I'm not a law student of anything, but I've seen a lot of comments in these forums which demonize one of the parties in the title. In this post, I want to clarify the concepts that each side is talking about, as well as provide my input. Feel free to add any corrections/additions but to the facts at hand. (Italicized text is my analysis.)
As for my background, while I did play Broodwar when it was first released, I wasn't really active with it (I've seen a few of the games on Arirang since it was available as a cable channel here but that's probably it). It's only with Starcraft 2 that I started taking interest in the game again.
IP Rights
Blizzard's claim:
First, GomTV is the exclusive business partner for SC1 and SC2 in South Korea. Because MBCGame and OnGameNet refused to sign the IP rights licensing contract, they are violating our IP rights. It is not right for them to broadcast when the negotiations are still in progress. So, I think our IP rights are being violated by some broadcasters.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7158393
KeSPA's claim:
KeSPA and the negotiation team have recognized Blizzard's intellectual property rights from the beginning of the negotiations as Blizzard is the original author. This agreement regarding recognizing Intellectual Property rights was something that was agreed upon even within the negotiations, and this was also the reason why negotiations were possible to the present, and KeSPA and the negotiation team had sincerely applied themselves to the negotiations.
But because recognizing the IP rights shouldn't be a chain that constrains the organizations involved via license fees, demanding complete ownership rights to derivative works, and to even demanding auditing rights to KeSPA, KeSPA has repeatedly been in discussions to try and reach a common ground where both sides can agree with with regards to IP rights acknowledgement.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7171870
I want to clarify, the conflict between the two is the interpretation of what it means to own "IP Rights". With Blizzard, they mean Starcraft and all its derivative works (i.e. broadcasting rights, competitions, etc.). For KeSPA, it seems that they're willing to acknowledge Starcraft: Broodwar is Blizzard's product, but not quite so much when it comes to everything else (i.e. derivative works).
Here's an analogy: For Blizzard, they own a hamburger retail shop (the hamburger is Broodwar in its entirety). KeSPA suddenly got their hamburgers, and started selling pieces (the bread, the hamburger) individually or even repacking them, but claiming it as their own. Blizzard wants acknowledgment that whatever KeSPA is selling belongs to them since it can all be traced to their hamburger (Broodwar).
For KeSPA, Broodwar is a tree in Blizzard's backyard. They acknowledge that the tree belongs to Blizzard. However, occasionally, fruit (derivative works) from the tree will fall on public property or KeSPA's property, such as the street. Thus KeSPA claims that Blizzard has no claims over the fallen fruit, since it fell on public property/KeSPA's property, and that they appropriated it (worked on it, refined it, etc.).
The gist of the conflict is the interpretation between these "IP Rights", and each side attaches different meanings to them. To be fair to Blizzard, it's a common acceptance in the rest of the world that they should own the rights to everything derived from their IP (there are exceptions of course). To be fair to KeSPA, in their mind, they developed the BroodWar scene without help from Blizzard (minus the game itself of course) and then here comes a third party suddenly asking for a share of the profits from all their hard work (similarly, if you're familiar with how franchise work [I'm not saying KeSPA is a franchise of Blizzard], some people don't like franchises because they perceive it as them doing the hard work yet the parent company gets a percentage of their profits; if you're this type of person, then you'll understand how KeSPA feels).
This IP Rights conflict however has to happen. If Blizzard doesn't defend their IP, they will be setting a precedent should others "steal" their IP for profit in the future. The longer they let this past, the longer it works against them. For KeSPA, the popularity of eSports in their country is unique, so they could attempt to present that their product isn't infringing on Blizzard's IP. Should they succeed, this has huge legal implications when it comes to the video game industry, not just in Korea, but in the world, due to this legal precedent.
More on KeSPA's definition of "derivative works":
KeSPA has expressed its position of being willing to pay for a rational level of usage fee and appeal its support of marketing and promotion for product line-up of Blizzard with continuous investment such as sharing all contents which belong to KeSPA like pro gamers, broadcasting and sponsorship.
However, Blizzard has asserted not the right as a copyright but unreasonable demands as following.
1. Set the contract term for using its games to 1 year
2. Prior approvals about all league operations such as contracting sponsorship, marketing materials, broadcasting plan
3. License fee for running of league and all license fee of sponsorship inducement
4. Ownership of all broadcasted programs, program videos
5. Right to audit KeSPA
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=5170767
"Blizzard is out to kill Broodwar"
Now many fans claim that Blizzard is out to kill Broodwar, especially with the release of Starcraft 2. I don't think this is the case, as it is more of protecting their IP Rights (see above). Most attribute this claim because Blizzard unveiled Starcraft 2 in Korea in May 2007, but Blizzard actually attempted to negotiate with KeSPA as early as February of the same year (source:http://www.teamliquid.net/forum/viewpost.php?post_id=5170767), most likely in light of KeSPA's Broadcast Rights Controversy (source: http://www.teamliquid.net/forum/viewpost.php?post_id=1680175).
I'd like to add that if you read through those old post on the subject (such as thishttp://www.teamliquid.net/forum/viewpost.php?post_id=1718118), it's hilarious to see history repeating itself. KeSPA/IEG for example claims rights to Broodwar, tries to prevent OGN/MBC from airing Broodwar, and antagonizes fans (but not the players/sponsors) source:http://www.teamliquid.net/forum/viewpost.php?post_id=1704839. Now it seems the roles are reversed, with Blizzard enforcing their rights.
If Blizzard wanted to stop the airing of Broodwar, they could have filed an injunction--which would stop the broadcasts until everything could be legally resolved, but didn't:
Why didn't you request an injunction to stop broadcasting?
Blizzard and GomTV has always been participating in the negotiations in the good faith. Any other companies in our situation would never have the same patience we have. We still acknowledge South Korea as an important market. But now, I think there is no answer other than the lawsuit. If we really wanted to get done with this faster, we would have filed an injunction. I think that in order to broadcast, a proper license is required. So, we filed an lawsuit in the basis of IP rights violation without filing an injunction first.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7158393
It also makes consistent sense in the fact that Blizzard hasn't gone after iCCup for example, which isn't a for-profit organization. Nor has Blizzard stopped selling Starcraft: Broodwar for that matter. And at the end of the day, Broodwar is still additional revenue, so why kill it?
Blizzard on Profits
From Blizzard:
South Korea only brings in 5% of overall global sales.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7158393
The fact of the matter is, this is both good and bad. 5% of global sales is a significant market share, especially considering Korea's niche, size, and population density. However, the number is also thrown about to diffuse the exagerration that the public have, that Korea is where Blizzard is deriving majority of its profits. It's also there, in my opinion, to alleviate Korean public opinion that a foreign company is deriving significant profits from them.
Some fans are complaining that the measurement of 3 years is unfair, that Blizzard should have mentioned their global sales in the past 10 years. I think it's necessary to limit the time frame to the present, since that's what's being discussed at hand. For example, Sega has sold a lot of consoles over the past three decades, but what's significant today when we're talking about console sales is how much Sega has sold in the past few years (i.e. they're not in the console-selling business anymore).
From Blizzard:
It is said Blizzard wants at least 700,000,000 won from the Korean market. Is that true?
The licensing fee is there to say that if they wish to use our content, they need to be capable of producing high quality content. When problems relating to intellectual rights is dealt with, the fee can be adjusted as needed.
Some are confused by the fee with regards to "producing high quality content". I'll re-post myclarification from another thread:
Basically, the licensing fee is a barrier to entry. Whoever plans to broadcast the games needs to prove that they have the financial capability to produce such shows. It's not necessarily Kespa-specific (i.e. whether MBCGame is unable to produce good shows), but rather a general rule for Blizzard's terms when it comes to broadcasting their shows (in the event that another broadcaster wants to air Blizzard's games). The issue at hand though is the acknowledging of IP rights, which is the second of Blizzard's conditions. I don't think there's any doubt that MBCGame and OnGameNet can produce quality shows, but rather that they're not recognizing Blizzard's IP Rights.
To restate, Sam is saying that Blizzard wants its IP rights acknowledged and is suing on principle. That's the reason for the fee (which is less than what Kespa was charging for their broadcasting rights), why contest license fees (not to be confused w/ broadcasting fees) are just 1 won per year (http://www.teamliquid.net/forum/viewpost.php?post_id=6950901), or that profits from broadcasting fees will be donated to charity (http://www.teamliquid.net/forum/viewpost.php?post_id=6614875).
From KeSPA:
Blizzard said that because players and audiences have a right to demand and enjoy high quality eSports broadcasts, and said that they need a broadcast license fee so that only companies that reach a certain standard can enter the eSports industry.
But in the last 10 years, the broadcasting stations and the Progame teams, KeSPA, and other organizations had worked together to create the foundation and the model of an eSports industry, and it's becoming the standard of worldwide eSports. Many organizations around the world took interest in the growth of Korea's eSports scene and introduced it to the world, and many countries are using Korea's eSports system as a model to develop an eSports market in their country.
In order to develop Korea's eSports market, over the last 10 years the Progame teams invested billions of won every year. The government, civilian organization, and KeSPA has also continued to put in many costs and effort to expand the base of eSports in Korea and to enhance the status of Esports internationally.
Thus, Blizzard's argument about "License fee to have a high quality eSports broadcast" is a statement that ostracizes the broadcasting companies, the progame teams, KeSPA, the government, and all other involved organizations, while ignoring the efforts and accomplishments of these organizations in the past 10 years, and we express extreme disappointment regarding this statement.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7171870
Rather than using a "barrier to entry" paradigm, KeSPA is making the assertion that the success of the success of e-sports is due to mutual cooperation and effort from everyone. This isn't necessarily incorrect, just a different paradigm.
As an analogy, Blizzard is selling you an encyclopedia: they've screened the contributors (not via fees of course but due to credentials) so that the reader knows that the information they're presenting is accurate.
KeSPA, on the other hand, is applying a Crowd Sourcing or Wikipedia model where everyone, irregardless of their station in life, can contribute to deliver accurate information to you.
From KeSPA:
While Blizzard has mentioned that KeSPA had made 1.7 billion won in the three years KeSPA had run a licensing business, and that the amount Gretech requested is only 1/5th of the amount taken in by KeSPA, but in reality, the amount requested by the Gretech amounts to 700 million won a year minimum if you combine the Proleague and both Individual Leagues. This amounts to far more than 2 billion won even through a simple calculation. Furthermore, because Gretech continues to push for year long contracts, we don't know how much they will charge for extending the contract after the first year.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7171870
In 2007, KeSPA originally charged 7,5000,0000 Won (approx. $3/4 million US) over 3 years and was lowered down to 3,9000,0000 Won (approx. $390,000 US) after negotiations. Source:http://www.teamliquid.net/forum/viewpost.php?post_id=1718118 (see KeSPA spoiler tag).
Gretech is currently charging 100,000,000 won per season (up to 3 seasons a year) and is good for one year. Source: http://www.teamliquid.net/forum/viewpost.php?post_id=6950901
Note: Other relevant info is how profits will be split, which I won't be going into here.
Again, KeSPA and Blizzard are working with 2 different paradigms. KeSPA was charging a large amount but was good for 3 years. Blizzard, on the other hand, was charging a small amount but was good, from my understanding, for one season.
As an analogy, KeSPA is asking you to make a huge downpayment on a car (spread over 3 years). How often you use the car is up to you (it's relevant because the stations air several seasons of Broodwar). Blizzard, on the other hand, is asking you to pay for this month's Internet connection. It's not a lot individually, but if you're airing a lot of seasons during a year, the cost IS indeed higher than what KeSPA is charging.
Having said that, why would Blizzard charge that amount today? Well, consider that this ultimatum came at the end of the year, so each station probably just has one or two seasons left to air within the year. Blizzard is looking at it from the short term perspective. Its current priority is:
Once the IP rights problem is dealt with, GomTV and Blizzard can adjust the licensing fee. This is not for the profits, but to protect our IP rights. To operate a business, it is important, as the holder of the IP, to get our IP rights protected.
All markets, including South Korea, request the rights to use our content. Of course, we cannot state exactly how much they needed to pay, but other markets do also pay as well. China and Taiwan came to us first, to get the license needed. We will finalize the licensing for broadcasting as well. It is not right to say that China has different situation than South Korea. This is same anywhere else including Europe.
Source: http://www.teamliquid.net/forum/viewpost.php?post_id=7158393
KeSPA, on the other hand, is looking at it from a long-term perspective. If Blizzard continues to charge 100,000,000 won per season, then it IS going to be expensive.
I do think Blizzard is willing to lower the fee once the initial fee is paid and the companies acknowledge their IP Rights. KeSPA, on the other hand, has other interpretations of "recognizing" IP Rights (derivative works), hence the negotiation of a lower broadcasting fee cannot be negotiated.
As far as arguments go, each one is attempting to position itself in a favorable position.
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