The Legalities of Advergaming by Barry M

The Legalities of Advergaming By Barry M. Benjamin and Jeremy A. Schachter*

Introduction

Advertisers have been implementing creative ways to reach videogame-playing consumers since their advent. Methods of reach have ranged from simple in-game product placement1 to more unique methods. For example, American Express’ latest partnership with the popular interactive online videogame League of Legends, in which AmEx offers players League of Legends prepaid debit cards, which can be used for making in-game purchases.2 Another method of reach is via the development of advergames, i.e. advertiser created videogames. After having disappeared for a while, advergames have made and are making a significant comeback. Unlike their initial introduction, however, it appears they are now officially here to stay. This article provides an overview of advergames, their related issues, and how to keep those issues under control.

The Advent of Advergaming

The 1980s was by far the best time to be an advergame creator. Advergames were at the height of legitimacy, with advertisers releasing full-blown video games that could actually be bought at the store. For example, on the shelf next to Pac-Man sat the Kool-Aid Man videogame. Kool-Aid Man, which became available for play on the Atari 2600 in 1983,3 allowed the player to be the Kool-Aid Man whose mission it was to destroy the “Thirsties” before they swallowed up all the water in the community swimming pool. As if there was any other way to thwart the pool-drinking Thirsties, the game’s packaging reminded you: “When THE THIRSTIES are after you, what can you do? Mix up the Kool-Aid Drink Mix before they get you.” Kool-Aid Man (and its advertising copy) was simplistic to say the least. But it was 1983. All games were simplistic. That is precisely why advertisers were able to get involved. The simplicity of videogames allowed the advertiser to stay on message without losing the attention of its audience. After all, if a kid can pretend to be a circle that eats pellets and occasionally fruit for three hours, why not let him do something similar as the Kool-Aid Man?

At first, the good times continued for advergames into the nineties, and arguably reached its pinnacle in 1993 when one (Cool Spot starring the spot from the 7up bottle) won Electronic

* Originally published by the Brand Activation Association (BAA) at its 35th Annual Marketing Law Conference. Barry M. Benjamin is a Partner with the New York office of Kilpatrick Townsend & Stockton and is the chair of the firm’s Advertising, Promotions, and Marketing group. Jeremy Schachter is an associate in the New York office of Kilpatrick Townsend & Stockton. 1 See Richtel, Product Placements Go Interactive in Video Games, NY Times, Sept. 17, 2002, available at http://www.nytimes.com/2002/09/17/business/product-placements-go-interactive-in-video-games.html (last visited Sept. 30, 2013). 2 See Vega, AmEx Links a Debit Card to an Online Video Game, NY Times, August 11, 2013, available at http://www.nytimes.com/2013/08/12/business/media/amex-links-a-debit-card-to-an-online-videogame.html?_r=0 (last viewed Sept. 30, 2013). 3 See Lamar, The 10 Least Subtle Product Placements in Video Game History, CRACKED.COM, Nov. 25, 2008, available at http://www.cracked.com/article_16798_the-10-least-subtle-product-placements-in-video-game- history_p2.html (last visited Sept. 30, 2013) (identifying video games built around brands such as Kool-Aid Man, the Spot from 7Up, the Noid from Dominos, Budweiser, etc.).

1 Games Magazine’s award for “Best Sound.”4 It was all downhill from there. As technology improved, traditional videogames started to pull way ahead of advergames in their development. We like to imagine that the advergaming boom of the eighties was all attributable to one guy named Bob. And then envision how disappointed Bob was after pitch meetings in the mid- nineties where young know-nothing ad execs hip to new videogames failed to appreciate Bob’s vision. Bob would pitch his latest brilliant idea for an advergame where players – as Pepper Roni, the mascot for Pizza Brand – had to eat pizza to earn enough strength to stop the “Cheesies” from kidnapping all the milk-producing cattle of the world in an effort to eliminate Earth’s cheese supply. Despite being fresh off the heels of an Electronic Games Magazine award for Best Sound, he would get shot down by the know-nothing ad exec because “What do you think this is Bob, 1983!? It’s 1994! Get with the program. Kids want Sonic the Hedgehog! Come back to us when you can create an advergame like that.” Bob refused, though, insisting that simple was better for advergames. As a result, advergames’ heyday came to an end, and Bob became an alcoholic never to be heard from again.

Advertising Issues in Videogames

Traditional legal issues facing advertisers have arisen in videogames from the outset, but none appear to have impacted an advergame specifically. The big videogame case of the eighties was Universal City Studios, Inc. v. Nintendo Co., Ltd., i.e. the Donkey Kong case.5 In the Donkey Kong case, Universal claimed that the videogame Donkey Kong infringed its KING KONG trademark. Universal lost for failing to establish any likelihood of confusion. The fact that Donkey Kong was a videogame had no bearing on the analysis, even though in retrospect it probably had an impact on the outcome. In fact, it is not entirely clear how much trademark law had to do with it either because the court appears to have been most influenced by a copyright standard altogether. “We agree with the district court that the two characters and stories are so different that no question of fact was presented on the likelihood of consumer confusion.”6 Then, in a footnote about Donkey Kong’s merchandising efforts, the court found that those items were also unlikely to cause confusion because they “have the same ‘total concept and feel’ as the videogame and just as obviously are unlikely to be confused with King Kong.”7 Advergames of the eighties were in the clear as far as trademark infringement goes, since (according to our research) advergames incorporated only their own trademarks.

After advergames fell out of favor, regular videogames, of course, continued to thrive and videogame cases involving legal issues of the type typically facing advertisers occasionally popped up. In 2005, for example, the Eighth Circuit heard a trademark infringement case brought against a Sony developed videogame for allegedly violating the plaintiff’s FROSTY TREATS trademark in the game’s depiction of an ice cream truck and a clown.8 Like the Donkey Kong case twenty years earlier, the court found that there was no likelihood of confusion and the fact that it was a videogame played no part in the analysis. A few years later, the Ninth Circuit ruled on a trademark claim brought against a videogame maker in E.S.S. Entertainment

4 See Lamar supra n. 3. 5 746 F.2d 112 (2d Cir. 1984). 6 Id. at 117. 7 Id. at n. 7. 8 Frosty Treats v. Sony, 426 F.3d 1001 (8th Cir. 2005).

2 2000, Inc. v. Rock Star Videos, Inc.9 By this point videogames were much edgier, so unlike the gorillas and ice cream trucks that preceded it, the mark at issue in Rock Star Videos was for the name and trade dress of a strip club called the Play Pen. The strip club owner took issue with Rock Star’s depiction of a similar strip club called the Pig Pen. Unlike the Donkey Kong case and Frosty Treats, however, the fact that the alleged infringement occurred in the context of a videogame was part of the analysis. Indeed, it was the deciding factor. The court found that the videogame was artistic expression entitled to First Amendment protection. To determine whether the Lanham Act could prevent the speech, therefore, the court applied the Rogers balancing test, which weighs the artistic value against the tendency to confuse and if the art weighs more (and any amount will do), the speech is protected.10

Concurrently with Rock Star Videos, other Circuits were finding videogames entitled to First Amendment protection for various reasons as well. These videogame cases culminated with the Supreme Court’s 2011 decision in Brown v. Entertainment Merchants Ass’n.11 Entertainment Merchants removed any doubt about whether videogames were entitled to the heightened speech protection when it held that “[l]ike the protected books, plays, and movies that preceded them, video games communicate ideas—and even social messages—through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player’s interaction with the virtual world). That suffices to confer First Amendment protection.”12

First Amendment Protection for Advergames?

Interestingly, advergames have made a comeback in a major way. Typically, the games are found online on a brand’s website, on a social media platform, or as a mobile app. Indeed, there are even a few full-blown advergames still available for purchase. So, with a definitive ruling on the First Amendment status of videogames, it begs the question, what about Bob? Could an advergame be entitled to full First Amendment protection too? Or would it be deemed commercial speech and entitled to something less? If we assume that Pac-Man would be entitled to the full protection of the First Amendment, which the scope of Entertainment Merchants would seem to allow, would the Kool-Aid Man video game or a simple online advergame? In some ways, creating a simpler “old school” videogame today, when the technology to create a much more complex game is available could be an artistic decision in and of itself. But assuming the complexity mattered, what if an advergame possessed it? Would it make a difference if the advergame were only available for purchase? Ford Racing, a simulated racing game where the cars are all made by Ford is an example of a modern advergame available for purchase.13 Would the court in Rock Star Videos have reached the same result if the Play Pen appeared in Ford Racing? What if Ford Racing included other cars and their respective trademarks? Would it matter if those cars were equally treated, or if no non-Ford could ever beat a Ford in the game? Could claims made in an advergame seriously give rise to a Lanham Act violation? Fortunately, there is a definitive answer to all these questions. Unfortunately, the answer is who knows.

9 547 F.3d 1095 (9th Cir. 2008). 10 Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). 11 131 S. Ct. 2729 (2011). 12 Id. 13 See http://en.wikipedia.org/wiki/Ford_Racing_3.

3 As with other mediums, it would seem that the logical first question to answer is whether the advergame is commercial speech or artistic expression. This question was never asked in Rock Star Videos, but it is unavoidable whenever the content at issue can be potentially framed as commercial. For example, in Facenda v. NFL Films,14 the expression at issue was a documentary. Coincidentally, the documentary was about the making of a videogame. When NFL Films was sued for Lanham Act violations for using Facenda’s famous voice without permission from his estate, NFL Films claimed that since the work at issue was a documentary, it was artistic expression and they were protected by the First Amendment. The court disagreed, though, finding that the documentary was commercial speech motivated by the NFL’s financial interest in sales of the videogame. Inevitably, in a Lanham Act claim brought against an advergame, the commercial speech issue will come up.

There are a number of tests for determining whether particular speech should be deemed commercial. The Bolger test, set forth by the Supreme Court and applied in Facenda, deems speech commercial if it is (i) in an advertising format; (ii) makes product references; and (iii) is commercially motivated.15 Considering that advergames have now been around for over thirty years, it is probably safe to say that it is in an advertising format, and the other two factors are easily met. The Supreme Court has also said that speech is commercial where it “proposes a commercial transaction,”16 which, according to the Court, is a “commonsense distinction.”17 If only it were. To use Ford Racing as an example, does commonsense tell you whether a game geared towards consumers above and below the driving age proposes a commercial transaction for Ford automobiles? Other tests and factors have appeared throughout the state and federal courts over the years. One of the more famous tests came from the Supreme Court of California in Kasky v. Nike.18 Kasky held that speech is commercial where there is (i) a commercial speaker; (ii) an intended commercial audience; and (iii) representations of fact of a commercial nature. The Kasky test is trickier to apply to the Ford Racing example as it (i) requires an analysis of who is doing the speaking, i.e. is it really Ford or is it Ford’s videogame developer licensee, and does that matter; (ii) again requires a determination of whether the videogame player is the intended commercial audience of whatever the commercial message may be; and (iii) requires a determination of what exactly the representation is, whether it is represented as fact, and whether it is commercial.

It would be inappropriate for a court to so hold, and it is therefore unlikely that it ever would, but as a practical matter, we think that the commercial speaker prong of the Kasky test is likely to be dispositive more often than not. In other words, if the advergame is put out by a commercial entity other than a traditional videogame developer, it will be deemed commercial speech no matter how artistic it may be. Indeed, this is probably the case even if it surpasses the artistic expression of any of the videogames deemed protected to date. One need only look to the manner courts have treated commercial speakers attempting to defend the artistic merit of their work in other contexts to realize that it is far less likely to get full First Amendment protection.

14 542 F.3d 1007 (3rd Cir. 2008). 15 Bolger v. Young’s Drug Products, 463 U.S. 60 (1983). 16 See, e.g., Board of Trustees of State University of New York v. Fox, 492 U.S. 469 (1989); City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 423 (1993). 17 Sorrell v. IMS Health, Inc., 131 S.Ct. 2653, 2674 (2011). 18 Kasky v. Nike, 119 Cal.Rpt.2d 296 (2002).

4 A more recent example is Louis Vuitton Malletier S.A. v. Hyundai Motor America.19 In Hyundai a basketball featuring what looked like the Louis Vuitton logo appeared in a Hyundai commercial for approximately one second. It was used as part of a series of images depicting luxury in unusual places. Hyundai argued that its ad was meant to make a social commentary on luxury and that its commentary should be weighed against its likelihood to confuse under Rogers. The court disagreed. It held that that any purported commentary offered by Hyundai was too subtle and that First Amendment protection in this context only extends where the comment made is about the plaintiff’s mark, not a broader social commentary. This is in direct contrast to Louis Vuitton Malletier v. Warner Bros. Entertainment.20 In Warner Bros., a knock- off Louis Vuitton bag appeared in the film Hangover 2. Its purpose, according to the court, was to make a joke not at Louis Vuitton’s expense but at luxury and snobbery, and the particular character’s silliness. Nevertheless, the court did not hesitate to apply the Rogers test because it was an expressive work. While the messages were conveyed differently, they were alleged to be virtually identical, yet in our opinion, because of who was delivering the message, there were two very different outcomes. What if Hangover 2 was produced by Hyundai, called “Hangover in a Hyundai 2,” made Hyundai references throughout the film, and was every bit as hilarious as the real Hangover 2? We think the outcome would have been as it was in Hyundai and not Warner Bros.

What Can Go In An Advergame?

Given the strong likelihood that advergames are deemed commercial speech, they involve consideration of the same issues considered for other advertisements, including copyright, trademark, false advertising, and right of publicity claims. The level of risk associated with each issue will vary depending not only on the particular use but also the format of the advergame at issue. For example, if a fast food chain creates a baseball advergame available for free on the restaurant’s website that depicts the trademarks of real Major League Baseball teams; Lanham Act claims for trademark infringement would inevitably be brought by MLB Properties and would certainly be successful. On the other hand, if a game like Ford Racing, which is sold in stores like any other traditional videogame, depicts the trademarks of other cars in races, the risk is probably lower, potentially even lower still if only the name appears on the other cars without the logos. If, however, at the end of each race, there is an animated vignette depicting the trademarks of other cars being flushed down the toilet, there is a high risk of losing a claim for dilution by tarnishment. A risk that would be decidedly lower (if not entirely absent) if the game were just called Racing and not associated with Ford.

In general, when structuring an advergame, it is best to take a lesson from our fictional advergame developer Bob and keep it simple. More than once, we have encountered clients who have allowed their creative instincts to carry them away into thinking they should create interactive, role playing advergames where players encounter and interact with competitors or entities they would love to be associated with but are not. First, there is a big risk with doing that. Second, even if the game were limited to authorized interactions, this introduces layers of complexity into the advergame that are neither necessary nor helpful. Given that the primary reason for developing an advergame is to sell a product or service, the simpler it is the better.

19 10 Civ. 1611 (PKC) (S.D.N.Y. 2012). 20 868 F. Supp. 2d 172 (S.D.N.Y. 2012).

5 The idea is to get consumers to stick around the website a little longer, not to replace League of Legends. Actual success of an advergame as a game for games sake is a secondary benefit. Moreover, simple games, when properly executed can still be enormously successful. Imagine, for example, if Angry Birds had been created as an advergame.

Second, even if the advergame is created by the world’s most renowned videogame developer, it is sold in stores, it brings players on a magical journey through the fictional land of advergamia, and players literally control how the game unfolds with no two players having the same experience, do not use celebrity’s names or likenesses without authorization under any circumstances. Even videogames that are not commercial speech are vulnerable to right of publicity claims. The Ninth Circuit’s recent holding in In re NCAA Student-Athlete Name & Likeness Licensing Litigation21 confirms this point. The case involved a right of publicity claim against EA Sports by a class of college athletes for using their likenesses in a videogame without their authorization. EA Sports argued for First Amendment protection, but it was denied essentially because the game was too realistic and not “transformative” enough under California’s right of publicity law. Even if an advergames use of a celebrity’s name or likeness were transformative, e.g., it featured an animated character named Ciley Myrus who could not stand up straight, walked around in a permanent “twerk” stance, and communicated by speaking between her legs, we do not think the advergame would be immune from liability in a right of publicity suit brought by Miley Cyrus. This is because part of the transformativeness inquiry is whether “the marketability and economic value of the challenged work derive primarily from the fame of the celebrity depicted.”22 We do not think that could be said to be the case in an advergame with a celebrity likeness. Accordingly, we think the risk is too great to make it worthwhile.

Third, we tend to doubt that an advergame would go to the lengths necessary to meet the fair use standard for copyright infringement, so use of copyright protected images, music, or anything else should be avoided just as it would be in any other traditional advertisement.

Finally, one issue that has not been addressed by the courts and does not appear to have a direct analogue in another medium is the concept of false advertising in an advergame. Perhaps it would be called false advergaming. We do not suggest that a false or misleading claim cannot be made in an advergame. We are merely pointing out that it has not come up. To use a variation of the Ford Racing example posited earlier in the article, suppose that other cars in the game were unidentified but clearly meant to be Chevrolet Camaros.23 Suppose further that players had the option of selecting the Camaro as their racecar, except that every time they did, the car malfunctioned on the track making it literally impossible to ever win a race with the Camaro. It might take a few times to realize it, but eventually players would never choose the Camaro. Presumably, this would present an actionable claim for false advertising. Accordingly, as with any other advertisement we would advise not making false or misleading claims in an advergame.

21 724 F.3d 1268 (9th Cir. 2013). 22 Id. at 1274 (internal quotations omitted). See also White v. Samsung Elecs. Am., Inc., 971 F.2d 1395 (9th Cir. 1992). 23 Indeed, Camaro has an advergame too, entitled Chevrolet Camaro Wild Ride. See http://www.amazon.com/Camaro-Wild-Ride-Nintendo-Wii/dp/B003OPX910.

6 Conclusion

In sum, advergames can be a very effective form of advertising, particularly for targeting younger consumers or bored consumers you want to help distract while they are at work. Although advergames are indeed videogames, it is imperative to avoid the misconception that they will be entitled to full First Amendment protection, and understand that they are most likely to be deemed commercial speech. As a result, it is important to consider all the issues you would consider in any other more traditional advertisement, and to keep that task manageable by avoiding adding unneeded layers of complexity that do little more than invite additional opportunities for risk. In other words, be like Bob and keep it simple. Lastly, the foregoing should provide helpful guideposts for avoiding the pitfalls inherent in creating an advergame, but because each game is unique and will create its own set of issues, it is always advisable to get the opinion of counsel before releasing the game.