Editor’s note: Sid Venkatesan and Gabriel Ramsey are IP partners specializing in disputes for internet and entertainment companies in the Silicon Valley office of Orrick, Herrington & Sutcliffe LLP. Randy Wu is a law clerk in Orrick’s IP group and a recent graduate of Stanford Law School. This column reflects the authors’ personal views on the topic; it does not constitute legal advice and does not represent the views of Orrick or its clients.

On November 8, U.S. District Court Judge Claudia Wilken partially ruled in favor of a class of former Division I college athletes in finding that their antitrust claim for an injunction against the NCAA could proceed as a class action. The players seek an injunction that, if granted, would limit the NCAA’s ability to license the players’ names, images and likenesses in various for-profit endeavors, including licensing to video-game makers.

This ruling is the latest development in a long-running dispute that originally began between the former players and both the NCAA, Electronic Arts, and a licensing entity. In late September of this year, EA exited the dispute via a highly publicized settlement with the former players that has led to EA dropping the NCAA Football franchise. The settlement followed decisions by two federal appellate courts that suggested that EA faced legal exposure from the use of the former players’ likenesses in the game.

Obviously, these cases will have significant impacts on the NCAA and EA. But the broader issue, and one that has significant implications for game developers beyond EA, is the uncertainty behind how courts will resolve right-of-publicity claims. Right-of-publicity disputes involving video game makers have popped up regularly over the years, affecting games that render realistic settings or even games that involve fantastical settings but import characters developed using real-world inspirations in their game.

This is an issue that affects large developers that have the budget to render lavish and realistic seeming worlds and even indies that now have the tools to render realistic games. Right-of-publicity issues may also impact developers that use purely hand-drawn fantasy worlds that include characters that draw inspiration from real-world personalities.

In addition, developers of MMO and similar games that involve significant use of user-generated content will face continued uncertainty and legal risk from real-world individuals that assert that user-generated avatars violate their rights of publicity.

The EA Disputes And The “Transformative Use” Test

EA was sued in the NCAA litigation due to its alleged unauthorized use of player likenesses in the NCAA Football series. The former players alleged that the EA’s use of their likenesses was unauthorized, since the NCAA’s licensing practice allegedly violated antitrust law, and therefore was a violation of their “right to publicity.” Specifically, EA was sued by former players in New Jersey and California who claimed that NCAA Football‘s use of the players’ biographies, stats, and playing characteristics violated the players’ rights of publicity.

EA’s core defense before it settled was that its video game’s use of player likenesses was protected because it was a “transformative use” of the likeness, and therefore protected First Amendment speech. The transformative use test was created by a court in California and has since been followed by the Third Circuit (covering Pennsylvania, New Jersey and other mid-Atlantic states) and Ninth Circuit (covering the west coast and other western states) as a way to balance individual personage rights against the right of others to create new expression.

EA’s transformative-use argument was ultimately rejected by appellate courts because:

• Similarity of NCAA Football‘s avatars to real football players. NCAA Football offers a roster of digital college football players that closely resemble the real ones. Although the digital avatars do not take on real players’ names, they match real players in height, weight, build, skin tone, hair color, and other physical characteristics. They also have matching personal details such as home state/town, jersey number, class year, and play statistics.
• Realism of NCAA Football‘s gaming environment. In NCAA Football, virtual players do exactly what real players do – play college football in digital recreations of actual college stadiums filled with realistic cheerleaders, mascots and fans. Therefore, the courts said that the game environment did not significantly “transform” the identities of the real football players depicted in the game. EA pointed to the fact that there were other game modes that did not involve using historical players at all, but the courts ignored these other game modes.
• NCAA Football‘s player customization feature was probably not being used. EA argued that the extensive character-customization features made the use of real-life likenesses optional, but the courts again disagreed. The courts reasoned that most players would, at most, make minor variations to real-life players.

There were significant dissents in both the Third and Ninth Circuit cases. The dissenting judges believed that the realism in the NCAA Football series showed heightened creativity, since gamers were buying the game for the realistic playing experience provided by game developers. The NCAA has asked the Supreme Court to take this dispute up and to set uniform rules regarding the scope of right-of-publicity liability.

Implications For Video-Game Makers

The EA publicity cases have firmed up the basic rules of the road for right-of-publicity claims in the Third and Ninth Circuits: The more true the use of a celebrity is in a game to the actual context that the celebrity is known for and the more central the celebrity likeness is to the game, the greater the legal risk.

However, these guidelines are not absolute. The “transformative use” test adopted by the Third and Ninth Circuit is a multifactor test and is very fact-specific. Thus, the EA case does not provide clear guidance for non-football video games involving realistic settings. Further, as the NCAA has noted, other judicial circuits use different tests to resolve right-of-publicity challenges.

Additionally, this will not be the end of video-game right-of-publicity litigation. Video games are a fertile ground for such litigation. Just two years ago, in the No Doubt v. Activision case, the band No Doubt prevailed on a right-of-publicity claim against Activision from the unauthorized use of No Doubt as game characters in the game Band Hero. And seven years ago a court rejected musician Kierin Kirby’s (of Deee-Lite fame, which produced the hit 80s song “Groove is in the Heart”) right-of-publicity claim that Sega misappropriated her likeness and signature phrases, though the game character and setting in the game at issue was far more fantastical than the NCAA Football environment.

We can expect that right-of-publicity cases will continue to pop up as gaming technology permits more and more realistic renderings of characters and environments. In fact, a recent flare-up occurred in the Sony/Quantic Dream production of Beyond: Two Souls, in which a 3D nude rendered version of the Ellen Page game character was leaked from a debug pre-release version of the game. Though the 3D-rendered character is a computer recreation of Ms. Page (rather than a digitized photo of her), one can expect that right-of-publicity legal issues will be at play in any fallout that may occur.

This controversy shows that video game makers will continue to face uncertainty as the legal rules regarding right to publicity claims sort themselves out and as developers push the envelope in rendering realistic game settings. Beyond: Two Souls reportedly has a $27 million budget, but that does not mean this is a large developer problem. Even indie developers now have the tools to render real-world environments, and thus need to take care as to the creative choices they make regarding in-game characters.

Moreover, developers that are not rendering real-world 3D environments still need to take care of right publicity issues, as these issues may arise in fantasy environments that include characters bearing real-life likenesses (such as in the Kirby v. Sega case). Thus, right-of-publicity issues will remain on the front burner: Video games will undoubtedly get much more realistic and immersive, as game developers take advantage of the processing available on the Xbox One and PS 4 platforms set to hit the shelves this month.

Another area of legal risk comes up in the context of user-generated content, for example, through the use of realistic avatars in Massive Multiplayer Online games. Again, new technology has made it increasingly easy to project anyone’s detailed likeness into the digital world. For example, Microsoft has announced that the upcoming Kinect Sports Rivals has a “likeness capture” feature uses a new Kinect sensor to perform a detailed scan of a person’s face and body, allowing anyone to create a highly realistic three-dimensional digital avatar.

It may not be long before gamers are recreating photorealistic celebrity likenesses and controlling avatars bearing these likenesses in realistic game environments. The Ninth Circuit EA case found that a customization tool did not shield a developer from liability when the developer rendered a real-world likeness. A different court may find a developer liable where it knows that users are using sophisticated character customization tools to do the same.

Thus, this scenario could possibly lead to a right-of-publicity lawsuit against the player and/or game company under current law. The outcome is murky, to say the least, as courts have yet to apply the transformative use test in an MMO setting or to user-generated content. These games may contain the ingredients for the next wave of right-of-publicity cases.