Games

The Game Industry Promotion Act strictly prohibits the production, provision, distribution, and exchange of speculative game products.

A speculative game product refers to a game product in which a pecuniary gain or loss arises depending on a chance outcome, and any game with a structure that allows betting, payouts, or exchange is subject to regulation.

A violation may result in imprisonment for up to five years or a fine of up to 50 million won, and a heavier punishment is imposed in cases of arranging exchanges or operating in connection with an illegal exchange shop.

Therefore, it is necessary to examine the content structure and operation method of the game from the early stage of the business to analyze whether speculative elements are included, and to incorporate a design that blocks the possibility of exchange.

If whether a game is speculative may become a matter of controversy, it is advisable to prevent disputes by obtaining an advance rating classification from the Game Rating and Administration Committee and by obtaining legal advice.

All game products must obtain rating classification from the Game Rating and Administration Committee before distribution or provision, and a violation may result in imprisonment for up to five years or a fine of up to 50 million won.

In particular, because rating classification itself is refused for game products that include speculative elements, distributing such products in an unrated state or distributing them online may result in serious legal sanctions.

Therefore, from the game production stage, the specifications and content type of the game product should be organized, and the procedure of applying for rating classification to the Game Rating and Administration Committee before the completion of production must be carried out in advance.

If rating classification is refused, an objection or a request for adjustment procedure may be used, and where the possibility of a dispute exists, it is recommended that the risk be managed through advance legal review.

To operate a game arcade business, registration with the competent authority is required, and operating without registration in violation of this may result in imprisonment for up to two years or a fine of up to 20 million won.

In particular, cases of operating speculative game products or probability-based item game machines without registration, or operating an illegal game arcade beyond the scope of business, are frequently detected.

In response, an operator should confirm whether registration as a game provider has been completed with the competent district office or city hall before commencing business, and should not begin business before registration is completed.

In addition, even after registration, if there is a replacement of game products or a change of facilities, a report or approval must be obtained in advance, and a management system in which the rating classification chart, registration certificate, and game machine report are kept on hand must be maintained in preparation for surprise inspections.

The Game Industry Promotion Act has made it mandatory to display information on the types and acquisition probabilities of probability-based items.

A violation results not only in the imposition of a penalty surcharge and administrative sanctions but also in civil liability for damages with respect to user harm.

In particular, harm to consumers caused by the non-display or false display of probabilities was an issue that was difficult to prove in practice, but the amended act allows the court to estimate a reasonable amount of damages and requires damages to be paid in cases of intentional violation, so the legal risk has been considerably strengthened.

To respond to this, an operator should transparently display all probability information when designing probability-based items, and it is important to provide the same information through all channels, including the website, in-app, and the item purchase screen.

If an allegation of a violation is raised, a strategy of carrying out a risk review and voluntary corrective measures through legal advice at the earliest possible time, and negotiating a reduction of the penalty surcharge or an exemption from administrative disposition, is necessary.

The Game Industry Promotion Act and the Juvenile Protection Act strictly restrict the provision of game products designated as media products harmful to juveniles.

If harmful media products are provided to juveniles under the age of 19, or if juveniles are permitted to access games during late-night hours, the imposition of an administrative fine, suspension of business, and criminal punishment may be carried out in combination.

An operator registered as a juvenile game provider must mandatorily operate a system to block access during late-night hours, and in the event of a violation, criminal punishment and administrative disposition are carried out at the same time.

Therefore, upon the release of a game, the rating classification according to whether the game may be used by juveniles must be thoroughly complied with, and a server operation system equipped with a function to restrict access during late-night hours must be established.

If the appearance, personality settings, voice, or background story of a game character is similar to the image of a specific person or a celebrity, this can develop into an issue of infringement of publicity rights.

In particular, disputes arise when the image, name, or voice of an actual entertainer, athlete, or influencer is used without authorization to create a character or is used in advertisements or events.

Publicity rights refer to the right to commercially use a person's name, portrait, voice, and image, and if explicit consent is not obtained under a contract, legal liability may follow.

To prevent this, a legal review should be conducted at the character design stage to examine in advance whether there is similarity to a real person, and written consent must be obtained when producing advertisements or collaboration content.

In the course of providing game services, the personal information of users is collected through membership registration, event participation, payment, and community activities.

In particular, sensitive information such as real names, contact details, account information, IP addresses, play logs, and purchase histories is included, and if this is handled improperly, it can lead to a penalty surcharge, criminal punishment, and a claim for damages for violation of the 「Personal Information Protection Act」 and the 「Network Act」.

Because the leakage or unauthorized use of personal information also deals a critical blow to the brand image, a clear consent procedure for collection, use, and provision must be followed, and the personal information processing policy must be managed at all times in accordance with the law.

In addition, when linking with external platforms (such as Facebook and Google), a legal basis for the transfer and processing of personal information must be secured.

Virtual goods such as in-game items, game money, points, and NFT characters are often exchanged for or traded as real economic value, and they therefore become a cause of disputes.

In particular, if the terms of use of a game do not clearly include provisions on refunds, prohibition of trading, and expiration, there are frequent cases in which users claim damages with respect to the retrieval of items, the suspension of services, and the refusal of refunds.

Recently, legal issues regarding the copyright attribution and revenue distribution structure of NFT-based items have also been raised.

To prevent this, it is necessary to clearly specify the ownership attribution, conditions of use, refund provisions, and grounds for expiration of virtual goods in the terms of use, and, in the case of NFT and blockchain-based assets, to prepare separate terms of use and a revenue distribution contract.

In the process of releasing a game and promoting its service, advertising and promotion are essential, and there is a risk of violating the Monopoly Regulation and Fair Trade Act and the Act on Fair Labeling and Advertising due to exaggerated advertising, false advertising, and advertising that misleads consumers.

In particular, if the acquisition probability of gacha-type probability-based items is exaggerated, or if the performance of in-game results is distorted in advertising, a penalty surcharge, a prohibition on advertising, and a civil lawsuit may be brought.

In addition, if paid advertising through a well-known streamer or influencer is not labeled as such, it becomes subject to sanctions under the Act on Fair Labeling and Advertising.

To prevent this, a legal review should be conducted at the advertising planning stage, the probabilities of gacha-type items must be accurately disclosed in accordance with the 「Game Industry Promotion Act」, and the labeling of all paid advertising as 'paid advertising' must be made mandatory.