Aw for Game Development

LAW FOR GAME DEVELOPMENT November 2020 Contents Legal aspects of the video game industry Jakub Barański, Dr Monika A. Górska, Lena Marcinoska, Krzysztof Wojdyło 3 Humvee, iPhone, Pip-Boy: Can real-life items be depicted in video games? Dawid Sierżant 4 In-game advertising: How to play it? Lena Marcinoska 7 Video games, virtual currencies, and money laundering Rafał Kuchta 13 Remote work and “employer of record”: Employment in the video game industry Magdalena Świtajska 17 Outsourcing in game development: Is it worth it? Dr Marcin Wujczyk 21 Claiming the IP Box in the video game industry Joanna Prokurat 25 End of the road for the secondary market in e-books and video games? Dr Monika A. Górska 34 Law vs. imagination Ewa Nagy 39 The name of the game: Video game titles and trademark protection Monika Wieczorkowska, Lena Marcinoska, Sandra Lipińska 43 Copyright and game jams, hackathons and competitions Dr Monika A. Górska 49 Fundamental issues a game developer should pay attention to when negotiating a contract for publication of a video game Jakub Barański 51 I have an idea for a video game. How can I protect it? Dr Monika A. Górska 60 Protection of video games: Industrial design, patent, or trade secret? Dr Monika A. Górska 63 Legal aspects of the video game industry The video game development sector has grown rapidly in re- cent years. With the spread of smartphones, new business mod- els, and distribution platforms, the market for video games has JAKUB Barański taken off, becoming a key sector of the creative industry. Its growth stirs the imagination and appetite not only of game producers and publishers, but also of the biggest companies in sectors like IT and film, who are increasingly oriented toward the game market. It is also a promising field for investors, particularly from Asia. The industry’s growth has not even been slowed by the COVID-19 pandemic. To the contrary, the indus- DR MONIKA A. GÓRSKA try has taken advantage of this time to reinforce its position and achieve new growth. The competitiveness of the video game market is also growing, and smaller producers and publishers must compete with global giants. This is not dis- couraging Polish producers and publishers. In addition to the largest studios, smaller but equally ambitious ones continue to spring up in Poland, with backing from various programmes and accelerators. LENA MARCINOSKA The picture of the Polish game industry is diverse and hard to summarise, but it can certainly be said that its value is growing year on year, as is the quality of native productions. In the upcoming years, Poland has a chance to become the biggest centre for production of video games in Central & Eastern Europe. KRZYSZTOF WOJDyłO We are aware that the video game industry is struggling with various legal issues peculiar to the sector. We devote a series of articles on the game development industry to some of these legal issues. We address issues of intellec- tual property law, employment law, tax law, and also less-obvious regulatory aspects. We hope you find it worthwhile reading. Jakub Barański, Monika A. Górska, Lena Marcinoska, Krzysztof Wojdyło 3 Humvee, iPhone, Pip-Boy: Can real-life items be depicted in video games? Video game designers often place the narrative of their games DAWID Sierżant in contemporary or historical times. This requires them to base elements in the game on items familiar from the real world, such as vehicles, clothing, jewellery, weapons, foods and electron- ics. Can such depictions be freely used in games, or is consent required? This is a crucial business question, and a mistake can generate significant legal risks for a game’s producer and publisher. It includes the risk of claims by owners of rights to depicted items, as well as contractual risks arising out of agreements between producer and publisher, or distributor and console risks manufacturer (in various configurations, depending on the business model). The risk grows for AAA titles generating high sales all around the world. This situation is not helped by the major differences between the legal sys- tems in the largest video game markets (the US, China, Japan, South Korea, Western Europe). A game using elements of reality can be more appealing to players, but licence fees can increase production costs, sometimes greatly. Buy a licence Licensing is the essence of certain games and sometimes accounts for their market power. The licence usually covers the entire “universe” (objects, trademarks, characters, story lines). This applies in particular to productions based on other works, such as films, books or comics, sports (e.g. FIFA, NBA), racing (F1, Need for Speed), or simulators (Microsoft Flight Simulator). In the case of other games, placement of items from the real world is an extra requiring realism but not essential to the production (e.g. action or adventure games). Increasingly, the reverse situation occurs, in which the producer of an item from the real world pays for developers to place the item in a game. Under Polish law, items appearing in games are protected mainly through copyright. Real-world items depicted in a game (e.g. furniture or clothing) may, but need not be, works within the meaning of copyright law. A nec- works essary condition is the existence of originality and individuality. The object 4 must be innovative and original, not merely the repetition of a commonly functioning idea, concept or design (see Poznań Court of Appeal judgment of 31 December 2014, case no. I ACa 989/14.) Thus mundane or typical items (such as a mug, a chair, a bottle or a window) will typically not enjoy protection. But this issue should be approached with caution due to the very liberal interpretation of the notion of a work adopted in the Polish case law (for example, a marathon route and the design of a typical graveside candle have been held to be works). Thus, as a rule, placement of such an item in a game requires the consent of the holder of the economic copyright. Works presented in a game may also be regarded as an elaboration (derivative work) of works existing in real life, particularly in cases where multimedia conversion, e.g. texturing, in itself is creative. By including such works in a derivative work published game, the publisher essentially disseminates such works, and for commercial purposes. Thus, as a rule, such action requires the consent of the holder of the economic copyright. Moreover, an item to be used in a game may be protected based on industrial designs, or trademark if the product displays a logo or designation of a business. Public domain, open licence, permitted use An interesting solution, particularly in the case of productions set in historical times, is to use works for which the economic copyright has expired. Eco- nomic copyright generally lasts until 70 years after the author’s death (or first dissemination of the work, if the author is unknown), and after that time the work enters the public domain. This may apply to such elements as weapons copyright has expired (e.g. swords), furniture, costumes, and paintings. Museums are helpful in this respect, typically labelling exhibits with notes on copyright (for example, it is possible to check which exhibits at the National Museum in Warsaw have entered the public domain). Another option is to use works under an open licence, such as Creative Com- mons. In that situation, however, it is essential to verify the precise terms of Creative Commons the licences, in particular whether they include consent to commercial use or to make elaborations. There is an exception to the requirement to obtain consent (to purchase a licence) under the notion of permitted use. In Poland, this is governed by Art. 292 of the Copyright Act, under which it is permissible to “unintentionally” permitted use include a work in another work if the included work is not material to the 5 work in which it is included. This has to do particularly with works “in the background,” or non-essential details. The work is included only incidentally and is not relevant to the game as a whole. This provision may thus be ap- plied to incidental depiction in a game of copyrighted elements of interiors (such as a table, window, refrigerator or chair) or items of everyday use (toys, cigarettes, telephone, food, clothing, etc). This regulation is narrow but essential. Considering the liberal interpretation of a “work” developed in the Polish case law, it would be irrational to require creators of games, films or photographs to obtain licences to show any background elements. But it should be pointed out that due to erroneous translation, the word “incidental” in Art. 5(3)(i) of the Copyright Directive (2001/29/EC) was rendered in the Polish version and the Polish act as “un- intentional.” This term is interpreted in the Polish legal tradition by reference to the subjective sphere (a person’s knowledge or purpose). Such an interpretation would recognise permitted use only when the game producer had no intention of including a depiction of a copyrighted item in the game. In practice, showing a lack of intention could be problematic. The original term “incidental” does not refer to a state of knowledge, but to the nature of the use compared to the work as a whole. Hopefully the wording of this provision will be corrected. But it is clear that applying this exception in the practice of game development can be quite difficult, as in each instance it is necessary to make an indi- vidual assessment, and any determination of whether a given item is part of the background is bound to be largely arbitrary.

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