IP
Moonton and Riot Games Reach Historic Settlement in Copyright Dispute
Moonton and Riot Games, two titans of the esports and gaming industry, have concluded their prolonged copyright dispute through a mutual settlement, marking a significant chapter in the evolution of intellectual property rights within the digital entertainment sector. This resolution concludes a series of legal challenges that had not only captivated the attention of the gaming community but also set a critical precedent for copyright law’s application in the fast-paced world of video gaming.
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The Genesis of the Dispute between Moonton and Riot Games
The legal battle began when Riot Games, the maker of League of Legends, accused Moonton, the creator of Mobile Legends: Bang Bang. Riot Games claimed that Moonton copied essential elements like character designs, game modes, and overall style from League of Legends, leading Riot to take legal action to safeguard its creative assets and copyright.
Legal Proceedings and the Journey Towards Resolution
Riot Games first took legal action in the United States but eventually had to to pursue the claims in China due to complex international copyright laws and challenges with jurisdiction, as both companies are heavily present there. This action highlights the challenges of dealing with copyright conflicts in a worldwide digital market, where intellectual property moves across borders easily and legal systems differ greatly in different regions.
Ever since starting in 2017, the legal dispute between Riot Games and MOONTON has evolved into a convoluted narrative, highlighting the fierce competition and legal complexities in the gaming sector. The main reason for this extended conflict revolves around the top games of each company: League of Legends (LoL) from Riot Games, a giant in the esports industry, and Mobile Legends from MOONTON, a rising competitor gaining fast popularity, particularly in the Southeast Asian mobile gaming sector.
The legal battle began when Riot Games accused MOONTON of copying key gameplay elements, character designs, and abilities from League of Legends for their mobile game Mobile Legends. The first legal case in the United States sparked a series of legal battles, as Riot Games claimed that Mobile Legends: 5v5 MOBA was not just inspired by but copied LoL.
Despite the US court deferring jurisdiction to China, MOONTON was still required to reach a USD 2.9 million settlement with Riot Games for copyright infringement, which also resulted in Mobile Legends being temporarily removed from app stores. However, MOONTON decided to make adjustments and relaunch the game as “Mobile Legends: Bang Bang,” in an attempt to address the controversial copyright problems.
Even with these changes and the significant agreement, the conflict was still ongoing. In May 2022, Riot Games launched another legal attack on MOONTON, accusing them of copying intellectual property from their mobile game, League of Legends: Wild Rift, including its unique promotional tactics.
The ongoing legal disputes between Riot Games and MOONTON have sparked extensive debates within the gaming community and among industry experts. Some believe MOONTON intentionally copied League of Legends to benefit from its popularity, while others argue that similarities in MOBA games are common and shouldn’t lead to legal action. These disagreements emphasize the fine line between finding inspiration and blatant copying, showcasing the continual difficulties in protecting intellectual property in the highly competitive gaming sector.
The Settlement
Yet, the parties decided to settle the dispute. The legal communication from Montoon reads:
“After several rounds of communication, the two parties recently officially signed a settlement agreement, and Riot Games has decided to formally withdraw the corresponding lawsuits.”
The settlement not only ends a period of legal confusion but also sets the stage for a gaming sector that, with any luck, prioritizes cooperation, respect for intellectual property, and legal honesty. It acts as a powerful symbol of the fragile equilibrium between encouraging creativity and honoring the legal protections for that creativity. As the gaming industry keeps developing, the knowledge gained from this conflict will probably have a significant impact on determining its future, particularly in terms of intellectual property rights.
Observations on Industry and Legal Matters
Industry stakeholders and legal experts are closely monitoring the agreement between Moonton and Riot Games, as they are interested in deciphering its impact on upcoming copyright disputes in the esports industry. It catalyzes game developers and publishers to align their creative aspirations with the need to uphold intellectual property rights, guaranteeing a dynamic industry future rooted in innovation, respect, and legal integrity.
Final thoughts
The settlement between Moonton and Riot Games demonstrates the importance of negotiation and highlights the value of intellectual property rights in today’s digital era. It indicates a shift toward a future where businesses participate in ethical actions, protecting the ever-changing environment of esports and gaming by being innovative, respectful, and following legal guidelines. As we move ahead, the gaming industry is at a critical point, with the resolution of this disagreement paving the way for a cooperative, respectful, and legally sound future.
Case Overview
Plaintiff: Riot Games, Inc.
Defendant: Shanghai Moonton Technology Co., Ltd.
Court: United States District Court for the Central District of California
Case Number: 2:22-cv-3107
Counsel for Plaintiff – Riot Games, Inc.
Kirkland & Ellis LLP
- Dale M. Cendali
- Joshua L. Simmons
- Miranda D. Means
- Yungmoon Chang
Counsel for Defendant – Shanghai Moonton Technology Co., Ltd.
Keker, Van Nest & Peters LLP
- Ajay S Krishnan
- Christopher S Sun
- Edward Andrew Bayley
- Michelle S Ybarra
- Travis Scott Silva
IP
Steamboat Willie entered into the Public Domain 95 years after its release: What is the Impact on the Gaming Industry?
The copyright on Disney’s 1928 short film Steamboat Willie expired in the US on January 1, 2024, 95 years after it was released. It means the early versions of Mickey and Minnie Mouse featured in the film – their first screen release – can be used without incurring a cost. The termination of US copyright protection for Steamboat Willie, has triggered a surge of creative projects featuring the iconic character. Shortly after this milestone, two horror films and a video game starring Mickey Mouse were swiftly announced.
Mickey Mouse – Inspired Game: Infestation: Origins
The game, named Infestation: Origins, was revealed via IGN just hours after the character’s earliest renditions entered the public domain in the US. Infestation: Origins offers players a cooperative horror experience, pitting them against sinister versions of classic characters and urban legends, with Mickey Mouse taking centre stage as the primary antagonist.
Originally introduced as “Infestation 88,” the game underwent a name change following concerns raised on social media regarding the connotations of the number “88.” The developer, Nightmare Forge Games, promptly addressed the issue, expressing regret over their oversight and swiftly rectifying the situation. Nightmare Forge Games appears unyielding, emphasising in both the game’s Steam store and trailer that it draws inspiration from works now in the public domain and has not been officially endorsed by the original creators or copyright holders.
This game is inspired by works that are now in the public domain. This independent creation has not been authorized, sponsored, or otherwise endorsed by any original authors of said works. All content in this game is used under appropriate public domain guidelines, and is not affiliated with, related to, or endorsed by any existing intellectual property or trademark holders.
Copyright Protection and Expiration
The evolution of Mickey Mouse’s copyright protection has been a subject of contention over the years. Initially set to expire in 1984, Disney successfully advocated for legislative changes, extending protection until 2003. Subsequent lobbying efforts, including the infamous Mickey Mouse Protection Act, further prolonged copyright terms, safeguarding Steamboat Willie until the conclusion of 2023. However, with the expiration of copyright in the US, creative opportunities have flourished, although the landscape remains complex due to varying international copyright laws.
Does this extend worldwide?
While individuals in the US have the liberty to utilise the 1928 short for crafting new narratives and artistic creations featuring Steamboat Willie, the global applicability of this freedom varies. In certain jurisdictions, where copyright protections extend for 70 years after the death of the last surviving author or creator, Steamboat Willie will retain protection until at least 2042. This is particularly pertinent considering that Steamboat Willie’s co-creator, Ub Iwerks, passed away in 1971.
However, in some countries, Steamboat Willie may only benefit from the copyright protection afforded by the nation in which it was originally created. Consequently, it may enter the public domain in those jurisdictions as well. For those interested in utilising Steamboat Willie in their creative endeavours, it is imperative to conduct thorough research into the copyright laws of their respective countries.
The Fine Line: Utilising Public Domain while Respecting Trademarks
While the public domain status of Steamboat Willie in the US allows for new interpretations, it’s essential to recognise that Mickey Mouse’s distinct characteristics (as we know him) and trademarks remain under Disney’s ownership. Thus, creators must tread carefully to avoid infringing on copyrighted and trademarked elements while exploring the possibilities offered by the public domain.
IP
Palworld vs. Pokémon Company – We have 111 Problems, but Plagiarism ain’t one?
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The remarkable success of Palworld has sparked discussions online, drawing comparisons between the game and Pokémon. Speculations have arisen regarding potential legal implications due to their similarities. Palworld offers an immersive open-world multiplayer experience, focusing on survival and exploration. Players embark on a journey where they hunt and strive to survive, encountering and capturing charming creatures known as Pals along the way. While Palworld shares similarities with the Pokémon series in terms of creature capturing mechanics, it’s important to note that it is not a Pokémon game. Instead, it introduces a unique blend of gameplay elements from various genres, including open-world RPGs and survival games.
While games resembling Pokémon have surfaced before, Palworld’s unprecedented triumph has intensified scrutiny. This scrutiny has manifested in side-by-side comparisons, online discussions, the emergence of an unofficial mod (later taken down), and a public statement from The Pokémon Company addressing the matter for the first time.
Pocketpair, the small development team behind Palworld, faces challenges related to server issues and ongoing bug fixes amid the game’s rising popularity. The recent attention drawn to comparisons with Pokémon adds another layer of complexity to their workload.
Recent Developments
As developments unfold, here’s what we currently know about the parallels between Palworld and The Pokémon Company, including the latter’s official response regarding an “investigation into another company’s game”.
Palworld was released into early access for Xbox Series X/S and PC on January 19, 2024. Since its launch, numerous individuals have noted resemblances between Palworld and the Pokémon franchise.
On January 25, the Pokémon Company issued a statement, indirectly addressing Palworld. Although not explicitly naming the game, the statement expresses concern about the unauthorised use of Pokémon intellectual property and assets in a game released in January 2024. The statement emphasises the company’s commitment to investigating and addressing any infringement on Pokémon-related intellectual property rights. Prior to this, Pocketpair CEO Takuro Mizobe confirmed that Palworld underwent legal reviews and emphasised the team’s commitment to respecting other companies’ intellectual property.
Comparison between Palworld and Pokémon
The primary point of comparison revolves around creature designs, highlighted in various online videos. While similarities exist, it’s important to note that other games, such as Digimon and Temtem, have featured similar designs without legal repercussions. Certain naming conventions, like Palworld’s Paldeck (similar to the Pokédex) and Pal Sphere (resembling the Poké Ball), have also drawn attention. However, Palworld differs significantly from Pokémon in its gameplay mechanics, focusing more on survival and base building elements.
Side by Side Comparison
Palworld’s Future
The Pokémon Company’s statement signals its intent to investigate potential copyright claims in other games but has not initiated legal action against Pocketpair or any other developers. While speculations abound regarding potential legal outcomes, the situation remains uncertain. Some anticipate a takedown, while others argue that Palworld merely imitates rather than directly copies Pokémon, potentially mitigating the risk of a lawsuit. For a similar discussion on the idea/expression dichotomy in copyright law, please see a previous post on Alan Wake 2.
As we await further developments, Palworld remains available in early access on Xbox Series X/S, Xbox One, and PC.
IP
Brand Protection in the Japanese Gaming Industry
This article explores the legal aspects and response strategies for handling counterfeit merchandise in the gaming and VTuber industries. It discusses the application of the Trademark Act and the Unfair Competition Prevention Act, focusing on trademark infringement and the misuse of well-known or famous product indications. The article outlines the rights holders’ legal remedies, including injunctions, compensation claims, and criminal penalties, and emphasizes the importance of proactive measures for brand protection. This guidance aims to support maintaining market integrity and protecting the interests of legitimate businesses in these rapidly growing sectors.
Table of Contents
Introduction
Original merchandise has long been a key part of marketing for popular games. Recently, with the rise of esports, there has been an increase in products related to games and their characters. This growth is also driven by the popularity of digital personalities like VTubers in Japan. In fact, Japan’s character business market is expected to reach 2,650.8 billion yen in fiscal year 2023, slightly above last year’s figures.[1]
With the growth in merchandise sales, there has also been a notable increase in business resales, particularly through e-commerce platforms that are easily accessible for businesses. Most products sold are legitimate, made and distributed by the game companies or their partners. However, in Japan, there have been instances of low-quality fakes or counterfeit items, which illegally use game or character names, logos, or symbols. These items are often made abroad, imported into Japan, and sold online.
As a matter of course, selling genuine merchandise by a business is generally allowed.[2] On the other hand, selling counterfeit items—those that copy or imitate trademarks without permission—can violate laws like the Trademark Act and the Unfair Competition Prevention Act, as they misuse the brand’s appeal to attract customers.
This article will discuss the legal issues around selling counterfeit products in Japan, including the actions and penalties rights holders can pursue when their products are copied.
Trademark Infringement
Understanding Trademark Infringement
The Trademark Act protects trademarks. Article 2, Paragraph 1 of the Trademark Act defines a trademark as any character, figure, symbol, three-dimensional shape, or color, or combination thereof, sound, or other item specified by a Cabinet Order, which is recognizable by human perception, and is used (a) in connection with goods produced in the course of trade, or (b) in connection with services provided in the course of trade.
For a trademark to be protected, it is necessary to file an application for trademark registration. Trademark rights are established only after the trademark rights are registered.[3] Trademark rights last 10 years from the registration date but can be renewed.[4] Details on trademark registrations are available on the “J-Plat Pat” patent information platform: https://www.j-platpat.inpit.go.jp/
Trademark rights give exclusive usage of the registered trademark for specific goods or services.[5] Using a mark identical or similar to a registered trademark on related goods or services without the owner’s permission infringes these rights.
If a game or character’s name, logo, or mark is registered and used on counterfeit or imitation products for similar goods or services, it breaches trademark rights.
However, if a product’s logo or mark is not registered, then its sale does not constitute trademark infringement. In such cases, the focus shifts to unfair competition, which is discussed in the following section 3.
Legal Actions in Case of Trademark Infringement
The trademark rights owner can take legal action against an infringer for violating their trademark. This includes seeking an injunction to stop the infringement[6] and demanding compensation for damages caused by the infringement.[7]
While an intentional or negligent act by the infringer is not required for an injunction, it is necessary for a claim for damages. However, there is a presumption of negligence on the part of the infringer in the act of infringement.[8]
In cases where counterfeit or imitation products of games or character goods are sold, the rights holder can demand an injunction. Specifically, the rights holders are entitled to (i) request the cessation of the sale of counterfeit goods, and (ii) demand the destruction of the existing stock of counterfeit goods. Additionally, they are also entitled to (iii) claim compensation for damages resulting from the sale of counterfeit or imitation goods.
Criminal Penalties for Trademark Infringement
Criminal penalties can also be imposed for acts of trademark infringement.
First, a person who uses a trademark identical to a registered trademark on the same goods without permission, thereby infringing the exclusive right, can face imprisonment of up to 10 years or a fine of up to 10 million yen.[9]
Next, unauthorized use of a trademark similar to another’s registered trademark on the same goods, or the use of a trademark identical or similar to another’s registered trademark on similar goods—constituting an infringement of the prohibited right or an indirect infringement—is punishable by imprisonment of up to five years or a fine of up to 5 million yen.[10]
Violation of the Unfair Competition Prevention Act
What Constitutes Unfair Competition under Japanese Law?
The Unfair Competition Prevention Act defines “unfair competition” as actions that hinder fair business competition.[11] It provides for the right to demand an injunction, compensation for damages, and criminal penalties for infringements on business profits. Key categories of unfair competition include:
- Inducing Confusion by Using Well-known Indication (No. 1)
- Use of Famous Indication of Others (No. 2)
- Imitation of goods’ appearance (No. 3)
- Misappropriation of trade secrets (Nos. 4-10)
- Deception concerning limited provision data (Nos. 11-16)
- Misrepresentation regarding technical restrictive measures (No. 17 and No. 18)
- Domain name fraud (No. 19)
- Misrepresentation of quality (No. 20)
- Defamation (No. 21)
- Unauthorized use of trademarks by agents (No. 22)
When counterfeit or imitation products of games, characters, or other items are sold, the relevant aspects of “unfair competition” include (1) Inducing Confusion by Using Well-known Indication, and (2) Use of Famous Indication of Others. Each type of unfair competition is further explained below.
Inducing Confusion by Using Well-known Indication
Article 2, Paragraph 1, Item 1 of the Unfair Competition Prevention Act defines “Inducing Confusion by Using Well-known Indication” as follows:
“the act of creating confusion with another person’s goods or business, by using an indication of goods or business (meaning a name, trade “the act of creating confusion with another person’s goods or business, by using an indication of goods or business (meaning a name, trade mark, marks, containers or packaging for goods belonging to a person’s business, or any other indication of a person’s goods or business; the (meaning a name trade name, trademark, marks, containers or packaging for goods belonging to a person’s business, or any other indication of a person’s goods or business; the same applies hereinafter) that is identical or similar to another person’s indication of goods or business that is well-known among consumers as belonging to that person, or by transferring, delivering, displaying for the purpose of transfer or delivery, exporting, importing or providing through telecommunications lines goods that use such indication.”
For an act to qualify as this type of unfair competition, the following conditions must be met:
(1) The indication is well-known among consumers; and
(2) The act incites confusion with another person’s goods or business.
The term “well-known” means that the product must be widely recognized among consumers, and it is not necessary that the product be known nationwide.
The following are examples of product indications that have been found to be “well-known” in court cases:
Examples of “Well-known” Product Indications: VOGUE, bow embroidery on Levi’s jeans, Levi’s red tab, 501, Fire Emblem (video game), Dojima Roll, Micro Diet, Shibuya Girls Collection
Furthermore, a trade or other representation is defined as a name, trade name, trademark, emblem, container or packaging of goods, or any other representation relating to the business of a person.
Thus, if a logo or mark, well-known as being associated with a specific product, is used without permission on counterfeit products, leading consumers to mistake these for genuine products, it is an act of unfair competition. Such unauthorized use of logos or marks, resulting in consumer confusion, is illegal.
Use of Famous Indication of Others
Article 2, Paragraph 1, Item 2 of the Act defines “Use of Famous Indication of Others” as:.
“the act of using an indication of goods or business that is identical or similar to another person’s famous indication of goods or business as one’s own, or of transferring, delivering, displaying for the purpose of transfer or delivery, exporting, importing, or providing through telecommunications lines goods that use such indication”. telecommunications lines goods that use such indication”.
Contrary to Inducing Confusion by Using Well-known Indication, there is no need to create confusion with another person’s goods or business under Use of Famous Indication of Others.
However, the indication must be “famous” under this category, which means that there must be a higher level of notability than merely being “well-known” under Inducing Confusion by Using Well-known Indication. Comparing the examples of “well-known” indications mentioned earlier in (2) with the following “famous” examples will illustrate the difference in the level of notability.
Examples of “Famous” Product Indications: Brands that have been recognized as “famous” in court cases include “Chanel”, “Louis Vuitton”, “JAL”, “Peter Rabbit”, and “Budweiser”.
Selling counterfeit products that unauthorizedly use a logo or mark identical or similar to a famous marking of another entity is considered an act of unfair competition. This is illegal, irrespective of whether it leads to confusion between the genuine product and the counterfeit product.
Legal Measures for Rights Holders Against Unfair Competition Acts
A business whose interests are harmed by unfair competition can seek an injunction against the infringer, as per Article 3 of the Unfair Competition Prevention Act. Additionally, if a business’s profits are damaged by unfair competition, whether intentional or due to negligence, the affected party can file a claim for damages against the infringer, as stated in Article 4 of the Act.
Similar to trademark infringement cases, when counterfeit goods of games, characters, etc., are sold, rights holders are entitled to (1) request the cessation of the sale, (2) demand the destruction of counterfeit stock, and (3) file a claim for compensation for damages resulting from the sale of counterfeit goods.
Criminal Penalties for Unfair Competition
For acts of Inducing Confusion by Using Well-known Indication, criminal penalties are applied for actions committed with an “unfair purpose” as per Article 21、Paragraph 2, Item 1 of the Unfair Competition Prevention Act. The term “unfair purpose” includes intentions like obtaining an unfair advantage, causing harm to others, or any other unjust motives, as stated in Article 19, Paragraph 1, Item 2of the Act.
Regarding the Use of Famous Indication of Others, criminal penalties are imposed for acts aimed at unjustly profiting from the reputation or fame of a famous indication of goods or damaging such reputation or fame, as outlined in Article 21, Paragraph 2, Item 2 of the Act.
Summary of Actions for Rights Holders to Address Counterfeit and Imitation Products
When there is suspicion of counterfeit or imitation product sales, the first step is to verify the authenticity of the merchandise in question. If the product is confirmed to be counterfeit or infringing, a written notice (oftentimes sent via content-certified mail) should be dispatched to the seller. This notice should demand the cessation of sales and the disposal of the counterfeit or infringing inventory. If the seller fails to comply, legal action should be pursued, including filing for a provisional disposition or a lawsuit. Additionally, for sales on e-commerce platforms, requesting the site provider to remove the product listing page is also advisable.
With the rising popularity of games, characters, and VTubers, the manufacturing and selling of counterfeit or imitation products can increase, often appearing on the market. This situation can lead to consumers or fans being unable to confidently purchase genuine products, resulting in reduced profits for rights holders like game companies and VTuber management agencies. For rights holders, proactive measures such as continuous monitoring of counterfeit or imitation product sales and immediately demanding infringers to cease sales or pay damages can be beneficial. This approach for brand protection safeguards the right-holders’ long-term interests.
[1] Yano Research Institute Ltd.’s press release dated August 1, 2023
[2] In the case of sales of used goods, the seller should be vigilant on regulations under the Secondhand Goods Business Act.
[3] Article 18, Paragraphs 1 and 2 of the Trademark Act
[4] Article 19 of the Trademark Act
[5] Article 25 of the Trademark Act
[6] Article 36 of the Trademark Act
[7] Civil Code Article 709. Article 38 of the Trademark Act as presumption of damages
[8] Article 39 of the Trademark Act, Article 103 of the Patent Act.
[9] Article 78 of the Trademark Act
[10] Article 78-2 of the Trademark Act
[11] Article 2, Paragraph 1 of the Unfair Competition Prevention Act