The litigation landcape of private sever actions in Asia
Private servers are widely used in the gaming world for players to host online games in a private environment. They can be used in order to emulate dead online games, games without servers and unplayable, or used to add features an owner of the private server may want to include in the game. Private servers operate within a grey area because in order to operate them, owners have to mimic the server in some way. This can be done by copying the source code of the game, which is usually illegally extracted and constitutes an infringement of copyright.
In Asia, legal and enforcement authorities have been clamping down against illegal activities relating to private servers. We outline below the enforcement framework on private servers across different jurisdictions in Asia.
From as early as 2003, Chinese enforcement authorities have been taking action against illegal activities relating to private servers. Administrative and criminal actions are the two major legal actions, and there are three main grounds:
1. Copyright infringement – administrative action, criminal action
2. Computer related crimes – criminal action
3. Regulatory offence, lack of business license – administrative action, criminal action.
Though there have been many published civil cases against rights-holders, rights holders in China can decide to take either administrative or criminal action and reach a settlement based on the claim for civil damages based on such action, without filing additional actions.
There is no public systematic information available on administrative actions relating to private servers. However, that is not to say that China has not been taking action against these servers behind the scenes.
The annual “SwordNet” campaign, a joint action initiated by the National Copyright Administration (NCAC) and assisted by the Ministry of Public Security (MPS), Ministry of Industry and Information Technology (MIIT) and Cyberspace Administration of China (CAC), cracks down on online piracy and copyright infringement through administrative and civil actions.
Following the end of the campaign each year, the NCAC and MPS will publish the top ten typical cases of the annual SwordNet campaign, in which typically one to three cases relate to private servers. In the 2012 SwordNet Campaign report, around 60 private server-related administrative actions were taken during that year, and many of the cases have been transferred to criminal actions as they were found to have reached the criminal threshold.
From the years 2007 to 2020, we discovered around 133 published civil cases in relation to private server infringement. The majority of the cases occurred during 2012 to 2020, with a sharp increase after 2015. In most criminal actions, a network is usually involved. Activities involved in the network include obtaining and modifying original server codes, buying or renting a server, server maintenance, advertising, and more. These activities typically cross geographical boundaries and involve multiple servers. The highest monthly illegal revenue earned was approximately RMB 183 million (US$280,000), while the average monthly illegal revenue was around RMB 186,000 (US$28,000).
Provinces or municipalities that have dealt with criminal cases relating to private servers include Jiangsu Province, Shanghai City, Guangdong Province, Hunan Province, Zhejiang Province, Chongqing City, Hubei Province and Beijing City. Jiangsu Province leads as the most experienced judicial authorities on private servers with 44 cases, followed by Shanghai City, Guangdong Province and Hunan Province with 11 cases respectively.
Jurisdiction of the criminal action falls within the location of the ‘victim’, which includes the developer of the infringed game and its licensee, or the location of the infringer (private server operator) or the server. The legal basis for criminal action for private server infringements is as follows:
1. Copyright infringement – Article 217 of the PRC Criminal Law
2. Illegal business operations – Article 225 of the PRC Criminal Law
3. Computer related crime – Article 285 of the PRC Criminal Law (Sabotaging Computer Systems); Article 286 of the PRC Criminal Law (Illegally Obtaining Data or Illegal Control of Computer Systems)
Infringers charged with a criminal offence will be subject to imprisonment and/or a fine. For imprisonment, infringers are usually sentenced to three years imprisonment, with four- or five-years imprisonment in more serious cases. With regard to fines, most cases imposed a fine to be paid to the state instead of the victim. There is only one case in which the court required the infringer to return the illegal revenue to the victim.
That is not to say that victims were not granted any compensation. In approximately 40% of private server cases, infringers paid compensation to the victims in exchange for mitigation. The compensation paid could be equal or even higher than the illegal revenue the infringers obtained.
In Vietnam, another very tech literate and youthful population, similar issues can be found. In November 2020, the Authority of Broadcasting and Electronic Information (ABEI) under the Ministry of Information and Communication (MIC) estimated that revenue from “illegal games” might reach USD325 million in 2020 – comparable to that of licensed games. The term “illegal games” refers to those not meeting either of the following requirements to be distributed in Vietnam under Decree No. 72/2013/ND-CP:
- They must be distributed by companies licensed to provide game services; and
- Exclusively for games involving interaction among multiple players via the game server (i.e. G1 Games), their content must be approved by the MIC.
Games provided via private servers therefore constitute merely a subset of “illegal games”. Failure to meet these administrative requirements serves as grounds for the ABEI to act against private servers, while there seem to be no cases where a private server was shut down successfully on copyright infringement grounds.
To tackle illegal games altogether (there is no specialized scheme for private servers), the ABEI has been requesting the cooperation of (i) Apple, Google, Facebook and TikTok in removing the presence/advertisement of illegal games from their platforms (as of November 2020, 121 illegal games were removed from App Store and Play Store), and (ii) the State Bank of Vietnam in restricting payment intermediaries like e-wallets from allowing cross-border payment to be made to illegal games. Large local gaming companies like VNG has actively recommended financial and technical solutions for the ABEI in restricting illegal games.
Private server gaming is a very profitable business and certainly damages the rights and reputation of the genuine rights owners. It can also involve cross border rights infringement and financial transactions. However, action against the perpetrators is not easy and needs the patience and persistence of the authorities and the rights holders, and it may also need financial institutions involvement. It also needs experienced advisors to pull all these elements together as there is not a clear legal route to address the issues.