by Rosanne Yang

On a good day, it is downright tricky to manage a beloved property that has a passionate fan/user base and thrives best on user generated content, while growing and protecting one’s own intellectual property and revenue. On a bad day, it looks like the PR disaster that faced Dungeons & Dragons owner, Wizards of the Coast, in the last couple of weeks. In the language of the world, Wizards admitted to rolling a 1 (essentially, for those who are uninitiated, a critical fail). But has Wizards locked itself in a dungeon of its own making? What lessons can be learned from its licensing decisions?

Building a Brand on Permissive Licensing

For over twenty years, Wizards has licensed the Dungeons & Dragons (“D&D”) game system under a license (the Open Gaming License, or OGL) that purported to be “perpetual, worldwide, [and] royalty-free,” allowing unrestricted creation of derivative works. Under this very permissive license, an enthusiastic fan community grew and flourished. Today, Wizards sells authorized books and merchandise, offers subscriptions to access additional tools and content online, and even has a licensed movie coming out soon. For a property that Wizards bought out of bankruptcy, it seemed a brilliant move.

But lurking in the not-so-dark shadows is the fact that D&D has also become the basis of a wide range of royalty-free commercial activity by its users, who in some cases have built entire businesses for themselves around it. Wizards now wants a piece of that action, as well as to exert greater controls over content that is developed, as concerns about intolerance within the community grow.

Changing the Relationship with the Community

Wizards has been shifting its licensing structure for a number of years. Some official D&D content was not published under the OGL – resulting in that content either not being available for community use at all (other than in private, non-commercial game play) or available for use only on other terms. Wizards introduced a Dungeon Masters Guild Content Community Agreement, which has different terms for certain uses. It introduced a Fan Content Policy, which has yet other terms for other uses. The interplay of those documents with the OGL is at best murky, but the community seems to have rolled with it. Still, these updates apparently did nothing to prepare the community for what happened recently.

In late December, Wizards indicated its intention to dramatically change the OGL terms. Going forward, and among other things, commercial users would need to be registered, revenue reporting would be required after a certain threshold was reached, and royalties would be imposed on every dollar of revenue over a different – and much higher – threshold.

Once the new license became public, the community revolted. Subscriptions were cancelled en masse, content creators threatened to change gaming systems or write their own, fans threatened to boycott the upcoming movie. News coverage in the “geek” press was widespread and not terribly flattering to Wizards. Wizards soon walked it back and said they would return with something better.

Can Wizards Effectively Change the License?

Certainly, any new material from Wizards can be subject to a different license from the start, but the extent to which a new license affects pre-existing material will be in question. If older materials remain under the original license going forward, parsing out what elements are under which license could be difficult.

The OGL applied to materials so far is terminable only if it is breached without a cure within 30 days of the licensee becoming aware of the breach. It expressly states that although Wizards can update the terms, “You may use any authorized version of this License to copy, modify, and distribute any [content] originally distributed under any version of this License.” [Emphasis added.] One of the original authors of the license is on record as saying that the intention was to make the license irrevocable.

However, the license does not actually say “irrevocable,” and Wizards is hanging its hat on this: they said that the original OGL will no longer be an “authorized version.” Might the original license language be clear enough on its face for a court to determine that it is revocable in this way? Maybe. But no matter what, there are legal risks for both Wizards and the community as this drama further unfolds.

Key Risks for Wizards:

• Vagueness in the Contract May Not Go Well for Wizards. If the OGL language is deemed not clear on its face, a court could:

  • apply the general rule that where one party did not have any part in negotiations, any vagueness is to be construed against the party who wrote it; and/or

  • consider testimony about the intent when the original license was written.

• User Reliance and Damages May Be at Stake. Users may be able to argue that they relied on the OGL and would be damaged by the changes (which Wizards seems to anticipate, because the new license explicitly restricts reliance claims).

• Brand Viability May Be at Stake. Wizards may win the battle and lose the war. If enough of the community abandons the game system due to a new licensing regime, or even just the attempt at a new regime, Wizards’ existing revenues may plummet and the future of the brand as a viable business could be at stake.

Key Risks for the Community:

• Existing User Generated Content May Already Be Infringing/in Breach of Contract. D&D content is already subject to a variety of different terms, so parsing out which terms apply to which content is already a task that content creators should be engaged in. The original OGL also had requirements about publishing user generated content under the OGL and providing notice of that. If they have previously overstepped the existing licenses, they may already be vulnerable to copyright and/or trademark infringement claims.

• New Gaming Systems May Infringe. Content creators who decide to abandon D&D in favor of creating their own gaming system will need to be very careful to avoid infringe on Wizards’ intellectual property in doing so. Regardless of the permissive nature of the OGL, the Wizards content is not “public domain.” Although game mechanics themselves are not subject to copyright protection, ancillary documentation, role descriptions, and the like can be.

Lessons to Be Learned

Encouraging user generated content can be a fast and fun way to build a property – be that a brand, a game, or a literary or theatrical universe – but it can be difficult to determine early in the process exactly how it will play out. Careful planning and good anticipation of future possibilities are vital, regardless of the outcomes projected and even where the original creators are feeling very generous and community-oriented. 

Anyone contemplating encouraging this type of community building and participation should be mindful of the following when drafting any license and other terms surrounding user generated content, and any later changes to those documents:

• Give yourself a very clear and easily exercisable “out.” Make sure your license is revocable in some reasonable-for-you-to-exercise way, just in case the circumstances change. You do not want to find yourself having a “Darth Vader moment” down the line. [I am altering the deal. Pray I don’t alter it any further.]

• Mind the old adage about what one giveth. You will have a very difficult (if not impossible) time taking it away. Even if you say to yourself “I will never, ever take this away from my fans,” give yourself the flexibility. You do not ever have to exercise it, and some day you may just thank yourself.

• Give your users some quality control guardrails. In other words, do not underestimate the creativity of users when it comes to making something you find abhorrent and do not want to be associated with. Imagine the worst they can do and address it.

• Make sure rights to use the user generated content itself are provided for. When a community member creates content, they have some level of rights in that content. Making sure that you – and other users – have the rights to use their content is important, as is having some protection from their infringement of third party rights.

• Make sure your license and other terms are clear. When language is vague or self-contradicting, interpretations of that language tend to go against the party responsible for the drafting. It may be “legalese,” but it’s important to get it right.

• Know Your Community. Sorry, Wizards, but if you didn’t see this revolt coming, you need to get out more.

• Participate in Your Community. Don’t just watch them and gauge their positions based on what you can see. Where user generated content is not just permitted but encouraged and even part of the core strategy, the community can be your lifeblood. They are invested in you and you in them. Communicate. Bring them along in your journey.

For Dungeons & Dragons, it’s back to the top of the round. Does Wizards have enough hit points to survive? Can they cast a calm emotions spell in time? How will the players fare? Regardless of the outcome, the lessons learned stand solidly.

Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.