The Lawbringer: The power of licensing
by Mathew McCurley 
Feb 11th 2011 at 2:00PM
You guys seemed to very much enjoy the last edition of the Lawbringer, discussing some of the more interesting facets of virtual currency valuation and the Zynga hacking story. Writing about virtual worlds, currency, and everything associated with MMOs is my greatest pleasure, and I just wanted to let you all know how happy I am that you read and enjoy my work. So, thank you from your loyal author.
This week, we're going to talk about the power of licensing. No, we will not be talking about licensing in the context of whether or not you own the copy of World of Warcraft on your computer. Rather, we're going to embark on an adventure of brand recognition and financial wonderment, into the world of licensing characters, creations, names, and likenesses. This, friends, is the world of products, to illustrate the ungodly importance of content licensing.
What is a license?
At its most basic, a license is a grant of rights to use someone's intellectual property in a specific way. The word can refer to the license document or the verbiage of licensing. Licenses usually have a duration and a scope of what can be done with the rights temporarily given.
Here's an example: Garrosh is under character trademark -- you can't just run around plastering "Garrosh, son of Grom Hellscream and Savior of the Horde, loves Pipitone's Pizza Parlor" everywhere, with a picture of Garrosh enjoying a fine slice of pizza. No, you see, Garrosh's character likeness is owned under Blizzard's trademarks. Sure, orcs have been done before, and there are probably other characters out in the world named Garrosh, but this particular combination of features lends itself to a recognizable, whole character. Garrosh, as he exists under Blizzard's fiction, is under Blizzard's control because they own him.
Let's say Blizzard and Pipitone's Pizza come to an agreement that Pipitone's will get to use Thrall's likeness to promote its pizza parlor. Blizzard stipulates that Pipitone's is allowed to use the likeness of Thrall on all advertisements for six months, with a predetermined slogan for Thrall to be proclaiming. Blizzard gets a licensing fee, and Pipitone's Pizza gets a recognizable face on its ads that has the potential to bring in a lot of business. That granting of limited rights to a character, not encompassing full ownership forever, is the licensing of rights. There's more to it, really, with different types of exclusive licenses and what-not, but for our purposes, that should be enough.
Exactly. Major League Baseball, as well as every sports franchise in the United States, has ridiculously complex licensing rules and regulations that it sets for itself. The money coming in from licensed products and gear is astronomical. In fact, think about how much licensed gear people buy with sports team logos on them, and then think about the brand power. No one else is allowed to print those trademarked logos on anything, lest they fear the mighty infringement hammer come down upon them. There is a lot of money in licensing.
Ask Rovio, the makers of Angry Birds. Those birds' sounds and likenesses are already multimillion-dollar characters. Imagine how much those little chirpers will rake in over the next few years when you see them in advertisements, TV shows, soda bottles, and everything else under the sun. If Rovio is smart about it, you won't be able to walk down the street without seeing a licensed Angry Birds T-shirt.
Blizzard's licensing over the years
One of Blizzard's qualities as a company that I truly respect is that it is free and open about a lot of information, ready and willing to serve up partner FAQs and easy licensing information. (Release dates are another story.) Here's Blizzard's list of licensed partners that make gear, hardware, board games, clothing and apparel, and other products that fall under the Blizzard family. You know these names because they make pretty damn good products.
That's one of the best parts of licensing out a hot property -- you get to choose who makes what. When you see a company like 3point, which makes the Warcraft steins series under the Taverncraft name, putting out a popular and well-made product, you can say, "How would you like, in our common interest, to make some Warcraft steins for us that are bound to be popular?" Successful companies want to work with other successful companies.
Attaching a brand name like Blizzard, StarCraft, Warcraft, or Diablo to a product is like encasing it in gold and stapling on as many diamonds as you can find. Suffice to say, there is a lot of value added. That's why licensing is so important. Moreso, that's why licensing to respectable, quality vendors is important -- a shoddy product with your company's or your characters' names on them brings value down.
That's actually where a lot of legal issues revolving around licenses come in. What type of work is appropriate for the licensed property? What are the bounds and scope of the rights given? If Blizzard gives Cryptozoic, the company responsible for the new wave of the Warcraft TCG, the rights to "character and name representations on paper products," does that also include posters? Does that include World of Warcraft birthday party plates and hats? It's all made of paper, right? Scope is key.
Licensing limitations, name recognition, and scope of property rights are all aspects of licensing that go into the decisions that Blizzard, Blizzard's lawyers, and its strategic product teams make. Isn't it fascinating? It is to me!
If you want to read about one of the most famous cases of brand recognition -- this time, a woman's name attached to a product -- read about Lucy, Lady Duff-Gordon. Her Wikipedia page can be found here. I think the story of Lady Duff-Gordon was one of my favorites from law school, not only because she was a survivor of the Titanic but because her infamous case Wood v. Lucy, Lady Duff-Gordon gave immense weight to "celebrity" endorsements and name rights. Give it a read -- you'll learn something!
The sky is really the limit, isn't it? There's a hard line to talk about sometimes, especially when you're dealing with multimillion-dollar companies on the one side and an emotional connection to a fantasy world on the other. We want to believe that it's about us and not about the money and the deals and the profit sharing and the contracts. The best way, and I believe the most successful way, that Blizzard reminds us that even though it makes some good money off licensing its property is that it is picking quality people to license it to.
One of my favorite Blizzard campaigns, and one that I haven't seen in a while, was the Mountain Dew advertising campaign. WoW players could pick up different Horde- and Alliance-themed flavors of the soft drink and download fuel once a day for the non-combat pet, the Battle-Bot. Nowadays, you can't get the fuel or the bot anymore. So many little toys lie in disrepair and sadness, their little servos slowly spinning down into irrelevance. There is a wealth of opportunity for more promotional and licensing tie-ins with tabards, pets, mounts, and other purely cosmetic items that don't have to be gaudy ad-grabs. Blizzard has shown that it can already come up with a fun way of tying it all together.
Let's drive home how important licensing is with a wonderful example from just yesterday. Geekologie reported on a StarCraft and World of Warcraft amusement park opening up in China called Joyland World. We've seen these pictures before, but the gravity of the thing is truly coming into the light. The licensing rights and contracts required for a project of this scale would be enormous. The character likeness grants, terms of use, immense scope of music and art licenses ... this is a big deal. The names Warcraft and StarCraft are worth so much in themselves -- well, if any of it was legally obtained. Blizzard's name isn't anywhere near this stuff, nor is its permission. Let's just rename the whole place to Infringement Land and be done with it.
So, the sky is the limit. Will we be seeing more licensed products and promotions? You betcha. Sometimes I wish that we could see all of the StarCraft Korean merchandise over here in the States. The most successful licensed products can tell us a lot about a culture or a place -- StarCraft is on everything in South Korea, and for good reason.
Licensing is important for business and important for consumers. You want to invest your license in smart partners that put out a good product and do so respectfully, not only respecting your own properties but your loyal user base as well. I think Blizzard has done a pretty good job thus far.
This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.Filed under: Analysis / Opinion, The Lawbringer
Reader Comments (Page 1 of 1)
uber_1337_brandon Feb 11th 2011 2:05PM
Interesting...
Haro Feb 11th 2011 2:42PM
But licensing scope is just in for-profit use of the intellectual property? i mean, what's the legal standing of fan-made "merchandise" so to speak? Like fanart, fanzines, etc, that aren't sold or distributed for profit?
Idran Feb 11th 2011 3:06PM
The preponderance of legal articles and case-law is that non-profit transformative fanworks fall under the category of fair use, which would include most all fanfiction and fanart.
http://community.livejournal.com/fandom_lawyers/440.html
The Organization for Transformative Works has more information here:
http://transformativeworks.org/faq/legal
Amanda A. Feb 11th 2011 4:18PM
Basically, because such things are not made for profit, and generally do not take away from the original product. If I write a short story about how Prince Varian and Bolvar might have become friends, no one is going to mistake it for Blizzard canon, nor would it discourage anyone from buying an official tie-in comic or novel on the same subject.
Drakkenfyre Feb 11th 2011 3:08PM
I think the part about Cryptozoic might be a little different. Cryptozoic was formed in-house by Blizzard. They are legally a separate company, but they are still a part of Blizzard.
tbutton Feb 11th 2011 3:13PM
The thing I'm curious about here is the other side of the coin: Warcraft, in it's constant need for content and penchant for lame pseudo-ironic pop culture references, seems to go right up to the line of infringement. Why hasn't, say, LucasArts come down on them? Or have they? Does Blizzard have lawyers vetting every quest? Or is there a bright line somewhere that's easy to steer clear of? Because, from a purely non-legal point of view, Uldum is egregious. It isn't parody, it's lack of originality.
Drakkenfyre Feb 11th 2011 3:25PM
Parody.
There are entire games based off of other games, and parodying them. "Pyst" was a parody of Myst, and had you walking around environments from Myst which had been vandalized. It was ok in the court's eye.
"Deer Hunter Revenge" had a deer getting revenge for being hunted, a parody of "Deer Hunter".
Unless they distinctly toss in names, like Lightsaber, or Indiana Jones, they aren't crossing the copyright infringement line.
They have a "Very Light Sabre", and "Harrison Jones", and those qualify as parodies.
Of course, there are times when a company does consult with other companies to make sure it was ok.
In TF2, Valve accepts models from players. If the model is good enuf, and it fits a theme they want, they might implement it, and give it stats according to their design, and put it in a future update.
Someone submitted a melee weapon for the Medic called the "Vita-Saw". The design clearly referenced and took inspiration from the ADAM harvester from BioShock.
Valve sought and recieved permission from 2K Games to put the model in the game, and it was released.
Vita-Saw.
http://wiki.teamfortress.com/wiki/File:RED_%C3%9Cberneedle.png
ADAM havester.
http://wiki.teamfortress.com/wiki/File:Bioshock_Needle.png
Artificial Feb 11th 2011 5:56PM
Yes. Don't let your obvious distaste for the practice confuse the facts. Blizzard doesn't come anywhere close to "right up to the line of infringement". LucasArts doesn't come down on them because they wouldn't have a leg to stand on, legally, as nothing in Uldum comes even close to the infringement line. LucasArts would probably go after them if they came even close, even if they didn't technically cross the line -- this is the same company that tried to tradmark "Nazi" after all. lol. If LucasArts hasn't sued, it ain't anywhere close to legally questionable.
Idran Feb 11th 2011 10:36PM
"Don't let your obvious distaste for the practice confuse the facts."
That goes both ways, Artificial. LucasArts never tried to trademark the word Nazi. They released an RPG in 1984 that contained a reference to "NAZI(TM)", but that wasn't referring to the word Nazi on its own. It was referring to the word Nazi in addition to the associated artwork, for which the combination of the two was under trademark. They have never made any attempt to trademark the word "Nazi" on its own.
Drakkenfyre Feb 11th 2011 3:15PM
"WoW players could pick up different Horde- and Alliance-themed flavors of the soft drink and use codes from the bottles and cases to purchase fuel for the non-combat pet, the Battle-Bot."
Completely and utterly wrong.
The Battle Bot required no code. You just registered on the Mountain Dew site, clicked "Unlock my Battle Bot", and you were given it.
The fuel required no code. You just went to the site, and clicked "Redeem my Battle Fuel", and which one you wanted, and it was mailed to you. You had to do this once a day if you wanted to keep the Battle Bot going.
The Battle Bot itself required a rename when they found out that a preexisting trademark on Battle Bot, uh, existed. I knew the moment they named it it was skirting on legal problems. They renamed it the Warbot.
The promotion ending also ended any usefulness of the bot outside of just following you around, because the fuel is completely gone, and it had a limited duration. Seeing this seems to be a marketed failure after the promotion ended, because they could have kept it going by using fuel sold by the Dalaran toyshop, maybe renaming the fuel so it wouldn't have the same name as it did under the promotion.
Lee Weaver Feb 11th 2011 5:00PM
Wrong. I still have several stacks of fuel for mine. it was not limited duration item.
Drakkenfyre Feb 11th 2011 5:13PM
You are right, I was thinking of the speculation that when the promotion ended, the fuel would disappear.
They really should have put some more fuel in the toystore. Now all those Battle Bots have been turned into regular non-combat pets if the owner is out of fuel.
mmofan2008 Feb 11th 2011 5:48PM
Then how does Square Enix have the power to shutdown fan projects like Chrono Resurrection? IIRC, it was fan made, non-profit, and didn't use any art assets from the original game, just likeness (like a story about Varian would use his name and history).
mmofan2008 Feb 11th 2011 5:49PM
Doh, above was supposed to be in response to Idran.
Idran Feb 11th 2011 7:51PM
If I remember right, they didn't actually do anything to shut them down. They sent the fangroup a C&D notice, and then the fangroup took it down both to avoid the legal battle and out of respect for Square-Enix. C&Ds don't have any actual legal power, they're basically a warning saying "if you don't stop then we'll come after you with our lawyers". So it never went to trial, and if it had then the ruling likely would have ended up in their favor based on past precedent.
Harvoc Feb 11th 2011 7:19PM
Your example of the Mountain Dew advertising campaign reminded me of the fact that me purchasing the bottle and signing up for a free trial was what got me into WoW. I guess the ads worked for both companies.
LeepinLeemur Feb 13th 2011 5:44PM
An interesting case earlier this week, where Fantasy Flight Games ended their license on Warcraft boardgames (they still have Starcraft).
After nearly ten years of publishing best-selling board games based in Blizzard Entertainment's popular fantasy realm, we at Fantasy Flight Games must announce that our licensing agreement for all Warcraft products has expired. We are immensely proud of Warcraft: The Board Game, World of Warcraft: The Board Game, and World of Warcraft: The Adventure Game. Each of these product lines presented its own unique perspective on Blizzard's beloved setting, and offered countless hours of enjoyment to our loyal fans.
We'd like to thank Blizzard Entertainment for conceiving the rich lore of Warcraft; the vibrant world of Azeroth provided acres of fertile creative ground to our eager designers. We'd also like to thank them for such a long and fruitful partnership. It was our honor to have been even a small part of Warcraft's impact on our culture, and along with millions of other fans, we at FFG look forward to Blizzard's future endeavors.
Finally, our deepest thanks go to the players, whose dedication to these three board games helped make them some of our most popular titles ever. We're confident that their engaging stories of adventure and warfare will continue to entertain fans for years to come. Thanks again for your continued support!
However as part of this, all games, content and forums are completely expunged from their site. It is like the games never existed!
PapAlliance Feb 17th 2011 8:18AM
Very interesting article. I thoroughly enjoyed it Thanks to BliZzard also Keep writing Mat!!!
Raginghobo Feb 13th 2011 8:52PM
You will serve the Pizza... or be crushed beneath it
PeeWee Feb 18th 2011 2:49AM
Interesting, the RSS-feed mentions an article "The Lawbringer: A world without remedy", about a leaked Crysis 2 development build with full single-player content as well as multiplayer. Clicking that link dumps me into a completely uninteresting article about the next WOW Insider Live Show (Yaaaawn!).
Was this article removed?
"One of the very basic tenets of our society and our social structure is that when we are wronged there is remedy. If your car is totaled by a careless driver, you have recourse through insurance companies or the driver's own wallet. There's someone you can sue, usually, and get enough money to make you whole again. The thing you lost, your car, has a certain value. The money puts you back in the position you were before you were wronged.
Late last week, we learned about a startling occurrence in the games industry -- Crysis 2 was leaked. And not just any leak: Rock Paper Shotgun reported that not only was a developer build of Crysis 2 leaked with the full single player content available, but also the multi-player experience as well as a keystone master online authentication key, making CD key facilitation magnitudes easier for pirates. Leaks happen, but Crysis was mere weeks from release. The most interesting, and potentially saddest, aspect of this story is that when games leak out from the watchful gaze of their developers, there is little to no recourse for these companies on the scale that is required to be made whole.
This week, I'm going to talk about a world without recourse, where one of the game industry's biggest and scariest problems lies, the world of online activation, and how Blizzard's tight-lipped security still doesn't prevent leaks even as one of the biggest gaming concerns running now.
Continue reading The Lawbringer: A world without remedy..."