Open Access Research Article
Derivative Works and Video Game Mods Under Copyright Law -By Divyanshu Mishra
Published Paper
Article Details
Derivative
Works and Video Game Mods Under Copyright Law
BY:
Divyanshu Mishra (L19BLB003)
Introduction
Video games are
a relatively new form of art, emerging in just the last few decades with the
first video game being Pong. The industry in the beginning was just limited to
arcades and was not even considered and artform until recently. Now it is an
industry which has even surpassed the movie industry in terms of the market
size[1]. Video
game industry market was in 2021 a USD 195.65 billion[2].,
while movies have only a market valued at around USD 28.9 billion in 2021[3]. While the
movie industry is expected to grow at a rate of around 7% in the US the video
game industry on the other hand is expected to grow at a rate of 14%. India has
also seen a huge rise in the gaming industry because of its smartphone and
internet boom. Mobile gaming in India is expected to grow at the CAGR of 19.75%
from 2022-2027[4]. As
intellectual property rights are mainly for encouraging creativity and economic
growth. Indian copyright laws currently, have had no cases regarding video
games. The Indian video games industry is still in its infancy, but as the
industry rapidly grows in India. This might present a challenge for Indian
courts. Application of Indian copyright laws, to the complex issue of modding
and marketability of mods is still an open issue.
The paper will
discuss the current cases of US origin and will try finding out how might these
issues be seen in the Indian legal context.
Nature of
Ownership of Software
The problem with
modding software and specifically video games arises from the nature of
ownership of such games. Customers who might have brought software in the past
must have noticed that most of the companies these days have been shifting to a
subscription based model to sell their software. This trend, of subscription
has been adopted by Adobe for its video, audio and image editing software and
also by Microsoft for their office suit. This subscription based model was
influenced because of a landmark judgement, which made companies nervous about
their copyright. The courts also recognised the ambiguous nature of an End User
Licencing Agreement, and what it could mean for consumer[5].
Rights of
customers regarding use of software sold as licences have been given in 3 cases
known as the “MAI trio”. These principles are; essential step and first sale
doctrine.
The MAI trio
propounded two principles essential for the rights and use of copyrighted
software and application of the principle of essential step.
First Sale
Doctrine
The first sale
doctrine, despite its name does not require sale of a product. It derives its
name from the logic that, exclusive rights of distribution, can only be enjoyed
till the first sale of the copy of the work[6].
As long as there is an EULA and it states that the copy of the work will stay
with the end user till perpetuity and does not restrict further transfer of the
software or work, it is considered, “sale of a copy”[7].
Aside from the intent of regaining possession, there must also be a clear
licencing agreement which cannot be confused with sale of a copy of the
product.
US state laws,
chapter 17 of U.S. code section 109 gives “the owner of a particular copy or
phonorecord lawfully made under this title, or any person authorized by such
owner, is entitled, without the authority of the copyright owner, to sell or
otherwise dispose of the possession of that copy or phonorecord[8].”
The right of
ownership of the physical copy also restricts exclusive rights of the copyright
holder, to be the only distributer of the product. Landmark case of UMG v
Augusto gave us a look into how this doctrine could be applied to digital
software. UMG had sued Augusto while he was trying to sell promo CD’s he had
legally acquired, on Ebay. Then Augusto brought a case against UMG for misuse
of DMCA laws and claimed his sale was protected under first sale doctrine. To
invoke this defence Augusto showed:
“(1) the CDs
were lawfully manufactured with UMG's authorization;
(2) UMG
transferred title to the CDs;
(3) Augusto was
the lawful owner of the CDs; and
(4) Augusto
disposed of, but did not reproduce, the CDs.[9]”
UMG appealed the
decision to the Ninth Circuit, to no avail: the court flatly rejected the
argument that merely slapping a notice on a copyrighted work prevents the work
from ever being re-sold. The ruling helped cement the principle of first sale
in copyright law -- once ownership has passed, copyright law no longer
interferes with resale of lawfully made books, CDs, DVDs, or other copyrighted
works.
Essential
Step Doctrine
Essential step
doctrine propounds that the owner of the software and product has the right to
create copies of a software, if such copy is essential for the use or enjoyment
of the product. The essential step doctrine is now codified in U.S. law section
117 of Chapter 17 of U.S. Code and was first propounded in the case of MAI Sys.
Corp. v. Peak Computer Inc. [10] There are
two reasons given in state for making such copies:
“1. that such a new copy or adaptation is
created as an essential step in the utilization of the computer
program in conjunction with a machine and that it is used in no
other manner, or
(2) that such new copy or adaptation is for archival purposes only and that
all archival copies are destroyed in the event that continued
possession of the computer program should cease to be rightful.”[11]
While copies for
the use of customer are allowed they cannot be in violation of the test of
essentiality. Also the right to copy cannot be absolute causing financial
damage to the owner of copyright. In the case of Wall Data v. Los Angeles
County Sheriff's Dep't, 3,663 licences were issued to the defendant but the
defendant had installed the software on 6,007 computers via HDD imagining.[12] The defendant had
tried arguing, without adequate evidence, that at one time, only 3,663 users
could access the software simultaneously. While the defence of essential step
was claimed it could not be applied as convenience of the user was not
considered enough for the application of section 117.
Change on
Business Model and Limitations of UMG v Augusto
A copy of
AutoCAD, a software, for computer aided design was licenced to Cardwell/Thomas
Associates, an Architecture firm. The physical disk copy of the software was
sold to Vernor when office equipment was sold. Subsequently, Vernor put up an
ad on Ebay for the sale of the second hand acquired copy of the software. The
sale ad was taken down when Autodesk alleged copyright violation. Vernor’s Ebay
account was temporarily suspended. Then Vernor filed a suit in the Western District
of Washington alleging Autodesk’s takedown as unfair trade practice and that he
had the first to sell his copy as per the doctrine of first sale. The first
sale doctrine whether applicable on software lisences or not can be assessed
through the following steps:
“(a) whether the
agreement was labelled a license,
(b) provided
that the copyright owner retained title to the prints,
(c) required the
return or destruction of the prints,
(d) forbade
duplication of prints, or
(e) required the
transferee to maintain possession of the prints for the agreement's duration[13].”
Judges in this
case accepted Autodesks arguments but criticised the EULA and called it a
“hodgepodge of terms that, standing alone, support both a transfer of ownership
and a mere license.”. First being the fact that the physical copy of the
product was supposed to be in perpetual possession of Cardwell/Thomas
Associates. Secondly, there was no mechanism created by Autodesk to regain
possession of the said software which they claimed was not sold to the company.
Because of this
precedent, software companies realised that they needed to change their EULA’s
and their business model. The fact that they might not be able to stop the
existence of a second hand market under a licence sale model made them consider
and switch to a subscription based model. There are also benefits to a
subscription and licencing model for the end customer. Subscriptions or
licences can be provided as different rates to companies and students, only
when there doesn’t exist a second hand market for the software to drive the
rates of the software down. But the same can also mean lack of ownership for
the customer for something they previously one brought and had rights over. To
use dispose and sell off as they pleased.
Mods and
their Legal Standing
Video game mods
as the name suggests are modifications made to aspects of gameplay, visuals or
mechanics of the game. Modifications in recent times have not been discussed in
Indian legal courts but the question of their legality still remains. A video
game is built upon a copyrighted piece of software called a game engine. A game
engine is a piece of code or algorithm which forms the backbone of the game. A
game engine is also copyrighted and is, in most cases, a proprietary piece of
technology developed by the publishing company. It is also essential to note
that a video game carries with it multiple copyrights. It has copyrighted
music, it has trademarks, it also has storylines plots and scripts all of which
enjoy copyright protection.
US law regarding
copyright seems to have a higher benchmark for originality. Recent judgements
also point to U.S. courts propounding that, rights of fair use can be forfeited
by a licensee through an EULA dictating the terms of use [14].
In one of the cases Blizzard (a video game company) sued a mod maker which had
created an alternative to its online services. The same company in MDY v
Blizzard had also sued another mod maker for modifying their game.
Nexus Test
of an EULA
Starting with
MDY v Blizzard, the most important point this case had propounded was that a
violation of an EULA doesn’t automatically cause violation of copyright laws.
It segregated the contract law and copyright law part of an EULA. The test to
check whether there was a copyright violation was called The Nexus Test. This
test in essence said that, if a term of EULA is connected or effects the
exclusive rights of a copyright holder, only then will it amount to a copyright
violation. Otherwise it would only be termed as a copyright law violation.
Facts of the case were that, MDY Industries LLC made a program called Glider
for the game, World of Warcraft. This modification helped the players play the
game through bots and also play when they were not at their computers, to get
ahead in the game. Blizzard had included an anti-cheat clause in their EULA
which banned bots and the software violated this term. The U.S. courts realized
that Blizzard had sued them for copyright violation and this could mean that
clauses unrelated to copyright laws could be included in an EULA to unlawfully
expand rights of a licence holder.
The modders were
held violative of the EULA, the agreement they had signed, but they were not
found guilty of copyright violation. This was the first instance when EULA
violation didn’t automatically mean the remedy lied in copyright law and it
became a matter of contract law.
Violation
of Copyright through Mods
Now, it is also
essential to acknowledge that the game Blizzard was suing modders over was an
online game. In Davidson v Jung,[15] modders had created an alternative to
Blizzards online service. Tim Jung had claimed he had done so because he found
Blizzards online services lacklustre and created an alternative, “bnetd.org”
for players to use and play online. This mod was hit with a permanent
injunction by Blizzard. This case of modding also involved an aspect of piracy.
As the game was online, battle.net service by Blizzard also acted as a DRM
check. This DRM check was absent while using bnetd.org, therefore allowed
pirated users of the game to also enjoy the online service. There was also the
issue that battle.net was a subscription offered by Blizzard. And bnetd.org
also competed financially with Blizzards battle.net. The court also noted that
it was impossible to create the mod without reverse engineering the code of the
game and was violative of the EULA. Here in this case the court propounded
that:
(1) Blizzard's
software end-user license and terms of usage agreements were enforceable
contracts;
(2) Appellants
waived any "fair use" defense;
(3) the
agreements did not constitute misuse of copyright; and
(4) Appellants
violated the anti-circumvention and anti-trafficking provisions of the Digital
Millennium Copyright Act ("DMCA")[16]
The defendant
was held guilty of copyright violation and as this mod compromised Blizzard’s
financial interest and also reverse engineered their game allowing piracy was
deemed violative of copyright laws.
Indian Laws
vs U.S. laws on Derivative works and Mods
The test of
copyrightable works and recognition of derivative works differs from India to
U.S. While the US uses the test of
Modicum of Creativity and does not recognise derivative works as
copyrightable. Indian standards of copyright, through the precedent of Eastern
Book Company v. D.B. Modak have accepted the test of Skill and Judgement for
copyright. Still that does not mean that Indian courts would allow mods without
any legal hiccups.
·
Firstly, the derivative work that was considered
copyrightable in EBC v. D.B Modak was already in public domain and was not
already copyrighted. Court cases are not computer software.
·
Secondly, Indian copyright law has separate
rights and sections for computer programs and the above precedent deals with
different facts.
·
Thirdly, video games don’t have just one form of
copyright associated with them. Characters of a game, scripts, music and even
use of the proprietary game engine of the publisher can give rise to copyright
issues.
The complicated
nature of video games and the copyright associated with them has been summed up
perfectly in the below cited paragraphs.
“interpretation
is in accord with the expressive/functional dichotomy proffered in the case law
on reverse engineering. The Ninth Circuit in particular has repeatedly noted that
copyright is not to be used as a vehicle to monopolize functional elements. In
Sega Enterprises Ltd. v. Accolade, Inc.,98 the court's reasoning suggested that
computer programs may contain both expressive (the story) and functional (the
physics system) code.99 This "hybrid nature of computer programs"100
counseled caution in extending copyright protection for potentially functional
elements.101 Sony Computer Entertainment, Inc. v. Connectix Corp.10 2 cemented
this distinction between functional and expressive software elements.103[17]”
Indian laws do
still provide fair dealing protections to computer programs which is different
from fair use. Section 52 (ad) of Indian copyright law provides protections for
making copies and adaptations of a computer program but only for non-commercial
and public use.
Indian courts
might have provided protection to Derivative works in D.B. Modak, but U.S.
courts have not given any such protection to mods. U.S courts have propounded
that even a partial mods of a game is considered to be derivative work and
therefore the copyright holder can only sell and manufacture such copies. The
partial mod in this case was an accelerated version of the game and even Indian
test of, skill and judgement adopted from a Canadian judgement might not
consider it a derivative work. Modern
mods of games are not that simple though. Most of the time modders add code
which is unique to the game. To change its visuals and gameplay which is still
protected under U.S. law through the precedent of; Lewis Galoob Toys, Inc. v.
Nintendo of America, Inc. The case involved sale of an external device which
modified the game code and was termed as non-derivative product, as did not
contain code made by Nintendo, the game publisher.
This does not
mean as long as there is addition of extra code there can be no copyright
violation through a mod. As courts in another case of Micro Star v. FormGen Inc[18] found
that a mod was being sold for the game Duke Nukem and it used character models
of the original game. Courts said it amounted to a derivative work. The mod
referenced underlying data in the game and courts were of the opinion that the
storyline of the main game could be infringed through the use of characters in
it. Here we can see conflicts between Indian benchmark of Skill and Judgment
and the U.S. benchmark of Modicum of Creativity. Mods such as these which used
the same characters can have variations is storyline, can be considered
derivative and still enjoy copyright protection with respect to the Indian
test. As per D.B Modak case para 57:
“The
derivative work produced by the author must have some distinguishable features
and flavour to raw text of the judgments delivered by the court. The trivial
variation or inputs put in the judgment would not satisfy the test of copyright
of an author.”
And as per above
test such mods might get protection which might not be available in the US test
of Modicum of Creativity.
Apart from the
nature of the work, Indian law does recognize the doctrine of first sale as
part of ownership of software. Through an amendment of section 14(b)(ii) in
1999 parliament removed the term “regardless of whether such copy has been sold
or given on hire on earlier occasions” and recognised the right to resale of
such products. The case differentiated between an EULA and a licence granted by
copyright holder under section 30 of the copyright act. But the judgement is
unclear regarding the question of sale of software by an end user if the EULA
does not permit such sale. It does not address the question of applicability of
first sale doctrine if the EULA does not permit any such transfer. The case was
regarding TDS on payment on royalties. The ratio simply propounded the
difference between an end user and whether payment for an EULA licence payment
will be considered a royalty payment in case a distributer bought such copies.
The ratio had nothing to say about how a sale restrictive EULA’s effects rights
of an end user and only talk about distributors. It only made clear that
resident distributors paying non-residents for distribution will not be covered
under section 14(b)(ii) and their payments will not be considered royalties for
tax purposes[19]. While
the court recognizes the doctrine of first sale, it in not clear what the
Indian stance is with respect to the end user.
As per the
interpretation of section 14(b)(ii) of the court the Indian system might want
to protect consumer rights. But looking at international judgements and the
influence of the TRIPS agreement on India. This lacuna in interpretation can in
the future cause problems not just in the realm of video games but also other
forms of software licences. India would need to decide how it would
differentiate the contract side of an EULA from the sale part. Considering the
contemporary business model of software companies, it seems unlikely that a
subscription based service can avail the remedies of doctrine of first sale.
Conclusion
As the rise of
mobile gaming market in India and digitization of our economy, litigation on
modified video games might soon knock on the doors of our courtrooms. There are
already modified version of mobile games(PUBG and Call of Duty) which
circumvent anti- cheat measures and also modify the games in other ways.
Websites which provide such software can also soon be hit with litigations.
With the rise of mobile market Indian might soon have videogame publishers who
might want to restrict such modifications. India is also famous for using
pirated software without licences and might need better and more clear laws
regarding copyright infringement. Clear laws will not just invite foreign
investment but also make sure domestic
industries can be profitable. Quick Heal is one of the few software companies
based in India which sell their anti-virus services. Recent judgements have
also come up concerning Quick Heal but they have not about payment of taxes.
Considering the high number of computer graduates in India, it might just be a
matter of time when game companies might soon be a substatial part of the
Indian economy. Already we see companies like Nooding Heads games based in Pune
which made a critically acclaimed game called, Raji an Ancient Epic. It just
seems like a matter of time the courts might have some very import decisions to
make.
[1] Patrick Shanley, Why Aren't
Video Games as Respected as Movies, HOLLYWOOD REP. (Dec. 14, 2017, 9:00 AM),
https://www.hollywoodreporter.com/heat-vision/why-arent-videogames-as-respected-as-movies-1067314
("[T]he video game industry earned $30.4 billion in 2016 in the United
States. Films, meanwhile, generated $11.6 billion in total box office revenue
in 2016. This does not include home entertainment sales for films, but Blu-ray
and download sales of films do not make up the nearly $20 billion gap between the
two industries.")
[2]
https://www.grandviewresearch.com/industry-analysis/video-game-market
[3]
https://www.grandviewresearch.com/industry-analysis/movies-entertainment-market
[4]
https://www.imarcgroup.com/mobile-gaming-market-india
[5] Vernor v. Autodesk, Inc., 621
F.3d 1102 (9th Cir. 2010).
[6] Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 350-51, 28 S.Ct. 722,
52 L.Ed. 1086 (1908)
[7] UMG Recordings, Inc. v. Augusto,
628 F.3d 1175 (9th Cir. 2010).
[9]
https://casetext.com/case/umg-recordings-41
[10] MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir.1993)
[13] United States v. Wise, 550 F.2d 1180 (9th
Cir.1977)
[14] Davidson v Jung 422 F.3d 630 See also. Bowers v. Baystate Techs, Inc., 320 F.3d 1317,
1325-26 (Dyk, J., dissenting)
[15] 422 F.3d 630
[17] Spare the Mod: In Support of
Total-Conversion Modified Video Games, 125 HARV. L. REV. 789 (2012)
[18]
Micro Star v. FormGen Inc 154 F.3d 1107 (9th Cir. 1998).
Article Information
Derivative Works and Video Game Mods Under Copyright Law -By Divyanshu Mishra
Authors: Divyanshu Mishra
- Journal IJLRA
- ISSN 2582-6433
- Published 2022/12/10
- Volume 2
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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