OGL and a Risky Decision
As reported by Gizmodo, Hasbro, owner of Wizards of the Coast (WotC) and the Dungeons & Dragons (D&D) properties, wants to revoke the current Open Gaming Licence (OGL) version (1.0a) that is currently in use. They want to impose a new licence, OGL v1.1, that includes provisions for royalties and to use third-party material without attribution or compensation. This has wide-sweeping, and potentially devastating, consequences for other publishers of role-playing games and game content. But there is risk, and Hasbro may find they don’t have the freedom to act they think they can, even if they roll a natural 20. There is more to this than just contract law and licensing.
A Disclaimer
I am not a lawyer. What I write here does not constitute legal advice, nor is it informed legal opinion. I am a layperson with a working understanding of various areas of law (contract, intellectual property, securities, employment, business and bankruptcy. Don’t ask about that last one, it’s a long story). If you want real legal advice or opinions, speak to an actual lawyer. Batteries not included, some assembly required, actual mileage may vary, see dealer for details.
The Background
I won’t get into the history of D&D, TSR, Wizards of the Coast, or how Hasbro came to own it all. You can read that here. What is important is knowing that in 2000, WotC published the Open Gaming Licence to allow other publishers to develop roleplaying games and game content using the mechanics also in use in the heavily-revised 3rd Edition of D&D. The licence was inspired by similar licences used in open source software.
As a result, a substantial ecosystem of other roleplaying games grew, along with additional content for D&D and others. This was for both table top play and for on-line/computer play. This had the benefit of making roleplaying games more visible, and that contributed to WotC revenue and profitability. The 4th season of Stranger Things brought increased visibility to D&D, and a forthcoming movie has also raised the game’s (and the genre’s) profile.
The problem, though, is that there are no royalties or other fees that WotC/Hasbro can collect with this licence. The recent increases in D&D’s profile is also likely to help these other publishers, who could be seen as getting a free ride on D&D’s recent resurgence and success.
The new licence is intended to ensure that Hasbro sees revenue from other publishers when they reach a particular revenue level. It also gives them the right to use material created by others under the licence, but does not require that Hasbro compensate those other creators or publishers, or even give them attribution. The royalty structure (based on gross, not net revenue) is such that it could bankrupt some of these other publishers, which are direct competitors to WotC/Hasbro.
Why A Licence?
Why would WotC use a licence, particularly one inspired by the open source software community? It’s simple: it gives them effective control on elements of roleplaying games and D&D that aren’t protected by other, more traditional legal forms like copyright or trademark.
There are basically three legal ways to protect intellectual property: copyright/trademark, patent, and trade secret. In this case, trade secret doesn’t apply because you have to keep it, well, secret. Publishing the rules in a book anyone can buy is the opposite of that. Things like fried chicken coating or soft drink recipes can be protected by trade secret (that’s what KFC, Coca-cola, and others use because patents have limitations, as discussed below). So that leaves copyright and patent.
Copyright
Copyright, and it’s direct relative the trademark, allow the author or creator to protect the distinct elements of their creation, such as names and images. What it does not allow, though, is protection of the concepts underlying them.
So, I can write a series of novels involving a young boy who discovers he is a wizard, and who attends a special school to learn to use that power, and has adventures while doing so. What I can’t do is call that boy Harry Potter, name the school Hogwarts, and call non-magical people muggles.
That’s why you see differences in names and images in different roleplaying games. Pathfinder First Edition (Pathfinder 1e), published by Paizo, is based on the same core ruleset as 3rd Edition D&D, and is published under OGL v1.0a. But Pathfinder 1e has some differences in nomenclature. It doesn’t have a “dungeon master”, it has a “game master”. It doesn’t include a “Monster Manual”, it has a “Bestiary”. Some of the names of character classes, spells, items, and monsters were changed to avoid infringing on WotC/Hasbro properties.
Using a licence, rather than trying to use copyright law, gives WotC/Hasbro control over the conceptual elements of D&D, without giving anyone a licence to use the unique D&D elements that are covered by copyright and/or trademark.
Further, copyrights don’t last forever. They have time limits (note how there is usually a list of works that fall into the public domain near the end of every year). If copyright did apply, it would eventually expire, and then all the elements of the game would fall into the public domain. A licence essentially lasts for as long as the licence issuer exists.
Patent
A patent is a time-limited monopoly on an idea or invention, in exchange for publicly disclosing the details of the invention. They actually protect concepts, not implementations. Could D&D have been patented? It is quite possible it could have been patented.
It would have to be patented using a “business method” patent which covers processes and procedures (in this case, the rules of the game). It’s the same basis for software patents today. The game would likely have met the tests for patentability: useful, unique, and non-obvious (to ordinary practitioners in the art). So hypothetically, it could have been patented.
However, had it been patented, that patent would have expired by now. And you can’t renew patents like you can a trademark. Once it expires, it expires, and you can’t attempt to “re-patent” it, even if the new rules might be considered “different enough”. The old patent acts as prior art, and now the concept is no longer “unique” in that regard. It isn’t cut and dried, and it could be messy to sort out.
The Licence Avoids These Issues
By creating a licence, and by virtue of multiple creators and publishers signing on to it, WotC/Hasbro avoids the issues and limitations that come with patents and copyrights. It keeps the conceptual elements of roleplaying games protected for as long as WotC/Hasbro or its successors choose to.
If a concept can’t actually be protected except via by patent, why bother signing on to the licence? Because it’s free, it’s cheap insurance against being sued for potentially infringing on protected material. Sure, WotC/Hasbro may not win, but the cost to defend against such a suit can be prohibitive, and accepting the licence is cheap. It’s easier to just adopt the licence than face the prospect of a lawsuit.
Can They Do This?
Can WotC/Hasbro unilaterally revoke the existing licence, and with it end the ability of publishers to release their current material? Legally, it would appear that they can. This power arises because of some standard elements of licence agreements.
Three Key Elements
Among other things, licences contain three key elements:
A scope (exclusive vs. non-exclusive)
A duration (periodic, perpetual)
Revocability (revokable, irrevocable)
The how the different combinations are applied varies considerably. When I worked for EFA Software, the licences we issued to our customers (stock exchanges and clearing houses) were non-exclusive, perpetual, and irrevocable. That was important, since these organizations needed to know they could keep using the software even if EFA disappeared (which it eventually did) or if they chose to not buy a new version.
A non-exclusive licence means that the issuer can licence the property to others. There are times where a licence is exclusive: the licensor will not grant a licence to anyone but the one licensee. Most software licences are non-exclusive. For published works like novels, the author may give a publisher an exclusive licence to the work, although for a limited period of time.
Which brings us to duration, and the concept of perpetual licences vs. non-perpetual licences. Many licences are not perpetual. Take, for example, video supplied by streaming services like Netflix. A subscriber is given a non-exclusive licence for a limited amount of time (usually either a month or a year). At the end of that time period, the licence is renewed for another limited time. If the licence is not renewed, it expires, and the licensee (or subscriber in this case) loses the right to use or access the material.
And that leads to revocability. A licence is generally automatically revoked when it expires. There may be terms in the licence that give the licensor the right to revoke the licence early, usually with some kind of notice, and possibly compensation to the licensee. There may also be statute and case law (where common law applies) that govern how a licence can be revoked, what notice is required, and what compensation is needed. Even an irrevocable licence can potentially be revoked under some conditions (like those that would breech the contract), so being irrevocable isn’t necessarily absolute.
But Isn’t Perpetual and Revocable Contradictory?
In regular, colloquial usage, “perpetual” would seem to imply “irrevocable”. If you can revoke it, how can it be perpetual, in that it lasts forever? Legally, though, they are distinct. A licence is “perpetual” in the sense that it doesn’t expire unless the licence is revoked.
A perpetual licence is typically used when there is a one-time fee for obtaining the material, such as when you “buy” a digital version of a movie or a song. What you are getting for your one-time fee is a perpetual licence in that it doesn’t have a set expiry date. But in some cases, the licence can still be revoked.
In OGL v1.0a, the licence is non-exclusive and perpetual. But it is not irrevocable. The owner of the licence (WotC/Hasbro currently) can revoke the licence at any time. The licensees don’t have much recourse, and the revocation can mean the end of their business. Technically, this appears possible.
The Flaw In The Ointment
The Sherman Antitrust Act
Now we come to the risk, and the problem, that WotC/Hasbro may have created for themselves. What may come to bear is another part of the law in the United States (and other jurisdictions): antitrust law.
It appears that WotC/Hasbro have created what amounts to a monopoly in roleplaying games. By making the material available via OGL v1.0a, and encouraging its adoption, WotC/Hasbro has created an organic monopoly, one that came about by the natural growth of the product and the ecosystem it encouraged. That’s as opposed to a “synthetic monopoly” (these are my terms, not legal ones, BTW), which can be created by acquisition or merger of competing organizations.
In the United States, a monopoly isn’t generally illegal. Certainly, some types of mergers or acquisitions can be denied or nullified by federal authorities if it creates a non-competitive environment that may harm the consumer. But if a company grows their monopoly “naturally” (we can discuss that concept some other time), then there’s no legal means to stop it, but only if they don’t abuse it. What is governed in the US is the behaviour, not the monopoly itself.
Windows
In some ways, this situation has parallels to what happened with the Windows operating system in the 1990s. Microsoft, by virtue of controlling more than 95% of the personal computer operating system market, had established a monopoly. It did that, not by acquiring competitors, but by simply getting large numbers of computer manufacturers to install it, and encouraging businesses to use it. Hardware vendors bought licences to Windows to install and distribute on their PC’s because that’s what customers wanted.
But Microsoft wanted to have tight control over many aspects of what was installed, and how it was presented. Hardware manufacturers complained, and state and federal authorities sued Microsoft for violating the Sherman Antitrust Act. The claim was Microsoft was abusing their monopoly and harming or preventing competitors from being able to operate.
The argument for the prosecutors was that there was no commercially viable alternative to Windows for personal computers. The only other options at the time, the Macintosh, Linux, and the variety of UNIX workstations available, had issues. Apple wouldn’t licence its operating systems to just anyone, and none of those platforms had the software catalog that Windows had. To sell a personal computer, you had to install Windows to have a chance at commercial success.
Microsoft’s defence was that the mere presence of other operating systems should be enough. Since the case also turned on browsers, Microsoft also tried to point to the presence of other browsers as evidence a competitive market existed at the time.
Microsoft lost. The judge found that it wasn’t enough there were competitors. The fact that Windows owned 95% of the market, and that Explorer was by far the most dominant browser at the time, meant they had a monopoly. Microsoft, in trying to impose rules to limit other software’s availability, was abusing that monopoly and limiting the chance of there being viable competitors.
Some called for Microsoft to be broken up, like AT&T had been in 1982. Instead, the result was an agreement to allow more latitude on what was installed on a PC by a manufacturer, as well as “unbundling” some aspects of Windows (in particular the web browser).
That prior judgement would loom when Microsoft entered the PC hardware business. It was natural to fear that Microsoft might use it’s position as the owner of Windows to give their own hardware a competitive advantage. That does not appear to be the case, but you can bet the other hardware manufacturers are keeping a close eye on the situation.
Ubiquity
The widespread adoption of OGL v1.0a to create new game systems, new content for those game systems, and new content for D&D itself, is similar to how Windows was adopted throughout business. In the same way that companies around the world came to depend on Windows, and the vast catalog of software that it supported, so too did publishers and creators of content for roleplaying games come to depend on OGL v1.0a.
Certainly there are other roleplaying game systems that do not use or depend on elements of D&D, or the game mechanics covered under OGL v1.0a. But whether there are “enough” to be considered viable competitors to it is an unresolved question.
Cast “Summon Government”
To understand the implications with revoking OGL v1.0a, consider Pathfinder Second Edition (Pathfinder 2e). Paizo undertook what was essentially a ground-up rewrite of Pathfinder to create the second edition. The apparent objective was to make it no longer dependent on the game elements covered by OGL v1.0a. The second edition Core Rulebook does include OGL v1.0a amongst its various copyright and attribution notices.
Whether they have accomplished the goal of not being bound by OGL has not been established. As such, Hasbro could claim that Pathfinder 2e is substantially based on Pathfinder 1e, and still covered by OGL v1.0a. The inclusion and acknowledgement of that licence in the Pathfinder 2e Core Rulebook would seem to strongly support that assertion.
With the revocation of the older licence, Paizo would be required to adopt the OGL v1.1, or face a lawsuit if they continue to publish Pathfinder 2e and related materials. Hasbro has far deeper pockets than Paizo, and even if it was potentially likely Paizo would prevail at trial, it’s possible they couldn’t afford the fight in the first place.
But, if Hasbro is abusing their monopoly position, Paizo isn’t the one that has to pay for the fight. The real fight may come if Hasbro has to face off against 50 state agencies, as well as the US government, to defend themselves against an antitrust suit. The government’s resources here are essentially unlimited. Whether they would bring these resources to bear is definitely an open question, though.
Assuming an antitrust trial where WotC/Hasbro loses, or enters into a consent decree to avoid trial, a likely outcome is that OGL v1.0a is made irrevocable. It would be a post hoc alteration of the licence by the courts, but one that removes the ability to abuse the monopoly that it created. It would also recognize the assumption that others had potentially made, that WotC and its successors were issuing the licence in good faith, and that it wouldn’t actually be revoked.
This outcome would mean that publishers and creators could continue to sell existing material, and create new material for other game systems. This would include creating content for D&D up to and including the current 5th edition.
Where WotC/Hasbro “wins” is that the upcoming D&D One (sometimes referred to informally by some as “6th edition”) wouldn’t be covered by OGL v1.0a, and instead could be covered by OGL v1.1. Anyone wanting to create content for D&D One, or base new games on the D&D One rules and concepts, would have to also abide by OGL v1.1.
Another Armour Class Penalty
There is a second potential problem for WotC/Hasbro, in part because of their stated attempt to mimic free and open source (FOSS) licences. It comes in the form of a question that was covered in a ruling from the US Court of Appeals, Federal Circuit. A discussion on StackExchange contains information on that topic which includes a link to the ruling on the appeal, Jacobsen v. Katzer.
The general finding in Jacobsen v. Katzer is that a licence that is silent on revocation is only unilaterally revokable if there was no consideration as part of the licence or if the licence terms were violated. However, in Jacobsen v. Katzer, the licensor did receive consideration, if only directly, because of the commercial opportunities they gained because of markets their open-source software made available.
Then there’s the issue of “partial performance”. Once the licensee uses some of the material, and abides by the licence, it is no longer revocable. This is based on opinions in the US, UK, and other jurisdictions.
OGL v1.0a could potentially be seen in the same light. When it comes to consideration, it’s existence improved the market conditions for roleplaying games in general, and D&D in particular. In doing so, this allowed WotC/Hasbro to benefit commercially. That none of their competitors paid WotC/Hasbro directly doesn’t mean there was no consideration. The consideration, like in Jacobsen v. Katzer is indirect, but it still exists.
Further, since others used the material to build game systems, or additional content for other game systems including D&D, they’ve now fulfilled the “partial performance” condition, meaning the licence can’t be revoked unilaterally.
A Critical Miss?
WotC/Hasbro has benefited from the ubiquity of other roleplaying games, as well as content for D&D itself, even if they haven’t received any direct payments from the other creators in the space. The use of OGL v1.0a made that possible. It was a good idea at the time, since table-top roleplaying games were moribund, displaced by the growing number of card-based games spurred by the success of Magic: The Gathering.
But in allowing all this material to be created, and encouraging its creation, WotC/Hasbro has put themselves in a position where they have sole control over the licence terms and the properties it encompasses. That would seem to be, by definition, a monopoly. And acting in a way that abuses that monopoly, and has the potential to harm competitors and consumers, would appear to be a violation of antitrust law. WotC/Hasbro may find they can’t simply revoke the current licence and impose a new one, particularly one that is tilted almost entirely to their benefit.
The fact that multiple organizations have used the materials, and are abiding by the licence now, also supports the argument that they have fulfilled the partial performance requirement. As such, the licence is already irrevocable, even though it is silent on that condition.
Where this could begin to hurt WotC/Hasbro is in decreased sales of their products, and poor box office at their forthcoming movie. If their position is considered “toxic”, the potential for D&D to be used again in other media (like TV shows and movies) could be limited or even non-existent. It will encourage other game and game content publishers to focus on other properties and franchises, and exclude D&D.
The reputational harm, and the damage to their brand, may far outweigh any money they hoped to receive from the new licence. And if they are sued, and lose, in an antitrust suit, that not only harms their brand, it hurts their bottom line. They may not be able to revoke OGL v1.0a, and can only hope others will adopt OGL v1.1 for other commercial reasons. Ultimately, this may all backfire on WotC/Hasbro, and hurt them rather than help.