IBM 120 – Products and Service Development

Instructor: Gus Lazopoulos

Risk Assessment Case Study
20 Marks (15%)
Due Date: March 23rd, 2022
 Competition Laws

Global Gaming

SesamWare is a Japanese software company responsible for the most popular open source software
available on the market today. In operation since the mid-1990s, SesamWare initially gained
international acclaim with an online, multiplayer, fantasy dimension game called Parallelworld.
Parallelworld was the most popular game in the world between 2012 and 2015, with over 300 million
worldwide gamers at its peak in 2014.

Today, the SesamWare software—initially installed as part of the bundle downloaded by hundreds of
millions of gamers around the globe to play Parallelworld—is used by those same hundreds of millions
of users for all other computer and online activities. The open source code was so user friendly that the
software was easily adapted to every facet of computer life for all platforms and operating, networking,
navigation and security systems.

IP Outrage

Like other SesamWare software, Parallelworld was designed using the open source methodology that
allowed all users to potentially be co-developers. Beyond the allure of the open source tactic,
Parallelworld’s fame grew from its realism. The initial premise of the game was an uncanny replication
of the current global scenario, including the minutest details of everything from geography and politics
to economic stability, famous individuals and even weather patterns.

The SesamWare global marketing campaign urged users to become the virtual incarnation of almost
anybody in the world and to use their character status to change, subvert, continue or improve the
course of civilization. In other words, users could control the world—virtually.

Millions of people accepted the licensing agreement and downloaded the open source game ware,
adopting a character and participating in the dynamism of the parallel world.

Alarmed and eventually outraged with the attention given to their online character versions and the
actions and decisions being made in their likenesses, governments, policy makers and other famous
individuals called for the plug to be pulled on the game, citing intellectual property (IP) infringements.

It took years for the various cease and desist orders to be enforced across the globe. The unprecedented
popularity of the game internationally, coupled with the open nature of its development and
SesamWare conducting all transactions online, caused the legal process to progress slowly. In fact, by
the time most countries got around to shutting down the game, most users had already lost interest.

Real World Competition

By 2014, SesamWare was by far the dominant software company in the world, having acquired many of
its competitors along the way. Initially, when the licences were first made available to users, the
contract agreement obligated users to pay an annual fee of USD 5.99 to keep using the software.

This low fee made it nearly impossible for many software companies to compete, and most of the
competitors were either bought by SesamWare or went out of business within three years.

The fee remained relatively unchanged until the competition phased out. But by 2018, the annual
licensing fee had increased to USD 150. When asked to justify the increase, SesamWare cited a clause in
the online contract that most users signed with the original Parallelworld software bundle agreement; it
stated the company could increase the annual licensing fee without customer notification.

SesamWare was once again at the centre of an international lawsuit, this time for subverting free
market competition.

Case Study Questions

1.) Assume Parallelworld was eventually ordered to cease and desist due to intellectual property
(IP) infringement. What category of IP has Parallelworld most likely infringed? Explain the
actions that constitute such an infringement. (5 Marks)

2.) What are some of the anticompetitive behaviours of which SesamWare might be guilty? How
did/might SesamWare’s behaviour adversely affect the free market competition upon which
international trade depends? (5 Marks)

3.) Is there an international law governing SesamWare’s behaviour? How will competition laws be
enforced globally? (5 Marks)

4.) If SesamWare had been headquartered in a country that had no competition laws, as is the case
in many developing countries, or if SesamWare had never signed a contract (for example, to buy
out a competitor) with a party from the U.S., how could the U.S. claim jurisdiction over the
enforcement of its competition laws? (5 Marks)