This also applies to characters, characteristics, brands, logos, event items, sounds, music and other goods that are sold in-game
Unsurprisingly, the gaming industry has changed a lot along its history. The market from 30 years ago now no longer exists – or rather, it does exist, but it is presenting itself differently. Over time, consuming games has changed; companies have been molding themselves to new realities and often being “forced” to create different forms of monetization.
Taking a leap in time, we basically went from arcade chips to digital content in a very short time span. We could draw a timeline here – describing the various methods of monetization that this industry harbors – but this is not the focus of our story. Here, we’re dealing with a specific “product”: virtual goods.
When we talk about “virtual goods,” we’re referring to everything that can be sold within electronic games: each and every item, skin, music, art, sound – that is, any content sold in-game and that alters or enhances the user experience is called (mistakenly, in my opinion) a “virtual asset.”
This is because the term “good,” in this sense, is controversial: these “goods” function and are marketed much more as services than products – since all components in an electronic game are part of that particular digital work and everything therein is protected by copyright laws and treaties, and is the intellectual property of developers, not players.
Further on, we will see how virtual goods can be distinguished from real goods and their existence in the legal system, but, first, the spoiler is: no, that rare skin that a certain player won in a championship and that, within the community, is worth a fortune, does not belong to him and should not or may not be traded, at least not from the point of view of current legal legislation.
So it’s important to establish the difference between material goods and virtual goods – but first we need to understand the concept of the term “good.”
Francisco de Assis Toledo, renowned Brazilian jurist and magistrate, used to define legal good as “any social situation that the law aims to protect against injuries,” which is nothing more than an interpretation of the limit of protection a given thing receives based on constitutional principles.
If we want a more legalistic definition, we see that our legal framework brings, in Book II of Brazil’s Civil Code, between articles 79 to 103, certain provisions about what is considered good.
In a quick search for the mentioned articles, it’s easy to locate movable, immovable, fungible, consumable goods, among others, however, “virtual assets” cannot be located. This is because this concept did not exist at the time this Brazilian legislation was created; if it did, it wasn’t relevant enough to society to draw the attention of legislators.
The fact is that, nowadays, such “goods” are extremely relevant (also economically and financially). With the exponential increase in the digital industry as a whole, virtual goods are increasingly exploited – economically – throughout society, raising the debate about their legal nature and existence as economic goods.
From the point of view of electronic games, “virtual goods,” by the community’s common and general definition, are “non-physical objects acquired for use in online communities or online games” and, from a material point of view, it is certain that “they have no intrinsic value and (…) are intangible.” [1]. This is a basic and broad concept, but it is an apt introduction to the topic.
From a legal point of view, we can try to (forcibly!) define “virtual good” as a mix of fungible and consumable goods, whose definition is in the law itself:
“Art. 85. Movable goods that can be replaced by others of the same type, quality and quantity are fungible.
Art. 86. Movable goods whose use implies immediate destruction of the substance itself are consumables, and those destined for alienation are also considered as such.”
We must also consider that they can be replaced by others of the same type, which is easy to imagine in digital content. Since all digital content is based on binary codes, for the most part, replication of these codes would be enough for the goods to be replaced by another of the same type (but this would not apply to NFTs, for example, but this is a subject for another text).
Moreover, certain digital content is “consumed” in-game, such as special ammunition, temporary clothing, loot boxes, and the game's own virtual currency. Once used, they cannot be reinstated, as they have already been consumed. Perhaps this is as far as one can go in an analogy between the legal definition of our civil legislation and virtual goods.
The fact is that, as we have already mentioned, virtual goods are much closer to the concept of service than to the concept of good, because virtual items have no real or redeemable monetary value, but only value within a specific game and while that game lasts. For example: most digital content (virtual items) are non-transferable and cannot be bought and sold between players. Obviously there are exceptions, when there is permission from the developer to do so, but the general rule is that this practice is prohibited.
It is also important to remember that virtual items are not material goods and, therefore, do not possess, in legal terms, all the characteristics of possession - since the user does not exercise control visibility and much less use or virtual economic destination of the item - or property - since the user is not the holder of the good, not being able to fully exercise all the faculties inherent to property (use, enjoy or fruition, dispose and repossess).
Characters, skins, features, brands, logos, event items, sounds, and music, among others, are assets that are part of the intellectual property of the developers and their licensors, and are protected by copyright legislation. All these elements are integral to the game and cannot be extracted and reused outside of it. Thus, the game is a unique and indivisible work – and this is determined by the developer, since she is the creator of that work.
Legally, what happens in cases involving electronic games is a license or assignment of use of that intellectual property, that is, the temporary and limited availability of that game and its characteristics to users. This, as a rule, is expressly provided in the “Terms of Use” or “Terms of Service” of any electronic game.
In addition, these digital assets (unlike NFTs or others) do not add to or become part of the user's assets, since they do not possess the characteristics of physical assets, cannot be measured financially or considered part of the set of that person's assets.
But allow me to bring a little of the understanding of the courts: the Brazilian judiciary has already positioned itself several times regarding the fact that these "virtual goods" are property of developers [2], who lend them to users, but only while the platform (game) remains active – and players, attentive to the rules of use.
In other words, “the credits acquired by the players are (…) virtual currencies used to acquire artifacts for their characters (…) with no refund of values”. In addition, most judgments reinforce understanding that “ownership of these items is exclusive” to the developer [3].
Finally, in addition to justification from the perspective of copyright, judicial decisions take into account the contractual freedom of the parties, validating the "Terms of Use" / "Terms of Service" regarding the "contractual clause expressing the impossibility of reimbursing amounts paid for” virtual items [4].
We all know someone who buys, sells or in some way commercializes digital content, accounts in online games or virtual goods – however, as well as being expressly prohibited by most developers, this is also not recommended from a legal point of view, since the content negotiated there has no monetary value and cannot be measured or placed in legal dispute.
There will obviously be a minority who disagree but, as we have seen, the digital content we have discussed here does not belong to players / users / consumers, whether professional or casual – and, thus, the duty of care and attention to the rules of games must be maintained so that users can continue to enjoy these services and items connected to their respective accounts, especially those who possess rare items or skins within the community.
[1] https://pt.wikipedia.org/wiki/Bem_virtual
[2] TJSP - Proc. 1000144-69.2017.8.26.0063 - 2nd Civil and Criminal Panel - Judge Betiza Marques Soria Prado – Judge. 03/23/18
[3] TJMG - Proc. 9005035-77.2017.8.13.0024 – 6th Special Civil Court of Belo Horizonte/MG, Brazil – Judge Napoleão Rocha Lage – Judge. 04/04/17
[4] TJ-SP - Proc. 1034811-20.2016.8.26.0224 - 17th Chamber of Private Law - Judge Afonso Bráz – Judge. 10/18/2017
Marcelo Mattoso holds a law degree from Universidade Estácio de Sá. He is a specialist in Digital Law (Innovation and Technology) by Fundação Getúlio Vargas; an enthusiast and specialist in consulting and litigation in the Games and Sports market; and lawyer, partner and coordinator of the Games/Sports field at Barcellos Tucunduva Advogados.
