids.”

The New Kids: Popcorn Time and Social Media “Prosumers.”

One fine afternoon last year, Gabe and Tycho talked about how terrible piracy was, and how funny it was that the ESA was going to allow Social Media Mavens to attend their E3 show alongside the press. This whole podcast is about these two topics, and the two of them seem unaware that the same theme actually permeates the entire discussion. These are two examples of how new media and technology shape culture in a way that dictates how established industries must change – two industries in particular. Though one of these industries was established 83 years before the other, they both face upheaval from the effects of the internet.  The ubiquitous availability of devices that connect the world is the result of a collection of forces that has – and will – entirely change society.

In their comic, “The New Kids” are ostensibly the “Prosumers,” set to arrive at E3 and replace the Old Guard, Traditional-Role Press. But there’s a layer built into this that Mike and Jerry don’t even know about: “The New Kids” are the technologies and media and cultural shift that change ESA’s thinking about who should be at E3. The New Kids are all of the reasons Popcorn Time can exist and even thrive, and why AMC needs to think very fast about how to avoid the fate of Borders Books. A society always has New Kids. Progress doesn’t happen without New Kids.

One Reason Copyright Discussions Never End: They Go the Wrong Direction

Copyright affects a lot of people on the internet, so it gets a lot of attention and discussion. Too much has already been said about copyright law – most of it is pretty unhelpful. Comparisons to the theft of physical objects only invite a hyperfocus on the distinction between copying and theft, which is just misunderstanding the issue in a different way. Arguing one misunderstanding against another will not lead to a better solution, just a different, less obviously-bad problem.

I think a better analogy is in spaying the goose that lays the golden* egg, or gelding some equally bounteous and mythical stallion. Analogies about terminating reproductive capacities are sometimes slow to catch on, for some reason—but maybe we could at least speak of taking an engine out of a car.

Ultimately, I think all of these analogies are really the wrong route. The most significant and salient point is lost in the effort to analogize: the way that digital media allows the manipulation of art is entirely unlike what human civilization has seen so far. It just isn’t like tools or farm animals or agriculture or cars or anything else to which we are tempted to analogize. The digital replication and transmission of images, text, and sound is entirely unlike the things that have happened in last 5 millennia (or 20 millennia) of recorded human history.

The internet, and the bundle of technological developments that have come with computing and telecommunication, fundamentally changes the potentials for human expression and connection. A fruitful discussion about copyright needs to consider how we got to this point, and where we can, must, and mustn’t go next.

 

Technology Giveth, and Technology Taketh Away.

Justice is a tricky thing, because it seems so obviously favorable and desirable when it’s on your side. The raw, unrestrained, unadulterated, unfiltered, concentrated justice is very difficult and very dangerous – much of the role of the legal and political process is to temper that justice with reason and mercy.

There is an important truth in this discussion which does not get mentioned often enough: through new possibilities in efficiency and distribution, technology made artists and entertainers wealthier and more famous than they could have been without those advances. There was once a time when an actor had to perform every single time the actor wanted to be paid. Now, the actor performs, and then enjoys the rewards of technology repeating that actor’s performance—hundreds of thousands of times, for millions of people. (Not to mention the role that technology plays in editing or reusing art!) No content creators complained when the technology allowed them to make more money for less work, and they aren’t worried about any potential benefits they now reap from increased exposure and dissemination of their products.**

Reaping benefits from digital technology is no justification for the violation of copyrights, of course—but it is important to see the broad picture of how technology has interacted with artistic creation and distribution, and consider at least three important facets of this realization. First and foremost, no one wants to argue that the technology is inherently bad. Anyone concerned about the protection of their works has profited from the efficiency of some technology – even the same technology that threatens to harm them.

Second, it raises questions about what “fairness” really means in this scenario: as we move into the future, how should we evaluate the benefits for creators against the costs to the audience? Who ought to benefit from the powers of digital technology, and what harms and benefits should be considered? There is a very big picture here, and evaluations of fairness will change as one’s values narrow or expand the scope of one’s view. A good discussion can only happen when the whole picture is really considered.

Third, the power of new technology makes us consider what is now possible: the separation of fame from fortune. As I have discussed, the internet allows someone to become famous without becoming wealthy. In ages past, the opportunity to gain fame usually required a lot of money, but now, propagating art does not require the same mountain of resources that it once did. As we move toward new structures to support art and entertainment, fame will become a prerequisite for wealth.

 

The Way Forward: The Return to Patronage.

IndieGoGo launched in 2008. Kickstarter launched in 2009. GoFundMe launched in 2010.  Patreon launched in 2013. It’s harder to demonstrate mathematically, but I will make the wild assertion that game pre-orders have been more heavily promoted and used in the last 10 years than in the preceding 30 years. (I would love to know if pre-orders are proving more successful than DLC or MicroTransactions as a business model.)

When people pay the creator up front, the creator is less concerned about piracy, because the money is already guaranteed. Presumably, the farmer cares less about the goose that has already filled a basket with golden eggs than the one that is expected to eventually fill a basket.

In the world of patronage, reputation (sub-categories: hype, public relations, image, trust) is everything. Creators rely on their history of quality and integrity to secure funding for their next project. Creators who fail to deliver quality products, or who demonstrate shady or unsavory business practices, will suffer for their failings in their future endeavors. Some artists and companies are already carving out their reputations, through repeated successes, unfortunate failures, public statements, and choices.

Navigating copyright in the conditions of Digital Patronage will be shaped by a different power dynamic than the familiar, one-to-many, gate-kept, closely-owned media structures of the 20th century. Clutching at straws of hard-line, traditional copyright enforcement will not secure survival. Thriving will require earning trust through performance. Creators must give more consideration to next year’s potential earnings than to next quarter’s bottom line. They must create a functional, interactive, cooperative, collaborative relationship with their audience. The successful creators of the 21st century will be those who treasure their reputation as they will rely on the good will of others.

… And reputation and good will are what Trademark Law is all about…

 

 

 

*“By establishing a marketable right to the use of one’s expression, copyright supplies the economic incentive to create and disseminate ideas” (p. 558) Harper & Row, Publishers, Inc. v. Nation Enterprises 471 U.S. 539 (1985)

 

** Those who manufactured physical products did not enjoy this same boon through the 20th century. Advances in 3d printing now give them a direct stake in the outcome of this transformation. There’s room for everyone at this party— I can’t wait for Physical Objects to show up with their partner, Patents!

 

“Come At Me, Copyright Bro” –Google Legal Team, 2015

Making Trades

Most competitive games involve the concept of trading. The idea of a trade is to risk some of your resources in order to deprive your opponent of some of their resources. This is part of a smaller skirmish which is only part of the overall game. The goal is to lose less than your opponent, thus putting you ahead. For most games, successful trades require a proficiency that comes with study and experience. It requires knowing both what you and your opponent are capable of and thereby knowing what will happen. The best players are not surprised by the outcomes of their choices; they know before they act how the exchange will unfold. When chess masters think about future moves, they are performing this kind of trading calculus.

Attorneys make the same kind of considerations. Particularly, those who litigate (though many attorneys don’t) use their knowledge and experience to predict the outcomes of various legal strategies. For a master attorney, the outcomes of legal choices are as unsurprising as the outcome of a chess move is for a chess master. Good attorneys don’t pick legal battles wildly or whimsically. They know in advance what the risks are. They know the possibilities and probabilities, the parameters and requirements.

I have no doubt that YouTube’s new fair use policy comes to us after many, many hours of careful thought by many legal experts. It is bold and brazen, but calculated and deliberate. It is not, strictly speaking, a defiance of a federal law. But this new policy does cast aside some of the protections offered by the law.

Picking A Skirmish

The Digital Millennium Copyright Act (DMCA) covers a wide range of topics, including questions of copyright infringement on the internet. To incentivize websites to host material, as well as to incentivize their cooperation with the policing of copyright infringement, the DMCA offers “Safe Harbor” protections to those websites that promptly take down those materials suspected or accused of copyright infringement. The system is called “notice and take down”: When someone gives a website notice about infringing material, the website simply needs to take it down. This is why so many US-based companies are quick to take down content when a copyright claim is filed: the compliance of the host protects them from a lawsuit for the copyright infringement.

For many years, YouTube took advantage of the protections offered by this law. When a copyright infringement claim was filed, YouTube promptly removed the content in question. It could often be uploaded again, with the content uploader asserting that the video did not infringe a copyright. The dispute would then be between the user and the [self-proclaimed] content owner, Google having excused (or protected) itself.

Google’s new policy is to reject some copyright complaints in certain cases. Those cases are those in which Google thinks that the video does not infringe copyright and is protected by the fair use doctrine. What sounds most impressive is that Google will even defend legal claims against those videos in court for up to 1 million dollars in legal costs. That isn’t actually as impressive as it sounds, because Google has left the Safe Harbor protections when it refuses to remove disputed content. In this act of defiance, Google is on the hook for copyright infringement as though they had been the ones to upload the video.*

The DMCA does not give license to content hosts to make judgments about fair use. That remains the purview of the courts. Google is relying on their legal team’s expertise to predict how a court would rule regarding a video. If they are wrong in this prediction, they could lose rather badly.

Uncertain Factors, Unpredictable Trades

The fair use doctrine is not extremely well-developed. American law schools require all students to pass certain courses, and many of these core courses** feature cases that are over 100 years old. One of the most famous cases in Contract Law is from 1854 (and from an English court, no less). The most famous cases on Fair Use are from the 1980s and 1990s, and they don’t give a thorough, detailed explication of this legal concept. They only apply fair use to some specific sets of facts.

Fair use is far less certain a legal doctrine than the two-hundred (or seven-hundred) year old precepts that guide areas of law such as property, tort, or contract. This makes it harder to predict the outcomes of taking some cases to court. There are no masters for making “trades” with fair use in court. It hasn’t gone to court enough times with different cases for anyone to know exactly what it’s capable of.

This is an incredibly exciting challenge that Google has thrown down. They have stepped out of their sanctuary. They have taken up a weapon that is uncertain and largely untested. They are risking substantial damage if they lose. And they really didn’t have to do any of it. They could have stayed safe and sound, risk-free, and followed the pattern of notice and take down. They didn’t need to change anything. I can only guess what might motivate them to make the world a better place for others. Perhaps Google decided that if they are going to control the world, they want it to be a world more worthy of their control.

(Or maybe Google is throwing their weight behind fair use now that it is it the next defense for Java APIs after a ruling earlier this year that Oracle can copyright the structure, sequence, and organization of an API.)

 

*A little over-simplified to avoid a discussion about the difference between joint and several liability.

**Copyright law is not a required course, and isn’t always even offered as a full subject by itself—making fair use a small part of a lesser-known area of law.

 

Reactions and “Buzz” from E3 Couldn’t Happen Without Trademarks

When Juliet famously mused “What’s in a name?” she meant to downplay the importance of names, contending that the thing which is named (say, “a rose,” or maybe a family name of “Montague”) persists beyond whatever we call it. The world of trademarks insists on the importance of names to help us understand the differences between roses in a flourishing garden. The current state of the video game industry illustrates this point well.

I didn’t do any dedicated E3 coverage this summer, but looking back, the entire conversation happens around trademarks. The video game industry has always made use of sequels and developing franchises, and one of the biggest reasons for this has to do with the philosophy behind trademarks.

I. Building a Brand…

Trademarks exist on the theory that the creator of a product, or provider of a service, has some consistency in their work. They might rely on the same materials or recipe, they might maintain a certain standard of quality, etc. Trademarks allow an owner to benefit from consistent quality. While trademark litigation is often an argument about preventing someone else from wrongfully benefiting from an owner’s legacy of quality, the norm is just the preservation of one’s own legacy.

In the world of video game developers and publishers, this legacy is reflected in the fan reactions. Why was there such elation over “Fallout 4”? Sure, the trailers looked visually appealing, and might have even hinted at a fun game—but many other games do that every year. Why is “Fallout 4” special? Because of everything it rests upon: Fallout 3, the Fallout franchise, Bethesda Game Studio’s demonstrated caliber of game production, ZeniMax’s proven management of product launches, game director Todd Howard’s numerous awards and consistent excellence in executing his game design philosophy.

The consumers in the game industry (“gamers,” one might call them) know many ways that a game can disappoint—but because of Bethesda’s history of developing and releasing great games, the consumers are steeled against the kind of doubt that would otherwise creep in to counter excitement over an E3 trailer.

II. Destroying a Brand…

In contrast, the games industry also shows how little excitement a tainted company can generate. The perineal whipping boy of the industry has been Electronic Arts for many years now. EA continues to be the foremost example of game industry failure because they (EA and any developer they ensare) seem sadly prone to incidents which only dig itself deeper into a pit of shame and universal contempt. After “Aliens: Colonial Marines,” EA will face increased difficulty in securing game pre-orders (or having consumers believe pre-release game footage trailers). After “SimCity,” EA will find it more difficult to have the kind of participation in a product launch that game studios often rely upon in their entire marketing campaign. But unlike Blizzard, who had their own launch fiasco with “Diablo3,” EA does not have many instances of excellent games and excellent player experiences in their recent history to restore consumer faith in their brand.

III. The Law of the Brand

Trademark law is sometimes a difficult thing to explain. Intellectual property law is necessarily a little bit abstract, but copyrights and patents protect a concrete thing (a book, a painting, a movie, a chemical process, a mechanical procedure, etc). Trademarks are really anchored in the “goodwill” that a company generates though its products and services. The vagueness behind explaining trademark law can lead some to think it is not important.

Trademarks are rooted in the abstract, unquantifiable difference between the excitement over a new Bethesda game and the bitterness over Konami decision to let go of Hideo Kajima. Economists and businesspeople find that their models work best when every factor in their equations and algorithms can be carefully determined.  However, they have long understood that brand loyalty and social popularity or prestige of a brand can influence the market in ways that are difficult to mathematically predict. That weird, unseen, abstract force that pushes the market in ways numbers fail to predict is both the effect of brands and the reason for trademark law.

Capitalism FAQ: Should You Respect or Abuse Your Customers?

No one likes to see a winner kicking the loser on the ground (unless we really, really hate the loser). We accept within our society that there are differences between people: that some will be more powerful or wealthy than others, and that’s just part of life. One of the limits on our acceptance of some inequality is the visceral rejection we have of abuse, of excessive exercises of power that do more to satisfy a desire to exercise power than actually further some external cause.

So, that’s one reason to be unhappy with Taylor Swift and Katy Perry right now.

These two ladies, through their lawyers and legal entities, are making great efforts to enforce intellectual property law against their fans— the very people who support and adore and ultimately finance their lives. There is good reason for us to judge harshly the multi-millionaires who attack the average citizen, but this is not a blog on Marxism or justice or truth. I’m here to write about law and video games.

So, let’s compare two approaches to intellectual property law in the 21st century. Let’s compare the business models and legal approaches of TS/KP with RiotGames, Inc. The framework to keep in mind is that most intellectual property laws don’t have to be enforced. There is no rule that you have to go after people for copyright or trademark infringements (generally). Yes, there are some sacrifices you make by not enforcing some of your rights, but it’s still a choice.

Though neither of them would like it (I guess they’re in some kind of feud, because being rich, acclaimed, and famous isn’t enough to overcome basic human failures), I’m comfortable using TS and KP interchangeably for this analysis. They offer the same goods and services for pretty much the same prices. So, their business model is $1 songs on iTunes, monetizing YouTube music videos, $100 concert tickets, royalties for radio and online audio services, sponsorships, appearances, and merchandise. They (with their enormous business operations) make musical products and sell them in the same way that musicians have since radio (with basic adaptations of the same model for television and internet).

RiotGames, Inc. develops, publishes, and maintains one of the most played video games in the world. Riot does not charge anyone to play the game. They do not charge for downloading, registering, playing, or for any other use of the game permitted by the EULA and TOS agreements. They will accept money for optional, purely aesthetic enhancements to the game, but this is the extent of their revenue (not counting their e-sports operation, which is distinct from the game and heavily guarded by NDAs that make analysis and explication difficult, if not impossible).

It seems obvious— even intuitive– that the business approach which demands more money would be the one to allow fans leniency with intellectual property. After all, KP/TS take in millions each year, so they certainly don’t need the extra potential money from meager merchandise sales to cover their expenses. Of course, for reasons we don’t need to explore, TS/KP are hell-bent on making sure their fans get no enjoyment from their manufactured musical entertainment apparatus without permission and a fee.

Equally intuitive is the idea that a company that gives away its only product must certainly be cautious and guarded with its intellectual property. That company needs alternative revenue sources, and almost everything it does is only recognized in a world of strong copyright and trademark protection. And yet, RiotGames has actively encouraged fans to interact with their work in every medium of creative expression. They even created a venue for fans to share and display their art, music, videos, poetry, and sculptures.

Here we have two different models, laid out for comparison. There are several questions worth asking: Which model is ethical? Which model shows respect for the fans, for the art, and for the artist? Which model engenders a sense of community and mutual appreciation? Which model will thrive in the 21st century?

For those who feel that, at the end of the day, the bottom line on the balance sheet is what matters, and should be what guides and justifies business and legal choices, here are those important numbers:

KP: 110 million

TS: 180 million

RiotGames, Inc: 624 million (2013), maybe over 999 million in 2014.

GG.

Software [Non-]Ownership: EULAs and Thinking About Property

We don’t really own most of the software we buy. As one writer put it a few years ago, “the software on my computer may as well be tied to a long piece of elastic, just waiting for the publishers to give it a tug.” That “piece of elastic” is a license, as in “End User LICENSE Agreement.” Almost all of the software we buy- especially what we download rather than physically purchase- is licensed to users by publishers and developers. These licenses vary from one piece of software to another*, but for a lot of games, the licensor (publisher or developer) has the legal right to take the game away from the licensee. Usually, the licensor will include specific reasons why they might do this, but will often round out the list with something like “or for any other reason.” There are not many limits on what this license cannot contain, must include, or how it has to be structured.

This model has been around for a long time, but I think it is fast becoming a serious problem. The core of the problem is that almost all users think, feel, and act as though they do own the software they have purchased. The American concept of property is still fundamentally rooted in John Locke’s Second Treatise of Government (a text that was a tremendous influence on the Founding Fathers and early US statesmen, politicians, and writers): if you work on something (or pay for it, or both), you have a claim of ownership on that thing. It is how we understand all of the other ownership paradigms in our society, and makes it easy to determine where ownership begins and ends. I cannot think of a single instance where one might purchase a physical object and not have full ownership rights over that object. Any arrangement where something is transferred with some kind of “elastic string” still attached is not called a “sale.” It is called “renting,” “leasing,” “borrowing,” or possibly “putting under mortgage.”

For most American minds, the concept of a “sale” includes the concept of a complete ownership transfer. I think it is easy to consider this one of the central reasons why there is so much resistance to copyright law, digital piracy laws, and other abstract controls on ownership of non-physical property. The laws that guide physical property do not apply to digital property, even though the only model we have for thinking about digital property is our history of thinking about physical property (Locke). A key point of contention is whether the legal concepts underpinning physical property must be different from the legal approach to digital property. The fact that US law does take these two different approaches does not mean that US law must take these two different approaches.

It may turn out that changes in net neutrality will affect how publishers and developers rethink this business model. As internet use becomes a worse experience, especially for data-intensive games, it is more important that companies ACTUALLY sell the product, not just license it. A data-choked internet will increase the need for offline gaming. It will create a whole new level of challenges for always-online DRM and increase the potential for server-crashing launch fiascos (e.g., Diablo3 and SimCity). A big reason that companies went to online-DRM models was to combat piracy. If net neutrality slips away, the ISPs might make piracy difficult enough (intentionally or unintentionally) to make developers feel more comfortable with moving to a sale-not-license model.

The only games currently practicing this kind of model are “abandonware” games: games whose developing companies have closed up, or have simply allowed their works to pass into the public without fuss. It is not clear that all presumed “abandonware” games are actually “orphan works” according to actual US copyright law. Indeed, a lot of games I’ve seen peddled under this banner are decidedly NOT orphan works and are not subject to the same freedom of transfer that the seller implies. But the videogame world operates on the legal principle of developers declining to enforce their civil rights against consumers as heavily as its programmers rely on the principle of “last in, first out.”

*I think the analysis is different for different software. Stricter license make sense for, say, reduced-cost versions of editing, publishing, or creative suite software for “Academic Use Only.” My position in this post is certainly not that “all licenses are bad,” or anything remotely close to that sentiment.

 

EDIT/ UPDATE:  Another recent blog post on this subject, from a slightly different angle.