In September of 2019, Riot Games ("Riot") announced its partnership with Louis Vuitton ("LV"). Riot is the video game developer, publisher, and eSports tournament organizer for the popular multiplayer online battle arena game League of Legends ("League"). League is a strategy game where players control an in-game character, called a "Champion," to battle other players' Champions and to achieve an objective.
Riot's two-way partnership with LV allows LV to design a travel case for League's World Championship trophy. In addition, LV will also design in-game cosmetic items for League. These cosmetics, called skins, modify the Champion's appearance. Riot sells skins and other virtual cosmetic items to its players via in-game micro-transactions. For its part, LV unveiled the LVxLoL collection, a League-themed set of real-world merchandise, which sold out within an hour of launch. The collection included shirts, parkas, trousers, shoes, and accessories inspired by two League characters, and featuring the bespoke "Louis Vuitton x League of Legends" monogram pattern.
While the license agreement between Riot and Louis Vuitton remains confidential, several fascinating issues arise in the unique setting of video game collaborations.
1. Ownership and control
The core of this partnership is that both companies, Riot and LV, get to use the other's intellectual property to promote their own goods in their own established markets. But LV operates in the real world, whereas League resides in the virtual realm. Thus, the cross-licensing between the companies require different considerations as applied to each company.
For LV's real-world merchandise, LV does not maintain control over its items after the merchandise is sold. On the other hand, in-game cosmetic items are game-specific, meaning upon purchase, the user can only use that item in the video game the item was designed for. This also means that Riot still possesses ultimate control over the item itself. Riot can modify the item or even take it back from the player.
As a result, the cross-license should address what happens to these items if Riot and LV ever part ways. After all, conceptually, Riot can not only stop selling LV-inspired cosmetics in-game, but it could also remove the ones that already exist in game. But doing so will likely irk players who bought and paid for the items. As a result, Riot may insist on a perpetual license that exists post-termination for existing virtual LV items.
2. Unauthorized Duping
One of the known and common problems in video games, including League, is "duping," whereby players use unauthorized or unintended mechanisms to duplicate cosmetic items for free. This can either be accomplished through finding "glitches" or "bugs," which are in-game coding mistakes that the game developer inadvertently created, or "hacks" or "cheats," which are external programs that a player either impermissibly injects into the game, or attaches onto the game through third-party software.
Duping LV-designed virtual items is an added complication, as the duplicated item not only impermissibly uses LV's IP, but could diminish the overall prestige of the brand itself. After all, LV is a luxury brand, built upon the idea that its products are exclusive and hard-to-obtain, and wide-distribution of its products dilutes that image. In addition, while Riot is the sole seller of its virtual items now, this micro-transaction model might change with its expansion of games. Other gaming platforms, most notably Steam, uses a marketplace model, where players are able to buy and sell their own items to each other, while giving the game developer a cut of their profits. If Riot changes to a marketplace model, then duping may also dilute the market value of existing LV items in League.
The Riot-LV agreement therefore should address Riot's responsibility to protect LV-designed virtual items, or alternatively, grant LV the right to enforce infringement in Riot games.
3. Champion availability and viability
Nike makes the uniforms for NFL teams. So no matter which teams wins the Super Bowl, the NIKE mark can be seen on the teams. LV likely wants the same thing here – for an entire new customer audience (gamers) to see and be exposed to the LV brand, especially at the biggest e-sports events and tournaments. But, as with all competitive video games, certain Champions are better than others. Thus, they are picked more often and appear more often in games, especially at the highest levels with the largest number of viewers. And LV may not create skins for every character. In fact, there are currently only two skins released, and League currently hosts 148 Champions, the majority of which are not free-to-play. A Champion that is not unlocked to all players creates a disincentive for players to purchase skins on that Champion.
The Riot-LV agreement may therefore contain a clause that obligates Riot to ensure player access to Champions and to ensure a Champion is competitive, for Champions which LV designed skins for, so as to promote the sale of those skins.
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