A New York court has recently ruled that the depiction of Humvee vehicles manufactured by AMG in Activision games is not an infringement of intellectual property and falls under the First Amendment of the US Constitution. This may signify a radical change in game studios' approach to content licensing.
The relationship between video games, or their content, and registered intellectual property is complicated from a historical point of view. Most players have frequently encountered differences in approaches to products from the real world. While some games use faithful depictions of existing guns or vehicles with their exact real names, others use fictitious names, even though the actual depiction of the guns and vehicles is so close to the original that it is quite clear to the average person what real object is being referenced in the game.
The reason for such division is apparent: some developers or publishers have the means to pay for licenses for depicting real products and their names, whereas others do not. At least this is how it was for many years before several incidents, lawsuits and statements involving gaming companies shook things up.
Electronic Arts: No More Licensing for Us
Gun manufacturers had long been working in symbiosis with game developers, which was evident from the consistent licensing of the entire game content that embodied real products. A single game could have hundreds of such licenses, but the cooperation was mutually beneficial: the games had content known from the real world, and gun manufacturers had a platform that de facto promoted their products.
However, when an armed attack was launched on Sandy Hook Elementary School on 14 December 2012, the functioning paradigms were disrupted and altered. The violence depicted in games, as well as the relationship with gun manufacturers, provoked a controversy that motivated game companies to distance themselves from gun manufacturers to a certain extent.
Electronic Arts ("EA"), one of the largest game companies, announced publicly in May 2013 that they would no longer be licensing guns. However, it was also announced that EA would continue to show real-world weapons in their games without licenses, since they claimed this was allowed under the First Amendment to the US Constitution, which guarantees the freedom of speech. As the then President of Labels at EA Frank Gibeau stated, "A book doesn't pay for saying the word Colt, for example."
What is interesting about this situation is not only that it occurred, but also what made it possible. A few years earlier, in June 2011, the U.S. Supreme Court had dealt with banning the sale of violent video games in California. The Supreme Court repealed the Californian law that banned the sale of violent video games to minors, providing video games similar protection on the basis of the First Amendment as other media such as books and films. That was crucial for the development of the relationship between video games and third-party intellectual property.
AMG vs. Activision, or Humvees and games
Since 2013, EA's example of gun licensing has been followed by other companies such as Activision, Take-Two Interactive, Bethesda Studios, PUBG Corporation and Epic Games. At the same time gun manufacturers have not seemed to oppose the move in any way. Yet the situation is different with other products.
While releasing its big statement about dropping the licensing of guns, EA was also involved in a dispute with Textron conglomerate as the parent company of Bell Helicopter over the depiction of several Bell helicopters in Battlefield 3. EA referred to the First Amendment in this case and stressed that the helicopters in question were just a few of many elements that make up its creative work - a military combat simulation.The dispute was eventually settled out of court, the terms of the agreement remaining unpublished.
A dispute of a similar kind is currently being resolved between AM General LLC ("AMG"), which has sued Activision Blizzard, Inc. and Activision Publishing, Inc. (together "Activision"), and also Major League Gaming Corporation - the company that holds a number of different video game tournaments. The crux of the dispute is the infringement of trademark rights due to the use of Humvees in the Call of Duty video game series. In brief, the first instance judgment held that Activision had not infringed AMG's rights, because the way in which it used Humvees in its games is under the protection of the First Amendment and does not satisfy the factors indicating the infringement of rights. The court's sophisticated reasoning provides interesting hints for predicting how the intellectual property of third parties may be used in the future.
The factors of trademark infringement in US law
The settling of the AMG v. Activision dispute is based on a comparison of two significant legal principles: the protection of intellectual property under the Lanham (Trademark) Act and the protection of freedom of (artistic) expression pursuant to the First Amendment. The procedure for such comparison is grounded in the Rogers v. Grimaldi case, which the so-called Rogers test was named after.
In Rogers v. Grimaldi, the court held that in relations between trademarks and the protection of freedom of expression, trademarks should not be afforded higher priority, if their use is of artistic relevance to the work, unless this confuses the consumer. In other words, if a trademark is used for some artistic purposes and does not imply that the proprietor of the trademark is somehow engaged in the work, it does not infringe any of the proprietor's rights.This is assessed with the help of the so-called Polaroid factors.
Artistic relevance to the work
The first factor of freedom of expression having priority over a trademark is the trademark's artistic relevance. The New York Court has concluded that the use of Humvee vehicles in Call of Duty definitely has artistic relevance. It argued that in a game that simulates a modern military conflict, the use or real-life vehicles used in military operations around the world definitely evokes a sense of realism.
The court used the argumentation presented in other cases and found that the use of the AMG trademark meets the first standard of the Rogers test, since it enables the player to feel like part of a special elite forces operation and increases realism in the game. The court also concluded that any reasonable juror would conclude that the presence of Humvees in Call of Duty possesses an artistic value that is at least above zero.
Polaroid factors
The second part of the assessment of the conflict between freedom of speech and trademark is assessment through an 8-factor test which emerged from the Polaroid Corp. v. Polarad Electronics Corp. case – the so-called Polaroid factors. This test assesses:
- strength of the trademark;
- degree of similarity between the marks;
- proximity of the products;
- likelihood that the senior proprietor of the mark would enter the market area of the junior user;
- the consumer's confusion of the marks;
- good faith;
- the quality of the defendant's products;
- purchaser sophistication.
Below are the essential elements of the court's reasoning in assessing the Polaroid factors.
The degree of similarity between the marks was assessed by the court in the context of the argument that "if the marks are used for different purposes and are presented to the public differently, despite presenting the same item, they are dissimilar and do not pose a problem." Put concisely, the court found that AMG's purpose was to sell vehicles to militaries, while Activision's purpose was to create video games that simulate a military environment for consumers.
The proximity of products, that is, whether the products may enter into market competition, is an interesting point. AMG argued that it also licenses the rights to the depiction of Humvees as a part of its business. However, the court did not accept this argument, for the proximity of products should rest on "the key purpose of the activity, not on a marginal one."
Good faith is an essential point of the assessment. In brief, it is an assessment of "whether the defendant used the mark for the purpose of exploiting plaintiff's reputation and good name and possible confusion of products." The aspects necessary for the assessment of this point are complex - what was crucial for the case was the finding, i.e. that according to the court, AMG failed to prove Activision's absence of good faith in using Humvees in Call of Duty.
On the consumer sophistication point, the court found that AMG runs into a problem that their purchasers - militaries from around the world - are not buying Call of Duty and the players of Call of Duty are not buying Humvees. It also offered a comparison that just as "moviegoers are sophisticated enough to know that the mere presence of a brand in the film, especially if it is shown briefly and intermittently, does not imply that the brand sponsored the movie", there is also no reason for assuming that video game players are less astute.
Rogers test assessment
The court relied on facts that were not disputed by the parties, which were that the vehicles depicted in Call of Duty correspond to those that the real-life soldier would expect to see in the place and time depicted, and that Humvees are widely used in military operations around the world. Thus, if realism is an artistic goal of the game, the depiction of real-life vehicles undoubtedly pursues that goal. The depiction of Humvees is considered an integral part of the game, because those vehicles contribute to the artistic purpose of game developers through techniques typical for video games such as the player's interaction with the virtual world.
The court therefore concluded that Activision succeeded in rebutting AMG's accusations that "the use of Humvees is a blatant and ill-conceived attempt to misuse the reputation associated with Humvees rather than an integral element of the game and the artistic expression of its creators". Nor was the court convinced that the use of Humvees was motivated by economic, and in no way artistic factors. Consequently, there was no infringement of trademark.
Consequences of the judgment and comparison with continental law
The extensiveness and comprehensiveness of the court's reasoning points to the fact that the situation surrounding intellectual property of third parties used in games is not entirely simple. It may generally be concluded that as long as such artistic use of intellectual property is compliant with the Rogers test, it is under the protection of the First Amendment, so the proprietor of the trademark concerned must tolerate its use. However, it is also necessary to take into account the extent of such use, as can be seen from the reasoning presented by EA in the dispute with Textron, where it emphasized that "the Bell-manufactured helicopters are not highlighted or given greater prominence than any of the other vehicles within the game". Thus, it can be assumed that there is a difference between using the intellectual property of a third party as one of the many elements of a game and the situation where it is a central element of the game, as for instance in the case of cars in racing games.
However, in the context of continental law, the use of intellectual property can be based neither on the First Amendment, nor on the concept of fair use, which is also often referred to in this respect. Being based on international treaties, community law and, finally, on the national law of individual countries, the protection of intellectual property is more complicated in this environment. In the European framework, one good source for comparison with the above-described case is Directive of the European Parliament and of the Council (EU) 2015/2436 of 16 December 2015, whereby the legal regulations of member states on trademarks are connected (amended wording) and which has also been integrated into the Czech Act on Trademarks. ("AT"), which may be used as an illustration.
The content of trademark law covers the usage of the mark in connection with the goods or services in respect of which it is registered. Yet it is not in connection with the designation of goods, but in the context of video games that the interpretation of the use of trademarks becomes ambiguous. The New York Court in its assessment of the Polaroid factors pointed to the difference that while AMG produces vehicles, Activision produces games, so the aims of use are different and the products do not enter into market competition. The game producer does not offer goods for which a trademark may be registered, and it does not use the mark for its own goods or services, but it is used as an element of a virtual setting within the framework of some artistic goal.
In the Czech law milieu, this reasoning might be paralleled by an option permitted by the Act to use a trademark of a third party in certain situations where the trademark is used to particularly credit the third party for producing goods or providing services. This limitation on the effect of trademarks is primarily intended for cases where the use of a third-party trademark is necessary for the presentation of particular goods or services, for example spare parts, that is, "in particular, when the use of that trademark is necessary to indicate the intended purpose of a product or service.
The question arises whether the use of a trademark in a video game can be that necessary. If the purpose of the video game is, for instance, the realistic depiction of a military environment in a particular period, as in Call of Duty, it may be assumed that this would be impossible to do without the real-life products and their names. However, it must be added in the same breath that there can be no certain conclusions until these cases are judged in the context of continental law.
To license or not to license
The situation with third-party trademark usage in video games is complicated. The fragmentation of legal regulations across the many jurisdictions in which the games are distributed together with the unclear legal definition of such use and a critical lack of case law does not offer many clues for decision-making.
It is difficult to form any general conclusions, but having considered the available information, some possible reasonings may be outlined. The purpose and context of using a mark in a video game is crucial. It is of great difference whether it is a racing game in which the player exclusively drives, say, Mercedes or whether in a depiction of a realistic modern street, among various other cars, a Mercedes just drives by. Yet this does not guarantee that the proprietor of the trademark will take the same view, at least because in some countries intellectual property must be protected in order not to be lost.
The decision of the New York Court is so far the only first-instance harbinger, but in the broader sense it is a very significant one. It builds on the earlier establishment of video games as an artistic medium, to which certain privileges apply, and on the idea that the protection of intellectual property has its limits. Thus, when developing games, it may be recommended to seek professional help in assessing the risks arising from the use of third-party intellectual property, especially in view of the changing legal milieu.
By Josef Donat, Partner, Pavel Hejl, Senior Associate, and David Slama, Junior Lawyer, Rowan Legal