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Over 20 years of disputes surrounding game IP

1. Background of Conflict 

In the entertainment business, IP is an important asset that can be critical to the direction of the business. The game industry is no exception, and as the IT industry develops, the 20+ years dispute over game IPs in Korea and China is in full swing; the dispute between WeMade and SandaGames over ” The Legend of Mir 2″.

ActozSoft created the online game “The Legend of Mir 1.” During that time, the founder, Park Kwan-ho, was working at ActozSoft before he created the company WeMade and developed “The Legend of Mir 2.” The same ActozSoft acquired 40% of the ownership of the new game.

 

2. Beginning of the dispute

The Legend of Mir 2 was officially launched in Korea in March 2001 and eight months later, in November 2001, it was serviced in China through SandaGames, a Chinese publisher. While it wasn’t popular in Korea, success in China was tremendous, gaining more than 600,000 users in a year. But in 2002, the dispute over royalties began.

The first dispute broke out in December 2002 when WeMade claimed it had not received its royalty fees over “The Legend of Mir 2” in China for the past five months–from July 2002 to November 2002. WeMade and ActozSoft filed 2 copyright lawsuits over The Legend of Mir, but the dispute was abruptly terminated in 2007.

ActozSoft extended its Chinese service contract for two years on the condition that it received all the royalty fees from the games in August 2003. In 2004, after SandaGames acquired ActozSoft and became its parent company, ActozSoft extended its licensing agreement with SandaGames for three more years. At that time, WeMade had been involved in more than 10 lawsuits against SandaGames and ActozSoft, but the dispute ended with a court settlement in February 2007.

ActozSoft sold 40% of its stake in WeMade to WeMade. WeMade also gave up a copyright infringement lawsuit over “The Legend of Mir 2” against SandaGames. Through a settlement letter, it was agreed upon to divide the royalties gained from “the Legend of Mir 2” and “the Legend of Mir 2” between ActozSoft and WeMade 30:70 and 20:80, respectively. The conflicts that began in 2002 were eventually terminated.

 

3. Expansion of Disputes

In May 2016, the dispute over “The Legend of Mir 2” was expanded because WeMade raised a licensing issue in China: WeMade said, The contract related with SandaGames ended in 2015, and further business partnership in China will be managed by WeMade. WeMade argued that Sanda Games created Web games and Mobile games without consultation to WeMade. From 2016, WeMade made contract independently with Chinese game companies such as Kingnet, Zhejiang Huanyou Network Technology.

ActozSoft, co-owner of the game, opposed to this movement. In 2016, ActozSoft filed a lawsuit to Korea and Chinese courts for copyright infringement. The confrontation deepened as ActozSoft had China service renewal contract with SandaGames about The Legend of Mir 2.

 

4. End of dispute

WeMade had to file a lawsuit against ActozSoft and SandaGames about copyright infringement and had to go through royalty disputes with Kingnet, Zhejiang Huanyou Network Technology etc. The case is now coming to an end with the victory of WeMade. In 2018, WeMade won a lawsuit against a 37-game that claimed to have received sub-licenses from SandaGames. In 2019, the ICC Arbitration Court in Singapore decided for Zhejiang Huanyou Network Technology to pay 80.7 billion won about IP infringement of WeMade.

 

5. Significance and Implications

Ultimately, the essence of this conflict is the initiative for license royalties. The Legend of Mir IP gives huge revenues, so it focuses on using IP, which is less risky than its own development. These conflicts of interest have also led to other disputes as they have become a problem of who owns the server that stores the game’s user information.

It was difficult to find such a thing in the Chinese game industry in the past. Because of the relatively low perception of intellectual property protection, IP was often used without permission, and in fact it was difficult to be legally protected. The Legend of Mir IP is now diversifying beyond games to animation, novel, and drama.

Will the game developer who is the birth parent be admitted to have the IP or the publisher who raise parent be accepted to have the IP? In the Chinese market where astronomical revenues are generated, will IPs of overseas game companies be protected in keeping with the policy of strengthening IP protection by Xi Jinping? Where is the scope of protection of the original game IP? This is why the game companies across the world are carefully watching the results of this conflict.

Author : Jonggu Jeong

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