Packed with valuable information, our publications help you stay in touch with the latest developments in the fields of law affecting you, whatever your sector of activity. Our professionals are committed to keeping you informed of breaking legal news through their analysis of recent judgments, amendments, laws, and regulations.
Behind every video game, there is intellectual property (IP) which is worth protecting to optimize monetisation of the game. As discussed in Studios and designers: Are you sure that you own the intellectual property rights to your video games, the first step for studios and designers is to make sure that they own all IP rights on the video game. The next step is to identify what type of IP protection is available between trademarks, copyrights and patents and then put in place an IP strategy to protect these assets in Canada and abroad. Below is a summary of the types of protection to consider to fully protect a video game. Trademarks The name of a video game is a valuable asset, with a potential to become internationally famous. Just think about Call of Duty, Fortnite, Minecraft and Assassin’s Creed or, for the more nostalgic, classic games such as Super Mario. Pokémon and Pacman. Trademarks have this power to evoke unique and captivating experience in the gaming world. In this industry, experience shows that a video game may become an instant international success, since it is an online market with powerful gaming influencers. For this reason, being proactive with trademark protection is key. What does it mean? First, clearance searches should be made as soon as you decide on the name of your game, in the most important markets where you anticipate sales. The idea here is to make sure that your brand is not conflicting with other marks so that you may use it and register it in your main market. Once the mark is cleared, you may then proceed with filing. Here again, the earlier the better as trademark protection is, in most countries, granted to the first-to-file. Filing before your project becomes public is therefore strongly recommend. As for the scope of the application, it should of course cover the game itself but also potential merchandising goods, either because it is part of the business plan to monetize the brand, or as a defensive strategy. Apart from the main brand, other aspects of the game may qualify as trademarks and be protectable. For instance, a sound or sequence of sounds associated with starting a console or a game could potentially be registered as trademarks. The names and image of characters in a game may also be protected, especially for merchandising goods. In short, for studios and designers involved in the video game industry, trademark registration is key to getting the most value out of a video game. This begins with a well-orchestrated protection strategy to minimize risk of conflicts and to build a solid and valuable brand. Copyrights A video game is a mix of literary, artistic and musical works which are protected by copyright, including computer program behind a game’s architecture is also explicitly protected by law.1 The protection offered by the Copyright Act (“CA”) applies as soon as a work is created, without the need for registration. This protection extends to the 176 member countries of the Berne Convention. Although the protection of a work by copyright is automatic, copyright owners may register their right with the Canadian Intellectual Property Office (“CIPO”) at any time. In particular, registration makes it easier to prove ownership of the right in the event of a dispute in that it creates the presumption that the person named in the registration owns the copyright. Copyright protection applies to the entirety of the game, as well as to its various components. Any infringement of these rights by a third party may give rise to a copyright infringement claim if the work or a substantial part of it is copied, unless a defense such as fair dealing is applicable. In this respect, the following activities may qualify as fair dealing: research and private study, education, parody as well as criticism or review and news reporting. Is video game live streaming copyright infringement? In recent years, the phenomenon of video game live streaming has really taken off. Video gamers film or record their computer screens and broadcast them on platforms such as YouTube and Twitch to show their characters, strategies and tactics for completing certain levels of a game. Some live streaming video gamers, who make this their living, have achieved celebrity status and have thousands of followers. Is live streaming a video game without express permission copyright infringement? The courts have yet to rule on whether live streaming games online constitutes a copyright infringement to communicate the work to the public by telecommunication under section 3(1)(f) of the Act. Faced with this widely popular trend, some studios accept this practice because positive reviews from such gamers can boost game sales. Others criticize the fact that they profit from video games without copyright owners receiving any compensation. Chances are that live streaming is not the highest priority of the video industry who is more concerned by the illegal downloads and counterfeits, which may explain why the courts have not yet had the opportunity to rule on video game live streaming. Patents Patents protect the functional aspects of an invention. The owner of a patent may prevent anyone from making, using or commercializing the patented innovation from the date the patent is obtained. Three aspects are taken into consideration before granting a patent:2 Novelty – The invention must be different or be innovative compared to anything that has been done before, anywhere in the world. Utility – The invention must have a useful function and economic value. Inventiveness – The invention must not be obvious to a person skilled in the field. In Canada, it is not possible to patent an abstract idea, but it is possible to patent the physical embodiment of that idea, provided that it meets the criteria of novelty, utility and inventiveness. Canadian patents in the video game industry Patents obtained in the video game industry mainly relate to consoles, controllers, headsets and other gaming accessories. The video game industry has proved to be innovative with the development of inventions that are both fun and useful. In 2012, Nike patented an invention to encourage physical activity among video game players.3 The patent describes a device placed in a gamer’s shoe when the gamer is physically active and connected to a video game. The energy spent by the gamer gives energy to the virtual character. Once the character’s energy is depleted, the gamer must engage in physical activity again. Are game play mechanics patentable? Certain aspects of a video game are less easy to patent, in particular the game play mechanics, which are a distinctive aspect from the standpoint of gamers when choosing a video game. The game play mechanics consists in the virtual experience of a video game: character movement, the interaction of the player with the game, the way the player moves through the levels of the game, etc. Unique and well-developed game play mechanics can be a great asset for a developer wanting to market new versions of a game. Gamers will go back to a familiar game to get immersed in a new experience. This makes patenting such an experience appealing for a studio. Given that game play mechanics are developed using computer code, it might seem that even if the criteria of novelty, utility and inventiveness were met, this type of invention could not be physically embodied and thus could not be patented. To be patented, game play mechanics must have a physical component in addition to the code itself. Consider a patent describing a video game in which a gamer’s heartbeat is integrated into the game,4 which is a good illustration of physical embodiment. Such transposition of a gamer’s vital signs is done physically through a heart monitor worn by the gamer and connected to the game. As all these aspects were described in the invention, this type of inventive game play mechanics was considered patentable. In the United States, the criteria for patents are similar to those in Canada, meaning that abstract game play mechanics would have to be linked to a physical aspect in order to be patentable. Conclusion Implementing an IP protection strategy prior to launching a video game can prevent conflicts, increase the value of assets and strongly position a company in the market to maximize profits. Copyright Act, section 2. “A guide to patents,” Canadian Intellectual Property Office, Government of Canada, 2020-02-24. Patent No. 2,596,041, issued February 9, 2006. Patent No. 2,208,932, issued June 26, 1997.
The year 2020 will have been difficult for the vast majority of industries, and in particular for the arts, entertainment and recreation industry. The video game industry, however, is growing in leaps and bounds. For example, Nintendo and PlayStation have each set record sales for their games released in 2020, including Animal Crossing:New Horizons and The Last of UsPart II. Over the past few decades, the number of video game players has never stopped increasing. The year 2020 will surely be no exception, especially considering the COVID-19 pandemic. Playing a video game is not only a way to have fun: it is also a way to stay connected with a community that shares the same interests. The world of video games is so popular that the Government of Canada teamed up with the Entertainment Software Association of Canada (“ESAC”) to launch the #CrushCOVID campaign, using ESAC’s and its members’ social media platforms to share mobilization and awareness messages about public health measures. The video game industry is an economic powerhouse in Canada. According to the latest ESAC report, the industry contributed an estimated $4.5 billion to Canada’s GDP in 2019 — up 20% from 20171 — and these figures will likely continue to rise. This video game boom has a decisive impact on the value of companies innovating in this field. A number of recent transactions illustrate this. For instance, last September, Microsoft acquired Bethesda Softworks, one of the largest video game publishers, for US$7.5 billion. Microsoft also bought the Swedish company Mojang Studios, which designed the legendary game Minecraft, for US$2.5 billion in 2014. Closer to home in Montreal, Beat Games was bought by Facebook following the launch of its virtual reality game, Beat Saber, while Typhoon Studios was bought by Google. A successful video game may be lucrative in various ways, between the sale of video games themselves and merchandising goods, such as clothing and accessories, figurines, as well as game-inspired TV series with giants such as Netflix, Amazon Prime, HBO and Hulu, which are always on the lookout for hit TV series. Protecting its intellectual property (“IP”) on a video game is key to monetize all investment put into the development of a game. Doing so is even more crucial in the context where video game commercialization knows no borders, and a game can become an international success overnight. In short, any company should ask itself the following questions before launching its video game, to better position itself in relation to potential investors, licensees or partners, as well as competitors and counterfeiters: Does my company own all of the IP rights on the video game? What kind of IP protection applies and where should IP be protected? Let’s look at the first question. Does my company own all of the IP rights on the video game? Designing a video game usually involves a team of creators, including ideators, programmers, writers, visual and sound effects designers. All these people contribute to the creation of the work that is the video game and the underlying IP. For instance, Ubisoft worked with muralists and graphic designers for its recent game, Watch Dogs: Legion. They designed nearly 300 works to create a post-Brexit urban London. The initiative earned Ubisoft praise even before the game’s release last October.2 Depending on their contribution to the game’s design and their status as employees or consultants, these creators may qualify as authors. As such, they may be considered co-owners of the copyright on the video game. Generally, the copyrights developed by employees in the course of their employment belong to the employer,3 while a consultant remains the owner of the copyrights, unless otherwise agreed upon in writing. Thus, a company behind a video game must make sure that its consultants assigns their IP rights to ensure that it retains full ownership of the copyright. What happens if a consultant has not assigned the copyrights to the company? Can the consultant claim co-ownership of the entire game, or are the consultant’s rights limited to the part he created, such as specific drawings, or music for a particular scene? This is an important question which may have an impact on profit sharing. In Seggie c. Roofdog Games Inc.,4the Superior Court held that a person (non-employee) whose contribution to a game is minimal cannot be considered as a co-author of the entire video game, insofar as: The contribution is limited to a few images; These images are distinguishable from the rest of the work; and The parties had no common intention of creating a collaborative work. Seggie was therefore denied the compensation of 25% of the profits generated by the game that he had claimed. However, the court recognized that Seggie held a copyright on the works he specifically created and which were incorporated into the game, and granted him a compensation of $10,000. Incidentally, this compensation is in our opinion arguable, given that Seggie had agreed to work pro bono for his friend. This decision shows how important it is to have a copyright assignment signed by any person contributing to the conception of a work, regardless of the extent of their involvement. Waiver of moral rights In addition to the assignment of copyrights, the company owning a video game should also ensure that the authors sign a waiver of their moral rights, so as not to limit the potential to modify the game or to associate it with another product or a cause. Indeed, the authors of a work have moral rights that enable them to oppose the use of their work in connection with another product or a cause, service or institution to the prejudice of their honour or reputation. An example would be the use of music or a character from a video game to promote a cause or product, or a television series derived from the game whose script could potentially harm the author’s reputation. To make sure you have plenty of leeway to exploit the commercial potential of the game, a waiver of moral rights should be signed by any employee and consultant involved in the creation of the video game. Conclusion Launching a video game requires a huge investment in terms of resources, time and creativity. In order to develop an effective protection strategy, the first step is to make sure that you own all rights. Then, you are in a position to fully protect and enjoy your IP rights. The next article in this series will discuss the significance and application of these IP rights—i.e., trademarks, copyrights and patents—to the video game industry. “The Canadian Video Game Industry 2019,” Entertainment Software Association of Canada, November 2019, [online]. CLÉMENT, Éric, “Le talent montréalais en vedette dans un nouveau jeu d’Ubisoft,” published in La Presse+, October 21, 2020, edition. Copyright Act, subsection 13(3). Seggie c. Roofdog Games Inc., 2015 QCCS 6462.
It goes without saying that the economic upheavals caused by the COVID-19 pandemic are posing countless challenges for all companies, whether or not they are pursuing their activities within the limits imposed by the governments of Canada and Quebec. Food producers such as agricultural and food processing businesses, considered by the Quebec government to be essential services, are not exempt from this harsh reality. In this context, different levels of government and certain key economic actors have taken critical measures to support and protect businesses in the agriculture and agri-food industry, which are vital to both the health of individuals and that of the Canadian and Quebec economies. This bulletin presents the various support measures specific to agri-food industry businesses, which may also be eligible for general tax and economic support measures announced in response to COVID-19, including the Canada Emergency Wage Subsidy (CEWS). Canadian measures Recruitment support Many food producers depend on the additional input of foreign labour during the summer months. To offset the impact of the mandatory 14-day isolation period for anyone arriving from abroad, the Canadian government is providing financial assistance of $1,500 to such producers for each temporary foreign agricultural worker arriving in Canada to work. This financial assistance is conditional on compliance with the mandatory isolation period or other public health guidelines. Financial support The Government of Canada has also increased Farm Credit Canada’s (FCC) capital base by $5 billion in order to increase its lending capacity for agribusinesses and food producers and processors. For existing borrowers, FCC offers: Deferral of principal and interest payments for up to 6 months or deferral of principal payments for up to 12 months; and Access to an additional secured line of credit up to a maximum of $500,000 (for Quebec borrowers only). FCC offers term loans of up to $2.5 million,with no fees, to any Canadian agriculture and agri-food business whose working capital or production is impacted by COVID-19. Borrowers have the option of paying interest only for 18 months and benefit from a 10-year amortization period. The Government of Canada additionally announced support measures for farm producers, agri-food businesses and the food supply chain, which consist of the following: A sum of $77.5 million to help food processors purchase protective equipment and adapt work areas; A $125 million injection into the AgriRecovery program to cover additional costs to meat producers; A budget of $50 million to buy back certain surpluses, including potatoes and poultry; An increase of $200 million in the Canadian Dairy Commission’s borrowing limit to support temporary storage costs for butter and cheese; Financial assistance of $62.5 million for the fish and seafood processing industry; and Income support for fishers who are not eligible for the Canada Emergency Wage Subsidy, in the form of benefits and subsidies. The Canada Emergency Wage Subsidy On May 15, 2020, the Government of Canada announced its intention to amend the legislation on the CEWS to include measures to increase support for employers that hire seasonal employees. These new provisions, once they are passed, will give employers that are eligible for the CEWS two options for the calculation of their eligible employees’ average “baseline remuneration”: (1) the period from January 1 to March 15, 2020, or (2) the period from March 1 to May 31, 2019. In both cases, any period lasting seven days or more without remuneration will be excluded from the calculation. To be eligible, the employees must not be residents of Canada. Quebec measures The reality of COVID-19 is demonstrating that the success of the agriculture and agri-food industry is one of the Government of Quebec’s top priorities, as it is for the population in general. Recruitment support On April 17, 2020, the Government of Quebec announced that it will pay a premium of $100 per week to anyone taking on work for farmers between April 15 and October 31, 2020. As of April 22, 2020, close to 2,300 Quebecers had applied for such positions, the government’s goal being to encourage 8,500 people to get involved. Financial support La Financière agricole du Québec (FAQ), a government organization serving the agricultural and agri-food industry, has also implemented exceptional measures: Loans of up to $50,000 to support farm producers experiencing liquidity problems related to COVID-19; A six-month moratorium on loan repayments; Interim payments increased to 75% under the AgriStability program to ensure that program benefits are quickly available; Notices of assessment for the Farm Income Stabilization Insurance Program deferred to July 1, 2020; Deadline to enrol in the Crop Insurance Program extended from April 30 to May 21, 2020. Deadline to apply for the Agristability Program extended from April 30 to July 3, 2020. Notices of assessment for the Crop Insurance Program deferred from June 1 to July 1, 2020; Investment grant payments under many FAQ programs moved up from June1 to May 1, 2020. Finally, the investment company Fondaction, whose mission is to practice socially responsible development, has undertaken to allocate $40 million to Quebec SMEs in the agricultural and agri-food industry over the next year. In addition, Fondaction has made its financing offer more flexible in order to provide support to industry businesses that are solid and growing, provided that they were profitable before COVID-19. Such businesses can apply for assistance from Fondaction to finance any project of $500,000 or more requiring development capital. The Lavery team is committed to supporting your agricultural and agri-food business. We are available to answer all your questions regarding the announced measures, how they affect your business and any aspect relating thereto. The information and comments contained herein do not constitute legal advice. They are intended solely to enable readers, who assume full responsibility, to use them for their own purposes. The information and comments contained in this document are limited to measures in Quebec or Canada announced or made public on or before June 4, 2020.