Legal essentials for eSports organisers and sponsors

The growing number of viewers and rising profits is making the eSports industry increasingly more attractive for event organisers, sports leagues, sponsors and traditional sports clubs. With the global eSports audience expected to grow to 580 million by 2020 (Newzoo’s 2018 Global Esports Market Report; https://newzoo.com/insights/trend-reports/global-esports-market-report-2018-light/ ), these groups are now establishing their own eSports divisions in order to capitalise on the profitability of the market.

In the eSports arena, intellectual property law plays an important role and there are some key elements that both organisers and sponsors need be aware of to avoid potential liability when becoming active in this sector. Although the issues outlined in this article are primarily based on German law, similar questions are also being raised in other countries, so it’s important eSports organisers and sponsors keep these in mind.

Commercial use of computer and video games and Copyright law

An important question is whether organisers of eSports events may lawfully copy computer programs without permission from the copyright holder. Permanent or temporary reproduction is subject to authorisation. It is important to know whether the copyright holder, whether it is a game developer or a manufacturer, has granted a corresponding license to the organiser.

End user licence agreements commonly used on the market generally exclude the commercial use of computer and video games. Organisers of eSports events therefore must ensure that they obtain the required usage rights in order make the respective computer or video game publicly available at their events or through other distribution channels such as online streams.

Virtual domiciliary rights

In cases where the hardware on which the game is installed is owned by the organiser, according to several German courts the organiser should have a virtual domiciliary right. However, whether or not organisers will also be granted virtual domiciliary rights in cases where the software is installed on the servers of third parties is yet to be decided.

Organisers need to ensure that they are protected in the ‘terms and conditions’ section of their contract and so they can regulate the behaviour of participants and allow them to disqualify players from the competition for misconduct if the occasion arises.

Advertising

Esports events are regularly broadcasted on television or the internet which means that all marketing material must be clearly identifiable as advertisement and distinguishable from editorial content. Infringement of this principle is prohibited by competition law because this type of reporting will likely reach target groups and have a large impact on them. These principles against covert advertising must be kept in mind, particularly in cases where egamers are sponsored by companies or advertisements.

Protection of minors

The Law on the Protection of Minors is another set of rules that must also be observed by organisers of eSports events. In particular, it is prohibited to grant minors access to events that may have a harmful effect. This is important to bear in mind for age-restricted games or those with adult content.

Esports is a very fast-growing market and the legal questions are numerous.  On the one hand, engaging in eSports offers enormous opportunities to event organisers and sponsors. On the other hand, it’s important to be aware of the various legal pitfalls, think carefully about the legal and commercial structures of the eSports industry and to seek legal advice if needed.