This is my third article on the legal issues facing the gaming and tech industries. This article focuses on intellectual property disputes, and how to avoid them.

Intellectual Property in Gaming:

Pokémon vs Palworld

Intellectual property (“IP”) in video games is particularly complex, as there are so many aspects covered in a video game, from moment to moment. It is a hybrid product with both artistic and technical elements. There is design, music, software (literary copyright), and copyright issues regarding the story to name a few. The latest viral dispute in the video game industry has been the release of an open-world survival game, ‘Palworld’, produced by Pocketpair. It has similarities, which gamers and journalists alike have referenced, to the Pokémon games, produced by Nintendo; Game Freak; and The Pokémon Company.

This potential dispute relates to the design of the ‘monsters’ in Palworld. Since its release on 19 January 2024, players have noticed a similarity between Palworld’s monsters, and Pokémon. The CEO of Pocketpair used to work at Nintendo, and has stated that Palworld took “inspiration” from Pokémon, but did not copy it. It has been highlighted that the game mechanics and story of the game are different.

As of the date this article is published, no proceedings have been issued by Nintendo or the Pokémon Company. Pocketpair and gaming journalists have marketed and referred to Palworld as “Pokémon with Guns.” Developers at Poketpair have even received death threats from a minority of Pokémon fans due to Palworld “ripping-off” Pokémon.

In order to attract copyright (in England and Wales), the art (in this case, the design of the monsters) must be original. To infringe on copyright, use of copyrighted work must be without the IP owner’s consent. Furthermore, infringement can be in relation to the whole, or a substantial part, of the works. The added complexity with this case study is how would a court interpret the “substantial part” of the copyright. Peter Lewin from Wiggin LLP highlighted that the two video games have vastly different game mechanics/physics, graphics, music and other elements. It is only the design of some of the monsters which has caused controversy in this instance.

To avoid IP disputes such as the one with Palworld, particularly if one is taking “inspiration” from another copyrighted work, consent must be sought (ideally in writing) to confirm that the original IP owner allows the use of their work, or confirm they do not believe it has been copied. Furthermore, it is increasingly essential that companies who rely on monetising their IP, to ensure that they have an IP policy in place in the first instance.

Intellectual Property in Tech:

The current UK Government has officially jumped on the artificial intelligence (“AI”) bandwagon. The UK Government has pledged more investment into AI than any other European government in order to attract investment, and are rushing to legislate to keep up with the technological developments.

Technology organisations saw one of the greatest increases in intellectual property disputes in 2023. A survey by NRF found that tech companies expect a 42% increase in IP disputes in 2024, and IP disputes are of the greatest legal concerns/risks to tech companies.

The increased use of AI has increased exposure of IP disputes to tech companies, on the basis that large language models use pre-existing IP to generate new/original works. The disputes arise from monetisation of their tools, as the AI tools have been trained with copyrighted works. Furthermore, anything created by AI tools cannot attract copyright because it isn’t considered to be created by a human.

Getty v Stability

Getty Images (UK) Limited (“Getty”) issued proceedings against Stability AI Ltd (“Stability”) for infringement of their IP. It has been alleged that Stability infringed on Getty’s IP by copying and processing twelve million images, without Getty’s permission, to “train” Stability’s AI tool. The AI tool will then generate new images from prompts, based on the pictures it was trained on.

There are some exceptions to using copyrighted work without permission. One example, is text and data mining (“TDM”) of copyrighted work for non-commercial purposes, which is usually subject to various contracts determining permitted uses, fees and other terms designed to protect the copyright holder’s rights (i.e. obtaining lawful access to the copyright).

The UK Government proposed expanding the TDM exception so that AI companies could exploit copyright freely (even for commercial purposes), however, the backlash received shortly after the announcement led to a retraction.

The proceedings are ongoing, and whatever decision is reached will be a landmark ruling for copyright/IP and AI going forward. It will also give investors and creators alike some degree of certainty going forward, on how best to use copyrighted works when training their models. For example, there is a case in America where 17 authors are suing OpenAI for using their works to train their models.

A simple solution would be for AI operators to enter into global licensing agreements with the copyright holders. While the up-front legal costs will be extraordinary (not least because the copyright owner will be in the stronger negotiation position), if the AI models/tools are as groundbreaking and revolutionary as marketed, then the legal fees will be dwarfed by the likely profits and growth of the industry (just don’t use AI to draft the licensing agreements).

If you believe your IP has been infringed upon, you have been accused of infringing on someone else’s IP, or have a potential dispute in relation to an Intellectual Property Licensing Agreement, you may need to instruct a lawyer to provide legal advice. Griffin Law can assist in these circumstances.

Griffin Law is a dispute resolution firm comprising innovative, proactive, tenacious and commercially-minded lawyers. We pride ourselves on our close client relationships, which are uniquely enhanced by our transparent fee guarantee and a commitment to share the risks of litigation.  For more details of our services please email justice@griffin.law or call 01732 52 59 23.

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