The volume of the Russian video games market in 2020 amounted to 163.4 billion rubles (equivalent to 2.1 billion USD), which is 35% more than in the previous year, according to a study by MY.GAMES, the gaming division of Mail.ru Group, based on data from analytical companies NewZoo, Superdata, AppAnnie, Sensor Tower and others.
However, the regulation of legal relations in Russia's online games industry is at an early stage of development and therefore contains many controversial issues. One of them is the issue of regulating licensing agreements.
A computer game or a game intended for another gaming platform is not a simple, but a complex object of intellectual property rights, which includes many different independent results of intellectual activity - music, script, plot, video, game characters. In addition, the logo of the company that created the game, game's title, various slogans and the packaging can also be considered as an independent protected result of intellectual activity.So, for example, on February 2, 2019, there was a virtual concert for the first time in the online game Fortnite. The organizer was DJ Marshmello together with the creators of the game Epic Games. The concert was 10 minutes long. There were more than 10 million spectators-players.
In most cases, the legal relationship between the player and the game operator is regulated under a public agreement - a license agreement (click-wrap), according to which the administrator of the game resource acts as the copyright holder of the game (computer program), and the player is the licensee of the game. The player, on the basis of the agreement, reproduces the client part of the game on his computer, the purchase of game objects is made under the terms of the general license agreement. A license agreement is a civil law contract under which one party, which is the owner of the exclusive right to the result of intellectual activity or to a means of individualisation (licensor), grants or undertakes to grant the other party (licensee) the right to use such result or means of individualization.
Click wrap agreement is an agreement on the use of a program / site / service, which is concluded with the user as a result of clicking by the user on "I agree / accept the agreement on the use of the program / site / service".
First of all, it is necessary to pose the question - what is the object of the relationship between the user and the developer? The object in their relationship is a computer game. Despite the two points of view regarding the question of what a computer game is, their identity lies in the fact that whether it is a computer program or a multimedia product, it is in any case the result of intellectual activity, and therefore it is intellectual property, in connection with which it is subject to regulation by Part 4 Civil Code of the Russian Federation. In Art. 1233 of the Civil Code of the Russian Federation stipulates that the rightholder can dispose of his exclusive right in any way that does not contradict the law and the essence of such an exclusive right.
One of the ways to dispose of an exclusive right is to provide another person with the right to use the result of intellectual activity. There are two main types of a license agreement: 1) a simple (non-exclusive) license, when the right to use can be granted by several persons; 2) an exclusive license, when the right to use can be granted only to one person. If the game is the result of intellectual activity, therefore, in order to use it, it is necessary to conclude an agreement with the copyright holder. Online play is most subject to the contractual design of a non-exclusive license. For example, Wargaming states in its license agreement: "a licensee of the Games to Wargaming under a non-exclusive license (hereinafter referred to as the" User ") ..."). Blizzard Entertainment, Inc. uses similar wording in its license agreement. As a result of all that we have said, the object of the relationship between the user and the developer is the result of intellectual activity - a computer game, and the relationship that develops between these entities is based on a license agreement.
As soon as the character acquires this or that item, then, within the framework of the whole legal relationship based on the license agreement, a simple connection arises - an obligation - between the player and the developer. Conclusion from the contrary seems to be a supporting argument. In his license agreement, he pointed to non-activated data and commands that are provided for a paid license. Meanwhile, we believe that they have already been included in the client part of the game.
Consequently, within the framework of the user agreement, two legal relationships arise. At first glance, in contrast, we can say that the specified Wargaming license agreement contains two agreements on a gratuitous and a paid license at once, therefore, these are two independent legal relationships. In fact, within the framework of one game and continuous gameplay, the player has different legal relationships with the developer.
The dominant position is that the developer owns copyrights to such objects as the program code for the computer base and audiovisual displays - these two parts are the object of virtual property. The proliferation of the rules on licensing agreements on controversial relations, in contrast to the "proprietary model" of regulation, has a positive property - recognizing that in closed virtual worlds (of which the majority) all rights to in-game objects belong to the copyright holder of the game or the game designer, we protect the turnover from the destructive tendency endowing the copyright holders of virtual worlds with excessive responsibility for the actions of third parties and players (of whom, as we have already noted, there can be several tens of millions in the virtual world, and whose behavior is difficult to control by the operator of the game process).
However, it is also possible to highlight the disadvantages of regulating relations that mediate the transfer of game objects through the conclusion of license agreements:
- By recognising the agreement between the copyright holder and the user of the license agreement, we will complicate the relationship by the fact that the further "resale" of virtual objects will be, by legal nature, a sublicense agreement, which does not correspond to the will of the parties. For example, it is obvious that the player (licensee) has no motives to bear responsibility to the licensor for the actions of the sublicensee under the concluded sublicense agreement. In addition, it is worth noting that the consent of the licensor is required to conclude a sub-license agreement, and the user agreements of most online games provide for an explicit prohibition on the transfer of rights from the license agreement.
- User agreements in essence are accession agreements developed exclusively by the copyright holder, the operator of the game process, in which he has full discretion. The user is a vulnerable, weak side, and in disputes with the copyright holder, he deliberately loses. Such an agreement plays the role of law for virtual space.
- The purchase of additional game objects (that is, a part of the game's program code) and the payment of a license fee by themselves do not give the user any guarantees of access to these objects. In the licensing relationship, the obligation of the licensor is fulfilled in the moment of providing, crediting game values, the further "fate" of the provided objects remains outside the scope of the responsibility of the copyright holder and constitutes the user's problem. In addition, if the account is blocked, there will be no refund from the gameplay operator.
- It is incorrect to reduce the legal relations developing around game objects solely to regulation by the norms of contract law, since this contradicts the idea of a legal relationship as a relative one, binding only its participants. It is impossible to assign all responsibility to the organizer of the gameplay, the developer of the game, since they do not have sufficient capabilities to control the virtual world. They do not stand between a user with a virtual object and an indefinite circle of persons from whom an encroachment on the game object can come. Unconsciously, society uses a property-legal model to regulate relations with game objects, in other words, the norms of the real world on property rights are transferred.
In judicial practice and in theory, there is no unambiguous approach to emerging relationships. In theory and practice, 3 main approaches have been formed:
- The user agreement is a license agreement between the user and the copyright holder, and the regulation of relations in this case is carried out by the provisions of Chapter 4 of the Civil Code of the Russian Federation. Accordingly, all income from the provision of a license to use a computer program is not subject to taxation in accordance with paragraphs. 26 p. 2 of Art. 149 of the Tax Code of the Russian Federation. And the new options provided are nothing more than an extension of the license agreement. It should be noted that this position is quite common and, based on the literal interpretation of the law, is quite applicable.
- An online game is recognised as an entertainment event, the organization of which is carried out by the administrators (copyright holders) of this game and their activities are recognized as activities for the provision of (entertainment) services.
- Recognition of an online game as a game within the meaning of Art. 1062 of the Civil Code of the Russian Federation. The rights of participants with such a legal approach are not subject to judicial protection (it should be especially noted that such a position was developed as a result of users' attempts to judicially challenge the deprivation of certain opportunities in the game, as well as restrictions on the use of the game).
In 2015, the Supreme Court of the Russian Federation in a tax dispute came to the conclusion that providing players for a fee the opportunity to use additional game functionality in order to facilitate the gameplay and faster development of the game character is an independent service for organizing the game process. The case concerned the payment of value added tax by Mail.RuGames (a division of Mail.ru), which provided additional game functionality in its online games for a fee (digital goods). The company tried to take advantage of the VAT exemption for the sale of software, databases and the rights to use them (clause 26, clause 2, article 149 of the Tax Code of the Russian Federation). The Supreme Court upheld the decisions of the lower courts and the Federal Tax Service, which interpreted the sale of virtual objects and services as a service, which destroyed the basis for the application of the tax break. Starting from the 4th quarter of 2016, the Federal Tax Service still exempted Mail.Ru Group from paying VAT for the sale of currency and items in online games. Thanks to this, the company received about 342 million rubles.
In January 2017, in response to an appeal, the Federal Tax Service confirmed its new position: "Taking into account that in relation to non-activated data and commands under the Agreement, LLC (Licensor) transfers the rights to an individual (Licensee) to use a computer program, and an individual (Licensee ) transfers to the LLC (Licensor) the corresponding remuneration for the specified right, the application of VAT exemption for the specified transfer of rights on the basis of subparagraph 26 of paragraph 2 of Article 149 of the Code is lawful. "
Thus, it turns out that in 2015 the Supreme Court of the Russian Federation determined that the sale of additional gaming functionality is the sale of a service, and in 2017 the Federal Tax Service changed its approach to gaming facilities, calling them part of the computer program that the licensor (operator and copyright holder of the game) transfers to the licensee (player) on the terms of the license, so their sale is not subject to VAT.
Thus, in current legal framework and litigation practice there is no single approach to determining the legal nature of the contractual relationship between the User and the owner of the game. Also controversial is the issue of legal regulation of the agreement concluded by the User with the Copyright Holder of the game. The emerging relationships are much broader and more diverse than licensed ones in their content.
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.
