Video games: (Not so) New Worlds for Licensing
Updated: Apr 13, 2021
If you’ve ever played a video game, it’s easy enough to identify a tie-in game. Building on well established practices dating back to licensed pinball machines, these video games allowed big names in the entertainment world to create value for their intellectual property (“IP”) by allowing either publishers or development studios to bring them to life like never before. These early licensed games have paved the road for increasingly varied and exciting collaborations between the fashion, automotive, movie and video game industries. Indeed, as the complexity, popularity, and form of video games changed over time, so too did the value and breadth of the industry’s collaboration with partners. Today, as an introduction to our vgLEX series, we’ve decided to take a look at how licensing and collaboration agreements can be used to great success to create deeper, and more organic pairings both within and outside of the video game industry.
Video Games and IP Protection
By now, it seems quite obvious that video games and their content should be protected under intellectual property law. Statista, a company specializing in market and consumer data, values the video game industries revenue in Canada alone at US $1,168m in 2020. As the products that generate this revenue become more popular, it has become a lucrative affair to license one’s video game properties. Indeed, video game licensing was valued at $280 billion in 2018 by License Global. While we have briefly talked about tie-in video games, licensing is a complex process which can add to, or make the most of video game properties. While initial efforts integrated existing properties into a video game, the notoriety of certain video games, their characters, soundtracks, and scripts have led to many merchandising opportunities (e.g., toys, apparel, etc.) and movies in the last two decades. It has also encouraged outside partners to form collaboration agreements which allow for mutual use of IP in projects. Before examining these agreements further, we ask the question: how exactly are video games protected under Canadian copyright and trademark law, and how do their corresponding rights end up being licensed? Let’s break it down, step by step.
Copyright protects the creative and artistic expression that goes into the code (software), the original script, the artwork and the music of a video game (e.g., in Canada, these individual products of originality will be referred to as a “Work”). Copyright is an acquired right which is imbued into an original Work upon its creation, or fixation. In Canada, the owner of a copyright in a Work has the sole right to produce or reproduce the Work or a substantial part thereof, the owner also has the exclusive right to perform the Work in public, and to publish it in whole or in part. Unlike trademarks or patents, copyright does not have to be registered for the rights which it grants to exist. The most important aspect to keep in mind with respect to video games and copyright is that most video games represent numerous Works which together form a final product. While not protected as its own category of Work in Canada, video games are better thought of as a bundle of IP rights which encompasses individual protected Works which range from original assets, code, to level design.
Trademarks protect the names and logos associated with a game, its characters or significant creative elements which the trademark owner feels should be protected in relation to goods or services. Should you want more information on Trademark registration, feel free to browse through our FAQ. To provide a more concrete example, while the popular game League of Legends® is trademarked and copyright registered in the United States, individual characters from the game whose names have acquired distinctiveness, such as Jinx® and Garen® may also be protected under trademark law. Remember, protection for trademarks is done on a territorial basis, which means that there is not always an equivalent trademark registration in Canada or elsewhere. We would note that everyone’s most loved/hated Yordle Teemo® is also registered in Canada under Trademark Registration No. TMA1071045. From a commercial standpoint, this makes sense, given the extent to which Teemo and his likeness is integrated into products such as apparel.
Licensing as a revenue model
So, we’ve examined the way the copyright and trademark regimes apply to video games, what does that mean practically? It means that, whether you are developing a racing game which plans to make use of the name of an existing car brand, its logo or model, or a toy manufacturer hoping to sell a reproduction of a character in a video game, you will most likely have to obtain a license agreement from the owner of the IP.
Under Canadian copyright and trademark law, it is possible to grant your rights with respect to your IP through licensing. Licensing can be subject to its own agreement (e.g., a license agreement, trademark usage agreement) or be a part of a larger written instrument between collaborators. A license allow one party, the licensor, to grant another, the licensee, the right to do certain things with their IP, whether that be to reproduce an image, stream their game, reproduce a character or concept onto another medium (e.g., digital to physical), or use a trademark in Canada in consideration for a set of conditions. Crucially, in the case of a license, the IP continues to be the property of the licensor, and enable it to create exciting partnerships with licensees which allow them to exploit the product in a manner compliant with the licensing terms.
The changing face of licensing and collaboration in video games
As video games acquired notoriety, more and more organizations spotted an opportunity to bring their brands to a wide audience through this new popular medium. While this was alluded to previously, the prime example for us are racing games, which have been the subject of many agreements between car manufacturers and video game publishers. Car models are faithfully recreated, and trademarks are included in games such as 2017’s Forza Motorsport® 7 and 2018’s Forza Horizon® 4. Indeed, licensing allows car manufacturers to set guidelines as to how their cars should appear, perform and be represented in games.
Development studios and publishers, who have identified licensing as a subset of marketing and brand awareness, have begun to form some high-profile deals so as to be able to distribute and sell toys and apparel, among other goods. In 2018, IMG® was appointed as the exclusive worldwide licensing agent for Epic Games®, the developer and publisher of Fortnite®, and Hasbro Inc. was unveiled as a master toy licensee for Blizzard Entertainment Inc. and a line of Overwatch® franchise toys.
However, the variety of these licensing agreements’ subject matter continues to grow. Esports provide a new and exciting avenue for established brands to explore. While collectibles, t-shirts and hoodies bearing character likenesses and video game references are familiar by now, the 2019 collaboration between Louis Vuitton® and Riot Games®, the developer and publisher of League of Legends®, broke new ground with respect to the exposure which can be acquired by collaborating with owners of IP involved in esports. Indeed, few can contest the rapid popularity of virtual pop idols, K/DA ™, who were recently featured in a cover article for ELLE® Singapore and represented during both the 2018 and 2020 world championship of League of Legends®. While the details of the deal between Louis Vuitton® and Riot Games® were not made public, it led to the creation of a Louis Vuitton® branded trophy case for the 2019 world championship of League of Legends®, in-game cosmetic skins designed in collaboration with Louis Vuitton® creative director Nicolas Ghesquière, and a collection of luxury clothing branded as LVxLOL. To us, the deal is an augury of the faith more brands will put in associating themselves with IP holders within the video game industry, particularly properties which are established through successful esport structures.
A new world of possibility
Video game developers, publishers and brand owners will need counsel to help ensure their licenses and collaboration agreements allow for carefully monitored and constrained use of their trademarks, copyrighted Works and brand material. Retaining legal counsel to draft such agreements can prevent your studio from having some nasty surprises during distribution, or even after if some material is not licensed in perpetuity or subject to conditions which conflict with other agreements. If you have a legal question and require legal advice, do not hesitate to reach out to one of the members of our team.
Third Party Trademarks
All product names, trademarks™ and registered trademarks® in this text are the property of their respective owners.
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Copyright Act, RSSC 1985, c C-42, s 3(1)
Canadian Trademarks Act, RSC 1985 c. T-13, section 50(1); Canadian Copyright Act, RSC 1985 c. C-42, section 13(4)