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Professional gaming — no longer something to 'LoL' about: Some IP implications of the eSports industry

06 April 2021

#Intellectual Property, #Dispute Resolution & Litigation

Published by:

Tom Goodwin

Professional gaming — no longer something to 'LoL' about: Some IP implications of the eSports industry

eSports is a booming industry. With viewership numbers now exceeding that of traditional high-profile sports such as the Super Bowl, it is important to understand some of the intellectual property implications for stakeholders as the industry develops. This article discusses some of these distinct issues and how intellectual property protection can be utilised by both developers and professional gamers to protect their commercial rights.

Key points/how does it affect you?

The intellectual property rights that apply in an eSports context differs in some respects from those in traditional sports. Although eSports is big in Australia, and has been for some time, it will be a while before we can rely on solid legal authority to show how intellectual property rights would be applied in the context of eSports. In the meantime, we can consider these issues by exploring overseas jurisdictions.

There are many intellectual property issues that apply in eSports. These issues will only develop further with the continued growth and sophistication of the industry.

This article discusses copyright in eSports, particularly whether there is copyright in an athlete’s performance in eSports and copyright issues that arise in the streaming of eSports.

The future of sport

Sport — it is the Australian way of life. We are a nation of sports lovers, be it the Boxing Day Test, Melbourne Cup, State of Origin, Australian Open, Sydney to Hobart Yacht Race, Australian Football League (AFL), Formula 1, the Olympic Games, you name it, we love it, and we have loved it for generations.

Despite our historical love of sport, the sports industry, like many other industries, faces challenges. In 2018, 31 per cent of Australian adults were classified as obese (see the statistics here). This impacts the sporting industry at a grassroots level and affects our ability to develop high-performance athletes. If our performance on the national and international level declines, this in turn affects things like viewership and sponsorship, which then affects sport at a grassroots level. It is a vicious cycle.

Our high-performance athletes are not achieving at the same level internationally as they were in previous years. For example, in the 2000 Sydney Olympics, Australia ranked 4th overall with a total of 58 medals, whereas in the 2016 Rio de Janeiro Olympics, Australia placed 10th with a total of 29 medals.

On top of this, the COVID-19 pandemic has impacted the sports industry significantly in both Australia and worldwide. The most significant being the postponement of the 2020 Tokyo Olympics. The total cost to traditional Australian sport is still unknown, however the expected cost to the International Olympic Committee for its postponement alone is estimated at upwards of $1 billion (read further here).

The sports industry is important for physical, mental and social wellbeing. It is also important for a growing economy. In Australia, the sports industry is estimated to have generated approximately $32.2 billion in sales in 2016–17. This resulted in a contribution to the gross domestic product (GDP) of $14.4 billion and supported approximately 128,000 full-time equivalent jobs. For context, this is approximately 0.8 per cent of Australia’s GDP and 1.5 per cent of total employment (see here).

Given the social, physical, mental and economic benefits of the sporting industry, it is particularly important in our post-COVID-19 world to look for opportunities for growth in the industry.

eSports — what are they?

One sector of the sporting industry that has seen tremendous growth in recent times is eSports. Although the current international climate will certainly have contributed to its success, the popularity of eSports has been on a meteoric rise for years. For example, in 2017, the League of Legends (LoL) World Championship had 106 million unique viewers across the competition. By comparison, the 2017 Super Bowl had 111 million viewers.1

So, what is eSports? The Oxford English Dictionary defines it as “a multiplayer video game played competitively for spectators, typically by professional gamers”. So competitive gaming, essentially. But eSports is not just video games in the more traditional sense (like LoL). Finding themselves in unprecedented times, traditional sporting organisations began catching on to the benefits of taking their sport online while countries worldwide were locked down and traditional sporting avenues ground to a halt.

The following major sporting organisations have taken advantage of the pandemic to target new online markets:

  • Formula 1 launched a virtual Grand Prix series
  • the Tour de France held a Virtual Tour de France on the Zwift platform
  • the National Association for Stock Car Auto Racing (NASCAR) launched an online racing series
  • the National Basketball Association (NBA) purchased its own eSports league for the NBA 2K game, with 17 franchised teams taking part
  • the 2024 Paris Olympics announced it will include eSports as a demonstration sport (see here).

We know that protection of intellectual property rights is important in the growth of the sports sector. Why? Because the industry must continue to change and evolve to keep up with society. To do that, we need to encourage and stimulate creation and innovation in all forms of sport (including eSports).

IP rights and eSports

In the evolving eSports industry, protection of intellectual property rights will be important for continued growth.

So how do the intellectual property rights in eSports differ to traditional sports?

There is likely to be many differences (and similarities). We explore three copyright-related issues below and identify some key areas that will likely be developed in the coming years as the industry continues to expand.

Copyright in the game itself

Leaving aside broadcasting of events (which will be subject to copyright protection), there is no copyright protection provided to a traditional sport. No one owns soccer, baseball or cricket. Luckily for you and I, we can go outside and play a game of cricket and not have to worry about infringing anyone’s copyright or having to obtain a licence to play the sport competitively.

An eSport on the other hand is a virtual game that has been created by (and is owned by) the developer of the game. We cannot tell you what goes into developing a virtual game (suffice to say, it is too complicated for us) but each video game is equivalent to a separate sport and has its own unique internal structure, gameplay and rules.

Unlike traditional sports, the game itself (or computer program) is protected by copyright under intellectual property law. Therefore, as the copyright owner, the developer has the exclusive right to use and authorise others to use the copyright in their game. Unlike a traditional sport, the owner of the eSport can control who gets a licence to it, and therefore who plays it.

This means that unlike playing a game of backyard cricket, you and I cannot play an eSport without a licence that lets us do so. This is easily overcome though — we are granted a licence when we purchase or download the game (the end-user licence agreement). If a game is downloaded and played illegally, there is a risk of legal action against the person or people who downloaded the game.

Developers gain significant control over the use of their games from these licences, which affects eSports in that developers maintain the discretion to shut down events or restrict the use of their content. This occurred in 2018 when Blizzard Entertainment announced it would shut down the development of its Heroes of the Storm game and Heroes of the Storm Global Championship 2019 eSports season (see here). Blizzard stated that their developers would be moving to other projects, causing many to believe they had decided to begin phasing out the game in preference of other more successful eSports games such as Overwatch. This is an example of the control that developers have over their creations and the ability to shut down events they determine are not successful or profitable.

Is there copyright in an athlete’s performance? 

In traditional sport, there is no copyright in an athlete’s performance. An athlete cannot claim copyright in the way they, for example, kick a ball or swim a particular stroke. These actions will not satisfy the requirement of originality, nor will they be artistic.

In the United Kingdom decision of Football Association Premier League Ltd v QC Leisure2, it was held that: 

"...sporting events cannot be regarded as intellectual creations classifiable as works within the meaning of the Copyright Directive. That applies in particular to football matches, which are subject to rules of the game, leaving no room for creative freedom for the purposes of copyright."

Although athletes’ performances do not attract copyright protection, a sporting event will have unique and original characteristics that will afford them protection. Take for example pre-recorded highlight packages that are broadcast on media avenues, opening sequences and logos which are subject to strict copyright. The sport of American football is not protected under copyright, whereas the Super Bowl halftime show will be protected under copyright and cannot be broadcast without the consent of its owner, the National Football League (NFL).

One issue that has been discussed within the industry is whether ancillary copyright can be granted to a professional gamer for “the way they play a game”. When an eSport participant performs a unique move or strategy in-game, will this amount to a creative work such that it will be subject to copyright protection? Is it more creative than an athletic performance in a traditional sport? It might depend on the move or strategy and how it is created. Any move or strategy that is performed in-game will likely satisfy the material form requirement of copyright protection. Whether or not it is “original” such that the move could be protected may depend on what is actually involved in making that move or play.

A key consideration is whether ancillary copyright should be granted where gamers develop a strategy or method of playing a game in a way that is original. Under section 10 of the Copyright Act 1968 (Cth), literary works are defined to include a computer program or compilation of computer programs. A computer program is defined as a “set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result”.

It is unlikely that the original work requirements of copyright would be satisfied by gamers who specialise in, for example, shooter or racing games where dexterity and intricate strategic movements are less common. This issue will be tested and resolved in the court as the industry develops.

One of the first major disputes arose in 2015 between Twitch, a Twitch streamer called “SpectateFaker” and professional gamer Lee “Faker” Sang-hyeok. Azubu, another streaming service, had secured and reached an agreement with Faker for the exclusive rights to stream his gameplay. SpectateFaker was an account created to broadcast Faker in spectator mode (a mode where users can watch others in-game, but not physically take part in it) which was publicly available to view in-game.

When Azubu was made aware of this, they issued an infringement takedown notice to Twitch.

Although Twitch complied with the takedown notice, this claim was one of the first to consider whether a professional gamer could issue exclusive rights to their performance within a game that was already subject to copyright protection.3

The issue of whether a player of a game can have ancillary copyright in their gameplay as a derivative work of that gameplay is yet to be determined. We will have to wait and see.

If ancillary copyright was to become commonplace throughout the industry, it would likely have significant financial benefits to eSports players and teams by allowing a greater commercialisation of their brand. With the combination of tournament prizes, team salary, sponsorships and revenue from online streaming, established eSports players can earn significantly more than mainstream professional athletes.

Image rights

Image rights (or personal brands) in traditional sports can be significant commercial enterprises — for example Michael Jordan’s Air Jordan brand. So far, there is not as much in the way of image exploitation and image rights in the eSports context.

Johnathan Wendel was successfully able to acquire the intellectual property rights to his online alias “FATAL1TY”. The key benefit for Wendel did not exclusively arise from owning the rights to his alias, but rather the ability to exploit and transition the FATAL1TY brand into an incorporated company with multiple partnerships within the gaming industry such as OCZ Technology and ASRock. Although his current net worth is unknown, Wendel is regarded as one of the highest earning entrepreneurs arising out of eSports.

While this has been explored by some high-profile gamers, it is yet to appear widespread in the industry.

Copyright in streaming

The streaming of eSports necessarily involves content protected by copyright. Because the developer owns the game, the developer has the exclusive right to limit how a game is used in online video, streaming gameplay, in-person tournaments and other potential platforms or uses.

What impact will this have on traditional sports moving to an online platform?

With the rise in popularity of eSports comes a rise in the demand for tournaments. The most significant of which in Australia was the Fortnite Summer Smash in association with the Australian Open (see here). The 2020 edition was the largest competitive gaming event in Australia to date and featured a $100,000 charity pro–am (professional and amateur) tournament and a $400,000 solo tournament. The event organiser Mark Riedy is quoted as saying:

"Competitive gaming is the fastest growing sport in the world, and to be able to tap into that audience and bring to life an event of this scale at one of the biggest sporting events in the Australian Open is something we are incred- ibly proud of."
In our first year the Summer Smash generated more than 11 million views on YouTube alone, and hundreds of thousands of fans tuned into live broadcasts via digital platforms."

eSports tournaments are broadcast online through YouTube and Twitch, ranging from the LoL World Championships to the Virtual Tour de France. Live streams are also becoming a common way of promoting charities and encouraging donations. In January 2020, the popular YouTube group “The Click Crew” held a 36-hour livestream and raised over $300,000 for the Australian bushfire crisis (read further here). They are progressively beginning to appear on mainstream television networks such as ESPN, who aired 12 hours of straight eSports coverage in April 2020 involving games such as Madden NFL, Formula 1, Rocket League and Apex Legends (see here). It is likely that this will continue to grow and eventually meet the coverage seen in countries such as South Korea, which has broadcast eSports competitions and analysis on TV for over 20 years through their dedicated channel OGN.

While most major tournaments are run by, or in partnership with, developers, this was not always the case in the early days of eSports. In 2010, Blizzard Entertainment was in dispute with the Korea e-Sports Association (KeSPA), which was running tournaments involving Blizzard’s game StarCraft II. Blizzard sought to obtain licensing fees from KeSPA for the use of their content, which KeSPA disputed on the grounds that the intellectual property rights to the tournament were not as expansive as they claimed.

Blizzard eventually elected to license the exclusive right to broadcast the StarCraft II gameplay to a different company and later brought claims against KeSPA for intellectual property infringement. Although this dispute was never determined in court, it does raise the question of the degree that developers have over the use and broadcast of their games.

Take home

As the eSports industry continues to grow in Australia and worldwide, the laws surrounding its development and governance will undoubtedly evolve. Until courts consider the intellectual property rights of professional gamers, caution should be taken within the eSports industry in order to protect their legal rights from exploitation.

Authors: Sarah Bryden & Tom Goodwin 

  • This article was originally published in The Australian Intellectual Property Law Bulletin 33.9

[1]K F Ridenhour “Traditional Sports and Esports: The Path to Collective Bargaining” (2020) 105(4) Iowa L Rev 1857.
[2]Football Association Premier League Ltd v QC Leisure [2011] ECR I-9083; [2012] All ER (EC) 629 at [98].
[3]F M Chee and V-M Karhulahti “The Ethical and Political Contours of Institutional Promotion in Esports: From Precariat Models to Sustainable Practices” (2020) 16(2) Human Technology 200.

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Tom Goodwin

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