Lawful Neutral: Leakers, trade secrets, and lawsuits in the online gaming world


In recent years, you might have noticed a new type of lawsuit coming out of game companies, as some of the more litigation-happy studios have been suing people who leak details about a game or a patch ahead of release. We’ve covered a few of the Epic Games cases here, and a few other notable game-leaks-as-trade-secrets cases pending, but despite the flurry of litigation, it doesn’t seem as though any have actually been tested fully in court. In the case of both Epic Games lawsuits, the defendants settled. In the EA CoD lawsuit and the Nintendo lawsuit, the companies can’t identify the leakers, so the suits are just hanging out in limbo.

All of the lawsuits so far follow the same general format. In the case of Epic Games, where the leakers’ identities were available, the company sued for breach of contract in regard to the non-disclosure agreement and the misappropriation of trade secrets, as both defendants had an employment agreement with Epic Games.

But what if you were to leak screenshots or design documents or even bug reports of a game during a closed player access event? Could you, as a player, be sued for “misappropriation of trade secrets”?

Trade secrets

Before we can really understand how leaking video-game content could potentially be prosecuted, we need to understand the legal definition of trade secrets. As in most Lawful Neutral columns, we will be doing our deep dive from the US legal perspective. There are actually threes different laws that influence trade secret legislation: the Uniform Trade Secrets Act from 1979 (UTSA), the Economic Espionage Act of 1996, and the Defend Trade Secrets Act from 2016. We’ll run through all of these and why they are important, but I do want to highlight the common bits of the legal definition of trade secrets found in all of them:

    1. the information is not generally known (because, you know, secret);
    2. the trade secret holder has made reasonable effort to make sure it stays secret; and
    3. the trade secret holder gains some economic benefit from the secret.

Let’s look at this through the lens of video game leaks, specifically the Epic Games suit. The changes for Fortnite season 11 were not generally known, so the first criterion is satisfied. Second, Epic Games made reasonable efforts to ensure the changes stayed secret (they’re spelled out in the complaint itself). The final criterion is where we get a little bit shifty: It’s logical that Epic Games would get some economic benefit from keeping the season 11 changes under wraps, but how do you quantify that? For the most part, trade secret legislation bypasses most of this by not requiring trade secret holders to show actual damages, as those would be incredibly hard to quantify in most trade secret cases, but especially here.

But wait, there’s more… definitions! The UTSA (we’ll get into this more later) defines misappropriation as “improperly acquiring a trade secret.” And because this is legalese, “improperly” has a definition as well, such as theft, bribery, breach of contract, or misrepresentation. This is in contrast to “properly” acquiring a trade secret, such as reverse engineering, which means the secret wasn’t “misappropriated” and therefore is not subject to litigation.

It seems a little counterintuitive that something that is ultimately meant to be consumed by the public could be a trade secret, but with the criteria above, we can at least see why these cases make it to court. This also affirms that even you, as a player, could be sued for misappropriation of trade secrets for doing something like breaking an NDA. NDAs fall under the second criterion as a reasonable effort to make sure the secret stays a secret.

A story in three ‘acts’

Now hold that thought as we go back over the three pieces of legislation I mentioned before. The trio of acts I cover here all build upon the earlier act. So in order to understand what happened in 2016 and why, we have to go back to 1979’s Uniform Trade Secrets Act.

The UTSA is a Uniform Act, which means it’s not a law in-and-of itself but rather is created to serve as a template or model act for states to implement, ensuring some degree of uniformity between states. The UTSA establishes uniform state-level legislation for prosecution of misappropriation of trade secrets. The act creates a framework allowing trade secret holders to sue individuals or companies for damages resulting in the misappropriation of trade secrets.

The UTSA is quick to point out that trade secrets can also be patented or subject to copyright; it’s not a mutually exclusive designation within IP law. It’s also interesting to note here that intent matters only a little bit. A trade secret holder could be entitled to additional damages for “willful and malicious misappropriation.” But the intent doesn’t matter for the rest of the act.

Between 1979 and 1996, trade secrets were controlled at the state level. As companies grew bigger and crossed state and national borders, state-level legislation wasn’t enough, prompting federal legislation to deal with the increasingly interstate and international nature of business. So in 1996, Congress passed the Economic Espionage Act (EEA) of 1996. (It’s a bit of a weird act, including sections about the insanity defense as well as the establishment of the Boys and Girls Club of America. I have no idea what either of those things have to do with economic espionage. Your guess is just as a good as mine.)

However, it also includes a title about the protection of trade aecrets. Drawing heavily on the UTSA’s verbiage, the EEA makes misappropriation of trade secrets an explicit federal crime. This allows the federal government to prosecute theft and misappropriation of trade secrets, rather than the trade secret holders themselves.

Finally, we get to the most recent act, and the one that’s important to us here: the Defend Trade Secrets Act (DTSA) of 2016. Signed into law by then-President Obama, the DTSA extends the EEA and allows trade secret holders to sue for theft or misappropriation of trade secrets at the federal level. The language of the act borrows heavily from the UTSA and brings all the trade secrets legislation roughly in line.

The end result here is that now a company like Epic Games can bring a federal lawsuit, in addition to the state lawsuit, against individuals or organizations that misappropriate trade secrets. They can seek damages in both jurisdictions, which means potentially more money for them should the lawsuit succeed in either place. According to a Forbes article on the DTSA, companies can potentially “game the system” by bringing the suit either to the state or federal level, whichever one is more likely to win, or both.

We haven’t actually seen this strategy tested adequately in court in regard to video games; we have no actual verdicts to see if a court would agree with the leaks-as-trade-secret argument. And judging by the Epic Games settlements, I’d say it’s safe to assume that Epic Games (and other developers) are using these suits more as an intimidation tactic against leakers (and journalists and former employees) than any real desire to get money from people.

That being said, it’s probably not worth the risk to break an NDA to leak anything, even as a player. It’s only a matter of time before this is tested in court and ends in a judgment rather than a confidential settlement. Sure, it hasn’t happened yet, but eventually the industry will need a sacrificial lamb to drive the point home, and you don’t want it to be you.

Every other week, Andy McAdams braves the swarms of buzzwords and esoteric legalese of the genre to bring you Massively OP’s Lawful Neutral column, an in-depth analysis of the legal and business issues facing MMOs. Have a topic you want to see covered? Shoot him an email!
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