The Covid-19 pandemic has rendered the traditional live sports industry across the globe practically comatose. Sporting leagues and tournaments may be gradually limping back into action, but the crowds remain largely absent, affecting revenues and growth prospects. Meanwhile, another kind of sporting entertainment has crept up on everyone: eSports (electronic sports).
In this time of self-quarantine and social distancing, the virtual world of eSports offers the adrenaline rush that sporting enthusiasts crave for, through competitive and organized video gaming. While the US, China and Korea still top the prize earnings charts in the eSports arena, India is slowly finding its feet in the space. Already, the most popular global games are also finding favour here, such as FIFA 20, Counter Strike, Fortnight, Call of Duty, PubG and DOTA. The world of competitive video-gaming was already a billion-dollar industry in 2019. The pandemic, although not quite a black swan event, has transformed the fortunes of the gaming sector exponentially, generating interest in the sector from newer sources every day.
In an early case in eSports litigation in India, the online fantasy cricket game Dream11 developed by Sporta Technologies Pvt Ltd (Sporta), which is a key player in the domestic gaming space in India, sued Dream11 Team against the unauthorized use of its trademarks DREAM11.COM and DREAM11 Design (CS (COMM) No. 355/2020). Sporta, which operates the website www.dream11.com, contended that DREAM11 Team had adopted and was using marks identical to its own, as part of its business name and as part of the domain name DREAM11TEAM.COM. The Delhi High Court decided in favour of the Plaintiff, Sporta, finding that it had established a prima facie case for an ad-interim injunction. Consequently, the Court restrained the Defendant from using the DREAM11, DREAM11.COM and DREAM11 Design marks.
As the eSports industry evolves and matures in India, a host of intellectual property (IP) issues are waiting in the wings, raising interesting new questions that our courts will have to deal with.
eSports and IP
The major revenue in eSports is driven by sponsorship and advertising, the sale of rights to broadcasters and payments from streaming services. Additionally, in-game purchases, add-on products, and affiliated merchandise, are also important revenue generators. Unlike traditional sports, the central subject of IP protection in eSports is the game itself. While the existing laws may not enable an original game developer or promoter to prevent all the aspects of a game from being copied, a well-defined IP strategy can protect the business interests of game developers and promoters.
Online and video games are the result of long hours of programming, source code development, artwork and graphic design, among many other things, each of which can be protected in some form or other. These are briefly discussed here:
Copyright: Copyright is believed to be the most important protection available for online and video games. It is the exclusive legal right granted to the creator of an original work and protects artistic works, cinematographic films, musical works, literary works, dramatic works, sound recordings, as well as computer software. It provides for the exclusive right to produce, reproduce, publish, and perform an original literary, artistic, dramatic or musical work. Some of the aspects of eSports that can be protected under copyright includes actual artwork and sounds in the game as an audiovisual work, and the underlying source code as a literary work. Although the registration of copyright is not compulsory, an author can also choose to register the copyright with the Indian Copyright office at a minimal fee which provides certain additional benefits, such as the right to statutory damages for copyright infringement.
Trademarks: Trademarks serve as an identifier of the source of origin of the game and are arguably the most valuable business assets, and perhaps the most recognizable form of IP protection. They protect the goodwill and reputation associated with the game as a brand. Some of the aspects of a gaming business that can be registered as trademark are the name of the game, taglines, logos of the game, characters of the game, among others.
Patents: Patents protect inventions from being copied. An invention can be any new and useful process (e.g., game play methods, graphics techniques, user interface communications), machine (e.g., a computer programmed with computer software), or composition of matter, and also includes new ornamental designs (e.g., icons, user interface artwork, characters, etc.). Once granted, the owner can negotiate the license terms with competitors, or in cases of infringement, sue for an injunction/or monetary damages. It is a powerful asset which provides monopoly on what is being claimed.
Having these IP rights in one's pocket can help game rights-holders sue infringers for unauthorized use of games by video streamers and tournament organizers who use trademarks, copyrighted material, or patented products, without gaining permission or acquiring appropriate licenses.
Besides the decision to award the injunction itself, what stood out in the Court's order in the Dream 11 controversy was the swiftness with which the Court was inclined to include the intermediary GoDaddy, LLC as a party to the suit. On the Plaintiff's plea, the Court also directed GoDaddy to block the Defendant's domain name. The issue which arises here is whether intermediaries can be held liable for any unlawful content, product or service posted via their platforms by a third party and the extent of such liability.
The rights and liabilities of internet intermediaries in India are constantly evolving. Presently, Section 79 of the Information Technology Act, 2000 ("IT Act"), the Intermediary Guidelines as well as the Supreme Court's decision in Shreya Singhal guide the law in this context. The default position in Indian law under Section 79 of the IT Act is that an intermediary is not liable for third party information, data, links hosted on its platforms. But Section 79(1), which grants general exemption from liability, is qualified by Sections 79(2) and 79(3), which lay down certain conditions under which protection is granted to intermediaries.
Millions of domain names are registered every day on GoDaddy and it would be practically impossible for the intermediaries to check the veracity of each website. Section 79 lays down the due process for informing intermediaries of activities and explains how they need to act only upon being provided with actual knowledge. However, if these platforms start to block every piece of content, the business viability of such platforms diminishes considerably. This was confirmed by the Supreme Court of India in the landmark Shreya Singhal judgment (AIR 2015 SC 1523), where it observed that "it would be very difficult for intermediaries like Google, Facebook etc. to act when millions of requests are made and the intermediary is then to judge as to which of such requests are legitimate and which are not.".
Lower courts, and notably the Delhi High Court, have expanded on intermediary liability in different contexts. The Delhi High Court, in Kent RO Systems Ltd & Anr vs Amit Kotak & Ors [2017 (69) PTC 551 (Del)], reaffirmed the Shreya Singhal position, observing that
"to hold that an intermediary, before posting any information on its computer resources is required to satisfy itself that the same does not infringe the intellectual property rights of any person, would amount to converting the intermediary into a body to determine whether there is any infringement of intellectual property rights or not... The IT Rules, according to me do not oblige the intermediary to, of its own, screen all information being hosted on its portal for infringement of the rights of all those persons who have at any point of time complained to the intermediary... Merely because intermediary has been obliged under the IT Rules to remove the infringing content on receipt of complaint cannot be read as vesting in the intermediary suo motu powers to detect and refuse hosting of infringing contents... I am of the view that to require an intermediary to do such screening would be an unreasonable interference with the rights of the intermediary to carry on its business."
But, when dealing with an issue involving trademark infringement and online marketplaces, in Christian Louboutin SAS v. Nakul Bajaj and Ors (CS (COMM) 344/2018), the Delhi High Court decided that the conduct of intermediaries, in failing to observe 'due diligence', could amount to 'conspiring, aiding, abetting or inducing' unlawful conduct and would disqualify them from the safe harbour exemption, as per Section 79(3)(a). We have written about this earlier as well.
Even as our Courts navigate around the tricky questions surrounding intermediary liability, it would be safe to argue that the trend is towards more stringent liability than the contrary. The Draft Information Technology [Intermediaries Guidelines (Amendment) Rules], 2018 has also placed various obligations on intermediaries.
In eSports, there are a range of stakeholders, such as eGamers, game publishers, and organizers of eSports events, who are faced with the challenge of protecting their rights. eSport tournament organizers need to ensure that stakeholders obtain the necessary usage rights from game publishers and participating eGamers, and these parties are aware of possible ancillary copyrights, and take appropriate precautionary measures to protect them. The parties in question should adhere to the licensing agreements in order to avoid adverse legal consequences. In the absence of proper guidelines or jurisprudence on the subject, grey areas in the gaming industry remain in abundance. But conventional tools of protection, such as through contractual provisions, are still available, and should be used to the fullest.
It would be trite to say that eSports are here to stay, although how eSports will get cemented in our lives is still uncertain, It may start in unexpected ways, perhaps with the collision of the worlds of traditional sports and eSports: the International Olympic Committee has said that eSports based on traditional sports such as football could be considered a sporting activity in future; and in early bids for the 2024 Olympics, the Chairman of the Los Angeles Olympics committee (which Paris eventually won; LA will host the 2028 Olympics) had even floated the idea of using augmented reality and virtual reality technology to make the global sporting event more accessible to younger audiences.
All this essentially means that we must brace ourselves for the protection of new subject matter, and by corollary, new legal challenges as well. India is gingerly exploring this territory on the industry side; it is time for our Courts to start preparing too.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.