The Phoenix Wright series aside, videogames and lawyers don’t make the likeliest of bedfellows. Nevertheless, 2009 proved to be a bumper year for game-related lawsuits. No Doubt and Courtney Love pointed the finger at Activision for improper likeness use, EA played tug of war with Activision over the IP rights for Brutal Legend and Take Two fired its judiciary torpedoes at 3D Realms for failing to deliver Duke Nukem Forever to deadline and budget. And with the industry’s third largest publisher now squaring off with one of its subsidiaries over the highest grossing game of all time, 2010 doesn’t look any prettier.

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Over the years, game creation has become an increasingly multi-faceted operation, with one AAA title alone potentially drawing in any number of publishers, studios and licensees. With marketing and development costs spiraling upward, all of these parties are understandably anxious to see their investments bear fruit (or at least insulate themselves from financial harm). That means the window for legal hoopla could open even wider as a result

But while that could result in more games beset by long delays or outright cancelations thanks to their stakeholders’ legal quarrels, these cases also often become touchstones in the hobby’s ongoing development. The lessons learned from legal action are necessary for the advancement of any industry. Developers learn from the mistakes of others, and as these examples are about to show, videogame companies have made plenty of mistakes.

The Great Apes

What is often considered the first pivotal legal battle for the games industry occurred in 1984 when Universal and Nintendo butted heads over likeness issues between the 1933 movie epic King Kong and Donkey Kong. With the games industry fast losing credibility in the wake of the recent market crash, the odds were stacked against Nintendo. Unbelievably, the developer emerged victorious due to the movie license existing in the public domain, rendering it free to be used by anyone. Judge Robert Sweet even ruled that Universal’s game tie-in of King Kong was derivative of Donkey Kong and awarded Nintendo a whopping $56,000 in royalties.

Events would come full circle in 1991 when a seemingly unstoppable Nintendo locked horns with gaming newcomer Sony over its early SNES-CD prototype. Dissatisfied that Sony’s contract gave them control over all titles published on the console’s new CD format, Nintendo withdrew from the deal and threatened legal action.

As such, development of the “Play Station,” as it was then called, could continue only if it retained a SNES cartridge slot and the name. Sensing it was onto a good thing, Sony skirted around the legal challenge by removing the cartridge slot and the space between “Play” and “Station.” The manufacturer would then launch the PlayStation worldwide in 1995, changing the face of the hobby and gaining ground as a powerful new force in the industry.

Identity Crisis

Increasingly realistic and violent titles have always courted controversy among the press, politicians and parents. That was especially noticeable in the early ’90s, when the game industry was beginning to mature and push boundaries. Along the way, it became something of a misunderstood black sheep.

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Lawyers found themselves in high demand when Mortal Kombat hit the arcades in 1992. The digitized sprites of actors set a new benchmark for realism at the time, making the game’s gory fatality finishers all the more controversial. But in a series of legal challenges that mimic No Doubt’s falling out with Activision, it didn’t take long for Mortal Kombat‘s ensemble cast to throw a legal uppercut in developer Midway’s direction.

Actors Daniel Pesina, Philip Ahn, Elizabeth Malecki and Katalin Zamiar – Johnny Cage, Shang Tsung, Sonya Blade and Kitana, respectively – all sued Midway, along with a plethora of publishers between 1996 and 1997. While the developer had secured likeness rights for the arcade release of the original Mortal Kombat and its sequel, it forgot to do the same for the game’s console versions. Luckily for Midway, the judge ruled the actors had consented to use of their likeness and that their character movements were directed and therefore owned by the developer.

While the absence of home version rights may seem like a rookie error, bear in mind that there was no previous precedent on the matter. Considering how many games employ actor likenesses today and do so by the book, the lessons learned from the Mortal Kombat case are invaluable. However, as games bearing licenses become more complex and steeped in online capability, current legislature on the matter becomes hazy.

DIY Lawsuits

The online gaming arena is still cutting its legislative teeth as MMOGs and competitive multiplayer-enabled titles continue to thrive. One unexpected side effect of these active online communities was the flood of legal activism triggered by the implementation of user-created content. Particularly well-documented were copyright issues raised by Media Molecule’s LittleBigPlanet.

Shortly after its launch in 2008, a torrent of user-created levels infringing on numerous intellectual property laws were uploaded into the game’s databases. Players had duplicated everything from Pac-Man to Donkey Kong to Mega Man in twee Sackboy fashion. Rather than risk a legal backlash from the copyright owners, Sony conducted an aggressive, immediate cull of all illegal stages.

When the mantra of your game is unbridled creative freedom, it’s only natural that users will want to exert that freedom by paying homage to their passion, including their favorite games. So when the publisher performed a U-turn and started restricting that freedom to create, they came across as a particularly nasty company. Forums quickly lit up with spleen-venting attacks from players demanding to know why their stages had been deleted without warning.

Ultimately, their tardiness with a clearly defined end-user license agreement (or EULA) was the real issue. But in the meantime, Sony had little alternative besides nipping the issue in the bud before it escalated. The real lesson here is to tighten user agreements and create an open, fair and, most importantly, transparent moderation system before a game sees launch.

No stranger to swinging the legal hammer, Marvel saw red in 2004 when its noticed character skins that resembled its own creations in Cryptic Studios’ City of Heroes. Marvel’s lawsuit suggested that the developer, along with publisher NCsoft, actively promoted the creation of trademark-infringing avatars, calling for the game to be shut down completely. The key difference between this and the LittleBigPlanet example is that game administrators NC Interactive foresaw this very issue and drafted an airtight EULA that held individual players accountable for actively infringing copyright.

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This particular case is a testament to the fact that trademark law as it stands can often be ill-equipped to deal with the rapidly changing nature of the games industry. Despite its solid EULA, Cryptic Studios was held liable for infringing trademarks by supplying the character creation kit to its users, rather than the creators of the offending material itself. The case ended in an out-of-court settlement the following year, with Cryptic Studios retaining the right to run City of Heroes freely. But the whole ordeal raises a host of questions over who is actually responsible when things go wrong. When user-created content is a core element of a game, attempting to satisfy a fan base, publisher and any number of IP owners makes for a tricky balancing act.

Legal Minefields

As game developers embrace the notion of social networks, online-enabled play modes and motion-controlled gaming, the risk of legal backlash will likely increase. One wonders where the next pivotal victory or loss for the industry will come from. Will we see the family of the first player to have a heart attack while playing Wii Fit attempt to sue Nintendo? Or perhaps players will attempt to sue developer Zynga after hackers gain access to a gold mine of sensitive player data via FarmVille?

Due to the speed with which gaming evolves, legislation will never be able to regulate the industry effectively without tapping into the expertise of its key players. Current statutes concerning game-related issues in both the U.K. and U.S. are typically blanket documents that cover a wide range of technical laws. Without a tight, clearly-scripted bill relating solely to the games industry, legal standards will always prove ineffective and outdated.

While many gamers and developers like to think that gaming is a mature industry, it still has a lot to learn as it explores new avenues and casts its net wider and further than before. As we rush headlong into more immersive control methods and sophisticated augmented reality integration that blurs the line between real and virtual worlds, a whole new can of worms could be about to open. The future of videogame development is still bright – but the future of videogame and IP lawyers may be even brighter.

Based in Scotland, Dave Cook is an award-wining freelance gaming journalist, blogger and managing director of iPhone PR consultancy Ink Media.

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