The Lawbringer: The power of licensing

Pop law abounds in The Lawbringer, your weekly dose of WoW, the law, video games and the MMO genre. Running parallel to the games we love and enjoy is a world full of rules, regulations, pitfalls and traps. How about you hang out with us as we discuss some of the more esoteric aspects of the games we love to play?

You guys seemed to very much enjoy the last edition of the Lawbringer, discussing some of the more interesting facets of virtual currency valuation and the Zynga hacking story. Writing about virtual worlds, currency, and everything associated with MMOs is my greatest pleasure, and I just wanted to let you all know how happy I am that you read and enjoy my work. So, thank you from your loyal author.

This week, we're going to talk about the power of licensing. No, we will not be talking about licensing in the context of whether or not you own the copy of World of Warcraft on your computer. Rather, we're going to embark on an adventure of brand recognition and financial wonderment, into the world of licensing characters, creations, names, and likenesses. This, friends, is the world of products, to illustrate the ungodly importance of content licensing.

What is a license?

At its most basic, a license is a grant of rights to use someone's intellectual property in a specific way. The word can refer to the license document or the verbiage of licensing. Licenses usually have a duration and a scope of what can be done with the rights temporarily given.

Here's an example: Garrosh is under character trademark -- you can't just run around plastering "Garrosh, son of Grom Hellscream and Savior of the Horde, loves Pipitone's Pizza Parlor" everywhere, with a picture of Garrosh enjoying a fine slice of pizza. No, you see, Garrosh's character likeness is owned under Blizzard's trademarks. Sure, orcs have been done before, and there are probably other characters out in the world named Garrosh, but this particular combination of features lends itself to a recognizable, whole character. Garrosh, as he exists under Blizzard's fiction, is under Blizzard's control because they own him.

Let's say Blizzard and Pipitone's Pizza come to an agreement that Pipitone's will get to use Thrall's likeness to promote its pizza parlor. Blizzard stipulates that Pipitone's is allowed to use the likeness of Thrall on all advertisements for six months, with a predetermined slogan for Thrall to be proclaiming. Blizzard gets a licensing fee, and Pipitone's Pizza gets a recognizable face on its ads that has the potential to bring in a lot of business. That granting of limited rights to a character, not encompassing full ownership forever, is the licensing of rights. There's more to it, really, with different types of exclusive licenses and what-not, but for our purposes, that should be enough.

So that's why one company makes MLB hats...

Exactly. Major League Baseball, as well as every sports franchise in the United States, has ridiculously complex licensing rules and regulations that it sets for itself. The money coming in from licensed products and gear is astronomical. In fact, think about how much licensed gear people buy with sports team logos on them, and then think about the brand power. No one else is allowed to print those trademarked logos on anything, lest they fear the mighty infringement hammer come down upon them. There is a lot of money in licensing.

Ask Rovio, the makers of Angry Birds. Those birds' sounds and likenesses are already multimillion-dollar characters. Imagine how much those little chirpers will rake in over the next few years when you see them in advertisements, TV shows, soda bottles, and everything else under the sun. If Rovio is smart about it, you won't be able to walk down the street without seeing a licensed Angry Birds T-shirt.

Blizzard's licensing over the years

One of Blizzard's qualities as a company that I truly respect is that it is free and open about a lot of information, ready and willing to serve up partner FAQs and easy licensing information. (Release dates are another story.) Here's Blizzard's list of licensed partners that make gear, hardware, board games, clothing and apparel, and other products that fall under the Blizzard family. You know these names because they make pretty damn good products.

That's one of the best parts of licensing out a hot property -- you get to choose who makes what. When you see a company like 3point, which makes the Warcraft steins series under the Taverncraft name, putting out a popular and well-made product, you can say, "How would you like, in our common interest, to make some Warcraft steins for us that are bound to be popular?" Successful companies want to work with other successful companies.

Attaching a brand name like Blizzard, StarCraft, Warcraft, or Diablo to a product is like encasing it in gold and stapling on as many diamonds as you can find. Suffice to say, there is a lot of value added. That's why licensing is so important. Moreso, that's why licensing to respectable, quality vendors is important -- a shoddy product with your company's or your characters' names on them brings value down.

That's actually where a lot of legal issues revolving around licenses come in. What type of work is appropriate for the licensed property? What are the bounds and scope of the rights given? If Blizzard gives Cryptozoic, the company responsible for the new wave of the Warcraft TCG, the rights to "character and name representations on paper products," does that also include posters? Does that include World of Warcraft birthday party plates and hats? It's all made of paper, right? Scope is key.

Licensing limitations, name recognition, and scope of property rights are all aspects of licensing that go into the decisions that Blizzard, Blizzard's lawyers, and its strategic product teams make. Isn't it fascinating? It is to me!

If you want to read about one of the most famous cases of brand recognition -- this time, a woman's name attached to a product -- read about Lucy, Lady Duff-Gordon. Her Wikipedia page can be found here. I think the story of Lady Duff-Gordon was one of my favorites from law school, not only because she was a survivor of the Titanic but because her infamous case Wood v. Lucy, Lady Duff-Gordon gave immense weight to "celebrity" endorsements and name rights. Give it a read -- you'll learn something!

Blizzard's licensing future?

The sky is really the limit, isn't it? There's a hard line to talk about sometimes, especially when you're dealing with multimillion-dollar companies on the one side and an emotional connection to a fantasy world on the other. We want to believe that it's about us and not about the money and the deals and the profit sharing and the contracts. The best way, and I believe the most successful way, that Blizzard reminds us that even though it makes some good money off licensing its property is that it is picking quality people to license it to.

One of my favorite Blizzard campaigns, and one that I haven't seen in a while, was the Mountain Dew advertising campaign. WoW players could pick up different Horde- and Alliance-themed flavors of the soft drink and download fuel once a day for the non-combat pet, the Battle-Bot. Nowadays, you can't get the fuel or the bot anymore. So many little toys lie in disrepair and sadness, their little servos slowly spinning down into irrelevance. There is a wealth of opportunity for more promotional and licensing tie-ins with tabards, pets, mounts, and other purely cosmetic items that don't have to be gaudy ad-grabs. Blizzard has shown that it can already come up with a fun way of tying it all together.

Let's drive home how important licensing is with a wonderful example from just yesterday. Geekologie reported on a StarCraft and World of Warcraft amusement park opening up in China called Joyland World. We've seen these pictures before, but the gravity of the thing is truly coming into the light. The licensing rights and contracts required for a project of this scale would be enormous. The character likeness grants, terms of use, immense scope of music and art licenses ... this is a big deal. The names Warcraft and StarCraft are worth so much in themselves -- well, if any of it was legally obtained. Blizzard's name isn't anywhere near this stuff, nor is its permission. Let's just rename the whole place to Infringement Land and be done with it.

So, the sky is the limit. Will we be seeing more licensed products and promotions? You betcha. Sometimes I wish that we could see all of the StarCraft Korean merchandise over here in the States. The most successful licensed products can tell us a lot about a culture or a place -- StarCraft is on everything in South Korea, and for good reason.

Licensing is important for business and important for consumers. You want to invest your license in smart partners that put out a good product and do so respectfully, not only respecting your own properties but your loyal user base as well. I think Blizzard has done a pretty good job thus far.

This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.