Your Nostalgia, While Charming, Is Illegal: the Problem with Fan Remakes

Some experiences are hard to reproduce. Things come along at a unique moment in your life and make an indelible mark on your brain. They become a standard by which you measure every other piece of art in that genre. There are albums that will always remind you of a wonderful summer, books that evoke the magic of new ideas, or paintings that give you life changing beauty. Revisiting art of this caliber can fuel you. It can inspire new creations, or place others in context. Truly special work is flexible, durable, and available for appreciation across generations.

Great video games are no different. Among RPG fans, there is a contingent that pines for the mid-to-late 90s, a golden era of console gaming. The genre was moving away from card tables in basements and into living rooms. The development art was incredible. Storytelling shifted from standard fantasy templates, to nuanced epics. Plots touched on mature themes like religion, corruption, and death. This reverence inspires animated adaptations, sequels, and re-releases.

Some take their fandom further. When it comes to fan-fiction, (writers using the original games’ plots to create sequels, alternate realities, and etc.,) rights-holders generally look the other way. (The Wikipedia article on the topic is not authoritative, but gives a good broad look at the issues.) First, fan-fiction is traditionally free. The writers do not make money. They just want to share their appreciation for the source material with others. The other problem with legal action against fan fiction is public relations. Someone who takes the time to write because of your work will be one of your biggest supporters, until you sue them.

Attempting to port, update, or create your own version of an existing game is not similarly tolerated. 1UP posted last week about an HD remake of Chrono Trigger. (Mark previously covered the related issue of fan sequels on Joystiq.) A group of programmers previously attempted to publish Chrono Resurrection in 2004. Everything was going fine, until they received a cease and desist letter from Square Enix. 1UP reached out to Mark and asked about Chrono Trigger HD. They wanted to know, what type of legal difference does it make if the programmers do not attach their names to the project or make a website? As he said, none, it is illegal. We will discuss this type of creation, a derivative work, and the options available for fans to keep things on the up and up.

Derivative works are an important branch of copyrightable material. They are based upon one or more already existing copyrightable works, and can include “translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted." That was a mouthful, so why not check out an example? If Halo is the copyrighted work, then the (late, lamented) film version is derivative, as is Red vs. Blue.

Protecting this class of copyrighted works provides a powerful incentive for people to create, because the rewards from creating are not limited to the work itself. If you find an audience, you have the option of expanding your creation into different genres, or continuing your story or universe in sequels. On the other hand, you can choose to not expand. Some people want to make a game and brand it on everything from paper plates to mobile apps. Some people do not. If you own a copyrighted work, it is your choice, and no one else’s. The absence of a lunchbox displaying your creation does give people the right to fill that hole in the market.

Since Chrono Trigger HD would be a derivative work, we will look at a case where the concept was applied to the gamespace, Lewis Galoob v Nintendo. Nintendo was unhappy with Galoob’s very popular Game Genie. For our younger readers, the Game Genie was a cartridge made for the Nintendo and other systems with a slot to insert another game. Once you turned on your console, the game would be ‘unlocked,’ allowing you to skip levels, gain invincibility, and so on. Previous cases had established that video games were copyrightable, so Nintendo hoped they could nip this type of modification in the bud, and maintain tight control over their products.

The Ninth Circuit disagreed, and concluded the Game Genie did not violate Nintendo’s copyrights. The court compared it to someone buying a book and then reading ahead to the end, or skipping to the credits of a movie. Just because your work is copyrightable does not give you unlimited control over how your customers use it. As Judge Fern M. Smith put it, “Having paid Nintendo a fair return, the customer may experiment with the product and create new variations of play, for personal enjoyment, without creating a derivative work." Since Nintendo had received a preliminary injunction banning sales of the Game Genie during the lawsuit, Galoob received $15 million along with legal fees.

While this gave some breathing room for the Game Genie, it is not a green light for Chrono Trigger HD. Galoob’s product allowed end-users to tweak their console titles without permanently altering the game. That is fundamentally different than releasing an upgraded version of an old title with better graphics. Nor does it help that the would-be programmers will not be selling their work at retail. Allowing that to be determinative of liability would be unfair to the creators. If they ever decided to release an HD port, their market would be harmed by the existence of a free version.

Keeping things anonymous and not building a website does not change the situation. It would certainly slow down the process of enforcement. But as Mark pointed out, Square Enix has other options available to protect their work. Cease and desist letters could be served on hosting companies, catching innocent users in the crossfire. That brings up a larger point about the direction of gaming culture and the internet at large. Torrents are a clever, 21st century solution to the challenge of mass file distribution. They, like the cloud, have many incredible legal uses.

They can be abused, and everybody gets hurt when that happens. Yes, it is frustrating to feel a company has let a title you love lie fallow. Many gamers have daydreamed about how they would make their favorites better. But trying to sidestep the law by torrenting an illegal derivative version shows why many rights holders are queasy about new file sharing techniques. The internet went crazy over the Stop Online Privacy Act. You could not go anywhere without being told, in all caps, that the law would turn the web into a police state or break the Internet completely.

If you think those types of laws are heavy handed, then please do not use torrents to share an illegal game. Every time we see BitTorrent and unlawful activity associated in the same sentence, it is a step backward for the technology. If you miss the golden era of 16-bit gaming, why not get together with some friends and make a title of your own? The market is there, as Xbox Live Arcade and the Playstation Store have shown. Legitimate distribution options are reasonably open; from Steam, to iOS and Android, to the Xbox Live Arcade Indie Marketplace, there is no shortage of ways to get a creation out there. To be blunt, if you are talented enough to make Chrono Trigger HD, you are talented enough to make an original game.

Many share your frustration that developers have not taken full advantage of their old games or localized every game overdue for translation. Using means that highlight the unsavory uses of useful technology is not a solution. In fact, recent examples like The Last Story show that developers and publishers may be listening now more than they ever have been in the past. Move forward, not backward.



Zack Bastian is an official contributor to Law of the Game. A third year student at George Washington University Law, Zack works at the Woodrow Wilson Center's Science and Technology Innovation Program and is a member of the American Intellectual Property Law Association. The opinions expressed in his columns are his own. Reach him at: zack[dawt]bastian[aat]gmail[dawt]com.

Class Action Against SquareEnix Targets More Than Fees

It's been on the major news sites that a class action has been levied against SquareEnix for fees associated with Final Fantasy XI, the company's MMORPG. However, there's more to it if you look at the filing posted by GamePolitics.

News sources have been quick to point out that the monthly fee is clearly stated on the Square website, as most MMORPGs with a monthly subscription plan do. Looking at the pleading, though, the main monthly fee isn't the crux of the complaint. I think the stronger complaint lays with the penalties and interest for late payments, and 'charges while the online game account is suspended,' if that means the monthly fee is continuing to toll. This case may not be about the base monthly fee at all, but rather what happens if you don't pay.

More troubling still are facts 11 i and vi, which essentially challenge the software licensing model as a whole. Fact 11i reads 'Licensing of the online games software disguised as a sale;' while count 11vi reads 'Termination of the right to use the online games for late payment of fees.' To me, this reads that they're challenging traditional software retail and MMO sales as a deceptive trade practice because buying the game doesn't actually purchase a copy of the game nor the right to play. The latter is certainly the weaker point, as I'm fairly certain the box references the required monthly subscription. Normally I wouldn't put stock in an attempt to redefine the entire software industry, especially in California where so much software is developed, but the California courts have been known to issue unusual decisions and have long favored consumer protection.

Count vii, which contests the terms of use, seems like a dead end unless the entire software licensing model is shot down by the court. The Terms of Use are an extension of the license, and if the license is upheld, then the terms of use will be. Other cases have failed to strike down either (other than with regard to things like arbitration provisions), so I doubt this will be successful.

It will certainly be interesting to see the claims in the suit fleshed out further. Based on the information available, this looks like a case of 'I bought the game, didn't pay my monthly fees, and are mad that you won't let me play and are charging me interest on the fees I owe you.'

Mergers, Acquisitions, and Divestments for Game Developers Part 2: Mergers and Acquisitions

Continuing from Part 1, this article addresses the concept of mergers and acquisitions, which are undoubtedly important to the smaller developer. For those outside the industry, or who don't hav a business background, the overwhelming question is probably a simple "Why?" Part of it seems to be a trend in the industry, a trend which has happened in many other industries before. Large game companies (i.e. EA, Ubisoft, Microsoft, Nintendo, Sony) like to acquire up and compning developers for a number of reasons, such as adding fresh thought to the development process, adding new intellectual property to their roster both from the standpoint of the software and the brand that accompanies it, and a broader mass appeal, not to mention the added revenue. From the standpoint of a start up developer, a big studio taking over gives you many of the perks that come with being in a big company, and may remove many of the financial concerns and burdens that occur with a smaller business. Of course, if your small business is more like, say, id software, or if you happen to have a genius like, say, Miyamoto* break off to form a small development company, then you're probably not looking into being acquired.

So, what are mergers and acquisitions? Well, it's two different means to the same ends: two companies combine to form one. A merger is where two companies come in on more equal footing, and merge into one new entity. An example would be SquareSoft and Enix becoming SquareEnix. An acquisition, on the other hand, is typically used to describe a large company absorbing a smaller company, such as when Microsoft originally acquired Bungie. In both types of transactions, the mechanism is controlled by the contract, and often times they all work about the same, other than the respective sizes and bargaining powers of the entities. Hence, Mergers and Acquisitions (or M&A, as they're often called in the legal and business worlds) are typically discussed as a single concept.

This brings us to the basic workings of the concept. Generally, this starts either by one company deciding it wants to acquire another, or two companies mutually deciding they're be better off joining forces. From there, the deal is negotiated through, once again, the contract. There may be some additional regulatory issues if there's a cross-border transaction or if both companies are publicly held, or if the new company would result in some sort of a monopolistic anti-trust monster, but generally, there won't be too much government interference to worry about, unless a location happens to require particular permits. There is also always a tax element to pay attention to, but that applies on both a local and national level (as well as a state level in many places). Once all of the details are ironed out in negotiations, there is some sort of closing to sign the documents, and then the companies are re-assembled according to the terms of the agreement. As this is such a flexible process, given the flexibility of the agreements and the dramatic differences between potential parties, this is another occasion where tips are more appropriate than a guide.

1. Keep your position in perspective. Remember that no two transactions are alike, and your place respective to the other party in the deal may reflect directly on your bargaining power. If it's a merger, you probably can't force the other party into too many different directions. In an acquisition, I tend to believe the little guy often has more power than the big guy. Typically, in an acquisition, the big guy wants the little guy, and the little guy may be able to get a few extra perks because of that desire. Of course, individual situations do vary.
2. Each side needs independent counsel. Much like I stated in the previous part, everyone needs to have their interests represented independently. More than that, independence removes the appearance of impropriety in case the deal falls apart down the road.
3. Organization is the absolute key. Negotiations in these deals can, and do, drag on for months at a time. Without a pretty thorough organization, things will be overlooked. Your legal representation should handle organizing the documents and keeping you apprised of the word for word changes in redlined versions, but checklists help with the bigger picture.
4. Remember: Contracts are flexible. When it comes right down to it, most any outcome can be written into the contract. If you want to maintain separate offices, that can be done. If you want salaries locked in for 5 years, that can be done. If your big sticking point is making sure there's a frozen yogurt machine in the breakroom, that can be addressed too.
5. Build in a mechanism to resolve future issues. As much as every attorney wants to be sure the document accounts for every contingency and every alternative, inevitably something will come up. If a way to resolve issues is built into the contract, hopefully it will keep the deal from falling apart over unresolved problems, be they with healthcare or office attire or the number of action figures allowed in a cubicle.

In the grand scheme of things, M&As are pretty routine. They have been happening in business forever, and there are plenty of professionals who have significant background in these transactions. Now that the game industry is one of the biggest kids on the block, more traditional business issues will continue to arise in the industry and be well publicized, just as the recent events noted in Part 1 were.


*Note: There's no indication this would ever happen, but he's a recognizable example of the concept. This is not meant to create some grand rumor about a new studio in the works.