As already announced, our series of articles on e-sports and gaming starts this week. In this connection, we will be answering legal questions from the areas of competition, corporate, data protection and labour law.
Dr. Patric Mau is kicking off the event. He will explain the legal situation and the claims under trademark law arising from trading in payment methods. If a distortion of competition is to be prevented and fair competition guaranteed, the question arises as to whether game developers are entitled to claim the abatement of and injunctive relief against the sale of soft currencies via third-party trading platforms.
Most game developers now rely on in-game payment methods for their distribution structures. In-game currencies can basically be divided into two categories: hard currencies and soft currencies. While hard currencies can be purchased with real money, the peculiarity of soft currencies is that they cannot be purchased with real money. Rather, soft currencies have to be earned during the game through performance and time spent in the game. However, more and more third-party trading platforms are offering the direct purchase of soft currencies for real money. This raises the question of whether game developers can assert legal claims against such providers for offering soft currencies for sale on third-party trading platforms. The primary incentive for players purchasing soft currencies with real money via trading platforms is that they do not have to earn them through performance and time spent in the game. However, this can lead to a distortion of competition as, also in e-sports, the creation of and compliance with equal conditions is also a key element of fair competition. Besides jeopardising a created ecosystem, game developers may face immense revenue losses. With annual global revenues of US$ 248.6 billion in 2022, the computer and video game industry is now one of the largest markets in the entertainment industry (by comparison, the annual revenue for films was US$ 76.7 billion and for music US $ 26.2 billion). Furthermore, all competitive e-sports players are under pressure to obtain in-game items via these trading platforms that they require in order to stay competitive.
This raises the question of whether game developers are entitled to the abatement of and injunctive relief against the sale of soft currencies via third-party trading platforms in order to ensure fair competition.
Claims under competition law
If third parties provide a trading platform for the brokerage and sale of soft currencies, this could give rise to a claim to injunctive relief under Sec. 8 (1) sentence 1 of the German Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb, "UWG").
For this to apply, there first of all has to be an unlawful commercial act pursuant to Sec. 3 UWG. This is the case if the operator of the trading platform acts unfairly by providing such services, Sec. 3 (1) UWG. This would require that the game developer and the operator of the trading platform are in a competitive relationship with each other, i.e. that they are competitors. Such a competitive relationship exists if both parties endeavour to sell similar services or goods within the same end consumer group and the competitive behaviour of one affects the other. This is the case if the advantages of one correspond to the disadvantages of the other (so-called interaction). Such interaction can occur even if the parties involved are active at different economic levels or even in different industries. Thus, "large" developers and publishers can also be affected by "small" trading platforms. In such a case, e-sports players can make use of the offers of the developers as well as the trading platforms to acquire the soft currencies. By enabling a "substitute market" for soft currencies, they have corresponding commercial actions, which means that a competitive relationship can be affirmed.
In addition, the sale of soft currencies by the operators of the trading platforms has to constitute an unfair act. In this respect, a deliberate hindrance of a competitor pursuant to Sec. 4 No. 4 UWG comes into consideration. Here, the impairment of the competitor's competitive opportunities constitutes a hindrance. In this case, there is much to suggest that the trading platforms are impairing the game developers in their distribution by providing a substitute market. The creation of a parallel distribution structure affects the market of the game developers. Such impairment is unfair if the hindrance leads to the competitor no longer being able to adequately exploit its performance on the market. This must be determined on the basis of an overall assessment that takes into account the interests of competitors, consumers and other market participants.
The purchase of soft currencies for real money via third-party providers provides e-sports players with advantages in terms of performance and time saved in the game compared to players who follow the developers' rules. In some cases, it can even be economically more lucrative to take up the offers of the trading platforms. Moreover, this also affects the economic interests of the developers. For example, in 2021 in-game purchases generated a total turnover of over 4 billion euros in Germany. Consequently, therefore, there are ultimately substantial reasons to support the assumption of unfairness. The offers of the trading platforms entice players to circumvent the rules established by the developers.
Claims under trademark law
Furthermore, claims to injunctive relief under trademark law may come into consideration under Sec. 14 (5) of the German Trademark Act (Markengesetz, "MarkenG") or under Article 9 (2) in conjunction with Article 130 (1) of the EU Trademark Regulation. This is the case if the designations and images used are protected trademarks. If trademark protection exists, the trademarks also have to be used within the meaning of Sec. 14 (2) MarkenG in order for a claim to exist. Here, a use according to Sec. 14 (3) No. 2 MarkenG comes into consideration. Hence, providers usually use the protected trademark to describe their offer.
However, a use of the protected trademarks could exceptionally be permissible under Sec. 23 (1) No. 3 MarkenG. According to this provision, the trademark proprietor may not prohibit the use of the trademarks by third parties in the course of trade if the use of the trademarks is necessary for the purpose of identifying or referring to goods or services. In this case, the trademarks are used to enable an association with the respective games of the developers. If soft currencies are considered as game accessories in this context, then Sec. 23 (1) No. 3 MarkenG would apply.
Anything to the contrary could at best arise from the fact that Sec. 23 (2) MarkenG provides for a reverse exception to Sec. 23 (1) MarkenG. According to this, the provision of Sec. 23 (1) MarkenG only applies if the trademark is used in accordance with "honest practices". This, in turn, must be determined through an overall assessment of all circumstances of the individual case, whereby all aspects of competition law in particular must be taken into account.
The central basis of the assessment is the protective purpose of trademark law. However, whether the specific use of the trademarks for the respective product designation constitutes an unfair use of the trademark must be assessed on the basis of the design of the trading platform. In all events, the unlawful use of the product in itself does not necessarily constitute an unethical infringement of the trademark. Thus, one can conclude that trademark claims only exist if the trademarks are used in a manner that is not in accordance with honest practices. This always requires an examination of the individual case and will tend to be the exception.1
Footnotes
1. For more information on soft currencies, see also: Saßenbach in SpoPrax 2023, 115 - Milliardenmarkt, Soft Currency Handel" (Soft currency trading" - a market worth billions).
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