Since the video game industry took off in the early '80s, the importance of intellectual property has only grown. Today the shelves at Walmart are stocked with games based on Star Wars, Harry Potter, Tolkien, Marvel, and other cross-media franchises. Games like World of Warcraft even create publishing empires of their own, spawning novels, comic books, game guides, board games, and other media. Video game production is more and more bound up in the business of intellectual property generally.
The core assumption of all of this activity is that we all benefit when creative companies have the ability to profit from the downstream use of their creative products. In today's transmedia age, however, we seem to be pushing intellectual property rights to their maximum reach. Paying every rights holder for every new work is becoming increasingly complex: a new game based on a film may require licenses from the studio that made the film, the author of the book on which the film was based, the actors who portrayed the characters, and many others.
In this system, where so much emphasis is placed on commercial compensation for existing content, creativity can be constrained. And it becomes especially easy for those in the game industry to overlook the creativity of players.
Sandbox games are the exception to the rule perhaps because they create cognitive dissonance for developers: players do not have the creative skills to make games, so why should they have robust creative tools? They'll just make boring junk.
Creative freedom in most games is usually an afterthought. If it exists, it is heavily managed and doled out in small doses. Players might be permitted to change the faces and hair colors of avatars, but most games run players on rails through pre-programmed content, showing off what game developers make and giving players little freedom to shape their virtual worlds.
Minecraft, intentionally or accidentally, took the opposite approach. It recognized that players appreciate artistic and creative freedom. However, for companies seeking to duplicate Minecraft's success, this is exactly where the law of intellectual property can create headaches. Our laws generally discourage game developers from offering powerful creative tools to players.
The litigation several years ago between Marvel and NCSoft over the City of Heroes MMOG is a perfect example. Cryptic Studios created City of Heroes for NCSoft. The game includes a "Creation Engine" that provides players with a powerful tool for designing superhero costumes.
For some City of Heroes players, the Creation Engine is the most interesting part of the game. But several years ago, the tool provoked a lawsuit from Marvel. Marvel sued NCSoft because it claimed that the costumes created by the players included Wolverine and Iron Man lookalikes. According to Marvel, these were copyright infringements. Marvel claimed that because NCSoft made the tools the enabled the infringing costumes and hosted them on its servers, it should be liable for the player-created copyright infringements.
If online game hosts were automatically liable for player-created infringements, no game developer would ever host a sandbox game. After all, statutory damages for copyright infringement can run up to $30,000 or more for each work infringed, and hosting the production from any creative online tool would quickly bankrupt the maker of any sandbox game.
Luckily, Congress passed a law in 1998 that gives online hosts some relief from that risk. The Digital Millennium Copyright Act provides a safe harbor for service providers who unknowingly store infringing material that is created by users of the service: i.e. infringing superhero avatars created by players. However, to comply with the DMCA, the game company must follow certain formal requirements, including designating a DMCA agent and instituting a procedure for the swift removal of infringing content upon notification.
Marvel was well aware of the DMCA rules: it had contacted NCSoft and demanded it remove a list of infringing avatars. NCSoft dutifully deleted scores of costumes, but Marvel argued this wasn't good enough. It told the court that NCSoft should be liable despite the DMCA, since it was technologically complicit in the ongoing player infringements.
The federal court hearing the case never rejected that argument. In fact, it denied NCSoft's motion to dismiss Marvel's copyright claims. Soon after that ruling, the parties agreed to settle the litigation on undisclosed terms. As a result, the case was closed and the issue of whether the Creation Engine infringed Marvel's copyrights was never conclusively settled. For designers who might want to offer similar creative tools, the case offers a warning about the legal risks of this approach.
If NCSoft was right, any game company that hosts player-created content should be able to take advantage of the DMCA procedures and avoid liability for player infringements. For over a decade, this has been the general rule: the DMCA protects online hosts from secondary liability for copyright infringement claims. Smart game companies use the DMCA as a shield. But the DMCA is again under attack, just as it was in the City of Heroes case.
Currently pending in the Second Circuit Court of Appeals is a lawsuit by Viacom against YouTube. Since its creation, YouTube has followed the DMCA rules to the letter. It hosts user-created videos but it removes them when it receives notice from copyright holders. Viacom, echoing Marvel, says that compliance with the DMCA isn't good enough.
It wants YouTube to actively police its servers for copyright infringement and claims that if it fails to do that, YouTube should be held liable for infringing videos. Like Marvel, Viacom is essentially attacking a business for providing creative users with a set of tools and a platform. If Viacom is successful, those sorts of tools and platforms will be harder to find.
There is a legislative front to Viacom's efforts as well. Pending bills like the Stop Online Piracy Act (SOPA) are essentially asking Congress to revisit the compromise enacted by the DMCA. While it seems unlikely as of today that SOPA will become law, the balance between technology and copyright may still shift to make the technology industry carry more of the burden of copyright enforcement. For instance, online payment companies that do business with sandbox game makers may face legal threats due to the copyright infringements of users.
However, it seems that most of the major players in the industry are choosing to side with the content industries in the digital copyright wars. To the extent new laws work against the development of sandbox games and interactive platforms generally, this is understood as an acceptable tradeoff for stopping piracy.