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How Intellectual Property Laws Shaped the PlayStation

The introduction of the PlayStation revolutionized the video game industry and forever altered the entertainment world’s landscape.

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Before the dawn of PlayStation in 1994, the video game console market was dominated by two Japanese companies: Nintendo Co Ltd and Sega Enterprises Ltd1. At that time, the industry generated close to US$4.3 billion2 in worldwide revenue.

26 years later, PlayStation’s projected worldwide revenue would reach US$175 billion3, with a forecast of US$217.9 billion in 2023, a number greater than 137 countries GDP4.

With its innovative technology, PlayStation heralded a new form of ground-breaking entertainment: No longer would video games be considered just toys for children.

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1988-1993

A CONSOLE IS BORN

Like most great stories, the origin of the PlayStation started with a catalytic moment.

Following an agreement to collaborate with Sony in the creation of an optical disc add-on for the SNES5 and the development of a separate console that would play CD-ROMs and cartridges (referred as the Nintendo “Play Station”), Nintendo pulled out of the deal and turned to Phillips. Nintendo was dissatisfied with the business terms and concerned about losing control of manufacturing involving the console.

5 Nintendo’s console was called the Super Nintendo Entertainment System (SNES) in the US. In Japan, it was called Super Famicom.

The incident motivated Sony to develop its own console in 1992 under the direction of Ken Kutaragi—now known as the “Father of the PlayStation”—who received the go ahead from Sony CEO Norio Ohga.

Sony’s
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Success factors for the PlayStation7

  • Significant technological improvements pioneered by the introduction of optical discs, which helped launch polygons and 3D environments in games
  • Pricing of the console and software
  • Strength behind the marketing, manufacturing, and distribution
  • Large number of third parties willing to develop for the console
  • Timing of release (Nintendo took 18 months to release their next generation console following the PlayStation launch)

7 As technology improved over the years making consoles more powerful and games more realistic, it also changed the way peripherals would impact gameplay. These included controllers, headsets, sound, graphic cards, keyboards, cameras, steering wheels, and even chairs designed for players. SCE’s introduction of the PlayStation game controller would have a major impact on the success of the PlayStation as well as the gaming industry not only for its design but also for the way it would affect game development and the player’s experience.

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From a business standpoint, Sony had to entice publishers, developers, distributors, and retailers with a business model that would motivate them to invest and participate in the product development.

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At the same time, Sony needed to ensure steps were taken to protect their products (hardware and software) and brand at every stage of the development, launch, and distribution of the PlayStation in order to build on their intellectual property in the years ahead.

Sony had a long history of building relationships in manufacturing, distribution, and marketing. These relationships—originated in Sony’s music and electronics divisions—provided guidance for the PlayStation team.

In 1993, Sony Computer Entertainment Inc. (SCE) was established as a joint venture between Sony Corporation and Sony Music Entertainment (Japan) Inc. In 1995, Sony Computer Entertainment America (SCEA) and Europe (SCEE) were established. PlayStation would then become a property of SCE, known as Sony Interactive Entertainment (SIE) since 2016.

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TRADE SECRETS

ATTRACTING THIRD PARTY DEVELOPERS

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1993-1995

CAN YOU KEEP A SECRET?

The videogame industry is basically a marriage between the hardware manufacturers that provide the devices (innovation) and the software developers who create the games (creativity).

During the development and subsequent release of the PlayStation, much of SCE’s competitive advantage depended on confidential information. This included the company’s strategy for the development, manufacture, and distribution of the PlayStation, protected through trade secrets.

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SCE needed to share confidential information with its game publishers and developers to make the PlayStation a success. The company had to be careful on how that information—protected by trade secrets—was going to be shared to preserve its value.

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Historically, the success of any console has been measured by the quality and selection of games. The same was true for the PlayStation during the critical early launch period, which relied on SCE’s ability to attract developers. This was even more critical since SCE’s internal development teams had not yet proven themselves.11

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In the early stages, SCE’s potential partners would have entered into non-disclosure agreements (NDAs), sharing just enough information to get them interested in working together. Next, SCE and the developers would enter into license agreements13 that dictated how the development tools could be used, who would have access to them, for how long, and how a breach of confidentiality would be handled.

13 A stand-alone NDA is usually signed when you are contemplating a relationship. If the relationship continues, for example, into a license agreement, those confidentiality aspects are usually incorporated into the subsequent agreement.

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TRADEMARKS

CREATING A UNIQUE BRAND

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1993-1995

TRADEMARKING A NEW GAMING EXPERIENCE

SCE needed to convince consumers of the ‘entertainment value’ of their product and that the Sony brand14 , while better known for its electronic devices, could produce a competitive console and games against established players. Internally, there was concern that if the gaming console was not successful, it could impair the Sony brand.

14 Businesses try to convince consumers on the reliability of a brand. The value of a brand is obtained after consumers build trust on the brand (brand recognition).

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Coming up with a new name could help solve two issues:

  • Establishing a unique brand, one that would become identifiable with the console.
  • If the console was poorly received, the damage to the Sony name might be minimal.

Herein lies the importance of trademarks.15

15 Trademarks play a valuable role in any business since consumers recognize a company and the quality of its products through the use of various trademarks. A successful brand builds “goodwill” with the public and a consumer, each therefore knowing the level of quality they can expect from that brand.

When Sony was working with Nintendo, the console was referred to as Play Station (two words)s 16 . SCE adopted the name, but combined the two words into one: PlayStation17. To secure the trademark, SCE had to ensure the name was available.

Focus groups in the US allegedly gave the name PlayStation a negative review, and briefly the development code PS-X 18 was considered. It didn’t come to pass, but SCE recycled the name in 2003 for their digital video recorder 19.

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To build the brand, the PlayStation name, logo, colors, designs, game titles, shapes, three-dimensional features (such as the shape and packaging of goods), and even the symbols on the controllers had to be protected using multiple countries’ trademark laws. SCE registered in the territories that would generate the most revenue and the ones that could present the most problems with counterfeiting.

SCE’s initial trademark application in Japan and then in the US in 1994 included words, letters, and numbers in stylized form. Over time, Sony eventually filed over sixty PlayStation-related trademarks, some of which would later be abandoned.

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As PlayStation gained in notoriety, interest from would-be licensees soared. To capitalize on this phenomenon, SCEA eventually established a licensing program23, primarily to focus on licensing opportunities, enter into agreements, expand brand recognition, develop revenue growth from licensing royalties, and foster further trademark protections.

As part of the licensing agreements with developers and licensees, all PlayStation related trademarks had to conform to a universal standard covering font, size, and placement so the logo and name would be consistent in all materials.

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COPYRIGHT

PROTECTING CREATIVITY

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1993-1995

COPYRIGHT IS NOT A GAME

During the development and prior to the launch of the PlayStation, SCE would own the copyright27 of the software used for the console, games developed internally, and by third parties subject to contract.

27 In the gaming industry, copyright protects the software that runs the hardware, the software used to develop the game (source code), and the content within the game (story, characters, art, music).

As part of providing hardware and software tools (e.g., development kits28 ) to developers, SCE would require the protection and control of their intellectual property and that the information and materials be kept confidential. This was done by requesting developers to sign licensing agreements29 describing what SCE owned, what limited non-exclusive rights they were licensing, how the software and hardware could and couldn’t be used, the length of the license, and grounds for breach as well as remedies.

The agreement would require developers to acknowledge SCE’s ownership of their intellectual property and limit SCE’s liability, including representations and warranties, indemnification, and damages in the event the software resulted in a problem for the developer.

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Sony’s 3D modeled Tyrannosaurus Rex technical demonstration in 1993 sealed the deal with developers. It became the benchmark used by developers to create new artificial worlds. Combined with music, the 3D and polygon technology gave video games a cinematic feel, namely camera angles, perspective, and dimension.

For SCE, it was critical that they owned the copyrights to materials30 created by their employees and contracted third parties, e.g. developers, consultants, talent, and vendors, so they could have complete discretion over their exploitation and distribution as well as of any derivatives.

SCE entered into written agreements confirming ownership of the intellectual property with their employees and vendors. Otherwise, it was conceivable that ownership would remain with the creator of the intellectual property and not the company.

30 This would also include any marketing materials created by employees and contracted third parties associated with the console and the video games.

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Music for games primarily involves either original scored music (whereby a composer is hired to provide work for hire services or licenses such scored music) or pre-existing music that is licensed, or a combination of both. The type of music that will be used in a game will be similar for what is done in films and television shows and will depend on the budget, the developer’s vision, and the intended use of each piece of music.

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Non-licensed companies attempting to manufacture and distribute products associated with PlayStation presented a new legal challenge for SCE involving copyright issues.

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INDUSTRIAL DESIGN

DESIGN CHOICES MATTER

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1993 - 1995

IT’S NOT ABOUT INNER BEAUTY

With every generation of videogames, gaming companies deliver new and aesthetically pleasing devices. The external appearance of newly released consoles is invariably a hot topic among the gaming community. In the case of the original PlayStation, the design choices were even more important. It was SCE’s introduction to the market: PlayStation needed to set itself apart and assert its place among the up-and-coming generation of 3D polygon-based video game consoles.

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Sony designer Teiyyu Goto provided a number of alternative designs for the PlayStation and in the end, opted for a sharp, sober, and modern look. The idea was to signal video games were more than toys for children. Goto also came up with a number of alternatives for the controller. The final design distinguished itself by incorporating an extra set of buttons, two handles, and a larger motif.37

The industrial design of a product is the ornamental or aesthetic aspect of a useful article. Applied to the game industry, industrial designs include the shape of the console, the controllers, and the games’ interface. While industrial designs do not protect the functional aspects of a product, design choices do affect gameplay, like the shape of the controllers or disposition of the buttons.

The most distinctive aspect of the original PlayStation were the controllers, in particular the two shoulder buttons that allowed users control the camera in a 3D environment.

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PATENTS

A GATEWAY TO INNOVATIVE IDEAS

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1993-1995

PLAYING DEFENSE WITH PATENTS

In 1993, SCE filed multiple patents38 for the PlayStation console. Typically, companies file in their home country and in the highest revenue-generating territories. SCE filed in Japan, the United States, and Europe, which represented the three biggest markets. Patents would help SCE control its destiny, by allowing the company to determine who could make, use, or sell the PlayStation game system within the countries they secured protection.

In Japan, where the PlayStation was first patented, SCE (as the owner) had the legal right to exclude or stop others from making, using, selling, or importing a product or process based on the patented invention.

Sony filed a utility patent/model (which covered the functional aspects of the invention but excluded abstract ideas) and a design patent that protected the appearance and ornamental design of the product (new and non-obvious aesthetic design), which later was assigned to SCE.

38 Patents give the inventor exclusive rights for making, using, and selling its invention for a limited period of time that is new, involves an inventive step and is capable of industrial application. This incentive can increase the overall value of a company, generate revenue from licensing fees, and provide a competitive edge by limiting competition. Inventors typically file in their home country and may also consider a country that will result in the most revenue from sales of the invention.

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As devices and games became more complex and innovative, the number of patents increased. Over the years, SCE/SIE registered patents covering hardware design, user interface, communication methods, game displays, parental control, gameplay, micro-transactions, and peripheral controllers.

Patents have other applications beyond legal protection:

  • Patent information facilitates knowledge sharing: The information in patent documents can be very useful to researchers and entrepreneurs to help them.
  • Assess state-of-the art in a specific technological field.
  • Avoid duplication of research and development work.
  • Identify inventions protected by patents (to prevent infringement).
  • Seek opportunities for licensing.
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Freedom to Operate40 : SCE licenses a number of technologies created by third parties to incorporate in its gaming products, including hardware elements and CD-player functions. These arrangements allow SCE to focus on the development of the most value-added components.

40 Freedom to Operate: The condition in which a particular action, such as testing or commercializing a product, can be done without infringing valid patent rights of others.

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Patents have played a significant role in the video game industry, dating back to the introduction of the Magnavox Odyssey in the 1970s. Patents have provided protection for hardware, software, and peripherals, and have been the subject of litigation.

EPILOGUE

TIME TO GO TO MARKET

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DEC 3, 1994

READY TO LAUNCH

Introduced first in Japan (1994) and later in the United States, Europe, and Oceania (1995), PlayStation would become the first video game console to sell over 100 million units.43 More than 7,300 games would be released during the product’s eleven-year lifespan.

In 1995, when the PlayStation was released in the US, it sold 100,000 units in the first weekend and one million units in six months, breaking then sales records for console-based systems.

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2020

THE NEXT GENERATION

In November 2020, SIE released two versions of the PlayStation 5. In February 2021, Sony Corp earnings announced that the global cumulative sell-in units as of the end of December 2020 was 4.5 million units 45.

In 26 years since the launch of the PlayStation, it has sold over 500 million units.46 Today, the Game and Network Service business segment within the Sony Group represents approximately 30% percent of Sony’s profits47 , making it Sony’s largest business segment.

As seen by this extraordinary example of a new entrant to the market, where video game consoles and games embody features that give rise to a range of intellectual property rights, understanding the strategic role of intellectual property in capturing value and market leadership is a critical factor for success.

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END NOTES

Video Games: A report on the supply of video games in the UK, by the UK Monopolies and Mergers Commission, March 1995
2018 Newzoo Global Game Market Report.
Global Game Revenues Up an Extra $15 Billion This Year as Engagement Skyrockets; Tom Wijman, Nov 2020;
According to 2020 estimates by the International Monetary Fund (IMF): https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
Nintendo’s console was called the Super Nintendo Entertainment System (SNES) in the US. In Japan, it was called Super Famicom.
As technology improved over the years making consoles more powerful and games more realistic, it also changed the way peripherals would impact gameplay. These included controllers, headsets, sound, graphic cards, keyboards, cameras, steering wheels, and even chairs designed for players. SCE’s introduction of the PlayStation game controller would have a major impact on the success of the PlayStation as well as the gaming industry not only for its design but also for the way it would affect game development and the player’s experience.
In some jurisdictions, trade secret protection is limited to technical information.
PlayStation Anthology, by F. Mellado, M. Manent, A. Clerc-Renaud, F. Latour, Geeks-Line publishing, page 356: https://www.geeksline-publishing.com/home/20-playstation-anthology-collector-edition-9791093752334.html ; and https://www.retroreversing.com/official-playStation-devkit
Sony Imagesoft became 989 Studios (which was first-party software house of SCEA) in 1995, Ramsay M. (2012) John Smedley. In: Gamers at Work. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4302-3352-7_10; and https://www.gameinformer.com/feature/2019/12/03/the-first-25-years
Console Wars: Sega, Nintendo, and the Battle That Defined a Generation by Blake Harris, 442 (Dey St., 2104) and PlayStation Museum at https://www.youtube.com/watch?v=ryi1QBA6XyI
A stand-alone NDA is usually signed when you are contemplating a relationship. If the relationship continues, for example, into a license agreement, those confidentiality aspects are usually incorporated into the subsequent agreement.
Businesses try to convince consumers on the reliability of a brand. The value of brand is obtained after consumers build trust on the brand (brand recognition).
Trademarks play a valuable role in any business since consumers recognize a company and the quality of its products through the use of various trademarks. A successful brand builds “goodwill” with the public and a consumer, each therefore knowing the level of quality they can expect from that brand.
Interview with Phil Harrison: “1990s Sony Playstation UK launch, Video Games. YouTube video: https://www.youtube.com/watch?v=qzVJYsxR8j0 ; and “From Bedrooms to Billions: The Playstation Revolution”. Documentary film by Gracious Films. Directed by Anthony and Nicola Caulfield.
WIPO IP Portal : Nice Home Page: https://www.wipo.int/classifications/nice/en/
In the gaming industry, copyright protects the software that runs the hardware, the software used to develop the game (source code) and the content within the game (story, characters, art, music).
This would also include any marketing materials created by employees and contracted third parties associated with the console and the video games.
Retro Pals. The PS1's Japanese Launch Lineup - PlayStation Year Zero. YouTube, 3 Dec. 2016. https://www.youtube.com/watch?v=KrkhywUNj4k
Classic Gaming Quarterly. The Launch of the Sony PlayStation (1995). YouTube, 7 Apr. 2015. https://www.youtube.com/watch?v=dsJVqC0pPFY
"The Future Sound of Game Music". Next Generation. No. 24. Imagine Media. December 1996; https://archive.org/stream/NEXT_Generation_24/NEXT_Generation_24_djvu.txt
John Festinger, Video Game Law at pg. 20 (Lexis Nexis 2002).
This registration was based on the priority No. 6-9791, registered in Japan.
PlayStation: The First 25 Years: An oral history of Sony’s big gaming play, and how it changed the world, by Jeff Cork, December 3, 2019; https://www.gameinformer.com/feature/2019/12/03/the-first-25-years
PlayStation Anthology, by F. Mellado, M. Manent, A. Clerc-Renaud, F. Latour, Geeks-Line publishing, page 345: https://www.geeksline-publishing.com/home/20-playstation-anthology-collector-edition-9791093752334.html
Patents give the inventor exclusive rights for making, using, and selling its invention for a limited period of time that is new, involves an inventive step and is capable of industrial application. This incentive can increase the overall value of a company, generate revenue from licensing fees, and provide a competitive edge by limiting competition. Inventors typically file in their home country and may also consider a country that will result in the most revenue from sales of the invention
Prior Art: All the relevant knowledge that existed prior to the priority date of a patent application. In some countries there is a differentiation between printed publications, oral disclosures, and prior use, and where the publications or disclosure occurred. Novelty and inventive step must be assessed in view of the prior art.
Freedom to Operate: The condition in which a particular action, such as testing or commercializing a product, can be done without infringing valid patent rights of others.
The Evolution of PlayStation Graphics (1994 - 2013), by Mad Nacho, https://www.youtube.com/watch?v=dmZSU0793hQ
Japanese Patent for the “Controller for Game Machine” by Sony Corp at https://worldwide.espacenet.com/patent/search/family/026436217/publication/JP3628358B2?q=ap%3DJP23889894A
“PlayStation 2 Breaks Record as the Fastest Computer Entertainment Platform to Reach Cumulative Shipment of 100 Million Units” (PDF) (Press release). Sony Computer Entertainment. 30 November 2005. Archived from the original (PDF) on 3 January 2006. https://www.sie.com/content/dam/corporate/en/corporate/release/pdf/051130e.pdf
SONY - Supplemental Information for the Consolidated Financial Results for the Third Quarter Ended December 31 , 2020; https://www.sony.net/SonyInfo/IR/library/presen/er/pdf/20q3_supplement.pdf
SONY Interactive Entertainment Press Release, August 9, 2018; https://www.sie.com/en/corporate/release/2018/180809.html
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CREDITS

wipo logo

© WIPO, 2021

by-icon  Attribution 4.0 (4.0 CC BY)

The CC license does not apply to non-WIPO content.

Author: David Greenspan

Editor: Donna Hill

Project Manager: Donna Hill

For more information on intellectual property (IP), and access to WIPO Services, IP Guides and publications on the Creative Industries, please visit the WIPO websites.

This project was initiated and led by WIPO's Intellectual Property and Innovation Ecosystem Sector, IP for Business Division.

Acknowledgements:  WIPO wishes to thank all colleagues in the IP for Business Division who collaborated on this project, the WIPO Japan Office (WJO), in particular Yuka Okakita.

Soundtrack After introductory music, throughout digital story: Music: “Birth of a Hero”, Composer: Benjamin Tissot (also known as Bensound) from www.bensound.com

Images:  Copyright and Trademark notices:

page 9: TOMB RAIDER © Square Enix Limited Inc.

page 10: © 1997, 2020 SQUARE ENIX CO., LTD. All Rights Reserved. Character Design: Tetsuya Nomura / Roberto Ferrari

page 15: © 1995 Twisted Metal, Sony Interactive Entertainment LLC

page 18: Technology demo for the original PlayStation®

  • Animation algorithm/Demo program:Akio Ohba
  • Model design:Masahiro Nakamura
  • Runtime model optimize:Sachiyo Aoki
  • CAD/Modeling advise:Kazuyuki Hashimoto

© Sony Interactive Entertainment Inc. All rights reserved.

Design and specifications are subject to change without notice.

page 18: Covers of video games in 1994 :

  • Top row, left to right: 
  • — © 1994 Crime Crackers, Sony Interactive Entertainment Inc.
  • — Mahjong Goku Tenjiku (Japanese title: 麻雀悟空 天竺) © Chatnoir
  • — Gokujou Parodius Da! Deluxe Pack © Konami Digital Entertainment
  • Bottom row, left to right:  
  • Nekketsu Oyako © SEGA;  
  • — Mahjong Station MAZIN (Japanese title: 麻雀ステーション 麻神) ©1994 SUNSOFT;
  • — RIDGE RACER™&©BANDAI NAMCO Entertainment Inc.; Courtesy of BANDAI NAMCO Entertainment America Inc. 
  • — A.VI Evolution © 1993,1994,1995 ARTDINK. All Rights Reserved.

This interactive infographic was developed in collaboration with: Rock Content  by-icon

Manny Alfonso - Global Category Manager, Web Experiences; Nick Vaka, Global Principal, Video.

Talent Network

  • Livia G.  - Project Coordinator
  • Jorge I. – Copywriter
  • Lisa E. – UX Designer
  • Janka M. –  Technical Lead
  • Pinar A. – Development Project Coordinator 
  • Diego R. – Developer
  • Michael D. – Developer


Disclaimer: The information contained in this infographic is not meant as a substitute for professional legal advice. Its purpose is limited to providing basic information on the subject matter.