Competition Laws

Open sesame

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 ParaWorld. ParaWorld

was the most popular game in the world between 2001 and 2004, with over 300 million worldwide

gamers at its peak in 2003.

Today, the Sesame softwareinitially installed as part of the bundle downloaded by hundreds of

millions of gamers around the globe to play ParaWorldis used by those same hundreds of millions

of users for all other computer and online activities. The open-source code was so user-friendly the

software was easily adapted to every facet of computer life for all platforms and operating,

networking, navigation, and security systems.

Like other SesamWare software, ParaWorld was designed using the open-source methodology that

allowed all users to become, in essence, co-developers. Beyond the allure of the open-source tactic,

ParaWorld's fame grew from its real-world likeness. The initial premise of the game was an uncanny

replication of the current global scenario of 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.

Global pandemonium ensued. It seemed as though every person on earth with access to the Internet

accepted the licensing agreement and downloaded the open-source game ware, chose a character,

and participated 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, policymakers, and other famous

individuals called for the plug to be pulled on the game, citing IP infringements.

Given the unprecedented global dispersion of its popularity, the open nature of its development (who

was responsible for the infringement?), and the fact that SesamWare conducted all of its business

(orders, licensing, and payments) online, it took years for the cease and desist order to be enforced

by the majority of nations around the world. In fact, by the time most nations got around to shutting

the game down, most users had already lost interest.

And the loser is...

By 2004, SesamWare was by far the dominant software company in the world, having acquired many

of its competitors along the way. Initially, when the licenses were first made available to users, the

contract agreement obligated users to pay an annual fee of $US 5.99 to keep using the software.

This low fee made it impossible for the majority of 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 2008, the annual

licensing fee had increased to $US 150. When asked to justify the increase, SesamWare cited aclause in the online contract that most users signed with the original ParaWorld software bundle

agreement that stated Sesame could increase the annual licensing fee without customer notification.

SesamWare was once again at the center of an international lawsuit, this time for subverting free-

market competition.

Question

What is your recommendation for SesamWare for their International Trade Law practices?

(6 Marks)