Industry Reflection and Legal Countermeasures Concerning Online Game IP Adaptation Problems

Tian Xiaojun,Cao Jianfeng,[Comprehensive Reports]

    Tian Xiaojun Deputy Secretary General of the Copyright Research Center of the Tencent Research Institute
   Cao Jianfeng Researcher of the Copyright Research Center of the Tencent Research Institute
   
In 2015, China's listed game companies reached 171, with a market value of RMB 4.76 trillion. China has become the world's largest game market, and the introduction of the over-entertainment concept has detonated China's online gaming market. However, the online gaming industry has been accompanied by problems including the inundant online game plagiarism, fuzzy standards for infringement cognizance and non-standard IP adaptation, developing with a negative impact. This article explores rights and wrongs in the online gaming IP adaptation and the online gaming industry from four - industrial, economical, legal, and governance - perspectives, and proposes feasible recommendations for the purpose of healthy and orderly development of the online gaming industry.
  I. Industrial perspective: online gaming ecology increasingly dependent on quality IP adaptation
  Since 2013, cross-border integration has become one of the hottest concepts on the internet. Internet companies such as Tencent and Alibaba promote the overentertainment business model with the platform ecology and have opened up the collaborative development space for electronic literature, online games, Internet videos, online animation and digital music around cross-border adaptation of the star IP contents. IP has become the core to connect and aggregate emotions of the fans in the overentertainment industry and IPcored over-entertainment layout has become the development trend of China's Internet content industry. Online gaming ecology is increasingly reflecting the elements of literature, animation, music, film, television drama and cross-border adaptation is increasingly active and its importance to the creation of online games is increasingly evident.
  In addition to fine polishing of their own online gaming IP to establish brands, the domestic mainstream game companies pay more and more attention to the introduction and purchase of quality IP. In recent years, Tencent Internet Entertainment continued to increase the introduction and purchase of quality IP and has reached cooperation with domestic and foreign copyright owners including Shueisha, Disney and STAR TV, and has obtained authorized copyrights of multiple writing and audiovisual works. Other game companies have expanded the cultural contents and gameplays by purchasing IP. SOHU-ChangYou and Perfect World have jointly obtained the right of adaptation of the Jin Yong series martial arts games; the CMGE has obtained the authorized copyrights of many animation works such as One Piece and Dragon Ball Z; Shanda Literature has auctioned the right of adaptation of a number of influential electronic literature works into mobile games; Tencent has authorized Longtu Game the right of adaptation of the well-known domestic animation works Zombie Brother into a mobile game for RMB 50 million.
  Relying on the economic effect of the fans of the star IP, IP adapted online games in the market can often be very successful. According to iResearch statistics, mobile games such as The Journey of Flower and Sky Change have a monthly traffic of over 100 million and webpage games such as Mang Huang Ji and Fate of the Cloud Nine have a monthly traffic of up to 30 million. In addition, the Tencent Internet Entertainment China IP adaptation Mobile Games Research Report shows that, seen from the performance of the iOS bestselling list, China IP games are most listed, accounting for nearly 60% of the top 100 games in terms of IP gaming revenue; moreover, the users are more looking forward to mobile games adapted from electronic literature, animation and films. IP adapted games have led to the rapid development of the online game industry, but also led to a continuous rise in the IP copyright price. Since 2013, the copyright prices of mobile gaming IP especially star IP have risen rapidly, with works such as Rage Comic and Qin's Moon priced up to RMB10 million. In this context, more games adapted from IP of outstanding literature, variety, films, animation, etc. can be expected in the future. The importance of IP adaptation to the game industry is self-evident.
  II. Economic perspective: online gaming IP adaptation chaos disrupting the industrial order
  What behind the prosperity of the online gaming industry is the increasingly serious online gaming infringement chaos. Infringement with respect to online games are mainly centered in the two aspects: one is that pirated online games infringe upon the copyright of quality IP including fictions, animation, films and television plays, sports programs, variety shows, especially online fictions, animation and films; the other is that copycat games infringe upon the copyright of the genuine online games such as "Cross Fire", "League of Legends", "Fantasy Westward Journey", "Hearthstone" and "Warcraft". China's online gaming industry has suffered infringement chaos since 2013. Fictions, animation, films and television plays, variety shows, etc. have become the main objects subject to online copyright infringement, and it's even worse when it comes to well-known Japanese animation and Jin Yong's novels. In terms of number, copycat games and skin-changing games without IP on the market are more than games or original games with IP.
  Online gaming infringement chaos has caused great adverse impact on the gaming industry. On the one hand, the development of a new online game requires high cost and long time while the copycat of a popular game costs only 1/4 of the genuine game. Infringing games can be put on the market quickly and recover costs in a short period of time. Great economic incentives tempt these infringers to take chances by defying the law again and again, resulting in frequent cases of infringing the intellectual property of online games, which adds self-evident harm to the gaming industry. On the other hand, online games especially mobile games have a short life cycle, generally 6 to 12 months, before they decline rapidly. In contrast, it generally takes the right owners more than 6 months to protect their rights. What's worse, the infringing mobile gaming companies tend to adopt delaying tactics and defy the law by taking chances; hence, they make profits and leave the market before these litigation cases are even closed.
  Furthermore, modern games usually consist of two main parts, software codes and game elements. As the software industry develops towards open source and open direction, the underlying codes of many game applications are open; because the game elements in online games are more important along with game pictures, ideas, rules and music, they gradually become the objects subject to imitation and plagiarism, or these elements themselves are produced by imitating or plagiarizing other wellknown IP. This development trend of modern games decides that online gaming infringement litigation cases are more around the game elements. In the Hearthstone v. Fantasy Westward Journey case, the focus of controversy lied in whether copyright elements in the original IP works had been used without authorization.
  III. Legal perspective: online gaming infringement decision dilemma limiting the industrial development
  The rapid development of the online gaming industry is accompanied by a surge in online gaming infringement suits. Online gaming infringement cases are generally divided into three major types, copyright cases, trademark cases and unfair competition cases. Of all cases with respect to the intellectual property of games, copyright infringement cases account for about 85%. The Investigation Report on Cases with Respect to the Infringement of Intellectual Property by Online Games issued by the Haidian Court shows that, from 2014 to 2015, the Haidian Court had concluded a total of 183 cases with respect to the infringement of intellectual property by online games, with an increase of 173.5% in 2015. The surge in online gaming infringement litigation cases is an external representation of the online gaming infringement chaos. At the same time, when the courts are trying cases with respect to the infringement of intellectual property by online games, problems such as fuzziness in cognizance, difficulty in identification, procrastination in proceedings, difference in judicial standards and low amount of compensation determined do exist, resulting in a greatly reduced protective effect of the judicial practice on the gaming industry and serious harm to the value of online games.
  First, re-adaptation and gaming cross-border infringement problems are conspicuous. According to the Copyright Law, the original works and the derivative works that come from the original works are two independent works; the derivative works are produced by the exercise of copyright and shall not infringe upon the copyright of the original works. Therefore, in terms of the use of the derivative works as a blueprint for the adaptation into a game, it is inevitable to conflict with the original works; as the Internet content industry develops towards over-entertainment, there are an increasing number of such cases in the judicial practice. For example, in the Ghost Blows Out the Light game adaptation case, the plaintiff Youqu had obtained the right of adaptation of the Ghost Blows Out the Light comic, the copyright of which was owned by Chengman, but was taken to the court for infringement of the right of adaptation by Xuanting, copyright owner of the original works Ghost Blows Out the Light, had to pay a great amount of compensation and finally lost the violation complaint [Yuan Bo: On the Authorization Rules for the Re-Derivation of the Derivative Works — with the Ghost Blows Out the Light Game Adaptation Case as a Perspective, China Copyright, 2012(3)]. Therefore, for the adaptation into a game based on the derivative works, if any content of originality from the original works is used, consent will need to be obtained from the original copyright owner; otherwise, it may constitute infringement. It's just that the specific standards for the cognizance of re-adaptation will be further clarified in the judicial practice. In addition, gaming crossborder infringement problems continue to come up, especially in connection with the copyright of works including online fictions, animation and films. For example, in the Jin Yong's novel adaptation infringement case, the court was of the opinion that the National Martial Arts game had used the same or similar equipment, martial arts, characters and plots as in the subject works, large in the number and beyond the scope of rational use, which constituted the adaptation of 11 Jin Yong's novels without permission of the right owner, and therefore infringed upon the exclusive right of adaptation enjoyed by Changyou with respect to the 11 novels in question. Gaming crossborder infringement acts are generally secretive and difficult to determine, which will not only affect the market value of the authorized game adapted into, but also have a negative impact on the market value of the original IP.
  Second, the property of the online games and the scope of their protection are not clear. The online gaming application is a kind of software products, but its biggest difference from the practical computer software lies in the practical computer software stresses the process and expression of code running while the game software tends to stress the macro external expression. As mentioned above, the development of modern games shows the trend towards open source of the underlying codes, and, even if the codes are completely different, it is possible to develop two games of the same external performance. If the game software is to be protected as computer software works, as long as the accused person can prove that the software has not been infringed upon, there is no way to hold such person liable for infringement. Although China's Copyright Lawdoes not specify the property of game works, protection will be provided to cover the audiovisual works, literary works, art works and music works included in the game elements in addition to the game software works itself in the judicial practice. For example, in the Fantasy Westward Journey case, the court was of the opinion that "considering such game software has included, besides computer programs and relevant documents, also corresponding art works and literary works as required by the game design, the owner of the game software may independently exercise the copyright of the above works." However, in the Miracle MU v. The Myth of Miracle plagiarismcase, the Pudong court was of the opinion that online gaming pictures were of originality and could be reproduced in a tangible form and consisted of continuous pictures represented from a series of plots continually developed in the game scenes, which were similar to film works in terms of creation and manifestation; the overall pictures of the subject game could be protected as "film-similar works", providing a new idea for online gaming copyright protection. However, as to whether the game rules can be protected by copyright, the domestic courts are currently inclined to hold a negative attitude.
  Third, there are no specified standards for the cognizance of online gaming infringement. There is an expression-thought bisection method in the Copyright Law; the protection of copyright only applies to the expression of thought rather than thought itself. A game, as the works made up of compound elements including the name, logo, scene map, plot, characters, text, dialogue narration, background music and many other elements of the game, makes it difficult to apply to the expression-thought bisection method. In judging infringement, generally the court will first need to determine the contents of originality in the game that are subject to copyright protection and then compare based on the "substantial similarity and access" test method. However, due to no unity in connection with the property of the game works, there is great uncertainty when the court applies the substantial similarity standard to individual cases. On the contrary, the cognizance standards including "abstraction-filtration-comparison", "internal test", "external test", "general observer in theory" and "total concept and feel" established by the US courts in the gaming infringement cases such as the Tetris case and the Triple Town case provide uniform high level protection to the copyright of games, which are worth learning. Again, there are "distinct delineation", "story being told" and "three elements detection" developed in the United States for the judicial copyright protection of virtual characters, providing reference paths for the copyrightable judgment of a single game element.
  IV. Governance perspective: urgent need to strengthen online gaming infringement governance and standardize IP adaptation
  The game industry has a growing contribution to China's economy. In 2015, China's game market had actual sales revenue of RMB140.7 billion, increased by 22.9%. At the same time, the online game industry is active in financing and investments and a number of online game companies have been listed in the domestic and foreign securities markets, with a market value of RMB 4.76 trillion. In this context, the online games industry still has problems including conspicuous re-adaptation infringement and gaming cross-border infringement problems, unclear property of online games and scope of their protection and no specified standards, and need to be improved from the view of governance.
  First, continuously develop online gaming infringement cognizance and copyrightable definition standards. The long-term stable development of the gaming industry depends on the efficient and quick judicial practice, so as to frustrate the game imitators and plagiarists with a fluky mind by preventing their reckless infringement acts in the form of free riding or playing an edge ball. Especially in the current phase when the online gaming industry is experiencing rapid development, more emphasis should be placed on the guaranteeing effect of the IP protection on the industry. In this regard, it is advisable to learn from the relevant standards formed from cases by the US courts in gaming infringement cognizance and be clear about the boundaries within to refer to acts such as unauthorized adaptation of cross-border IP and competitive products. Furthermore, as to whether the game rules should obtain protection from the Copyright Law, it's recommended not to limit the focus of debate to the expressionthought bisection method in that "substantial similarity and access" is the base for infringement cognizance while, in terms of the game rules, whether they are within the range of thought, whether they constitute expression and whether they are copyrightable lies in whether the substantial contents of the rules may be represented in expression in the sense of the Copyright Law, namely, in defining specifically to what extent the game mechanism constitutes expression.
  Second, define the property of game works and strengthen a synergistic legislative, judicial and administrative protection. The uncertainty about the property of game works in China's Copyright Law gives rise to many differences in the copyright protection of games in the current judicial environment. At present, to protect games as audiovisual works or filmsimilar works gradually become an international trend. The Pudong court has adopted this idea in the Miracle MU v. The Myth of Miracle plagiarism case, which is worthy of recognition. Therefore, copyright legislation and judicial practice should be in line with the development trend of the game industry, in order to improve the standards for copyright protection of online games. In addition, administrative law enforcement, due to its efficiency, convenience and low costs, is fit for the online gaming industry; hence, it is proper to purify the copyright environment by continuously strengthening the administrative law enforcement in the protection of online gaming industry. In addition, the court may also put forward reasonable proposals to prevent risks and improve work to the relevant competent agency or authority in the form of judicial advice with respect to problems found in the judicial practice.
  Third, strengthen the application of injunctions before and during litigation and increase the amount of compensation for infringement. As mentioned above, online games especially mobile games generally feature high development costs and a short life cycle and after long litigation proceedings, the infringing games may have recovered costs and left the market, bringing difficulty to the right owners who are seeking protection of copyright. So it is practicable to apply more preliminary injunctions before and during litigation in a more flexible manner to intensify efforts to crack down the infringing acts of adapted games and competitive games and avoid irreparable losses caused to the right owners from too long litigation proceedings. Furthermore, the statutory amount of compensation provided in the current Copyright Law is too low to encourage the actions to protect rights; and in most of the games infringement cases, the low amount of compensation determined is far from what it should be compared to the revenue and size of games and far from making up for economic losses and even litigation costs, unable to effectively deter any infringement acts. Therefore, it is recommended to raise the statutory damages and properly lower the standard for proof, maintaining the confidence of the legitimate operators to protect copyright while holding the infringers liable with severe penalties so as to promote the development of the industry.
  (Translated by Liu Lei)

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