Intellectual property in blockchain and e-gaming

Is your love for cats shackled by a fear of commitment? Dreams of adopting an eternal, one-of-a-kind cat have been fulfilled by Daper Lab Cryptokitties- a blockchain-based game, wherein all the cryptokittes are essentially NFTs(Non-Fungible Tokens).

Gaming industry is highly susceptible to disruptive evolution. Global Video market is expected to reach $ 413 billion by 2028[1] and e-sports industry with a consumership of 577.2 million[2] by 2024. Dynamic application of cryptocurrencies resulted in Blockchain being touted as the most revolutionizing tech-innovation of the recent past. Malleability of tech-savvy gaming and e-sports industry pinpoints a shift to blockchain for better user interface and enhanced gaming experiences.

With great innovations come great legal responsibilities. Inherent guarantee of technology to provide fidelity and security of the recorded data results in a revolutionized IP regime.

A blockchain is a decentralized database or ledger, shared among the nodes of a computer network wherein information is stored electronically in digital format.[3] Proposed Online Gaming (Regulation) Bill, 2022 in India, defines “e-gaming or online gaming” as games played on any electronics device, including Computers, Mobile Phones, Tablets etc[4].

E-gaming can be categorized into:

fantasy sports
e-sports
online casual games

Fantasy games enable users to create a team containing players from real sports teams and win points based on their real-life performance. E-sports are video games of yesteryears, now played on the internet in an organized fashion held for professional players, individually or as teams. Online casual games are either games of chance, the result is based on random activity such as rolling the dice (considered gambling if money is involved), or a game of skill requiring physical and mental strategies to win.

In 2020, online gaming market generated approximately $21.1 billion in revenues globally, a record 21.9 percent growth from 2019. 1 billion online gamers exist worldwide, predominantly in China, South Korea, and Japan. In 2025, online gaming audiences and size is projected to surpass 1.3 billion[5] and attain $132 Billion by 2030, growing at 10.2% CAGR[6] respectively.

Blockchain games use NFTs to trade assets who can be characters, names etc. and can release its own NFTs used by players creating transparency due to independent verification of ownership records making in-game assets marketable and creation of a decentralized market. Cryptocurrency, may be used for the purchase of in-game assets enabling gamers to buy items like extra lives, coins etc., directly from the game. Gaming tokens, like Axie Infinity (ACS), are in-game cryptocurrency acquired for the purchase of in-game assets from crypto exchanges (eventually traded on crypto exchanges) or, acquired as winnings in games adopting the ‘play-to-earn’ model. Gaming coins and in-game assets (including cryptocurrency) incentivize gamers for their time and skill in playing the game.

E-sports involves multiple stakeholders- game developers/players/sponsors/advertisers/team managers/media; blockchain provides a robust single platform (or ecosystem) to amalgamate them.

Intellectual Property in Gaming

Intellectual Property is very much prevalent in the gaming world. The music, underlying code, the characters are all subject matter of copyright; the name, logo, title and subtitles of games and slogans are a part of trademarks, while patent protection could be explored for the inventiveness of the game designs/play, and technical innovation.

Infringement of such IP

IP is at heightened risk due to complex, advanced online gaming interfaces. The sale of copyrighted NFT artwork may contain authentic and fake artwork, the purchase of virtual products may result in Trademark infringement, the creation of virtual or physical equipment may result in Patent infringement and Trade secrets generated/shared via virtual platforms make it susceptible to misappropriation.

Adoption of a proactive trademark registration system for virtual products and services will help counter trademark infringement; regular monitoring by embedded mechanisms will hamper online copyright infringement, deploying Virtual investigators, including humans, Artificial Intelligence, and automated systems, will result in the identification and control copyright, trademark, or patent infringement.

Blockchain facilitates the embedment of rights, alongside the content, associated with the goods and services at the time of the establishment of NFTs. The multiverse existence of virtual goods and services ensures the usage of blockchain as a traceable, reliable, and transparent source of information of a good such as ownership history, and description of the good throughout the digital lifecycle to reveal the authenticity of a product and can serve to protect a brands IP.

Despite improved experiences paved by the integration of NFTs, Metaverse and Blockchain coupled with an ever-increasing rise in users, competitors alongside unlimited innovation possibilities necessitate gaming platforms to retain authenticity and secure IP in an otherwise glitchy landscape- both virtually and towards the current regulatory regime.

Written by V.C. Mathews, Group Head at Fox Mandal & Associates LLP