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Machinima: The Legal Landscape of a New Art Form

Machinima is film-making using the computer-generated images of a video game. The three-dimensional physics engines of modern video games provides computer animation in real-time, without the need for time-intensive rendering. Screen capture technology, available in most video games, allows a user to record the action as various players control characters in the game. Voice-overs are recorded independently and layered onto the visual recording.[1] Machinima has become increasingly popular, not just among video game fans, but among independent artists in general, for its low cost and time efficiency relative to live action film or other forms of computer animation.
Some artists have already succeeded in turning this art form into a commercial enterprise, and to date there has been no litigation concerning machinima.[2] However, as the genre grows in popularity, future machinima artists may face legal challenges in distributing their creations. While video game publishers may be reluctant to sue fans who distribute machinima videos for free, commercial machinima works are more liable to face legal challenges from copyright holders.
This paper will discuss the potential liability for copyright infringement for machinima works, and the possibility of a fair use exception, focusing primarily on commercially distributed machinima. Several potential schemes under which machinima can remain a legally viable art form will then be considered.
Copyright Infringement
In general, a machinima video will be considered an infringing derivative work of the particular video game used in production. A work is derivative if the material it incorporates from a copyrighted work would by itself be considered an infringing work.[3]
Most examples of machinima incorporate graphics (known as art assets) directly from the video game. In such a case, the direct copying of art assets would qualify as infringement, and it would not be necessary to apply a “substantial similarity” test in comparing the machinima graphics to the video game assets.[4]
Fair Use
In addition to being infringing derivative works, machinima videos would be unlikely to receive a fair use exception, especially if distributed commercially. §107 of the Copyright Act sets out four factors to consider in a fair use analysis.
The first factor, the purpose and character of the use, largely focuses on whether the use is transformative, and should favor machinima creators. Machinima uses an interactive video game to create a dramatic or comedic performance, an entirely new form of entertainment. Such use is clearly transformative.
On the other hand, commercial distribution would undermine a finding of fair use. Nonetheless, courts have found that a highly transformative use will support a finding of fair use, even if distributed commercially.[5]
It is also important to note that most machinima are not parodies of the original video game. While some machinima videos do criticize or comment on the original video game, machinima as a genre includes a diverse set of styles, including satire, music videos, and dramatic works. Thus, machinima in general should not merit special protection as commentary that needs to copy material from the target of its criticism in order to be effective.
The second factor, focusing on the nature of the copyrighted work, would favor copyright holders, as video games are largely fictional (as opposed to factual) works.
The third factor, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, will vary according to each particular machinima work. In almost all cases, the amount of copied material would be limited to the art assets, as opposed to the game’s computer code or its plot. Nonetheless, the graphics of a video game are a substantial element of the work. A court would further consider the substantiality of the art assets taken in light of the video game assets as a whole.[6] Machinima works which use central characters in the game, for example, would be less likely to be granted fair use status.
Another source of variation would be the amount of copyrighted assets used in any given machinima work. Certain machinima creators use exclusively graphics from the video game, whereas others may develop their own art assets. However, given the importance of ready-made graphics to the desirability of machinima over standard computer animation, it is likely that most creators will rely heavily on protected art assets.
The fourth factor in the fair use analysis is the effect of the use on the potential market for the copyrighted works. In this case, it is unlikely that machinima works would displace the market for the video games themselves, since the two works serve entirely different purposes. However, most commercial machinima works in existence have negotiated licensing agreements with video game copyright holders. Thus, there is a legitimate market for machinima licenses, and allowing fair use for these derivative works would eliminate the need for this market.
Although the transformative nature of machinima strongly favors fair use, this would be somewhat diminished by the commercial nature of a work. On the other hand, the high likelihood of harm to the licensing market strongly weighs against a finding of fair use. Thus, commercial machinima would be unlikely to be considered fair use. Non-commercial machinima works would be more likely to be granted a fair use exception, perhaps depending on the amount and substantiality of the work copied.
The Future of Machinima
Individual Licensing Agreements
Individual licensing is the current model for commercial machinima. Video game copyright owners are willing to grant licenses to these established creators for several reasons. A machinima production serves as an effective marketing device for a video game title, and also builds brand loyalty.[7] Moreover, a machinima work may increase the interest of others in creating machinima works using the same video game, resulting in increased sales of that title.
However, this system may ultimately limit the overall number of artists who can produce machinima works. Copyright owners may become more discerning about the types of projects with which it wishes to associate, fearing the tarnishment of its video game brand. Copyright owners may also find diminishing returns for each subsequent machinima project, especially in light of the transaction costs involved in negotiating individual licenses. At some point, the marginal license will no longer be profitable, and the number of licenses will be capped. Moreover, successful machinima creators may seek to leverage their bargaining power to gain an exclusive license to generate machinima works derived from a particular title.
Group Licensing Schemes
Machinima groups, such as Machinima.com, are currently attempting to obtain blanket licenses for use of particular game titles in machinima.[8] Success in these negotiations would certainly go a long way to opening legitimate commercial machinima to the masses.
From the standpoint of the copyright owners, such a scheme has the benefit of reducing transaction costs, while retaining the benefits in advertising, brand loyalty, and the direct increase of sales for machinima production. Indeed, the increase in brand loyalty would likely outstrip what would be possible under an individual licensing scheme, based on the goodwill generated by a blanket license.
The inability to control objectionable uses will remain a substantial concern of copyright holders, although this could be mitigated through terms of the licensing agreements. More importantly, a group licensing scheme may provide less revenue than would otherwise be possible under an individual licensing scheme.
Open Source Licensing of Video Games
Video games are occasionally distributed under an open source of free software license, most frequently under the General Public License (GPL).[9] Although the GPL applies to software code, it also includes copyleft licensing terms, which would apply to derivative works. Since the copyleft guarantees free use, modification, and sharing of the work it protects, it would permit the creation machinima, while effectively precluding its commercial distribution.
User Owned Intellectual Property
Advances in video game technology have allowed publishers to give their users more control over the creation of in-game art assets. Publishers could then grant their users intellectual property rights in any art asset they create within the video game. One early example of this system is Second Life, a new genre of video game described as an online virtual world. Almost all art assets in the game are created by Second Life users, which currently number over 4 million worldwide.[10] Under this model, rather than seeking permission of the game publisher/developer, a machinima creator deals with individual content owners.[11]
Conclusion
While most machinima productions will infringe upon copyrighted video games, and may not receive the benefit of a fair use exception, these legal issues are not likely to impede the development of the genre as a whole. Indeed, commercial machinima seems likely to flourish. Holders of video game copyrights have strong incentives to license their intellectual property in order to encourage this art form. Indeed, the only question seems to be how generous they will be in the licenses they grant. Finally, as both video games and users become more sophisticated, open source licensing and user-owned content will provide opportunities to those unable to receive a license from copyright holders.

References:
[1] http://www.machinima.org/machinima-faq.html (viewed on 03/08/07)
[2] Machinima and Copyright Law, Journal of Intellectual Property Law. (Fall, 2005)
[3] Anderson v. Stallone, 11 USPQ2d 1161 (C.D. Cal. 1989)
[4] Id.
[5] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994)
[6] Machinima and Copyright Law
[6] American Geophysical Union v. Texaco Inc., 60 f.3d 913 (2d Cir. 1994)
[7] http://www.muproductionsonline.com/2006/01/machinimas-future-and-games.html (viewed on 03/07/07)
[8] http://lsolum.typepad.com/copyfutures/2004/10/machinima_red_v.html (viewed on 03/09/07)
[9] http://www.codeproject.com/managedcpp/Quake2.asp (viewed on 03/09/07)
[11] http://en.wikipedia.org/wiki/Second_life (viewed on 03/09/07)
[11] http://www.secondlifeinsider.com/2007/01/04/permission-to-shoot/ (viewed on 03/09/07)

Posted by at March 12, 2007 11:30 PM in Commentary Posts