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Changes in the Gaming Industry Call for New Strategies for Intellectual Property Protection and Enforcement
by Scott Popma on 04/19/13 05:30:00 pm   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.


Changes in the Gaming Industry Call for New Strategies for Intellectual Property Protection and Enforcement

By Scott Popma and James Barney

The gaming industry is changing rapidly. The emergence of open source gaming consoles, the increasing popularity of mobile gaming platforms, and tools such as crowdfunding and crowdsourcing, are all working to decrease market entry barriers. These same factors, however, threaten to cause price erosion, creating a need for non-traditional revenue streams. To compete in this environment, gaming companies must update their intellectual property (“IP”) strategies to protect their brands and technology and to protect and diversify revenue streams.

Strategies for Protecting IP

In today’s gaming industry, creativity is key. Small developers with good ideas can turn to crowdfunding sites to get the capital needed to develop their products. Games with compelling story lines, familiar or well-developed characters, and appealing graphics are more likely to get funded. But what happens if these proposed games look like someone else’s?

Respecting the IP of others may be an afterthought for small developers that are focused primarily on the technical elements of the game. These developers may “borrow” certain features from other games to use in a crowdfunding pitch or to make their games more interesting or familiar. Developers may (or may not) recognize that they could be infringing someone else’s IP (even if borrowed elements are used only as a place filler), but they may be willing to take that risk, believing that enforcement is unlikely and that the potential rewards outweigh the risk. The industry should take steps to change this attitude and to protect its IP.

As detailed below, there are two IP strategies that every gaming company should pursue: protection of copyrights and trademark through enhanced End User License Agreements (EULAs), and protection of technological innovation through patents.

Update and Expand EULAs

Many existing gaming industry EULAs don’t go as far as they could to protect against infringement. As users sometimes forget, games are not “sold;” they are licensed. These licenses often take the form of a click-through EULA that users must accept in order to gain access to the game. Once accepted, the EULAs set limitations on the use of the game. Although basic EULAs are a good first step, they can be enhanced to provide more protection.

Some in the gaming industry are already using EULAs to protect elements such as characters, artwork, and storylines, but this is a strategy all developers should employ. To maximize protection, EULAs should include express prohibitions on the export of protected IP for use in other games and the use of characters, artwork, or depictions of the artwork to raise money on crowdfunding sites. EULAs also should contain User Created Content Clauses, which assign the rights to IP created by players back to the developers. Note that EULAs can be an effective tool for developers of games big and small; as market entry barriers decrease, it is increasingly likely that even non-blockbuster games could be knocked-off for use on new platforms, or that appealing elements could be exported for use in fan fueled mash-ups. For this reason, even EULAs for older or underperforming titles should be updated.

Develop a Patent Strategy That Is Both Offensive and Defensive

Patents may be used to provide another layer of protection. Clever developers may be able to get around the copyright and trademark protection afforded by even strong EULAs to knock-off of a game or to export popular features to a competing product, but patents, which protect ideas, are harder to circumvent. Although patents have fallen out of favor in the gaming industry in the past decade, with the recent patent reform effort, patents have become a viable tool for protecting gaming innovations. Before patent reform, there were limitations on the usefulness of patents in the fast-paced gaming industry because the patent application process was lengthy, and by the time a patent issued, gaming technology often had become obsolete. The Patent and Trademark Office (PTO) now offers an expedited application process that promises to cut the time for patent review to about 12 months. These “Track One” applications should allow patents to track more accurately the life cycle of a game or gaming technology.

An effective patent strategy will enable innovators to use their patent portfolios to protect market share, increase pressure on their competitors, and generate revenue. But the key is not just to obtain patents, but to obtain the right patents. There is likely little utility in pursuing a patent for a unique but limited feature that may be of use in only one game. The real value is in patents that could be widely applicable to many games, such as in-game purchases, security features, social networking, or graphics generation.

Gaming companies also should monitor their competitors’ portfolios. Though patents have been asserted only rarely in the gaming industry in the past decade, it only takes a spark to ignite—as has been evidenced in the smart phone industry—an industry-wide war. Knowing the types and quantities of patents a competitor is pursuing can provide insight into the competitor’s strategy and can inform decisions on how to tailor a portfolio with both offensive and defensive elements. Additionally, companies that monitor their competitors’ activity at the PTO now are able to challenge applications through new administrative proceedings made possible by the recent patent reforms – generally a more cost-effective option than defending a charge of patent infringement down the road.

Developing and Protecting New Revenue Streams

Patents can be used to protect new revenue streams, which have become increasingly important as the average price of games has declined. This decrease is due, in part, to lower price expectations on mobile platforms, and prices likely will continue to drop as open-source hardware and software enter the mainstream. To increase revenue, the gaming industry has been developing new methods for charging existing customers (including subscriptions, in-game purchases, micro-transactions, and cross-platform access charges) and methods for attracting new customers (including partnerships with third-party developers for in-game applications, generating and selling data and services through crowdsourcing, and advertising). Technology related to these new methods will have industry-wide value and may be patentable. These patents themselves could provide licensing revenue.

Crowdsourcing is an increasingly popular method of revenue generation in the gaming industry, but gaming companies using crowdsourcing must consider ownership issues when relying on the power of the crowd to develop content, provide services, or solve complex problems through gamification. To minimize ownership disputes that may arise, companies should utilize EULAS that clearly assign all ownership rights in any IP or data created through the platform.

Strategies for Overcoming Challenges Related to Patent Enforcement

There are challenges inherent in patent enforcement in the gaming industry that will increase as companies implement the strategies recommended in this article. It can be difficult for a company to know when its IP is being used when each game it develops has potentially hundreds of protectable elements. And it is not clear that a company should take steps to stop its IP from being used in all cases. There are steps a company, or its outside counsel, can take to overcome, or at least minimize, those obstacles. Here are some practical tips:

· Early identification and action is critical. It is easier to convince unauthorized users to cease activity before they have invested substantial time and effort into a project, and certainly before they begin generating a revenue stream from a product or service that includes someone else’s IP.

· There are services that can help. Gaming companies should explore the possibility of investing in IP monitoring services. Law firms often work with third-party services that specialize in scouring the net for unauthorized use of trademarked or copyrighted material, and can issue cease and desist letters and initiate litigation when necessary.

· Be mindful not to alienate the customer base unnecessarily. The challenge for the gaming industry is finding a way to protect its IP without alienating its customer base. Customers are now more than a source of revenue; they are sources of content. The key is selective enforcement; companies should allow users to generate content and expand and use content and should crack down only if revenue streams are compromised.

· Consider intervention at the distribution or cash collection point. Games generally are dependent on an application store for revenue collection, even games that are “free.” Notify the application stores of the alleged infringing activity and ask that the distribution and cash collection be suspended. These stores deal in volume, and they may make a rational business decision to avoid being dragged into a lawsuit.

· When crowdfunding is involved, detecting violations before a project is fully funded is critical. Most crowdfunding portals hold money in escrow until a short time after the target fundraising goal has been achieved. If violations are detected before this time, companies can request that portals delay release of the escrow account. The aim is to detect and stop violations before a game is completed. Once a game is distributed, any borrowed material could live on forever on file sharing sites.



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Lihim Sidhe
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The real key is simplicity. Let's say I release an intellectual property in the form of a game. I would be fine with something like this, "If you want to use, modify, and distribute my IP in a non-commercial manner go for it. If you want to use it in a commercial manner, I get 5% of your net earnings. In either case I must attributed as the original IP creator."

I understand the above wouldn't be for everyone. But after reading through your article all I could see are stacks and stacks of paperwork, red tape, lawyer fees, etc. It can't be like that. If someone takes my IP, makes a $1,000,000 off of it, I am recognized as the original creator yet I only get $5,000... that's FINE by me. Hell since they are making so much money from my idea they shouldn't be seen as a knock off artist... they should be seen as someone I should work with.

Eric Spain
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The problem with protecting IP is that the people who are doing it the most aren't the small studio with the small project that's just trying to get a kickstarter funded so they can make some real art.

It's the large studios, like EA and Zynga. Zynga steals game ideas, reskins them, and then sells them. That's their whole strategy. Join them, or they clone you and beat you. Because game mechanics aren't protected they get away with it. With EA though, they just copy everything around them. They make it flashier and prettier, but everything they do is just a copy of someone elses work.

These large companies back their practices up with their teams of lawyers. There's nothing the original developers and artists can do about it.

Also, as for EULAs: IP stealing is already protected by law. EULAs can't take away the rights given by the law to consumers and they can't create any rights for the company that aren't already provided by the law. This makes EULAs worth about as much as the paper they are written on.

Eric Spain
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On top of this, Patents are only used to squash creativity and competition. All of your points above only serve the giant publishers. They don't need more protection, they don't need more money, they are doing just fine.

How about some protections for the independent developers?

Josh Neff
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This reads, to me, as a how-to guide for squashing indie developers for the sizable publishers out there.
"EULAs also should contain User Created Content Clauses, which assign the rights to IP created by players back to the developers."... Your going to find that notion incredibly difficult if not impossible to be able to legally enforce... moreover, its unethical as hell. No, the problem, as usual, is not minority groups who may or may not be using IP that they have no right to... the problem is that publishers are consistently placing themselves in a bad light with their audience. Be receptive, responsive, and respectful to your audience, and they will treat you like gold.

Josh Neff
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Also, the lack of a disclaimer regarding your affiliation with a lawfirm coupled with the equivalent of crying "be afraid of IP thieves!!!" is obfuscatorily dishonest and subjects your whole piece to questions such as: is this merely an article to drum up business? How much truth is there to the article, considering the conflict of interest? Why the lack of transparency? What are you trying to hide?

John Maurer
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Yea, let's do more to strangle creativity, cause the market isn't bland enough yet, douche

Bruno Xavier
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Yet another of those lawer's bullshit.
Sometimes I question myself if Gamasutra does accept money to promote shit disguised of article. At least for many and many times is what just look like.

Zack Wood
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Personally I think fan-fueled mash-ups are gonna become more and more important in the future, and should be nurtured and valued in all creative industries. The net gain is generally much more than any lost coin.