In Case You Hit Pause: An Update on Two High-Profile Video Game Cases with Intellectual Property Implications
The video game industry is a gold mine for intellectual property lawyers: as the video game industry grows by about 5% a year,[1] companies are spending more time and money litigating video game-related matters in courts as well.[2] The video games themselves are copyrightable.[3] The company making the video game is trademarkable. And as two especially high-profile cases have demonstrated recently, the content of a popular game can cause significant harm to the owner of a trademark or copyright if the game infringes that intellectual property.[4]
Take the case of the tattoo company, Solid Oak Sketches, that launched a potentially billion dollar law suit against video game developer Take-Two Interactive. Take-Two’s “NBA 2K” games, in an effort to simulate reality, depicted athletes’ tattoos – which the tattoo company owned the copyright to.[5] This blog has discussed the merits of such a case when Solid Oak’s lawsuit first broke in February 2016, ultimately concluding that Solid Oak might have had a serious chance because of the well-established legal principle that people do not own the rights to the designs on their bodies; rather, they only own the rights to their copy of the tattoo and the ink.[6] As of August 2016, however, a New York federal judge had ruled out Solid Oak’s demands for statutory damages and attorney’s fees because “in order to obtain statutory damages and attorney’s fees, a plaintiff must have registered its copyright prior to the alleged infringement.”[7] The video game franchise had allegedly been infringing on Solid Oak’s designs since its “NBA 2K14” game in 2013, but Solid Oak had only registered its copyrights in 2015.[8]
Both companies have been litigating the case since. As recently as August of this year, Take-Two filed its motion to dismiss the lawsuit and end Solid Oak’s claim for actual damages based on copyright law’s doctrines of fair use and de minimis use, but the matter is still pending.[9] Under the doctrine of fair use, any copying of copyrighted material done for a limited and “transformative” purpose, such as to comment upon, criticize, or parody the copyrighted work, can be done without the copyright owner’s permission.[10] Courts analyze the copyright use’s purpose, nature, substantiality, and effect on the market to assess the validity of a fair use defense.[11] As such, it would appear unlikely that a court will accept Take-Two’s fair use defense because their “fair use” is for commercial gain, involves recreating the entirety of the tattoo designs, and is copying creative, non-functional elements of the design. However, Take-Two will be able to argue that their infringement does nothing to negatively affect the potential market for the tattoo’s designs. The doctrine of de minimis use states that courts will allow copyright infringement to occur without penalty if the transgression is small enough. A notable example of this is in the motion picture Seven, where several copyrighted photographs appeared in the film without the copyright holder’s permission, but appeared so “fleetingly,” “obscured,” “out of focus,” and “virtually unidentifiably” that the court excused the use of the photographs.[12] There is no bright line test for the de minimis defense, but it seems more likely that the court would accept Take-Two’s de minimis argument given the size of the tattoos as they appear in the game. However, given the detail of modern video games, and how video games advertise their realism and graphic quality, this argument is questionable as well. Either way, Take-Two is on the right track, though after over a year of litigating it’s unclear when they might be out of the weeds.
The NCAA is having more success with its claim that video-game developer Kizzang LLC was infringing on its basketball tournament trademarks with its use of “April Madness” and “Final 3” in a newly developed fantasy sports game.[13] This blog has not yet addressed the Kizzang infringement case, but the NCAA is well-known for aggressively protecting its tournament-related marks.[14] The NCAA has been using its “March Madness” and “Final Four” trademarks for over twenty years on a variety of products from duffel bags and towels to telecommunication services.[15] As of 2011, the most recent year that audited numbers are available, about 81% of the NCAA’s $871.6 million revenue came from selling the media rights to its basketball tournament that uses these marks.[16] The NCAA is concerned that similar sounding marks like Kizzang’s will dilute the value of its most significant asset, and as such commenced a suit against the video game developer in March of this year after protesting Kizzang’s application for its own trademarks to “April Madness” and “Final 3” in 2015.[17]
Kizzang almost immediately agreed to cease using the marks,[18] but as the NCAA wanted the court to issue a permanent injunction, this agreement left the NCAA unsatisfied. By August, Kizzang filed a motion to transfer the case out of Indiana, the NCAA’s place of domicile and potentially “friendly” home court.[19] This would prove moot, as by November a U.S. District Judge granted the NCAA the default judgment it wanted.[20] Now the NCAA appears very close to getting its permanent injunction. Though the matter is still being litigated, the NCAA has won at almost every step, proving that courts do view trademark infringement in the video game industry as a potentially very harmful practice.
Footnotes
