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Jeremy M. Gruber
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Pokéstop and Think: Potential Benefits and Risks of Games Like Pokémon Go for Shopping Center Owners

By: Dennis M. Wu and Jeremy M. Gruber

Pokémon Go, a game available on Apple and Android mobile devices, has taken the world by storm since its July 6 release.  Pokémon Go is an “augmented reality” game: it integrates with a mobile device’s geolocation and camera functionalities to superimpose Pokémon characters and points of interest, such as “Pokémon Gyms” and “Pokéstops” (more on those later), onto real-world surroundings.  This groundbreaking technology, coupled with its availability for download free of charge, has made the mobile application (the “app”) wildly popular. Pokémon Go has set download records for both Apple and Android, and, as of this week (less than one month since its initial release), has been downloaded an estimated 75 million times worldwide.  Pokémon Go and other augmented reality games offer opportunities for shopping center owners to attract more retail customers, but they also raise the possibility of security problems and increased liability risk.   

Pokémon Go users roam their communities in an effort to collect Pokémon characters scattered through the virtual landscape and visit “Pokémon Gyms” (virtual locations where users can “train” the characters they have collected and cause their characters to “battle” other users’ characters in real time) and “Pokéstops” (virtual stores where users can acquire items needed to play the game).  Pokémon Gyms and Pokéstops are real world locations that have been designated as virtual landmarks by the game’s developer, and users must be physically present at a Pokémon Gym to “engage in battle” or at a Pokéstop to “buy” virtual supplies for catching Pokémon characters.  As examples, the fast food restaurant down the street from your house may be a Pokémon Gym, and the water fountain outside your office building may be a Pokéstop.    

Noting the app’s widespread popularity and its potential to generate significant foot traffic through the search for Pokémon characters, Pokémon Gyms and Pokéstops, retailers have begun exploring ways to attract potential customers to their stores, both by using Pokémon Go’s in-game features and creating various promotions and discounts centered around the game.  Some retailers and shopping centers may already be designated as Pokémon Gyms and Pokéstops by chance, in which event such retailers or shopping centers have likely seen increased visitors as a result of such designations (whether they know it or not).  In addition, the game’s developer has also begun selling Pokémon Gym and Pokéstop designations to retailers as part of sponsorship packages, with McDonald’s being the first sponsor to ink such a deal.  Under the McDonald’s sponsorship deal, 3,000 McDonald’s locations in Japan were designated as Pokémon Gyms in exchange for the purchase by McDonald’s of advertising on the Pokémon Go app.  In the future, shopping center owners and/or other retailers may consider entering into similar sponsorships with the game’s developer (or other developers of augmented reality games) in order to attract users.  Retailers and/or shopping centers that are not designated as Pokémon Gyms or Pokéstops and do not wish to purchase a sponsorship can still attract users by purchasing “Lure Modules” within the game; Lure Modules allow a retailer or shopping center owner (or any other user) to cause a high concentration of Pokémon characters to populate at a retail establishment or shopping center (or any location of the user’s choice), attracting Pokémon Go users (i.e., potential customers).

Based on the success of Pokémon Go, augmented reality games seem to be here to stay and will probably be incorporated into the marketing strategies of both retailers and shopping center owners in the future.  Shopping center owners that acquire Pokémon Gym or Pokéstop status as part of a sponsorship may not only reap the benefits resulting from increased foot traffic, such as increases in percentage rent and in the overall success of retailers located at the shopping center, but such a designation may actually be a selling point for shopping center owners in attracting new tenants.  Shopping center owners may even be able to pass through some or all of the sponsorship costs as part of marketing or promotional charges (to the extent permitted under applicable lease provisions).

However, although the potential advantages of Pokémon Go for retailers and shopping center owners may prove significant, shopping center owners should also be aware of the enhanced risks and novel legal implications associated with Pokémon Go use in their shopping centers.  For example, shopping center owners may be exposed to growing numbers of personal injury claims by inattentive gamers and additional instances of loitering and crime. 

With respect to personal injury claims, Pokémon Go by its nature requires users to focus their attention on the screens of their mobile devices while exploring often busy areas open to the public, including shopping centers.  As a result, users may be less likely to notice a crack in the sidewalk, a car reversing in a parking lot or even other shopping center patrons.  The fact that two San Diego users recently fell down a cliff while playing Pokémon Go is illustrative of the inherently distracting nature of the app. 

While the increased foot traffic generated by the hunt for Pokémon characters at retail establishments and the designation of such establishments as Pokémon Gyms and Pokéstops may indeed increase sales for retailers, it is also likely to result in loitering by users who have no intention of shopping.  Among other things, such users may utilize valuable parking spaces that would otherwise be available to paying shoppers and, as some major tenant leases may contain provisions requiring the shopping center owner to reasonably prevent or police loitering activity, non-shopping users may cause shopping center owners to expend additional resources or incur additional costs in regulating such activity. 

Although the link between Pokémon Go play and increased criminal activity may seem remote, there have been some alleged instances of criminals luring users to particular locations using the game’s features in order to commit crimes against them (e.g., theft and even assault).  In some instances, a shopping center owner may wish to consider implementing enhanced safety measures to protect against criminal activity.

In order to protect themselves with respect to the foregoing risks, shopping center owners should take several precautions.  First, with respect to personal injuries that might occur in the shopping center common areas as a result of Pokémon Go, shopping center owners should confirm that they have adequate policy limits under their commercial general liability policies covering such common areas.  In addition, shopping center owners should also confirm that the insurance provisions of their leases require their tenants to maintain commercial general liability insurance with sufficient policy limits and adequate coverage in connection with the operation of such tenants’ leased premises, and that their tenants are in fact maintaining the required insurance per the terms of their leases.     

In negotiating leases with prospective tenants, shopping center owners should try to eliminate (or at least limit) indemnity obligations in favor of tenants for injuries occurring in the common areas of the shopping center so as to avoid becoming potentially liable to tenants for Pokémon Go–related injuries that may occur in the common areas.  Shopping center owners should also confirm that their leases include appropriate landlord liability waivers for activities within tenants’ premises and that tenants’ indemnity obligations to the landlord are broad enough to cover any potential Pokémon Go–related injuries that may occur at the leased premises.  Additionally, shopping center owners wishing to regulate Pokémon Go–related promotions at their properties should attempt to include a provision in their tenants’ leases that requires such tenants to obtain the shopping center owner’s prior approval before engaging in any such promotions. 

In some instances where shopping center owners actively attract Pokémon Go users (either through Pokémon Gym or Pokéstop sponsorships or the use of Lure Modules), such shopping center owners may increase their obligations to provide security measures and prevent other dangerous conditions.  Such shopping center owners should ensure that they implement reasonable security measures to meet any increased risks posed by Pokémon Go traffic and should attempt to remove dangerous conditions which would seem to be particularly likely to injure a user focusing on his or her phone screen as opposed to his or her surroundings. 

Shopping center owners may also consider posting signage and/or enlisting security personnel to remind patrons to be mindful of their surroundings, or limiting Pokémon Go use to certain safer areas of the shopping center.  In addition, shopping center owners may require, through shopping center rules and regulations, that tenants that actively attract Pokémon Go users (whether through sponsorships, special promotions or otherwise) impose similar safety and security measures.    

Pokémon Go and other augmented reality games appear to be here to stay, and retailers have already employed, and will continue to find new ways to use, Pokémon Go as a tool to attract potential customers.  While increased shopping center foot traffic resulting from Pokémon Go and retailer promotional efforts around the game can certainly have positive impacts on a shopping center, shopping center owners should be mindful of the potential risks posed by Pokémon Go use on their properties.  Shopping center owners should also keep in mind that as augmented reality games continue to grow in popularity and become fixtures of modern society, legal issues surrounding such games will continue to develop and arise in new and often unforeseen ways.  As a result, legal approaches and solutions to such novel issues will continue to evolve. 

If you have any questions or need assistance implementing any of the foregoing recommendations, please contact Dennis M. Wu or Jeremy M. Gruber for further assistance.

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