As previously covered by Law Street, the majority of litigation in the video game industry concerns intellectual property. However, outside that sector, other important issues rack the gaming giants. These analyses cover all the other litigation the industry has brought and faced since 2019. Notably excluded from the following analyses are Tencent and Microsoft, for their litigation related to video games cannot be easily separated from their work in other technology sectors.
Loot Boxes
A continual cause for concern among video games is the issue of “microtransactions.” Many games, including some that sell for $60 or more, include microtransactions, opportunities to buy in-game items, like new visual appearances for player characters. Microtransactions are paid for either real world money or in-game tokens purchased with money. One particular form of microtransaction is the “loot box.” Unlike other microtransactions, which provide a given in-game item for a given amount of currency, loot boxes give a player chance of winning anything from a random assortment of in-game items, with the chances of winning each item set by the game developer. As such, they have earned a fair bit of scrutiny by regulatory authorities and plaintiff attorneys.
As summarized by Leon Xiao in Games Industry, different countries are tackling the issue of loot boxes in different ways. At the most stringent, Belgium has completely banned the inclusion of loot boxes in video games, ruling that they constitute illegal gambling; however, the ban is not well-enforced due to a lack of resources. Other countries, like Germany and Australia, have incorporated the presence of loot boxes into the age rating for games with the latter mandating all games with loot boxes must be rated for individuals fifteen years of age and older. Taiwan, South Korea, Italy, and the Netherlands mandate public disclosure of the probability distributions for every available loot box. Thanks to these countries, said probability charts are globally available. The Netherlands also requires the price to be listed in euros, even if the loot boxes are not directly purchasable with euros.
The United States has yet to enact any regulation surrounding loot boxes, so the burden has fallen on individuals to seek justice for any alleged damages. Since 2019, sixteen cases have been heard before the courts on whether loot boxes and microtransactions in general are predatory.
Fortnite has been the most targeted game in such suits, with three suits targeting Epic, the company who make Fortnite, themselves and two targeting Sony, for hosting and facilitating Fortnite’s microtransaction system. These have resulted in a roughly 50/50 split between judges ruling in Fortnite and Sony’s favor and some sort of settlement.
Sports games are another popular target, specifically for the build-your-own-team play mode. Electronic Arts (EA) is the favorite target for these suits, and plaintiffs describe how players can purchase Ultimate Team Packs using in-game currency bought with real-world money. These Ultimate Team Packs contain a random assortment of players. Electronic representations of real world players are ranked in skill from 0 to 100, with higher skill players appearing in the packs less frequently than lower skill players. The plaintiffs argue this system is akin to gambling, and like cigarette manufacturers with Joe the Camel, EA is profiting off tempting children into destructive behaviors. Take-Two, the company behind NBA 2k has been sued for similar game mechanics.
Hearthstone is a digital trading card game where players can either put in hours of gameplay to earn new cards, or buy them in booster packs, which two suits have alleged is akin to tempting children into gambling.
Also targeted have been MiHiYo, Activision Blizzard (recently acquired by Microsoft, Nintendo, and Valve.
In terms of venues, the most popular by far is the Northern District of California, and a few cases have been appealed to the Ninth Circuit.Plaintiffs usually file their suits under the Nature of Suit Code 190 Other Contract, though a fair number have filed under 370 Fraud.
In terms of outcome, of the sixteen, five cases resulted in the judge ruling in favor of the company, two returned a mixed ruling, three cases were settled out of court, one plaintiff voluntarily dismissed, and three cases are ongoing.
Product Liability
Outside issues surrounding loot boxes, there is an emerging legal trend of plaintiffs suing the game industry over fostering video game addiction. Since October 2023, four cases have been filed alleging the gaming giants are nefariously enticing children into a loss of self-control around gaming. Specifically, the plaintiffs argue that the game makers design games to be addicting. Some plaintiffs blame the gaming giants on their children’s difficulties with school. Of note, all the plaintiffs thus far have been represented by Bullock Ward Mason.
Roblox, in particular, has faced a different sort of product liability suit. First, they have been named in the large social media multidistrict litigation currently being heard in the Northern District of California. In it, they are treated as any other social media company and are accused of fostering addiction and ruining children’s mental health.
Roblox has also faced a couple suits over allegedly not doing enough to protect children through moderation. One case was settled for $10 million for the plaintiff class, and the other is ongoing. In 2023, Roblox grossed over $2 billion in profit.
Antitrust
In addition to the Federal Trade Commission proceeding, a number of individuals have filed their own antitrust suits in an attempt to stop Microsoft’s acquisition of Activision Blizzard. Demartini et al v. Microsoft Corporation concerns a number of individuals alleging fairly standard Sherman Act violations. Turner v. Federal Trade Commission et al., on the other hand, concerns an individual, Terrance Turner, suing the Federal Trade Commission, alleging they are not doing enough to stop the mega merger.
The last few years have seen a slurry of antitrust litigation filed against app and video game marketplaces. Most notably, Epic Games filed suits against both Apple and Google for allegedly monopolizing the sale of apps and the payment processing in said apps on iPhones and Androids respectively. Both cases have bounced between the Northern District of California and the Ninth Circuit with no end in sight. In addition to Epic’s suits, Epic, Valve, Microsoft, Activision Blizzard, and Nintendo signed on as interested parties in Cameron et al v. Apple Inc. where Apple chose to settle and disbursement is ongoing. Google settled some of the claims made in a similar case filed by all fifty states
Similarly, Playstation is facing three suits over the PlayStation game store. While players can buy physical copies of games, the plaintiffs allege Sony has formed a monopoly by restricting the sale of digital copies to the PlayStation store.
Valve has faced two suits, that have since been consolidated, over whether the online game store Steam holds a monopoly over digital PC game sales.
And outside suits over the Microsoft-Activision Blizzard merger, Activision Blizzard has faced two antitrust suits over esports. In July, 2023, the games giant entered into a consent decree where they agreed to restore the competitive balance tax, which helped lower-ranked teams earn enough to get by.
Labor
Foremost among the game industry’s labor disputes is a suit filed in the Northern District of California on February 16 this year. The plaintiffs allege Roblox is profiting off child labor. They describe how in Roblox, users can purchase in-game currency, Robux, using real-world money and then spend those Robux on experiences and in-game items. Users can also earn Robux by creating content that many users experience or by selling the content directly to users. These often child developers can cash out the Robux they earn, but as the complaint explains, Roblox currently takes a 70% commission on all sales, and the exchange rate to cash out is far below the exchange rate to buy in. Furthermore, to even cash out, the plaintiffs say, users must earn an exorbitant quantity of Robux and pay a monthly subscription fee. Six months ago, More Perfect Union interviewed these child developers, possibly inspiring this lawsuit.
In September 2021, the U.S. Equal Employment Opportunity Commission sued and obtained a consent decree over rampant sexual discrimination and harassment at Activision Blizzard. The California Department of Fair Employment and Housing also entered the case seeking damages. This spurred on a securities suit alleging the company knew and failed to warn investors of the results of regulator investigations preceding the suit. Sony also faced two gender pay gap suits.
Nintendo’s Drifty Joy Cons
On March 3, 2017, Nintendo released its latest gaming console, the Switch to the world, the key feature of which is the ability to play at home on a TV or on the go. The Switch does this through the use of removable controllers, called Joy Cons, which can be affixed to the core tablet of the console itself for on the go play or removed and used wirelessly while the console is plugged into a dock. However, as early as November that year, users started complaining that the Joy Cons were drifting. Put simply, the joysticks were reading inputs when no input was entered.
On July 19, 2019, Ryan Diaz filed a class-action lawsuit against Nintendo, alleging the company sold a defective product, the Joy Cons. Since, four other suits have been filed in federal court claiming similar damages. Of the five, one case was dismissed for lack of prosecution, one was settled out of court. In a third, the court forced some of the plaintiffs into arbitration and dismissed the claims of the others for lack of standing. The remaining two, including the original suit, are ongoing.
In late 2019, Nintendo started repairing Joy Cons sent in with drift issues free of charge.
