Level Up: Video games guide - Level 4

Level Up: A guide to the video games industry

Level 4 - Third-party IP

The video games industry is well-known for fostering collaborations between well-known brands and franchises. Indeed, some of the best selling video games have often involved collaborations between different rightsholders operating both within and outside of the video games industry. For instance, Sony Interactive Entertainment, Insomniac Games and Marvel teamed up to develop the award-winning Spider-Man video games franchise. Similarly, endorsements, promotions and appearances by celebrities in games and for associated events has become increasingly popular and has been used by Fortnite developer, Epic Games, with great success to reach new audiences via collaborations with musicians Travis Scott and Ariane Grande. However, collaborations don't come without their risks and can often give rise to disputes over the use and monetisation of in-licensed third-party IP. Indeed, it was only recently reported that a dispute over licensing arrangements between Ms Pac-Man creator GCC and Pac-Man owner Bandai Namco has led to the removal of Ms Pac-Man from Bandai titles.¹

With the above in mind, we wanted to create an all-in-one guide for those that currently operate in or are considering entering the video games industry with the purpose of providing an overview of the life cycle of a video game – from the early stages of development, past the grind of regulatory compliance, through to the final stages of monetising the product. The result is "Level Up: A Guide to the Video Games Industry".

In Level 4 of the Guide, we examine how third-party IP is used in connection with the development and promotion of video games and common pitfalls for key stakeholders to avoid.

Level Four

There a number of different IP rights that might subsist and protect different aspects of a video game. With the advancement of technology, video games have become increasingly more complex in terms of gameplay, content, design, features and user experience. This means that the number of IP rights that might exist in a modern day video game will be infinitely greater than those that might have existed in the classic 8-bit games of arcades in the 80s.

Third-Party Technical IP

Developers may want to collaborate with third parties (e.g., programmers; other developers) to make use of technical IP and know-how that can be used in the development of a video game. Indeed, it is common practice for many developers to enter into numerous technology licence agreements with software providers to use software products to develop and create content for the video game.

Third-Party Core IP

Many video games are based on underlying core IP such as a book or film and are often part of a wider franchise. Indeed, such video games are created in order to maximise the rights holder’s revenue by diversifying the underlying core IP and can rely on the prior success and reputation of the original work in order to springboard itself into a receptive market of fans.

With the above in mind, a pre-warmed market should not be taken as a guarantee for success. Indeed, there are a number of video games that have been launched over the decades where rushed development has adversely impacted gameplay and led to consequential damage to the video game brand and franchise as a whole. Careful consideration should therefore be given by key stakeholders before pushing ahead with the monetisation of an existing brand in the gaming industry as there is always potential for damage to the brand.

Third-Party Brands

Incorporating existing and popular third-party brands and trademarks into video games has become increasingly common. This enables developers to increase game content, advance user experience and benefit from the reputation of the brand to attract new customers. In exchange, third parties can commercialise and monetise their brand by:

charging the developer a royalty or licence
using the video game as a platform to advertise its products and services to a wide group of users.

For instance, it is commonplace for sports video games to collaborate with sports retail giants to use their trademark on clothing, merchandise and adverts in the game.

Of course, third-party brands and trademarks can also be used outside of the video game; for example, in connection with the packaging and trade dress, advertising, marketing and merchandise associated with the game. For more information, on in-game and out-game advertising and product placement.

Celebrities and Personality Rights

With the demand for blockbuster video games higher than ever, developers are turning to third parties to in-license IP for incorporation into their video games in order to increase marketability and popularity. For instance, over the past few decades, a number of sport celebrities have licensed their personality, name and image rights to developers for use in different sport video games as playable characters (e.g., FIFA, Madden NFL, NBA) and/or to endorse the game concept itself (e.g., Tony Hawk’s Pro Skater, Tiger Woods PGA Tour). In certain cases, this will involve the celebrity providing important input on the design and mechanics of the game based on their technical knowledge of the sport.

In recent years, we have also seen an increased trend in developers collaborating with celebrities to physically act (using Motion Capture or Performance Capture) and voice act in video games. For instance, Hideo Kojima’s blockbuster game “Death Stranding” made use of an enviable cast of actors and actresses to create the game’s lead characters, including Norman Reedus, Mads Mikkelsen and Guillermo del Toro.

Similarly, endorsements, promotions and appearances by celebrities in games and for associated events has become increasingly popular among developers both to keep current players entertained and to attract new players. For instance, earlier this year Epic Games collaborated with US rapper Travis Scott to host a virtual concert online in its hugely popular video game Fortnite. The event included a visual and musical performance by Travis Scott’s avatar and was attended by more than 12 million players.² Following this success, PlayStation entered into a “strategic creative partnership” with the US rapper to promote the launch of its PS5 console.³

Personality Rights

The existence and scope of personality rights varies between jurisdictions. From a UK perspective, personality rights include:

Name rights: given name, family name, stage name, nickname etc.
Image rights: facial and body features, distinguishing marks (e.g., birth marks, tattoos), hair style, distinctive and associated apparel, etc.
Voice rights: sound and likeness of voice, voice recordings, famous catchphrases, etc.

Case Study: GTA V

Following the release of GTA V by Rockstar Games in 2013, Lindsay Lohan filed suit in New York against Rockstar’s parent company, Take-Two Interactive. The actress failed in her claim that the developers had breached her privacy in depicting the character of Lacey Jonas, which she claimed was based on her. In a 2018 judgment, the court found that whilst a video game character could constitute a “portrait” for the purposes of US privacy law, the character of Lacey Jonas was merely a “generic artistic depiction of a ‘twenty something’ woman”.

In another example the character of Ellie in The Last of Us was altered following similar concerns from Elliot Page.

Whilst there have been no cases in the UK on this issue, there is no English law that a celebrity has a general right to control the use of their image in all contexts. Instead, a celebrity seeking to control the use of their image may rely upon another cause of action, e.g., breach of contract, breach of confidence, infringement of copyright or passing off, as in the 2015 case of Rihanna v Arcadia (concerning a Topshop T-shirt bearing her image), or multiple causes of action simultaneously.