In July of 2016, Nintendo stock more than doubled in value over the span of two weeks, increasing Nintendo’s market value by $23 billion. However, shortly after this surge, Nintendo was forced to issue a press release clarifying that the game was made by Niantic, not Nintendo, and that Nintendo only had a 32% stake in The Pokemon Company, which had licensed its IP to Niantic. Following this press release, Nintendo’s stock dropped by 18% over the course of a single day. In May of 2018, nearly two years after it was first released, Pokemon Go generated a monthly revenue of $104 million and reported 147 million active users.
Pokemon Go is the most successful game in a growing trend of Augmented Reality (AR) gaming. Unlike Virtual Reality, which creates an entirely new, generated world around the player for them to engage with, Augmented Reality seeks to incorporate the existing world as part of the gaming experience and to overlay aspects of the game onto the world. In Pokemon Go, for example, GPS systems are used to track the location of the player’s phone and various Pokemon are generated in the game depending on where the person is in the real world. Even real weather conditions or the climate of the area can affect what types of Pokemon appear to the player.
Association of AR game elements with actual trademarks can cause serious damage to the image cultivated by the trademark owner. Perhaps no example is more illustrative of this fact than the run in of Pokemon Go players with the United States Holocaust Memorial Museum. Soon after the game’s release in the summer of 2016, players released that the Holocaust Memorial and Arlington National Cemetary were both designated “Pokestops” within game. This led a wave of people to go to both locations simply to find and catch various Pokemon, rather than honoring the somber atmosphere of either location. The trademarks of locations like memorials and cemeteries are built on being places of quiet remembrance, where one can learn about and honor history. The use of such locations as in-game play places is clearly damaging to this image. While Niantic did eventually remove the US Holocaust Memorial Museum from its list of “Pokestops” at the Museum’s insistence, it seems that the power to do so remained entirely in the hands of Niantic, rather than the trademark owner.
It does not seem that our current system for evaluating trademark expressive fair use can adequately remedy these sorts of situations. In order to determine whether an expressive use defense to trademark infringement will be successful, courts have adopted the two-element test of Rogers v. Grimaldi. First, the use of the trademark must have some “artistic relevance” to the underlying work. Second, if it has any artistic relevance, it must not explicitly mislead as to the source or the content of the work. These two elements are balanced against each other in order to balance the 1st Amendment rights of the expressive work creator and the rights of both the trademark owners and consumers who might be mislead by the use of the trademark.
In 2008, the Ninth Circuit heard a case regarding whether the depiction of a strip club in a Grand Theft Auto game bearing remarkable similarity to a real strip club in Los Angeles constituted trademark infringement. Applying, the two-element test, the court said that the use of the strip club trademark was artistically relevant to Rockstar’s purpose of depicting a seedy version of Los Angeles in its game. In deciding that the game did not explicitly mislead consumers as to its source, the court focused on the fact that the strip club was not the “main selling point” of the game and therefore, consumers would not likely be fooled into basing their purchase decision on its inclusion or a perceived association with the real club. Given this focus on depicting reality as artistic relevance, it becomes clear how this standard could be abused with regard to Augmented Reality. Augmented Reality, by its nature, seeks to display the world as it is to the player and overlay gameplay elements on top of that world. Augmented Reality could deal with real trademarks around the player in any number of ways, which would likely be justified by this standard by noting that the game is not just depicting reality, but actually displaying said reality as it actually exists. Therefore, going forward, the court will need to reevaluate how it treats technology such as Augmented Reality, as, in its current form, tests such as that of Rogers v. Grimaldi cannot adequately deal with these growing trends.
John Stathis, 11 February 2019