Written by Richard Wee and Carmelia Yong Chiu Thung

Introduction

In our previous articles, we looked at various legal disputes in the gaming and esports industry with regards to contract law, anti-competitive law, intellectual property infringement and class action lawsuits, to name a few. Along with the incredible advancement of technology, the industry is expanding exponentially, unhindered by the pandemic year of 2020 due to the borderless nature of online video games and esports.

As gaming and esports become the norm of today, the spotlight is increasingly fixed upon game developers and publishers, as the creators and proprietors of video games. In this article, we briefly examine a few recent legal cases involving some big names of the gaming industry.        

On 24 December 2020, a mere 14 days after the launch of the massively anticipated game Cyberpunk 2077, a class action lawsuit was filed against the developer of the game, CD Projekt by investors who had acquired shares in CD Projekt in 2020.

Why? The console versions of the game (for Xbox and Playstation 4) had been major flops, gravely criticized by established game reviewers such as IGN for having low technical quality and bad performance. Mere days after the launch, Playstation and Sony removed the game from their platforms and offered full refunds.

The investors alleged that CD Projekt had made many misleading material statements which led to a false inflation of the company’s share prices. The subsequent negative impact on CD Projekt’s stock price caused losses to the investors.

CD Projekt issued a statement on the next day, announcing that the company will undertake ‘vigorous action’ to defend itself against the claims.   

The complaint filed can be found here:

https://cdn.arstechnica.net/wp-content/uploads/2020/12/gov.uscourts.cacd_.805901.1.0.pdf

This relates to a lawsuit that had originated in 2019, concerning the purchase of loot boxes by minors in the widely popular game Fortnite, and Rocket League. After a transfer and the filing of a new suit in a different jurisdiction (the current 2021 suit), a settlement was soon approved by the Superior Court in North Carolina.

The plaintiffs were minors, with the action brought on behalf of them by their guardians or parents. They claimed that Epic Games had unfair and deceptive marketing practices that preyed on minors who played the games, including the use of loot boxes and virtual currencies, which induced minors into in-app purchases they would not have made otherwise.

Under the settlement, Epic Games agreed to compensate players who had spent money in-app, subject to conditions, with in-game benefits and cash payments.     

Kindly visit the link below for more details on the lawsuit:
https://www.epiclootboxsettlement.com/Content/Documents/Complaint.pdf

In January 2021, a lawsuit was filed against Valve by five gamers who alleged that Valve’s inclusion of a ‘Most Favoured Nation’ clause in agreements hinders innovation and prevents price competition. The aforementioned agreements are a prerequisite for game developers to put their games on the Steam platform. 

More information and the full complaint can be found here:
https://www.hollywoodreporter.com/thr-esq/popular-gaming-platform-accused-of-abusing-market-power-through-contracts

This case involves allegations that EA had misrepresented their loot boxes in their games (the EA Sports franchises, which include FIFA) by not disclosing their usage of an EA patented Dynamic Difficulty Adjustment technology- a difficulty adjusting mechanism that adapts the game by making it harder.

This has been termed ‘scripting’ by some, and may pose a problem because players would never be able to perform as well as they should in-game, thus inducing them to purchase Player Packs in hopes of improving their competitiveness.

EA had since commented that the allegations were baseless and misrepresented their games, and that they will defend.

Kindly refer to the link below for more information:
https://www.gamesindustry.biz/articles/2020-11-11-ea-faces-yet-another-class-action-lawsuit-over-alleged-use-of-dynamic-difficulty-adjustment

A lawsuit was filed in the beginning of 2021 by Riot Games and Bungie over cheating and hacking softwares produced and sold by GatorCheats for use in their respective online games, Valorant and Destiny 2, thus breaking State and Federal law in the United States.

The complaint claims that the cheating softwares caused and were causing irreparable damage to the business interests of the gaming companies, as the commercial value of games depends heavily upon fair play. In addition, it also alleges that by selling the cheats and hacks, GatoCheats was effectively inducing players to break the contracts they had agreed to upon downloading and installing the games.

To read more about the case and the full complaint, please visit the link below:

https://www.polygon.com/2021/1/11/22224696/riot-bungie-destiny-2-valorant-cheat-maker-lawsuit

In February 2021, Clayton Haugen, owner of literary works who had created a character named Cade Janus, filed a lawsuit alleging that Activision had copied Cade Janus into one of the most successful Call of Duty franchises ever, Call of Duty: Modern Warfare, in the form of an in-game character “Mara”.

Haugen alleges that Activision had, among other things, employed the same actress and make-up artist who had been involved in Haugen’s concept art for Cade Janus, had required them to sign Non-Disclosure Agreements, and had used Haugen’s photographs of Cade Janus in development documents and even put them up in a studio.

In Haugen’s claim, it is stressed that Activision had never marketed a female lead character as extensively as they had with “Mara”, which was the reason for the “blockbuster launch” of Call of Duty: Modern Warfare. He seeks monetary remedies, which may include all profits Activision has gained attributable to the infringement.

This is not the only copyright infringement lawsuit against Activision at the moment. A trial date for WWE Legend Booker T’s case against Activision has also been set in April 2021, which involves allegations that Activision had ripped off Booker T’s pro-wrestling persona, G.I.Bro to create an in-game character David ‘Prophet’ Wilkes in Call of Duty: Black Ops 4.

Kindly visit the link below to read more:
https://torrentfreak.com/images/2-21-cv-00035-Clayton-Haugen-v-Activision-Complaint-210202.pdf

Conclusion

The novel and unorthodox setting of the industry, coupled with its exponential growth and lack of legal precedents and governance, leads to the inevitability of legal disputes. As mentioned in Parts One and Two of this article, effective and relevant legal support is crucial in any business setting, project or transaction, so that potential legal challenges can be spotted from the outset and dealt with swiftly in order to evade lawsuits. 

 

Published on 24 May 2021

Photo by Igor Karimov on Unsplash

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