Magnusson nyhedsbrev November 14, 2016
Jens Vinther Nielsen
Partner / Head of Real Estate
M: +45 20 26 87 48
E: [email protected]
Sam Jalaei
Advokat / Partner
M: +45 27 74 05 04
E: [email protected]
Jesper Kragh-Skriver
Advokatfuldmægtig / Associate
M: +45 60 38 10 62
E: [email protected]
LEGAL CHALLENGES IN E-SPORTS:
Since gaming evolved into e-sports in the early 2000’s and took shape
as a real sport for competitors as opposed to mere entertainment,
e-Sports has gradually begun to align itself with the structure of
conventional sport.
Nobody will be surprised to hear that whenever a major European
football club or American basketball club signs contracts with players,
lawyers are involved to make sure that all legal issues are taken care of.
If, however, there’s a Playstation 4 – FIFA 16 or Counter-Strike GO
tournament on the PC, would anybody find it natural WADA showed
up and tested for prohibited substances?
We assume not – but that is what it should be like. Professional cyber
athletes (e-sports athletes) are truly beginning to make money. Real
money. According to one list, the highest paid player in e-sports in
2015 made more than USD 2.1m!
With recent e-sport sector investments in Denmark from well-reputed
investors such as Saxo Bank founder Lars Seier, former cycling pro
Bjarne Riis, venture capitalists Sunstone Capital, American and Swedish
celebrities like Shaquille O’Neal, Martin Dahlin and Robin Söderling, as
well as investments from giants of conventional sport like the football
clubs Manchester United, Manchester City, Paris Saint-Germain, Schalke
04, Bayern München, Valencia, e-sports is certainly not just a ‘game’
anymore – it’s a business.
Becoming a professional sport holds challenges for e-sport – not least
of all, legal.
In this newsletter Magnusson will address some of the legal challenges
concerning the commercialisation and professionalisation of e-sports.
Contracts and transfers
It came as a surprise to many of the cyber athletes (players) we have
been in touch with, that in most jurisdictions in the world as well as
according to international law, all commercial agreements and contracts
are binding. This means that players cannot swap teams as they please
if they have entered an agreement with the previous team/club. It
would be a breach of contract in most cases to sign with another team,
even though there is no international organ like FIFA to enforce the
contracts through exclusion from competitions for example.
Surely the breach of contract does not restrain them from competing
in tournaments for the new team, but the old team could bring the
player before the courts and claim compensation and damages for
breach of contract. Once e-sports organizations are formed and
become entitled to control the games and tournaments, an unauthorized
transfer will most likely exclude the player from competitions within the
organization, and compensation for breach of contract may be owed.
The cyber athletes and their new clubs should bear the binding nature
of a contract in mind.
Sponsor contracts
E-sports as well as conventional sports is largely funded through
commercial sponsors. Teams, organizations, players, tournament
organizers and even game developers will sooner or later enter into
sponsor contracts, which – compared to employment contracts – have
even more complications, because different sponsors might compete
externally within their own markets, e.g.: AMD and Intel both produce
computer chips (CPU’s), and thus Intel might have vested interest
in their e-sports teams not cooperating with AMD. This creates
MAGNUSSON DENMARK ADVOKATPARTNERSELSKAB
Bredgade 30, 1260 Copenhagen K, Denmark, T: +45 82 51 51 00, F: +45 82 51 51 01
Advokatpartnerselskab, CVR-nr. 3749 8092
www.magnussonlaw.com
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/ LEGAL CHALLENGES IN E-SPORTS /
complications when Intel signs with an e-sports team. It is clear that this
particular team cannot enter agreements with AMD afterwards without
the permission from Intel. However, can one of the team’s players enter
a personal sponsorship with AMD? Many of these questions depend
on the wording of the particular sponsor contracts, which makes their
draft thereof very important.
A related issue regards the names of the players – how can one legally
use a player’s name commercially? The player itself can normally use
his own name, but may the club automatically use the name of the
team players simply through the employment relation? What about the
team’s sponsors and personal sponsors?
Dealing with sponsor contracts is a very delicate and complicated
matter which can cause very problematic legal challenges if done
improperly, and all stakeholders of e-sports should be aware of that.
IP and streams
Making protected intellectual property publicly available (e.g. through
the internet) is illegal in most modern countries. You may not upload
a song on YouTube without the permission from the rights holder.
This is somewhat common knowledge. The same laws of IP (copyright)
however, prohibit more or less any form of public sharing of digital
content without a valid license.
It is quite common for game streamers to have music playing while
streaming. Unless the streamer has bought a license to do so, the stream
will constitute an IP violation for which the streamer can be punished
and sued for compensation and damages by the rights holders.
Cheating
While in conventional sports cheating is mostly done through doping,
this is different in e-sports. Most cheating is done through third party
software (hacks) which enables various possibilities for the player such
as the ability to see through walls.
In sports law, cheating i.e. doping as well as technical cheating, is dealt
with through exclusion of leading organisations such as FIFA, UCI, ATP
etc. Until such organisations are established within e-sports, tournament
organisers need different means to deal with cheating, mostly in form of
implied regulations or explicit agreements. Such agreements, however,
will most likely not exclude potential cheaters from other tournaments,
but only seek to recover prizes from the cheating players. But, note that
with the monies involved, cheating may be a criminal offence that
could subject cheating players to fines or even imprisonment.
Another question to be addressed relates to the rule of law. Who can
decide if anyone cheated, and how are players protected against arbitrary
exclusions and rulings?
As of today, cheaters are mostly dealt with by game developers (e.g.
Valve Anti-Cheat “VAC”) or tournament organisers. It is highly doubtful
if these players get a fair “trial” as no uniform rules exist. It may sound
amusing to talk about fair trials for players cheating in a video game,
but the cyber athletes do it for a living, and should thus have the same
treatment and protection given to e.g. football players. If a professional
football player is accused of using EPO, he will have a hearing before
the relevant body of FIFA with the opportunity to appeal this decision
to the Court of Arbitration for Sport – CAS.
This is certainly true for the music, but most likely also for the images of
the computer game shown on the stream. Digital, computer-generated
images are subject to IP-protection, and thus the game developer has
the sole right to make these images publicly available.
Apart from going to court, cyber athletes have no such protection or
opportunity.
Most of the IP-related problems within e-sports relate to copyrights.
However, if one forms a team, one has to observe the trademark
related challenges too. There is a well-known Counter-Strike team
called Copenhagen Wolves. If a new team owner decides to call his
team Odense Wolves or Danish Wolves while operating a professional
e-sports team, this might be a violation of the rights holder of
Copenhagen Wolves.
The problems mentioned are just some of the many legal issues that
exist in electronic sports and in our opinion, e-sport should be no
different than conventional sport from a legal point of view. E-sports
will gradually experience more and more legal challenges until
fully developed as a professional business, at which time we predict
it to have at least as many – if not more – legal challenges than
conventional sports.
In conclusion:
Cyber athletes as well as tournament organisers and team owners
should be well aware of the IP rules governing how they can operate
their businesses.
This newsletter is published for informational purposes and is not and does not replace legal advice. If you need legal advice concerning Danish or
international sports law and e-sports law, we encourage you to contact Magnusson.
With former FC Copenhagen General Counsel Jens Vinther Nielsen and Sam Jalaei among its partners, Magnusson is one of the leading sports law
offices in Denmark. As a former football player Sam Jalaei has a vast domestic and international network and has for the past 17 years provided
legal assistance and services to both major clubs, agents, players and managers and thus works closely with the relevant stakeholders in the business.
Magnusson’s office in Denmark
MAGNUSSON DENMARK ADVOKATPARTNERSELSKAB
Bredgade 30, 1260 Copenhagen K, Denmark, T: +45 82 51 51 00, F: +45 82 51 51 01
Advokatpartnerselskab, CVR-nr. 3749 8092
www.magnussonlaw.com
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