Product Liability, Antitrust and Fraud: Lawsuits in Gaming Beyond IP

• Jurisdiction: United States,Federal
• Subject Matter: Analytics,Insights,Tech,Gaming
• Author: David Herman
• Published date: 27 March 2024

Introduction 1

As previously covered by Law Street, the majority of litigation in the video game industry concerns intellectual property. However, outside that sector, other important issues rack the gaming giants. These analyses cover all the other litigation the industry has brought and faced since 2019. Notably excluded from the following analyses are Tencent and Microsoft, for their litigation related to video games cannot be easily separated from their work in other technology sectors.

Loot Boxes

A continual cause for concern among video games is the issue of “microtransactions.” Many games, including some that sell for $60 or more, include microtransactions, opportunities to buy in-game items, like new visual appearances for player characters. Microtransactions are paid for either real world money or in-game tokens purchased with money. One particular form of microtransaction is the “loot box.” Unlike other microtransactions, which provide a given in-game item for a given amount of currency, loot boxes give a player chance of winning anything from a random assortment of in-game items, with the chances of winning each item set by the game developer. As such, they have earned a fair bit of scrutiny by regulatory authorities and plaintiff attorneys.

As summarized by Leon Xiao in Games Industry, different countries are tackling the issue of loot boxes in different ways. At the most stringent, Belgium has completely banned the inclusion of loot boxes in video games, ruling that they constitute illegal gambling; however, the ban is not well-enforced due to a lack of resources. Other countries, like Germany and Australia, have incorporated the presence of loot boxes into the age rating for games with the latter mandating all games with loot boxes must be rated for individuals fifteen years of age and older. Taiwan, South Korea, Italy, and the Netherlands mandate public disclosure of the probability distributions for every available loot box. Thanks to these countries, said probability charts are globally available. The Netherlands also requires the price to be listed in euros, even if the loot boxes are not directly purchasable with euros.

The United States has yet to enact any regulation surrounding loot boxes, so the burden has fallen on individuals to seek justice for any alleged damages. Since 2019, sixteen cases have been heard before the courts on whether loot boxes and microtransactions in general are predatory.

Fortnite has been the most targeted game...