Congress is moving quickly on legislation that could have significant and largely unintended consequences for the video game industry. The No Fakes Act, formally titled the Nurture Originals, Foster Art, and Keep Entertainment Safe Act, is bipartisan federal legislation that has been reintroduced in both chambers of Congress. The legislation aims to safeguard the voice and visual likenesses of creators from the unauthorized creation and use of digital replicas. While those goals are understandable in the context of AI-generated deepfakes targeting performers and public figures, the bill as currently drafted casts a net wide enough to potentially ensnare some of the most foundational creative and technical practices in video game development. Game developers and their counsel should be paying close attention to what is happening in Washington right now. 

At the core of the concern is the bill's definition of "digital replica." Under the No Fakes Act, a digital replica is defined as "a newly created, computer-generated, highly realistic electronic representation that is readily identifiable as the voice or visual likeness of an individual," living or dead, and can be embodied in sound recordings, images, or audiovisual works in which the individual did not perform or in which the individual did perform but the "fundamental character of the performance or appearance has been materially altered." That definition, read broadly, could encompass countless characters that populate video games today, from photorealistic athletes in sports titles to the thousands of background characters that give open-world games their immersive depth. It could also reach the tools developers use to build those characters in the first place. The bill makes no meaningful distinction between a bad actor using AI to generate a non-consensual deepfake of a celebrity, and a development studio that has spent years perfecting technology to create entirely fictional but lifelike human characters. 

The Entertainment Software Association has raised these concerns directly with the Senate Judiciary Committee. In a letter to Senators Chuck Grassley and Dick Durbin, ESA President and CEO Stanley Pierre-Louis wrote that "The NO FAKES Act as currently drafted creates a level of uncertainty that poses a real threat to existing games and to the future of video game development in the United States. Importantly, the bill makes no distinction between harmful deepfakes and legitimate digital replicas, such as those in video games. The breadth of its current definition of 'digital replica' threatens to engender frivolous lawsuits by those who may, even by coincidence, resemble a game character, especially one of the thousands of background characters present in video games. While the industry would likely prevail against such claims in court in the end, the time and expense of litigating such suits would be economically devastating." The ESA letter also flagged the bill's potential reach over the creative tools developers rely on every day, noting that "the bill, as drafted, fails to adequately differentiate between tools and services built specifically to enable the creation of harmful digital replicas, and the potential for third-party abuse of innovative, multi-purpose, and otherwise legitimate tools capable of creating digital replicas." These are not abstract concerns. Avatar creation systems, character customization engines, and motion-capture pipelines could all be implicated under the bill's current framework. 

The video game industry has pioneered the digital rendering of real-world athletes, with licensed sports titles representing some of the best-selling games in the market year after year. Those titles depend on the ability to create realistic depictions of real people under carefully negotiated licenses. The No Fakes Act, without a tailored carve-out for the video game context, could upend those established licensing frameworks and/or create uncertainty for deals that are already in place. Developers who build user-facing character creation tools face similar exposure if the bill's secondary liability provisions are read to cover platforms that enable users to generate lifelike characters that may, intentionally or not, resemble real individuals. 

The No Fakes Act is well-intentioned legislation responding to real harms caused by AI-generated deepfakes, and the industry has every reason to want those harms addressed. The goal now should be to ensure that in doing so, Congress does not inadvertently regulate away the creative tools and practices that make video games one of America's most vibrant and economically significant art forms. That said, developers would be wise to monitor the progress of the No Fakes Act and review existing agreements involving licensed likenesses, athlete appearances, and character creation tools to assess potential exposure if the bill is passed. Going forward, developers should also think carefully about how they document and structure their creative processes, particularly around realistic character generation, to be in the best position to demonstrate the legitimate and expressive nature of their work.