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Gaming companies face legal pitfalls when dealing with minors

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For 30% of the world’s players – around 750 million people – are under 18, minors constitute a valuable and important part of the video game market. However, as any loving parent will tell you, kids are great, but they can complicate matters. As a recent series of court rulings involving Epic Games’ Fortnite has shown, children can sometimes make a games company’s Ender User License Agreement (EULA) inapplicable, complicating a company’s legal strategy. .

An almost universal way for software publishers, including publishers and game developers, to manage their legal risks and protect their intellectual property is to use an EULA. When a customer purchases software, such as video games, they almost always purchase a license to install and use the software, so the customer ultimately does not own the software themselves. What the customer can and cannot do with the software is defined by the EULA. Not only do EULAs help protect a company’s intellectual property, but they also frequently limit where the customer can sue the business, what state laws apply, etc. However, when the customer is a minor, all or part of an EULA may be unenforceable.

One of the risks that many companies, including publishers and game developers, seek to avoid is to have a lawsuit certified as a class action suit. This is why companies often include arbitration provisions in their EULAs because while a customer dispute can only be filed as arbitration, it cannot be certified as a class. However, in certain circumstances these provisions cannot be applied against minors.

In one case, RA v Epic Games, Inc., # CV 19-1488-GW-Ex (CD Cal. July 30, 2019), a minor plaintiff, RA, has filed a lawsuit against Epic Games alleging violations of California Consumer Legal Remedies Act , unjust enrichment and deceptive advertising based on Epic’s Fortnite. RA filed the case as a putative class action suit, meaning RA would eventually ask the court to certify a group of similarly-situated plaintiffs who would all benefit from any settlement or verdict. To avoid this development, Epic decided to enforce the arbitration clause of its EULA against RA Unfortunately for Epic, in California, where the case had been filed, minors can terminate a contract by “any act or statement revealing a unequivocal intention to repudiate its binding nature. force and effect ”, as long as they terminate the contract in its entirety. Since RA had stopped playing Fortnite and also filed a statement disaffirming the EULA, the court dismissed Epic’s request to force arbitration. The following year, in Doe v Epic Games, Inc., 435 F. Supp. 3d 1024 (ND Cal. 2020), another California federal court came to the same conclusion based on similar facts.

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Video game companies can work around this problem by establishing that, even if the person playing the video game is a minor, the person who has consented to the EULA is a parent or guardian. For example, in Crawford v Sony Interactive Entm’t LLC, No. 3: 20-cv-01732-JD (ND Cal. March 30, 2021), the court referred the case to arbitration because, even though a minor was playing Fortnite hosted on Sony’s PlayStation Network and had spent $ 1,000 on app purchases without parental permission, the minor’s parent did not dispute that she was the person who originally agreed to Sony’s license agreements and terms of use. Of course, inserting a parental consent requirement into an EULA or other agreement is not always sufficient on its own – RA used his father’s email address to install Fortnite and consent to the EULA without his knowledge. father.

While a sufficiently motivated child can be unstoppable, game companies can reduce their risk by requiring a parent to provide credit card information (even when the base game is free, like Fortnite), to use a solution. third-party identity verification, or to provide biometric data. And, to limit the degree of exposure once a parent (or someone claiming to be a parent) consents, game companies may require multi-step authentication, such as receiving a text message or receiving an email. an email containing a verification code, for each in-app purchase to prevent a child from making unauthorized purchases using stored payment information. Businesses can also avoid litigation by allowing refunds for in-app purchases, as angry parents who get their money back for unauthorized or accidental purchases don’t need to sue.

As noted above, kids are great (they are valuable customers for the video game industry), but they can complicate matters (they can make an EULA completely ineffective). As a result, video game companies must consider the legal status of their underage customers when drafting their EULAs and other agreements, and they must take steps to better ensure parental consent to these agreements and subsequent in-app purchases. By implementing more stringent verification requirements for online and in-app purchases or offering refunds on purchases made without parental consent, gaming companies can limit their liability and risk of litigation while continuing. to serve their young customers.

Ryan Meyer is an intellectual property lawyer with the international law firm Dorsey & Whitney LLP and Chairman of Dorsey’s Video Game Industry Practice Group..

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