Last year, consumers spent more than $21 billion on the video game industry. The Entertainment Software Association reports that almost 60% of Americans—roughly 200 million people—play video games. To put that into perspective, that rivals the number of Americans who saw movies in theaters, is almost double the number who subscribed to cable TV, and is about six times the number who subscribed to Netflix in 2013.

Players often create their own unique content—including characters, items, maps, and movies—based on their favorite games, often integrating that content back into the game itself. Is this player-generated content copyrightable and, if so, who owns it?

Contract Is King

Copyright protects creative expression, which is typically owned by its creator. Video game players, however, often give up any rights they have to their in-game content when they agree to a Terms of Service or End-User License Agreement in order to play their favorite game. Courts typically enforce these agreements, even though they take away rights that would otherwise belong to the player. Because these contracts make game companies the owners of player-generated content, courts have yet to consider whether players can assert copyright protection over their in-game creations.

Protection Under the Copyright Act?

The Copyright Act affords protection to creations that are sufficiently original. It is well-settled that certain aspects of a game are copyrightable, but unclear whether player-generated content is original enough to warrant copyright protection.

In general, the bar for originality is low. But player-generated content is less likely to be original if the creator’s choices are tightly constrained by the mechanics of the games he or she plays. For example, imagine a player creating his or her character in an online role-playing game. If the player can only choose one of two genders and one of five classes, the resulting character is not “original”—there are only 10 possible combinations of gender and class. The character is largely a function of game-imposed limitations, not player originality, and is therefore the intellectual property of the game company.

But when games offer players large amounts of creative freedom, the outcome is different. Imagine a player constructing a virtual building. If the player can choose from hundreds of building materials with billions of possible configurations, the player can create almost anything. Because the resulting building is more a function of the player’s creativity than of game-imposed limitations, the virtual building could be original and therefore copyrightable by the player. Thus, courts are likely to use creative freedom as an important factor in determining which player-generated content is original enough to warrant copyright protection.

Ownership

Assuming player-generated content is copyrightable, who owns it? Copyright law could treat players as sole owners of their creations, excluding any ownership claims by game companies. But this ignores the contributions of game companies, which provide players with the inspiration and tools to create.

Alternatively, copyright could treat players and game companies as joint owners of player-generated content. This acknowledges the combined contributions of both parties but creates logistical hurdles for commercial exploitation—particularly because it would require profit sharing.

Lastly, copyright could treat player-generated content as a derivative work—a mere incremental addition to the underlying, copyright-protected game. This would require players to obtain permission from game companies to use or exploit any of the content that they create.

In 1998, the Ninth Circuit suggested that player-generated content is a derivative work of the underlying game. In Micro Star v. FormGen, Inc., 154 F.3d 1107 (9th Cir. 1998), it held that player-generated maps for a popular first-person shooting game were infringing derivative works because they were sold without permission for profit. Writing for the majority, Chief Judge Kozinski explained that the maps invoked the underlying game’s story by drawing on its setting and characters. According to Judge Kozinski, this was similar to creating a sequel, which is prohibited without receiving the original author’s permission.

Judge Kozinski’s analysis does little to address the larger question of copyrighting player-generated content. It focuses on how the maps were used, not whether they were worthy of copyright protection in their own right. It also fails to account for games—like Minecraft—that have no underlying story and, instead, simply encourage players to be creative.

Recent Changes to the Legal Landscape

With game companies’ interests protected by contract, and copyright-based alternatives mired in uncertainty, change seems unlikely. Surprisingly, the past few years have seen quite a bit of it.

Some game companies have become more assertive of their right to use player-generated content. The creators ofSecond Life—once the only online game to affirmatively recognize players’ rights to content created in-game—recently revised their Terms of Service to grant themselves the right to use player-generated content.

Other game companies have taken a more player-focused approach. In 2007, Microsoft released its “Game Content Usage Rules,” which provide players with a limited license to use copyrighted Microsoft content in their own creations. Blizzard—the creator of World of Warcraft—quickly followed suit with its “Letter to the Machinimators,” providing players with a limited license to create movies using copyrighted material from World of Warcraft.

In addition, courts might be warming up to the idea of players asserting copyright protection in the content they create in-game. For example, in FireSabre Consulting LLC v. Sheehy, No. 11-CV-4719 (S.D.N.Y. 2013), a technology development company sued a group of educators for copyright infringement. The company created virtual islands in the online game Second Life, which were then used as virtual classrooms—players would log in to the game, meet at the designated in-game spot, and proceed with their lessons. The technology company alleged that the educators (1) used images of its virtual classrooms without permission and (2) later duplicated the company’s classroom without permission on a different Second Life server. The case got as far as being scheduled for a jury trial, but the parties ultimately settled out of court. It is not clear why the case got as far as it did, especially if the company’s claim to copyright ownership had no merit. Perhaps the case got so far because of Second Life’s then-unique stance on content ownership. But it might also indicate a willingness on the part of courts to engage in a discussion about whether players can copyright their in-game content.

Finally, players are finding more and more ways to monetize—and in some cases live off of—their in-game creations. In 2003, Valve Corporation launched its massively popular “Steam,” an internet-based digital distribution and social networking platform for video games. In 2011, Valve released “Steam Workshop,” a centralized hub where players can create, publish, organize, and even integrate their own user-generated content into various games. Part of that functionality allowed users to sell the unique items, maps, and costumes they created in-game. In early 2015, Steam Workshop was opened to third-party publishers, allowing players of non-Valve games to make and sell their own in-game items. The revenue implications of this change are huge: as of January 2015, Steam Workshop owners have collectively earned $57 million from selling in-game content.1 With serious money to be made by game companies and players, the need for clearer and more equitable ownership rules is growing.

Since their inception, video games have challenged our understanding of copyright law. Now, with billions of dollars at stake, it is no surprise that some have resorted to copyright as a way of carving out their piece of the pie. Although the above discussion suggests that player-generated content can be protected by copyright, it leaves open the question of whether it should be. Perhaps the entire gaming industry would be better off if no one owned the rights to player-generated content.

While the future legal status of player-generated content remains uncertain, one thing is clear: now that video games have entered the world of mainstream entertainment, the intersection between copyright and video games has never been more important.