Taylor Wessing - Key legal issues for games businesses

complaints by parents/guardians and (ii) in some markets, the threat
of government intervention (such as around consent notices, or limits
on spend over a fixed period of time).
u E-money
E-money means any electronically stored monetary value represented
by a claim against its issuer which:
> Is issued on the receipt for the purpose of making payments and
> Is accepted by someone who is not the issuer as valid means of
paying for goods or services.
Financial regulation is not the most obvious issue in the context of games,
but publishers should be mindful of inadvertently issuing ‘e-money’
to facilitate in-game purchases. E-money is regulated throughout the EU
under the Electronic Money Directive and requires, among other things,
that the issuer be authorised by its national regulator, for funds to be safeguarded
and for the e-money to be redeemable on demand.
Typically, this could be relevant to any third party issuing pre-paid vouchers
or virtual ‘tokens’ that enable customers to make in-game purchases.
As always, the devil is in the detail and affected businesses should
seek professional advice to ensure they are not carrying on regulated activities
without the requisite licence.
u Virtual currencies
Not to be confused with the regulation of issuing e-money in the somewhat
less regulated world of virtual currencies (such as Bitcoin). Bitcoin,
in particular, is increasingly accepted by games businesses such as Zynga,
and Microsoft recently restored it as a payment option in its Xbox
and Windows stores. Virtual currencies have been getting a lot of media
attention, not always positive, which may scare off potential users. Any
business thinking of accepting virtual currencies must consider how to
manage risks including theft, fraud, exchange or marketplace insolvency,
hacker attacks and money laundering as well as the risk of serious reputational
damage, if things go wrong.
Along with the US and other jurisdictions, the UK government has started
to consider whether regulation is necessary in this area and there is a risk
that fragmented regulatory and taxation frameworks could emerge. Mainstream
adoption is hindered by the overall lack of certainty in core areas
and, ultimately, we expect legislation to harmonise requirements covering
a range of topics, such as refunds, price guarantees, complaint handling,
protection schemes and secure IT-Systems.
Publishers need to think about how they can design systems to accept
virtual currencies – and how to redeem them – in an ever changing regulatory
environment.
u Market Practice
Whilst some games businesses may focus only on the key markets in
which they operate in Europe, it is important to note that non-compliance
can lead to criminal sanctions. As such, the in-game payment issues
should be treated as higher risk.
Advertising Law
Advertisement in Europe is regulated by several Directives such as the
Directive on Misleading and Comparative Advertising and the Directive on
Unfair Commercial Practices. There is a strict labelling requirement as all
advertisements should be recognisable as such. Subliminal techniques are
generally unlawful. Labelling should be sufficiently clear and visible. Advertising
directed at children may not contain direct exhortations to purchase.
Advertising should be true and not misleading and the advertiser needs
to be able to show and prove that his assertions are correct. Specific advertising
restrictions apply to certain media (e.g. broadcasting), content
(e.g. violence or nudity) and specific products (e.g. alcohol). When using
influencers on social media for advertising campaigns, advertisers may
also be liable for false or missing labelling by such influencers.
Loot boxes
The purchase of so-called loot boxes is currently the subject of controversial
discussion, in particular, the classification as a game of chance. The
Dutch and Belgian gambling supervisory authorities have classified some
games (Overwatch, FIFA franchise, CS: GO, Star Wars: Battlefront II) as
gambling due to the embedding of loot boxes and found that they violate
the relevant gambling laws. Either the loot boxes must be removed or a
gambling license must be purchased. In Germany, loot boxes are currently
not seen as generally illegal. In addition to gambling law issues, questions
may also arise with regard to consumer law and the protection of minors.
General additional issues
The above issues do not include the general additional issues that any
digital business operating in Europe needs to cater for including:
> IPR protection including trade mark registration (in each territory or
as a European wide Community Trade Mark);
> IPR licensing (from partners, to users and across corporate groups);
> VAT, corporation tax, transfer pricing and other tax and accounting
issues;
> Employment and stock options;
> Specific issues regarding in-game content such as age-related
restrictions, copyright, trademark, design and competition law issues;
> Use or selling of cheat bots.
Outlook
There are a number of upcoming European sets of rules which need to be
monitored, such as:
> The EU-Geo-Blocking Regulation which will enter into force in
December 2018 and will prohibit to block or limit access to online
interfaces on the basis of nationality, residence or establishment of
the customer;
> The EU Commission’s proposal for a Directive on the Regulation
of Online Platforms;
> Plans by the EU Commission to introduce new tax rules for digital
activities;
> New rules will be introduced in European Copyright Law by the
Directive on Copyright in the Digital Single Market which is
currently still being negotiated but expected to become binding
law soon.