By K.S. Anthony on 18 July, 2017

Riot Games Sues Chinese Mobile Game Developer In U.S. Court: But There's A Twist

2016 was a massive year for  video games: Superdata Research reports that the market was $91 billion worldwide, with $41 billion spent on mobile gaming alone. Meanwhile, the P.C. industry held its own claiming $34 billion, which the company notes was "driven largely by free-to-play online titles and downloadable games." In fact, $18.6 billion belonged squarely to the free-to-play (FTP) market which derived the majority of its income from Asia where it claimed $12.5 billion in revenue. The European and North American markets trailed with $2.8 and $2.2 billion respectively. 

One game in particular has held the top spot in the FTP market for years: League of Legends. Released in 2009 by American video game developer Riot Games, League of Legends quickly gained in popularity and by 2012 was the most-played P.C. game in the world, with users logging over 1.2 billion hours of game play worldwide.

While that alone would be worth bragging rights, what's even more impressive is that League of Legends is Riot Games' only game.

In 2016, the company's founders estimated that League of Legends had 100 million monthly players. By November of 2016 Riot Games had made $1.7 billion for the year, with no signs of slowing down. 

(League of Legends via: Giphy)

Developers like Riot Games make money on free-to-play games from a relatively small – Fortune estimates 2 - 20% – number of players engaging in microtransactions to purchase aesthetic upgrades or other in-game "extras." Those little transactions add up as more and more players compete online: Riot Games sees increased returns every year.

But there's one player that Riot Games isn't too happy about. Riot Games is suing mobile game developer Shanghai Moonton Technology (Moonton) in U.S. District Court. Riot Games alleges that Moonton is infringing on their intellectual property by creating what amounts to mobile copycats of League of Legends. As their name suggests, Moonton is a Chinese company, headquartered in China. But what's not as obvious is that Riot Games, though based in Los Angeles, is completely owned by Chinese tech titan Tencent

Yes: a Chinese-owned American company is suing a Shanghai-based Chinese company in a U.S. court for copyright and trademark infringement. Here's why.

(League of Legends via Giphy)

The lawsuit is under American jurisdiction, Riot's lawyers claim, for a number of reasons. According to the copyright and trademark infringement lawsuit Riot Games filed earlier this month in the Central District Court of California, these include the fact that Riot Games is an American company headquartered in Los Angeles, that Moonton conducts "extensive and ongoing business with customers in the United States and the State of California" and, interestingly, because the games are distributed "in the United States and the State of California through the services provided by at least two California companies, Apple, Inc. (“Apple”) and Google, Inc. (“Google”)."

This probably – I am not a lawyer, nor did I consult one while writing this – gives Riot a stronger legal foundation than they might have in China. In discussing intellectual property on its website, the U.S. – China Business Council warns that "if a company doesn’t file its copyrights, patents, and trademarks in China, its IP has no formal protection there" while also noting that "challenges remain, including lingering issues with China’s IP legal framework in areas such as trade secrets, uneven enforcement, and significant procedural barriers that frustrate company efforts to protect IP in China." 

In the lawsuit, which seeks $150,000 per instance of infringement, Riot claims that:

"Moonton has developed and distributed a succession of mobile games designed to trade off Riot’s well-known and valuable intellectual property: Magic Rush: Heroes, Mobile Legends: 5v5 MOBA, and Mobile Legends: Bang bang (collectively, the “Infringing Games”). Each of the Infringing Games contains (or at one time contained) a vast array of elements that were directly and deliberately appropriated from LoL, including but not limited to LoL’s characters, artwork, map designs, and unit and monster designs. And, to add insult to injury, Moonton marketed and distributed certain of its games with a logo that is confusingly similar to Riot’s LoL logo, using the exact same font and color scheme as Riot’s LoL logo."

The filing contains multiple screenshots and side-by-side comparisons of League of Legends and Mobile Legends: Bang Bang, in which the alleged infringements are spelled out in exacting detail.

(Screenshot from court doument)

In the wake of Riot Games' lawsuit, Moonton responded sharply on Facebook with a statement that quickly went viral and seem to threaten unnamed media outlets and competitors for spreading "unreal information and rumors."

(Via Mobile Legends/Facebook)

This particular strategy may prove to have been misguided: while many of Mobile Legends: Bang Bang's fans were quick to defend the company, more than a few made their own observations about perceived similarities between Moonton's mobile game and League of Legends.

(Via Mobile Legends/Facebook)

 

(Via Mobile Legends/Facebook)

Riot Games included similarly worded reviews from Google's Play store as part of Exhibit B in their allegations.

Regardless of who prevails in this battle, it's unlikely that Riot Games or its parent company will lose their footing anytime soon in gaming, despite the current lack of a mobile platform for League of Legends. More importantly, the case underscores the strength of both the mobile and P.C. gaming market in Asia – and around the world – where FTP players couldn't care less about who makes their games. 

Topics: China, Intellectual Property, International Business, Legal, Entertainment, Internet

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