Computer gaming has changed considerably in recent years: Where floppy disks and CDs were common in the past, sometimes in combination with obscure-looking copy protection measures (I like to remember the Mix’n’Mojo hub at Monkey Island,which, by the way, is also available online today), not only downloads prevail today, but also completely new gaming cultures that have partly shifted completely to the online realm.
Massively multiplayer online role-playing games (MMORPGs) have heralded a real cultural change in this respect – and also completely new legal issues: Whereas people used to be most concerned about how best to copy games, other desires prevail today. At a time when accounts cost money and virtual goods have a real market value, cheating in games is valued very differently. This is also reflected in current court decisions. Attorney Jens Ferner, active in the field of software law including the legal issues of online games, gives an overview of the legal situation in Germany.
Note: In our law firm by specialist lawyer for IT law Jens Ferner the creative industry is represented in the field of software law – especially game developers and software houses. No activity for consumers / private individuals!
Legal evaluation of accounts in online computer games
One’s own account in an online game is of outstanding importance, as one’s own game scores or character properties of the associated game character depend on it. If the account is blocked or even terminated, not only is any amount paid for use lost, but – which is regularly worse for the player – everything that has been earned, especially the virtual character with all virtual goods and levels acquired.
Contractual issues in computer games
Legally, there is a contract between the player and the gaming provider, which can be called a “gaming contract”. The question of what of this is to be classified as a GTC – with corresponding GTC control – is exciting.
Rules of the game are not GTC
The Hamburg Regional Court (312 O 390/11) has ruled that game rules do not qualify as GTCs. This decision is easy to misunderstand, as it does not mean that the game provider can now freely and arbitrarily enforce illegal terms and conditions. Rather, according to my reading and legal opinion, a distinction must be made between the “external” terms of use and then the “internal” game rules.
In my opinion, the “Terms of Use” of the game provider can easily be qualified as GTCs that are subject to the usual legal review. This means that the game provider is by no means free to standardize what he wants here, rather there are limits. The terms of use concern, for example, the circumstances of “admission” to play. If, for example, a certain price is charged for an annual membership, an additional payment may not be demanded after three months due to a price increase. Ultimately, however, the possibility of review will depend heavily on how the usage agreement is structured – free usage will be reviewed less closely than usage for which a fee is charged.
It thus fits in with the picture when, for example, the AG Karlsruhe (8 C 220/12) wants to accept the contractual agreement of a termination option at any time without cause in the case of a free game. This will not be so easy in the case of a paid contract. In any case, it will also be possible for the game provider to strive to prevent abuse. Likewise, there will always be a legitimate interest in preventing so-called “cheating”, especially since this will cause other players – who do not cheat – to lose interest in the game quite quickly.
However, implementing this interest in legally impeccable GTCs will sometimes be complicated, as clauses that are too vague may not be used. In this respect, the provider must take care to keep abuse clauses as specific as possible, so that it must be possible for the player to understand without further ado what specific behavior is prohibited.
The rules of the game, on the other hand, i.e., the rules governing the behavior of players within the game, the virtual world, will regularly escape the control of the GTC. The game provider will be free to change and adapt the “rules of the game” as he sees fit.
Sale of used computer games is permissible
The sale of computer games and console games, at least if on a data carrier, will be possible in principle. Both the Federal Court of Justice and the European Court of Justice have established groundbreaking case law in this regard, which leaves no doubt as to the fundamental permissibility of reselling on a data carrier – but certainly with regard to downloads or the isolated sale of activation keys. Even the sale of user accounts and online access (such as with Steam) is not necessarily legally possible.
In detail, the permissibility of selling used computer games is presented here with us (in german).
But: No sale of user accounts
The German Federal Court of Justice (BGH) has now ruled (I ZR 178/08) that it may be permissible to prohibit the resale of user accounts in general terms and conditions. Specifically, the issue was that a game is linked to an account and the (possible) sale of the game on the data carrier is worthless if the account cannot also be sold. (Note: Trading with used online software will now also be possible, see the decision of the EUGH here at our site).
The GTC read: “You are prohibited from selling your user account, charging money for its use, or otherwise transferring it.” The wording “The transfer of a personal account or individual game characters to third parties requires the prior written consent of …” was blessed by the AG Charlottenburg (208 C 42/11).The GTC read: “You are prohibited from selling your user account, charging money for its use, or otherwise transferring it.” The wording “The transfer of a personal account or individual game characters to third parties requires the prior written consent of …” was blessed by the AG Charlottenburg (208 C 42/11).
And also no sale of virtual currency or virtual goods
The Hamburg Higher Regional Court (5 U 168/11) prohibited an operator from operating an online forum that called for unauthorized trading (i.e., in violation of a game operator’s terms and conditions) in game currency or virtual game items.
Right of withdrawal when purchasing virtual goods
A special feature applies to consumer law in Europe: Due to the EU Consumer Rights Directive, there is a right of withdrawal for distance contracts (cf. Section 356 BGB). This now also includes a contract for the supply of digital content if the consumer can download digital content (so-called download contracts) or if this content is made available to him in some other way, e.g., through access to an online computer game. According to the decision of the Karlsruhe Regional Court (3 O 108/21), however, it is possible to prevent such a right of withdrawal by placing an online order in a game with confirmation via checkbox if the wording is appropriate.
Right of cancellation in the event of match cancellation?
Numerous games are nowadays (only) playable or sensibly playable online, especially MMORPG. What about the right to terminate the contract if such a service is unavailable for a longer period of time? One provider wanted to grant itself a goodwill period of 72 hours – and lost before the Berlin Regional Court (15 O 300/12). The court correctly ruled that recurring short-term outages, as well as frequently announced long-term outages, can also constitute grounds for termination for cause.
Right of cancellation in the event of match cancellation?
Numerous games are nowadays (only) playable or sensibly playable online, especially MMORPG. What about the right to terminate the contract if such a service is unavailable for a longer period of time? One provider wanted to grant itself a goodwill period of 72 hours – and lost before the Berlin Regional Court (15 O 300/12). The court correctly ruled that recurring short-term outages, as well as frequently announced long-term outages, can also constitute grounds for termination for cause.
Cheating & Bots!
In online games, so-called “bots”, i.e. computer programs that perform actions independently, can literally be worth their weight in gold. In quite a few games, “items,” especially virtual gold or other virtual goods, can be generated, which can later be traded on platforms such as ebay and thus generate real money. Bots” can be used to try to generate and exploit corresponding goods automatically – it is obvious that the game operators have no particular interest in this.
Use of bots can be prohibited
The Charlottenburg District Court (208 C 42/11) ruled early on that both the prohibition of bots by means of general terms and conditions and the termination of the gaming contract by the gaming provider based on them do not raise any legal concerns. The court found that proof of the use of bots had been provided by the fact that the provider had
- proved that a large number of accounts were used not only by the same IP, but also MAC address (identifier of the network card), as well as
- a large number of the affected accounts stuporously tried to run through suddenly appearing objects when the game characters were moved (Simple test, bots are STUPID: They more or less always run on fixed routes…).a large number of the affected accounts stuporously tried to run through suddenly appearing objects when the game characters were moved (Simple test, bots are STUPID: They more or less always run on fixed routes…).
The court was probably right in recognizing the use of bots as a generally valid important reason for termination (according to §314 BGB). According to the court, the game provider can no longer be reasonably expected to adhere to the contract when using bots: The circumvention of chargeable services associated with the use of bots “disturbs the balanced structure of the game, which only functions if the game participants behave in accordance with the rules; it harbors the risk that other, honest users who pay for the additional services will be driven away, which in turn threatens the financing and thus the existence” of such games, while a special need to protect the use of such bots is not apparent.
The GTC in this case read: “The user is further prohibited from using the online game in a manner not intended by …. In particular, the user is prohibited […] from using or distributing software that alters the gaming experience or gives the player an advantage over other players (in particular cheats, tools, bots, modifications and/or hacks)”.The GTC in this case read: “The user is further prohibited from using the online game in a manner not intended by …. In particular, the user is prohibited […] from using or distributing software that alters the gaming experience or gives the player an advantage over other players (in particular cheats, tools, bots, modifications and/or hacks)”.
In the meantime, this can definitely be seen as established case law, and the use of bots is viewed critically across the board, also because this endangers the business model of the game providers:
However, the bots in dispute profoundly change the concept of the game because they reverse the basic idea of the game, which is to mobilize the user, by making it possible to play from home. The plaintiff already does not have to accept such a radical intervention in the game concept. The use of bots in contravention of the rules is also likely to lead to the annoyance and disappointment of honest players at the use of bots in contravention of the rules and is likely to cause them to turn away from the game. It is understandable and in line with life experience that players lose interest in a competitive and cooperative game in which they cannot compete with other players under the same conditions and cannot execute moves together as intended (cf. BGH, judgment of 12.01.2017, I ZR 253/14 – World of Warcraft II, juris, para. 82).
Landgericht Köln, 14 O 38/19
Problem: Evidence of cheating and bot use
However, it is often difficult for the game provider to prove abuse – except for the cases above, where someone uses a large number of accounts. In the case of a single account, the individual, concrete behavior must prove why there is abuse (bot or cheating). The burden of proof is on the game provider if he wants to derive positive consequences for himself from this.
In this regard, the Cologne Higher Regional Court (19 W 2/10) correctly recognized that it will not be possible for the game provider to prove the existence of unauthorized additional software on the computer of the respective user at the time of the alleged infringement (due to the lack of access to the computer of the excluded party). Nevertheless, it is incumbent upon the game provider to at least cite concrete circumstances that suggest such an inference and are not exhausted in vague assumptions or suspicions. In the case of a first-person shooter, jerky movements are by no means necessarily an indication of unauthorized additional software!
Offer cheating solutions
The providers of corresponding bot software should also be careful – as the Regional Court of Hamburg (legislation on this here with us) has shown, game providers can obtain injunctions against the creators of such bot software with regard to distribution! Because: The court has determined that the provider of an online game does not have to tolerate that third parties offer (according to the game rules unauthorized) bot software. Here, a competition law claim for injunctive relief arises from § 4 No. 4 UWG. Thus, the court points out:
For one, the reputation of the game is affected when players are disappointed or upset because other players are playing with the assistance of a bot.
In addition, the game allowed players to buy and sell virtual items for money. Here, too, the court sees damage to the attractiveness of the game, since interest in the game decreases if others use automatic game aids to obtain items. This raises the aggravating question of whether cheating software interferes with the existing copyrights of the game provider. The German Federal Court of Justice has submitted this question to the European Court of Justice (C-159/23), so an answer can be expected from there at some point.
Advertising in computer games: Coercive advertising and children
Somewhat disconcerting – and widely criticized – is the decision of the Berlin Regional Court (103 O 43/10), which found that advertising shown before the start of a browser game, which cannot be skipped, should generally be inadmissible:
If interstitials cannot be terminated prematurely, the user is forced to wait until access to the actually accessed page is released. The user’s only option to escape the advertising is to leave the page by closing the browser window. This is unacceptable even when taking into account the interests of the defendant.
The court based its decision on the fact that there are also free sites without advertisements. The reasoning may not be convincing to date, it remains to be seen whether a line in the case law develops here or it remains a (questionable) individual case decision.
At least if children belong to the target group, caution is required in any case when it comes to advertising: If advertising is formulated in such a way that children feel – inadmissibly – addressed and are encouraged to make a purchase, which can already result from the payment option via SMS, this is to be refrained from (BGH, I ZR 34/12). With the BGH, perhaps a complete ban on advertising to children would be pronounced – which can only be evaluated after publication of the reasons for the judgment.
At the time, the Court of Appeal in Berlin (5 U 84/12) had ruled against a comprehensive ban on advertising to children. However, it rightly demanded a very clear marking of advertising and provides further explanations on this, which should be kept in mind for the time being when designing:
Compared to adults, children (especially when they are only seven years old or barely older) generally have weaker attention and reading skills, but on the other hand a stronger play instinct, which is particularly susceptible to “moving images” (as in this case). This must be taken into account in the case in dispute, which is why the defendant would have to be required to point out the commercial character of the advertising in question much more clearly and in a manner more suitable for children than was done here.
Similarly, the Cologne Higher Regional Court (6 U 132/12) considered an advertisement of up to 10 seconds (pre-roll) in a game aimed at children not to be problematic.
Taxation of online profits
As a general rule, privately generated winnings from genuine gambling are not subject to taxation in Germany. However, there are exceptions.
A particularly important exception is winnings from online poker games (e.g., in the “Texas Hold’em” variant), which may be subject to income tax as income from business operations (see Federal Fiscal Court, X R 43/12, III R 67/18 and X R 8/21). According to case law, the necessary distinction from private activities in the case of players – just as with athletes – depends on whether the taxpayer satisfies private gaming needs with his activity like a recreational or hobby player or whether structural commercial aspects come to the fore decisively in an overall view. For the “model of the professional gambler”, which is decisive in this respect, it is above all the planned exploitation of a market using “professional” experience, which is to be assessed in the individual case.
Another underestimated risk is gains made in the form of “foreign exchange”: if these are exchanged for other currencies within one year of receipt, the exchange process may result in a tax charge!
Conclusion on legal issues in computer games
Online gamblers are well advised to know the basic rules of their provider and to take them to heart. At least in the area of actual abuse, you will have to reckon with the courts taking the position of the gaming provider, as long as the terms and conditions are defined in such a way that a consumer can really understand them. In any case, a special right of termination will certainly always be granted by courts in the case of cheating and the use of bots, since the provider’s business and gaming model is significantly endangered here.
Note: In our law firm by specialist lawyer for IT law Jens Ferner the creative industry is represented in the field of software law – especially game developers and software houses. No activity for consumers/private persons!
Our law firm specialises in criminal defence, white-collar crime and IT law / technology law. Note our activity in digital evidence in IT security and software law.
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