ARTICLE

To print this article, all you need is to be registered or login on Mondaq.com.

* This article is co-authored by Tracey Tang and Vincent Wang. Vincent is a Partner at Davis Wright Tremaine LLP.

Online gaming in China represents one of the largest and fastest growing internet business sectors in the world. In 2016, the online gaming industry in China saw an unprecedented total market value of RMB 165 billion (or approximately $24 billion USD). Unfortunately, many in the global online gaming world suggest that revenue from game infringement contributed to this figure. With the largest consumer base in the world, China presents a huge opportunity for online game developers, but the risk of infringement of successful games, brands, and images has become a continuing headache for right holders. So, what actions can be taken to ensure statutory protection of online games in China?

Similar to the U.S., Japan, and other western countries, China does not enact laws or regulations specially designed for statutory protection of online games. Online games are protected by specific intellectual property laws, anti-unfair competition laws, and criminal laws when their elements and aspects are determined as qualified subjects of legal protection under those laws. Copyright holders of online games may be able to seek protection and remedy based on trademark, copyright or patent infringement, unfair competition, or criminal offense (respectively or on a combined basis), depending on the particular circumstances of the infringement.

This article is the first in a series introducing the available protection options and proper strategies to fight against online game infringement. This article will provide an overview of the various protection alternatives based on applicable laws and recent court rulings in China.

Copyright

Essentially, online games are software and game content running on a network platform. Given that both the source code and the expressive elements, such as the characters, art works, literary works and music of a game are entitled to copyright protection, copyright law is the most frequently used option to protect intellectual property from being stolen, replicated, or used without permission. According to 2016 statistics released by Beijing Haidian District Court and Beijing Shijingshan District Court1, around 85 to 90 percent of online gaming infringement cases are based on copyright infringement.

As infringement culprits become more and more sophisticated, pursuing civil claims on copying game source code is less commonly asserted by the plaintiffs. In practice, if a plaintiff claims that person A has copied its game source code, normally the plaintiff would expect an expert witness, mutually agreed on by both parties in the dispute or designated by the court, to make a comprehensive and detailed line-by-line comparison of the source code of the copyrighted game and the game allegedly committing copyright infringement. This method has a prolonged time period for trial and a costly professional fee, initially born by the plaintiff, making the civil claims less efficient and effective compared to the potential reward from the final judgment on the source code infringement dispute. Because (1) private servers or illegal plug-ins usually involve hacking or unauthorized modification of game source code, (2) the operators of private servers and illegal plug-ins, usually make substantial illegal gain, as an alternative to the civil claims, copyright holders in most cases could also choose criminal charges against the illegal operators. As a result, solely filing civil lawsuits on source code infringement has become less popular. In contrast, copying characters, storylines, plots, scenes, settings, literary works, art works and music in a well-known prior work (including, but not limited to, online games, novels, TV plays, movies, animations, comic books, etc.) is more commonly seen in online games offered to Chinese fans. Some Chinese developers would rather take the chance for a free ride on the popularity of an existing game by emulating the look and feel or the features of the prior work than create innovative expressions of their own or seek authorization from the original copyright holders for the use of these copyrighted works in their own games. In accordance with the PRC Copyright Law, as well as our research of recent court cases relating to copyright infringement disputes regarding online games, the game elements listed below may be categorized into the following statutory types of copyrightable works and may be granted copyright protection by China courts if they are the original works of authorship, met with the proper level of creativity.

Generally speaking, if a plaintiff can demonstrate the substantial similarities between the above-mentioned elements in an allegedly infringing game and those in a copyrighted game based on side-by-side comparison, a copyright infringement claim can be successfully established. It seems pretty simple to classify various elements of an online game into the categories listed in the chart above and decide whether copyright infringement can be constituted. However, this practice has never been straightforward, especially when the defendant may argue certain components are not copyrightable or protectable even though similarities exist. You will get a sense about this complexity from the following brief summary of a few recent and influential online game infringement cases where China courts upheld or denied copyright protection over certain game elements:

"My Name Is MT" vs. "Super MT"

In this lawsuit, the mobile game "Super MT" was alleged to have copied the mobile game "My Name Is MT". The Beijing IP Court found the names of the plaintiff's game and its characters are not copyrightable for lack of creativity and personalized expression. Further, because the plaintiff's game was originated and adapted from a comic book, the court decided that, as far as the character images are concerned, only new elements created by the plaintiff that are different and separate from the pre-existing expressions in the comic book are protectable.

"MU Online" vs. "Miracle Legend

In this lawsuit, the web game "Miracle Legend" was accused of cloning the game "MU Online." The Shanghai Pudong New Area Court held that the combination of names and introductions of game characters (including non-player characters), maps, characters' skills, weapons and equipment can be deemed as part of the storyline of the game, and therefore are protectable literary works, even though such names or introductions, if standing alone, may not meet the level of creativity.

In addition, this court judgment for the first time in China's judicial practice recognizes that consecutive game pictures are copyrightable as works analogous to cinematography because the visual expressions of the plaintiff's game are very similar to those of cinematographic works, despite the fact that users may interface differently with the game pictures within the developer's pre-established game designs and settings.

Given the substantial similarity of the overall look and feel of the two games, the court concluded that the defendant infringed upon the plaintiff's copyright by cloning the maps, scenes, game level designs, characters and their skills, weapons, equipment and more of the plaintiff's game. The court rejected the defendant's defense that the plaintiff's three-dimension client game cannot be similar to the defendant's two-dimension web game.

"Hearthstone: Heroes of Warcraft" vs. "Crouching Dragon Legends"

In this lawsuit, You Ease's "Crouching Dragon Legends" was alleged to infringe Blizzard's "Hearthstone: Heroes of Warcraft." The Shanghai No.1 Intermediate Court held that game rules and gameplay, as well as the layout of game interface, are in fact ideas rather than expressions of ideas and thus, are not protectable under PRC Copyright Law.

In addition, when commenting whether the defendant copied the plaintiff's game instructions, the court held that the allegation was not supportable due to the limited number of expressions of same gameplay or game rules, which, in essence, applies the theory that prevents a monopoly over "an idea where there are only a limited number of ways of expressing the idea."2

It is worth noting that, although Blizzard lost the two copyright claims on game rules and instructions in the above lawsuit, it eventually won this lawsuit based upon its successful claim under the anti-unfair competition law, as discussed later in this article.

As such, the judicial determination of copyright infringement in the online gaming environment is not very different from that in other creative industries. Under normal circumstances, the China courts would affirm copyright infringement and support the plaintiff's case if (i) the expressive elements in plaintiff's game copied or used by the defendant fall within the statutorily defined subjects that are entitled to copyright protection under the PRC Copyright Law; (ii) there exist substantial similarities between the two games' expressive elements; and (iii) no substantive copyright defense, such as the merger doctrine or fair use, is applicable to the specific situation.

Trademark

Generally speaking, only a very small portion of game elements, such as game name, icon, and images of key characters are registerable as trademarks under Chinese law. Therefore, only unauthorized use of the plaintiff's registered trademarks that confuse the public will be recognized as trademark infringement by China courts. Given the long process for trademark registration in China and the short life span of most online games, trademark protection may not be a viable option for many online games. However, because trademark protection is comparatively straightforward and efficient in law enforcement, it is still very important for game developers to register their game-related trademarks in China in order to build their own proprietary brands and fight against copycats and free-riders.

Patent

Patent might be the most overlooked option for protecting innovation in online games. Only as recently as two to three years ago did international and Chinese game developers begin building up their patent portfolios in China. Today, more than 35,000 patent applications relating to online games have been filed in China. Most are for game balancing mechanics, user control methods, anti-cheating systems game user interfaces, and game-related hardware, such as a console. However, patent infringement claims relating to online gaming are still rare in China. Given the lengthy period of the patent application process and the general vulnerability of a patent title ownership, there may not be a significant amount of forthcoming patent disputes in the online gaming industry in the near future. It should be expected that game developers will put forth a greater effort to develop their patent portfolio and make full use of the "defensive" value of patents.

Anti-Unfair Competition

In China, the Anti-Unfair Competition Law typically serves as a useful supplement or substitute where the specific intellectual property law is neither applicable nor sufficiently effective in a particular intellectual property infringement dispute. More and more plaintiffs in online game infringement lawsuits are seeking remedies under both the relevant intellectual property laws and the Anti-Unfair Competition Law where applicable. The China courts often rule that the defendants are responsible for their unfair competition activities or in violation of good faith principle if the game elements being copied are not protected or cannot be sufficiently protected under the relevant intellectual property laws. Anti-Unfair Competition Law is particularly useful where the defendant is found to make false or misleading publicity about its game or tries to take a free ride on the fame of plaintiff's games, brands, and images, or confuse the public. The following are examples of recent court cases where anti-unfair competition protection has been granted.

"Hearthstone: Heroes of Warcraft" vs. "Crouching Dragon Legends"

As stated above, the Shanghai No.1 Intermediate Court denied copyright protection for gameplay and game rules in the plaintiff's game because those elements are ideas rather than expressions. Nevertheless the decision made it clear that the plaintiff's game is an intellectual and creative product with considerable commercial value, and the gameplay and game rules created and designed by the plaintiff should be protected under the PRC Anti-Unfair Competition Law. Therefore, the defendant was held liable under Anti-Unfair Competition Law for its unreasonable and unfair copying and imitation of the plaintiff's game.

"World of Warcraft" vs."Everyone Warcraft"

In this lawsuit, Chengdu Qiyou's "Everyone Warcraft" was claimed to infringe Blizzard's "World of Warcraft." The Guangzhou IP Court first concluded that Blizzard's World of Warcraft series was a well-known online gaming service, then decided that the game name, in addition to certain user interfaces, were uniquely associated with the plaintiff's online game series and, thus, formed a unique name and trade dress of a well-known service, which should be protected. As a result, the defendant's unauthorized use of the plaintiff game's unique name and decoration in its "Everyone Warcraft" game had caused public confusion and was in violation of PRC Anti-Unfair Competition Law.

HuoMao TV vs. Douyu TV for live streaming of Dota 2 Asia Championships

In this lawsuit, Douyu TV was claimed to have infringed the exclusive live streaming rights of Yaoyu (the operator of HuaMao TV) for the Dota2 Asia Championship by providing a live stream of the same. The Shanghai Pudong New Area Court determined that the defendant's unauthorized broadcasting and live streaming of the Dota 2 tournament directly damaged the plaintiff's competitive advantage obtained from its exclusive broadcasting right of the same tournament authorized by the game operator and, therefore, violated good faith principles and generally accepted commercial ethics. The court found that the defendant should be liable for its unauthorized live streaming of the Dota 2 Asian Championships, although it did not infringe the plaintiff's copyright.

With online game infringement growing more and more complex and sophisticated, sometimes specific intellectual property law may be inapplicable or insufficient to enforce the rights of a copyright holder. As a result, the Anti-Unfair Competition Law is becoming more and more important as a tool for game developers to attack clones, especially when the visual similarity of the two games is not obvious, but the core value of the game owner's innovation, such as game play or game rules, is unfairly used. The good faith principle, as a catch-all provision under the PRC Anti-Unfair Competition Law, offers a more flexible legal basis to protect the game owner's competitive advantage, originated from the novelty and creativity in its online game. Therefore, in fighting against copycats in online games in China, plaintiffs should evaluate the facts carefully and craft sensible strategies that will balance claims under both the intellectual property laws and the anti-unfair competition law.

* This article is co-authored by Tracey Tang and Vincent Wang. Vincent is a Partner at Davis Wright Tremaine LLP.

Footnotes

1. These two courts are the top two courts in Beijing in terms of the number of the first instance trials of online game disputes.

2. Timothy B. McCormack, COPYRIGHT PRIMER: Merger Doctrine, MCCORMACK INT'L PROP. & BUS. L. (Dec. 28, 2010), http://www.mccormacklegal.com/blog/copyright-law-Seattle/copyright-primer-merger-doctrine

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.