​​Here’s a quick disclaimer. This is not specific legal advice, this article serves as an educational resource only. You should always speak to an attorney about your specific situation to get the best advice for you. If you’re looking for representation you can contact me here.
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If your website is designed for user engagement, you might know that you can be held liable for copyright infringement. Here are some strategies you might try in addition to registering a DMCA agent for the protection of safe harbor provisions.

1. UGC Intro
User Generated Content can add value to any platform, especially in online gaming, where the strength of the community’s involvement is the primary driver of success. However, giving control of the game’s content to one’s users can be a risky venture. This is the world where when the internet is given the ability to name a landmark for all time, they vote on names like Dickbutt and Boaty McBoatface.  One should never underestimate the willingness of internet users to push boundaries.
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For example, this was submitted to a contest to pick New Zealand’s new flag.

With that in mind, there are steps that one can take to limit one’s liability in the case of a bad actor using one’s game engine. This guide will address copyright issues specifically.
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a. City of Heroes Lawsuit
In 2004, a lawsuit emerged over the game, City of Heroes, in which,
“[Marvel singled] out a game feature for creating “a gigantic, green, ‘science-based tanker’-type hero that moves and behaves nearly identically” to the “Hulk.” Players can also create a “mutant-based” hero powers and a costume nearly identical to Marvel’s “Wolverine,” according to the suit. The New York-based company also took issue with the ability of players to go so far as to name their superhero creations after Marvel comic book characters. ”

Marvel had sued game makers NCSoft and Cryptic Studios over their game, City of Heroes. City of Heroes was a massively multiplayer online role-playing game where players were able to custom design their own superheroes with a variety of powers, origin stories, costumes, and appearances to suit their own personal style, and their characters would then embark on a journey to defend the city from arch-enemies, mutants, and various supervillains. Marvel took issue with the ability to custom create characters nearly identical to their intellectual property and filed a lawsuit against NCSoft and Cryptic Studios.

User-built characters in City of Heroes alongside their Marvel-owned counterparts.

2. What is secondary infringement
Though the presence of direct infringement is a prerequisite to these claims, there are issues in copyright, called secondary infringement, that are particularly salient to games that encourage user generated content:
contributory infringement, where a secondary party “[1] with knowledge of the infringing activity, [2] induces, causes or materially contributes to the infringing conduct of another.”
vicarious liability, where a secondary party “(1) has the right and ability to control the infringer’s acts and (2) receives a direct financial benefit from the infringement.”
Inducement of infringement, where a secondary party “distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement”

a. Copyright Infringement
In order for the company to be found liable for secondary forms of infringement, there must first be a direct infringer.

“To the extent that the infringer is the agent of another, the master can be held culpable for the infringement. If the infringer is the employee of a corporation, as often happens, then the corporation may be held liable. For example, it has been held that if a writer-employee unlawfully copies a work, the corporate employer is liable for the resulting infringement. … The writer of infringing literary material upon which an infringing motion picture is based is liable individually for such writing and, in addition, is regarded as a contributory and joint tortfeasor with respect to the infringing motion picture, even though his participation was limited to writing the script and did not encompass any part of the production, distribution, or exhibition of the resulting motion picture.”

To then find direct infringement:
A party is directly liable for copyright infringement if it exercises an exclusive right of a copyright owner without authorization (17 U.S.C. § 501(a)). These exclusive rights include the rights to:
Reproduce a copyrighted work.
Prepare derivative works based on a copyrighted work.
Distribute a copyrighted work to the public.
Perform a copyrighted work publicly (this includes the right to perform a copyrighted sound recorded through a digital audio transmission).
Display a copyrighted work publicly.
(17 U.S.C. § 106.).

If the company’s products are used by an infringer, as described in the above list, then the company may have to deal with a lawsuit for secondary infringement. Particularly relevant here, are the rights to reproduce a copyrighted work and the rights to prepare derivative works based on a copyrighted work. As was apparent from the earlier image, user generated content can lead to reproductions of copyrighted material. Derivative works would be something like creating a “Son of Superman” type character- in other words, a character or story that would not exist but for the copyrighted work.

b. Contributory Infringement
Contributory Infringement is when the company takes actions that make someone else’s infringement easier to accomplish either through encouragement or actual assistance; the company must also know that infringement is occurring, but willfully turning a blind eye is not a defense to the knowledge requirement. For example, if someone uses your platform to infringe on other people’s copyright, and if you use images of that infringement in advertising, then you are encouraging infringement and you have knowledge of the infringement- satisfying the Contributory Infringement requirements.

c. Vicarious Liability
Vicarious Liability occurs when the company is in a position to stop people from infringing on a copyright but doesn’t do anything about infringement, and the company also receives a direct benefit from the infringement. For example, if you run a video hosting site where you make money on the advertisements shown to users, and you allow people to upload brand new movies to your website without any consequence, then you would have Vicarious Liability because you were making money as a consequence of the infringing material and you did nothing to stop it.

“Napster’s failure to police the system’s “premises,” combined with a showing that Napster financially benefits from the continuing availability of infringing files on its system, leads to the imposition of vicarious liability. We address the scope of the injunction in part VIII of this opinion. … Napster may be vicariously liable when it fails to affirmatively use its ability to patrol its system and preclude access to potentially infringing files listed in its search index. Napster has both the ability to use its search function to identify infringing musical recordings and the right to bar participation of users who engage in the transmission of infringing files. ”

In the foregoing case, Napster was found to have Vicarious Liability for its lack of impetus to develop the structures necessary to deter and remove instances of copyright infringement from its systems. Napster, in fact, was a known platform for copyright infringement, and their reputation as such must have been known to them (not said in so many words in the case). Napster’s reputation for infringement was what bolstered their user base and led to its extreme popularity, and the court found that there was at least a significant potential for revenue based on their infringement model. The nail in the coffin was Napster’s lack of positive response to takedown requests from groups like Metallica and Dr. Dre.

Napster’s original platform with Metallica-infringing content listed.

If the company fails to develop deterrence practices, discouraging users from creating infringing material, the company is inviting potential lawsuits. Similarly, failing to implement takedown procedures, where copyright holds are assisted through a systematic takedown process of infringing material, can also leave one open to lawsuits. Finally, if the company allows themselves to be financially benefitted by the use of copyrighted material (for example, creating a fighting game where it’s possible to recreate the Ninja Turtles, and based on that fact gaining support from the Ninja Turtles’ fanbase) then the company is giving the courts the final required piece to grant a judgment against the company.

d. Inducement of Infringement
Inducement of Infringement is when the company provides a tool specifically for the purpose of furthering infringement. The tool can either be explicitly designed for infringement, or it can be shown that infringement is an obvious and substantial use of the tool. Not every court believes Inducement of Infringement is its own offense, some courts see it as a part of Contributory Infringement, but it’s something that the company should be aware of. For example, if you design software that specifically allows people to download videos off of Netflix, then you know that any users are conducting infringing activity and you are contributing to the ability of the users to infringe copyrights, so you would have Contributory Infringement.

“Here, evidence of the distributors’ words and deeds going beyond distribution as such shows a purpose to cause and profit from third-party acts of copyright infringement. If liability for inducing infringement is ultimately found, it will not be on the basis of presuming or imputing fault, but from inferring a patently illegal objective from statements and actions showing what that objective was. ”

The court here found that Grokster was liable for Inducement of Infringement because the goal of the software was specifically to enable the infringing use. Grokster had sought to bypass the legal obstacles that Napster faced by having all file transfer searches and downloads be handled peer-to-peer, whereas Napster had a centralized server and the ability to take down infringing traffic. The fact that there were legitimate uses for the software was not enough to defeat the claim. If the software’s primary use had even been legitimate, the fact that the goal was to increase infringement would have led Grokster to be liable for Inducement of Infringement.

Grokster screenshot with infringing content.

3. Avoiding Secondary Infringement by Design
Before secondary infringement can be found, actual copyright infringement must be demonstrated. Therefore, one of the first lines of defense for your company is to try to prevent the possibilities for users to infringe copyrighted material. A necessary element of copyright infringement is “similarity,” so we will first look at ways to avoid instances of users being able to achieve similarity.

a. Substantial Similarity
The Substantial Similarity “test asks whether ‘the ordinary observer, unless he set out to detect the disparities, would be disposed to overlook them, and regard their aesthetic appeal as the same.’”  In the 9th Circuit, there are two prongs to Substantial Similarity tests, the extrinsic and the intrinsic tests.

“The extrinsic test is an objective test based on specific expressive elements: the test focuses on “articulable similarities between the plot, themes, dialogue, mood, setting, pace, characters, and sequence of events” in two works. E.g., Berkic v. Crichton, 761 F.2d 1289, 1292 (9th Cir.), cert. denied, 474 U.S. 826, 106 S.Ct. 85, 88 L.Ed.2d 69 (1985) (citation omitted).”

“The intrinsic test is a subjective test that focuses on “whether the ordinary, reasonable audience would recognize the defendant’s work as a ‘dramatization’ or ‘picturization’ of the plaintiff’s work.” Id. at 1292 (focusing on the total concept and feel of the two works) (citing Litchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir.1984), cert. denied, 470 U.S. 1052, 105 S.Ct. 1753, 84 L.Ed.2d 817 (1985)).”

The court used both the extrinsic and intrinsic tests to determine substantial similarity during a dispute between Dr. Seuss Enterprises and Penguin Books.

“Penguin and Dove’s argument is based on an analytic dissection of the following elements:
infringement cannot be based on the title of the parody… ;
the design of the lettering of the words used in the accused work cannot be found to infringe… ;
the poetic meter used in Cat in the Hat known as anapestic tetrameter is no more capable of exclusive ownership than its well-known counterpart, iambic pentameter;
no claim of ownership may be based on the whimsical poetic style that employs neologisms and onomatopoeia…. ; and
the visual style of illustration using line drawing, coloring, and shading techniques similar to those used in The Cat in the Hat are not copyrightable.”

However, this kind of analytic dissection is not appropriate when conducting the subjective or “intrinsic test” (asking if an “ordinary reasonable person” would perceive a substantial taking of protected expression) under Krofft. Penguin and Dove’s contentions on this issue are thus unavailing. As for the objective analysis of expression, the district court’s preliminary injunction was granted based on the back cover illustration and the Cat’s Hat, not the typeface, poetic meter, whimsical style or visual style. For these reasons, we conclude that the court’s findings that Penguin and Dove infringed on Seuss’ copyrights are not clearly erroneous.

The infringing work was a parody of the OJ Simpson trial.

In this case, the court analyzed Penguin’s arguments on the extrinsic test, cited here for illustrative purposes, which are based on objective criteria that are data based and are not as easily disputed (e.g. it’s difficult to dispute that your poetic meter is not identical to another source’s since it’s an objective criteria), and found that the extrinsic test succeeded when applied to factors not argued by Penguin and their codefendant. They also found that when all of those extrinsic factors were taken together, the intrinsic test was shown to succeed because the infringing work gave off the sense of a Dr. Seuss work. The court found in Dr. Seuss Enterprise’s favor because both the extrinsic and intrinsic factors of the Substantial Similarity test were satisfied.

In the 5th Circuit, Substantial Similarity is determined under the ordinary observer test.
Under the ordinary observer test, the fact-finder examines whether the defendant
Copied from the plaintiff. To make this assessment, courts may allow:
expert testimony concerning indicia of copying; and
evidence of similarities concerning elements that may not be copyrightable.
Copied enough of the copyrightable elements of the plaintiff’s work to create substantial similarity between the works. Courts make this assessment using the ordinary observer test, which examines whether an ordinary observer would find the two works to have the same aesthetic appeal (see, for example, Peter Pan Fabrics, Inc., 274 F.2d at 489).

The named Peter Pan case explored the ordinary observer test as such:

“Both designs have the same general color, and the arches, scrolls, rows of symbols, etc. on one resemble those on the other though they are not identical. Moreover, the patterns in which these figures are distributed to make up the design as a whole are not identical. However, the ordinary observer, unless he set out to detect the disparities, would be disposed to overlook them, and regard their aesthetic appeal as the same. That is enough; and indeed, it is all that can be said, unless protection against infringement is to be denied because of variants irrelevant to the purpose for which the design is intended.”

The court declared that an ordinary observer would be unlikely to detect the differences enough to distinguish the sense of the pieces. Ultimately, the idea behind the decision was that if the copied design was actually copied and then slightly varied, the infringing intent was not going to be rewarded simply because of the minor variations introduced to get around the statutory rights of the copyright holder.

Peter Pan Fabrics: Original design on the left. Infringing design on the right.

The more discerning ordinary observer test is designed for cases involving both copyrightable and non-copyrightable elements. The object of this test is to extract the non-copyrightable elements from the analysis. The analysis is whether an ordinary person would consider the aesthetic appeal of the works the same if that person:
Ignored the copied portions that are unprotected by copyright.
Considered only the copyrightable elements of the plaintiff’s work copied by the defendant.
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i. Beating the Extrinsic Test
The Extrinsic Test “focuses not on basic plot ideas, which are not protected by copyright, but on ‘the actual concrete elements that make up the total sequence of events and the relationships between the major characters.’ ”

When developing a user generated content engine, one is likely to imagine the desired outcomes and then work backwards to provide the necessary tools to the end user. When you are developing the vision for the video game’s outcome, it would be wise to document the creative process and the steps taken along the way. Anything you can do to document that your intended outcome was substantially different from a potential litigant’s copyrighted material may serve to deter potential lawsuits. Publishing data on that process may even be a wise move, since the consumer often enjoys those behind the scenes looks at stories that they have connected with, and it serves as a marker for potential litigants and their counsel that their expensive lawsuit may be in vain.

“Independent creation is an affirmative defense, evidence of which may be introduced to rebut a prima facie case of infringement.”  Independent creation is a showing that your project’s development was not dependent on another person’s work. By continuously documenting your work processes, and showing that your ideas developed out of an independent kernel, you will be able to better prove independent creation. “We have previously determined that independent creation is an affirmative defense and may be used to rebut a prima facie case of infringement.”

Another potential defensive measure, though it may be prohibitively time consuming, is to find public domain examples of similar outcomes to “base” your characters on. If you can demonstrate that your work is based on something free to copy, then your work is not going to be found liable for copyright on someone else’s work. “Once a work enters the public domain, no individual—not even the creator—may copyright it.”

Something to be wary of is the attempt to imitate or mimic the feel, vibe, tone, style, or other qualitative aspect of another person’s work. The court has found in recent cases (Marvin Gaye) that the attempt to recreate a style was enough to demonstrate substantial similarity between two separate works. The court based their ultimate outcome on the fact that the defendants were cognizant of the fact that they were channeling someone else’s style. Documentation of the process will serve as evidence that you did not intend to imitate another artist. “The Producers rely on the ‘inverse ratio’ rule, which ostensibly lessens the quantum of proof required to show copying when the plaintiff can show that the defendant had a ‘high degree of access’ to the protected work.”  Though the court acknowledged in the case that the trend is away from the inverse ratio rule, the fact that the plaintiffs raise the issue demonstrates the danger in not clearly establishing an independent creation process.

“(T)he law imposes no prohibition upon those who, without copying, independently arrive at the precise combination of words or notes which have been copyrighted.” Stated another way, “If A produces identically the same work as B, by independent thought, in good faith, without hearing, or seeing, B’s work, both A and B would be entitled to individual copyrights in their individual works.”

Your game will be your own creative work, but you need to keep an eye out for works that are reminiscent of your own, particularly easily recognizable ones. Once you’ve identified works with some similar features, you will want to ensure that the user generated content outcomes cannot achieve substantial similarity to those works. For example, if you are making a game based on ancient Greek myths and legends and the artwork is in the style of an animated cartoon, then you should prevent combinations of character features that would resemble the Hercules character from the Disney movie. This is obviously a complicated task- how similar is too similar? But in every instance where this is possible, you should programmatically prevent people from making infringing characters. You might want to prevent only the most obvious of combinations because the cost can otherwise be prohibitive. For example, if you design a character with super strength, then they cannot ride a flying Pegasus. While that may limit the customization options, and possibly a popular one, you know that users will be unable to infringe on Disney’s animation. Alternatively, you can program in more nuanced conditions to prevent copying, perhaps creating the very model you want to prevent, breaking the model down into its customizations, then creating a rule that at least three of those customizations must be different for it to be a valid character. Again, that would be expensive, as well as cumbersome, but it is an option to consider depending on your appetite for risk of litigation.

ii. Beating the Ordinary Observer Test
The court will look to see whether two works have the same aesthetic appeal. When considering aesthetic appeal, the courts will look beyond technical similarities for the sense of the work as a whole. The court will examine the minute details for dissimilarity, but largely as evidence of the differing overall nature of the two pieces. For example, the second circuit found that two similar works were not similar enough to find infringement:

“Belair’s photograph depicts young women of opposite characters, one a “Devil” and the other an “Angel.” Bratz dolls portray young women who not only share, but are defined by, a common characteristic: their “passion for fashion.” J.A. 382. Thus, even though one Bratz doll wears a shirt with the word “Angel” on it, the image is not substantially similar in its aesthetic appeal to Belair’s halo-wearing angel.”

The messaging of the two works was different enough that the other similarities were not enough to find a similar aesthetic appeal. Having clear branding, independently developed, thus can serve to differentiate your work from any other work against which yours is compared. Additionally, the use of messaging around the central theme of the game can give your users an identity to attach to the game.

b. Striking Similarity
“Striking Similarity is similarity between the works that is either so comprehensive or so exact that it cannot be explained other than as a result of copying (see, for example Selle v. Gibb, 741 F.2d 896, 904 (7th Cir. 1984)). Striking similarity creates an inference of actual copying (see, for example, Gaste v. Kaiserman, 863 F.2d 1061, 1068 (2d Cir. 1988)).”  “However, the inference of copying created by striking similarity is rebuttable and must be reasonable in light of all other facts and circumstances (see, for example, Gaste, 863 F.2d at 1068). For example, the inference of copying would be rebutted despite a striking similarity between the two works if a defendant can prove that its work pre-dated the plaintiff’s work.”

i. Beating Striking Similarity
If you’re going to combat a claim of Striking Similarity, you will have to show that you demonstrated an effort to prevent the Striking Similarity. You will have to show that any instance of Striking Similarity was against your efforts to prevent them. When a user identifies an instance of Striking Similarity they should be able to report that instance. When they report that instance, an employee of the company should be able to review the reports, and have the authority to remove the accounts that violate the Striking Similarity events.

Another method to discourage Striking Similarity would be to include language in the terms of use that forbid the direct copying of other people’s work. Creating a culture that discourages copyright infringement can keep claims from being developed. For example, there is a robust modding community for the game Rocksmith. The game is a guitar teaching tool that uses mechanics similar to those of Guitar Hero, but with real instruments. The user is able to play real songs with increasing difficulty levels with the idea that the user will eventually be able to play entire songs without visual tools or other assistance. The number of available songs is limited, so the modding community has developed tools to create their own tracks. The community has strict rules to reduce the problems for the gamemakers themselves. The community is so happy with the product that they try to protect the game from their own conduct. For example, anytime the game releases downloadable content in the form of a new song, that song is forbidden from being modded- to allow the game maker and copyright owners to make money off of their product. For the game makers, ideally, the community would discourage all forms of infringement, but if they’re going to infringe anyways, then at least they are trying to do so responsibly and reasonably ethically.

c. Similarity in Computer Software
Technology has disrupted all areas of the law, if only because it requires reinterpreting existing law onto a new canvas. The same is true of copyright law, and the courts came up with ways to navigate copyright claims in regards to software:
Computer programs and games often involve:
An audiovisual component consisting of the sights and sounds displayed to the user.
A literary component consisting of the code.
Regarding computer games, story elements, such as plots and characters.

Copying any of these elements alone or in combination can give rise to infringement.
Courts analyze the visual and story components in the same manner as other audiovisual works by comparing:

• The visual display.
• Any sights and sounds.
• Any story elements.

When users are developing their content for your game, whether it is entirely with a character creation mechanism, a scenario editor, a map builder, or just a machinima, any recreation of copyrighted material which falls under these listed categories (in addition to verbatim copying ) can open you up to liability:

“[A] computer’s “non-literal” elements consist of elements other than the code, and may generally be described as the “structure, sequence, and organization” of the underlying program. These elements include ‘general flow charts, as well as the more specific organization of inter-modular relationships, parameter lists, and macros.””

4. Final Notes
The accumulation of these suggestions should help deter the majority of frivolous lawsuits, and at a minimum provide for a speedy procedure if things end up in court. The steps listed above are applicable regardless of the form of liability you are looking to avoid. By zealously trying to discourage infringement, the courts are more likely to not find any form of secondary liability and dismiss the lawsuit more speedily.

Ultimately, the company should perform hygienic practices to demonstrate goodwill among its users, of course, but also among its fellow game makers. Creating a culture of respect around copyright may encourage anyone who thinks they have a claim of copyright to reach out and speak with you directly instead of initiating costly litigation.

When possible, code in ways to defeat infringement. Disallow copyrighted names through database checks, disallow character creation that matches likely targets of infringement, prominently include terms of service that forbid copyright, make it easy for users and copyright holders to report instances of copyright, and follow through on reasonable takedown requests.

Document your creation processes, including brainstorming sessions. When developing the process for allowing character creation, or other user generated content forms, keep track of your ideas, what prompted them, what sort of discussion went into them, and what steps you took to avoid infringement.

Remember, there is no such thing as litigation proof practices. You are seeking to minimize litigious behavior, and you are aiming for the speedy resolution of any court proceedings that are initiated against you.