The extent to which video game makers can use third party brands within the game is currently a hot topic. In March 2020, a New York court ruled on whether the publisher of the hugely successful Call of Duty games had infringed the HUMVEE trade mark by depicting Humvee military vehicles in the game. In England, Manchester United is currently suing the developer and publisher of the Football Manager game for using the football club's name in the game, but also for not using its club crest.
The Humvee Case
In the New York case, the court ruled that Activision had not infringed AM General's HUMVEE trade mark.
Humvee vehicles, which are used by the American military across the world, have been depicted in nine different Call of Duty games. The vehicle is also mentioned within the game's dialogue.
The New York court granted Activision summary judgment against all of AM General's claims (the main claim being for trade mark infringement). The judgment was reasoned on the basis of striking a balance between the monopoly rights of a trade mark owner and First Amendment free speech interests. The judge noted that, though it was "metaphysically possible for [Activision] to have produced video games without the presence of Humvees", they increased the game's sense of realism and fulfilled a genuine purpose (i.e. Activision was not simply trading on the Humvee brand).
It is likely that a UK court would reach a similar outcome, though for different reasons. First, for a trade mark to be infringed, it has to be used in a way which affects one of its "essential functions". These functions have evolved through case law over the last 15 years, but the principal function remains the ability of the trade mark to act "as a badge of origin". Given that the game uses the trade mark to refer to Humvee vehicles to add realism, and does not appear to make any use of the mark for any other purpose (in particular, as a means of marketing the game), this function should not be affected – people would not assume that there is any connection between the game and trade mark owner.
Secondly, an EU or UK trade mark owner cannot prevent others from using its trade mark to identify its own goods (e.g. a newsagent can use the mark "Coca-Cola" to convey that it sells that drink). Although Activision were not selling Humvee vehicles or using actual Humvee vehicles within the game, they were trying to represent that the US military uses them, and the most realistic way to do that was to reproduce Humvee-branded vehicles in the game.
Avoiding trade mark infringement on these two bases is something of a fine line. If, for example, the game featured a Humvee more prominently than was necessary to add realism, or if a Humvee featured in the advertising of the game, then that could easily lead to a finding of trade mark infringement.
The Manchester United Case
In England, Manchester United is claiming that the inclusion of "Manchester United" as one of the teams that players can manage in Football Manager infringes its EU Trade Mark for those words.
More unusually, the club is claiming that the exclusion of the club crest from the game (the game instead features a simple red and white striped logo) infringes its EU Trade Mark for that crest. This claim is based on the novel argument that, given the game uses the team name, as well as the real names of its stadium and players, users of the game would expect to also see the official club crest. Accordingly, the failure to include the crest has, Manchester United argues, deprived it of its right to license the trade mark to game developers/publishers.
It is hard to comment in much detail on this case, which is still at an early stage. It has long been customary for makers of football simulation games to obtain licences to feature football teams in the game under their real name. The FIFA series of games has long had an advantage over its rival, Pro Evolution Soccer, in that it has licences to use official club and competition names, whereas Pro Evolution Soccer changes team names such as Manchester United to "Man Red". However, it is far from certain that such licences are strictly necessary under trade mark law. A key question is whether users of the game would assume that the games are licensed by the owners of the trade marks used within the game. Here it may well be that the aforementioned custom has educated consumers to expect any football simulation game to be licensed, whereas 20 years ago they did not. However, they may not have that same expectation for football management simulation games, as the practice has not built up in the same way. As the developers and publishers of Football Manager have pointed out in their defence, their game has been using Manchester United's name in different versions of the game since 1992.
It is certainly possible to use a third party’s trade marks in a video game, if that use is of the right sort. Care needs to be taken to ensure that the risk of infringement is minimised. If the use ever seeks to take “unfair advantage“ of the trade mark, in particular, by seeking to benefit from its reputation, then there is a high risk of infringement. The trade mark should only be used to the extent necessary to refer to its owner’s goods or services, and there should be a justifiable reason for doing so.
It is worth noting that the position under copyright law is very different. Assuming that both the Humvee logo and Manchester United crest are protected by copyright (which they almost certainly will be, unless the works are very old), then any reproduction of the logos within the game would almost certainly infringe that copyright. One exception to copyright infringement that is worth consideration, is if the inclusion of the relevant work is only 'incidental'. However, what is 'incidental' is open to argument and, if a work has been deliberately incorporated into a game, it is likely to be very difficult to argue that its inclusion is incidental. In a similar vein to copyright protection, any reproduction of a logo that has been protected within the EU as a registered design would almost certainly be found to infringe that registered design. This is a key advantage to graphic works, such as logos, being protected by these IP rights.