The Importance of the Intellectual Property in the Gaming Industry

The gaming industry has grown exponentially over the last few years, having largely overcome the revenue generated by the cinema industry of Hollywood. The transition from a niche entertainment to a very lucrative business further dictates an increase of the risk and the proportional cautions that must be taken. In this sense, considering every factor that encompasses the gaming industry, the importance of all Intellectual Property rights should not be overstated and must be perceived as a priority when a new project is initiated.

The Intellectual Property (IP)

The intellectual property is a legal matter, in which the categories of intellectual assets are legislated and standardized that may belong to an entity. These assets are not subject to the general property rights as said assets are not tangible in any shape or form. Nonetheless, these assets must be protected within the legal system considering their worth and importance.

Furthermore, with the exception of copyrights, these rights are subjected to registration, with the competent offices, and shall not exist without this registration. In Portugal, the legal body with competence and jurisdiction of all intellectual property, with the exception of copyrights, are the Portuguese Institute of Industrial Property (INPI), regarding Portuguese rights, and the European Union Intellectual Property Office, in all matters of European IP rights.

Every intellectual property rights have the main goal of promoting the development of the free market, through the granting of exclusive rights to all entities who strive for innovation, safeguarding these entities positions over their competitors. The latter, while competing in the same market, are prohibited from exploring goods and services with similar technical characteristics, similar look and feel and / or identified by a similar commercially sign, depending on the applicable rights to a given case.

In most state legislations and with all due exceptions, the first entity to file the registration of any intellectual rights, with mandatory registration, benefits from a legal presumption of ownership of said rights. Additionally, any intellectual property right is only effective within the territories upon which it is registered. As such, it is always necessary to determine in which countries the intellectual right should be registered. The very first step when our goal is to create and commercially explore a new product is to promote the registration of all the applicable intellectual rights. Finally, all intellectual property rights have a limited duration, detailed below.

Accordingly, each country’s legislations determine and conceptualize the available intellectual property rights applicable to any given good or service within its market. Regarding the gaming industry, the most relevant rights are patents, trademarks, industrial designs and, finally, copyrights.

Patents: This type of intellectual right protects inventions their technical characteristics, guaranteeing that the inventor benefits from an exclusive right of commercially exploring a product or process up to 20 years, in the Portuguese legislation. This means that no other entity is able to introduce into the market any product or process with technical characteristics similar to the product or process covered by the patent right. Videogames, as software, are subjects normally excluded from patentability. However, it is still possible to protect an invention and its technical matter related to videogames through a patent if said matter constitutes a technical solution to a technical problem.

Regarding this type of intellectual property, we may find the European patent no. EP0844580, owned by KONAMI CO., LTD., which covers the mini-map system, located on the bottom of the unit interface present within their football simulator game. Another example of a granted European patent within the matter of videogames is the European patent no. EP1078664, owned by NINTENDO CO., LTD. The owner of this patent protected a computer program that analyses the time of the device and, through a variable probability, spawns a creature at a given time, allowing for different creatures to be spawned throughout the day in the same area within the game. A final example regarding a videogame related patent would be a patent which protects the engine of a videogame.

Trademarks:  The object of a trademark is totally different to that of a patent. While the latter cover the technical matter of a given product, a trademark is the legal protection of a distinctive sign used in the commerce to identify goods and / or services. As such, the owner of a trademark is the beneficiary of an exclusive right of using a sign to identify goods and / or services. This sign may be comprised exclusively by a word element, a figurative element or both. Furthermore, the owner of a duly registered trademark may promote the same with its consumers, with the knowledge that no other entity may copy or usurp said trademark. Finally, a trademark is valid for 10 years after its registration, this duration may be renewed every 10 years.

Another function of this category of intellectual property rights also has the function of enabling the consumers to identify the corporate origin of the goods or services identified by the trademark. This function will also allow a consumer to determine the quality of the goods or services, depending on the prestige or notoriety of the trademark.

Within the gaming industry, a product is normally connected to multiple trademarks. Not only will it be identified by the producers’ and distributors’ trademarks but it may also be identified by the game’s trademark itself. It is also possible to safeguard the videogame’s characters through independent trademark registration. As such, the companies in this industry should, and commonly do, proceed with the registration of all trademarks related to their games, not only allowing their consumers to determine the corporate origin of the goods but also prohibiting their competitors to launch similar games, identified by a similar name, image and / or characters.

In short, the goal of filing trademarks may be considered as a trifecta. I. Trademarks allow the consumers to correctly determine the corporate origin of a given videogame; II. A trademark also aids the consumers to determine the product’s quality based on the affixed trademark; and III. A trademark fosters a relationship, based on loyalty, between consumer and videogame developer. As such, with the relationship between consumer and producer in mind, the trademark system constitutes the most important intellectual right within this industry.

Industrial designs: Another type of intellectual property that may be applied within the video game industry is the industrial design, usually simply referred to as designs. The Industrial designs protect the appearance of a particular product. These rights do not protect any technical functionality, but only external features such as lines, contours, colours, shape, texture and / or materials of the product and its ornamentation. The holder of a design has an exclusive right to commercially use a product with a specific appearance, regardless of product type. The industrial designs have a total term of 25 years, subjected to the payment of renewal fees every five years, both in Portugal and in the European Union.

Thus, regarding the application of the industrial designs within the gaming industry, the owner of the rights from a given game may protect not only the game’s characters’ visuals and other in game models, such as buildings or maps, but also the videogame cover or even its graphic interface. Such registrations make it impossible for any other entity to profit without consent from any product with the appearance of the subject covered by the design registration.

Copyrights: Finally, the last category of intellectual property rights, which are of particular relevance in the this industry, is that of copyright.

These are the main exception to the registration requirement, since they exist without the need to file a registration application. Notwithstanding, the registration is highly recommended as it serves as proof of authorship and that the work existed at a given date, in case of a copyright dispute.

One of the main characteristics of the copyright system is the fact of these rights may exist without being registered. Said rights’ existence depend solely on the fact of the creation of the work and its’ merit. Nonetheless, registration is highly advisable as it allows the copyright owner to prove that a work not only existed at a given date but also belongs to said author.

Regarding the author of a videogame work, most games are ordered by a company and created either by its employees or by outsourced workers. In this sense, the ownership of the copyright may be dependent on the applicable contracts and the national legislation regarding applied to each individual case. In most cases, these rights belong to the company that ordered the work, but the actual intellectual authors may benefit from some rights, depending on jurisdictions. Said rights may go from simply be mentioned within the final work to allowing of these authors to remove the work from the public, compensating the copyright owner.

Copyright also allows the work’s author to prevent any third party from commercially exploring a product that constitutes a copy of said work.

A videogame is a work that integrates a set of autonomous works, whether these works have been specifically designed to integrate the game or have an independent origin and the integration in the final work occurred after its creation.

With this said, in a videogame we can usually find the following works:

• Written works: the scripts of the story and of conversations between the characters and in the source code of the game;
• Video graphic works: the game graphics and in the so-called cut scenes;
• Works of musical compositions: all the sound design within the game, both in the form soundtracks and sound effects;
• Graphic works / drawing: the sketches, conceptual art and other graphics designed for a game;
• Performance of the actors: the performance of the actors, such as voice actors or animation actors, is also protected although this right is designed as a related right, in Portuguese copyright law.

Thus, it can be deduced that both the video game as a whole and all the works that integrate it are protected by copyright or related rights.

The gaming industry

As stated in the introduction of this article, in 2017 the video game industry generated worldwide revenue of $ 117 billion, with the number of active players already exceeding $ 2 billion. The trend of these figures is to increase, with a forecast of global revenue reaching $ 138 billion in 2018, according to a preview for the current.

Further to this point, the game "Grand Theft Auto V" ("GTA V") which was originally released in 2013, achieved the astronomical revenue of $ 1 million in just 3 days. This game surpassed the 90 million units sold worldwide, in 2017.

Finally, in recent years, the gaming industry, as is the case with all technology-based industries, has seen its sales revenue sources shift from physical to digital, creating alternative methods of providing content to its consumers. One such example would be the emergence of subscription services paid periodically and the micro-transaction system, particularly dominant within the mobile gaming genre.

Based in the mentioned numbers one may easily grasp the size of this industry. With this in mind, the importance of acquiring exclusive rights, through registrations of the applicable intellectual property rights, cannot be overstated. In a market as competitive as this, the concession of exclusive rights is essential in that it may determine the success or failure of any product. These exclusive rights assure its holders that no other entity shall be able to commercially exploit any protected elements of their games or the prestige within the consumers’ minds, without their authorization.

Regarding the exclusivity of rights, the choice between competing videogame platform may also take into account the games available for each different platform, with exclusive games being a very important factor. These exclusive games create a dependence relation in the consumers, which existence rests on the duly registered intellectual property rights.

Furthermore, the intellectual property rights are an essential characteristic of contractual relationships between companies stemming from different industries, such as the sports or cinematography industries. A videogames publisher who wants to adapt or recreate original and protected elements from another genre of entertainment must first contact the owners of the respective intellectual property and acquire the required licenses to use the original material, and vice-versa.

The existence of IP rights therefore allows its owner to harness the full economic potential of their products, through the dissemination of their products over multiple industries for mutual benefit and economic growth of all involved companies. These relationships permit a better distribution of the revenue, gained from a videogame, through several industries. One of the most famous and profitable example of these relationships is the videogame “FIFA”, with annual releases. For this videogame to have the characteristics that are known, and upon which rest its prestige among its consumers, the publisher “Electronic Arts Inc.” must acquire the required licenses of the intellectual rights from entities such as FIFA, UEFA, national leagues and real clubs that exist within the game. In the same way, it is also possible that a game is adapted onto another genre of entertainment, where an entity from another industry intends to commercially explore an intellectual rights resulting from a videogame. One of the most recent examples is the new film of “Tomb Raider”, which premiered early this year.

In conclusion, the act of registering all intellectual rights should be regarded as the utmost priority at the start of a new project as these rights provide a fundamental edge against all competition. In this sense, given the demanding and competing facet of the gaming industry, getting there first is the surest way to victory.

Game Over. Insert Coin?