Part 1- Introduction and Copyright
The eGaming Industry has emerged as one of the most dynamic and prosperous sectors globally. From its humble beginnings as a niche leisure activity, the industry has evolved into a million-dollar industry, captivating millions of players worldwide and attracting significant investment. In 2022, the worldwide gaming market generated nearly 347 billion U.S. dollars in revenue, with the mobile gaming sector contributing approximately 248 billion U.S. dollars to this total. In 2023, the online gaming industry in India was valued at approximately 220 billion Indian rupees, up from about 181 billion rupees in the previous year. The sector is projected to surpass 388 billion Indian rupees by 2026, reflecting a compound annual growth rate of around 20.7 percent.
This meteoric rise can be attributed to several key factors. Technological advancements have significantly enhanced gaming experiences, offering high-definition graphics, immersive virtual environments and interactive gameplay that appeal to broad audience.
This expansion has not only resulted in a thriving market but also created a multitude of career opportunities. eGaming has emerged as a stable and lucrative career path for professionals across various fields- from game development and design to streaming and esports management. The advent of this new vocation has been supported and accompanied by the development of a nascent professional infrastructure with features familiar from the world of physical sports and entertainment, including tournaments, leagues, fans, teams, team owners,
player contracts, sponsors, and the like.
In India, the industry has seen soaring popularity of various eGaming platforms. For instance, Nazara Technologies is a leading mobile games company headquartered in Mumbai, India. Founded in 1999 by Nitish Mittersain, the company has grown to become a major force in the Indian gaming market and beyond. Nazara specializes in developing, publishing, and distributing mobile games and has diversified its portfolio to include various gaming segments.
Nazara Technologies has made significant strides in the gaming industry through strategic partnerships, acquisitions, and market expansions. In 2015, Nazara obtained the license from Green Gold Animations to create mobile games based on the popular Chhota Bheem animated television series. In March 2021, Nazara Technologies was listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) following its initial public offering (IPO). Further in 2022, it bought out the US-based kids gaming company WildWorks for $10.4 million. In 2023, Nazara Technologies joined the All India Gaming Federation (AIGF) as a principal member.
The trajectory of Nazara is the success of stroy of many other platforms that have reaped the benefits of this industry’s growth and established themselves.
However, as the industry continues to thrive, it faces increasing scrutiny pertaining to its legal aspects. Issues such as Intellectual Property Rights, data protection, consumer protection and regulatory compliance are under constant speculation. Furthermore, the global nature of eGaming necessitates adherence to diverse legal frameworks across different jurisdictions, adding layers of complexity to legal compliance.
In light of this rapid expansion, it is crucial to understand the complex relationship between intellectual property rights (IPR) and the eGaming industry. This series of articles aims to thoroughly examine and analyze this intricate interplay. By delving into how intellectual property issues impact various facets of eGaming—such as game development, graphic protection, distribution, rights sharing, brand image, and streaming—these articles will highlight the challenges and opportunities that arise at this intersection.
Through a comprehensive exploration of legal frameworks, emerging trends, and case studies, this series will provide valuable insights and practical recommendations for stakeholders within the eGaming sector. Each article will focus on different aspects of IPR, including copyright, trademarks, patents, and the contractual relationships between developers and companies, offering an in-depth understanding of the legal landscape shaping the future of online gaming.
Copyright protection
In this first article of our series, we focus on the crucial role of copyright in the eGaming industry. Copyright law plays a fundamental role in protecting the creative elements of games, from storylines and characters to graphics and music. By examining the legal frameworks, emerging trends, and notable case studies, we will explore how copyright issues impact game development, distribution, and user-generated content.
Video Games as Multimedia Products– Although the Copyright Act, 1957 does not explicitly mention video games, they are protected as creative works under its provisions. Video games, being complex multimedia products, encompass various elements that fall under diffe rent categories of work as outlined in Section 14 of the Act. These elements include:
- Literary Work: This can include the game’s storyline, dialogue, and text-based content.
- Artistic Work: This covers visual elements such as graphics, character designs, and in-game artwork.
- Musical Work: The game’s soundtrack and any other musical compositions used within the game are protected.
- Cinematographic Work: Any cutscenes or video segments within the game are considered cinematographic works.
To illustrate the field of copyright protection in video games, the example of Mario is well-suited. Mario, one of the most famous video game characters of all time, is a plumber whose adventures center around saving a princess through multiple levels. Nintendo holds the copyright for Mario, and the rights to both the game and the character are valid until 2080. This means that Nintendo can restrict any unauthorized use of Mario in other games. Additionally, Nintendo has exclusive merchandising rights, meaning that any toy, accessory, garment, or other items featuring Mario can only be produced and sold with a proper license from Nintendo.
In the video game Mario, there is distinct background music for each level, including the iconic main theme created by composer Koji Kondo. These musical works, along with the specific sounds associated with various actions in the game—such as collecting coins and jumping—are all protected. The music of Mario is globally famous, with hundreds of instrumental covers available on platforms like YouTube. Any unlicensed use of this music requires the payment of royalties to Nintendo, which then distributes these royalties to the sound creators.
In India, a significant legal precedent regarding copyright in video games is found in the case of Sony Computer Entertainment Europe Ltd. v. Harmeet Singh. In this case, the Delhi High Court issued an interim injunction under Section 65A of the Copyright Act. The injunction was against the defendants for infringing copyright by circumventing technological protection measures on PlayStation consoles. This circumvention enabled the modification of consoles to play pirated games. Additionally, the defendants were found selling these pirated games without the necessary licenses, further violating copyright laws.
Licensing-
One important aspect of copyrighting in eGaming is about sharing of rights, between developers and platforms that finally bring the game to the market. Here comes the concept of licensing. Licensing is an agreement between two parties: the owner or creator (licensor) and the licensee. This agreement permits the licensee to use the owner’s creation, which can include characters for merchandising, music, and other gaming-related purposes, effectively utilizing the creator’s intellectual property. For creators, licensing allows them to retain control over their work while generating revenue. It offers a way to monetize their intellectual property without fully relinquishing ownership. For the licensee, licensing provides access to valuable intellectual property that they may not have the resources to develop independently. This access can help businesses expand their offerings and reach new customers by leveraging established and popular content.
This part of Copyright protection involves a complex set of rights that are to be shared and may be subjected to limitations such as territorial constraints, rights and liabilities of the parties to the contract etc.
Broadcasting and Fair Use-
When a streamer broadcasts a game on a live streaming platform, they are effectively sharing the game’s plot, music, and video in the public domain. This action could be seen as an infringement of copyright under Section 51 of the Copyright Act. Whether streaming constitutes infringement depends on the user/policy agreements between the game’s users and developers. Some developers encourage broadcasting their games, while others, like Nintendo, enforce strict copyright policies and require prior authorization for live streaming.
Streamers might rely on the doctrine of fair use, claiming their broadcasts involve commentary and criticism, potentially falling under the fair dealing exception in Section 52 of the Copyright Act. Continuous feedback during live streams could be seen as transformative work, amounting to a “review” under Section 52(1)(a)(ii). However, for this defense to apply, the streamer must provide continuous commentary and review of the game.
In the United States and the United Kingdom, the doctrine of fair use typically applies to non-commercial works. As Indian courts often reference these jurisdictions for guidance on issues not covered by local legislation, it’s likely that fair dealing under Section 52 would not apply to commercial game streaming, given streamers’ substantial earnings. This legal ambiguity highlights the need for clear regulations on potential copyright liability for live streaming video games. Such laws should define fair use parameters and establish guidelines for revenue sharing and other financial relationships between broadcasters and game producers. Without clarity, legal challenges will continue to arise, potentially hindering the growth of this exciting new form of entertainment.
Modding and Copyright-
The rise of the internet has introduced numerous changes to the gaming industry, including the phenomenon of game modification, commonly known as “modding.” Modding involves altering a game through computer programming using software tools that are not originally part of the game. These changes, referred to as modifications or “mods,” are made by users who add or alter game data. Many popular games like “Counter-Strike” and “Cry of Fear” started as mods for the earlier game “Half-Life.” Developers often support modding, providing tools and even rewards to modders, allowing games to be customized to user preferences. While game modding is not new in India, there are no specific rulings by Indian courts regarding the copyright aspects of mods. However, U.S. courts have consistently held that modders cannot claim copyright over their creations, even after investing significant effort. This means modders cannot legally profit from their work without infringing the game owner’s copyright. The original developers retain the right to block the publication of mods unless there is a licensing agreement, such as an End User License Agreement (EULA).
While the United States Supreme Court has yet to rule on this issue, lower courts have addressed the matter of mods and their copyright. In the case of Midway Manufacturing v. Artic International, the plaintiff sued the defendant for allegedly infringing the copyrights of the arcade games Pac-Man and Galaxian. The defendant was selling a mod that sped up the game without a license, creating high demand and denying the rightful owners additional revenue. The Seventh Circuit Court ruled that the defendant’s mods were derivative works of the plaintiff’s games, and their unlicensed sale constituted copyright infringement.
In conclusion, as the industry continues to grow and evolve, understanding the nuances of copyright law becomes essential for developers, publishers, and other stakeholders. This also highlights the the dearth of robust regulations and developments in the Indian Jurisprudence be it in terms of streaming rights, modding, fair use, among others. Hence, as one could infer by now, copyright is a cornerstone of intellectual property protection in the eGaming industry, safeguarding the creative assets that drive innovation and engagement, and its relevance, only seems to enhance in the future.
BY PAANKHURIE SHRIVASTAVA, RGNUL, INTERN DUCTUS LEGAL FIRM
DUCTUS EDGE 