MOVA was first developed in the early 2000’s by Rearden. The head of the incubator, Steve Perlman, put his long-time friend Greg LaSalle in charge of the project. LaSalle formed his own company, MO2, and transferred MOVA to it before selling the software to Digital Domain Holdings (DDH), a US visual effects studio. MOVA was transferred to DDH’s Chinese subsidiary, Shenzhenshi Haitiecheng Science and Technology (SHST).

��𲹰�����’s over the ownership of MOVA was with SHST in 2016. SHST initiated the proceedings, but Rearden argued that LaSalle had no right to sell MOVA to SHST in the first place. A federal court in San Francisco issued an injunction against SHST and all of their licencees (including DDH’s US subsidiary, Digital Domain 3.0 or DD3) for distributing and using MOVA.

In August 2017, the that Rearden officially owned MOVA, not DDH. Rearden is now going after the movie studios Disney, Fox, and Paramount for using the copies of MOVA that were illegitimately licensed to DD3. The studios have filed a ��𲹰�����’s suit, which was by Rearden.

One of ��𲹰�����’s arguments is that they own the copyright in the studio’s CG characters because 1) they own the output of their software, and 2) this output was incorporated into the films, thus making the films derivative works.

For output ownership, Rearden relies on two video game cases ( and ) where the courts ruled that the audiovisual output of computer programs is afforded copyright protection, even if the end user contributes to this output.

This is a questionable comparison to the current case because the nature of audiovisual output in a video game is significantly different from the output of a graphics design program. With interactive entertainment, the output is not intended to have any further use. Even when video game footage is used in subsequent works (like s), it is done so under licence. The content creator only owns the copyright in their footage and commentary, not the game. This is unlike the output of MOVA, where the 3D render output is intended to be used in further works.

Rearden also claims that they own MOVA’s output because the software does a “lion’s share” of the work required to produce the output. They rely on a US case, , in which the court ruled that the plaintiff software maker owned the output of their software because the end user only contributed single words or phrases, and this was considered “marginal” input.

Deciding who does the “lion’s share” of the work when producing a CG character is a difficult issue. To briefly explain the process of creating a CG character using MOVA, an actor wearing special makeup is filmed. This 2D recording is passed through MOVA, which synthesizes a 3D rendering of the face and head. This 3D model is then used as a template onto which animators add features like hair, colour, and wrinkles. Once this is complete, the 3D model is removed, leaving just the animated shell that we see in the movies.

So, it becomes a chicken-and-egg problem: without the software, there is no output, but without the acting and direction, there is no input to make the output. The analogy that the movie studios draw to Adobe Photoshop is quite apt because there is a clear distinction between the contribution of the artist and the contribution of the software, and in that case, it can hardly be said that the artist contributes “marginal” input. The software used in Torah was much simpler and may not offer the best comparison to the present case.

It will be interesting to see how the court decides the issue of derivative works. The movie studios argue that their CG characters and movies are not derivative works because they do not “substantially incorporate protected material from [a] pre-existing work” (quoting ). Rearden, on the other hand, argues that the CG characters and movies do incorporate their works (i.e., the output of their software). Even though the 3D template and related coding are taken out during the production process and do not appear in the movie, Rearden argues that because the facial motion is transferred from the 3D template to the CG character with “sub-millimeter precision,” the CG character is similar enough to constitute a derivative work. But how would that weigh against the fact that the CG character is also “substantially similar” to the original actor’s face and performance, which the studio owns?

Another important point is the substantial relief that Rearden is requesting. They want all infringing copies of MOVA output and the movies that contain them to be destroyed. Logistically, it is difficult to imagine what this would entail. There is no a guarantee that every copy of Guardians of the Galaxy can or will be destroyed. There is also the question of what will happen to clips of the movies that are being used by third parties. Would those have to be destroyed as well?

The Rearden case brings up some complex copyright issues, and it will be interesting to see whether the courts decide in favour of Rearden or the movie studios. A ruling for Rearden could have major implications on the way end users manage their copyright when using computer programs.

Alexandria Chun is a JD Candidate at Osgoode Hall Law School and was enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.

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Within the first week of the internship, I was surprised by all the different areas of law that were involved in running a public broadcast company. As a media outlet, the legal team at CBC must work closely with journalists and content creators to make decisions that are editorially and creatively sound while also avoiding infringing upon third-party intellectual property rights. This is much easier said than done, considering the ease at which individuals can go on the internet and appropriate material without even realizing they are violating copyright or trademark law. Journalists must tread carefully when using third-party content, and the lawyers at CBC play a key role in preventing such infringement.

On the business side, CBC’s legal department must arrange the licensing of content and stay within the bounds of telecommunications regulations. And as a Crown corporation, CBC must comply with various governmental regulation in areas like procurement and financial administration. The legal department at CBC has the difficult task of balancing these different areas of law, as well as the interests of the various stakeholders involved with the organization: journalists, content creators, the audience, and the general public, just to name a few.

I was amazed by the variety of issues that the legal department faced. For every routine task (like reviewing a licensing agreement), there were a dozen novel ones. I was exposed to new areas of law that I had not been previously familiar with, such as defamation and contest law. I also saw novel issues in areas that I was familiar with, like copyright and trademark, and found that the solutions to these questions were not as simple as the issues we had learned about in class. Intellectual property and media law are constantly changing to keep up with modern technologies and entertainment services. And with the movement toward global digital distribution, seemingly simple IP issues become much more dynamic and involved.

One of the most important lessons I learned about being an in-house lawyer is that not everything is a legal question. It takes a great deal of business knowledge and judgment to determine which issues are worth pursuing. As a student, it was a really valuable experience to see this decision process in action at a complex organization like CBC.

I am grateful to the entire legal team at CBC for making my placement one of the most enriching and valuable experiences of my time at law school. I am also very thankful to IP Osgoode for organizing the IP Intensive Program and facilitating this placement.

Alexandria Chun is a JD Candidate at Osgoode Hall Law School and was enrolled in Osgoode’s Intellectual Property Law and Technology Intensive Program. As part of the program requirements, students were asked to write a reflective blog on their internship experience.

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Online gambling platforms, however, present a major regulatory problem. Gambling websites are often hosted in countries with lenient gambling regulations. This allows gamblers to skirt local prohibitions like cash gambling on sports events, which is banned in Canada and parts of the United States (US). In the eSports context, online gambling regulation is further complicated by the fact that not all betting sites use real money. Instead, they use in-game decorative items called skins as virtual currency for wagers. This is known as “.”

But if there is no real money involved, is skin gambling technically gambling? The short answer is yes. Although the law on eSports gambling is still being developed, a recent case involving game developer, Valve, and their highly popular game, (CS:GO), illustrates the problems that arise when applying traditional gambling laws to eSports gambling.

What happened with Valve’s CS:GO?

In 2013,  released the “Arms Deal” Collection, a set of decorative skins that players could apply to their characters and in-game weapons in CS:GO. Many games release limited edition skins that are confined to the game. What made CS:GO skins unique was that they could be sold and traded amongst players outside of the game platform. This allowed players to use their skins like casino chips on third-party eSports gambling websites. A whopping  were reportedly gambled worldwide in 2016. And what’s more, there were no age checks on any of these sites, which meant that minors could participate freely.

In June 2016, an was reportedly brought against Valve by a US resident, alleging that Valve “knowingly allowed, supported, and/or sponsored illegal gambling.” Later that year, the Washington State Gambling Commission, which operates in the same state as Valve’s headquarters, demanded that Valve stop transferring CS:GO skins outside of the game environment. In response, Valve sent numerous cease-and-desist letters to stop online gambling sites from using their CS:GO skins. Unfortunately, this caused many gambling sites to go underground to avoid detection by Valve and other regulators.

The risks of skin gambling

Gambling is heavily regulated to protect minors and to promote responsible gambling. In Ontario, for example, section 3.8(1) of the requires strict standards for protecting players and their assets. But because skins are not real money, online gambling using these virtual currencies is compared to traditional forms of online gambling. The use of virtual items as wagers also makes it difficult for children and parents to recognize skin gambling as actual gambling.

The role skin gambling plays in facilitating under-aged gambling was recently addressed in the United Kingdom (UK) when Craig Douglas and Dylan Rigby, owners of the gambling site FUTgalaxy, were reportedly  under the UK Gambling Act. FUTgalaxy held lotteries using in-game items from the soccer games developed by EA Sports. However, their site was unlicensed and, therefore, illegal under UK gambling law. In February 2017, Douglas and Rigby were for promoting FIFA lotteries on their respective YouTube channels and encouraging minors to gamble. The case focused on how the two defendants “” to the use of their gambling site by children.

Are game developers liable?

While there is little question that gambling sites are responsible for facilitating skin gambling, it remains unclear whether game developers are also to blame. For example, in the FUTgalaxy case, only the owners of the gambling site were named in the lawsuit. But both gambling site owners and Valve were named in the CS:GO case.

An important consideration is the developer’s level of involvement. Game developers create skins to enhance a player’s in-game experience, not to create an external gambling market. So in that sense, only third-party gambling sites should be liable for their “” activity. But it has been argued that developers should be in monitoring and preventing the use of their in-game items on gambling sites.

The future of eSports gambling

Unfortunately, the CS:GO case provides little guidance for future eSports gambling cases. It was dismissed from the US District Court for the Western District of Washington and sent to arbitration, as per Valve’s service agreement[1]. However, Valve recently the use of their game data for illegal gambling in another one of their games, .

Many questions have yet to be answered in this emerging area of gaming law. The UK Gambling Commission recently published a following the FUTgalaxy case, where they take a strict stance against skin gambling. The good news is that, as the position paper reports, the video game industry is “committed to working with [the UK Gambling Commission] to prevent customers experiencing gambling-related harm through their platforms.”

Alexandria Chun is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

[1] GG v Valve Corporation, 2017 WL 1210220.

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