Game Counsel

Sheppard Mullin Base

Despite all of the artistry that goes into making a game, at some point early in the development process the question must be asked, “How are we going to make money?” And with the ever-growing cost of developing modern games, this is no trivial question. Technology has opened up a litany of new methods for monetizing games; gone are the days where a publisher’s only option was the uniform system of retail sales. Each modern method of monetization has different requirements for what a game must do to be implemented successfully, and these elements need to be intrinsically woven into…
The State of Nevada has taken to the initials steps to create an official commission governing esports with the introduction of Senate Bill 165, and its subsequent discussion in a hearing of the Nevada Senate Judiciary Committee on March 17, 2021. The proposed commission would be tasked with creating regulations overseeing esports competitions within the state. Such a move is the first of its kind in the US, and a major step as esports continues to move into the mainstream. The size and composition of the commission was still being worked out, though the current draft of the bill…
This article was originally published by the International Game Developers Association. Between the global rise of competitive gaming and esports, the proliferation of mobile and console gaming, and the financial and cultural success of games such as Fortnite and Minecraft, it appears little can stop the growth of the video gaming industry. Having long since overtaken the annual revenues of the film and music industries, the global video game market continues to expand at a rapid pace, with consumer spending on video game products reaching a record $56.9 billion in 2020. With consumers largely being confined to their homes…
While most patent disputes involving gaming companies are located in district courts, the ITC remains a viable option for at least some gaming disputes, where a patent owner can have the U.S. government bar importation of products found to infringe. While the ITC does not provide monetary damages, it’s extremely fast schedule and willingness to bar importation of infringing products makes it a desirable forum for patent owners. The desirability of this forum has also increased recently with the PTAB seemingly unwilling to grant IPR challenges for patents being asserted in ITC investigations. Earlier this week, an IPR challenge filed…
The esports ecosystem experienced transcendental growth in 2020 due at least in part to the Covid-19 pandemic, and is poised to act as a spring board for even further growth this year. With traditional sports largely sidelined last year, stadiums closed to fans, and people starving for personal interaction, gamers and spectators alike have turned to esports in record numbers.  According to Newzoo, a prominent esports analytics company, 22% of the internet population participates in esports, and global gaming revenue is expected to hit $159 billion by the end of 2020.[1] Streamers and streaming platforms have exploded in popularity,…
When participating in an M&A process involving a video game company, whether you are on the sell-side or the buy-side, there are certain key terms that are included in industry standard commercial agreements that the parties need to keep on their radar. Failure to identify these terms early in the due diligence process can create roadblocks for the parties as they near the finish line, whether that be signing the definitive acquisition agreement or closing the transaction. A key aspect of the due diligence process is going to be the review of the developer’s publishing agreements, development agreements and/or tool…
Loot boxes have become a regular feature in many mainstream video games. However, while their popularity is clear amongst gamers, the legal issues and positions from regulators about their use, both in the US and abroad, are a bit more murky. By the end of 2020, several of the major console manufacturers have pledged to require games developed for their platforms to disclose information on the relative rarity or probability of obtaining randomized virtual items. These required disclosures will also apply to game updates, if the update adds new loot box features. Many major publishers have made a similar commitment…
The streaming landscape has experienced its second major shakeup this year with Huya’s merger with DouYu on October 12, 2020. Huya and DouYu are China’s largest streaming platforms, averaging 169 million and 165 million monthly users respectively, and will combined be worth around $11 Billion USD. The merger positions the new entity as the largest esports platform in China, and makes it the de facto destination for esports eyeballs in the region. This shake-up is coming off of Microsoft’s decision to functionally shut down its streaming service, Mixer, in June. As part of that move, Microsoft released its exclusive…
With 6 lawsuits, 32 preliminary injunction actions, and over 20 PTAB proceedings, GREE and Supercell have been duking it out in the IP world, with millions of dollars in legal fees being spent in the process.[1] Most recently, the PTAB denied Supercell’s PTAB challenges to GREE patents in early September, while an Eastern District of Texas lawsuit went to verdict and found in favor of GREE on September 18th, awarding $8.5 million dollars in damages to GREE.[2] The Texas dispute provides several lessons regarding missteps by both sides that weakened their positions. Other gaming companies should consider these…
During the first few months of the COVID-19 lockdown, with virtually all major sporting events cancelled, sports betting and gambling companies turned their eyes toward the esports universe in search of a solution. While initially large scale esports events were also cancelled, professional gaming competitions soon began taking place online. As one of the only professional “sports” competitions being broadcasted with any consistency, esports competitions filled the gap for many sportsbook operators. Online bookmakers that specialize in esports, such as Luckbox and Unikrn, caught the first wave of esports betting explosion, reporting incredible growth in total bets placed on their…
The allegations of gambling issues with games continues. Last week, a class action lawsuit was filed against  Apple relating to games in its App Store that include loot boxes. The complaint alleges that sale of such games are predatory practices enticing consumers, including children, to engage in gambling and similar addictive conduct in violation of California law. The suit alleges that loot boxes are like Vegas-style slot machines and allegedly constitute illegal slot machines when played on an iPhone or similar device. California Penal Code § 330(d) broadly defines an unlawful “slot machine or device” as: a machine, apparatus, or…
Musicians and gamers are no strangers to each other; the two industries have been capitalizing on the crossover of their respective fan bases for nearly a decade. Although these collaborative efforts are not news, the utility of virtual and remote fan engagement has been re-contextualized in the wake of the COVID 19 pandemic. As the average musician derives the overwhelming majority of their revenue from live performances, technologies that can simulate these experiences have taken on a new importance virtually overnight. Marshmello’s performance within the game Fortnite at the beginning of 2019 revealed how the synergy between music and gaming…
On Thursday April 30, 2020 U.S. Senators Ted Cruz and Josh Hawley announced their intent to introduce the ” Countering Chinese Attempts at Snooping ” Act,  with the goal of “… Banning U.S. Officials from Using Tencent, … [and] Other Chinese Communist Party-Backed Platforms.” Specifically, the legislation requires that the company that creates the prohibited technology be “domiciled in the People’s Republic of China or subject to influence or control by the Government of the People Republic of China or the Communist Party of the People’s Republic of China” (“China”).  Given Tencent’s investments and involvement in some of the…
Fortnite streamer Soleil “Ew0k” Wheeler signed on as a brand ambassador for HyperX on April 29, a sponsorship deal that will see the female gamer exclusively use the manufacturer’s products while streaming. The pact between 14 year old Wheeler – a prominent influencer recognized by Forbes 30 under 30, Teen Vogue’s 21 Under 21 and the recipient of the Golden Joystick Award for Best New Streamer in 2019 – and HyperX was brokered by her agency, A3 Artists Agency. “As a young female gamer, I feel it’s important to show others that there are no limits to what you can…
There has been a wave of celebrity lawsuits against game companies over in-game dance moves allegedly made famous by the celebrity. A number of legal theories have been tried, including trademark, copyright, right of publicity, misappropriation of likeness, etc. Nearly all of these claims have failed. A recent decision from the Eastern District of Pennsylvania granted a motion to dismiss on seven of eight counts brought. The sole surviving count relates to a false endorsement claim under the Lanham Act. Leo P made two claims under the Lanham Act, the second being for false designation of origin was dismissed by…
The Washington State Federal District Court recently issued a decision stating: “Washington’s definition of ‘gambling’ only reaches ‘staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person’s control or influence’ and that “[m]ost games not derived from casinos involve some amount of skill and would thus be unlikely to meet the statutory definition.” While this is not new law, it is very much a positive for traditional video game companies that offer games to players in Washington state. Washington has been a hot bed for gambling lawsuits…