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Digital Dance Moves… the newest wave of litigation to hit Fortnite creator Epic games. Do these creators have a case, or is this a failed attempt to change the law?

Over the past few months, Epic Games the creators of Fornite saw an increase in the negative press over the Fortnite’s use and sale of digital dance moves via Fortnite’s in-game store. A number of creators came out against Fornite’s practice claiming Epic Games “stole the creator’s intellectual property, and is profiting off its use.”  Famous rapper, Terrence Ferguson a.k.a 2 Milly, Actor Alfonso Ribeiro, known as Carlon from the TV Fresh Prince, and even the mother of “Orange Shirt Kid” all filed copyright infringement cases against Epic Games claiming the studio willfully copied their various dance moves. Each case is seeking damages from Epic Games for the sale of the digitally recreated dance moves that Epic subsequently sold to the Fortnite player base.  Do these Plaintiffs have an actual case, or is this an attempt to force the courts to reinterpret the Copyright Act of 1976?

To answer the question we first must determine if a dance move can be copyrighted? For a work to qualify for copyright it must (1) be an original work of authorship or artistic expression, (2) fixed in a tangible medium of expression.  (17 U.S.C.A. §101) Copyrightable subject matter includes literary works, musical works, dramatic works, pantomimes, and choreographic works, and several other forms of artistic expression.  We are only going to focus on one, choreographic works.  The United States Copyright Office defines choreographic works as “the composition and arrangement of dance movements and patterns and is usually intended to be accompanied by music. (Compendium of Copyright Office Practices, Compendium II § 450.01 (1984)). Most importantly.

This leads up to the most important question, Can a single dance move or a simple routine of dance moves qualify for protection as a choreographic work? Does copyright protection expands to 2 Milly, Carlton, and the Orange Shirt Kid, and if so do they have the right to sue Epic for damages for subsequently “copying” these dance moves, and selling them via the Fortnite in-game store?

One of the important cases in examining these questions is Horgan v. MacMillan, a case concerning the alleged infringement of the copyright in George Balanchine’s choreographic works for the Nutcracker ballet. The Second Circuit when examining the Copyright Act and the legislative reports held social dance steps and simple routines are not copyrightable. H.R.Rep. No. 1476, 94th Cong., 2d Sess. 53–54, reprinted in 1976 U.S.Code Cong. & Ad.News 5659, 5666–67. The Compendium of Copyright Office Practices, Compendium II (1984) The Court detailed that Section 450.03(a) explains:

“the basic waltz step, the hustle step, and the second position of classical ballet are not copyrightable. However, this is not a restriction against the incorporation of social dance steps and simple routines, as such, in an otherwise registrable choreographic work. Social dance steps, folk dance steps, and individual ballet steps alike may be utilized as the choreographer’s basic material in much the same way that words are the writer’s basic material.”

The Court in Horgan indicates that the definition of what is a choreographic work and what is a simple dance move has to do with the “the flow of the steps.”

Now let’s apply the Horgan standard to the current cases against Epic. Do these cases, looking from purely a copyright infringement stand-point hold up? The answer has to be no. The Carlton, the Milly, the Orange Justice all of these moves are just that, a simple dance move. This is no different from the waltz, the hustle, etc. Yes, people do associate the move with a person or character, but is that alone enough for copyright protections? The answer still is no. While other claims could exist like a right of publicity, and likeness, that’s not what we are examining in this post. So what are these individuals doing going after Epic if the current legal standards don’t support their case? Clearly, they’re upset that someone is profiting off their dance move. Was it right for Epic to not compensate the creators? I can’t answer that, it’s something we call in legal industry as a “business decision.”  Was it illegal, does it entitle these individuals to damages, based on what we examined above, the answer is no.

Do you have any questions about your game, its copyrights or other intellectual property? Send us an E-mail and let up a free consultation with one of our attorneys!

The Westworld Fallout. A Discussion on Work-for-hire.

In today’s post, I am going to discuss a recent lawsuit filed by Bethesda Softworks versus Behaviour Interactive regarding the new Westworld mobile game and Bethesda popular Fallout Shelter title. We are going to take a look at Work-for-hire agreements, the necessary verbiage required, and why they are both dangerous and helpful to Studios and Publishers. I will not discuss alleged claims Bethesda has against Warner Bros. Entertainment, as it does pertain to the Work-for-hire topic. As always this is my option, and should not be treated as legal advice.

  1. The Setup

In 2014, Bethesda engaged Behaviour to assist in developing the Fallout Shelter mobile game. The parties agreed to a Software Development and Services Agreement that set forth among many things several work-for-hire provisions, assignment of rights, and a multitude of confidentiality and trade secret provisions.  Under the agreement, Bethesda provided the conception, design, and overall direction of the game’s mechanics, and the resulting look and feel of the title. Behavior would provide the implementation of Bethesda concepts and artwork to create what we know now as Fallout Shelter.  Additionally, the Agreement expressly states, “all work product and any other materials created by Behaviour related to Fallout Shelter, including its source doe, content, assets, and associated intellectual property rights, were created as works made for hire for Bethesda.
The game “puts you in control of a state-of-the-art underground Vault from Vault-Tec. Build the perfect Vault, keep your Dwellers happy, and protect them from the dangers of the Wasteland.” Fallout Shelter was released on the App Store and Google Play in June 2015 and within a day of the release, became the most-downloaded free mobile app in the United States. On September 11, 2015, Bethesda was granted a Copyright Registration for Fallout Shelter’s underlying code and game assets. (Reg. No.: TX0008074781)
Around March 2018, Warner Bros. announced the Westworld mobile a brand new mobile game set in the Westworld universe developed by Behaviour Interactive. In Westworld mobile you “Build and control the park, create and evolve Artificially Intelligent Hosts, and indulge the many human appetites of your Guests. Prove yourself as an employee, and you’ll gain access to the park in ways only Westworld’s creators could have designed.” Warner Bros. demoed an early build of the game to overwhelmingly positive reviews at GDC and SXSW. Most if not all publications covering both events and saw the Westworld demo noted how the game closely resembles Fallout Shelter’s art style and gameplay concepts.

  1. The Lawsuit

On June 21, 2018, Bethesda filed suit against Behaviour alleging breach of contract, copyright infringement, and misappropriation of trade secrets. The lawsuit details the overwhelming similarities between Westworld Mobile and Fallout Shelter, even going as far as to call Westworld Mobile “blatant rip-off of Fallout Shelter.” However, similarities are not enough to prevail, meaning just having the same gameplay concepts is not enough for Bethesda to succeed in its claims against Behaviour. This is because concepts or ideas are not intellectual property, and cannot be protected by copyright law.
Bethesda is able to show Behaviour allegedly copied the code they created for Fallout Shelter, and they did this by finding a very particular a bug in Westworld Mobile that was in the early builds of Fallout Shelter. The chance of the two separate games having the exact same bug without the same code being used is almost impossible. Additionally, Bethesda detailed how the movement of the characters from walking around the screen in a 2D space, to how the cartoonish NPC’s drink beer is identical in both titles. Furthermore, Bethesda explains how the camera in both titles works and moves exactly the same way by “double tapping” on an event space. Bethesda claims, these events could only be replicated in such a fashion that Behaviour used the exact code from Fallout Shelter to cut development time and costs for Warner Bros.

  • Work-for-hire
  1. The Work-for-hire Doctrine

Before we can address the Work-for-hire issue at the heart of Bethesda, it’s important to examine the Work-for-hire Doctrine, and the relevant case law that’s evolved the concept over the past 40 or so years.
Generally, under the Copyright Act, ownership if a copyright and its exclusive rights vets in the original “author” of the work, unless they are otherwise properly transferred to another. 17 U.S.C. §106. These exclusive rights vested in the author include These include the right to reproduce the copyrighted work in copies or phonorecords, to prepare derivative works based on the copyrighted work, to distribute copies of the work by sale or other transfer of ownership or by lease, to publicly perform and publicly display the work and, in the case of sound recordings, to publicly perform the work by means of a digital audio transmission. 17 U.S.C. §106.
How does this play out in an independent contractor situation where party contracts to have a copyrightable work created for a particular purpose? For example, a Bethesda contracting with Behaviour to create the code for Fallout Shelter. Enter the Work-for-hire doctrine, where an employer or hiring party under appropriate circumstances acquire the status of “authorship” and entitled said employer or hiring party the exclusive rights that otherwise would belong to the actual creator.
In 1966 the Second Circuit heard the case Brattlebroro Publishing Co. v. Windmill Publishing Corp., one of the first Work-for-hire cases that applied the original work-for-hire doctrine to independent contractors. In Brattlebroro, the Second Circuit explained, the work-for-hire doctrine makes the employer the “author” of the work, whenever the employee’s work is produced at the instance and expense of the employer. Brattlebroro Publishing Co. v. Windmill Publishing Corp 369 F.2d 565 (2nd Cir. 1966). When applying the same principles to independent contractors, the Court held, “it could see no reason why the same principles are not applicable when the parties bear the relationship of employer and independent contract.” Brattlebroro Publishing Co 369 F.2d 565 (2nd Cir. 1966).
Congress sought to codify the existing law regarding work-for-hire under the Copyright Act of 1976. Congress crafted definitional provisions of the statute in response to a carefully balanced compromise between the interest of employees and the actual creators of the various copyrightable works. H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 121 (1976). Section 101, of the Copyright Act of 1976, Congress set forth a threshold tests stating, “a work qualifies as a work made for hire if its created by an employee within the scope of employment or if its specially commissioned work that falls within one of nine categories and its accompanied by a written agreement signed by the parties that provides that the work is a work-for-hire.” 17 U.S.C. §101. These nine categories include a contribution to a collective work, part of a motion picture or audiovisual work, a translation, supplementary work, compilation, instructional text, a test, answer material for a test, or an atlas.
The most important case that shaped the modern work-for-hire doctrine was Community for Creative Non-Violence v. Reid 490 U.S. 730 (1989). In Reid, the Supreme Court set the work-for-hire test pertaining to independent contractors. The Court held for a work to be considered work-for-hire, it must fall within the range of the nine categories set forth in 17 U.S.C. §101, and there must be an express writing signed by the parties that consider the work to be one for hire. Reid 490 U.S. 730 (1989)

  1. Work-For-Hire in the Interactive Entertainment Industry, and The Rise of Assignment of Rights

The most important thing that Video Game Developers/Publishers need to take away from the Reid case, and §101 is literary works are not considered works for hire. Generally, computer programing/video games code is considered a literary work for copyright purposes. Therefore, a studio or publisher contracting with another to create code, such as the case with Bethesda, simply having a work-for-hire clause in your agreement does not transfer the authorship of said code to the studio/publisher.
So can you do? As a Studio/Publisher contracting with another to create anything outside of the nine categories, you must have an assignment of rights in your agreement. An assignment of rights is a simple paragraph that transfer ownership of any and all works not considered work-for-hire to the party contracting party. A fantastic example of an assignment of rights is the one Bethesda used in its agreement with Behaviour that stated:
“Bethesda owns all intellectual property and rights related to the development of Fallout Shelter, including all associated versions, derivatives, artwork, game designs, gameplay features, programming, trademarks, trade names, copyrights, know-how, patents, trade secrets and other Intellectual Property Rights.  Any rights resulting from the development of Fallout Shelter not automatically vesting with Bethesda under this contract are irrevocably and unconditionally assigned to Bethesda.”
This section of the agreement between Bethesda and Behaviour clearly transfer the ownership of any and all rights in Fallout Shelter to Bethesda. This effectively takes a work not part of the nine categories in §101 and turns it into a work-for-hire by transferring the rights over. Bethesda takes it one step further in the agreement by contracting that Behaviour appoints Bethesda as attorney-in-fact for Behaviour for the right to execute such instruments in the name of Behaviour on Bethesda’s behalf on a work made for hire basis. The goal here is to ensure there is no possible way the rights in the work Bethesda contracted for would ever stay with Behaviour.

  1. So what happened here, and how can I avoid it in the future?

Without knowing all the facts of this case, and only going off of what Bethesda stated in their complaint, I can only speculate. I don’t want to go out and say Behaviour used to knowledge and access to the Fallout Shelter code to create Westworld, but based on Bethesda’s complaint and evidence it’s hard not to. This is the risk you take as a Developer or Publisher contracting with a third party to work on your project. Yes, you can contract to protect yourself and it gives you the legal remedy to file suit, but is that really going to stop your contractor from ripping you off? In some cases, yes, but this is not an uncommon occurrence. There a multitude of the story’s about Studio filing suit against contractors who stole their game assets or copied their code and created a competing product.
How can you protect yourself? This is a challenging question, on one hand, it’s easy to say we have a contract and both parties are bound by those terms, and those terms will protect me from this happening.  As you can see from this present case, that’s just not entirely true. What I always tell my clients in this position is don’t give away your secret sauce. When entering contracts with third parties to provide work on your games, only give them what they need to complete the agreement, nothing more. Don’t give them access to the source code of the game library if they don’t need it Always have a strong contract with very detailed and specific terms in place, and never sign anything with reviewing it or having your attorney review it.
What about works made prior to the work-for-hire? This question was asked by a Client who performs contract work on the side of large studios to fund his projects. This Client was presented with a predicament, one of this contracting studios wants the Client to create some code to complete a battle system in a game the contracting studio is working on. The Client just happens to have exactly what the contracting studio needs as the Client was working on the code for his own project.  Would signing a contract with the work-for-hire provision and the assignment of rights transfer ownership?
The answer… It depends. If my Client created code for his own works and signed a contract with contract studio, then depending on the terms of the contract, the code modified to work for the contract studio could transfer over to the studio. A way to avoid this is by licensing the rights in the code over while retaining ownership. My golden rule for these types of issues is if you paid to create something, and you signed a contract to do so, chances are is going to be a work-for-hire situation, and your rights in what you create are going to vest in the partying paying you.
Press Start Legal is well versed in creating work-for-hire and assignment of rights agreements. If you have any questions about a contract or need a contract drafted for your next project send us an email at Info@PressStartLegal.com
 
 

Using Copyright Law to Sue Cheaters?

This post is the first of a series looking at the two-sided issue of using the legal system to protect your player base that may result in a negative public reception.  Will you be viewed as the protector of your players or a greedy evil corporation looking for another revenue stream? In Part 1, we will explore the history and current events facing an industry that’s rapidly evolving.
The Video Game Industry is evolving at a rapid pace, one that is constantly pushing the boundaries of technology. The demand to make games more connective, more challenging, and more social comes with associated risks that developers have to balance every time they approach a new project.  Multiplayer or player versus player games are a testament to the ever-changing landscape of video games. No longer are you sitting on the couch with your best friends playing a game on the same screen. Today, popular multiplayer games such as Fortnite, Call of Duty, Overwatch, and mobile titles like Clash Royal pits players from all over the globe against each other on a wide range of devices. What makes these games so popular? A high competitive player base, and fair accessible gameplay.
One of the most difficult challenges any developer of a multiplayer game faces is keeping people playing your game. At the end of the day, no one wants to play a multiplayer game if they are the only player, and with so many competing entertainment options available at any given time, companies face an ongoing battle for your free time. Now, throw in the cheaters and the hackers, players that gain unfair advantages by using the malicious software. You can ban their accounts, but they just keep coming back, and as their numbers grow your player base starts to drop. What can you, the developer/publisher, do to protect your game and your players? The answer… You sue your players.
Video Game Developers and Publishers filing lawsuits to protect their games and intellectual property is not an uncommon notion. In 1999, Sony sued Michael and Carol Chaddon over a PlayStation “game enhancer,” or as Sony’s attorneys described it, a console hack. In 2008, Blizzard filed a lawsuit against the makers of a World of Warcraft Bot that allowed users to go on “autopilot” and advance in the game.  In 2012, JageX launched a series of legal proceedings against bot developers and users in an effort to eliminate illegal gold farmers. Also in 2012, Nexon America, creators of MapleStory, filed suit against the creators of UMaple, a for-profit venture that enables users to copy, access, and play MapleStory on private servers without Nexon’s consent. In 2017, Blizzard was again back in the courts this time going after the German company Bossland GMBH best known for creating the “Watchover Tyrant” cheat tool used in popular first-person shooter Overwatch. Blizzard was awarded over 8 million dollars in damages as a result of the Watchover Tyrant tool.
What do all of these lawsuits have in common? Each one was filed against the companies reasonable for creating hacks and cheating software which installed malicious software that edited the game’s code to allow players to cheat. Additionally, some studios went as far as to go after the websites and message boards where players could purchase the cheating tools. Not one of these high profile titles and studios went after the actual cheaters, with one exception. JageX filed suit against “John Doe” in an effort to identify bot using players by subpoenaing records from PayPal. It appears from court filings, after JageX discovered the players identify and contact information, it dropped the lawsuit and banned the players. Additionally, JageX sent out settlement letters giving the banned players an option to walk away freely, and never return.
The list of games and Studios above is not all-inclusive, they’re many studios through North America and all over the world filing lawsuits to combat cheaters. Most if not all of these Studio’s lawsuits are aimed directly at the coders, sellers, websites and message boards that support and create the tools used by players get an unfair advantage in a game.  Each filing paints an image that the Studio is the protectors of the player, going above and beyond protecting the equal playing ground that causes their games to thrive. The Studios’ weapons of choice, violations of the end user licensing agreements and copyright infringement.
End user licensing agreements commonly referred to as “EULA” is the first legal line of defense Studios can use to protect their intellectual property, their game, and their players. An EULA is a contract entered into between player and studio that set forth the legal terms and conditions a player must agree to in order to play the game. In other words, it lays out the rules each player must abide by, and a failure to do so will constitute a breach of contract between the parties.
In 2010, as part of the Blizzard case against the World of Warcraft bot maker, the 9th Circuit Court of Appeals confirmed that under Blizzards EULA, a player who purchased a copy of World of Warcraft and agrees to the EULA, are deemed as a licensee and not owners. Therefore, Studios are no longer selling players a copy of the game, rather they are selling a license to use the software. That license as stated above comes with very specific terms and conditions and failure to comply results in a breach that may subject a player to legal consequences.
Blizzard is not alone in going after cheaters who breach the EULA, Riot Games the creators of the wildly successful MOBA League of Legends filed suit in 2016 against the creators of the hacking took Leaguesharp. What Blizzard set in motion, the 9th Circuit confirmed, and Riot expanded on, is the legal theory that the player is the licensee and as such when a player breaches the EULA the license is void and infringes on Riots copyright. This is a gross simplification that requires some explanation to truly understand how Studios are successful in these lawsuits.
The Digital Millennium Copyright Act (“DMCA”) is the sword that studios are using to assert copyright violations against hackers and cheaters.  The DMCA states, “No person shall circumvent a technological measure that effectively controls access to a work protected.” This one clause often referred to as the Anti-circumvention clause effectively gives Studios the right to go after the creators of cheats that circumvent anti-cheating barriers the Studios put in place.  This is exactly what Riot Games did in 2016 when they sued Leaguesharp. League of Legends is arguably the first real mainstream E-Sport title in the United States, and as such, Riot Games had more on the line than just losing its player base. Riot faced a hit to its reputation allowing cheats like Leaguesharp to taint its competitive gameplay.
In 2017, Blizzard was award over 8 Million dollars against Bossland for creating the “Watchover Tyrant” cheat tool. Blizzard used the DMCA sword to protect its popular E-Sport title Overwatch from the Watchover Tyrant tool that created among many things: wall hacks, aimbots, and placed an overlay that provided the player with a gameplay advantage. As part of their lawsuit Blizzard claims that Bossland used a “tripwire” to “watch the watchers” in an effort to circumvent Blizzards anti-cheating barrier “the Warden.”
Most if not all of these cases are filed against the creators of the cheating tools. What happens when a studio shifts its focus from punishing the creators of malicious software and targets the actual players using it? Does this shift the perception of the Studio from a protector of players to the evil greedy corporation? What happens when the games are played by individuals under the age to give consent, does the EULA still apply? In Part 2 of this series, we will examine the recent events taking place with Epic Games, the creators of the wildly popular game Fortnite, who filed suit against a 14-year-old kid who was caught using malicious software that altered the game’s code on his local machine to gain an unfair advantage over players.

Think Fair Use Protects you? Think Again…

A topic that comes up fairly often in the development of Video Games is Fair Use. Typically, the discussion starts “can I redesign this famous character and use it in my game?” What proceeds the question is a large number of incorrect answers that range from “yes, it’s fair use” to “yes if you change it enough.”  The issue is, the ones making these blanket statements either don’t fully understand the concept of Fair Use or they are relying on what Wikipedia told them about fair use.  Today’s blog post is going to clear up the confusion for anyone wondering if their use of someone else’s copyrighted work falls under the fair use protection. This post is going to review the Fair Use definition/history, the factors courts consider when weighing fair use, and why your use in your game is not protected.

  1. A History of Fair Use.

Fair Use originated as an equitable concept created by Section 107 of the Copyright Act of 1976. The Fair Use doctrine seeks to advance social interests in having widespread access to works of authorship while preserving copyright owners exclusive rights of control. The original idea of Fair Use dates back to the “Copyright Clause” in the constitution, which purpose is to “promote the Progress of Science and useful Arts.”
One of the earliest cases of Fair Use dates back to 1841 where a Massachusetts court held the use of copyrighted work really and truly passages for the purposes of fair and reasonable criticism.  Folsom v. Marsh, 9 F. Cas. 342, 344 (C.C.D. Mass. 1841) The Folsom Court was reviewing the use of a use of a copyrighted work for criticism in a publication. The court expressed the need to allow those to openly criticize copyrighted works without fear of legal repercussions. Additionally, Fair Use is often referred to as the First Amendment safety valve, as exclusive rights afforded by the Copyright Act are often in tension with the rights of free expression under the First Amendment. Elder v. Ashcroft, 537 U.S. 186, 219-20 (2003).

  1. What is Fair Use?

In Section 107 of the Copyright, Act Congress laid out the framework for evaluating Fair Use. The major issue with Fair Use is no one legal definition exists that Courts can follow, instead, Section 107 sets out guidelines that enable copyright owners, users, and courters to determine whether a particular use may be fair. In fact, Fair Use is one of the most nuanced areas of copyright law as it requires a large degree of subjectivity to determine if the use if protected.
What use falls within the framework of Section 107? Criticism, Comment, News Reporting, Teaching, Scholarship, and Research are some of the non-exhaustive purposes for which use of copyrighted work is likely to be considered fair. However, Congress added a catchall provision which states if the use is deemed sufficiently transformative such that it does not substitute for the copyrighted work than such use may be considered fair. We will examine what is sufficiently transformative later in this blog. Once a determination is made on the type of use, a Court then examines addition factors to determine if that type of use is considered fair. The main four factors A court uses to determine if the use is fair are the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use on the potential market for or value of the copyrighted work.

  • The Factors and the Balance.

Let’s review how each factor is examined by the Courts in weighing the use of a copyrighted work.

  1. Purpose and Character of the Use.

A Court will review if the use is of a commercial nature and whether the use is transformative.  Non-commercial uses of copyrighted work are, in general, more likely to qualify as fair use than commercial uses.  Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994). This analysis could be as simple as, is the person making profits from the use of the copyrighted works. However, use does not have to directly involve financial gain to be considered commercial.  For example, the Court in A&M Records, Inc. v. Napster, held saving users the expend f purchasing authorized copies was considered commercial. Additionally, in Compaq Computer Corp. V. Ergonome, the Court held use is commercial if it’s used to induce the purchase of other products.
What about free to play games with no microtransactions? This was a question recently asked, what if I launch a free to play the game to show off my studio, and we don’t have any microtransactions in the game. The answer is in the use, here the game studio wanted to show off its work by giving away its game for free. The game made use of copyrighted work without expressed permission from the original rights holder.  Although the Studio wasn’t making any money from giving away its game, the fact that its free offering was to promote the studio, that promotion arguably is a commercial purpose as a way to gain more sales for the studio’s other offerings.  Therefore, its use of copyrighted works in the free game would more likely than not fair this factor.
What about transformative uses? A use is considered to be transformative if it either adds something new to the underlying copyrighted work, or has a different function, purpose, or character than the original work.  What this means is the use cannot be seen as competitive with or supplanting the demand for the original. However, the idea being transformative is vastly different among the circuit courts. For example, the Ninth Circuit found that where an internet image search engine displays thumbnail copies of copyrighted photos use is transformative because it serves an informational function and the originals have an aesthetic purpose. The Second Circuit held, a copyrighted work is used as raw material for a new work, the new work must have new information, aesthetics, or understands for the use to be deemed transformative.  In the case Blanch v. Koons, the Second Circuit found the use of a copyrighted image of fashion feature in a lifestyle magazine to be fair as Koons only used the legs and feet from the original photo, showed the image in new context (a colleague of feet) and was a commentary on the aesthetic of mass media.
How does this work in the Video Game Industry? As a developer, you want to use concert posters from a famous band in your scene your building in your game. Arguably the use of these copyrighted concert posters would be considered fair, as the new use would show the posters in a new context and a purpose that was different from the original purposes.  (See Bill Graham Archives v. Dorling Klindersly Ltd., 448 F.3d 604, 609 (2d Cir. 2006))

  1. The Nature of the Work.

Is the use of the work creative or factual? The more creative a work, the closer it is to the core of the scope of copyright protection. (Stewart v. Abend, 495 U.S. 207, 237-38 (1990))  Why? Facts and ideas are not generally protected under the copyright act. The Idea behind the copyright act to protect artistic works, simply using facts or historical settings does not lend its self for copyright protection.  For example, The Second Circuit in The Swatch Group Management Servs. Ltd v. Bloomberg the Court held the use of audio recordings of a company’s earning calls was fair, as it manifestly a factual character.

  1. The amount and Substantially of the Portion Used.

This factor looks to whether the new work uses only as much of the original work as is necessary. The use of a relatively small portion of a copyrighted work, such as just the legs and feet in the Koons case, generally supports an argument that the use is fair. However, even using a small portion of the work can be deemed unfair if that portion is significant or the “heart” of the original work. (Harper & Row Publishers, 471 U.S. at 598-600)  This factor is often examined in cases where copyrighted characters are used for other purposes in other games. For example, when attempts to use a character like Sonic the Hedgehog in a different setting for a different purpose, but they don’t take the gold rings or the red shoes.  The fact that those are not the “heart” of the character but the ionic look and style of the character as a whole would still deem the use of infringement/unfair.

  1. Effect on the Market for the Copyrighted Work

The Fourth Factor in this analysis is one of the biggest factors when dealing with the copyrighted video characters. The Courts consider both the direct market harm from the use at issue and harms that may result from potential, similar infringing uses. Market Harm can include lost or diverted sales, lost royalties or licensing revenue, or barriers to entry in yet-unexplored markets.  Often times I see people discussing using a character’s likeness without permission, and most people without knowledge claim its ok its fair use. What these individuals don’t understand is using that characters likeness in your game is taking away the potential for the copyright holder to gain licensing revenue.
Iv. Why your use isn’t protected.

Now that you have an understanding of fair use, and how a court determines its protections, let’s do a case study of a recent issue.  The other day a Reddit user on the IndieGaming Subreddit posted a question, is the use of this asset in a video game as a skin fair use. As you can tell from the image, the skin in question looks like Sonic the Hedgehog, what I learned after communicating with the poster is they planned on using the asset in an educational game, and they plan on giving away that game for free.  Now that all the facts are laid out let’s do the Fair Use analysis, Note the asset in question is 100% a derivative work from the original Sonic the Hedgehog, and we will address derivative works in a later post.
Question 1. Does the game fall into a fair use category, and the answer is yes. The poster stated the game was going to be an education game. Now we must look at the 4 factors discussed above.
Question 2. Purpose and Character of the Use. The poster stated this was free to play the game, and stated there is no commercial purpose. However, there is an argument to be had that although there is financial gain from sales, there is a huge financial gain from the promotion and use of the game for his studio.  What about transformative use? Yes, it is transformative to an extent, sonic the hedgehog is an adventure game character, use in an educational game is transformative, however, the fact is its still sonic being used in a video game, therefore still within the original purpose of this character.
Question 3.  The Nature of the Work? Sonic is 100% a creative work, therefore its use without permission would fail this prong.
Question 4. The amount and Substantially of the Portion Used.  Again 100% of the character is used, therefore its use without permission would fail this prong.
Question 5. Effect on the Market for the Copyrighted Work.  Let’s look at how the use of Sonic may cause direct market harm from the use at issue, and harms that may result from potential, similar infringing uses. Direct harm is caused as its devaluing the character, and opening him up to future exposure by infringers.  If allowed to appear in your game without paying a royalty or licensing then Sega/Team Sonic are losing out on that revenue.  Additionally, your blocking Sega/Team Sonic from directly entering education games, affecting their business.
Based on the factors above, its use would not be considered fair, and you would be considered an infringer.
That said Fair Use and copyright laws are tricky, and every use requires some type of analysis. The team at Press Start Legal are experts in Copyright and Intellectual Property Law. We always advise you speak with an Attorney regarding your use of copyrighted works without permission. If you have any questions please contact us at Info@PressStartLegal.com for a free consultation.