Games and Law (Part 2): Japanese Consumer Contract Law, Japanese Specified Commercial Transactions Law, and Japanese Telecommunications Business Law

Particularly in recent times, with online games and in-game purchase models becoming commonplace, it is necessary to verify the legality of game operations in relation to various laws and ensure that operations are conducted legally. In the first part of this article, we discussed the Japanese Copyright Law, the Japanese Act against Unjustifiable Premiums and Misleading Representations, and the Japanese Funds Transfer Service Providers Act. In the second part, we will explain the Japanese Consumer Contract Act, the Japanese Act on Specified Commercial Transactions, and the Japanese Telecommunications Business Act.

https://monolith.law/corporate/game-copyright-part1[ja]

About the Japanese Consumer Contract Act

What is the Japanese Consumer Contract Act?

The Japanese Consumer Contract Act is a law that regulates the contractual relationships between consumers and businesses.

Purpose of the Japanese Consumer Contract Act

The purpose of the Japanese Consumer Contract Act is defined in Article 1 of the Act as follows:

(Purpose)

Article 1: This law aims to protect the interests of consumers by allowing them to cancel their application or acceptance of a contract in cases where they are misled or confused by certain actions of a business, considering the quality and quantity of information and the disparity in bargaining power between consumers and businesses. It also invalidates all or part of clauses that exempt businesses from liability for damages and other clauses that unfairly harm the interests of consumers. Furthermore, it allows qualified consumer groups to request businesses to stop actions that could lead to or exacerbate consumer damage. This is done with the aim of contributing to the stability and improvement of people’s lives and the sound development of the national economy.

In simple terms, the Japanese Consumer Contract Act is a law that aims to protect the interests of consumers by ensuring that contracts between consumers and businesses are concluded fairly, taking into account the quality and quantity of information and the disparity in bargaining power between the two parties.

Regulations under the Japanese Consumer Contract Act

In offline games, it is generally considered difficult for game companies to access user accounts or take any measures against users.

On the other hand, in online games, users create accounts and access servers provided by game companies to play games. Therefore, in online games, the relationship between the game company and the user continues.

Considering these personalityistics of online games, I believe that almost all online games have terms of service.

Not many people read the terms of service carefully when playing games, but in relation to the Japanese Consumer Contract Act, these terms of service can be problematic.

In the terms of service for games, there may be clauses that allow for sanctions such as account suspension or deletion against users who violate the terms, as well as clauses related to penalties or damages.

About clauses that allow for sanctions

First, regarding clauses that allow for sanctions, the relationship with Article 10 of the Japanese Consumer Contract Act is an issue.

(Invalidity of clauses that unilaterally harm consumer interests)

Article 10: Clauses in consumer contracts that limit consumer rights or increase consumer obligations compared to the application of provisions not related to public order in other laws, and that unilaterally harm consumer interests contrary to the basic principles stipulated in Article 1, Paragraph 2 of the Civil Code, are invalid.

Regarding sanctions in the terms of service, the issue is particularly related to the part of the above provision that states, “clauses in consumer contracts that limit consumer rights or increase consumer obligations compared to the application of provisions not related to public order in other laws, and that unilaterally harm consumer interests contrary to the basic principles stipulated in Article 1, Paragraph 2 of the Civil Code.”

If such a clause is violated, the clause in the terms of service that stipulates sanctions may be invalidated.

However, it is generally considered that court precedents do not recognize the invalidity of sanction clauses (e.g., Tokyo District Court, January 27, 2010, Tokyo District Court, September 16, 2009), so it is necessary to be aware of this point.

About clauses related to penalties or damages

Next, regarding clauses related to penalties or damages, the relationship with Article 9 of the Japanese Consumer Contract Act is an issue.

(Invalidity of clauses that stipulate the amount of damages to be paid by consumers)

Article 9: The following clauses in consumer contracts are invalid with respect to the parts specified in each item.

1. Clauses that stipulate the amount of damages associated with the cancellation of the consumer contract or set a penalty, and the total amount of these exceeds the average amount of damages that should occur to the business due to the cancellation of a consumer contract of the same type, according to the reasons, timing, etc. set in the clause – the part that exceeds

2. Clauses that stipulate the amount of damages in the case where the consumer does not pay all or part of the money to be paid based on the consumer contract by the payment due date (in the case where the number of payments is two or more, each payment due date. The same applies hereinafter in this item.), or set a penalty, and the total amount of these exceeds the amount calculated by multiplying the rate of 14.6% per year by the amount to be paid on the payment due date minus the amount already paid from the amount to be paid on the payment due date, according to the number of days from the day after the payment due date to the day of payment – the part that exceeds

Article 9, Item 1 of the Japanese Consumer Contract Act stipulates that clauses that stipulate penalties or damages, if the amount exceeds “the average amount of damages that should occur to the business due to the cancellation of a consumer contract of the same type, according to the reasons, timing, etc. set in the clause,” are invalid for the part that exceeds.

Therefore, when a game company stipulates clauses related to penalties or damages in the terms of service, it is necessary to establish the terms of service while paying attention to the relationship with Article 9 of the Japanese Consumer Contract Act.

About the Japanese Act on Specified Commercial Transactions

What is the Japanese Act on Specified Commercial Transactions?

The Japanese Act on Specified Commercial Transactions is a law that categorizes certain transactions where consumer issues, such as those arising from door-to-door sales and mail-order sales, are likely to occur. It establishes rules that businesses must adhere to and rules for the protection of consumers.

Purpose of the Japanese Act on Specified Commercial Transactions

The purpose of the Japanese Act on Specified Commercial Transactions is stipulated in Article 1 of the Act as follows:

(Purpose)

Article 1: The purpose of this Act is to ensure fairness in specified commercial transactions (transactions related to door-to-door sales, mail-order sales, and telephone solicitation sales, multi-level marketing transactions, transactions related to the provision of specific continuous services, transactions related to the solicitation of business provision sales, and transactions related to door-to-door purchases. The same shall apply hereinafter.), to prevent damages that purchasers and others may suffer, to protect the interests of purchasers and others, to ensure the proper and smooth distribution of goods and provision of services, and to contribute to the sound development of the national economy.

In simple terms, the purpose of the Japanese Act on Specified Commercial Transactions is to prevent illegal and malicious solicitation activities by businesses and to protect the interests of consumers.

Regulations under the Japanese Act on Specified Commercial Transactions

As mentioned earlier, the use of in-game purchase systems has been increasing in recent games.

In offline games, consumers generally only pay money at the stage of purchasing the game. However, in the case of online games with an in-game purchase system, users will pay money even after purchasing or downloading the game.

This in-game purchase system is considered to fall under “mail-order sales” as defined in Article 2, Paragraph 1, Item 2 of the Japanese Act on Specified Commercial Transactions.

2. In this Chapter and Article 58-19, “mail-order sales” refers to the sale of goods or specific rights or the provision of services conducted by a seller or service provider who accepts applications for sales contracts or service provision contracts by post or other methods prescribed by a Ministry Ordinance (hereinafter referred to as “post, etc.”), which do not fall under telephone solicitation sales.

If in-game purchases in online games, etc. fall under “mail-order sales”, they will be subject to the regulations of the Japanese Act on Specified Commercial Transactions.

One of the regulations to be aware of in relation to the Japanese Act on Specified Commercial Transactions is the display of advertisements (Article 11 of the Act).

Game companies are, in principle, required to display the following items:

1. Sales price (consideration for services) (shipping costs must also be displayed)
2. Time and method of payment
3. Time of delivery of goods (time of transfer of rights, time of provision of services)
4. Matters concerning the withdrawal of applications for sales contracts or the cancellation of sales contracts (if there are special agreements, their contents)
5. Name (trade name), address, and telephone number of the business operator
6. If the business operator is a corporation and advertises using an electronic information processing organization, the name of the representative or the person in charge of mail-order sales
7. If there is a valid period for applications, that period
8. If there are any costs other than the sales price and shipping costs that the purchaser must bear, their contents and amount
9. If there are provisions regarding the responsibility of the seller in case of hidden defects in the goods, their contents
10. If it is a transaction related to so-called software, the operating environment of the software
11. If it is necessary to conclude a sales contract for goods more than twice in succession, that fact and the sales conditions
12. If there are special sales conditions (service provision conditions) such as restrictions on the quantity of goods sold, their contents
13. If a catalog, etc. is sent separately upon request and it is charged, its price
14. If commercial advertisements are sent by e-mail, the e-mail address of the business operator

https://www.no-trouble.caa.go.jp/what/mailorder/[ja]

If a game company does not make the required disclosures based on the Japanese Act on Specified Commercial Transactions, measures such as orders for business improvement (Article 14 of the Act), orders for business suspension (Article 15 of the Act), and orders for business prohibition (Article 15-2 of the Act) may be taken.

About the Japanese Telecommunications Business Act

What is the Japanese Telecommunications Business Act?

The Japanese Telecommunications Business Act is a law that regulates telecommunications operators who conduct any business using telecommunications services.

Purpose of the Japanese Telecommunications Business Act

The purpose of the Japanese Telecommunications Business Act is stipulated in Article 1 of the Act as follows:

(Purpose)

Article 1: The purpose of this Act is to ensure the smooth provision of telecommunications services and protect the interests of users by promoting fair competition, thereby aiming to promote the sound development of telecommunications and secure the convenience of the public, and to enhance public welfare.

In simple terms, the Japanese Telecommunications Business Act is a law aimed at promoting the development of the telecommunications business and protecting the interests of users who utilize telecommunications.

Regulations under the Japanese Telecommunications Business Act

Recent games often take place online, and in some cases, chat and messaging functions are provided to facilitate communication between users.

Depending on the method of sending and receiving chats and messages provided in the game, registration/notification of a telecommunications business (Article 9 and Article 16 of the Japanese Telecommunications Business Act) may be required.

Firstly, a “telecommunications business” is defined as a “business that provides telecommunications services in response to the needs of others” (Article 2, Paragraph 4 of the Japanese Telecommunications Business Act).

Next, “telecommunications services” are defined as “mediating the communications of others using telecommunications equipment, and providing other telecommunications equipment for the communications of others” (Article 2, Paragraph 3 of the Japanese Telecommunications Business Act).

Therefore, those who wish to operate a telecommunications business are, in principle, required to register/notify their telecommunications business.

However, in the case of chats conducted in a situation where an unspecified number of users can view them, such as on bulletin boards, rather than chats conducted between game users, it is considered that the game company is merely providing a place for users to interact with each other. Therefore, it is not considered to be “mediating the communications of others”, and it may be judged that it does not fall under the category of a telecommunications business.

In such a case, registration/notification as stipulated by the Japanese Telecommunications Business Act is not required.

Therefore, when setting up chat functions or message sending/receiving functions in a game, it is necessary to thoroughly check whether the Japanese Telecommunications Business Act applies.

Summary

We have divided our discussion into two parts, the first and the second, to explain the laws related to games, which are surprisingly unknown to many.

As the gaming industry is rapidly evolving, the laws related to it are also changing rapidly to keep pace with this development.

Furthermore, as the content and manner of games become more complex, the laws related to games are also becoming more complex. Therefore, it is crucial for companies and individuals involved in games to have a solid understanding of the accurate legal knowledge related to games.

As explained in this article, the laws related to games require a lot of legal knowledge and professional judgment. Therefore, please consult a law firm for detailed information.