Blog

By Purple Fox Legal

June 29, 2022

The world of esports and online gaming continues to skyrocket in popularity, with a growing number of people choosing to get involved as players, viewers, and even investors. And, believe it or not, the numbers are only going up. In fact, by the end of 2022, the industry is expected to be worth more than $3 billion. 

Because esports is still a relatively new industry, people are taking advantage of the unprecedented growth. And, legal issues and implications continue to emerge. In this article, we discuss those legal implications beginning with the definition of esports and what it actually is. Then, we will explore the top three legal issues facing the industry today. Finally, we’ll offer a few real-life tips to help players involved in esports fully protect themselves from any legal challenge.  

What is eSports?

As the name suggests, esports is a term that encompasses sports that take place electronically. To put it simply, it refers to competitive video gaming. The world of esports involves leagues, teams, and competitors who participate in organized gaming experiences in a battle for victory. It’s the same concept as traditional sports, but with an electronic playing field. And, just like typical sports, the games are recorded and streamed live to help build fandoms and support players.

3 Legal Issues Facing the eSports Industry

There are lots of different factors that make up the world of esports, from the players and their teams to the video games themselves. Because of this, the industry finds itself facing legal hurdles quite frequently. Most of these tend to surround contract law and intellectual property. Here are the most important legal issues that need to be addressed in esports today. 

1. It Can be Difficult to Navigate the Contracts

Before most esports competitors earn income, they have to sign up with an organization. The organization is responsible for creating teams, training players, and helping competitors make a living through esports. In most esports organizations, players are considered independent contractors. They sign a contract with an organization, play with them for a while, and eventually transfer to another one. An unfortunate reality though is that the industry is ripe with predatory agreements, which could leave players signing up for long working hours, low wages, and exclusivity clauses. 

eSports competitors should consider the importance of signing a contract, and take time to read between the lines, looking for key information like:

• Compensation
• Key performance indicators (KPIs)
• Morality clauses
• Use of players’ IP
• Branding information
• The type of employment
• Holiday/sick time information

Failure to properly review a contract could result in a player being locked into a contract that doesn’t serve them best, or even at all. Some of them can go on for years. And, breaking a contract could mean ending a career. This is one of the most critical legal aspects for an esport competitor, and it must be taken seriously. 

Additionally, players’ publicity rights are often overlooked even though publicity rights are esports players’ greatest and most valuable asset.

2. Intellectual Property Plays a Monumental Role

eSports competitions are buzzing with different forms of intellectual property (IP), including logos, sayings, game modifications, and the games themselves. The sheer volume of copyrights and trademarks involved in esports can leave players feeling extremely confused and unsure where to turn. But, failing to follow the rules could be catastrophic. 

For example, most End User License Agreements (EULA) exclude the commercial use of the video games they cover. This means that competitors or their organizations are responsible for obtaining all the necessary usage rights before they can legally compete in tournaments. The same due diligence is required for the creation of different game modifications and skins. 

Another area where IP rights must be considered is in brand advertising and merchandising. Because a large percentage of a player’s revenue is generated from their online following, competitors and their organizations are required to adhere to FTC guidelines. Players must reveal whether they are working with brands and when posts are sponsored contractually. 

3. Player’s Rights Aren’t Protected Well, If At All

Though players are primarily responsible for the explosion of popularity in the esports industry, they have very few defined rights and no real organization looking to protect their best interests. And, unfortunately, many esports players just aren’t aware of their rights or effective ways of protecting them. 

Thankfully, new organizations are beginning to pop up that promise to put the player first. They offer to help esports competitors navigate the legal side of the industry, and inform them of ways to protect their IP rights. Some of the protections esports players need to consider include:

• Performance Rights:

While no copyrights exist to protect a player’s performance in an esport event, there are certain protections over any footage taken from a match. Casting players could hold some IP rights over footage taken from an event, depending on agreements with an organization. 

• Personal Branding

A player’s voice, gamer tag, and nickname are some of the only ways they can distinguish themselves from other competitors. For this reason, a competitor’s personal brand should receive some protection. In esports, a personal brand is everything to developing a following, creating content, and maintaining an online presence. 

What about NFTs?

Just like with traditional sports, NFTs have found their way into the esports industry. And, this opens an entire world of legal hurdles and challenges. IP rights, especially copyright confusion, is one major difficulty in this arena. Sales and transfers of NFTs should be closely monitored to ensure they are issued properly. 

Design patents should also be kept in mind regarding certain, more valuable, esports NFTs. These can directly influence the profits earned from the NFT and can be particularly confusing for buyers. Ultimately though, because this is such a new legal area entirely, new rules and regulations should always be expected. 

eSports Players Should Take Their Rights Seriously

Professional esports competitors need to stay mindful of their jobs and their rights. It’s so important to prioritize protection from the very beginning to reap the most benefit from an esports career. And the best way to do this is by hiring an attorney. An attorney experienced in representing esports professionals can help with so many different aspects of the industry, including:

• Licensing publicity rights
• Registering federal trademarks
• Developing an IP portfolio
• Drafting contracts
• Reviewing endorsement agreement
• Negotiating compensation
• Branding
• Protecting and enforcing IP

Purple Fox Legal can assist with all these services and additional aspects of the esports career. Contact us today to learn more about protecting yourself.