Video Games: A Growing Market and its Intellectual Property Needs

The video game industry is a rapidly growing market. The rising prize pools of video game tournaments and the popularity of streaming personalities are just a couple of the signs of this growth. Game revenues are expected to hit $108.9 billion in 2017, an increase of nearly $8 billion from 2016. That is a near eight percent increase, with smartphone and tablet gaming seeing a twenty percent increase. The global player base is estimated at 2.2 billion.
 
Video games, however, differ from other conventional entertainment products. While the design and story fall under copyright, comparable to films and books, video games also require software and engineering knowledge. For that reason, patents are one solution for game developers to further protect their content.
 
Why turn to patents? For one, it can keep copycat games from being made. If the only protectable element of a game are the story and visual design, then other developers can change these aspects but copy the core mechanics of the game. When some games cost well over a $100 million to make, steps should be taken to fully protect that investment.
 
So why is it not more common for game mechanics patents to be filed? One reason is that the video game industry moves too quickly, with the patent process taking too long and being too costly, especially when many games are developed by small companies. Another reason is that Alice v. CLS Bank, a 2014 Supreme Court decision, made it more difficult to get patents for software. A two-part test was set forth, the first step being whether the patent claims were directed to ineligible subject matter such as abstract ideas. The second step involves a determination of whether an inventive concept transforms the claimed abstract idea into something that is eligible for a patent. With these difficulties and constraints in mind, perhaps many developers do not want to go through the process of securing a patent that they may or may not get the rights to.
 
For some companies, it might be worth to make the investment. BioWare, for example, has a patent for its graphical interface for interactive dialogue, introduced in its popular game Mass Effect. This patent protects the game’s dialogue wheel interface, including positioning dialogue options based on tone (the diplomatic choice would always be top right, while the aggressive choice bottom right). Nintendo owns a patent that incorporates a game character’s sanity level. The character’s sanity level incorporated things such as whether a gruesome situation was encountered or if a creature spotted the character. These patents were pre-Alice, but video game mechanics can still be patented, though likely more difficult to obtain.
 
Alice also poses a problem for the enforcement of some of these earlier patents. White Knuckle Gaming sued Electronic Arts for patent infringement in November 2015, alleging the NBA Live series violated its patent technology which covered a method for updating sports video games to match real-world changes. The Federal Circuit upheld a decision from a federal judge in Utah that the patent EA was accused of infringing was invalid under Alice. The district court judge had ruled that the patent was an abstract idea of updating software parameters in sports video games.
 
There are two views on the Alice standard. One view is that it has hindered the ability of video game companies of protecting their intellectual property against competitors. A second view, however, is that it has allowed video game companies to incorporate various technologies into their games with more security that they are not infringing a patent.
 
Regardless of which view one takes, as the industry grows so too does the importance of intellectual property. Unlike say books, video games are largely a digital medium, meaning they are easy and cheap to copy. In 2009, eighty percent of U.S. computer video games were bought physically, that number down to twenty six percent in 2016. As a result, they are more susceptible to intellectual property theft and arguably deserve more protection. As the business grows and the legal landscape changes, it should be interesting to see how the industry adjusts its intellectual property strategies.
 
 
Bedram Bararpour is a J.D. candidate, 2019, at NYU School of Law.