By Jon Festinger on January 30, 2013
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For anyone interested in The Discoverers by Daniel Boorstein (referred to in class in the context of mechanical clock kept “secret”:
Will and I wanted to provide a brief synopsis of Wednesday’s lecture in case anyone is considering writing their paper on the subject.
The European perspective is quite varied considering the number of countries – each with its own legal system. The EU has harmonized this up to a point, but there are still issues to consider in the gaming industry.
It’s important to recognize the size of the EU gaming market. Although the USA is often considered the major player, the EU market is relatively close in size. It is therefore important to consider the importance of EU from a jurisprudential standpoint. Other methods of calculating market size should also be considered, for example, market penetration is much higher in Scandinavia than in the USA or even other areas in Europe. Online and mobile gaming is much more popular in Asia, and will probably make Asia the largest gaming market by 2015.
In terms of the legal aspect, there has been little harmonization of contract law between nations. As a result, development contracts where there are a variety of legal systems present must be kept in mind. In the UK, for example, the Unfair Contract Terms Act gives wide power to strike down contract terms. There has been some harmonization from International Treaties, the EU, or other supranational treaties. However, even where the rules have been harmonized generally, “the devil is in the details”, and the actual application will be different in each location. Consider the example of copyright in the US and UK. Although under operating under similar systems, issues like the value of registration are much different in each jurisdiction.
Typically the location for development coincides with where it happens physically. For sophisticated games, however, companies must think more critically about where development will take place. A good source to look at is the IFC Economy Rankings which review where the best place to do business is.
The first question to ask is what kind of corporate structure are you going to use and in what country. Consider the example of Yahoo expanding into Europe and putting its HQ in Paris. The company failed to consider the implication of the French laws more generally.
Secondly, tax considerations should be taken into account. Jurisdictions like Canada and the UK offer favourable tax incentives. The US and other jurisdictions are not far behind in this regard.
Finally, there are questions around IP law. Offshore game production may be cost effective, but it might be difficult to obtain and maintain the control over the IP content of the game. Different countries have different copyright requirements. Some countries require registration of copyrights, while others do not, and there are different approaches to the fair use doctrine. Trademark law is country specific, and trademarks must be registered in each country, though there is some standardization in the works (Madrid Convention and Community Trademarks). Patents are also country specific.
While the majority of games are still physically distributed, online distribution is increasing rapidly. In terms of contractual distribution there is a certain amount of harmonization, however, local practices are still very important. For example, consider the EU Commercial Agents Directive, which gives anyone who does work on your product wide powers. Other jurisdictions in Europe give distributors absolute right of return if your game does not perform. At the far end of the spectrum, China requires government approval to create a game in their jurisdiction.
It is important to keep in mind that business models should be adapted to the local demands. For example, in Starcraft 2, a traditional distribution model was used in the west, whereas a subscription method was employed in Brazil and Russia. This goes to the question of how easy it is to control the prices of your product. Under EU Law, minimum or fixed prices are generally frowned upon, but recommended prices are acceptable. In China, there are antimonopoly laws that say that resale price maintenance is only illegal if it restricts or eliminates competition. Like much of the laws related to video games, the ability to control prices is largely dependent on local laws.
When dealing with advertising and marketing, there is little to no harmonization. There are different cultural sensitivities in each location. The UK now has regulated advertisement of games, arguably in a very poor manner. The French also have strict rules, especially when it comes to the language of the advertisements. A developing issue that will inevitably become more important with advertisement is children. The EU is already discussing how advertisements at children can be regulated.
The EU arguably has the most advanced consumer protection system in the world with contract legislation being especially stringent. EU law dictates that any consumer contract that’s unreasonable is automatically void.
The EU leads other areas as well, consider consumer privacy. The EU is still engaged in enormous reforms. This new law will likely include the right to be forgotten which will open up a new slate of issues for video game companies. Mr. Purewal also identified the following areas as being current or pending issues for video game law:
Q: Germany has a more complicated rating system than anywhere else, has this had any effect on the market in Germany?
A: Not really, seeing that Germany is the largest market in the EU. Because it is such a big market, companies have to deal with the lengthier process for obtaining German ratings. While it might take a bit longer for games to be released in Germany, or have a small effect on creative freedom, ultimately the companies will deal with it. Interestingly, Mr. Purewal suggested that the days of national regulators are probably coming to an end, and we will see international rating systems before long.
Q: What effect does/will the differing copyright infringement laws in the EU, especially laws related to unfair terms in contracts, have on people uploading copyrighted information to things like youtube?
A: The terms of the contract for youtube say you are liable for uploading copyrighted information. This isn’t an unfair term, and the legislation won’t go so far as to say that platform owners like youtube are responsible for all of the content on their site. As long as the platform takes down anything copyrighted once they are notified, there shouldn’t be any problems.
Q: What effects will orphan works (where it is unknown who actually has the right to aspects of a game or characters, content, etc,) have on games development?
A: The concept of orphan works is complicated, and fragmented across Europe. The recent Hargreaves Review suggested creating a copyright exchange and a repository for orphan works, which would charge a licensing fee for use of copyrighted material where the owner was unclear. If the rights holder is subsequently ascertained, then the money will go to him or her. Otherwise, the money can be applied to other areas (not specified).
Thanks for the synopsis and overview of the international issues. It is helpful in terms of both context and particulars. Found the following very funny and well done video piece (which can also be found under the Resources – International button on this Blog) on the practical aspects of international copyright “assembly”. It’s from the “vlogbrothers” and is titled “Across Three Continents: A Tale of Tumblr, Copyright, and Excellent Posters”: http://www.youtube.com/watch?v=tHp3c9ziIq0