Pokémon Go 201: What business can learn from its success

Our first article for businesses eager to celebrate the initial Pokémon Go craze discussed in-game attractions such as PokéStops, gyms, and incense. Now, a little more than two months after the game’s record-shattering U.S. debut, we explore some of the businesses (and the intellectual property issues) that have sprung up in the Pokémon Go ecosystem.

The Informal Pokémon Go Ecosystem

As Pokémon Go rose in popularity, businesses (physical and virtual) quickly sprang up to form an entire entrepreneurial ecosystem surrounding the game. Some of these businesses have already run afoul of Niantic or other entities that hold intellectual property rights relating to Pokémon Go. Others appear (at least for now) to be tolerated.

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Pokémon Go Extensions

One way that businesses have tried to capitalize on the Pokémon Go phenomenon is to offer some type of game support to players. Early on, Niantic struggled to implement its “Nearby Pokémon” feature that would tell players about “sightings” of particular Pokémon in their vicinity. While Niantic worked out these initial kinks, numerous other location services popped up to fill the void.

While some Pokémon trackers were ostensibly born out of a love of the game, others had unabashedly commercial purposes. In one popular case, a travel company built a real-time “Catch That” Pokémon tracker in an effort to lure Pokémon players to its online booking website. In its words, “[j]ust like finding the rarest Pokémon in the wild, we can find you the cheapest flights and hotels online!”

Unsurprisingly, however, Niantic is “[n]ot a fan.” According to CEO John Hanke, Pokémon trackers not only take out the “fun” from game, they also “take data out of [Niantic’s] system” in a way that is “against [the] terms of service.” In addition, unlicensed game extensions may constitute copyright infringement, may violate the Digital Millennium Copyright Act, and may give rise to claims of unlawful computer access. Although a number of trackers continue to operate, several have shut down, purportedly at the request of Niantic.

Dating with Pokémon Go

Taking a different approach, other businesses seek to engage with Pokémon Go players outside the game. Focusing on the “reality” part of “augmented reality,” many dating apps are encouraging their users to go on Pokémon hunting adventures. If that is not enough for Pokémon Go fanatics, newer dating apps are also being built exclusively to match Pokémon Go players with each other.

Although these apps do not necessarily impact game play, they target the Pokémon Go community with promises to “PokeMatch” players for “Pokédates.” Absent a license, such activities may constitute trademark infringement.

Pokémon Go Locations

Brick-and-mortar businesses are also getting into the action. As we discussed in our prior article, many real-world businesses are already identified in the game as PokéStops and gyms. Yelp has released a “PokéStop Filter” to help to connect local businesses and Pokémon Go players. Relying on user-generated information, Yelp allows players to search for local businesses that are known to be PokéStops. Using this feature, players can plan their real-world errands around  their efforts to stock up on Zubats, Charmanders and Eevee, thanks to these crowd-sourced facts about physical locations (which may or may not be an index of PokéStops).

Trademarks, Copyrights, and Pokémon Go

From formal sponsors to businesses that have incorporated creative Pokémon Go references into their consumer outreach, businesses seeking to be on-trend have sought to connect to Pokémon Go. All of this Pokémon-centric activity, however, raises a number of considerations regarding potential infringement of intellectual property.

The legal landscape surrounding Pokémon Go is complex: fanciful cartoon characters, well-known brands, and other pre-existing assets have been newly tied to mobile and gaming technology, to geospatial data, and to real-world locations. As is increasingly common in the gaming industry, many different companies own portions of the IP associated with Pokémon Go. For example, Nintendo has applied to register United States trademarks for the logo and words “Pokémon Go” (on top of the countless other Pokémon-related marks it already owns), while Niantic seeks to trademark the logos for the three teams of trainers within the game.

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Copyrights associated with prior iterations of the game’s beloved monsters are owned by the entities making up The Pokémon Company (Nintendo, Creatures, and Game Freak); the in-game copyright notice for Pokémon Go also names Niantic and Pokémon as rightsholders. Yet more rightsholders may be associated with other game components and inputs, such as mapping data, the game engine, and even the images of buildings and artwork and the names of businesses and other landmarks associated with PokéStops and gyms. And all of the IP discussed above (and far more) may have been licensed, behind the scenes, to yet more participants in the IP marketplace.

Why is this dizzying panoply of IP ownership relevant to Go-friendly businesses? An appreciation for this complicated landscape helps to explain the appeal of Niantic’s expected sponsorship platform for in-game tie-ins and advertising opportunities: such offerings should offer a business the opportunity to license any needed IP rights from a single source, rather than having to evaluate and potentially engage multiple rightsholders.

What should a business in jurisdictions such as the United States, where sponsorship has not yet become available do? If sponsorship deals will target major international brands such as McDonald’s, at least initially, what options will smaller businesses have? What should a business that simply wants to welcome GO-playing patrons do? Simply put, any plan to celebrate, extend, or re-purpose Pokémon Go-related IP should involve reflection on how a business’s own actions might be viewed by any relevant rightsholders, and an evaluation (preferably involving legal counsel) of whether the business must license any relevant IP.

Patterns of Enforcement

Even as to clear instances of infringement, a rightsholder must consider the broader business question of whether and how to enforce its rights. For Pokémon Go, early enforcement campaigns by Niantic appear to have targeted Pokémon Go trackers that Niantic believes have misappropriated game data and negatively impacted the in-game experience. The company has communicated its enforcement plan through a series of public interviews by its CEO as well as reportedly through private communications to the developers.

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In contrast, Niantic is not known to have made any public efforts to preclude other types of businesses from reaching out to Pokémon Go customers. This may reflect the challenges of establishing infringement in these varied contexts and given the interlocking and overlapping rights of multiple rightsholders. Niantic may also have made a considered business judgment that, at this stage in the product lifecycle, creative uses of Pokémon Go that strengthen the game’s user base and encourage greater connections between Pokémon Go players are positive (or at least benign) developments. A business seeking to keep a toe in the waters of Pokémon Go would do well to stay abreast of any enforcement trends related to the game, as past toleration of certain behavior by a rightsholder does not prevent the rightsholder from taking action against future instances of the exact same behavior.

Fair Use and Other Defenses Can Be Risky, Expensive Bets

Not every Poké-inspired reference is a violation of intellectual property. From a copyright perspective, for example, limited usage of characters, artwork, or music from Pokémon Go could be defensible under fair use doctrine. From a trademark perspective, use of certain Pokémon Go-related marks to describe the connection between the game and the real world may be permissible. While there is no magic formula for when these and other defenses apply, commercial use is typically disfavored compared to other kinds of use. And especially in new contexts (say, a geospatial mobile game with augmented reality features), such defenses are likely to be resolved in the context of a copyright or trademark infringement lawsuit, and only after significant time and expense. Companies that receive a cease-and-desist letter from one of the Pokémon Go rightsholders should take immediate, appropriate action to minimize any potential exposure.

An intellectual property litigator and former software engineer, John Polito represents companies in disputes relating to software, mobile devices, e-commerce, and online content, and he provides clients with strategic advice regarding software licensing and copyright portfolios.

Lucy Wang has broad experience representing financial institutions and high-tech companies in complex and cross-border disputes, and her practice focuses on securities and regulatory actions as well as a range of intellectual property and commercial litigation.

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Nick Herrera represents clients in a range of intellectual property and commercial litigation matters, including copyright and trademark protection, trademark prosecution, and contract disputes.