Games

CDAS Partners Briana C. Hill and Benjamin Jaffe Named Co-Chairs of the Entertainment and the Digital Media & Technology groups, respectively.

Briana Hill, Co-Head of the Beverly Hills office of Cowan DeBaets Abrahams & Sheppard LLP, joins Fred Bimbler and Simon Pulman in leading the firm’s Entertainment group, which includes televison (traditional to broadband), streaming, film, new media, talent, theatre and podcasting. The group assists clients with their entertainment projects through early development, the solicitation of investment, production and ultimate distribution, securing all necessary rights and negotiating agreements with top-tier talent.

Ben Jaffe joins Joshua Sessler in leading the Digital Media & Technology group that represents top digital talent, including game developers and distributors, digital agencies, production houses, broadband video networks, mobile app developers, podcasters and social media ventures. The group provides counsel to a wide range of social media, transmedia and mobile plays that are using emerging software and hardware technologies to create, develop and distribute content in new ways.

Fair Use in Gaming Content – FAQS For Creators

By Simon Pulman and Mikaela Gross

Fair use is one of the most important – and most misunderstood – concepts in the area of copyright law. It is an important concept for anyone who is using content owned by third parties – which includes anyone who livestreams gaming, creates “let’s play” videos or otherwise uses gaming assets and branding. Unfortunately, there is a lot of misinformation on the internet and thus creators are often unclear about their rights and responsibilities.

With that said, here are answers to some frequently asked questions for creators:

What is Fair Use?

Fair use is an exception to the general principle that unauthorized use of a copyrighted work is copyright infringement. Simply put, if a claim of copyright infringement is brought against a defendant, the “defendant” can try to demonstrate they made a fair use of the allegedly infringed work in order to prevail in the case.

Because fair use is a defense, only a court can say whether a particular use of copyrighted material is a “fair use.” However, experienced attorneys can provide an opinion, based on their evaluation of the use using the four-factor test (see below) and their knowledge of case law.

What are the Four Factors?

Courts look at four factors when making a fair use determination

  • the purpose and character of your use
  • the nature of the copyrighted work
  • the amount and substantiality of the portion taken, and
  • the effect of the use upon the potential market.

The application of these four factors is nuanced and often complicated, but in short, the use of a copyrighted work is not likely to be fair use if it is used for the same or a similar purpose for which it was originally intended or in advertising/marketing materials, uses a lot of the original work including its most important parts (what the courts have called “the heart of the work”), and/or is used in a manner that competes with the market for the original work. It is more likely to be fair use if the new use is “transformative” in that it comments on, critiques, or otherwise adds new meaning to the original work in some way, if only a small portion of the original work is used (i.e., only enough for the user to make their point), and if the original work is not being used to advertise or otherwise promote the new work or use. So, if a video talks about, for example, loot box mechanics or the historical treatment of race in gaming by using game clips as examples, commenting on and analyzing those clips, it is probably more likely from a legal perspective to be fair use than straight game footage.

Note, however, that there is no bright line amount of use that constitutes fair use. For example, you can never assume that “if you use less than 5%, that’s fair use” – courts have found using only a line or two of text or music to be infringing. If you are in doubt, you should speak to a lawyer.

Is Crediting Important?

It’s nice, and may be considered best practices or industry custom, but it’s generally not relevant for a legal determination of fair use.

Can’t I Use a Disclaimer?

In short, no. Those disclaimers that you see on YouTube stating “This is a fair use. No copyright infringement intended” are generally not legally relevant. There is a small chance that they could be helpful to you in determining the damages that you owe in the event that you are found to be infringing, however, because they may bear on whether your intent was “innocent” or “willful.”

What if I get a DMCA takedown notice? And if a website removes my video, do I have any recourse?

The DMCA notice and takedown process provides copyright owners with a way to request removal of their copyrighted work from a website or other internet service if they believe the use infringes their copyright. To benefit from the “safe harbor” from copyright infringement the DMCA provides ISPs, the website or platform must designate a registered agent to receive and process DMCA takedown notices.  DMCA notices must include certain specific information to comply with the law, and the registered agent of the ISP has the job of reviewing and determining whether to comply with the takedown request.

An ISP, such as a platform that hosts gaming content, does not have to comply with a DMCA notice if the notice does not fully comply with the legal requirements for a takedown notice. However, if an ISP does remove content following receipt of a DMCA notice, it must also promptly notify the party that posted the video. That party then can file a counternotice if it believes the content was wrongfully taken down, for instance if the use of the copyrighted work is likely to be a fair use.

Whether you’re a platform looking to benefit from the protections of the DMCA safe harbor, or a content creator looking to correct an improper takedown of your video content, you should consult with an attorney to make sure you’re in compliance with the DMCA’s requirements, and are not taking any actions that could potentially subject you to liability down the line.

Will I Be Sued For My Videogame Videos?

This is where we have good news. Because video game publishers largely view streaming and game-related media to be helpful to their business (under the theory that exposing more people to the game will increase sales), publishers rarely bring copyright infringement lawsuits against gamers. The exceptions where publishers do bring legal action tend to arise in instances where users create new installments of games (what lawyers and courts would call “derivative works”) without authorization, insert other infringing material into games via mods, create and sell software “cheats,” or do something that is offensive in addition to being infringing (e.g., adding explicit or hateful material). In recent years, major players such as Take-Two Interactive and Epic Games have actively policed these types of infringements of their copyrighted games.

This means that it isn’t always necessary to apply the fair use analysis outlined above. However, those creators who are seeking to make heavy commercial use of game assets (other than solely streaming/YouTube video revenue) should consult with an attorney before embarking on their plans to ensure compliance with copyright law.

One of the greatest challenges in defending claims of copyright infringement in the gaming space seems to be the wildcard of the judge’s expertise and understanding of the emerging fields of gaming and streaming. A key defense strategy will inevitably involve a careful framing of the discussion, including describing how the game works, what the purpose of the video is, explaining the meaning of common terms, and the context and communities in which these activities exist online.

Moreover, everyone should keep an eye on the risk factors listed below.

What Red Flags should I be aware of?

While the use of gaming footage in the form of livestreaming and “let’s play” type videos rarely results in a claim, there are a number of uses that creators should be particularly cautious about:

  • Licensed music: Any game video that features licensed popular music is more likely to cause an issue with the game creators and/or the owners of the rights in the music being used. Creators are generally fine with exhibiting those videos on YouTube (which has a blanket license with multiple labels), but uses of music in other contexts or on other sites could trigger a DMCA takedown or a copyright infringement claim.
  • Choreography: Any videos that use choreography or dance moves tend to pose a higher risk. There has been a spate of recent choreography-related claims alleging that games have made unauthorized use of protected dance moves, in particular against Epic Games for the use of short animations in its game Fortnite. Choreography is probably an overlooked area (versus other areas of copyright risk) and thus it is not a fait accompli that the game publisher will have secured the rights, so a video creator could be pulled into a potential lawsuit. Obviously dance-focused games are highest risk, but other games that include “celebration dances” are also a risk. While many recent choreography-related claims have failed because copyright law does not protect simple routines or common social dances, they are nonetheless costly to defend and could become increasingly risky as the law develops in this area.
  • Street Art and Tags:  Videos that include any kind of pre-existing graffiti or tags, or even original designs that closely resemble a pre-existing artwork, are similarly susceptible to a copyright infringement claim. Street artists have become notorious copyright infringement plaintiffs in recent years, and like choreography, game creators may not have cleared the rights to these works. The unauthorized use of graffiti may also raise trademark and right of publicity claims, depending on the context in which the tag is used.  
  • Athletes and other Identifiable Real People: Any gaming footage that includes the recognizable likenesses of real people (e.g., sports games) is susceptible to a claim. This is not actually a copyright issue, but rather falls under what lawyers call “right of publicity” (i.e., a person’s exclusive right to make commercial use of their name [or alias], likeness and other identifiable features). User-generated content that inserts a real person into a game via a mod could also trigger a claim of this type, particularly from celebrities who regularly monetize their names and likenesses.

The Entertainment Industry in 2020: Four Legal and Business Issues For Consideration

By Simon Pulman and Briana Hill

1. AB5 Brings Uncertainty: The new California Assembly Bill 5 (AB5) became effective on January 1, 2020. Originally created to codify the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), and to address the increase of misclassification of workers as independent contractors, the drafting of AB5 is so broad that it greatly expands the definition of “employee” in a way that potentially reclassifies most independent contractors as employees. This has huge potential repercussions for many companies doing business in California, including those in the entertainment industry (which has traditionally been extremely reliant on independent contractors), as companies may now need to provide full employment benefits to individuals previously characterized as independent contractors.

While there are certain statutory exemptions, the exemptions do not cover traditional entertainment job categories.  There is currently very little guidance as to how the law will be interpreted and enforced, and how it will interact with guild rules. It is incumbent on all studios, producers, networks, and other entertainment companies to watch developments closely, and to consult with knowledgeable counsel when in doubt.

2. Continued Evolution in Streaming: The rise of streaming platforms has dominated the film and episodic programming business over the past few years. 2020 is poised to bring the most significant year of change yet, as new platforms such as HBO Max, Quibi and Peacock will join the recently launched Apple TV+ and Disney+, and incumbents such as Netflix, Hulu, and Amazon. Each of these platforms is targeting a slightly different position in the marketplace, and the economics for content producers vary on a platform-by-platform basis based on the rights and territories that each discrete platform is presently seeking to acquire.

From a deal-making perspective, it is possible that the increased competition will put pressure on platforms to offer greater transparency into the performance of their content and potentially more meaningful participation for creators in the upside of successful series and movies. Additionally, it will be interesting to see if Netflix blinks with respect to its (to date) steadfast insistence on dropping all series on an all-at-once “binge” model, given the plaudits and positive buzz that Disney+ has received for releasing episodes of The Mandolorian on a weekly basis. Finally, Quibi is a truly interesting new entrant that is planning some fascinating creative experiments with short form and interactive content, in addition to providing producers with a business model that is arguably more favorable than some of its competitors.

3. Exclusivity Reigns in Podcasting: 2019 was a year of huge growth and continued maturation for the podcast industry. Mainstream coverage of the industry expanded significantly, many major celebrity names launched podcasts for the first time, and a number of big media conglomerates entered the space or materially increased investments in their podcast divisions. The maturing of the podcast industry has had notable effects on the business side of this burgeoning medium. Participants at all levels in the value chain have started to stake a claim to ownership of, or participation in, podcast rights and revenues. Moreover, the deal-making has become much more sophisticated. Prior to 2019, the dominant podcast distribution model was very simple – make your podcast available on as many ad-supported platforms as possible, and split revenues between stakeholders (usually the creator and the production company or network) (often in a straight 50/50 configuration). This began to change during 2019 as certain companies grew and engaged more experienced representation, and entrants such as Spotify and Luminary started to lock down exclusive rights to content.

Expect the podcast content arms race to heat up in 2020, as high-profile shows and creators commit exclusively to platforms in exchange for sizeable minimum guarantees. However, platforms that offer podcasts in combination with music (such as Spotify, Apple, iHeart, and Pandora) would appear to be best positioned in the market versus pureplay podcast subscription outlets because of their existing subscriber bases and the value proposition of bundling music with podcast (and, indeed, expect 2020 to be the year of the “music podcast”).

4. Gaming Grows: As Netflix Chairman and CEO Reed Hastings famously opined, Netflix is primarily competing with Fortnite rather than with other SVOD platforms. Expect 2020 to be a huge year for gaming, with the release of several big titles (such as Cyberpunk 2077 and The Last of Us 2) being followed by the impending launch of much-anticipated new consoles Playstation 5 and Xbox Series X in the fall.

The continued growth of gaming will fuel a corresponding growth in esports and “game-adjacent content culture” – the creation, consumption and interactive fan participation in content around the culture of videogames, via platforms such as Twitch, Mixer, YouTube and Instagram. All of the next-generation gaming platforms will include built in recording and streaming capabilities allowing gamers to easily create media and engage with other users. While this arguably implicates copyright issues for rightsholders, many of the game companies have taken a permissive stance regarding streaming (and other activities, such as creating derivative works), believing it to be helpful to their business – although distributors must also be cognizant of other issues such as right of publicity.

Additionally, as discussed in a previous blog, expect a flurry of announcements during 2020 and beyond with respect to entertainment extensions of videogame properties – most notably film and TV adaptations, but also podcasts and graphic novels. A significant portion of these will probably involve the original game developers and/or publishers in a meaningful way, as rightsholders understand the importance of maintaining a strong and consistent brand across platforms.

Other sectors of the entertainment business should ignore gaming at their peril. For more, we recommend reading “7 Reasons Why Video Gaming Will Take Over” by Matthew Ball.

Acquiring Videogame Properties for Film and TV: Considerations for Buyers

By Simon Pulman

The videogame industry is now the most profitable individual sector of entertainment, having experienced exponential growth over the past forty years. Great games can quickly generate a large and unusually engaged fanbase, and as a result it could be argued that games will be the single biggest source of major entertainment brands for the foreseeable future. A cursory glance at Twitch reveals tens or hundreds of thousands of viewers concurrently watching streamers playing games like Fortnite, The Witcher, Sekiro, Overwatch and Grand Theft Auto. Even indie titles like Hollow Knight, Stardew Valley and Untitled Goose Game can attract thousands of attentive viewers. The potential to grow videogame properties into multi-platform entertainment franchises is greater than ever.

Historically, television and film adaptations of videogames have been critical and commercial misfires. However, the general growth of gaming, the increased sophistication of storytelling in videogames, and the general demand for IP-based content (driven in part by the emergence of multiple new streaming platforms) has created a perfect storm. Accordingly, we are currently seeing more videogame adaptation deals than ever before, some of which are very complicated and extremely high level.

While the fundamental structure of acquisition or licensing deals for videogame properties is similar to that used when acquiring older forms of media such as books and articles, there are some specific considerations when dealing with videogame properties, some of which are listed below. It is strongly recommended that parties on both sides of the negotiation engage an attorney and/or agent who is familiar with both the film or TV (as applicable) and videogame businesses to negotiate the deal. It will be very difficult to close a deal without an understanding of the gaming world and what motivates its rightsholders.

  1. What is the “Property”? : Up until recently, it was relatively easy to define what a “game” was. Games came on disc, cassette, cartridge or CD sold as physical products through brick and mortar retailers for a one-time payment. Successful games yielded sequels and spinoffs (and sometimes “add ons”), but games were generally released in a fixed form. With the emergence of digital distribution and the concept of “games as a service,” that has gone out of the window. Games are now routinely and regularly patched, updated, supplemented and expanded via a combination of free and paid downloadable content (or “DLC”). For example, the game No Man’s Sky has been updated and expanded so comprehensively since its launch in 2016 that it is almost unrecognizable as an experience from the version released at launch. As a result, it is imperative that buyers understand what they are acquiring – and unless negotiated otherwise for a very specific reason, the “Property” that is granted to the buyer should include all elements, versions, expansions and content relating to a title, for as long as such title is supported. Ideally, all sequels and spinoff games would be included in the rights grant as well (but that is a more nuanced subject that may require some discussion).
  2. Investigate Third Party Interests: While other forms of properties (including novels and podcasts) can have complicated chain-of-title issues, videogames are particularly likely to have unforeseen ownership and/or approval issues complicating the acquisition process. Often the rights in the game may be owned and controlled by a publisher, but sometimes the actual creator or developer may have approval rights or other interests that need to be addressed. Things get even more complicated when dealing with Japanese properties, where there may be one or more intermediaries to deal with before one is able to negotiate directly with the rightsholder. It is important to ask the right questions at the very start of negotiations to be able to identify and address any specific issues.
  3. Discuss Controls and Approvals: While television and (particularly) film producers often view their medium as the pinnacle of artforms, it is important for producers to understand that – in many circumstances – a videogame publisher or developer does not need them. Many videogame rightsholders make millions or billions of dollars solely from videogame sales, which can then be supplemented through the sale of DLC and merchandise. Even independent developers may be able to make a good living through a combination of the right business model and smart engagement with their fanbase. As a result, rightsholders will often be extremely cautious about entering into any kind of arrangement that could tarnish or dilute their brands. No sophisticated rightsholder today would agree to the kind of agreement that yielded the likes of Super Mario Bros. (1993), Street Fighter (1994), BloodRayne (2006) or Tekken (2009), all of which were critically lambasted and bore little relation to their source material.

Indeed, many videogame rightsholders are unlikely to be prepared to enter into a traditional option purchase type arrangement where they are viewed as passive rightsholders without any kind of active involvement or approval. Producers therefore need to think carefully and walk a tightrope to ensure that they make the rightsholder feel invested and comfortable, without ceding control in a manner that could jeopardize their ability to set up and produce the project. Of course, if they can strike the right balance then the dividends – both creative and financial – could be spectacular.

Victory for Blizzard/Activision in “Call of Duty” Right-of-Publicity Battle with Manuel Noriega

This Blog is an Update to a Previous Post. To read the original post, please click here.

On August 1, 2014, we reported that former Panamanian dictator Manuel Noriega had filed a lawsuit in California Superior Court against Blizzard/Activision over Activision’s portrayal of the despot in its highly successful game “Call of Duty: Black Ops II” (“Call of Duty”). On October 27, 2014, the California Superior Court dismissed Noriega’s complaint in its entirety, with prejudice, granting Activision’s special motion to strike pursuant to California Code of Civil Procedure section 425.16, California’s “anti-slapp” statute, which is aimed at curtailing lawsuits brought for the purpose of chilling free speech. Under the statute, when a defendant can show that its work constitutes protected speech, the burden shifts to the plaintiff to demonstrate a probability of prevailing on his claim. The court held that Noriega had not satisfied his burden, and that his “right of publicity is outweighed by defendants’ First Amendment right to free expression.” Continue reading

Video Game Cases May Break New Right Of Publicity Ground

Note: This blog is cross-posted from Law360.com with permission of Portfolio Media, Inc.

A lawsuit filed in California Superior Court has taken video game right-of-publicity cases beyond college athletes and Hollywood celebrities. Former Central American despot Manuel Noriega, from his prison cell in Panama, is suing Blizzard/Activision over Activision’s portrayal of Noriega in its highly successful game “Call of Duty: Black Ops II.”

Manuel Noriega ruled Panama in the 1980s as a military dictator, and has been in prison in the United States, France, and Panama since 1992 for drug smuggling, money laundering and the murder of political opponents. “Black Ops II,” released in 2012, is the latest installment in Activision’s military first-person shooter series “Call of Duty,” and netted over $1 billion in sales worldwide in its first few weeks on the shelves. Continue reading