Nike’s Deal to Bring Virtual Jordan Brand Air Jordan 1s to Fortnite is the Best Example of Crossover Branding Ever

 

 

With over 250 million registered players, Fortnite is unquestionably become a gaming phenomenon.  The free to play battle royale style game, where up to 100 players drop from flying bus into a large island in order to gun one another down in a slightly cartoonish style in order to become the last person standing, has taken over the gaming industry.  It’s no secret that the Fortnite style of game play, known as battle royale, has become ubiquitous in the gaming community, with most multiplayer game developers launching some form of the game play style on their own titles.

Fortnite is largely funded by players who, as opposed to paying anything for the game itself, pay for items that personalize their appearance (i.e., “skins”).   This is a strategy that has clearly worked for Epic Games, the developer of Fortnite, which reportedly grossed $3 billion in 2018 with this model.

Epic has been running a massively successful branding and advertising operation through Fortnite, having collaborations with the likes of Marvel’s Avengers: Endgame, Summit Entertainment’s John Wick, the NFL, and Wendy’s.

Now, in its latest move, Epic has teamed with Nike’s Jordan Brand to bring a set of skins that have the characters wearing classic Air Jordan 1s.  These virtual kicks will be offered in various color schemes, like the venerable red and black associated with the Chicago Bulls.  The skins, like most in Fortnite, will be offered only for a limited time.

This collaboration between Nike and Epic is perfect on so many levels.  Given the limited time offering of the skins in Fortnite, and the similar mass appeal of Jordan Brand shoes among a very dedicated type of consumer, the synergies are perfectly aligned.  There is little doubt that the sneaker heads will be dropping plenty of V-Bucks (the in-game currency used in Fortnite, which can be earned over time or purchased with real world currencies) on these new skins.

Another great aspect of this collaboration is that we are seeing real world companies put branded products in virtual worlds, and capitalizing off of it.  While it is not public what the split is on these virtual goods, it is in any case a win for both Epic, which is undoubtedly going to profit from the sales of the Air Jordan 1 skins, and Nike, by keeping its products relevant in new mediums in attempts to maintain one of its flagship brands, which faltered slightly in 2018.

From an intellectual property standpoint, the deal is interesting as we see not only Nike’s licensing the Jordan branding for certain use in the game, but also the generation of new virtual IP, in the form of the in-game graphical representations of the sneakers.  These are the kind of deals we will undoubtedly see more and more of, as video games and eSports become ever more a part of the mainstream fabric.   It will become even more interesting as the professional eSports players start having not only brand deals with companies for out-of-game endorsements, but what will invariably be in-game endorsement deals as well.

The future is bright for the eSports community, and deals like the one between Nike’s Jordan Brand and Epic’s Fortnite serve as a reminder that we are on the verge of an entirely new world of advertising and branding principles.

One Video Gamer May Change How The eSports Industry Is Regulated

On Monday, May 20, 2019, eSports icon Turner ‘tfue’ Tenney filed a lawsuit against Faze Clan Inc. (i.e., FaZe Clan), the gaming collective that made him a star.  Tenney wants the courts to release him from a 3.5 year “Gamer Agreement” he signed with FaZe Clan on April 27, 2018.

Tenney shot to stardom almost immediately after signing with FaZe Clan, earning millions of fans across a variety of social media and video streaming platforms through playing the popular battle royal game Fortnite.  Between streaming revenues, tournament victories, sponsorships and other revenue sources, it is estimated that tfue has made between $3 million and $5 million (USD).

According to the complaint, the Gamer Agreement included provisions that allowed FaZe Clan to claim a “finder’s fee of up to eighty (80) percent of the revenue paid by third-parties for Tenney’s services.”  Something that FaZe Clan boss, Ricky Banks (AKA FaZe Banks), denies entirely.  In an interview, Banks claims that FaZe Clan has only made $60,000 off of two endorsement deals it originated for Tenney, representing a 20% cut – something Banks refers to as “standard.”  Banks goes on to state that FaZe Clan has collected zero percent of Tenney’s prize winnings, streaming revenues or tournament winnings.

The complaint, which was filed in the Superior Court of the State of California, in Los Angeles County, is aimed at getting Tenney’s contract with Faze Clan declared invalid.  Among various legal arguments made, Tenney’s counsel argues that the Gamer Agreement with Faze Clan runs afoul of California’s Talent Agency Act.  The Act requires any person who “who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist” must be licensed and conform to professional regulations. The definition of artist in the Act is broad, including any person “rendering professional services in motion picture, theatrical, radio, television and other entertainment enterprises.”

Other arguments made in the complaint for invalidating or terminating the Gamer Agreement include: failure to pay revenues received by FaZe Clan for work done by Tenney; illegal and anti-competitive restraints related to the “Exclusivity and Matching Right” portion of the Gamer Agreement; and unlawful, unfair or fraudulent business practices.

Regardless of the merits of Tenney’s arguments related to whether Faze Clan is operating illegally as a Talent Agency under California Law, the lawsuit underlines a growing concern in the eSports industry.  As the complaint highlights, “unlike traditional ‘sports’,” the revenues in eSports are driven by videos and other content generated by the gamers themselves.  In general, eSports players make more money in YouTube views and streaming on platforms like Twitch, than on tournament earnings.

The eSports world is very new, and as such, law makers have not had much time to review and regulate the industry effectively.  With eSports expected to become an over $1 billion a year in revenue industry in 2019, and the broader influencer marketing industry estimated to reach $10 billion by 2020, there is serious money at stake.  In fact, more and more cities either have or are building their own dedicated eSports stadiums, like the Blizzard Arena in Burbank, or Philadelphia’s Fusion Arena.  ESports is no longer an untried fad; it is here to stay.

Couple this with the fact that the professional gamers themselves are usually young, with many being minors (Benedict “MrKCool” Ward was 14 when he was signed in 2016),  there is a significant risk of them being exploited.  Tenney himself was 20 years old when he signed with Faze Clan.

It is not dissimilar to child actors, or young sports talents, in that without proper representation and counsel, bad deals will be made.  With so much at stake, it is truly important for both the gamers and their representatives, whether it be parents or professional agents/counsel, to understand what they are agreeing to when entering into any kind of talent agreement.

On the other side of things, it is just as important for the professional gaming leagues, clans and other collectives to ensure that their contracts with talent do not run afoul of any legal requirements or restrictions, like those alleged by Tenney’s counsel.  Just as important is to ensure that these organizations take a long view on their agreements with talent, as there are numerous revenue streams to address, and player turnover can be an issue.

These organizations must also consider their ability to cut or trade gamers, similar to how professional sports leagues do with their players.  Unlike traditional professional sports, where the game is the same year in and year out, the games played by eSports gamers/teams change, and there is no guarantee that today’s Fortnite superstar will be the same talent in Apex Legends, or whatever comes next.

Having counsel that understands and appreciates the complexity of eSports and how it differs from representing other forms of talent is critical in ensuring that nothing is overlooked.  While the eSports industry may be relatively new, the concepts and issues are not, especially to counsel that grasps the landscape and relevant issues.  This is ultimately what will provide the stop gap in ensuring both gamers and organizations are properly protected, while awaiting the inevitable regulation of the industry as a whole.

Protecting Your Game – IP in the Video Game World

As a preface, I am a gamer.  Since playing text based games at the age of 6 on a TRS-80 (Pyramid 2000), to ESO and Fortnite today, video games have always been a part of my life.

fortnite.gif(My Solo win in Fortnite without firing a single shot – Ghillie Suit FTW)

Fifteen years ago, video games were considered obscure things nerds would play in small groups and LAN parties, or perhaps a place to play a game of Madden with your friends.  These days, video games are a massive cultural aspect, with the video game industry accounting for over $100 billion dollars in revenue a year.

In fact, these days video games like Fortnite have crossovers with massive media hits, like Avengers: Infinity War.  It is clear, video games are a cornerstone of our media and entertainment culture.

But as anyone who has ever played a game on the mobile device knows, there is never just one title in any genre.  For every PUBG, there will be a Fortnite.  For every Candy Crush, there will be a dozen tile matching games (or 17).

But why are there so many copycats and how do you protect your game from copycats?

Intellectual Property in the Video Game World

When thinking about protecting a video game, the law turns almost exclusively to intellectual property (IP) rights.

IP rights are a bundle of protections that comprise:

  • Patents;
  • Copyrights;
  • Trademarks; and
  • Trade Secrets.

Each of these various prongs are directed to a different potion of the actual construct of a video game.

PATENTS

There are two separate types of patents – design patents and utility patents.  Design and utility patents protect two very distinct portions of a video game.

Design Patents

First, design patents may be applied for to protect the UX/UI (User Experience / User Interface) of a game.  For instance, if you have a novel layout that is ornamental in nature, you can protect the ornamental appearance of the design.

USD0780776-20170307-D00000.png

US Design Pat. No. D780776 – King Com Ltd.

However, these design patents truly only cover the single ornamental design. So if a competitor changes your cute little fruit to cute little gems, the design patent will not be sufficient to protect your game design.

One advantage of design patents is that they can be obtained quickly, relative to utility patents.

Utility Patents

Utility patents cover the novel aspects of the actual game, such as game mechanics.  A utility patent can cover anything from gameplay mechanics and methodology, to user interface functionality, to how data is received and processed by the underlying computer systems.  Truly, anything that is utilitarian, can potentially be covered by a utility patent.

There are of course limitations, especially when it comes to video games.  First is that for an aspect of the game to be protectable, it must be patent eligible subject matter, and in the case of video games, this means the claimed inventive aspects of the video game must be more than an abstract idea.

While there are a lot of considerations to think about as to whether a utility patent is right for you in protecting your video game, it is definitely still something to consider, and something that large companies are doing, even on the most nuanced portions of their games.

For instance, Zynga Inc., just received a patent on an aspect of their Frontierville (The Pioneer Trail) game.  Namely, using a “Show Me” button in a game to identify to users how to perform tasks in a game that may not be easily apparent until detailed to the user.  (US Patent No. 9,962,612, granted May 8, 2018).  Similarly, Nintendo just received a patent on an aspect of matching players that are close in proximity to one another for providing the ability to share user information with one another.  (US Patent No. 9,967,737, granted May 8, 2018).  As you can see, if it has functionality, or relates to game mechanics, it could potentially be patented.

There are significant considerations to be made with respect to filing a patent.  But we will save those for a series of separate articles, as the actual process of drafting, filing and prosecuting a patent can be quite complex.

One additional benefit of having a patent is that since it covers the mechanics of a game, it is likely to cover other games that copy or lift from your game design.  Further, patents may also be licensed or assigned to others, providing additional streams of revenue, value and capital to your company.

COPYRIGHTS

Copyrights cover the actual expression of the video game.  Copyrights can cover your artwork, the source code, the plot lines, the video cutscenes, the audio elements, and more.  If it is an audio, visual or textual work, it most likely may be copyrighted.  Again, there are limitations, but assuming there is a level of creativity and originality involved, it may be protectable.

The main limitation on copyrights is that they generally only cover the actual expression, not the ideas or concepts behind the expression.  While there are several examples throughout the years, there are two relatively recent cases that we can look at to drive the point home about what is and is not protected via copyright.

The first is Tetris Holdings LLC v. Xio Interactive Inc., 863 F. Supp. 2d 394, 410 (D.N.J. 2012), which involves the venerable classic Tetris, versus a virtual clone, “Mino”.  Below is an image of the two games side by side.

Tertis Clone.jpg

It is not hard to see the similarities, because Xio’s intent was to copy the game mechanics and gameplay of Tetris.  As noted before, these are aspects of a game that are not protectable by copyright.  However, the court found that Mimo went beyond just copying the game mechanics, but copied the actual expression.  The court even pointed to other examples of how one could create a legal clone without running afoul of copying the expression, noting in particular Nintendo’s Dr. Mario.  So here, if you are truly copying not just the game mechanics, but the overall look and feel, you may be running afoul of copyright laws.

Dr Mario.jpg

 

US Patent 5,265,888 – Dr. Mario Patent!

But what if your game is nothing more than a copy of the game mechanics, with no similar appearances?  Well, we can look to our second case, DaVinci Editrice S.R.L. v. Ziko Games LLC, 183 F. Supp. 3d. 820 (S.D. Tex. 2016), for the answer.  In this case, DaVinci Editrice, maker of the popular card game, “Bang!”, accused Ziko Games of distributing a game, “Legends of the Three Kingdoms” (“LotTK”), that infringed DaVinci’s copyrights.

In this case, the appearances were completely different.  Bang! Was a game situated in the wild west, while LotTK was set in ancient China.  The cards looked different.  The artwork was dissimilar.  Visually, the similarity ended at the fact that they were both card games.  Instead, DaVinci argued that LotTK copied the characters of Bang!.  Bang! had a Sheriff, Deputy, Outlaw and Renegade that had the exact same functionality as LotTK’s Monarch, Minister, Rebel and Turncoat.

However, the court found that this amounted to nothing more than copying of game mechanics, which are not subject to copyright protection.  Notably, the court found that these mechanics are dissimilar to book or movie plot, which would be protectable.

So, when it comes to copyright protection, it is truly the expression that matters.

TRADEMARKS

Trademarks protect the branding of a game.  Trademarks can truly extend to anything that evokes in the consumer the origin of a good or service.  It is not just the game name, studio name, or logos, which are what most people commonly think of when they think of trademarks.  Trademarks can also extend to color (e.g., Tiffany & Co. have a registration for their robin’s egg blue boxes with white ribbons), sound (e.g., NBC has a registration for the three note “NBC Chimes” – you probably just heard it in your head) and even scents (e.g., Hasbro registered the smell of PLAY-DOH).

In the video game world, you can protect identifiers like the game name, studio name, taglines, and logos.  But you can go further, like Microsoft did for HALO’s Master Chief, and trademark certain names and other aspects, to the extent that they identify the source of the product or service.

One main consideration with trademarks is that they cannot be generic or merely descriptive of the underlying goods or services.  You could not get a trademark on the term “First Person Shooter” as that is merely a generic term for a type of game.  Examples of merely descriptive marks may be something along the lines of “Goat Simulator”.  This is actually a good example in that, while you can never get a registration on a mark that is generic, you CAN actually get a registration on a mark that is descriptive IF that mark develops “Secondary Meaning.”  Secondary meaning is when the consuming public comes to know the descriptive mark as an origin of goods or services.  Goat Simulator may have been descriptive of the game at first (i.e. a game that simulates the life of a goat, quite questionably I may add), but with hundreds of thousands of downloads under its belt, it likely has become a name that most people recognize.

Marks that are suggestive, arbitrary or fanciful are able to be protected without any evidence of secondary meaning, and may be registered immediately, assuming the mark is in use.  That is, assuming it is not confusingly similar to another mark in use.

TRADE SECRETS

Trade secrets are the secret sauces kept under lock and key.  These are things like the recipe for Coca-Cola or the KFC’s 11 Herbs and Spices, at least until they were revealed.  Which is the crux of trade secrets.  They are only trade secrets for so long as they remain a secret.  Here, the real priority is ensuring that you properly keep access to these trade secrets as limited as possible.  Once out of the bag, there is nothing you can do to put them back in the bag.

For trade secrets, developing policies around access, maintenance and security of the information is crucial.  Sure, you may be able to sue the employee or company who stole your trade secrets, but after that, it is in the public domain for good.

TAKEAWAY

There are numerous aspects of intellectual property that apply to video games.  It is important to come up with a plan to protect those rights, and determine what bag of rights you would like to protect and how to protect them.  Coming up with a strategy that works for your game is crucial, and timing can be very important, as each of the various types of intellectual property has ramifications for not taking action by a certain time.  Speaking with counsel about creating and implementing the strategy should be part of any game development process.