Nexon v Ironmace and the Lesson Indies Can Draw from It
In mid-2022, Ironmace Co. Limited (“Ironmace") entered the indie game ecosystem as the new kid on the block
Marketing their new title Dark and Darker through Steam Early Access, the studio garnered substantial praise and attention from both typical consumers and gaming influencers alike. A year later, the rising studio is mired in legal disputes with a large Korean publisher, Nexon, resulting in the game’s removal from Steam and lawsuits in both the United States and South Korea. As of the publication of this article, the U.S. case was dismissed due to America being an inconvenient forum for the lawsuit, while the South Korean case remains ongoing.
Nexon is suing both Ironmace as an entity and two of its top executives, Ju-Hyun Choi and Terence Seungha Park. Nexon makes several allegations: that when Choi was terminated from Nexon, he improperly accessed source code for an unreleased Nexon project (“P3”), recruited other Nexon employees to work for Ironmace, and leveraged P3 assets to quickly cobble together Dark and Darker. A similar case involving stolen trade secrets in game development occurred between NCSoft and Bluehole Studios / En Masse Entertainment. In that case, the Korean criminal court found the former NCSoft employees guilty of stealing the trade secrets and repurposing the assets into a new game and a 2012 U.S. civil lawsuit resulted in an undisclosed settlement.
The Nitty-Gritty: Legal Arguments
When allegedly taking the source code for an unreleased Nexon project, Choi may have wrongfully appropropriated what Nexon was rightfully keeping secret, thereby violating Trade Secret Laws. That is because the law awards protection to a business’ ‘secret sauce,’ if you (1) maintain that information as confidential; and (2) if that information’s value is derived from its confidentiality. In other words, it is valuable because you are keeping it secret.
In game development, a trade secret can take the form of privately designed tools (e.g., code that procedurally generates an area with a medieval theme) that are not publicly available and that a developer has taken measures to keep secret. So far, the Korean courts have found that Ironmace did not steal and repurpose any of Nexon’s protected assets, though more evidence will need to be reviewed in order to determine whether Dark and Darker incorporated actual code or audiovisual material from the P3 files.
The outcome in this case will have significant impacts on the indie game landscape, particularly as more and more executives for AAA developers branch out as studio heads on new IP. For example, a studio like Frost Giant should be wary of “reviving” the classic RTS game, as some of the indie’s top talent had worked on Blizzard’s Warcraft III and Starcraft II, two forerunners of the genre.
Unlike trade secrets, a company can also protect its copyright in information only if that information is (1) an original expression that is (2) fixed in a (3) tangible medium. Infringement occurs when there’s an unauthorized use of another’s copyrightable material resulting in a work that is substantially similar to the original. Among many copyright infringement claims, Nexon alleged that Ironmace used Nexon’s tangible game assets (e.g., audiovisual displays) without Nexon’s permission in creating Dark and Darker and that Dark and Darker had contained the exact same six class options on initial release as did P3 (Barbarian, Cleric, Tanker or Fighter, Wizard, Thief or Rogue, and Ranger). It has since, wisely, added several more classes.
A copyright infringement claim is difficult in games, unless there is a verbatim, or close to verbatim, copying involved because video games are such a diverse and interdisciplinary form of art. This Blog shines light on the borders of copyright protection here. With regard to these arguments it seems that Dark and Darker can likely rely on the so-called doctrine of scènes à faire, which basically says that no one can hold a monopoly on generic tropes necessary to create an individual and original expression and work of art. In a medieval-centric, Dungeons-&-Dragons–esque games like Dark and Darker and P3, players would likely expect to play in such generic roles, as is common across the board for similar games. It is therefore more a question of whether the individual design of the classes as a whole is similar rather than whether the classes are the same.
Take-Away: Make Sure to Start with a Clean Sheet
The Ironmace case is a prime example of what to watch out for if you are starting your own studio—make sure that you have a clean sheet! To avoid the legal headaches caused by misappropriation, wrongfully soliciting former employees, and more, any indie dev leaving another project should ensure they start from scratch and incorporate the following tools into their arsenal:
- Non-compete and non-solicit exclusivities: Check your employment agreement, acquire a written waiver from the old employer for your new actions, stating that they do not conflict with your plans. Some of these agreements usually include regional limits (i.e., you can’t start a studio within X distance of the other employer) or express bans on creating or joining a competitor to the former employer. Work agreements may also preclude you from soliciting certain customers or vendors that did business with your former employer.
- Make a different game and create your own content and brand: It is impossible to guarantee that you will not use what you have seen. The distinction between inspiration and copying is a fine line. Hence, make sure to create new assets and avoid using any common elements from the old project, whether we are talking actual game assets, information, or branding. Put the effort into not copying and pasting.
- Review your former agreements (incl. employment, contractor, or invention assignment agreement) as partner for the scope of your assignment (or even work made for hire) or exclusive licensing of rights to assets and information that you had created previously. Oftentimes, these agreements are far reaching and go beyond only the specific material that is included in the project you worked on, but covers all assets that you created during the time that you worked on that project, regardless of its connection to the project.
- Lastly, ensure that your partners and employees are screened for the above mentioned issues; otherwise you are implicated by these issues all the same.
There are several other business- and legal-related tasks when starting your own studio. The above list is in no means meant to be comprehensive, but rather for attempting to flag some concerns that you will likely have with your former employer or business (of which you were a founder or member).
Bonus Level (for experts only, read at your own risk): Pick Your “Level”!
Two technical (though important) aspects of the case were jurisdiction (whether the U.S. court’s power to bind parties to an enforceable decision) and venue (whether a U.S. federal court is the proper place to hear the lawsuit). Nexon’s complaint argued that a U.S. court had proper jurisdiction because Ironmace purposefully targeted U.S. consumers through the widespread sale of Dark and Darker throughout the country.
Although the case was initiated in a U.S. federal court in Washington, Ironmace sought dismissal based on forum non conveniens and won, arguing that settling the dispute in the American legal system is both improper and inconvenient. And because Nexon already sued Ironmace for similar criminal claims in a Korean court, the U.S. judge did not wish to hear a case that binds two foreign parties where a remedy can be granted more appropriately by the Korean court.
Interestingly, Ironmace appears to have consented to jurisdiction in the Washington court in its April 2023 response to Valve’s DMCA takedown notice. A unique legal question presented by this turn of events is whether that “consent” would have trumped whatever forum-selection clause was in the former Nexon employees' contracts. These clauses dictate what courts will hear and what law applies in the case of an employer-employee dispute. Ironmace’s motion to dismiss noted that because Korean law applies to this dispute, it’s logical to dismiss the U.S. case and settle the matter in Korea, where the case is further along anyway and where the majority of evidence is located.While this legal foray may seem annoying or excessive, it can become a deciding factor where a dispute is heard. Furthermore, the journey of disrupting a proceeding before it finds its proper venue can stifle motivation, increase frustration, and create confusion, all of which are viable tools in a dispute. Therefore, studios selling their games in foreign markets should be aware that they may subject themselves to legal actions in those markets. A common tool to control such issues in most cases is to have clear language in your agreements that clarifies where a dispute is heard and what law is applicable.
Author: Matthew Vernace