In this article, Ranojoy Middya discusses Legal framework regulating eSports in India.

Introduction

With the very advent of Esports in global as well as Indian platform, the sports industry worldwide has witnessed a spectacular evolution. Considering its nonpareil significance which simply leaves us captivated with its gradual augmentation around the world at large, this very e-gaming sector has now become a phenomenon which in recent times carries a cultural connotation in its core. This monumental growth of Esports can be traced back to the year 2015 when the word ‘Esports’ got its first official inclusion in the Oxford Dictionary. From there onwards this e-gaming sector has trodden on its never ending streak. As result of such today is the day when Esport has been considered as a potential event at the 2024 Olympics. The major demographic criteria for this Esports gaming industry is the age group between 18-25 years, that’s might be the reason why most of the youths are found being crammed up in an single apartment for two straight days with their joysticks in hands. With the continuance of such practice, this e-gaming which was once reckoned as a childhood obsession and youthful indulgence has now gradually become the most important professional endeavours.

Esport carries very distinctive characteristics of its own. It has an unique transcendental connects towards the youth. The players are known as the real torchbearers of this virtual world where they get to promote themselves through participating in the breathtaking experience that too being literally unbound by geographical limitations. And resulting in such rapid growth the entertainment sphere opens their arms to welcome this cultural shift.

Where Indian Esports market stands in the Entertainment sphere

The so called unexplored or untrodden status of Indian Esports market now has no longer remained the same. It met its extremity with the advancement or establishment of companies such as Alibaba, Nodwin Gaming, JetSyntheses and Nazara who have already invested the bulk of their money in this particular sector considering its burgeoning expansion due to the rise of disposable incomes that too coupled with the ease of access to smartphones and internet. Going by the statistical stands, India till now has produced 120 million online gamers which is estimated to go beyond the number of 300 million by 2021. In addition to that there were also few efforts made to strengthen the very Indian Esports market. Companies like Nvidia brought about few symposiums as GamerConnect in order to bring together the sparse E-gaming community. Earlier, the Confederation of Indian Industry (CII) also came up with a Indian Gaming Show in which different stakeholders such as publishers, organizers and players were called upon a common platform to assist each other in building up a positive interaction and developing the very E-gaming ecosystem in the country. The rise of Esports cafes and championships in the country has made it indispensable to understand the various law and policy issues around India and the world’s the next sporting revolution.

Important aspects of Esports in India & globally

• Governance Overview

Before overviewing the governance of the Esports gaming sector nationally or internationally we must refer to the very famous saying of Cyrus Pallonji Mistry–

“When you look at good governance you also need to look at how to approach the subject”.

As it is widely perceived that the governance of Esports is usually a twisted or tangled one which is mostly seen to be intertwined in the ambiguous confluence between the virtual and real gaming industries, there have been several attempts made to regulate this befogged administration. But everytime it embraces the hurdles. However, these days the very trend of Esports has been at its prime due to the guaranteed revenue generation which eventually led to the increase of various Esports leagues. Therefore it simply deems imperative to formulate an appropriate governance model.

Talking about the development of the Global Sports Governing Bodies (GSB) which mostly works in favor of the traditional sports, was an organic regulatory that came into being with the exigency of standardization of rules. On the other end the distinctive characteristics of Esports and the competing interests of the different stakeholders such as publishers, organizers, and sponsors have been the major reasons which made the process more cumbersome for digital sports.

For building up a better understanding on the very complexity of the governance of Esports gaming industry we must place it in comparison with the very governance model of the traditional sports. Here it is as follows;

Global Governance Model

As it is pretty much evident so far that Esports has a very distinctive stand in the global market which somehow to a certain extent describes its characteristics which in recent times has led to the unionization of gaming communities stressing on few specific games such as LOL, CS:GO crew etc. The rarest outlining of this model is something which makes the involvement active throughout the world. Hence it is needless to mention that the elementary existence of corporatization in the unions provides the very stability in their economic structure. Apart from that the players are only left with the option of self funding which nowhere seems to be a viable supposition that too for these sort of a budding networks.

• Role of Global Governance Body

For any sports to be acknowledged in their progressive strides, they demand an International Federation to be the catalyst for the growth. And after the distinction laid down above in between traditional sports and Esports, the reason of having no such federation as a catalyst has already been transparent. As a result of such, the functional overlap between growth and governance of Esports has led the complexities of governance to a greater extent. As a repercussion of the same, the publishers resort to the concept of empowering third parties for the governance which resulted Global Governance Body in laying down the charter for international best practices, ensuring economies of scale in operation, bringing in transparency and accountability in the conduct of the tournaments. Just like the way competition law globally is equipped with the specificity of sports, similarly Esports must also be complemented with the specificity of the digital games especially considering the exigencies of framing the rules of governance.

• Role of International e-Sport Federation (IeSF)

It is noteworthy to mention that so far there have been few number of attempts to formulate a world governing body for sports. One of the major ones among them is International e-Sport Federation (IeSF). This federation predominantly aims at constantly improving e-Sports and promoting it in the terms of its values which, inter alia, includes humanitarian, educational, cultural, a unity of purpose and ability to promote peace. IeSF is also known as the signatory of the World Anti-Doping Code (WADC) and conducts doping tests on cyber athletes. But still the suitability of IeSF for regulation of Esports is questionable. The reasoning of such can easily be traced back to the very peculiarities of Esports as illustrated earlier. The Esports industry and its distinctive features has led IeSF to conceptualize on the framework of input legitimacy. In addition to that it also focuses on various aspects of this sector such as national membership, segregation of teams as per gender, uniformity in the application of rules. But they somehow overlooked the reality which shows the majority of the Esports are international. Therefore, focussing only on national governance that too in accordance with traditional sports has turned out to be a flawed one.

• Role of World e-Sport Association (WESA)

There is another organization naming World eSports Association (WESA) which was founded in 2016 by a group of E-Sports teams and Electronic Sports League (i.e. largest video game event in the world). WESA mostly entails in professionalizing the industry, regulating matters regarding revenues and schedules. This organization is also brought about with its own internal arbitration court that operates independently and has always been open to everyone involved in E-Sports, such as players, teams, organizers and publishers.

Keeping the very distinctive characteristics of Esports governance, the structure of this organization seems to be more suitable. The membership consists of few multi-gaming organizations, Esports teams founded on the model of revenue sharing among the constituents. But in recent times its membership mostly focuses on the European countries.

• Reconciliation

In order to reconcile the efforts of these organizations and ensure a good governance, IeSF and WESA must step forward to shake their hands together for promoting a united association. IESF is basically structured on the lines of other GSB with a national membership. Hence it can be very helpful in organising national events. Whereas, WESA on the other end, can oversee the organization of inter-club games and international competitions not founded on national orientation. That is how they can easily help each other in the creation of norms of competitive integrity. IeSF can help in maintaining a hierarchical framework of governance whereas WESA can be the international observer. This will result in better policies as WESA consists of more stakeholders and direct involvement of athletes.

As it has already been understood that Esports are these days in ultimate exigency to bring unification of global governance within their e-gaming industrial sphere. We are almost at the threshold of the era where Esports would acknowledged as synonymous with any other physical sport. Hence, it is high time for the norms to be placed rightly as an equipment for us to counter all the challenges that we may encounter in its organic development.

Esports Governance in India

Considering the governing aspects of Esports in India, Esports Federation of India (ESFI) plays a very pivotal role as ESFI is presently known as the governing body for digital gaming. It shares its membership along with IeSF and Asian Electronic Sports Federation (AESF). SInce the Director of ESFI is also the Vice-President of AESF, it somehow cropped up as the bone of contention in creating a situation of potential conflict of interest but it is too trivial to be reckoned as an aberration.

Esports Federation of India (ESFI)

ESFI has may be been bestowed with the onus of governing Esports in our country but despite being the governing body it has not been entitled to be a National Sports Federation (NSF). As it is a well known fact in recent times that in order to be a NSF, the particular body is required to be recognized by the Ministry of Youth Affairs (MYAS) on a yearly basis. And ESFI has not been mentioned in the two consecutive lists of NSFs released by MYAS in 2017 as well as 2018. In accordance with the National Sports Development Code of India 2011, (Sports Code), there are certain mainstream criteria fulfilling which a governing body can be recognized as to be a NSF which are as follows;

Failing in maintainability of all the above mentioned criteria eventually put the governing body out of the very ambit of MYAS which means that all the requirements to be an NSF have not been complied with hence the body cannot be considered as a NSF.

Similar to the BCCI who is not a national sports federation, but is still considered to be the sole governing body of cricket in our country resulting from the absence of any other competing body, ESFI has also so far gained the recognition to be considered as the nodal body for esports governance in India. The only difference or concern is IOA’s approval which stands mandatory on the purpose of being considered as NSF for Olympic and Asian games sports. Since such approval is very much responsible for sending the entries for these competitions from the country. Cricket on the other end is a kind of sport which faces no such difficulty as the tournaments are only conducted by the governance of ICC. But in case of Esports which has already been a demonstration sport for 2018 Asian games, and also included in the 2022 Asian Games, that  too coupled with its potential inclusion in Olympics in 2024, India right now is in the exigency of forming a particular governing body which would be compiled with both the Sports Code and international governance norms. This particular need of an hour has been identified by none other than Ronnie Screwvala who is also at the same time speculating talks with MYAS to create a proper ecosystem for governance.

• Reviewing Esports Players Contracts

The very essence of sports contracts can only be sensed from a point of view of the traditional athletes but with times and the emergence of Esports Digital Gaming Industries worldwide the trend of sports contract has become more integral that too focusing on brand new digital athletes. Usually whenever we encounter a sports contract it seems very standardized either in the form of an embodiment of “Take it or leave it clauses” or as an representative of unequal bargaining power. However, these contracts mostly are seen to be doing away with the need to negotiate every minor or trivial issues, the reason being the sole responsibility of the federation to ensure that the welfare of both the federation and the players is taken into consideration.

Needless to say, negotiation of athletes’ contracts carries a very cardinal connotation in the sports industry. But before delving the minds into the negotiation we must frame a suitable outline in our heads relating to certain major elements which are must for negotiating athlete contract. And apart from that since India is already on the verge of making a grand entry soon to the professionally developed global Esports industry, our digital athletes or prized possessions can no way be kept as incognizant of the various channels through which the prevalent contractual exploitations take places. Here are the important factors to be looked at while drafting or negotiating the Esports contracts as follows;

• Consideration

This will include the clauses of payment of salary, base salary, performance based bonuses, tournament purse shares (the earnings increase if they win and the media hype also accelerates the sale and revenue) etc. The specificity of these clauses should be looked into and any case of arbitrary finality reserved with the organizers of the event or the federation over payment should be double-checked.

• Non-Gaming Responsibilities

• Fan Base and Popularity

Digital athletes have their own fan base and popularity. To cash on their public demand, it is common for them to find themselves obligated to go certain events, tweet fixed no. of times over the week, give interviews etc. As players, it is important that the contracts delineates all these responsibilities specifically and there is a provision to inform the players through advance notices. (The clauses have assumed exceptional importance in the professional athletes where they are as much a player, as they are an idol, a brand endorser and a very important public figure).

• Morality clauses

Another important element is morality clauses which outline the parameters to be followed at social events or during the progress of the matches. Esports being international in true sense, such clauses also contain a code of conduct to respect the different cultural sensitivities.

• Competitive Integrity

This is an area where both traditional sports and Esports dovetail. The issues of match-fixing, doping and gambling might have found novel ways of expression in the virtual world but encapsulate the same concerns. There are a few international agencies such as Esports Integrity Coalition(ESIC) which have formulated regulatory policies. Otherwise athletes have to mandatorily agree to abide by the event specific policies. In countries such as India, which are not a part of the ESIC, with respect to issues such as bribery and gambling which are not specifically addressed by  International Esports Federation (IeSF) and Asian Electronic Esports Federation (AESF), local laws are referred in the case of disputes. It is important for the players or agents to be aware of the governing law of the contract.

• Image Rights / Personality Rights

These clauses have been the bone of contention for quite some time both in India and other jurisdictions. In the event of signing the contract the athletes should be wary of the duration and the range of things they are assigning control over to the organizers, federations, and the team owners with respect to their name, persona, logo, image or likeness.

• Intellectual Property Assignment

Digital athletes have dual consideration pertaining to personality rights. They have an added virtual identity which can be protected under the ambit of intellectual property laws. Thus the athletes should be circumspect while evaluating these clauses to ensure that they have maximum control over their brand which is distinct from team’s brand with which the player is associated for a tournament (This is important because even India is resorting to the concept of hybrid tournaments). Thus the players need to ensure their rights over the ownership of;

• Trademark rights in their gamertag and phrases or expressions associated with them
• Their past content creation pertaining to any game.
• Ownership of their gaming e.g., Origin, Xbox Live accounts etc. and social media accounts.

• Termination Clauses

They play a pivotal role in any sports player contract. The players should be explicitly aware of the grounds for their termination in a tournament. The provision of notice and appeal against termination should be available to the players to protect their rights and prevent exploitation. The contract should also detail the consequences of the breach of disciplinary processes and non-compete clauses. Additionally, the players should have an option to initiate termination as well, such as in the cases of unreasonable terms for benching them or due to injury. This ensures that the contract is not inequitable.

Analysing the downright disparity of Esports Federation of India’s (ESFI) Player contract for the Asian Games 2018

There are a few things which lawyers and non-lawyers perceive in the same manner. The expression of utter disbelief on seeing the contractual obligations of the players in the Exhibition event of Esports in Asian Games 2018, is certainly one such rare thing.  It gives the impression of being a copied document of the worst template of contracts found online. The following section will vindicate the vitriolic narration.

In the imminent Asian Games, Esports is going to be held as a demonstration sport.  The National Qualifiers for the event were held on with only a 36 hour window for registration. AESF has opened a deadline of 15 days between May 15 and May 31, 2018, for the conduct of qualifiers to send the national teams. ESFI took a poll on the Facebook page on 26th May 2018 to gauge the possibility of conducting qualifiers and eventually decided to go ahead with participants having less than two days to be ready for the same. Time constraints is something to which the ESFI certainly seemed oblivious. The contractual obligation threw down the gauntlet to all lawyers to look for tiny vestiges of legal protection for players in it.

• Clause 7 of the contract titled –Expenses stated that all participation expenses will be borne by the players. ESFI will not be liable for any accommodation or travel expenses. Moreover, they also have to provide for their own travel and medical insurance. (The welfare of the players certainly does not seem to be their prime concern.)
• Sub clause vii of General Terms and Conditions (T&C) stated that any non-adherence with the terms and conditions is a ground for disqualification from the tournament. This is overriding over the requirement of providing an opportunity of being heard in the previous clauses. (This contract can be a perfect case study for the principles harmonious interpretation)
• Sub-clause viii of the General T&C states that participants have to make themselves available at any time for any photo-shoots, video recordings or promotion. Additionally, they waive their image rights completely in favour of ESFI and ASFI. This grants the federation a royalty free, exclusive and worldwide license to exploit them on any platform
• In per Sub-clause xvi of the General T&C, in case of breach of any of the contractual rules and regulations, ESFI is not responsible to compensate the athletes.
• Sub-clause xvii is a notch higher as it immunizes ESFI from giving any feedback or answering any queries of the participants. ( Transparency and accountability are no longer the virtues of good governance)
• Per Sub-clause xx, participants agree to assign all the IP and their benefits to ESFI without any qualifications. (My Way or Highway!!)
• The supremacy of this contract is ensconced by sub-clause xxi of General T&C. It states that regardless of any foreseen or unforeseen events, you cannot withdraw from the competition and if you do so, compensation has to be paid to ESFI within 15 days.
• As we move further ahead in the contract, responsibility and governance become parallel to each other. Sub-clause xxv states that ESFI will not liable for any “foreseen or unforeseen” event, mishap or damage that might be caused to the participants or their legal guardians. But participants have to indemnify the federation for all damage that may be caused due to their actions which may or may not be within their control. (This is seriously the best example of unequal bargaining power). Similar inequitable provisions continue throughout in the contract.
• As they say, save the best for the last, this contract did not disappoint in this regard. Sub clause- Xlii states that the T&C of the contract may be changed or modified at any point of time and they may or may not be intimated separately to the participants. Also, ESFI can withdraw anytime from the tournament without any reason and with no responsibility towards the participants. (ESFI- The BOSS!)

The above pointers justify why the standard form of contracts are known as “contract of adhesion”. In India, unlike in England, there is no separate legislation to govern the standard form of contracts. Despite the recommendation of 103 Law Commission, such a method could not come to fruition.

Although the standard form of contracts is not barred in India, in order to protect the weaker party, there are some legal principles which have to be followed to ensure its enforceability.  For example, reasonable notice has to be given to the parties so that they have precise knowledge of all the terms they are bound by. In ESFI’s contract, the discretion of the federation to alter the contract at any time with no liability to give individual notices in case of contract alteration defeats this basic requirement.

Another measure is to enable the party in a lower bargaining position to enforce the terms of the contract in case of a fundamental breach. But in the ESFI’s contract, the federation is conveniently free from all liability of performance, damage or compensation in case of non-adherence. Such contracts can also become unenforceable only if they are signed under influence as per section 16 of the Indian Contract Act (ICA) or are opposed to public policy as per section 23 of the ICA. This criterion will have to be assessed on the basis of objective evaluation of the contract. Besides the standard form of contracts also have to uphold the provision of privity of contract. The liability of the players in case of third party claims also raises question over the availability of these contracts.

Although ESFI, later posted on their Facebook page that they are open to suggestions with respect to the demands of the players, to be incorporated in the contract, this is clearly an indication for the sports lawyers in the country to step up and assist the digital athletes of the country.

• Intellectual Property Protection

Esports have an interlinked association with intellectual property. The best way to understand the legal complexities of IP for esports is by analyzing the legislative framework for video games as they have occupied a prominent space since the beginning of the 20th century.

In India, the video games are not classified under any particular category of IP. Under section 2 of The Copyright Act 1957 (Copyright Act), “cinematograph works” is defined as;

“any work of visual recording on any medium produced through a process from which a moving image may be produced by any means and includes a sound recording accompanying such visual recording and ‘cinematograph’ shall be construed as including any work produced by any process analogous to cinematography including video films.”

As per the above definition, the reference to any “process analogous to cinematography” is wide enough to include video games under its ambit. As per the Copyright Act, the computer programmes can be protected as literary work. Thus the source code of the video games can also be protected under the Act.

The derivative protection to video games holds true for the legal protection of the Intellectual property of Esports in the country. For example, trademark law aids in the protection of the name of the game, its logo, its tagline as well the distinct identity of the characters. Copyright law is usually used in the protection of the source code, background music, and other artistic content which is used in the game. Patent law basically helps in the protection of the gaming devices such as joysticks, or any other technical processes which help in enabling games.  Trade secrets come into play when the publishers do not want to divulge the source code of their games. (Competition, not common sense is commonplace these days).

The common contractual requirements pertaining to Esports are as follows-

• As per Section 2 (d) (vi) of the Copyright Act, the meaning of an “author” in relation to any literary, dramatic, musical or artistic work that is computer-generated, is the person who caused the work to be created. Thus in the case of Esports, the author will be the publisher of the game who would be entitled to all the authorship rights, This should be read in consonance with section 17 of the Copyright Act which details the different scenario of the first owner of the copyright. Thus only in the absence of a contract to the contrary such as contract of employment would the authorship normally vest with the publisher.
• As per section 18 and section 19 of the Copyright Act, the owner of a work can assign the rights through a contract. Thus the publishers of the game can transfer the limited rights to the organizers of the tournament through an assignment contract. The assignment contract as per section 19(3) also has to specify the amount of compensation/ royalty if any that has to be paid or their legal heirs. The licensing and assignment provisions also come into play, when the game is inspired from any game or a comic strip etc.
• Recently there has been concern over the protection of the contribution of the players to Esports while playing the game. Recently by the amendment to the Copyright Act in 2012, there has been insertion and protection of performers’ rights. As per section 2 (q) of the Copyright Act, performance means -“in relation to performer’s right, means any visual or acoustic presentation made live by one or more performers”. Section 38 explains about the protection of the performer right which is exclusive to the protection of the rights of the authors.  This is a fairly new provision and its application for the protection of Esports players is still terra incognita. Although this provision may provide for a possibility of protection for the rights of the players.

Conclusion

As far as the governance of Esports industry is the concern, we always envision the industry to be one of the upcoming potential biggest gaming hubs of the world. With that vision in eyes, it also seems to be of utmost importance to bring about a kind of Esports governance system which would be modelled in compliance with all the existing norms of the Sports Code and IOA requirements.

Next, concerning about the Esports players’ contract reviewing section it is simply imperative for the entire legal fraternity to take a stand for the same and get the new generation of digital players acquainted with the very intricacies of contractual clauses in respect to negotiating and exploiting issues.

And last but not the least, Intellectual property issues revolving around this digital gaming sector have already ensured that although there is no direct provision for the protection of Esports IP, India certainly has a basic legislative framework in place to provide protection for its development. As the governance for Esports becomes sophisticated, there might be a possibility to bring in new legislative mechanism tailored to the specificities of Esports.

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