Legal Battle Royale: Not Boring Edition

Good afternoon everyone. Thanks for for coming by at the at the very very end of GDC. Happy to see so many people here. This is legal Battle Royale not boring edition. And put bluntly the idea is to go through hot and interesting topics in the game industry from a legal perspective but in a way that's going to be useful to non-lawyers. So can I get a can I get a sense of who in the audience how many lawyers do we have here? Okay. Oh, uh-oh. Uh-oh, sleeper agents. Um But for those of you who are non-lawyers I I assume that most of you are here because you have either some questions or you you want to get a better sense of how legal issues are going to impact decisions you make as developers or publishers. So I think what we're going to do is maybe

take about half the time to go through a couple of topics that we consider pretty interesting and that are that are currently kind of hot legal topics that we think there's something important to say about and then about halfway through we'll switch over to audience questions. And I've got you know I've got a million things we could talk about so if if there aren't a lot of burning questions we can always go back to that. Um so I think I'm going to go through and allow everyone to introduce themselves. I'll I'll start. My name is Chris Reed. I'm in-house counsel for Tilting Point who's a mobile game publisher and and growth marketing company in New York. Woo. And then we have Steven. Great. I'm Steven McArthur. I will stand up this one time so that everyone on that side of the room can see me. Hello. Uh My name is Steven McArthur. I run a small law firm with four or five attorneys in Los Angeles and we work with video game developers. Okay. I I'll also stand up and wave to the other people with crazy colored hair. Uh Mona Ibrahim. I'm with Interactive Entertainment Law Group. Uh we are based in El Segundo, California,

which is in Los Angeles. And uh we represent about 300 companies, publishers, and developers, all exclusively in the game space. My name is Greg Boyd. I am partner at Frankfurt Kurnit Klein & Selz. We have office in New York and in Los Angeles. Uh we're a media and entertainment firm in general, but um my group is is mainly interactive entertainment. That's do about the other half of my time in advertising. Cool. So, I think before we get started, there's two two things I want to do. And uh the first is that in the interests of helping bridge the gap between uh between lawyers and humans, um I've gotten some some visual signifiers. A lot of times people say, "Hey, can you give me that contract in like human-readable format?" Which I've always taken a little bit of offense to cuz it implies that lawyers aren't humans. Um but Why not? Oh, yeah. Not fully hu- We're more human than human. So, uh the idea is going to be that uh a

lot of questions we're going to answer from a legal perspective, uh giving sort of uh an angle from our legal knowledge, but then there may also be cultural or non-legal aspects to the question. And I want to be really distinct as when we're talking as lawyers and when we're speaking as humans. So, to that end, we've got two sets of hats so that you can we can literally wear our lawyer hats when we're being lawyers and wear our human hats when we're pretending to be humans. Uh so Wait, pretending? Yeah, emulating emulating. You're giving away the guest. Do I get to keep this cuz this is awesome? Oh, this is badass. Best swag Best swag of GDC. I know. I'm sorry. It's okay. I'm sorry. You can hold it up. You don't have to wear it. I'll still wear it. All right. I'm going to start. I'm going to start as as lawyer. What are you going to be? You're going to be what? I'm going to be the Um and the second thing I want to point out is and you've of course heard this if you've ever dealt with lawyers, but we do not represent any of you. Our firms are are not representing you.

When we speak, we're we're giving generalized information about legal issues and not specific legal advice that you should go home and act on. So, I know that there will be questions where it's like, "Well, my friend has this really specific scenario." We can tell you generally about it, but we it's not legal advice. And I think it also is important to state that, you know, we all work for our firms or for companies and the opinions we're going to give do not reflect those of the companies we work for or any of the clients. And there'll be certain issues upon which some of the panelists cannot speak because they may be working with people involved in those issues. So, if someone is yeah, the human hats will be helpful there, but even then it's So, if if someone gets a little cagey, it's probably because they're they're working, you know, they're we're talking about one of their clients. Okay. So, so with that, I'm just going to jump around to a couple of issues that I think probably are top on people's minds that they've heard about. And I think we kind

of have to start with dancing. I think everyone's aware that there's been a a series of a series of lawsuits leveled at Epic for dances that you can buy as emotes in Fortnite. And they're not the only company that has, you know, that has emotes that maybe based on identifiable real-world dances. But I think I wanted to throw it open to the panel. From a legal perspective, how you know, how likely are any of these any of these suits to succeed and can we maybe just give a quick primer on why why you think that and how sort of how the law in this area works and what the what the implications may be for for any games using emotes since mocap is becoming a, you know, more and more common in games. Um, sure. So, um, I'll start and I'll let you both, of course, jump in uh, and interrupt me as you please. So, this issue is is very and I will be wearing my lawyer hat for this, for sure.

Okay, so the issue here is what is protectable. So, what happened for those that don't know is uh, there are these dances that have been made that have been popularized and sometimes created by certain people. They're often simple dance steps, two or two or three moves, and they this person people become known for them and Fortnite, uh, you can buy emotes in Fortnite such that the you can make your character do that certain dance. And in every situ- in every situation they've renamed the dance. So, for example, uh, this rapper 2Milli created something called the Milli Rock in 2014 and popularized it. Can you show us? Uh, I I Can you show us? I don't know it. You didn't pay for the emote. I did not pay for the emote. Um, but so he popularized this and it becomes known as the Milli Rock. So, in Fortnite, uh, they they rename it to I don't remember the something else. They the fresh is what they call it, I think. Uh, but they don't call it the Milli Rock and they don't use 2Milli's name, they don't use his likeness. All they're using is his dance moves. So, uh, this this begs the

question, if they steal his creation from him and they use it to make money, what cause of action does 2Milli have? How how can he how how how how can he be reimbursed for this? Cause of action means uh, right to sue someone. Yes, yes. When when when you sue someone and you file a lawsuit, you have causes of action such a breach of contract. in a certain bucket in order to you can't just sue someone because. So, Wow. Yes. So, so the interesting with with uh, so one of the first things I went to was copyright law because copyright law is supposed to be there to cover creative works and creative expressions such as music and books and poetry. Uh, source code even when you when you draft your source code or um is uh that is covered by copyright law. But and copyright law the statute specifically says it covers choreography. So it would seem at a first glance that perhaps they can sue for copyright infringement. The problem is the short answer is no they can't. And the the even though they they can sue for it but they will not win. And the long answer is because the copyright

office and the federal courts have been very very clear that you cannot get copyright protection for a simple dance step. So need like a ballet. Yes, you you you need the actual uh legislative history talks about a 22-minute ballet. And that is what you can get copyright protection dance over. Yes, it is. It is. Like 22 minutes. Because the they gave an example of a particular ballet that happened to be 22 minutes long is is I I think the issue. And so there have been other lawsuits in the past. There was a lawsuit in the early 80s over the electric slide, which was this 18-step dance move. And the creator of the electric slide started suing people who were who were doing the electric slide because they were doing it wrong. That is awesome. pissed him off that they were doing it wrong. So he started suing them and lost. And so we have this this this And and as you know the law looks what's called precedent and case history, you know, what happened in the past cuz it's very important that we are consistent. It's often more important than being right is just being

consistent so that people know what they can do and and whether they're going to get sued or not. This is called precedent. Precedent, yes. So the answer is that they will probably lose their copyright lawsuits. Although they have a couple of other causes of action around right of publicity. Trademark, things like that. Right of publicity being your right to not have people put your face on a cereal box without your permission. Right. Essentially. Unfair competition would be more accurate than trademark. So it's it's it's a right of publicity issue which differs state by state. So the issue with right of publicity is is and this is a huge issue in video games is you cannot use someone's and we will probably talk more about this later. You cannot use someone's likeness without paying them generally speaking because it's an economic right. And what is your likeness? Your likeness is your image, your name, and some voices if someone has a I think Barbara Streisand won that her voice was her likeness. But Um So to win these cases based off likeness, it is very difficult because they have to argue that the floss for

example, the kid that does the floss, if you see anyone do the floss want to see the floss first of all. You you have volunteered. I'm I'm old. Chris. I I don't know. It's something like this. Yes. Can't see it. It's behind the My niece was teaching me that one. It's the one that goes like 1 2 Yeah, I I think you have to go like in front and behind. Very complicated. My like 9-year-old niece was teaching me this at Disney World. We we have some volunteers in the back flossing. It's amazing. There we go. Perfect. So So the long story short is this is going to be an uphill battle for them to win because they have to establish that when you see this dance, it has become merged with their likeness. It's basically a photograph of them. And this is going to be really difficult for them to win that argument I think. So I have a one thing to point out though on that particular right of publicity issue is that So for example, the Carlton one that the only dance I actually know out of all of these different cases. The Carlton dance is actually owned by the studio that did the Fresh Prince of

Bel-Air. So the issue is more about preemption because the copyright law is would preempt the right of publicity that Carlton has. So Yeah, there's there's a lot of issues and preemption is is another one. These these guys have a lot of reasons they're probably not going to win their cases, but that pulls up another issue. So Speaking as as a as a human now, um What does this mean if I'm a publisher or I'm a developer? What practically speaking given that you know, there's a lot of sort of cultural artifacts like dance moves that that sort of blow up, become viral, and that that a lot of times people want to reference in their games in in one way or another. What does this mean for developers in how they're going to how they're going to approach thinking about the risk of doing things? Does that you know, what you just said, does that mean sure, fair game, should we just jump in and grab whatever we want? You know, practically speaking, does it make sense uh to approach people who are

creators of these, and how do you even determine who gets credit for that? Ask your lawyer. Right, so at the end of the day, it's a case-by-case basis, right? We're not talking about something that you can just give a blanket answer to on this one. Because it's going to come down to how much are you using, who are you taking it from, how big like how much of a of a mark are you going to be on the radar in terms of in terms of liability. Look, go ahead. I want I want to I'm going to do the I'm going to do the human hat for a second. Um this is the way I explain it to people when they come to me. So, the more successful your game is, the worse cases people will bring against you. And the less people play your game, the more you can do anything you want. Okay? Now, you can come to me and I can tell you what the law is. And here's the thing, and I'm not talking about in fact, I can't discuss this particular game. Let's be 100% clear because we do a an enormous amount of that particular game. Um but in general, if your game makes

$100 million a year, you are going to have to be beyond spotless or else, and you're just going to have a ton of things that have nuisance suits. And at the same time, if you have a browser-based game that your grandmom and your aunt will play and your second-grade teacher, put Kim Kardashian in it. You know, put you know, put a buy now for heroin in it. I mean, it like The the the thing that I'm not actually to remove the human hat for that one. No, no, no, this is human. But but and obviously not collected connected to real by now for that. But I'm just saying you can take a tremendous amount more risk when you have a small audience. But by the time that you become very successful and think about a top 20 publisher, things have to be ultra buttoned up and things have to be conservative necessarily and you're going to there's nothing you can do. You're going to draw crappy cases and you're just going to have to have a budget for that. Yeah, this is I think being extremely successful there is just a tax and and people suing you is just a

tax on success and there's no way around it. I have clients ask me how can we avoid getting sued by Paton trolls? How how can we avoid patent infringement? Don't make money. Exactly. The answer is you can't. At a certain point of success you will be sued. You will be sued for patent infringement and there's literally nothing you can do to stop it. And I'm going to say that's that's all I had to say. Like don't make money. That's pretty much the only way to not get sued. Yeah. And the interesting thing is there was many other video games doing this exact same thing yet they weren't sued. Only Fortnite was sued even though many other companies were doing that. I have a question about I'm going to put on my human hat because this is a legitimate question about World of Warcraft. Like and I say this is somebody who played World of Warcraft for years. There are all sorts of dances. They were all sourced from you know fairly popular dances. On top of that like just blanket theft of I like general IP like Dark Crystal. Like there's an entire like race of creatures in World of Warcraft which is a straight rip off from the Dark Crystal. And like so you kind of have to wonder how is it that a company like Activision can borrow this material without the

liability that for example Fortnite is seeing. Well, I I think one issue that is going on is that I think a lot of it is actually driven by this law firm. So this there's been a lot of these lawsuits against Epic. And they're all based on the same thing and they're all brought by the exact same law firm and there's this new law firm. And I I I I I it's a little bit of a disservice because I I I think Fortnite or Epic is at the wrong place at the wrong time because this law firm wants to get their name out there and they're using these lawsuits and these celebrities as a way to almost market themselves and it's it's a They're they're not going to be very popular with other lawyers in this space. I'm just going to put that out there. are very unpopular with lawyers in this space right now. So let's speaking of being careful as you as you get more successful. And I think you know, I think the message here has been that yeah, you can't stop people from suing you. The best you can do is anticipate which things might be an issue and make sure that your house is in order. So another area where where people have to be very careful and that's also

garnered a lot of attention the last couple years is loot boxes. People love to have opinions about it both you know as as would-be game designers and as would-be legislators. And So there there's been I think a lot of discussion about it but also a lot of potential and actual regulation in different countries and in different states. Where do we see this shaking out? I mean if if I'm a if I'm a company that wants to use loot boxes or let's just let's just open it up to to gambling in general. Um I think we need to be very careful about that line. Please let's be very careful Well, okay. So let's let's start let's start with the question of where on the line do loot boxes fall and that that that comes into questions. One, looking at current legislation is it clear where they whether they may be defined as one of the other and then if you if you dare to opine on on where

that line should be I'd be I'd be happy to hear that too. Okay, so gambling requires under almost every single state's law at least three things. Consideration, prize, and chance. And consideration is something that you give usually in the form of cash or currency, in order for the right to participate in this chance to receive a prize. Real simple way of explaining what gambling is from from a legislative perspective. And that more or less reflects what we see in the US and what we see abroad for for what gambling is. Now, where loot boxes become tricky is well, a few things. Uh first, let's look at the question of consideration. Well, what are you paying for it? If it's If you're actually paying a cash price for it, um that's one thing and and yes, that's pretty clearly well-defined. But then you look at a game like PUBG where you're not actually paying cash for it, the currency you're generating is from time played, right? At least that was my experience playing or getting loot boxes from PUBG.

Um if that's the case, then what is your consideration? Does it qualify as actual consideration under the particular statute or whatever in question? Um then there's the question of chance and generally speaking, loot boxes are going to incorporate an element of chance unless you're guaranteed to get certain things in that loot box that you're purchasing. Right. So, it may it like whether or not there odds associated with a loot box or not are going to be an issue. Um and the final thing is obviously a prize. And the the issue with the prize is that the law isn't always really clear on whether or not a prize needs to have cash value or not. So, if the prize that you receive isn't convertible to currency in some form or can't be sold, then does it actually have value enough to qualify as a prize? So, we really actually do have to be very careful about whether we we call loot boxes gambling or not. And honestly, the biggest issue with loot boxes from a regulatory from a regulatory standpoint, at least as far as the FTC is concerned,

has more to do with consumer protection and keeping kids from spending like 3K on their parents' credit card. Um and and it's really just about informing the public if there are odds and stuff like that. And And this reason she's talking about being able to sell it is one of the reasons that when you read a terms of use as I'm sure you always read the terms of use of every video game you you play and download. I do. I draft them and I don't think I've ever read one. The terms of use and the I read them because I draft them. Yeah. I copy paste ones that I think they're cool. Like, "Ooh, this one's interesting. Let's save that for later." have time to play anything if you're reading them all. But you you There's terms of use in the bare in every one it will say things such as, you know, you don't own any of this this software is all owned by the company we can revoke it anytime. Importantly, you cannot sell this, right? Uh so, even though technically even if you maybe could go out to a third-party marketplace, the the the terms of use in the EULA says you cannot. Like, you we we we disallow you from selling this. If we figured out you sold this, you know, we'll ban you. And this this actually became very relevant in a case where the judge said

there there was no cash value to these loot boxes because even though they theoretically could go out in these third-party websites and sell them. I think this is the big fish case. Uh it's against the rules and they they don't encourage it. There's no official way to sell these and it's against the rules in the terms of use. And so, they they got that case dismissed. So, where do we think um So, that's that's a good explanation of of sort of where we are right now uh with loot boxes. But given that this mechanic is is something that seems to be, you know, it it it's useful in a lot of games and and people can debate whether they like it as a game design thing. But where do we see, if we had to predict, uh legislation and regulation on this going? Because obviously right now, yeah, it's it's quite complicated we're trying to fit a new phenomenon into existing laws that were designed for casinos and slot machines and that sort of thing. And you know, it's it's not clear always where it fits. But I mean, if if you had to guess, uh you know, is is it going to continue to be a patchwork and a mess, different states, different countries? I'll do it. Yeah, so I have

a few Well, I don't know. Which one this is? This is kind of This is kind of lawyer thought lawyer thoughts. Um so, okay, I think there are two paths on this decision tree. So, one is less regulation of the status quo, right? Like, I would like it if and it sure would be nice if and I mean it for all of us, the home team, the game developers, and it's not bad for the consumers either, is if the rule was and the rule pretty much is now, pretty much is is like with some exceptions, if you don't have a cash out mechanism, you're okay. Right? But then to the extent that it becomes more regulated, I hope it's not more regulated than we do sweepstakes contest and promotion. So, and I and look, I know that sucks, too. But the thing is, sweepstakes contest promotion has state laws, but we have a consensus, a lot of it's about disclosure. I'm not wishing for it. You know, I what what I wish is something like we have right now, but I hope it doesn't get I hope that's the far right boundary, right? I hope that it doesn't go beyond that and you know, cross over into

gambling regulatory, which is much much worse. But to me, right now, if it's not harming children, if there's a special disclosure for under 13 games, then I I think it's in a pretty good spot, especially if you as game companies, this is one of the things I say to people just quickly in closing on this is that you can solve a lot of this in a customer service level. If a mom calls you and says 17-year-old boy, girl, whatever, spent $3,000 on my credit card, you you make it right there on a customer service level and you don't eat that money and maybe you put a stop in there like they can't spend more than $100 a month or something, right? There's something you can do on a customer service level and that's going to save us from some regulatory intervention because then that mom or dad's story doesn't become a news story, which is what a politician reads in an election year and decides this is some new kind of, you know, save the kids, mom and apple pie legislation that would be really easy to be elected on. So,

that would be the that would be the ideal for me. Yeah. And And, you know, following on that, and and we see this in copyright, too. We see this in in censorship in general with violence in games. Generally, the best way the industry can insulate itself from regulation is to be responsible. Like, to to actually exercise some level of of social responsibility with with how you engage with your customers. And that that is as much true for gambling and loot boxes as it is for violence in games or anything else. The more we try to say, "Well, freedom of speech, let's do whatever we want. You know, we can we can say and do however we want. We don't need to be responsible for it." The higher the likelihood that eventually some government is going to come in and say, "Oh, yes, you do." Like, you need to be responsible for this because obviously, you are incapable of regulating yourselves. Um One of the things that the video game industry has really benefited from are are programs like the ESRB and the ESA that help us self-regulate. The more we get to self-regulate, the better off we are in terms of being able to service our

customers and give them what they want without customer interfe- or without government interference because governments are really terrible at economics and customer support in general. I'll I'll I'll just end this Maybe the one time I put on my my human hat for tonight. Um the two things I will say that it may not be technically required, but generally make uh loot box type experiences less evil is when when game companies one, uh show you the odds, right? So, if there are some chase item out there that everyone wants, and there's a one in 10,000 chance of you getting it, so people are spending a dollar or two dollars to buy these loot boxes that look for this awesome chase object. You know, no If if the consumers know there's only one in 10,000 chance of getting it, that is important. And I I I think that's something people should know, right? If if when they're spending money on loot boxes, they should know that what the odds are. And the second thing is, you know, usually give them if they're going to spend a dollar on your loot box, give them a dollar's worth of product in there. Uh not 10 cents worth of product. Yeah. Also, just to put that in, if you're

distributing in Japan, you have to do that one way or the other due to gotcha regulation. Right. A many countries do require that already. So, I want to move over to uh, to another area that I think has kind of exploded in the last 5 years in the game industry, and that's streaming and the rise of sort of influencers as a very dominant force. So, you know, Apex Legends dropped with almost no fanfare and basically rode to 5 million plus, you know, installs on the back of A, being a good game, but B, uh, a lot of prominent streamers playing it. Um, and it then came out like came out makes it sound like it was it was a big secret, but the no surprise, some of these streamers were paid quite substantial, you know, sums in order to stream it at a specific time all on the same on the launch days. I think Ninja was paid a million dollars or something like that to play for like 8 hours. Uh, so I I want to just I want to ask a little bit about what we think uh, developers and publishers, if they're the ones handling the marketing,

need to understand when they're uh, interacting with influencers, uh, any kind of marketing or advertising, what what kind of pitfalls are there? Uh, can I just hand over a bunch of money and say, "Hey, play my game, say XYZ." What do I have to do? Yeah. So, I'll I'll start this off and go real quick. So, the current guidelines for influencers are the same thing for um, people in video games as there are for people that are selling shoes. Right? The Federal Trade Commission has come out and said, "If there's a material connection between your company and the influencer, then that influencer needs to disclose the material connection." This is where you see hashtag ad or hashtag sponsored or hashtag, you know, your game ambassador, or the streamer says, "I'd like to thank game company for their support." Uh, etc. The disclosu- disclosure has to be clear and conspicuous, and the disclosure has has the medium and travel with the medium. So, there's a lot of complexity to unpack there. We don't have to do it right now, but they are supposed to say something and they and they are supposed to disclose. And here's the question or

here's the way that you should think about it to the extent that you're asking the question, you're making games and you're asking the question, or to the extent that you're an attorney and people are asking you the question. If your creative folks come to you and say, "Um hey, you know, is such and such sufficient?" In the tiny little mouse voice. The answer's no. The answer's no, because that's not clear and conspicuous, right? So, that doesn't meet the that doesn't meet the FTC guide. Um anyway, we we can chat more about this. We we now have hundreds of FTC letters saying what's sufficient what not what's not sufficient. So, you know, two two years ago, we were guessing. We don't have to guess anymore. And if if I screw this up as a developer or uh a publisher, who what is what's the result going to be? Who's going to sue me or fine me? And who should be worried? Should it be the influencer? Should it be the developer? Um you know, what how how should they think about this in terms of risk? Uh this hat. Okay. So, the what would

likely happen if what's happened in the past continues to to happen is the brand, the publisher, the video game publisher, or the developer would get a letter from the FTC that would be published, um and it would be embarrassing. The uh influencer would also likely get one. Now, the fear is at this point that there would be some um combined regulatory business that would occur, and what's been letters in the past will now become fines, because they could look at us and say, "We have We gave you guys hundreds of examples. We have FTC cases on dis- on disclosure." Uh there was a It was Machinima case was a case on dis- was a case on disclosure. The um Sony Vita case with the hashtag GameChanger there um AstroTurfing, which is like fake grassroots, which that was essentially also a case of non-disclosure because if they had properly disclosed, it wouldn't have been astroturfing. So, they could say now that, you know, you guys have had years of warning and years of understanding, the you know, the stakes

are going to be higher. The The thing I do want to point out that's a really big deal that should be unambiguously described is if you are the party paying the money, meaning you're the ultimate brand, you're the developer, you're the publisher, you cannot absolve yourself of responsibility by putting it on the influencers or putting it on your marketing agency. The regulators have said outright it has to be you that is responsible for policing. And and even if it's in the contract. Well, this is going to be a little bit of both, but yeah. The reason for that is because ultimately the the party paying the money is the one benefiting the most from the advertisement or from the endorsement. Another thing that because I I actually did a talk on this with with online performers group and some other people at PAX last year. One of the other things that I hear from a lot from influencers is, well, they gave me this for free, but it's not money. Like they didn't pay me to do the ad. Or, you know, they they gave me, you know, this headset to test on to test so I can talk about it. Do I have to disclose that? The answer is yes. You

still have to disclose it because unless you actually paid for it yourself, you are receiving some kind of of benefit whether it's financial or otherwise, and you still have to disclose that you received this. Now, how you do that in a stream like, you know, we have that hashtag ad and whatnot. Um We have the 30 Okay. Uh so, the hashtag thing is great for Twitter and whatnot, but when you're running a stream, how do you do these disclosures? And um generally I think like that you know, the FTC is has written guidelines on this as well, and it's generally like, you know, if you're doing a super long stream, maybe once every couple of hours. If you're doing like a short 1-hour stream, maybe at the beginning and maybe have a have a card in the at the end um disclosing the fact so. And I'll say I'll say one other quick thing about streaming. Another thing I'm seeing more of now um are transparent badges, especially if you are paying a streamer to stream for two hours, you know, early access to your game. They come up and they say, "Thanks game company for giving me early access to

this level. Really excited to be playing it tonight." And then there might be some kind of transparent badge or something like that. The key is not one click away. If you're one click click away, you're hosed. Don't do that. But could you could you could you explain that? Sure. So a one click away is like um people used to ask or or were curious, "Well, what if I go to more?" And then at the bottom of more there's some disclosure or what if it's in the about page for the streamer. And in fact, I'm I don't want to name you you guys can look into this or talk to me after. Um there's one particularly embarrassing case that all the way at the bottom of a whole lot of lines of more, it actually wrote something like, "I can't believe that you read this far, you know, that you know, that this is this is so embarrassing and unlikely, but this um video was sponsored by such and such." And that was reprinted in the in the uh FTC opinion against uh this party. It's like, "How how could you allow your influencer to sort of mock

the process like this?" Yeah, so don't don't be that person. That That's a human hat for this because this is a general rule for streamers, for game developers, for everyone. Don't be a dick. That's actually a general rule for for everyone. I I would I would hope. Audience Audience Um yeah, so I I wanted to move to audience questions, but I do feel like What do you think? Should we should we dive into privacy GDPR? Uh well, I want I think I think it's important to talk about privacy because I think it it's connected to a lot of things, but I don't want us to take like 20 minutes cuz I want to get to audience questions. So, the the last like sort of preceded topic that I'm going to talk about is uh privacy. You may recall around May last year you got approximately 400 emails that said, "We've updated our privacy policy." And you may have scratched your head and said, "Why am I getting these all in the same week?" And the answer is that the EU uh The answer is Mona. She drafted most of them. Um

All like all at the same time because the clients all came within the same like 3-week period right before May 31st, 2018. So, what happened was the EU uh finally put into effect a sweeping privacy regulation that that sort of altered the responsibilities of anyone on the internet collecting personal data from people in the EU, uh which is a lot of people. Um and so everyone scrambled to kind of figure out, "Oh, what do we have to do to become compliant?" Because some of the uh some of the potential fines were huge. Now, the problem is this is a sort of a government regulation where they said, "Here's what might happen." But of course nobody knew whether they were going to be mean about it, whether they were going to be, you know, chill about it uh for lack of a better term. And so uh it it has a lot of far-reaching implications. Uh for instance, you know, I uh Tilting Point does free-to-play mobile. We we spend a lot of effort uh making sure that our technology is is on point to separate out personal data and do all of that. And it's in games in general, even if even if

it's a single-player game, you're generally collecting quite a bit of data. And that data can be useful. And some of it is a name for an account or things that can identify a person. So, uh and this is especially interesting because just earlier this week Google announced Stadia, which is their Is it Stadia or Stadia? I don't know what they're calling it. Stadia, yeah, that's that's what I thought. Um And this is going to be interesting because Google is known for having quite a bit of information about you. So, it raises some interesting questions as to as to how they might, you know, combine that data with the data they're going to have of your every move within games as you stream it. So, uh I think, you know, if anyone wants to take sort of a very top-level explanation of Correct. It's not. Okay. Um of why anyone should care about it and just very very generally what are the new obligations that developers and anyone that's using data, uh which is everyone, uh what what what new obligations do we have? So, as to why you

will put out a number for you, $57 million. That's what Google was fined by the GDPR Commission for violating GDPR. Uh chances are this is going to continue to be litigated. They're going to fight it back and forth, but that's $57 million most of us don't have. So, um just to put that out there, GDPR Commission is not afraid of finding as much as they want. Um they have some some benchmarks for that, but they are taking it very seriously. Uh a couple of high-level points on this. Uh the entire point of GDPR and the easiest way to explain it is private like what they are trying to accomplish is they want to make the internet as an industry uh privacy by design. They want companies to sell privacy as a service. They want this to be incorporated in how they uh service their their customer base. So, they don't want data to be the selling point for the business unless their clients are very very unless their their customers are very aware of that fact.

One of the biggest issues for this and one of the reasons as to why Google was fined $57 million, which probably isn't actually that big of a number when we talk about Google. Fair. Um the the the reason why Google got into so much trouble one of the many reasons as to why Google got in so much trouble is this idea of consent and when you need to ask people for for for permission in order to collect their data, your privacy policy is no longer a contract, and that is something that you need to be very aware of at this point in time. If at any point you thought, like if you if at any point you had an accept or do not accept at the end of your privacy policy, get rid of it now, cuz blanket consents are not allowed. You have to ask consent at the time of collection for that specific point of data. Yeah. And and to to to clarify that GDPR is talking primarily about what we call personal information. So, you know, totally anonymized data is not

so much the issue as any type of data that would let me figure out who you are in in the really real world. definition of personal data is extremely it's not just your email address, date of birth, it could be your IP address. I mean, it could be So, so the the tricky part about it is that it's it's not just any information you collect, it's any information when taken with like anybody else that you work with could identi- could could possibly identify that that individual in some context. That is considered person- it's bull- it's it's huge huge Well, hold on. myself. I said, "Well, Well, no, no, no, I just the the cursing wasn't my issue. No, no, I was just like, one day you might find yourself in front of a regulator and they play this back. I'd say that I would say that maybe the argument is that the execution and the way that it was drafted is perhaps not clear or helpful, but perhaps they are aiming at very valid goals. So, I was just going to I was going to put the human hat on and just say this entirely non-legal thing.

The statute has its own website. If you print it out, it is 500 pages. It is the modern Necronomicon. So, you can Yeah, if there's something in your life that you think you should get some help with, it is it is GDPR. Okay. Um Fair. Uh all right. So, I think at this point, cuz you know, I think GDPR, no matter how how user-friendly we make it, is going to make people's eyes glaze glaze over. Um, I'm going to throw it open to questions, cuz I think maybe that will be a great way to sort of see what what people in this industry are actually concerned about, and hopefully we can provide some clarity on on how you should be approaching it. Um, so Yeah. Hi. Uh, thanks very much. This is a very interesting uh, panel. I want to circle back to the loot box conversation, but use it in the context of blockchain. Okay. Um, so blockchain technology, especially non-fungible non-fungible tokens in

blockchain CryptoKitties is what you're talking about. I'm actually legal counsel for CryptoKitties. That would explain it. Okay, hello. Nice to meet you. Uh, I'd love to talk to you about that. one of the questions that I have had is how to manage the gaming mechanic question when by its very nature non-fungible tokens, you were saying, "Look, the way to solve the problem of loot boxes is make sure you can't cash out." Guess what? NFTs are based on being able to have secondary market sources. Mhm. So, how would you handle it? It's a very specific legal question. I would say Well, well, I would say to a certain extent, again, it comes down to those three questions, right? Consideration, chance, and prize. So, the question is really that chance, I think, when it comes to non-fungible tokens, because you are effectively guaranteed to get an entirely unique token, based like if from my

understanding of CryptoKitties, whenever you whenever you create one of those non-fungible tokens, which is basically the kitten, right? It's it's the it's the cat you actually get from the game. Um, those are each unique, and those are each special. So, by virtue of the fact that they are all distinctly unique and distinctly special and and therefore non-fungible in the sense that they cannot be exchanged for something identical, then they all share effectively the same value at base because they are all essentially unique. This is me over-lawyering the the crap out of this question, by the way. But that would be the argument. That would be the position I would take if I were if I were counsel for CryptoKitties. So I will also say, and maybe this is maybe this is the human I'm not sure. Um but to a certain extent, there's a lot of things out there that already meet all three of those definitions and are clearly each of those, yet are not illegal, right? Magic cards. Magic cards would be my example. You you you you you pay I got I've not played Magic cards since like 1999. It was like $3 for a pack of Magic cards. I don't know what it is now. Um five, okay. Get get into

it, man. Inflation. Uh played a lot of Artifact recently. Um but these these are all um yeah, I know it died very quickly. Um anyway, uh you are paying money for something and there's a complete random chance what you walk what you take out of there. It is directly exchangeable for cash. I mean, Magic cards and and and are just directly exchangeable for cash. So this meets the entire definition. Why aren't these illegal? Aren't these isn't this a loot box? And yet yet yet they've been around for 20 25 years and no one's ever gone after them. So just because you're doing something that meets the criteria does not mean anyone's ever come you come after you. Yeah, cuz that really comes down to the gambling question, right? It comes down to how are how are consumers using your product? How are consumers actually like playing your game? Are they spending a dangerous amount of income in order to get that specific kitten? And if not, then you're probably not going to be getting on anybody's radar and anybody's bad side. Thank you.

But then Magic is so huge. I I don't know, I can't explain it. Magic is magic. May- maybe the regulators are maybe they play. And Nick Mitchell is That's Oh gosh, we have two. Sorry, I didn't realize there were two whole things. I'm so I'm sorry to this side of the room, by the way, that they put this in the middle. There was no way to Yeah. So. Great great panel. I have a question about historically accurate games, especially if you're trying to preserve history of like our present Is is that mic on? It's it sounds so. Oh, can we can we make sure that that mic is live as well just for for recording? Yes, the question's about historically accurate video games. Video games taking place in like Oh, just get closer to it. taking place in 2019 and you want to use um maybe like trademarks like logos Sure. of real corporations, real countries, real people. Yeah. Like it sounds totally illegal, but Not I think all three of us may have a lot to say about this, but it really depends. It's extremely is extremely context dependent. myself from this one cuz this is way too

much of a like of that. It depends if there was actually Mona, Mona, why don't you tell us about Red Dead Redemption and and Pinkerton? No, I'm not touching that one. Um I but no, oh god, that was silly. That was really silly. Oh yeah, well, so so this is an example. I guess this was not modern day, but uh there's a lawsuit ongoing right now, who everyone you guys may have heard of this, of uh Pinkerton versus Red Dead Redemption. Um that's not the name of the companies, but that's essentially the the the uh IPs at issue. And Red Dead Redemption is a sort of historically accurate uh Old West game. And and and they have Pinkerton agents in them. And Pinkerton sent them a threatening letter and said, "You need to pay us. You need to license." By the way, Pinkerton, in case like anybody hasn't played Red Dead Redemption cuz I actually had to look this up. I didn't pay attention to like how the Pink- Pinkertons were this uh bound- were this bounty hunter company or agency that used to go around and pick people. Oh, that's It's also the best Weezer album.

Yeah, like yes, it is. Thank you. And they have union busting. There's like photographs of them with Abraham Lincoln. They're they're real historical figures. I actually just gave a talk on this last week with the GC of Riot Games and it turns out he used to be a Pinkerton agent before before before he went to law school. It was it was really random. Anyway, um so the the point is that they're a Pinkerton's going to lose this because you can to a certain extent uh there's something called nominative trademark fair use and that is just one of many considerations to use. If you want to use a modern day game and you're you're you're you're getting Coke caps and then every single Coke cap is is a Coca-Cola logo, you're going to get sued and you're going to lose. Um if you use uh photographs in your game or even architecture of modern day buildings, that could be covered by copyright and if that's on the cover of the games, maybe that's not okay. If it's just incorporated in the game like in Spider-Man, maybe that is okay. It's so context dependent. I And And I just want for fun um to just describe like how this actually works like in in real life. So, you have

you're you're going to make a game. Let's say there's a thousand art assets in it that could be something else. It's not just generic whatever. Let's say there's 10,000. Let's say there's 100,000. What those folks do are they send a spreadsheet to our firm, these guys' firms, and it has um little miniature links to the art asset and it has multiple columns about it including where it was sourced from and whether or not it was modified. And then this one particular company that I'm thinking about but a lot of them do a variation of this, we color code a column red, yellow, and green based on how it's used and and what we think the relative risk is. Another thing we haven't discussed that goes into this analysis that takes I mean it it takes months of attorney time to go through all of the assets is um how litigious is the is the party. So, you know, like those little tree tree air fresheners, those are some dangerous bastards. I'm just letting you know. Lindsay Lohan will sue you. Yeah. Anything Disney, keep away from Disney. I mean Yeah. I think to to summarize on

a practical level though, um you never know who's going to see you. There there are risks and it depends on if you're a tiny indie where you don't make any money so no one cares. Um and it depends on who you're using and how. So there's there there are no blanket rules for this. Um go So there's a lot of questions so I'm going to for the next couple I'm going to ask that we try and keep it to like kind of a nice pithy pithy responses so everyone can get asked their questions. And I'm sorry in advance cuz some of these like that question we could have a whole one-hour talk on. It will all be available outside afterwards by the way. So well at least I will. Are you guys Yes. Stick around? For like 15 minutes. I got a client meeting. Uh okay. Yes. Okay, so this uh this goes back to the um the issue of uh of privacy and that it kind of goes beyond it just the GDPR. Uh companies companies like Facebook and Fitbit and Google and so on they've been dealing with sort of personally identifiable information for a long time. And they have formed typically have formed a sort of an in-house review

board of of of some sort which is not just lawyers but also uh user advocates and technical people and so on who basically review the uh the the issues here and um you know uh give a an a thumbs up or down as to whether this process should be implemented. Um this is sort of analogous to institutional review boards that you get in universities doing human subject testing. Um I'm wondering is there any any kind of um structure or or uh standard way of dealing with this within um within the games industry? No. It's There's nothing standardized yet. Keep in mind a lot of these companies came into this pretty late in game in games in particular. Uh as I said like I like most of my clients didn't come to me even though I gave them notice on GDPR about a year ago or a year before. Um they didn't start even thinking about implementing any kind of consumer-facing

documentation or their own back-end process until like a month before it went and until a month before GDPR went into effect. So, do they like they are in the process of trying to establish a process right now. They haven't the most of the companies that I've worked with and and even some of the bigger companies with the exception of a few who, you know, are are owned by Google or um Hasbro, for example, Wizards of the Coast. It's a very well-defined process. Um, you know, some companies have gotten there, usually the bigger ones, Microsoft, you know, Wizards, whatever. Um, but the smaller studios and the smaller publishers and the indies, no, they're still trying to figure this this out. Seems like there'd be good scope for an industry-wide scope. I have to like seriously censor myself. I apologize. Thank you. Um, oh, a quick reminder, by the way, after the talk, please do fill out the evaluations. They're very, very helpful uh to let us know how we did. Um, so, you know, any any comments, concerns,

etc. Um, and uh they should send you an email about it. Yes. All right, so I kind of have a loaded question and Get really close to that mic and it's not good. I kind of have a a loaded question away. So, recently uh Civilization VI updated their EULA uh and one of the paragraphs, I don't have it on me, so I can't quote anything, but uh essentially allowed them to access and read any information whatsoever, not necessarily restricted to their product, on on our computers. And they updated that and with the expansion to the question, with a lot of games, games only actually provide you the EULA after you purchase the game. And then if they update at any time, you're not able, unless you agree to it, you're not able to play the game that you purchased and spent money on. If we take an example of Stellaris, that's $300 worth of game right there. Yeah, that's that's two entirely different questions. The second one is like huge issue. We actually discuss it. It's like

one of these few kind of issues we discuss in law schools, these shrink wrap wrap agreements. You've already bought a game and then you've already bought it some software product. You you you get home and open it. It says, "Great, you have now agreed to these terms of use." And essentially, if if you can return it, if there's a if there's a method, I think, of returning it, then you are deemed, because you have not returned it, to have agreed to it. So, I I think as long as there was a method of returning it or refunding your money, then you are out of luck. And they said, "Well, sure, you paid $300 for an opened it, but you could have returned it. You had like in Steam, when you buy something, you have like 2 hours or something to play it and return it. So, you're SOL." And Well, and just real really quickly on that. So, in in my experience, the the if you contact the publisher and it means a lot to you, you can get your money back. I mean, that's what I always advise them to do. Try it, see if it works. I mean, they they may ask you to send the game back or not. And the second thing is the reason it has to say something that looks like that is because the best cheat programs run entirely outside of the

of the software. They you know, they're they're not looking at your Facebook photos. Yeah. I mean, they shouldn't be. Right. Uh thank you. So, my question has almost nothing to do with anything you've spoken about, which Excellent. yes. I really enjoyed what you spoke about cuz I have a consumer viewpoint about a lot of those topics that you mentioned. But my question is I'm an indie and we we are a team that just came together as friends wanting to make something really cool. We all care about Oh. Oh, I see an expression. We all care about the product and we all want to make it happen, but there has been almost no conversation as how we're going to actually make this a business. And um well, I think everyone would agree that having legal protections and bylaws and all that would be amazing and would be

helpful in the long run. I am concerned about bringing it up because we haven't had this conversation at all and I don't even know if other people in the team have even thought about it. So So, oh god. I have I have a quick I have a quick question just to kind of elaborate. Is this a hobby project or are you actually planning on selling it? We're actually planning on selling it. Then you need to you need to incorporate or otherwise form a business entity because it's this is not a hobby. Well, my question is more not do we need to do this? More of how do we approach this subject between a group of friends who you know, we trust each other but this is still contentious and difficult. So

Yeah, I I agree. That's that's that's that's that's very well said. able to have that conversation. So so and also just this is a situation I've seen quite a few times is you guys don't incorporate or you guys have just some kind of loose agreement, maybe some handshake agreement. There's four of you each on a fourth of the company. You're going to you're going to go forward. This is great. Well, in six months one of you takes a job at like Epic and now they're out of the picture. Two years later your game releases, it's a huge success. Well, guess what? That guy that never really worked on the game that took the job at Epic and never put anything else still owns a fourth of your game. So he owns a fourth of your game. So you better have a have an agreement in place. Yeah, and I too have been on I've been on a I think I think we ended up selling settling this case which is not public but for almost a hundred million dollars on a mega mega game that just nobody decided to talk to each other for a long time. Somebody just went away and they thought they weren't ever going to hear from them again until that game started to make some real real money. I just realized that we actually had that we were the first time I ever worked

against you on a case. Yeah, both of them were opposite each other on a very contentious deal where this is literally what happened. And and but the thing I'll say real quick is it's it's super common but don't let it be common. If you guys are in here I mean get get it get it done right. You'll be so happy you got it done right even if the game doesn't work out. To be honest, I can say this I think for both of us. It sucked for both of our clients. Like there was no happiness in that situation. So go ahead and have that conversation. If you're a team, if this is something you all care about, they should they should acknowledge that you are not selling out by actually creating a business if you if you plan on selling a product. You are always selling out if you're selling a product. That's what selling out means. You're selling something. Right? Right? Right? A good a good way to to broach it in a way that won't be awkward if you feel awkward is to say look this is about protecting our friendship because you know seriously because if I would say that the more you trust and like someone the more important it is to

have a contract. And the reason is that when you trust and like someone many things will go unsaid because you trust each other. That's what trust is. And if you're dealing with a random stranger, you're going to know to ask a lot of questions. Say well well how exactly do the percentages work? But you're not going to know this. And by having this conversation and this contract, you have the confidence that your friendship isn't going to be destroyed if someone has a change of heart. So yeah I I would do it and you'll feel better about it. to breathe a sigh of relief when you bring it up and say oh yeah great. We were thinking this too. Let's let's get this wrapped up. So there's a reason as to why I'm probably perpetually single but one of my one of the things that one of the things that we do is Yes, with contract. Is it Is it the lawyer hat? Uh no, I treat I treat True, but I treat I treat all relationships like they are like I treat business relationships the same way I treat my romantic relationships and vice versa. Um and that is you go through stages, right? Yeah, see this is why I'm single. You go through You go through these

stages. It's not a zero-sum game, right? It's not about winning and losing and anybody who says otherwise is full of it and does not know anything about contracts and that means you, Donald Trump. Um Ooh. What When it comes down to it, you are creating a relationship, right? You are You are courting each other to find out if you if you have similar goals in mind. You are negotiating your values to determine what what boundaries you establish in the relationship. And you have like a term sheet phase, which is kind of the honeymoon phase, and then you have the long-term or the long-form agreement, which is effectively like, you know, your pre-nup. So, at the end of the day, I mean, you the business relationship is still a relationship and the conversation isn't going to be that different. All right. Cool. Uh so, we've got about 5 minutes left, so now we're going to go to like lightning round cuz I I really want to make sure everyone gets their question. All right, thanks. I'll try to make this brief. My question's related to personalization and it connects with both the gotcha loot box question as

well as GDPR and privacy. Uh when I think about monetization and mobile and sort of random base monetization, we're entering a place where as Google and more players have more data, they're able to generate offers on a very individual level, right? And the bigger the the data sets get, the more personalized the offers become. Right. What risks do you see for either publishers or developers from a legal perspective in terms of like how deep can you cut or sort of can you change the odds based on consumers? Can you like what could you do and what pitfalls would you see as more players that deal with personalization enter the space? Yeah. I I think I mean at a top level the the the use of the personal data the the sort of GDPR and it's not just that regulation but is sort of about either consent or having they call a legitimate business interest. So that that frames how you what it is you're allowed to use

someone's data for and if they're if they're not aware that you know they say yeah sure of course you can have my email and this and you can track my clicks because I'm playing the game and that's how the game works and yeah I want to get special offers. That's fine. And if they agree to that or if it's it's clear that that's what you're doing that's fine. Um if you start doing this but they think oh it's just everyone gets the same ads that's an issue. Um I think as far as the changing of the odds I I would assume that it has to do with disclosure and that that they need there needs to be a way for them to understand and I don't know if if the fact that it's based on an algorithm and it could fluctuate 10 times a day how how do we disclose that? I think if you find out that someone is is is vulnerable or not very smart or likely to make rash decisions so you start offering them deals where they have terrible chances of winning. That seems really like predatory? That seems bad. Mean? That's with my lawyer hat and my human hat. That seems like that seems like it's going to go poorly. What do you think? Yeah. I think Lightning round. Yeah. Lightning round. All right. Yes. Okay. Uh so yeah so on

the disclosure and promotion type things I work with educational institutions I work with festivals and we talk about okay a click away doesn't count. If a university wants to retweet stuff that's a student project being shown someplace. If a festival wants to retweet something that's by creators are there concerns there of like they paid tuition they paid submission fees for access to these PR machines or is that not a concern at all? Awesome. they're paying for. Okay. Thank you so much. Easy. Yes. So when it comes to this is more also about Tyson communicating with the superiors. So, for Rainbow Six Siege what happened was there was a scandal of them censoring violence I believe fit into the Chinese market. And what happened was there was a lot of controversy surrounding that and basically there are different what I'm trying to say that is that there are different costs to just being legally compliant whether that be financial or reputational. How do you How would you suggest communicating that to a superior who might be from a different culture or you know all that to convince them that

it is important to stay legal? Yeah. It's I mean it's the price of entry. Specifically with China it's the price of entry. Yeah. Well, that and and too never mind I'm not going to say that would be offensive. Um yeah like with China in particular things are are extremely regulatory. It generally you're working with a Chinese publisher anyway. So, very few I don't know of any companies that can get Chinese distribution without working for a company actually based in China. As a Chinese person I give you full permission to say that. Like you are so right. So, the additional cost also goes to who you need to bribe to get it through the regulatory and licensing channels. has laws against uh foreign corrupt practices act though. Well, we do but Okay. I think I think we've hit time. Um everyone yeah everyone who's still in line we're happy to talk to you outside uh and and take your take your questions off the air. Thank you very much. Fill out your surveys, please. Thank you.