{{tag>marvel cryptic copyright trademark "city of heroes"}}

~~DISCUSSION~~


======Marvel v Cryptic - the hypothetical Australian position======

NCSoft and Cryptic Studios are the creators of a popular Massively Multiplayer Online Role Playing Game (MMORPG) in which players create superheroes and do battle with the forces of evil. Marvel are publishers of comic books, one of the two production houses credited with creating, or at least resurrecting, the superhero genre.

Marvel alleged that NCSoft had “created, marketed, distributed and provided a host environment for a game that ‘brings the world of comic books alive,’ not by the creation of new or original characters but, instead, by directly, contributorily and vicariously infringing upon Marvel copyrights and trademarks.”((Second Amended Complaint, Marvel Enterprises v NCSoft Corporation (25 January 2005) CV 04-9253-RGK (PLAx) available at http://www.eff.org/IP/Marvel_v_NCSoft/ (28 November 2005); Most of Marvel’s claims for direct and indirect trademark infringement were dismissed by the District Court, except for direct infringement of a common law trademark (Marvel Enterprises Inc v NCSoft Corporation (9 March 2005, unreported, Klausner J, CV 04-9253-RGK (PLAx)%%)%% available at http://www.eff.org/IP/Marvel_v_NCSoft/ (28 November 2005).)) Marvel pointed to the character creation process in City of Heroes, which allows players to design their own superheroes, and, with some work, replicate to some extent the likeness of well known protagonists of Marvel’s comic books. Marvel alleged that the flexibility in the character creation system empowers users to infringe their valuable copyrights and trademarks.

The claim is alarming. For years, children have role-played with the characters that form their popular culture. Content producers have used advertising and merchandising so extensively that it is difficult for a child not to be immersed in a world populated by representations of these characters. These same companies encourage children to buy licensed merchandise in order to role-play with their favourite characters. For years children have played not only with that merchandise, but also with home-crafted representations – drawings, paintings, a handmade cape or costume, the possibilities are only limited by imagination. This sort of play is either a symptom of, or fuel for, the popularity of the characters depicted, and is encouraged by the production companies. However, once this role-playing moved into the digital environment, Marvel brought suit for copyright infringement.

It would be unthinkable for a production company to sue children for dressing up as their favourite comic book character and playing in the park. A shift in context to a digital environment is little different conceptually. If Marvel were successful, the ability to role-play online would have been removed to a large extent. It is difficult to reconcile how Marvel can on the one hand bombard children with images and merchandise of their characters, in the hopes of encouraging them to play with those characters, and on the other hand, bring suit to restrict those same children from playing with those characters in an unlicensed setting.

The case was settled out of court in the United States in December 2005. The terms of the settlement were not disclosed, but no changes to NCSoft’s City of Heroes character generation process are to be made. Whilst this may be a win for NCSoft in this case, the fact remains that a similar case brought under Australian law may be significantly more difficult to defend.

===== Primary liability in Australia =====


Superhero comics, and potentially the superheroes themselves, are original artistic works for the purposes of Part III of the Copyright Act. Liability for primary copyright infringement will occur when a player of a game can be shown to reproduce the characters, or the characters as a substantial part of the comics, in a material form, or to communicate a substantial part of the characters or comics to the public.((Copyright Act 1968 (Cth) ss 36, 31(1).)) ‘Material form’ includes “any form (whether visible or not) of storage of the work or adaptation, or a substantial part of the work or adaptation, (whether or not the work or adaptation, or a substantial part of the work or adaptation, can be reproduced)”.((Copyright Act 1968 (Cth) s 10.)) This broad definition will cover the creation of a character in a game, as will the definition of ‘communicate to the public’ in a multi-player game (to “make available online or electronically transmit”).((Copyright Act 1968 (Cth) s 10.))

In determining whether the characters have been reproduced, the Court will look for objective similarity between the in-game character and the original superhero, and the establishment of a causal link between the original work and the in-game character.(([[lc>Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465]]; [[lc>SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466]].)) Where the two characters are objectively similar, a causal connection may be inferred by the popularity and level of exposure of the original, even if the person is copying subconsciously.(([[lc>Francis Day & Hunter v Bron [1963] Ch 587]].))
Where only some features of the character have been reproduced, the plaintiff will need to show that those features are substantial. The question of substantiality with respect to Part III works is determined primarily by reference to the original features that have been reproduced. Determining whether a substantial part has been reproduced will again be determined by the qualitative value of the part taken, but the emphasis is on the originality of the reproduced portions. Reproduction of a large quantity of unoriginal features is unlikely to constitute reproduction of a substantial part,(([[lc>Data Access Corp v Powerflex Services (1999) 202 CLR 1]].)) but reproduction of a small portion of original material which resulted from a high degree of skill and labour is likely to be substantial.(([[lc>Blackie & Sons Ltd v Lothian Book Publishing Co Pty Ltd (1921) 29 CLR 396]]; [[lc>Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465]]; [[lc>Fasold v Roberts (1997) 70 FCR 489]].))

Given the recent restrictive approach taken by the Federal Court in relation to substantiality in Part IV subject-matter,((See TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 145 FCR 35.)) the features of a superhero are likely to constitute an important part, or a highlight, of the artistic or literary work of a comic book. Unless the court takes into account the type of use made of the player character, it is likely that they will be seen to infringe copyright in the original superheroes. Australian players will not be able to rely on a fair dealing exception to infringement.((Reproduction for entertainment will not fit within exceptions for news reporting, research or study, or criticism or review.)) The logical conclusion is that the players will be liable to the original owner. However, owners of copyright are understandably reluctant to sue their fans for copyright infringement. It is much less embarrassing and more convenient to achieve the same result by suing the producers of the game for secondary liability.

===== Secondary liability in Australia =====

Secondary liability for copyright infringement in Australia arises when a person ‘authorises’ the doing of any act comprised in the copyright.((Copyright Act 1968 (Cth) s 36(1).)) Section 36(1A) tells us that, when determining whether a person has ‘authorised’ the doing of any such act, the matters that must be taken into account include:

(a) the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

%%(c)%% whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

The meaning of ‘authorisation’ was recently considered in the Federal Court by Wilcox J in Universal v Sharman.(([[lc>Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1]].)) This case dealt with authorisation of infringement in sound recordings, but the relevant provisions in the Copyright Act for Part III works are worded identically. His honour considered the relevant authorities and extracted some guiding principles. ‘Authorise’ is to be construed according to its dictionary meaning of “sanction, approve, countenance”.((Ibid 90, citing University of New South Wales v Moorhouse & Angus & Robertson (Publishers) Pty Ltd (1975) 133 CLR 1 (‘Moorhouse’), 12.)) Authorisation does not have to be a positive step: “inactivity or indifference, exhibited by acts of commission or omission, may reach such a degree as to support an inference of authorisation or permission”.((Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1, 90, quoting Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481.)) Mere provision of the means of infringement is not enough.((Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1, 98; Copyright Act 1968 (Cth) s112E.)) Mere inactivity without knowledge will not be enough.((Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481.)) Mere knowledge is not enough.((Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1, 90, citing Nationwide News Pty Ltd v Copyright Agency Ltd (1996) 65 FCR 399, 422.)) An implied general permission or invitation does not require specific knowledge.((Moorhouse (1975) 133 CLR 1, 21.))
In Universal v Sharman, Sharman Networks was found to have authorised the mass infringement of copyright in sound recordings by providing the software for the Kazaa peer-to-peer filesharing network. The two most important factors considered were that (1) Sharman provided the facilities for infringement; and (2) Sharman had knowledge that Kazaa was being used predominantly to share copyright works.((Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1, 49, 98.)) Wilcox J did not accept that there was a large proportion of legal filesharing traffic.((Ibid 49.)) It wasn’t important that Sharman did not have actual knowledge of infringing acts, merely that it knew that a major proportion of traffic must be infringing.((Ibid 50.))

Next, Sharman had a financial interest in increasing filesharing, because of increased advertising revenue. Because most filesharing is infringing, Sharman therefore had a financial interest in high rates of infringement.((Ibid.)) Sharman did nothing effective to curb the illicit filesharing on their networks.(Ibid 99.)) Sharman ran some campaigns which implicitly promoted illicit filesharing.((Ibid 98.)) Critically, Wilcox J found that Sharman could exercise some degree of control over its users.((Ibid 100.))

In Universal v Cooper,((Universal Music Australia Pty Ltd v Cooper (2005) 65 IPR 409.)) Cooper operated a website where other parties could post hyperlinks directing users to remote websites where infringing sound recordings could be downloaded. The Federal Court found that Cooper had knowledge of the infringing material, his website facilitated the infringement of copyright, and he had power to exercise some control over the links, but did not do so.((Ibid 429.)) Accordingly, Cooper had authorised the infringement of copyright in the sound recordings, notwithstanding that none of the infringing material was hosted under his control, or that the links to the websites hosting the infringing material were placed on his website by other users.

Although the decisions in Universal v Sharman and Universal v Cooper were confined very tightly to the facts of the cases, we are able to see how the same principles could be applied to find a computer game manufacturer liable for secondary copyright infringement. NCSoft provides the means of infringement, could be shown to know of the infringement (depending on how prevalent it is), and have the power to stop such infringement (MMORPGs are much more tightly controlled than distributed filesharing networks). It is also possible that NCSoft could be shown to engage in tacit promotions of infringement in their advertising materials.

The fact that NCSoft’s game obviously has many non-infringing players may be the crucial point in any such litigation. In this case, the game developer could probably successfully argue that it should not be held responsible for the infringing behaviour of a small number of its players.

NCSoft in this case may be able to escape secondary liability in Australia. However, we must consider whether this is the approach we want to take when we are shaping our digital environments. Are we certain that we only want people to be able to role-play with their favourite media icons in spaces which have been licensed by the appropriate publishers? If a provider of a virtual world made a space (like a park) where players could express themselves as they wanted, should they be liable when a significant portion of those players express themselves in ways that draw on copyright portions of their popular culture?
The disadvantages to such an approach are significant. Primarily, only people who have the ability to pay pop-culture creators have the opportunity to play – at least in the offline world, merchandisers cannot (completely) stop children from using their imagination or someone else’s toys to role-play. Next, we lose a great potential for creative re-expression – the environment must be controlled by the owner or a licensee, meaning that the potential for expression is limited to their ideas of ‘safe’ playing with iconic characters. We also lose the ability for players to mix genres and media – Marvel characters will be segregated not only from DC Comic superheroes, but also dinosaurs, spacemen, and Walt Disney characters. The qualitative value of play is reduced because it is confined to the boundaries of corporate merchandisers.

The better solution is to exempt this type of play from copyright infringement, either by determining that it does not reproduce a substantial part of the original works, or that it should be excused as a fair dealing or fair use of material. Unfortunately, current Australian law does not support such an approach.

~~DISCUSSION:closed~~