The roaring success of online gaming: Urgency to protect Indian innovations and IPs

Nations legislate to bring about constructive change that furthers public welfare and protects the interests of citizens. Legislation, especially in sunrise sectors, often follows change. The success of the online gaming industry is a shining example of how a new technology domain has witnessed huge public participation with over 400 million gamers in India and has quickly emerged as a strong contributor to the digital economy.

A sunrise industry of the digital economy

With a three-year compound annual growth rate (CAGR) of 28%, India’s online gaming industry is estimated to be over ₹16,000 crore, while attracting nearly ₹23,000 crore worth of investments between FY20-24. Online gaming, per industry reports, has led to 1,400 start-ups employing over 100,000 people in 2023 and is expected to generate nearly 250,000 jobs by 2025, thus playing a big role in achieving the government’s vision of Startup India.

Looking at it from a global perspective, India today has the second largest number of online gamers and shares 16% of the global game downloads in 2023. Over 41% of Indian gamers are women, thereby shattering age-old stereotypes.

Such rapid growth and value creation make this a sector that must not be ignored and needs positive reinforcement by providing adequate legal safeguards.

The problems caused by archaic laws

Intellectual property (IP), innovation, as well as creativity remains highly vulnerable in the online gaming space. Currently, India secures IPs through various laws such as the Copyright Act, the Patents Act and the Trade Marks Act.

While the larger discourse in around online gaming is stuck at the “skill versus chance” debate, multiple court rulings have created a ‘dominant factor test’ to differentiate a ‘game of skill’ from gambling. However, despite the evolution of the ‘dominant factor test’, online games of skill continue to face restrictions due to the misconceived notions around them.

Gaming studios have today developed online games, which are Indian in every sense with Indian stories, characters, motifs and themes. However, in the absence of a sharply defined legal framework in place to distinctively identify and protect these innovations, start-ups risk losing their originality and their products which would have a cascading effect on their markets, investments as well as the jobs they create. This impedes on the larger bucket of individual and organisational rights as well as on the opportunity for the Indian gaming industry to compete on the global stage.

Insights from global best practices

A conducive environment for the industry to flourish and continue contributing to the economy requires a dire need to protect the uniqueness in interactive games i.e., the elements and the expressions. This requires a set of competitive laws with sharp definitions that address the grey areas and adequately protect this sunrise sector. Clear regulations that distinguish skill-based games from chance-based games are also required to help innovators move forth without unnecessary hurdles.

US’s protection of audio-visual content under copyright law, Denmark’s recognition of distributive qualifications for originality, and France and China’s approach to unfair competition claims are some global best practices that we can learn from.

Responding to the call of India’s gaming start-ups

In the interim, while new laws reflecting new realities are legislated, it is important that we give a purposive interpretation to the existing laws to afford immediate protection to the stakeholders. Courts in India have generally followed the rules of interpretation which help give meaning to laws which would have otherwise defeated the very purpose of such laws. Such interpretations amplify the purpose of the law. The law must be read in a broad manner to afford protection to the industry.

Parliament as well as the state legislatures in the past decade have rehauled several old and archaic laws to adapt them and make them relevant for the changing times. For instance, three new criminal laws - the Bharatiya Nyay Sanhita, the Bharatiya Nagarik Suraksha Sanhita and the Bharatiya Sakshya Adhiniyam - have replaced the erstwhile Indian Penal Code, Code of Criminal Procedure, and Indian Evidence Act.

Discourse and legislative action are necessary to address the challenges faced by game developers, emphasising the role of both the judiciary and legislative branches in providing recognition and protection to innovative electronic games. A collective response based on commitment, clarity as well as urgency is required today.

Gopal Jain is a Senior Advocate practicing before the Supreme Court of India.