eSport: the legal status of the company

E-sport, for “electronic sport”, i.e. electronic sport, refers to the practice of video games opposing at least two on different media (Internet, local or LAN). For a company, partnering with e-sport means targeting a young, dynamic clientele focused on video games. It is therefore necessary to look at the legal status of the company and to determine the regime that most protects the interests of the company.

The legal status of the company

The question is whether a company that wants to develop an e-sports business should adopt a specific regime to do so. It is therefore interesting to focus on the possibility of adopting the status of sports agent or even that of ordinary law agent.

The status of sports agent

In the context of sport, Article L. 222-7 of the Sports Code provides that: “the activity of bringing in contact, in exchange for remuneration, the parties concerned with the conclusion of a contract either relating to the paid exercise of a sports or training activity, or which provides for the conclusion of an employment contract for the purpose of the remunerated exercise of a sports or training activity may only be carried out by a natural person holding a sports agent's license.” The title of sports agent is therefore subject to, in particular, To:

• the bringing together of interested parties to the conclusion of a contract relating to a sporting activity.
• the obtaining of a license by a natural person.

However, on the one hand, e-sport is not yet recognized by the legislator as a sport in its own right, the ministry in charge of the above approvals being, thus, the one in charge of digital technology, and on the other hand, a company interested in the idea of joining e-sport will probably not want to take the exam necessary to obtain the agent license. As a result, it appears that the status of sports agent is not yet applicable to e-sport.

The status of ordinary civil servant

Both the business agent and the artistic agent can be approached. As for business agents, whose profession is commercial in nature, they usually manage the affairs of others, in return for remuneration, as a mandatary or not, by helping natural or legal persons to carry out certain commercial or real estate transactions. As a mandatary, the business agent is subject to 3 main obligations:

• fulfill the mandate faithfully and loyally while he remains responsible for it;
• answer for fraud and mistakes committed in its management;
• report to its mandator on the implementation of its mandate.

Although the definition and the subsequent obligations do not seem contrary to the situation in this case, it seems that this status is not appropriate insofar as, on the one hand, it would place the company in a position of being accountable to e-players and, on the other hand, it could involve corporate liability, which is highly appreciated by business agents because they are employee agents. As a result, this status does not seem to be adapted to the specificities of e-sport. As for the artistic agent, it does not seem to be a relevant option either insofar as: e-players cannot be considered artists, in the legal sense of the term; a license, subject to strict conditions of obtaining, is necessary (articles L. 762-3 and R. 762-2 of the Labor Code).

The search for a regime that protects the interests of the company

In view of the above elements, it is appropriate to study the contracts likely to be concluded with non-employee e-players as well as the means of protecting them.

Contracts to be concluded with the self-employed e-player

Two types of contracts can be concluded: the service provision contract; the sponsorship contract.

• The service contract

Whether as a self-employed person, in the form of self-entrepreneurship or a SASU, or as a natural person, e-players can enter into a contract for the provision of services with companies. The services to which e-players engage generally consist of participation in interviews, match comments as well as the promotion of the company's products. However, training and participation in video game competitions are not expressly provided for in these service contracts: e-players train and participate in competitions privately and not under any contract. This regime therefore requires a strict framework insofar as it involves a significant risk of requalification into an employment contract. Consequently, in view of this risk of being reclassified as an employment contract, it appears that the conclusion of contracts for the provision of services does not provide sufficient protection for companies that risk costly labour litigation.

• The sponsorship contract

The sponsorship contract, or sponsorship, is generally defined as an agreement by which a company, the sponsor, provides financial or material support to a sports event, to a sportsman or even to a sports organization, the sponsored person, which undertakes, in return, to promote the image, the brand or even the distinctive signs of the sponsor.The sponsorship contract has the major advantage of not forcing the e-player to adopt a particular status. For information purposes, sponsorship contracts generally provide for: — exclusivity of the rights granted; — obligations to the sponsor (remuneration of the sponsored party, payment of bonuses, the supply of equipment, etc.) — obligations to the sponsored party (obligation not to infringe the exclusivity granted to the sponsor, obligation to avoid any behavior or attitude that could damage the image of the sponsor, general obligation to promote the image and brand of the sponsor, promotional obligations etc.), the deductibility of expenses of operating (sports sponsorship expenses are deductible under operating expenses, under certain conditions).

The various means of protecting the contractual relationship

In order to avoid a talent drain, several clauses can be provided: a penalty clause (a.); a withdrawal clause (b.); or even a non-competition clause (c.).

• The insertion of a penalty clause

The penalty clause makes it possible to deter the e-player from breaking the contract by providing, in the event of early unilateral termination, the payment of a large amount of compensation. However, it is advisable to be very careful in determining its quantum insofar as if it is excessive, it may be revised, ex officio, by a judge hearing a dispute inherent in this contract.

• Inserting a withdrawal clause

The withdrawal clause, which may be provided for in an employment contract, can be defined as a contractual stipulation under which a party to a contract may reserve the right to withdraw from this contract. However, the amount provided for in this clause must be proportionate in order to avoid drawing the attention of the judge to a desire for a “disguised criminal clause”.

• The insertion of a non-competition clause

The company may also provide for a non-competition clause that would prohibit the e-player, at the end of the contract, from competing with the company. The wording of this clause must, however, be particularly precise insofar as it must be limited in time, to a specific geographical area and provide for a financial counterpart.Esports is in constant evolution. Legal solutions are also evolving in consideration of the evolution of this practice. Therefore, despite this non-exhaustive overview of its legal issues, the e-sport problem of companies cannot be resolved without a concrete assessment of each case.

Source: Lesechos.fr [/column]