Part 3- Patent Protection and Contractual Relationships
In the last part of this trail, we delve into the third IP right, patents and conclude the series with one of the most important contractual agreements that take place in eGaming industry,
contracts between developers and publishers, and their essential elements.
The “Odyssey System,” invented by Ralph Baer, holds the distinction of being the first patented video game system in history, granted in 1968. Baer designed an apparatus that, when connected to a home television set, enabled users to manipulate rudimentary dots and lines on the screen, creating a tennis-like game. This groundbreaking invention laid the foundation for the modern video game industry, demonstrating the potential of interactive entertainment and setting the stage for future technological advancements in gaming.
In India, video games can be protected under patent law, but the scope of protection is limited compared to other jurisdictions due to specific exclusions in the Indian Patent Act.
Hardware Innovations: Any novel and inventive hardware used in gaming, such as specialized controllers, virtual reality equipment, or other gaming accessories, can be patented.
The Nintendo D-pad is a gaming console component that gained significant popularity in the 1980s. Its efficient and intuitive design made it one of Nintendo’s best-manufactured products at the time. Due to its immense popularity and innovative functionality, Nintendo patented the “multi-directional switch” incorporated into the D-pad, ensuring exclusive rights to this critical aspect of the console’s design and operation. This patent helped Nintendo maintain a competitive edge in the gaming market by protecting its unique design and preventing competitors from copying the multi-directional control mechanism.
Software Innovations: For a software program to be granted a patent in India, it must not merely be an algorithm but part of a technical invention. According to Section 3(k) of the Patent Act, 2002, mathematical methods, business methods, computer programs per se, and algorithms are not considered patentable inventions. Specifically, the law states that only computer programs per se are excluded from patentability. Thus, software can only be patented if it is integrated into a larger invention where the software acts as a component of that invention. To circumvent the restrictions of Section 3(k) of the Patent Act, 2002, the hardware must be an integral part of the invention alongside the computer program and software. This integration ensures that the software is part of a technical solution, making it eligible for patent protection.
For example, innovative algorithms or methods that enhance gaming experiences or improve the functioning of gaming systems could be patentable if they provide a technical solution to a technical problem.
The Nemesis system, introduced in “Middle-earth: Shadow of Mordor” and refined in “Shadow of War,” revolutionized procedurally generated enemies in video games. Instead of battling nameless, identical foes, players face unique members of Orc society, each distinct to their playthrough. After several years of attempts, Warner Bros Interactive Entertainment successfully patented the Nemesis system. This patent means that a similar system is unlikely to appear in games produced outside of WB Games, ensuring the Nemesis system remains a distinctive feature of their titles.
Developer- Publisher Relationship
While discussing the various aspects of Intellectual property rights in the realm of eGmaing, it is also pertinent to analyze the equation between the two most important drivers of the eGaming industry, the game developer and publisher. The relationship is almost analogous to that of an author of a book and the publisher. The relationship is key in understanding the intellectual property of eGaming as mostly the right sharing of ownership begins here.
A game publisher agreement is a vital contract between a game developer and a publisher. It delineates the terms under which the publisher will handle the distribution, promotion, and marketing of the game. A well-drafted agreement ensures that both parties have a clear understanding of their rights and obligations, and helps to mitigate potential disputes. Here’s a closer look at the essential components of a game publisher agreement:
● Revenue Share- This section outlines how revenue from the game’s sales will be divided between the developer and the publisher. It specifies the percentage of revenue each party will receive and any conditions that might affect this distribution.Defining the revenue share clearly ensures that both parties understand their financial stakes and helps prevent disagreements over earnings. It aligns expectations and incentivizes both parties to maximize the game’s commercial success.
This observation is made in a scenario where say, a freelancer developer is entering into an agreement with a company. Another situation more prevalent in the industry is when a developer makes the game software under regular employment of a company and the the game is sold altogether to another platform. The revenue in such a case will involve, the amount paid to buy the game and any royalty that may be paid in the future.
● Rights- This part of the agreement addresses the ownership and management of intellectual property (IP) rights related to the game. It specifies who holds the copyrights, trademarks, and patents for the game’s content, and whether the developer retains any rights to use or promote the game post-agreement. Clear delineation of IP rights prevents legal conflicts and ensures that both the developer and publisher understand their respective claims to the game’s intellectual assets. It also defines what happens to these rights if the agreement is terminated.
● Exclusivity- The agreement should state whether the publisher has exclusive rights to distribute, promote, and market the game. It should also outline any conditions under which the developer might be allowed to approach other publishers or distribute the game independently. Exclusivity clauses can significantly impact the game’s market reach and competitive positioning. A well-defined exclusivity term ensures that both parties are clear about the limitations and opportunities for the game’s distribution.
● Marketing- This section details the marketing strategy and budget that the publisher will commit to. It includes the target market, marketing activities, and expected outcomes. The agreement should also involve the developer in the marketing process to ensure that the game’s unique aspects are effectively communicated. A comprehensive marketing plan is crucial for the game’s visibility and success. By specifying the marketing strategy, the agreement aligns both parties on how the game will be promoted and ensures that the developer’s creative vision is supported in marketing efforts.
● Support- The agreement should outline the types of support the publisher will provide to the developer. This includes technical assistance, customer service, and any other resources necessary for ongoing game development and maintenance. Support clauses ensure that the developer receives the necessary resources to address any issues that arise during and after the game’s launch. It helps maintain the game’s quality and addresses potential challenges promptly.
● Termination- This section specifies the conditions under which either party can terminate the agreement. It includes details on the notice period required, any compensation due upon termination, and the process for unwinding the partnership.Clear termination provisions protect both parties by outlining how the agreement can be ended and what the consequences will be. It provides a structured approach to resolving the partnership if it no longer meets the parties’ needs or expectations.
Conclusion
As the rise in the eGaming industry becomes increasingly evident, so too is the inevitability of its continued growth. The industry’s expansion underscores the critical importance of addressing its interplay with Intellectual Property Rights (IPR). This analysis highlights the existing inefficiencies within the legal framework governing eGaming, revealing a gap in the development of a stringent and coherent legal landscape within Indian jurisprudence.
The global data reflects that while India’s eGaming sector is burgeoning, with impressive growth rates and significant investment inflows, the current regulatory environment remains fragmented and underdeveloped. The lack of comprehensive and clear legal guidelines poses challenges for stakeholders, from game developers to players, and threatens to hinder the sector’s potential.
The interplay between eGaming and IPR is pivotal, as it affects various facets of the industry, including game development, copyright protection, licensing, and trademark enforcement. As the sector continues to evolve, it is imperative for Indian policymakers to address these legal deficiencies and implement robust measures to protect intellectual property effectively. Doing so will not only safeguard the rights of creators and investors but also foster a more stable and innovative environment for the industry’s growth. The Online Gaming (Regulation) Bill, 2022, was introduced in Lok Sabha on April 1st, 2022, to establish rules and regulations guiding the gaming industry to prevent fraud and misuse. The Bill proposes the establishment of a regulatory body to oversee the online gaming business, and is a beacon of hope in regulating the industry.
In conclusion, while the future of eGaming in India holds tremendous promise, its success will depend on the establishment of a well-defined and efficient legal framework. By bridging the gaps in IPR regulation and ensuring a fair and transparent legal landscape, India can strengthen its position in the global eGaming arena and unlock new opportunities for sustainable growth and innovation.
BY PAANKHURIE SHRIVASTAVA, RGNUL, INTERN DUCTUS LEGAL FIRM
DUCTUS EDGE 