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Monday, 4 July 2016

e-Sport in the French Digital Republic Bill

Jean-Sébastien Mariez
French Government is currently engaged in a number of initiatives in the area of internet governance, including net neutrality, open data, e-privacy, connectivity, and e-sport. All this is within the framework of the so called République Numérique initiative. 

Last week, French Parliament adopted a draft regulation on e-sport. Katfriend Jean-Sébastien Mariez (De Gaulle, Fleurance & Associés) explains what this is about.

Here's what Jean-Sébastien writes:

"On 30 June 2016, the French Parliament put the finishing touch to the French regulation on e-Sport. This new regime is inserted into the so-called French Digital Republic Bill (the Bill) that is expected to enter into force within the coming weeks.

The key provision of the Bill in regards with e-sport clarifies the conditions that have to be satisfied by 'video game competition' organizers not to fall within the legal regime that prohibits the organization of lotteries' (ie principle of prohibition of gambling and games of chance – the Principle of prohibition). 

Indeed, under the current law, there is a substantial risk for e-sport competitions to be prohibited under that Principle of prohibition (please see below b)). With the objective to ease the development of video game competitions, the Bill provides - subject to certain conditions - for a derogation to the Principle of prohibition (the Derogation).

The Bill establishes 2 different regimes, depending on whether or not the competing gamers are physically present in the place where the video game competition takes place:

a.    Video game competition requiring the gamers to be physically present: in this first scenario, the organizer willing to benefit from the Derogation would have to satisfy the following conditions:
o      file a specific declaration with the French administration;
o      such a declaration will detail the measures and processes set up by the organizer in order to satisfy the following conditions:
·        ensure that the amount corresponding to the cost borne by gamers participating to the competition does not exceed a certain percentage of the total cost related to the organization of the competition itself. The exact percentage not to exceed has yet to be determined by a decree;
·        ensure that the total amount corresponding to the prices (either cash prices or other type of prices) is effectively returned to the participant gamers, except in the situation where the total amount corresponding to the value of the prices does not exceed a specific threshold. The amount corresponding to such a threshold has yet to be determined by a decree.

b.    Video game competition taking place online: the above mentioned Derogation does not apply to this second scenario. 

Therefore, the legality of such kind of video game competition will still have to be assessed in light of the four steps test applicable to lotteries. In accordance with that test, the Principle of prohibition applies only when four cumulative conditions are verified: (i) the gamer hopes for a gain/a price; (ii) the offer to join the competition is public; (ii) the outcome of the competition depends, at least in part, on luck; (iv) the participation to the competition involves a financial contribution from the gamer.

This being said, the Bill brings something new in respect of the last condition ie financial contribution. Indeed, the Bill specifies that the cost related to the access to the internet (A) and to the price of the video game itself (B) cannot be considered as a financial contribution as such. As a consequence, its seems like the Principle of prohibition might be set aside every time a competition would not require from the gamer other financial contribution than A and B. In such a case, condition (iv) would not be satisfied and therefore, the competition would be authorized.

Note also that the Bill specifies the conditions for minors to participate to e-sport competitions either as amateur or professional gamers. It also clarifies the conditions under which a professional gamer can be hired in compliance with employment law. This said, the Bill does not provide any specific rules regarding to the ownership and/or the transfer of IP rights related to the e-sport competition.

My own recommended next steps are as follows:

o   closely monitor the drafting of the expected decree;
o   ensure that e-sport events to which you may be associated with will comply with the conditions applicable to scenario a) or b)."


Thanks for this update Jean-Sébastien!

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