Saturday, May 14, 2011

Massively Multiplayer Online Role-Playing Game Industry (MMORPGI): End User Legal Issues

This article acknowledges the proliferation of MMORPGs as an indubitable flourishing industry with fast growing Millions of consumers and has yielded Billions of annual revenues. It is befitting that this phenomenon be termed as Massively Multiplayer Online Role Playing Game Industry or MMORPGI. This effort was motivated by the popular demand for legislative reforms to regulate the operations of the developer/publisher of MMORPGs that shall address the prevailing unfair relationship between the service provider and the consumers, to avert abuses against consumers property rights, to respect consumers needs, and to protect consumers vested rights provided under related microtransaction laws and regulations.



     This is an attempt to explore end-user legal issues in Philippine Online Gaming Industry, particularly that of MMORPGs. It is intended to provide information to  CabalPH Crossover Players  and the  CabalPH Gaming Community. I will be treating MMORPGs as an industry that includes among other components, but not limited to: the game developers/publishers; the online game microtransactions; and, the end-users. Let me call it MMORPGI, in short.

     I hope that this effort will be of help to end-users of MMORPGs in understanding the developments of legal issues in MMORPGI.  I'll be updating this title by parts, each dealing with specific legal issues. Each part will be a work in-progress, which means there will be edition and modifications as I see fit.


Part I - End User License Agreement (EULA) and Official Game Policy

Disclaimer and No Compensation Rule

     There is no specific law in the Philippines that regulates MMORPGI. The closely associated statutory law is Republic Act 8792 known as the "Electronic Commerce Act of 2000" which took effect on June 14, 2000, and which was enacted and passed at a time when MMORPG is not yet born in the Philippine Industry. Existing Philippine related laws on gaming generally regulates gambling and not MMORPGs.

     It's a given fact that end-user has no influence in the form, content and terms of the MMORPG EULA. The content and terms thereof is all a monopoly of the game developer/publisher for there is no prevailing law in the country that otherwise regulates it. And there is no existing legal prohibition that precludes the game developer/publisher motu proprio from modifying/revising the terms of the EULA after it is has been entered into with the end-users.  However, under R.A 8792, EULA is no doubt an "electronic document". If the end-user agreed to the terms of the EULA, it then becomes an "electronic contract". In effect, it has legal recognition.

     In case a game account is compromised, "No Compensation Rule/Disclaimer" is a term and a rider-component of contract that now enjoys, at least in writing, the absence of a law that may regulates MMORPGI and may define what a "just EULA" should be. Moreover, there is no existing jurisprudence that had determined the distinction, bounds and legal requisites of a would be "just EULA" in MMORPG.

     However, the absence of the said regulation and jurisprudence doesn't prohibit a legal suit challenging a given "disclaimer and no compensation rule". This is a matter that is under the discretion of the Court or any governing forum that may assert legal jurisdiction. Determination of the issue will depend on the attending circumstances, the appreciation of the substantive and equity problem, and the reasonable claims of the plaintiff. Besides, there is no law in the country, that may pertains to MMORPGs, which may, in any manner, institutionalize or uphold the one-sided terms of a "disclaimer and no compensation rule".

     "Disclaimer and no compensation rule", in MMORPGI, in the absence of a regulation, has yet to be appreciated in the light of our jurisprudence whether or not it has legal effect against end-user and whether or not it will absolutely protect game developer/publisher from any liability arising from game account being compromised.


Part II - Compromised Game Account: Liabilities of Game Developer/Publisher

R.A. 8792: Legal Implication to MMORPGI

     The enactment of R.A. 8792 into law brought our country and people into the arena of domestic and international electronic transactions which is said to be a wealth-creating phenomenon. Philippines is the third country in South-East Asia to have enacted Electronic Commerce Law.

     Despite of our advance in E-Commerce regulation, R.A. 8792 has no profound implication to, and neither does it regulates the popular, ever-growing and lucrative MMORPGI beyond its provisions that defines "electronic document"and "electronic contracts".

     End-users of MMORPGI may however present a controversial issue into the purview of R.A. 8792, on "obligation of confidentiality" and "electronic signature", if:
  1. circumstances of microtransactions involving "real money", "electronic money transaction" and "real economy" are alleged to assert end-user acquired property right and damage against acquired extension of oneself which then may give rise to liability arising from data security and civil liability; and,
  2. access to the developer/publisher game server and webpage, using the solicited information of the EULA/Game Policy, presents a circumstance that may have compromised end-user confidential information as defined and protected under R.A. 8792.
     To hold game developer/publisher in violation of R.A.8792 has to consider the following in the formulation of an actionable legal theory vis-a-vis the intent of the law:
  1. the MMORPGI is not specifically stated in the objective, policy, and sphere of application of R.A. 8792;
  2. the R.A. 8792 was enacted and passed into law before the advent of MMORPGI, and its practice of microtransaction, in the Philippines; and,
  3. governing rules, guidelines and other related instructions for the implementation of R.A. 8792 do not specifically address the practice of microtransaction in the Philippine MMORPGI.

Part III - Intellectual and Property Rights: End-user game client and MMORPGs Microtransactions

End User Game Client

     Use of MMORPG game client is a license granted by virtue of an agreed EULA. it is not given free or sold to end-users. Thus, game developers/publishers retains ownership over the published game client.

     End-user modification, or reverse engineering, or use of third party program on or made to run simultaneously with the game client that eventually creates imbalance, detrimental to the virtual economy, and that allows undue advantage over other end-users is prohibited and dealt with corresponding sanctions, provided under a given Official Game Policy.

MMORPGI Microtransaction

     Microtransaction is a newly added feature of MMORPGs. In online games, it generally refers to selling of virtual goods and services for real money. The most popular objects of this type of microtransaction, are:
  1. player-character premium subscriptions - that which augment the performance, level progression, made playing easy, of a player-character, often called premium services (i.e., exp boost, crafting bonus success percentage, teleportation service to maps, ect.).
  2. virtual item purchase - refers to avatar, sword, auto-pots, etc.
  3. enhancement item purchase - that which enhances the quality of virtual item or enhances the success rate of a consumable virtual item (i.e., safeguard kit, upgrade core, core enhancer, etc.)
     This microtransaction is hosted and the virtual goods and services are offered/advertized by the game developer/publisher. Real money is involved in the purchases of these virtual goods and services. This is a fast growing revenue-making industry for the game developers/publishers. This is where real world economy is blended with virtual world, it then creates a new property right which is recognized as "Virtual Property Right".

     As game developers/publishers offer/advertize/spam messages/open events of goods that end-user could own and use in-game, purchases thereof using real money creates a sense of ownership, thus may establish positive rights such as:
  1. property right/virtual property right over acquired virtual goods;
  2. property right /virtual property right over the created player-character that have been consuming virtual services in its progression and quality development; and,
  3. and implied right to demand extra-ordinary care and security in protecting the confidential details and status of a given virtual player-character that has been nurtured by purchased virtual goods and services with the use of real money.
     These circumstances make MMORPG EULA/Game Policy difficult to totally or partially shield game developers/publishers from liabilities in protecting this conventionally acquired end-user "Virtual Property Right". The assertion of that third acquired positive right, which requires "data security" and "due restitution" will then qualify to fall under the purview of R.A. 8792, as well as the protection afforded by related commercial and civil laws.

 Right to be Protected Against Hacking and Data Leakage

     MMORPG EULA/game policy affirms the right of the game developer/publisher against hacking. It requires the end-user to agree not to "hack or crack" the game client or employ third party program to that effect. It also provides range of penalties for violations thereof. This in effect implies that game developer/publisher do not hack, expose, or compromise end-user game accounts.

     The advent of MMORPG microtransaction, which is an electronic commerce, in effect necessitates the recognition of the right to protection of game developers/publishers and end-users of MMORPGs against hacking.  The protection is mandated by R.A. 8792 as it defines the act of "hacking or cracking" and provides penalties thereof.

     The practice of MMORPG microtransaction likewise necessitates the obligation of the game developer/publisher to secure any corresponding and resulting electronic data. Game developer/publisher in effect falls under the category of a "service provider" as defined under R.A. 8792 which is mandated to perform the "obligation of confidentiality". This in effect implies that end-user do not expose or compromise their confidential data.

     Although the terms of the EULA/Game Policy, specially when it has a "no compensation rule/disclaimer", does not define the obligations and liabilities of  game developer/publisher in the security of data pertaining to the status of end-user's player-character, it is now mandated by law. The presence of MMORPG microtransaction is a significant circumstance that bring MMORPG end-users into the protection of R.A. 8792.

     Despite the absence of specific penalty for noncompliance of the "obligation of confidentiality" or "data security" mandated by R.A. 8792 to "service providers", that omission of law however doesn't preclude the right of the end-user to assert "due restitution" and reasonable consequential damages arising from nonperformance or failure to perform that expected legal obligation with due diligence.

     R.A. 8792 in effect has given legal emphasis on the capability and resources of "service provider" to be able to comply with that legal obligation as a required qualification and competence  for a "service provider" to be accredited or be granted franchise to operate, and lack of which as a cause to seize operation. It also implies the compliance and implementation of the most efficient and effective measures, protocols, and regulations available, pertaining to security of data and networking.

The Game System and The Player-Character

     MMORPG concept design, storyline content, virtual content design, system design, and gameplay interface, microtransaction webpage, and all structures comprising the game system are owned, registered or otherwise licensed by the game developer/publicher. This ownership is expected to be confirmed by the end user once "I Agree/Accept" button of the EULA is pressed.

     Virtual available characters that can be created or manipulated and virtual available items that can be looted, or used, or be crafted in-game are components of the game virtual content. The are data owned by the game developer/publisher.

     "Player-Character" is a character created by a player or a gamer resulting from the preferences and options made available in-game through the game interface. It is an expected outcome when a person accepted the invitation of the game developer/publisher to register a game account to the game system and to accept the offer to play the game or enjoy the license to use the game client. It is often treated by end-users with value, allowed it to earn his/her emotional attachment, allowed it to take part of his/her time and efforts, which by all means qualify as an extension of oneself.

     Although choices were made available by the game developer/publisher in the character creation template, character creation is eventually made possible by the decision making and final confirmation of the end-user. Player-character is usually referred to by game developer/publisher as owned by who ever has the game account that has created it. In case there is a need for technical help, game help-desk requires game account owner to show personal identification documents as proof of ownership. The proof of ownership always refers to the personal details solicited in the registration of game account.

     Consequently, controversy as to the question of right of ownership, between the game developer/publisher and end-user, may arise over:
  1. Player-Character;
  2. Looted items, gathered in-game currency, crafted items, level progression, earned capabilities/attributes, and acquired items through in-game trading and selling;
  3. purchased virtual items and services, using real money, over the microtransaction system hosted, maintained, and advertized by the game developer/publisher; and,
  4. acquired virtual items, attributes, virtual proceeds or items acquired due to trading and selling of purchased items from the game cash item shop.
     As a given fact, the contents and terms of the MMORPG EULA/game policy is formulated to assert absolute ownership  over the game data and carefully constructed to settle future questions of ownership just after a game account is registered. This intention often incorporates rider-terms like "disclaimer and no compensation rule" and "right to terminate the game or the license clause". Game developer/publisher has conditioned its legal relations with its community of end-users in the legal maxim - "Consensus facit legem (consent makes law).

     However, MMORPG EULA/game policy has difficulty of legal enforceability due to its common intrinsic inadequacy in substance and equity, and doesn't satisfy the antecedents of that legal maxim on contract and obligation, such as:
  1. the absence of force or deceit (end-user having the opportunity to question or modify the terms of contract before agreeing to it, the presence of meaningful choices, or  the absence of unconscionability);
  2. the act of express stipulation (the deliberate participation of both parties in the consideration of the terms of agreement or the act negotiation); and,
  3. the lack of knowledge of the other party that the terms are permitting what is otherwise not allowed (like terms of contract that violates vested rights and protections afford by law; and terms like permitting the other party to modify or revise the agreement at any time; or the fact that it is excessively unfair contract of adhesion).
     Having granted the license to play MMORPGs, whether it is "free to play" or "pay to play", doesn't per se transfer or confer any part or shared ownership to the end-user, from that of the game developer-publisher. Value, emotions, time spent attached to player-character do not earn or acquire any form of ownership for the end-user. This is a matter that is yet to be particularly considered by our state legislative body, in light of our the growing electronic commerce and the progress of information technology, in promoting human and property rights, to keep up with the legal issues put forward by the prevailing social and economic developments.

     What changes the right of ownership of game developers/publishers, even before a governing law on online gaming industry is enacted, is their entry to the main stream of electronic commerce, as they emerge as big players in electronic economy, employing the most modern information technology, and taking active participation in the systems and structures institutionalized by E-Commerce and IT laws and regulations.

     Inviting and motivating end-user to invest and utilize real money to purchase virtual goods and services, which is now a transaction covered and regulated by law, will eventually give rise to ownership and right to protection of end-users that may prove difficult for game developer/publisher to ignore.

     Thus, while game developer/publisher may have manifested an upper-hand over end-users in exploiting the inadequacy of existing standards of contract laws to cover obligations created in relation to the activities in virtual worlds, they can't have similar superior advantage, with the standards provided by E-Commerce and IT laws and regulations, in their microtransactions over end-user.

Part IV - Statutory Laws and Regulations on MMORPGI

Recognizing Legislative Needs for Online Gaming Industry

 
As stated previously, our country has no specific statutory law or regulation on MMORPGI. For close to a decade now, this industry generated huge revenue and have lured a surprising high percentage of the population ranging from age 12 to 40. The phenomenon brought about by this industry seems to have not made a mark of concern in the agenda of the Philippine Government, both in the legislature and the agencies of the executive branch like that of the Department of Trade and Industry (DTI).

Granting that the Philippine talents don't constitute among the big leaders in the development and creation of online games in Asia, yet online games are published in the country. We have more than 2 Million consumers under this industry that generates Billions of revenue. And still this phenomenon remains negligible and continued to pose real challenge to our legislature in their thrust to be pro-active. While Korea Online Gaming Industry on MMORPGs can generate revenue worldwide in a year that could viably fund two or three Annual General Appropriation Act of our country, our government can't seem to find a way into the arena of online game politics and the crossover between the real economy and the virtual economy.

Nevertheless, the subject at hand needs to look again into our ICT related laws and regulations that may pertain to Online Gaming Industry.

R.A. 8792 and It's Implementing Rules and Guidelines

Again, this Act needs to be made profound by our implementing agencies and be interpreted by our judiciary if its provisions on "electronic data message", "information and communications system", electronic signature", "electronic document", "service provider", "electronic transaction", "obligation of confidentiality", and "protection of users" indeed cover and are applicable in MMORPGI and its end-users.

Thought, by the looks of its penal provisions, it covers hacking and cracking related to online games, its enforcement has yet to be found in our jurisprudence or at least in the records of our prosecution agencies.

The Act doesn't even provide standards for electronic contracts, like the EULA, beyond the legal recognition of "electronic document" and "electronic contract". And by omission, it doesn't define "database" and doesn't lay out "database directive" which are significantly related to virtual world and virtual property right.

R. A. 7394 and It's Implementing Rules and Guidelines

In this Consumer Act of the Philippines, online game is not categorically defined to be among the "consumer products and services". As to the definition of "commerce", "consumer", and "consumer transaction", the only related term therein is "lease" if that may work in a sense as "license" granted to end-users by the game developer/publisher. Although "services" is treated therein to cover tangible and intangible, yet the definition of "consumer services" may not includes managing the game to be online and patching it to fix error. Besides, the law was enacted in 1992 when MMORPG is just a dream beyond local networking in the country.

One of it's objective is protection against hazards to health and safety. There is no indication that it's policies are then adopted in online gaming industry. If so, you will find a warning on screen like: "You have been playing for hours. You need to have a break and rest". Moreover, since online game developer-publisher is relatively a new concept in the Philippine industry, the Act is inadequate to categorize that concept with that of "manufacturer", "distributor" or "supplier".

Even though the DTI was mandated to enforce the Act with respect to other consumer products and services, not otherwise specified under R.A. 7394, it has not issued instructions or implementing guidelines pertaining to online gaming industry.

E.O. 269 and The Commission on Information and Communications Technology


Executive Order 269, issued in 2004, may have precipitated the existence of Online Gaming Industry in the country. It is interesting to note that CICT, created by E.O. 269, is mandated: to establish a strong and effective regulatory system that will ensure consumer protection and welfare and foster a healthy competitive environment; and, preserve the rights of individuals to privacy and confidentiality of their personal information.

But CICT has yet to fully recognize the emerging revenue-making phenomenon of online gaming industry and its wide community of consumers, along with electronic commerce. End-users of MMORPGI still have to wait for CICT to empower itself to issue a regulation specifically addressing Online Gaming Industry.


Republic Act No. 10175: Cybercrime Prevention Act of 2012

Republic Act No. 10175, signed into law last September 12, 2012, entitled " An act defining cybercrime, providing for the prevention, investigation, suppression and the imposition of penalties therefor and for other purposes", likewise may have defined additional legal tools for the service providers of MMORPGs against account/character hackers, game server hackers, game cheat developers, even against end-users who are using game cheat programs but none for the protection and security of end-users against the culpability, negligence, fraud, inadequate cybersecurity, account/character hacking, avatar thief, personal information leaks, and unfair profit schemes of service providers. These new legal tools are mere set of prerogatives for the service provider to take or not and none for the end-users.

Even the full text of this R.A. when it was proposed in 2010 including it's submitted explanatory notes doesn't talk, anywhere therein, about MMORPGs except of course "online gambling" which is very far from the persistent worlds of MMORPGs. MMORPGs maybe considered as a "social network" due to the chat interface but the fact is they are far different. Thus, end-user may happen to request an investigation forcing a legal issue within the purview of this particular law yet it is certainly doubtful if it will even be given a fair chance by the expected corresponding implementing law that will be issued. The worst that may happen is the abuse of the competent authority, which this R.A. unfortunately warrants, against a service provider under Section 12 and Section 19.

Still, millions of consumers of MMORPGs are wanting appropriate legislation that shall address their concerns and protection.
This R.A. doesn't and isn't designed to define or even shade a slightest light over issues of "ownership" of game account, avatar and virtual items created/gained/purchased by end-users in a persistent world vis-a-vis the rights of the developers and publishers of MMORPG's. Thus, it is another legislation that doesn't define the end-user of MMORPG as a "proper party" to an investigation or a lawsuit.
 

However, it is hopeful that Section 13 which states for a "six-month data preservation", provided that Section 24 be implemented conscientiously to consider the welfare of the MMORPG consumers, may awaken the given competent authority for the possibility of recognizing the need for a viable system of "account/character restoration", and other necessary standards for MMORPG service providers to comply.

Furthermore, it is hopeful that if the full potential of Section 24 is harnessed, by the given enter-agency, it will sure pave the way for the enactment of a particular legislation for the protection MMORPG consumers.


Other Related Laws and Regulations

1) R.A. 8293, known as "The Intellectual Property Code of the Philippines" only defines "computer", "computer programs", and "reproduction of computer programs". Enacted in 1998, it is lacking in particular about the virtual world: the activities of end-user in a virtual world, what they could create and acquire virtually; and, about end-user property right over virtual items, purchased through electronic transaction, using real money. It does somehow covers "privacy and data security".

2) Civil laws related to contracts and transactions like Obligation and Contract and those pertaining to Torts and Damages.

3) Other laws that are indirectly related to MMORPGI but made possible the legal existence of Online Gaming Industry in the country, such as: Republic Act 8756 and its Implementing Rules and Regulations which amended the Omnibus Investment Code of 1987, laying down the procedures for any multinational company to establish regional or area headquarters in the Philippines; the Revised Securities Exchange Act of 2000 strengthens the supervisory and monitoring powers of the Securities and Exchange Commission over the Philippines stock market; Foreign Investments Act of 1991 seeking to promote foreign investments in the country, laying down the procedures for registering enterprises that do business or other activities in the Philippines; and, other policies and issuance related to General Business.


CONTENTS in progress:

Part I - End User License Agreement (EULA) and Official Game Policy

  • Disclaimer and No Compensation Rule

Part II - Compromised Game Account: Liabilities of Game Developer/Publisher

  • R.A. 8792: Legal Implication to MMORPGI

Part III - Intellectual and Property Rights: End-user Game Client and MMORPGs Microtransaction

  • End-User Game Client
  • MMORPGI Microtransaction
  • Right to be Protected Against Hacking and Data Leakage
  • The Game System and The Player-Character

Part IV - Statutory Laws and Regulations on MMORPGI

  • Recognizing Legislative Needs for Online Gaming Industry
  • R.A. 8792 and Its Implementing Rules and Guidelines
  • R.A. 7394 and Its Implementing Rules and Guidelines
  • E.O. 269 and The Commission on Information and Communications Technology
  • R.A. 10175
  • Other Related Laws and Regulations

UP COMING parts:

  • Part V - Ontological Arguments: End User Virtual Property Right and Suit in Law
  • Part VI - Affirmative Defenses: Game Developer-Publisher
  • Part VII - Assessment: Bargaining Power of the End User Community and the Game Developer-Publisher
  • Part VIII - A Review: End User Legal Issues and Concerns

Notes:

Updated September 20,2012; R.A. 10175 included. 

This unfinished work was originally posted by Snowflakes7X, from May 11-16, 2011, covering the first four parts at link: http://forums.cabal.com.ph/index.php?s=&showtopic=4287&view=findpost&p=64263

No comments:

Post a Comment