IP Potential in eSports

Sports play a big role in entertaining people around the world. The variety of sports brings a significant amount of fans, amounting to tens of billions. Each sports market involves some form of intellectual property. For instance, the football market has many patents. Football patents exist for helmets, trousers, the ten-yard line, artificial turf, shoes, and more. Trademarks exist for Super Bowl logos, specific team names, taglines, and much more. And of course copyrights exist for televised games. Without intellectual property, these markets would not make near the revenue that they do and there would be no entitlement to the pieces that make up the markets. For instance, without copyrights, any fan could sell or copy televised events, merchandise, or tickets without repercussions. At that rate, the sport would not be able to make a profit to pay the team players or other personnel that make events happen. In turn, the markets would fold and billions of fans would be in mourning.

While traditional sports command big followings, another type of sport is receiving great interest, eSports. eSports is hitting the market by storm. In 2017, eSports drew 258 million unique viewers with $1.5 billion revenue, with an expected reach to 299 million viewers this year and $2 billion revenue by 2021.

eSports is the sport of video gaming on a professional level. It typically involves a team. Popular eSports include League of Legends, Dota 2, Counter-Strike, and Overwatch. Fans can watch via online or at special venues such as arenas. Prize pools are in the millions of dollars, with an expected rise as eSports continues to garner more interest. Just like traditional sports, eSports advertises, endorses, and brands its events. Therefore, obtaining intellectual property to protect the eSports market is a necessity.

What makes eSports so enticing and exciting to so many people is that it does not take extraordinary athletic ability, a specific body build, or an exorbitant amount of money in training, equipment, and apparel to make it in the sport. The average person could make it in the eSports world with lots of practice in front of a video screen at home. Honing one’s skills still takes commitment, but the costs of getting there are not quite as high as traditional sports. Furthermore, the average person is more likely to relate to eSports competitors because he or she can also be a participant, making it even more exciting to watch others at the professional level. In contrast, most average people can only dream of having the skills, knowledge, and build to make it to a traditional sports level. For all of these reasons, the eSports market is expected to soar in the coming years. As a result, it is likely that intellectual property surrounding eSports will increase.

In the past ten years, patent grants for “digital gaming” have reached nearly 160,000, according to a search in ipAnalytx, an IP analytical database. Companies involved in the market include technology giants such as Samsung, Google, Microsoft, Intel, and many others. However, patents are just one type of intellectual property that will experience an increase in the eSports market. Gaming companies that broadcast or hold events must file for copyrights to avoid piracy. Teams and their players must invest in trademarks to protect their identities, market their brands, and gain sponsorships. Therefore, the IP potential for eSports may be enormous.

China’s IP Changes and Their Impact

China is a big contender in the innovation world. According to the WIPO, China was closely on the heels of the United States in 2017 for the most international patent applications. The United States filed 56,624 PCT (Patent Cooperation Treaty) applications, while China filed 48,882 PCT applications. In 2016, China received more overall patent applications than any other country with more than 1.3 million applications. In comparison, the United States paled with a little more than 605,000 patent applications.

Given the sheer size of China and the number of patent filings, China will remain a big contender in innovation for years to come. While competing with the volume of innovation coming from China is cumbersome, the United States also faces billions of dollars in IP theft from China. The exact number is not known, but estimates range from $225 billion to $600 billion annually. Furthermore, inconsistent protection of foreign patents and various rules make it challenging to solve IP infringement cases fairly. In addition, China typically offers damages awards at the low end of the spectrum, making litigation exceptionally expensive due to the time, effort, and loss in sales during the process.

In order for the United States and other foreign parties to feel that they are getting a fair shake, the treatment of IP via China must conform to higher standards. Fortunately, albeit slowly, China is showing signs of improvement resulting in fairer outcomes. For instance, in late 2017, China awarded New Balance $1.5 million in damages for trademark infringement. This was a significant win for New Balance as it previously had little luck winning counterfeit arguments in China prior to this point. Also in 2017, the Motion Pictures Association of America (MPAA) won a copyright infringement case against a large online Chinese video company, indicating China’s effort to crack down on piracy. Furthermore, according to a 2016 study, foreign companies won more than 70% of patent infringement cases in China.

While China is showing marked improvements in its treatment of IP, the standards do not rival those of the United States. Treatment of IP in China will likely be challenging for years to come as the country works to define its standards and policies. However, the good news is that the country is working on the issue. Therefore, a positive outlook for fair treatment of IP may strengthen U.S. and China business relationships.