Navigating Intellectual Property Challenges in the Evolving Video Game Industry

The video game sector has emerged as one of the fastest-growing segments of the entertainment industry, a trend that the COVID-19 pandemic has only accelerated. According to Newzoo’s October 2020 assessment, the global games market generated revenues of USD 174.9 billion in 2020, marking a 19.6 percent increase over 2019 and exceeding pre-pandemic forecasts by USD 15 billion. Concurrently, the number of gamers worldwide is projected to surpass 3 billion by 2023, reflecting the medium’s expanding social and cultural significance.

Video games have evolved beyond mere entertainment to become vital platforms for social interaction. Newzoo’s research identifies socializing as the second most common reason for increased gaming during the pandemic. This shift is exemplified by events such as the April 2020 in-game Travis Scott concert within Fortnite Battle Royale, which attracted 12 million viewers and demonstrated video games’ capacity to replicate real-life social experiences.

Technological advancements have driven rapid changes in video game design, complexity, and diversity. Players now engage with a broad spectrum of genres and formats, with AAA titles often offering extensive story content spanning dozens or hundreds of hours. Graphical fidelity has reached new heights, enabling realistic depictions of characters, frequently modeled after Hollywood actors or influencers.

At the core of video games lies their intellectual property (IP), encompassing a complex amalgam of computer programs, audiovisual elements, artwork, literary content, voiceovers, music, performances, trademarks, and more. This multifaceted nature presents significant challenges for IP protection and management.

The global distribution of video games further complicates IP considerations, as developers and publishers must navigate varying legal regimes across jurisdictions. Despite the importance of IP in gaming, many aspects remain legally ambiguous, posing risks for creators and users alike.

One prominent IP issue arises from video games’ increasing realism, which often involves incorporating real-world objects, brands, and landscapes. For instance, warfare-based games frequently replicate historical weapons, vehicles, uniforms, and equipment, many of which are protected by trademarks. This practice raises questions about whether artistic expression justifies the use of such trademarks within games.

The genre of warfare games has been a focal point for trademark disputes. A landmark case in 2020 involved AM General’s Humvee trademarks and their use in the Call of Duty series by Activision Blizzard. A New York district court ruled in March 2020 that this use was protected under the United States’ First Amendment right to freedom of expression. Applying the Rogers test from the 1989 Rogers v. Grimaldi case, the court found that the trademarks’ use served an artistic purpose and did not mislead consumers. The court stated, “If realism is an artistic goal, then the presence in modern warfare games of vehicles employed by actual militaries undoubtedly furthers that goal.”

While the Humvee ruling represents a significant precedent within the U.S., its applicability is limited geographically. Most other jurisdictions lack explicit legal provisions permitting trademark use for artistic purposes in video games. Nevertheless, alternative legal arguments may support such use. For example, a 2012 Parisian court allowed the use of Ferrari’s logo in the Grand Theft Auto series, citing freedom of expression and the absence of consumer confusion.

Another notable IP consideration involves “Easter eggs,” or hidden content embedded by developers, often as jokes or cultural references. These can range from subtle nods to other games or media to direct parodies or replications of copyrighted works. Examples include a reference to Assassin’s Creed in The Witcher 2: Assassins of Kings, battling My Little Pony-style unicorns in Diablo 3, and accessing classic Activision games within Call of Duty: Black Ops 2.

Easter eggs typically involve some degree of appropriation of copyrighted material, raising questions about infringement. Legal assessments hinge on factors such as the amount and substantiality of the borrowed content. Conceptual references generally avoid infringement since IP law does not protect ideas alone. However, direct use of copyrighted elements may infringe unless justified by exceptions.

The fair use doctrine, primarily recognized in U.S. copyright law, provides a flexible framework for such exceptions. It considers factors like purpose, nature, amount used, and market impact. Civil law jurisdictions, by contrast, often apply narrower, specific exceptions such as quotation, parody, or educational use. Consequently, video game Easter eggs may face varying legal risks depending on jurisdiction.

User-generated content (UGC) further complicates IP management in video games. UGC includes fan art, gameplay videos, and modifications (mods) that alter game features or add new content. These creations are shared across developer-owned platforms, third-party sites, and within games themselves. Some games are designed around player participation, blurring lines between creators and consumers.

As video games increasingly resemble traditional cultural works in their creative complexity, clearer legal recognition and protection of their IP elements are essential. Enhanced understanding by legislators and courts will enable developers to better assess legal risks and foster innovation in this dynamic industry.