Games and money: risks of legal uncertainty

The gaming industry is one of the most dynamically developing industries, which brings huge profits not only to the organizers of the MMOG (Massively Multiplayer Online Game, a massively multiplayer online game), but also to their users. Transactions with virtual artifacts and game objects bring great revenue. For example, the most expensive officially confirmed purchase was made in the game Entropia Universe - the user purchased virtual real estate for $ 2,500,000.

In the world now there are almost 2.5 billion gamers . For some people, online games become the second reality, a place of socialization, users communicate, pump their characters, buy digital artifacts. The question arises, what place do virtual games occupy in the Russian legal system? In many playgrounds, you can make microtransactions: buy improved equipment, armor or new weapons for the characters, equipment. When the sums invested in game objects grow to tens of thousands of rubles, or even dollars / euro, a question comes to mind: how are the relations connected with the sale and purchase of game artifacts, transactions for the transfer of game characters and accounts, what are the risks and guarantee the protection of property rights of gamers in such transactions?
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In Russia, for the time being, there is no special regulation in relation to emerging on online gaming platforms, and the approach to such relations that has emerged in judicial practice can be called detached. However, in November 2017, the head of Roskomnadzor, Alexander Zharov, at a conference on the protection of personal data announced the development of a draft law on the regulation of video games. It is developed by the e-sports association. There is already a concept of a law that offers mandatory age marking of games, certification of a self-regulating organization of game developers who are in Russia, but the deadlines for the discussion of the draft law have not been announced. At the same time, the Security Council of Russia instructed the Ministry of Communications and the FSB to jointly develop measures to regulate Internet resources, which have a messaging function. The authorities are concerned not only with the terrorist threat, but also with the discussion and coordination of opposition rallies in gaming chats, "popular audiences like World of Tanks have a large audience, and in chats they can really discuss a political agenda."

Purchase of game objects

In most cases, the legal relationship between the player and the game operator is regulated by a public contract - a license agreement (click-wrap *), according to which the game resource administrator acts as the copyright holder of the game (program), and the player is the licensee of the game. The player, on the basis of an agreement, reproduces the client part of the game on his computer, the purchase of game objects is made on the terms of a general license agreement.

Click wrap agreement is an agreement to use the program / site / service, which is concluded with the user as a result of clicking on “I agree / accept the agreement to use the program / site / service”.

For example, in the World of Tanks game license agreement, game artifacts are referred to as “ rights to non-activated data and commands — rights to use data, commands (in particular, in-game currency, premium equipment, premium account, other data, commands) and audiovisual displays of the Game, which are activated sequentially in order for the User to obtain a certain result stipulated by the Game scenario, acquired by the User after making the royalty set by Wargaming ”. Such provisions can be interpreted as a kind of extension of the license to use the game in exchange for the “royalty”.

Blizzard Entertainment (copyright owner of StarCraft games, World of Warcraft, Diablo) sells “digital content” / service (with digital content and service identical). The user places an order for the purchase of digital content (services), the contract is concluded with the opening of access to the content (services) or from the moment the company sends an electronic confirmation. The user also has the function “Wallet Balance”, where you can put money and buy digital objects. However, the gaming service emphasizes that the funds in the “Wallet” have no cash value. The use of digital content (services) is also governed by a license agreement. Thus, the sale is carried out on the basis of a mixed contract with elements of contracts for the provision of services and sale, however, the use of additional digital content is governed by a license agreement that applies to the entire game as a whole.

Based on the foregoing, it can be assumed that game objects are parts of a composite work - software for which a user has certain rights with the purchase. Nevertheless, the legal status of virtual objects in Russia and many countries around the world is not clear.

In 2015, the Supreme Court of the Russian Federation in a tax dispute concluded that providing players with the opportunity to use additional functionality of the game for the purpose of facilitating the game process and developing the game character more quickly is an independent service for organizing the game process . The case concerned the payment of value-added tax by Mail.RuGeims (a division of Mail.ru), which provided in its online games additional functionality of games for a fee (digital goods). The company tried to take advantage of the VAT exemption on the sale of software, databases and rights to use them (paragraph 26 clause 2 of article 149 of the RF Tax Code). The Supreme Court supported the decisions of the lower courts and the Federal Tax Service, which interpreted the sale of virtual items and services as a service, which destroyed the grounds for applying the tax benefit. Curious is the fact that, starting from the 4th quarter of 2016, the FTS still exempted Mail.Ru Group from paying VAT on the sale of currency and items in online games . Due to this, the company received about 342 million rubles. In January 2017, in response to the appeal, the FTS confirmed its new position:
“Considering that with respect to non-activated data and commands under the Agreement, LLC (Licensor) transfers the rights to an individual (Licensee) to use the computer program, and an individual (Licensee) transfers to LLC (Licensor) for the said right the corresponding remuneration, exemption application from VAT on the specified transfer of rights on the basis of subparagraph 26 of paragraph 2 of Article 149 of the Code is legitimate. ”

Thus, it turns out that in 2015, the Supreme Court of the Russian Federation determined that the sale of additional gaming functionality was selling the service, and in 2017 the FTS changed its approach to game objects, calling them part of the computer program that the licensor (the operator and copyright holder of the game) licensee (player) on the terms of the license, so their sale is not subject to VAT.

Cryptocurrencies are also being introduced into the gaming industry. There are already many games based on already existing digital currencies, the creator of new games also create their own in-game token. For example, the game based on the blockchain Cryptokitties allows players to grow and sell virtual kittens. Users buy cryptocate for ethers (ETH).



In another game, UnicornGo created its own virtual currency CandyCoin, for which you can buy unicorns. But as you know, cryptocurrency regulation is still in its infancy, so most jurisdictions do not have cryptocurrency turnover rules and regulations about the blockchain, not to mention the regulation of games, the order of purchase of game crypto artifacts. Most often, owners of games based on the blockchain using cryptocurrency also enter into a license agreement with the user for using the game, the functionality of which allows you to buy game objects.

Gaming risks

The virtual economy also has its dark side. Game platforms and their user bases have become an ideal target for hackers and cybercriminals, all the more you can make real money in exchange for virtual goods by selling them on sites like eBay.

Theft of the account, game artifacts

An account in an online game can be stolen in many ways. Often this happens when the user enters the name of a favorite game and the word “cheats” or “mods” into the search box, for example, to quickly go through a mission. Downloading a file with cheats downloads a malicious file. Also, attackers can get hold of a player account by creating a phishing site. As a result, the world of online games is replete with reports of missing and possibly stolen artifacts in the game, characters, in-game tokens, bank account statements about incomprehensible purchases. Although for small players, the loss of a virtual product may seem unimportant, this is a serious matter for a player who has spent dozens of hours playing and real money to become the owner of something valuable within the game. For example, in World of tanks you can buy one tank for 40 Euros, which are summed up in a rather big number (you cannot fight with one tank).

In 2012, the Supreme Court of the Netherlands upheld the decision of the lower court, which rendered a sentence for virtual theft in the game RuneScape with the appointment of punishment in the form of community service. In 2007, adolescents were forced by the use of force of a 13-year-old victim to give them all the virtual objects and game currency.

The court of first instance analyzed whether virtual objects are property within the meaning of the Criminal Code of the Netherlands. The court found that "things do not have to be material for the right to recognize them stolen", "magic items have a game value and are obtained by players as a result of the application of effort and time." The defendant’s defense claimed that “a magic mask and a magic amulet are nothing more than a visual illusion consisting of bits and bytes”. An interesting conclusion was reached by the appeal: “The court believes that as a result of digitization of society, virtual reality has arisen, which cannot be considered in all aspects as a simple illusion in relation to which it is impossible to commit an offense.”

Despite the fact that the user agreements of most online games stipulate that virtual objects are not intellectual or any other property of the players, but are provided for use under license, the Dutch courts have recognized that such “items” have value even if they are theft the victim is entitled to protection.

Difficult to defend gamer's rights in court (but possible)

As already noted, the relationship between the game operator and the player is governed by a license agreement (Art. 1235 of the Civil Code of the Russian Federation). At the same time, when it comes to court, one may encounter the unpleasant and erroneous approach of the Russian courts to the legal relations arising from the use of online games: the right should not interfere with the relations arising from the MMOG. To implement this approach, the courts of general jurisdiction qualified online games as gambling and betting based on risk, and in such cases player rights are not subject to judicial protection.

For example, in 2011, the company Innova Systems LLC (the game Lineage 2) blocked the Shevchenko E.I. account. for getting game values ​​from an account that has been hacked. A dissatisfied user filed a lawsuit against LLC Innova Systems for the recovery of material damage, interest for using other people's money, and compensation for moral damage. The court of general jurisdiction refused to meet the requirements for the restoration of the account and compensation for its restrictions, citing the fact that “the plaintiff’s account was blocked by the defendant due to the violation of the rules of the game by the plaintiff. Meanwhile, the presence or absence of violations of the rules of the game in the user belongs to the organization of the game process, thus, the requirements of the plaintiff related to participation in the game, by virtue of paragraph 1 of article. 1062 of the Civil Code of the Russian Federation are not subject to judicial protection. ”

At the same time, the legal relationship between the player and the distributor of the game is governed by a user (license) agreement, which is made up only by one party - the game operator. This situation puts the player in a frankly weak position and the probability of successfully defending their rights is small. But sometimes gamers still manage to do it. In the following example, the court considered the digital product as a paid service under the law on consumer protection and collected compensation from the game owner and a penalty in favor of the gamer.

In 2013, Matsukov D.P. He appealed to the Kemerovo Magistrate Court with a claim on the protection of consumer rights against Mail.Ru Geyms LLC: the company blocked the plaintiff’s account in an online game, and he could not use the paid virtual goods. The court of appeal considered the arguments of the defendant (Mail.Ru Geyms LLC) that the legal relations between the parties to pay for the purchase of virtual goods did not fall within the scope of the Consumer Protection Law as insolvent because the plaintiff, as a consumer, ordered a paid service in the form of crediting a purchased digital product to an online game account for personal purposes, not related to business activities. However, the plaintiff could not use this service due to the defendant’s blocking of the account in the game, i.e. due to the refusal of the defendant to fulfill obligations to provide paid services.

Nevertheless, while in the practice of Russian courts of general jurisdiction, an incorrect approach to online games prevails as a risky gambling and betting, which is not in the hands of gamers.
Overseas practice has gone a more progressive way and the courts are on the side of users, despite the violations of the user agreement.

In the US, Mark Bragg's account was blocked by the game operator (Linden Lab distributor in the US) due to a so-called violation of the service agreement. So Brag lost virtual savings (in-game real estate and currency) worth the equivalent of 4 to 6 thousand dollars. The user sued Linden Lab for reimbursement of its in-game savings. The court found a number of provisions of the game agreement "unconscious" (unconscionable) to the extent that it prevented the execution of the contract. The parties entered into a settlement agreement, and Brag got his account back.

In Europe, there is also a favorable court practice for gamers.

In 2006, a Finnish citizen purchased a copy of the World of Warcraft online game from citizen B. The game account was purchased for 50 euros, but after 2 years of active use of the account and the purchase of things in the internal store, the account value (estimated by the gamer’s lawyer) was 2,000 euros. The previous owner regained access to the account using a master password. With the support of the prosecutor of Central Finland, a criminal case was opened against the unscrupulous seller of the account for the articles "unauthorized use" and "causing criminal damage." As a result, an amicable agreement was concluded with payment of 4000 Euro to the victim in compensation. It is important to note that despite the user agreement, which provided for a ban on transferring a player’s account to other hands, the Finnish court still accepted the dispute for consideration.

Gamers feel most at ease in Asian countries, where there is a persistent tendency to recognize virtual objects as property and appropriate judicial protection. In China, virtual law is being actively developed as part of a program to build the virtual property sale industry, the Taiwan Ministry of Justice issued a decree in 2011 which fixed the classification of virtual objects as property in a legal sense, and in South Korea, back in 2003, the police began to actively consider statements about virtual crimes - out of 40 thousand applications received in 6 months, 22 thousand concerned the theft of game objects or accounts.

Dictate online game operators

User agreements are made in favor of the owner of the game, who bears the minimum responsibility. To illustrate this argument, let’s look at the Wargaming agreement for World of Tanks:

- Wargaming may, without prior notice to the user, modify at its discretion the technical and other characteristics of any part of the game, including digital products; change the scenarios of the game, including changes in the gameplay, etc. That is, the list of possible one-sided changes in the characteristics of the game is open [in this section italic notes of the editor are highlighted].

- Wargaming may, at any time, terminate the agreement unilaterally in an extrajudicial manner if the Game is closed and the opportunity to use the Game is terminated, including digital goods, as well as other components of the Game or in the event of any violation of the terms of the agreement or key documents by a user also the terms of use of other wargaming games. In this case, Wargaming does not return money to the user and does not pay damages. Adieu, investment in super-boosting characters.

- In the case of the closure of the game Wargaming no less than one hundred eighty (180) calendar days prior to the closing date of the game sends a notification to the user. At the same time, Wargaming does not pay any compensation and, among other things, does not refund to the user the monetary equivalent of the purchased digital goods. Goodbye again.

- Wargaming has the right to limit or terminate the provision of the user rights to use the game (including access to the account) in accordance with the agreement, in particular, in case of violation by the user of the terms of key documents. At the same time, Wargaming is not obliged to provide the user with evidence that the user has violated the terms of the agreement, as a result of which the user has been terminated or restricted. What I want, then turn back.



The result is obvious. The owner of the game bears a minimum of responsibility in relation to the game goods purchased by the user, and in addition, may at any time limit access to the user account without providing any evidence.

Risks for game owners

The main risk for game owners is the risk of recognizing the game to be gambling. If this happens, the site of the game will simply be blocked, since the organization of gambling must be carried out on the basis of a license (in Russia such licenses are issued by the tax service). Moreover, the illegal organization and conduct of gambling provides for administrative (Article 14.1.1. Of the Administrative Code of the Russian Federation) and criminal liability (Article 171.2 of the Criminal Code of the Russian Federation).

For example, the Russian Federal Tax Service in 2017 blocked 4,000 sites in two months . Under the distribution got the company Playtika ltd. (Playtika Ltd.), which tried to challenge the tax decision to lock the page with the game in iTunes, but the Arbitration Court did not satisfy the requirements of the gaming operator (higher authorities supported such a decision).

In another case , the site csgofast.com, which was owned by Sveta Commerce GmbH, was blocked in the same way. The reason for the blocking was also the decision of the Federal Tax Service of Russia. The site was implemented the opportunity to take part in a gamble, make a bet, get a win. The user who made the necessary amount of money was given the opportunity to play on the slot machine principle and electronic roulette, in which the draw is performed using a random number generator.The Moscow Arbitration Court supported the Federal Tax Service and found that the game offered on csgofast.com corresponds to the notion of “gambling” within the meaning of Art. 4 of the Law "On State Regulation of the Organization for the Organization and Conducting of Gambling and on Amendments to Certain Legislative Acts of the Russian Federation." The court also analyzed the features of the payout: on the site itself, the winnings were paid in the form of “skins” and game coins, not real money. Such a game would seem harmless, but the court dug deeper. It was found that the “skins” can be converted into real money through the payment systems Skrill, UnionPay, etc., and the course of the game coin was indicated on the blocked website itself.

In Europe, they are also concerned about the presence of the “gambling element” in games. One of the varieties of microtransactions are luthboxes , virtual boxes or containers in games, opening which you can get a random reward (loot boxes, from the English. Loot - production). Game operators should be attentive with the introduction of luthboxes in games. Belgium has already equated lutboks to gambling , the Netherlands also demandedfrom gaming companies to remove lootboxes from games, since there is an element of randomness with lootboxes, rewards can be sold outside the game, which means they have real market value. The authorities of the Netherlands say that discussions are under way with other regulatory bodies in the EU about similar rules. The US states of Hawaii and Washington are also following the example of Belgium and the Netherlands.

Another risk for game operators is the so-called bot-farming and cheating. In Russia and the world already there is a judicial practice related to bots.

In 2014, Petrov V.V. was sentenced to correctional laborunder articles 272 of the Criminal Code of the Russian Federation (illegal access to computer information) and 146 of the Criminal Code of the Russian Federation (violation of copyright and related rights). The convict committed unlawful access to legally protected computer information - an online game "King of kings 3" using a bot (computer program), after which he unauthorizedly created in-game items in an online game, some of which were sold to other users of this game.

On January 12, 2017, Blizzard Entertainment won a lawsuit in the Federal Supreme Court of Germany, the defendant for which was Bossland GmbH. The defendant was accused of creating the forbidden software Bossland Hacks, designed to violate user rules in a video game, in particular - "bots" for "World of Warcraft".

The problem of bots and cheating in online games is usually solved in a complex way. Most games have additional specialized software to protect against cheats (anti-cheats), anti-bot utilities. Game operators also implement a complaint system. Each user has the opportunity to help in identifying offenders by sending a complaint to the actions of another player.

Conclusion

While abroad, gaming facilities and pumping are equated to property, theft of which can lead to criminal liability, the legal status of gaming facilities has not yet been clearly defined in Russian law enforcement practice. In law enforcement practice, they appear either as services, then as additional software functionality, or as gambling. The uncertainty of approaches to gaming legal relations in the MMOG at the same time reduces the level of protection of the rights of gamers and carries risks for game operators. By virtue of the standard provisions of the game agreements, the user is in a weaker position than the game operators: account blocking without explanation, loss of all artifacts and the lack of any compensation from the administration of the game. But gaming services have their own risks, for example,recognition of gambling and subsequent blocking of the game, attacks of bots and cheaters. Perhaps, with the adoption of special norms, these negative aspects will be leveled.