The Legal Side Of Gaming’s Digital Revolution

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Writing about video games isn’t all about sitting on the couch in your underwear and staring at a TV for hours on end. There are those rare occasions when those of us who do it get out and actually, y’know, talk to people involved in games.

Such was the case this week at the Montreal International Games Summit. I listened to and chatted with a great range of people across the whole spectrum of the industry, from writers and programmers to executives and even recruiters.

I’ll have more on MIGS over the next little while, but today I wanted to share one of the more interesting conversations I had. I interviewed Maxime Gagne, a lawyer from Heenan Blaikie who represents video game developers. Many wouldn’t think a conversation with a lawyer would be fun, but given how quickly video games are changing thanks to digital distribution and interaction over the internet, Gagne is covering some particularly poignant areas.

This rapid change was the topic of a presentation he did at MIGS. I chatted with him afterward about it, as well as the legal aspects of free-to-use services such as Facebook and Canada’s controversial copyright legislation, Bill C-11. Here’s an edited transcript of the interview.

How would you boil down your presentation to its essence?

The first big aspect that needs to be looked at in the context of the end user license agreement is the ownership of the game itself, which can include the ownership of player generated content. With digital distribution that’s really taken a whole new meaning. You have even through retail a few games that allowed user to go online and interact with each other but [so many now] have the ability to upload content and enhance the game, it’s really changed the way we have to license those games.

Also, when you’re looking at the end user license agreement you have to take into account all the consumer protection laws, the laws regulating access by minors – whether it’s advertising to minors or your game is rated for a certain audience – and of course in most online games either the developer or the distributor will collect data with respect to the users, whether it’s purchase patterns or to sell that data for advertising or for the purpose of establishing an audience. That data needs to be managed. What I see more and more is the outsourcing of that data, which poses problems too and people are not aware of that.

What we’re looking at broadly is an increasingly complex set of rules that regulate the game industry and the conduct of the gamers and their interactions with the game. From both the developer’s and the consumer’s standpoint it’s getting increasingly complex, that’s for sure. That’s where we step in. Lawyers oftentimes make the process more complex or less complex. My role as a lawyer is to play on both ends and sometimes take the role of the player and look at the license and say, “Can I understand any of this? Is it reasonable in a certain manner?” I keep reinforcing it with my clients that even though you’re drafting this agreement, you can’t just write anything in there, you can’t write all the rights in for yourself. You can’t get unlimited assignment of representations because it’s not the way it works.

Do you play games yourself?

I do. I’m not an avid gamer, but yes I do.

The obvious question is, how enforceable are end user license agreements (EULA) given that virtually no one reads them?

I agree with you, but there are ways to make them enforceable. One of the ways that I personally favour are the summary statements of the rights and obligations of players. Twitter, even though it’s not a game, has an interesting example of this. If you go on the Twitter website, even though they have a full-length license agreement, they have a summary that tells users in clear language what they’re allowed to do and what they’re not allowed to do. Often times, even though that’s being followed by a very long license agreement, if the basic principles are made clear to the end user right off the bat, then you have a much greater chance of having an enforceable EULA. I always say to my clients, if it’s important to you, make it clear and summarize it.

Also, it looks simply but often what you’ll see is that the EULA will pop up on the screen and you already have the “I agree” button even though there are 77 pages that you don’t have to read to click it. If at the very least you can demonstrate that the player had to go through the entire license before clicking “I agree,” in most circumstances it will be enforceable. That being said, there are rules in respect to unconscionable contracts that are unfair to the user. Within the frame of mind that most EULA are consumer contracts, courts will tend to favour consumers over developers in the interpretation of those EULAs.

Did you ever see the South Park episode about Apple’s EULA, where one of the characters inadvertently agreed to have his mouth sewn to someone else’s rear?

No, but that’s hilarious. That’s basically it. I would tend to think those kinds of situations could never happen. If there are such things as unfair provisions, the courts will strike it down, which is why from a developer’s perspective, well-crafted survivability clauses are a must but I won’t bore you by going into that.

Are we headed towards all games having EULAs, or could each platform – like Xbox, or iTunes – just aggregate them as one on behalf of developers?

They could definitely aggregate it by platform but the problem with EULAs is its becoming excessively complex. Every game has its own type of content that will be input or uploaded so yeah, you could aggregate it, but then you’d end up with a EULA that’s 177 pages long. And then the question is, do you really expect anyone to go through 177 pages of legalese? I personally wouldn’t recommend it to a client because the information the end user is looking for is lost in a mass of information. You have to make it easy for the player to retrieve information. It would become overly complex.

But isn’t the problem also that if players have more EULAs to read, they’ll probably read fewer of them?

Yeah, but on a case by case basis that’s more or less would have an impact on the enforceability. There’s such a rule in contracts that you can’t claim ignorance. If you’re presented with a document and you decide not to read it, you can’t just claim ignorance, you’re bound by it. If you’re a developer and you’re able to establish that the contract was presented to the person and he had a reasonable chance of going through it and agreeing to the terms, then technically if all other provisions are valid in the contract, it should remain enforceable. So yeah, it is true in practice. As more and more EULAs are flourishing through the digital distribution channels, people will read them less and less. But then again, the reality is even through regular retail outlets people don’t read the fine print. It comes to the lawyers and judicial side of things to make sure there are clear statements for the users that they can understand. That’s always been a problem with contractual law and it doesn’t really change with digital distribution.

One of the things you said during your presentation is that if you’re not paying for a product, chances are good you are the product. Can you expand?

It is the reality of the web and most free games. You have to realize that developers are looking for revenue streams. They’re in a business just as you and I are in a business and if they’re not making revenue directly from payments from the players, they’re making revenue otherwise. That otherwise in many cases is selling consumer data. That can be done, it’s not a problem, but it has to be clear to the user whenever that information is collected. That consent has to be clear and right at the beginning before I purchase the game because later on it’s not valid, so I have the option to opt in or out. People have to realize that there’s not much that comes for free in life. If you’re playing a free game, you’re paying for it in another way.

So people who complain about things like Facebook violating privacy, do they just not understand that?

There’s more and more concern about the realm of privacy and people are not realizing that those companies are making an investment in developing a platform that they use for free. There has to be a way for them to be able to generate revenue so they can enhance that platform and keep it available. Yes, I don’t think people realize the costs to having access to that platform is that, that they can sell not necessarily information that will render you identifiable as an individual, but they’ll take your information in aggregate. They’re selling advertising like that. There’s an increased awareness of what privacy is and what personal information is, but then again, you can’t have your cake and eat it too. If you’re going to have access to those services and take advantage of them, then part of the deal is you relinquish some information.

The copyright bill, C-11, also came up during your talk. You said it will be good for game developers. Can you expand?

Digital rights management is good news for developers in a sense that DRM in Canada is not protected. If you break DRM you could be found in violation of the EULA, but there is no statutory provision that will make you liable for a fine, for example. That would come into place in the new act. It is a good move for developers. That said, users have been really outraged over the user DRM, mostly to regulate the use of and transfer of their license. For example, if you have a game on one platform and then you sell your X-Box and you want to transfer that game, in some cases you won’t be able to do it. DRM will prevent you from doing that. From the consumer’s perspective, it may be seen as a setback.

What I’m hopeful about with the protection of DRM is that it will be used to locate the actual copies of games and make sure that they’re traceable. The problem we have now and why we don’t allow copying, in most cases, of video games is that you can make one copy or five, six, seven, 10 and you can decide to distribute them. As a developer with the DRM, which are basically technological tracking systems, I can see that you’ve taken your copy and just transferred it to another platform. I’m hoping that with that tracing being possible, the developers will allow users more and more to transfer their games. Right now because it has no protection, DRM isn’t being used to its full capacity to enhance the rights of the users, which they could do. Tha’s a misunderstanding people don’t often see in DRM. Right now because there’s so much piracy, it’s primarily used to prevent copying.

There’s the suggestion that C-11 should have an exception to the lock provision, where people could break DRM for their own private use. Some say that such an exception would make the rule itself pointless. What do you think?

I haven’t seen the exception but there could be ways that it’s crafted that wouldn’t necessarily make it pointless. It would allow private copying but still prevent the uses that are technically restricted to the author of the work, meaning distribution or public performance of the work. That would still be considered infringement. You could break the DRM and make a private copy but you can’t break the DRM and make 160 copies and sell it. It doesn’t render the provision pointless, it just makes clear that there are certain limited uses that you’ll be able to do.

So you’re not in favour of one approach or the other? Private copying could be enabled by the digital locks or by the non-infringement exception, right?

Yes.

So it’s potentially good news either way?

The DRM is not necessarily a move that’s coming out of nowhere. There are international treaties for the protection of intellectual property that require protection of DRM. Canada was not in compliance with those treaties so it’s a move that’s also being forced by international organizations. Whether those standards are good or not for developers and distributors, that’s a debate that’s been going for quite a while. So we’re not just trying to mimic what the States are doing.

Critics of C-11 have said the DRM protection isn’t required by treaties such as WIPO and that it’s just being pushed by U.S. entertainment companies. Are they just interpreting the treaties differently?

I do see it definitely as a response to the criticism that we’ve had from the United States, but with that said, that’s not the only reason why we’re moving towards it.