Developing Concerns : Video Game Development Lawyers & Attorneys: Reed Smith Law Firm: Intellectual Property, Marketing, Promotions & Privacy Law

Gamasutra has a great article on why it makes good business sense to utilize players as developers of new content.  It can be a new revenue stream for the publisher, it can build brand loyalty, it can increase the game's long tail, and it can mean fresh content without having to build it yourself.  So pretty much all positives and very few, if any, negatives.

At least, there are very few negatives so long as you build the legal structure appropriately.  There is a ton to consider when developing a means by which players can build, distribute, and monetize their own content - a typical development agreement between a publisher and a developer can span dozens of pages of dense, legalese print. Is this something you think you can implement in the context of a player/developer relationship?  Doubtful.

So what are the issues that should be considered?  This post will by no means cover them all, but here are a few key highlights:

Intellectual Property

The grand poobah of the issues bucket list.

1. You as the "publisher" (note the use of quotes here, since that distinction is becoming less relevant in this context) need to have in order to distribute and exploit the player-created content.  But there can be a tendancy to take more than what you need in order to "lock down" these rights.  I challenge my clients to constantly ask themselves whether they need all of the rights they are seeking, or whether something less would work just as well, and be easier to monitor.  After all, licenses can be perpetual; grants of ownership may be subject to reversionary rights later in life.
   
   The question of license-vs.-own becomes even more important if you want to take the content and exploit it internationally.  For example, do you know your requirements as publisher for comply with various countries' moral rights laws?  Does the country you seek to exploit the work in even allow you to do what you want to do?
    
2. Consider the kinds of content you are allowing players to create, and whether ancillary IP laws like VARA may apply.  (How this could happen is a fascinating question, but that's another post).
    
3. When players create content, publishers have no way of knowing whether the content is original or not.  There's no clearance process to speak of, so taking advantage of the safe harbor provisions of the DMCA is incredibly important.  For example, have you appointed a copyright agent, or are you at risk for a Righthaven-like troll coming after you?  Do you have an appropriate notice-and-takedown regime in place?
    
4. Aside from copyright issue, have you considered the impact of trademark laws in the player-created content?  After all, the DMCA doesn't apply to trademark issues so how will you handle a situation where someone uses the McDonald's Arches as an architectural work, or the Nike Swoosh on virtual clothing.
    
5. What about publicity rights?  If I put my face on a digital item then distribute it through your player-created content network, can I turn around and sue you for infringement of my right of publicity?  Maybe, maybe not depending on whether there is an implied right to use my name/image/likeness, but why not deal with it up front?

Revenue Share

1. Are you taking an off-the-top fee like Apple does, or is your rev share more complex?  If it's more complex, what kind of definitions for "gross" and "net" are you using?  Keep in mind that there are industry standards with this, so if you depart from that standard, you should have a good reason for doing so (and a compelling sales pitch as to why that departure is good for the player).
    
2. Are you providing access to any sort of dashboard or control panel so players can monitor the exploitation of their content?  What promises, if any, are you making with regard to access to and usefulness of this program?
    
3. What rights, if any, will players have to dispute the revenue share?
    
4. On what kind of payment cycle will you pay players?  Will you keep any of the player's share as a holdback, and if so, how much and when will this be liquidated.
    
5. If you're going international, where does currency exchange fees come into play?

Nature of the Content

1. How will you respond if someone uploads buggy content, or even worse, content that contains malware?  Do you know the extent of your liability?
    
2. Will you engage in a rigerous approval process (a la Apple App Store), or take a more laissez faire approach (a la Google Play).

The above checklist of questions is not meant to be all-encompassing, but as you can see there are more than a few issues that need to be thought through prior to launching a player-created content system.  Moreover, you should seek out an expert to assist with your decision-making and documentation thereof.  Not only will this help you understand the contours of the issues you face, but this will also help you create player agreements that are easy to use and easy(ier?) to understand.

• Print
• Comments
• Trackbacks
• Share Link

If you haven't already heard, over this last weekend a character in World of Warcraft went on a killing spree.  A virtual killing spree, but a killing spree nonetheless.  Video of the massacre can be found on the linked page (thanks to Wired for the coverage).

The Wired article points out that the scene was very similar to an episode of South Park called "Make Love, Not Warcraft."  If you haven't seen it, you can watch it here: http://www.southparkstudios.com/full-episodes/s10e08-make-love-not-warcraft.

Go ahead, we'll wait..........

Great episode, right?  Of course, as we lawyers are wont to do, we read stories like this do not focus on the "life imitating art" aspect.  Instead we pose questions to ourselves like "who's liable for what?"  It's sad, but true (sigh).  So here are some initial thoughts on legal liability:

The Hacker

There are a lot of people who were harmed here, but we can make things simple by classifying them into two categories: Blizzard and other players.  As to Blizzard, they could pursue a number of causes of action against the Hacker.  For example, trespass to chattels (an archaic legal name for "you improperly took my stuff, or otherwise deprived me of it") could exist.  So too could a copyright cause of action depending on how the exploit occurred (consider the glider case - MDY v. Blizzard - and whether this would rise to the level of a precondition to the license agreement [pdf]).  Other causes of action may similarly apply, depending on facts like the nature of the exploit, the location of the Hacker, the systems used to take advantage of the exploit, etc.  After all,

As to other players, however, this is a more complex question than you might think.  After all, WoW is a game where players can and often do kill each other.  So we would have to separate the killings from those inside a no-PvP zone, and those outside.  For those inside, causes of action against the Hacker may be available because no one would expect to be killed in a no-PvP zone.  However, you have to ask whether it would be worth anyone bringing a claim for loss of virtual property triggered by a WoW death for several reasons.  First, players may not even own the lost property depending on what was lost and the applicable EULAs/Terms and Conditions.  Second, what is the value of that property?  If it is something Blizzard could restore at the touch of a button, perhaps there is little to no value to the lost items.  Third, what if the player whose character was attached had no right to certain lost items in the first place (e.g., purchased through illegal online auctions, stolen etc.).  For these reasons, it would be difficult to value what may have been lost, thereby reducing the incentive for someone to sue the Hacker.

For the killings in a PvP zone, there might not be any cause of action available for players to sue the Hacker in the first place.  After all, they were in a PvP zone, and thanks to a legal doctrine known as assumption of the risk, that might be the end of the case.  Assumption of the risk states, in its most basic form, that if I engage in an activity I know to be dangerous, I cannot sue for damages if I'm hurt by the activity.  Consider jumping off a high dive into a pool with no water - I know there's a chance (a really good one) that I'll be hurt badly.  So if I jump and get hurt, I can't sue - I "assumed the risk" inherent in the activity.  Same goes for being in a PvP zone.   Of course, that's not to say someone won't come up with some creative legal theory, but making it stick will be difficult in this circumstances.

Blizzard

Could players sue Blizzard because it did not catch and fix the exploit prior to the Hacker's massacre?  Perhaps, but this will depend entirely on the facts.  If Blizzard knew of the exploit but did nothing about it, that could form the basis of a negligence case.  But if Blizzard was caught entirely by surprise by the existence of the exploit, a negligence case could be difficult to prove.  Moreover, Blizzard appears to have acted quickly in hotpatching WoW so that the exploit could no longer be used, meaning that a claim of ongoing negligence would be difficult to win. 

Besides, Blizzard's EULA states that the software is provided "as is."  This gives Blizzard another defense should a player whose character was killed by the Hacker try to pursue a legal claim against Blizzard.

Take-Away Points

What from the game dev/publisher side can be learned by this experience?  A few thoughts:

1. People will always find some way to take advantage of your game - expect it and have a plan to deal with it.
    
2. Put that plan on paper before you need it.  I don't know whether Blizzard did this, but given the speed with which everything happened, it would not surprise me if they did.  Having a plan in place prior to needing it is a "good fact" that can help reduce claims of negligence down the road.
   
   Also, don't create a plan then lock it in a box.  Review it regularly, and revise as necessary to keep up with new threats and technologies.  A plan dealing with a computer crisis circa 1992 isn't a good plan for 2012.
    
3. Take action to stem the damage being done as soon as you reasonably can, regardless of whether that damage is legally cognizable or not.  Be careful not to act too soon, however.  Never act just for the sake of doing something quickly - do your research and act responsibly, just do it as quickly as you can.
    
4. Review your EULAs and Terms and Conditions documents.  If you don't know what precondition language I referred to in the above sections, read the links, then drop me a line.  It is something you definitely want to look into.

• Print
• Comments
• Trackbacks
• Share Link

Important legal news out of the EU (and no, "important legal news" is not a contradiction in terms).  The European Court of Justice has issued a decision in a case involving resale of digital goods.  Our colleagues in the EU have written an excellent piece that breaks down the decision, and they have this to say about the case:

In a landmark judgment delivered by its Grand Chamber on 3 July 2012 (Case C-128/11), the European Court of Justice (ECJ) has effectively declared the second-hand sale of physical copies and downloaded copies of software to be legal. The ECJ explains that the principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website. This decision which markedly extends the scope of the principle of exhaustion beyond what has been the understanding to date has a potentially significant impact on the way software is sold and consumed.

The full article can be found here.  It is absolutely worth a careful reading, especially for games companies that do business (or will want to do business) in the EU.  So, in other words, its important for just about all games companies.

Now, some of you loyal blog readers may recall that one of the very first posts to this blog was about sales of "used" digital goods, and how game companies can structure their End User License Agreements (or "EULAs") to approve of or restrict secondhand sales (depending on what the desired end result is).  If you would like a more full treatment of US law regarding secondhand sales of digital goods, you could read End Runs (an article written by yours truly in the Los Angeles Lawyer magazine), but here are the broad strokes:

• What do you tell consumers about the transaction?  Do you call it a license?  Do you have a license agreement?  If you don't, the transaction is likely to be deemed a sale.
   
• If you have a license, do you:
  
  
  • Restrict the use of the digital goods in significant and material ways?
     
  • Restrict resales/secondary transfers by the user?
     
  • Have a tracking/monitoring system in place to guard against violations of the license?
     
• Even if you have a license, do you do (or not do) something that implies that you intend the transaction to be something other than a license?

As you can see, the inquiry about "exhaustion" does not appear in the US analysis of whether secondhand sales of digital goods are legal or not.  At least, it doesn't literally appear in the analysis, but the principle of "exhaustion" in the EU is closely aligned with the "first sale" doctrine in the US, which forms the underpinnings of the secondhand sale analysis. 

The "first sale" doctrine is an exception to copyright law's grant of exclusive rights whereby an owner of a valid copy of a work can resell that work to any third party without the original author's permission.  Imagine a hard copy book - if you own that book, you could legally sell it to your neighbor or a used bookstore, and not run afoul of copyright law.  A digital eBook version, however, is a different story, and that's where the above analysis comes into play.  The "license versus sale" analysis is used to determine if the eBook transaction is a "sale" (to which the first sale doctrine applies) or a "license" (to which the first sale doctrine is not applicable).  In short, the US and EU inquiries are not wholly unrelated.

Yet notwithstanding the similar theoretical underpinnings, it is the differences in approach between the US and EU that can have a significant impact on games companies doing business in both regions.  So, what should a games company think about in terms of the varying US and EU interpretations of "sale?"  Here are just a few thoughts off the top of my head:

• What exactly is the reason behind the need to control secondhand sales of a particular work?  Is the work of an ilk where it is important to craft appropriate licensing regimes, or can your interests be protected in other ways (e.g., spending more on innovation and new content rather than licensing enforcement).
   
• Taking the ECJ position that "perpetual" license grants are akin to sales could cause a games company to time-limiting a license in order to avoid exhaustion.  However, if you time-limit your license grant, you must have some system to track and enforce the limits (and evidence showing you actually do these things).  Failing to track and enforce the time limits may cause your license to be deemed a sale transaction in the US.
   
• Games companies that use a subscription model, as well as cloud gaming companies, may think that the ECJ decision does not apply to them as the license is granted in exchange for regular payments.  However, there are all sorts of digital goods that can be "sold" within the context of a subscription game.  Digital items, avatars, power-ups, plug-ins, etc. can all be sold (and therefore potentially resold) even if a subscription is required in order to access the item.  Thus, this decision is of import to games companies of all stripes.

As to how we are helping our clients move forward after this decision, I think our EU colleagues put it best when they said:

Creative lawyering should make it possible to find solutions which will enable the software industry to comply with the ECJ case law while maintaining its interests.

We will be giving careful thought to the best ways for our games clients to avoid unintended consequences stemming from international distribution of their works while still maintaining their interests.  We encourage all games companies to do the same. 

• Print
• Comments
• Trackbacks
• Share Link

Lots going on in the games industry recently, and with E3 on deck, the flurry isn't likely to slow down.  Here are some key developments in legal issues related to video gaming.  The highlights: an author learns that idea theft cases against games companies can be just as difficult as idea theft cases brought against movie and TV studios; the trades will be devoid of more juicy details from the Infinity Ward lawsuit; rights of publicity cases, now with a pending jury decision; and the future of unlockable content is at stake:

• Ubisoft seeks to stop the copyright infringement lawsuit brought against it by author John Beiswinger.  Earlier, Beiswinger opted to voluntary drop the suit without a settlement with Ubisoft.  Upset by this (and the need to defend itself in court), Ubisoft is now seeking a declaration that its Assassin's Creed games do not infringe Beiswinger's novel LINK, as well as costs and attorneys' fees.
   
• Activision has ended its contract row with former Infinity Ward heads Jason West and Vince Zampella, which comes on the heels of Activision and EA settling their related dispute.  This case is too important to deal with in brief, so a retrospective will be forthcoming (I can tell how excited you are at the prospect).
   
• EA will have to participate in the Bill Russell, conspiracy-related lawsuit the former basketball star has brought against the NCAA.  The crux of this case is EA's agreement to abide by the NCAA's prohibition on compensating student athletes.  This will be another one to watch closely, as it could affect just about every form of video gaming that involves collegiate sports.
   
• No Doubt's publicity lawsuit against Activision for inappropriate use of the band's image/likeness in Band Hero will go the jury.  Look for this case to become a foundation upon which future use of avatars and unlockable content will be based.
   
• Epic wins $4.45 million in Silicon Knights countersuit.  You may recall that the suit began when Silicon Knights sued Epic for $50+ million based on claims that Epic's Unreal Engine didn't live up to the promises made by Epic (thereby forcing Silicon Knights to build a new engine from scratch).  Epic countersues, claiming that Silicon Knights may have infringed upon Unreal Engine code in building the new "from scratch" engine.  Now, Epic wins... epically.  How's that for a reversal of fortune?  Lesson here: resorting to a lawsuit may not always be the best way to resolve your differences.  You could end up owing the company you're suing, which just adds insult to injury.
   
• Social game maker Blingville LLC has agreed to not use the -ville suffix in its games, thereby resolving a trademark dispute with Zynga. 

• Print
• Comments
• Trackbacks
• Share Link

It's the day after May Day.  And since there's no good way to make a transition from that into some bullet point topics of interest for games companies, let's just get right into it, shall we?

• EA's declaratory judgment against Textron in the lawsuit over the inclusion of Bell helicopters in Battlefield 3 can stay in California.  Sometimes, it pays to move quickly when threatened with a potential lawsuit.
   
• Speaking of lawsuits, if you're involved in a copyright infringement suit and you're seeking a preliminary injunction against an infringer, then you need to be aware that the "presumption of irreparable harm" may no longer be valid (it depends on your jurisdiction).  Instead, you may need to show evidence of irreparable harm (PDF) if you are to prevail on the prelim.
   
• Developing Concern's own Patrick Sweeney was recently interviewed by Ayzenberg for a feature on developing trends in game finance and monetization.  Great read for those who are interested in how games are getting funding and making money in today's games market.
   
• Amazon settles its digital purchase sales tax dispute with Texas.  Amazon will now invest roughly $200 in capital investments in Texas, and will begin collecting sales taxes on digital goods sold to consumers in Texas.  Read our previous coverage of the issue with collecting sales taxes on digital goods.
   
• The US DOJ has indicted 10 individuals for making and selling mod chips that circumvent DRM technologies.  The indictments stem from "Operation Tangled Web," which was launched in 2008.  As GamePolitics points out, the mod chip issue is being considered by the US Copyright Office as an exemption to the DMCA (the law under which the 10 individuals are being prosecuted).  I have no idea whether the DOJ's prosecution of mod chippers will have any impact on the Copyright Office's rulemaking, but whatever the Copyright Office decides it is unlikely to be of much help to those individuals already in the DOJ's sites.
   
• A Pennsylvania man has sued Ubisoft for copyright infringement.  The man claims that Ubisoft's marquee franchise "Assassin's Creed" infringes upon his novel "Link."  The basis of the claim is that both storylines involve the ability to relive ancestral memories.  Although a lot of fact development will need to occur before any final judgment can be rendered for this case, a quick perusal of the complaint indicates that a lot of the "substantial similarity" may stem not from original expression but rather from the ideas of reliving ancestral memories (there's a device that allows you to tap into those memories, while reliving those memories you interact with historical figures, good battles evil, etc.).  If that's the case, the plaintiff may find it difficult to prove copyright infringement because, as we've said a few times here, copyright law does not protect ideas.
  
  In the meantime, however, the plaintiff appears to be on the receiving end of a lot of vitriol from fans of Assassin's Creed.  Sometimes, legal actions have non-legal consequences (a factor that should always be kept in mind when exploring your own legal options).
   
• EMI filed a lawsuit in New York federal court alleging that Def Jam Records owes UMI for making unlicensed use of EMI's music in Def Jam’s new video game, Def Jam Rapstar.

• Print
• Comments
• Trackbacks
• Share Link

Starting the week off right, with some news and notes on items of interest to the games industry:

• HBO has fired back in the suit brought by a former MTV reality personage over use of the phrase "Johnny's Bananas," asking a New York state judge to dismiss the suit in its entirety.  Reasons: 1) no publicity rights in a nickname; 2) the show made no references to the individual, but rather used the phrase in a different way, unaffiliated with the plaintiff; and 3) time-barred by New York's applicable statute of limitations.  Previous coverage of this suit.
   
• Arnold v. Mutual of Omaha Insurance Co. - a California Supreme Court case that explores the differences between an employee and an independent contract.  Particularly useful for games companies as many game development services are performed by independent contractors (especially if you're a small/indy/emerging growth company).  Note the checklist of factors the court provides.
   
• Psystar has filed a petition for cert with the US Supreme Court in its long-running dispute with Apple over Psystar's distribution of "mac clones."  At the same time, Apple lost its bid to keep certain documents related to the litigation sealed, meaning that some information submitted in briefs and contained within decisions will now become part of the public record.  All those interested in copyright protection and software (so, pretty much everyone who reads this blog) should follow this case closely.
   
• Ninjavideo co-founder sentenced to 22 months in prison after pleading guilty to conspiracy and criminal copyright infringement.  Perhaps Ninjavideo's motto should be changed from "this sh*t is ninja" to "copyright law is no joke."
  
  This development will be particularly interesting to keep in mind as the ongoing debates over SOPA/Protect IP Acts continue.  More on SOPA/Protect IP coming, so stay tuned.

• Print
• Comments
• Trackbacks
• Share Link

According to a lawsuit filed on September 30th, the answer is "yes."  Plaintiff Astrolabe, Inc. filed a lawsuit against two individuals for maintaining online databases of historical time zone information.  The plaintiff alleges that it owns copyrights in the software program ACS Atlas, and that the defendant's website, by offering historical time zone information, infringes upon those copyrights.

Let's give Astrolabe the benefit of the doubt and assume that it meant to draft the complaint so that the allegation was that the defendant's websites copied the code or table structure of the ACS Atlas because, as we've said a number of times on this blog, you cannot copyright ideas or facts.  Facts are facts; data is data.  Such things are not protected by copyright.

Copyright does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed.  United States Copyright Office.

Thus, no infringement of copyrights can occur if the things being infringed are facts and data because facts and data are not copyright protected.

That is not to say the suit is totally without potential merit.  If the alleged infringement is against original expression (e.g., introductory paragraphs and explanations about those facts), or the software code that drives the database, then copyright law may come in to play.  Even the layouts of databases and menus pay be subject to copyright protection.  See Positive Software Solutions, Inc. v. New Century Mortgage Corp., 259 F.Supp.2d 531 (N.D.Tex. 2003) (finding that "data structures" - layout of a database - could be subject to copyright protection).

Outside of the facts/expression issue, there are a couple of additional issues with this complaint:

First, Atlas ACS does not appear to be registered with the US Copyright Office.  A federal registration (or at least a pending application, depending upon your state of residence) is a prerequisite to filing a copyright infringement lawsuit.  17 U.S.C. 411(a).  It is unclear from the complaint whether ACS Atlas has been registered or not.

Second, assuming that the protected expression is the data structures built within the databases, one has to wonder whether the merger and scenes a faire doctrines will come in to play here.  These doctrines are limits on the monopolistic power of copyright law.  The merger doctrine holds that protection is denied to expression that is inseparable from the ideas, processes or facts underlying the expression.  Gates Rubber Co. v. Bando Chemical Industries, Ltd., 9 F.3d 823 (10th Cir.1993).  Similarly, the scenes a faire doctrine, in the context of software, states that protection is denied to those elements of a program that have been dictated by external factors.  Id. at 838.

Both of these issues came to bear in a case brought in the District of Massachusetts (the same court Astrolabe brought its case in) - Baystate Technologies, Inc. v. Bentley Systems, Inc. 946 F.Supp. 1079, 1087 (D.Mass.,1996).  In that case, the court relied on both the merger and scenes a faire doctrines to find that no infringement of software had occurred.

Third, there is a three year statute of limitations when it comes to civil copyright infringement cases.  17 U.S.C. 507(b).  If the defendants can show that they have run their websites - with the allegedly infringing content - for more than three years, then it will be up to Astrolabe to show that it did not, nor could not have known, about the infringement until recently.  This may be difficult to prove, depending upon the facts.

Fourth, the complaint seeks costs and attorneys' fees.  However, these remedies are only available if the work was registered prior to or within three months of registration.  17 U.S.C. 412.  Therefore, awarding attorneys' fees and costs will only be possible if ACS Atlas was registered prior to publication.  That does not appear to be the case.

Finally, there might be a fair use argument here.  The two defendants appear to be employed by the NIH and UCLA, so there may be a strong argument for the alleged infringement being an educational use.  Of course, fair use is very fact-dependent, and the other fair use factors (the cost to license the portion of ACS Atlas that is being infringed, how much of the Atlas is being infringed, and the potential effect upon the work as a whole) may require a certain result.  But at a minimum, from the facts currently at hand, I would say that fair use is certainly a potential defense.

The bottom line here is that this complaint does not look very likely to succeed unless facts not within the complaint are established.  Even then, the chances of success may be slim depending upon what original expression (if any) is being infringed.

What Can We Learn: Here are a couple of takeaways when it comes to copyright infringement lawsuits:

1. Always, always register your work.  Copyright law gives you sufficient incentives to do this, and makes enforcement of your rights a lot harder if you don't.
2. Register your work at the earliest opportunity.  Failure to do so can result in a loss of important incentives - statutory damages, costs, and attorneys' fees.
3. Copyright law is an area full of complexity - understand that not all "infringement" is actionable.  Merger, scenes a faire, and fair use may require that an "infringement" actually be legal.

Ultimately, this may be another example of copyright law being used to monetize underperforming IP assets, which, as we all know from the story of Righthaven, is not necessarily a winning strategy.

• Print
• Comments
• Trackbacks
• Share Link

A couple of interesting copyright developments, plus...

• George Lucas lost a copyright fight in the UK over Stormtrooper helmets.  The reason: the helmets were ruled "industrial works," not "sculptures," meaning that the term of copyright protection in the helmets was only 15 years.  The differentiation between "industrial works" and "works of art" does not exist in American copyright law, so not to worry US game devs.
   
• Marvel has won a copyright battle over superheroes including Spider-Man, Iron Man, and the Incredible Hulk.  Marvel was sued by the heirs of comic book artist Jack Kirby, who argued that they had successfully terminated the publishers' rights to the characters.  The court disagreed.  This is an important development in copyright law (with particular application to the games industry because of the developer/publisher relationship), and more thoughts on this are likely to follow.
   
• A British court has ruled that British Telecommunications PLC must block its subscribers from accessing a website that provides pirated movies.  The case, being heralded as a "test case victory" for content owners in the U.K., could led to similar results for websites providing pirated/cracked games.  This may be another way to tackle the piracy problem if you don't have a lot of faith in DRM.
   
• EA ordered to respond to an antitrust lawsuit regarding unpaid student athletes.

And now for a few news items that, though a bit off the "courtroom roundup" theme, are interesting nonetheless:

• Video games as a means of relieving stress and achieving enlightenment?
   
• Nintendo slashes the price of the 3DS.  Does this mean 3D is a fad?  I mean, it's not like this was ever tried before.  Oh, wait... Virtual Boy anyone?

• Print
• Comments
• Trackbacks
• Share Link

[This post was written by Drew Boortz and Julya Vekstein, a summer associate in Reed Smith's Washington, DC office]

When does a work made abroad and published on the Internet qualify for protection under US copyright law?  Or, perhaps more importantly, when does such a work not qualify for protection?  That was the focus of the (somewhat) recent case of Kernal Records Oy v. Mosley.  Mosley is the classic boy-meets-song, boy-takes-song, song-owner-sues scenario.  In this case, Finnish recording company, Kernal Records, claimed that producer Timbaland and musician Nelly Furtado copied the sound recording and musical arrangement of "Accidjazzed Evening" and used it in Furtado’s song "Do It." The controversy began with a single YouTube video claiming to show the similarities between songs.  It ended with a determination that the Finnish song was a "US work," and that the case should be thrown out because the record label did not satisfy the requirements for bringing a copyright infringement lawsuit.

We’ve covered copyright issues here before, but to quickly recap: copyright law protects original expression, and grants to authors certain exclusive rights – the rights to copy, sell, distribute, and make derivative works of the original being chief among them. When a work is taken and copied, sold, distributed, etc., without the permission of the author, the exclusive copyrights of the author are "infringed," and that’s when the lawyers come out to play.

Of course, nothing in the law is that simple, and bringing a lawsuit for copyright infringement is subject to a few constraints. One of the most important constraints is the fact that, in order to bring a lawsuit for copyright infringement of a work created in the United States, that work must be registered with the US Copyright Office. Note that this applies to "works created in the US."  Works created outside the US are treated differently. And based on the facts of the Mosley case, it would seem that the requirement to register a song created by a Finnish artist would not apply. However, the court in Mosley applied the requirement to register and, since the song was not in fact registered, the court threw out the case.

How could a song owned by a Finnish record label (and presumably created in Finland) get treated as a "work created in the US?" Well, the answer takes a bit of mental gymnastics, so click through the jump to read on.

• Print
• Comments
• Trackbacks
• Share Link

Regular blog readers (all six of you) have probably noticed a drop in the frequency of posts.  Here's hoping that this post gets us back in to the swing of things.  And now, legal-related games industry news from in and around the interwebs.

• EA buys PopCap.  Looks like EA has Zynga in its sights. 
   
• Louisiana revises its tax incentive offerings.  No more transferrable credits, but those credits are now refundable.  In plain English, that means sales of the tax credits aren't allowed, but if the credit is worth more than your total tax liability, the state pays you.
   
• In other tax incentive-related news, Michigan has limited its interactive entertainment credit to a total of $25 million across all projects.  This is a steep drop from the previously unlimited amount of funding. 
   
• Angry Birds dev Rovio has sued Ideal Toys Direct, Inc. for copyright infringement.  Rovio is alleging that Ideal Toys' "Roly-Poly Birds” and “Roly-Poly Farm Animals” line of products are substantially similar to characters in Angry Birds.  If the allegations are true, then this would appear to be a modern day version of the H.R. Puff n' Stuff case (with fewer cheeseburgers being affected, of course).
   
• Games begetting movies?  First Ubisoft, and now Rockstar.  Care to place bets on whether a Red Dead Redemption game will fare better or worse than Prince of Persia: The Sands of Time?
   
• The "truthiness" behind the creation of a Stephen Colbert-themed video game.
   
• [Shameless plug] Upcoming speeches/presentations by the DevConcerns team to include talks on protection or fictional characters in old and new media, and entertainment-related tax credits.  More information on these talks, and possible presentation notes, to come.

• Print
• Comments
• Trackbacks
• Share Link

What do an app game about illegal immigration and a downloadable FPS have in common?  They are both games that were made to get people talking.  They also look to the legal grey area of parody/satire to avoid potential legal issues.  Which brings us to the topic of today's post - where does parody and/or satire (yes, they are separate, though related, concepts) come into play in the games context, and why is this useful.  But first, a bit of background.

For those of you who have not heard of the Smuggle Truck app controversy, here's the basic gist.  A game, distributed on the Kongregate network, asks players to smuggle immigrants across a "fictional border."   So perhaps one may think that a possible message of the game is that illegal immigration is okay. But as the Smuggle Truck story page explains, the game "...was inspired by the frustration our friends have experienced in trying to immigrate to the United States.  With such a troublesome issue being largely avoided in popular media, especially video games, we felt the best way to criticize it was with an interactive satire."  So the game, according to its makers, is not all that it purports to be.

Similarly, a few weeks ago the makers of Bulletstorm (which itself is no stranger to controversy) released a downloadable FPS called "Duty Calls."  Clearly, Duty Calls was intended as a swipe at Activision's Call of Duty franchise - it even says so on the bottom of the webpage - "Duty Calls is a parody. It is not associated with Activision or the Call of Duty games."

One game as "satire," the other as "parody."  What do these game devs gain by self-identifying as parody or satire?  If there are legal ramifications for calling one's game a parody or satire, is that self-identification all that's required?  Thoughts after the jump.

• Print
• Comments
• Trackbacks
• Share Link

Brad Newberg of the Reed Smith Video Games Team has written a further in-depth analysis of MDY v. Blizzard that has been featured by the Washington Legal Foundation.  Previous blog coverage of the case can be found here.  Congrats Brad!  (Even though your analysis is noticeably void of bad puns).

• Print
• Comments
• Trackbacks
• Share Link

[Ed. Note: we seem to be having a few technical difficulties with this post.  Hopefully this version will have fixed the problem]

Okay, I don't really like bots. Of course, I don't generally dislike them either. It's just that I can't seem to stop with the bad puns.

Here's my thinking on bots: I've never understood why people would want to use them. Bots play videos games for you - you don't need to be involved with the game in any way other than starting it up. Now, when I play games, I do so because I want to experience what my avatar/character is doing (solve mysteries in the old west, explore alien worlds, save the human race from mutated zombies - you know, those things I would do in every day real life if I wasn't writing this blog). Having a computer play the game automatically takes away that experience, and leaves me with no payoff or sense of accomplishment when it's done.

But for those of you who feel differently, I have some good news/bad news. The good news -thanks to a recently-decided Ninth Circuit case, using (and making, selling and distributing) bots to automatically play games is not necessarily copyright infringement. Bad news: bots may still violate the Digital Millennium Copyight Act's anticircumvention laws.

Analysis of the decision after the jump.

• Print
• Comments
• Trackbacks
• Share Link

According to reports, Apple has removed a "jailbreak"-detection API from its latest version of iOS.  The API, which was introduced as part of Apple's Mobile Device Management functionality in iOS 4, would have allowed third party developers to check to see whether the device had been "compromised" (that is, not running as Apple intends - unlocked, jailbroken, etc.). 

While no one is sure exactly why Apple removed the API from iOS, some concerns have been raised that the API opened up a number of potential vulnerabilities in exchange for not much protection (it was theorized that the API could be "fooled" into thinking that a jailbroken device was operating normally, which would render the detection functionality essentially useless). However, I do not think that Apple's decision to drop the API is based on this concern alone. 

Rather, I think the decision reflects both this concern and a broadening attitude toward certain kinds of jailbreaking.  Remember, it was not too long ago that the US Copyright Office completed its Digital Millennium Copyright Act ("DMCA") Anticircumvention Rulemaking.  Through the Rulemaking, the Copyright Office concluded that jailbreaking smartphones to run third party software was not (in many, but not all, cases) a violation of copyright law.  By removing copyright law as a cause of action against certain jailbreakers, the Copyright Office also removed the potential penalties that could be obtained against such people.  This means that device manufacturers like Apple will likely be reassessing how they spend money in relation to the cat-and-mouse game that is jailbreak prevention. 

What can we read from the tea leaves offered up by this decision?  First, I don't think we can expect Apple to embrace the jailbreaking community wholesale.  Jailbreaking can still be a violation of contract law (through the license you agree to when you buy and active an iPhone), and will still likely violate the warranty Apple offers on its iOS devices.  Second, I would not be surprised to learn that Apple is refocusing its jailbreak prevention efforts on its enterprise customers.  These customers are typically much more concerned about rogue devices/software than the everyday user, and so I doubt Apple (or any other device manufacturer) will ignore jailbreaking completely.  Third, I think that in offering the API to all developers, there was an implied incentive to utilize it.  Adding code that is not part of the app's core functionality could lead to bloated, buggy code.  By removing the API (instead of just leaving it alone), Apple effectively kills the implied incentive, thereby helping ensure that apps offered through the App store are more streamlined/less buggy.  It also has the nice effect of keeping app sizes smaller, which may not mean much in individual cases, but in the aggregate, may add up to a lot of space.

• Print
• Comments
• Trackbacks
• Share Link

The Grand Theft Auto franchise is no stranger to controversy.  The San Andreas game itself was been the subject of number of legal actions (the "Hot Coffee" and "Playpen" issues are two that come immediately to mind).  Now, Rockstar Games and Take-Two Interactive (the makers of GTA:SA) have been sued for 1/4 of the total estimated profits of the game.  And trust me, those estimated profits are eye-popping.  The lawsuit complaint estimates that the game has garnered roughly $1 billion worldwide, so that 1/4 in damages sought would amount to a whopping $250 million.

Why are Rockstar and Take-Two being sued, and by whom?  The lawsuit was filed by a man named Michael Shagg Washington, and he is suing for fraud, misappropriation of likeness under Cal. Civ. Code 3344, and copyright infringement.  Having read the complaint (made available by IGN here), I have a few thoughts on this lawsuit.  In short, if someone were taking bets on Mr. Washington's bout with Rockstar/Take-Two, I'd put my money on Rockstar/Take-Two.

Thoughts after the jump.

• Print
• Comments
• Trackbacks
• Share Link

The landmark trial against alleged XBox modder Matthew Crippen has been dismissed by federal prosecutors.  The dismissal comes after the judge in the case publicly berated prosecutors, and raised "serious concerns about the government's case." 

For those of you unfamiliar with the case, the defendant was charged with violations of the Digital Millennium Copyright Act (commonly referred to as the DMCA) as a result of his modding XBox consoles to run "other than authorized" software.  According to the charges filed against the defendant, the modding violated 17 U.S.C. Section 1201(a)(1)(A), which makes it a crime to circumvent technological measures designed to control access to copyrighted works.

Based on the fact that the government dismissed its case, and the judge questioned whether the government had enough to bring the case in the first place, one can assume that modding is completely legal, right?  Not exactly.  This was just one case, with arguably bad facts for the government.  Another case, with another set of facts, may have an entirely different outcome.

Here's what we know about modding - it is, by definition, an issue under the DMCA if there is software involved.  Software is subject to copyright protection, and based upon the additions to copyright law made by the DMCA, actions you take to circumvent technologies designed to protect that software may constitute copyright infringement.  But that is not the end of the story, because the DMCA contains several exemptions to its anti-circumvention statutes, and there is the overriding defense of fair use that may be applicable as well (though the Crippen case has made it less likely fair use will apply, at least in modding-for-profit cases).

The DMCA exemptions specifically state that certain kinds of modding, from jailbreaking and unlocking cell phones to creating video mash-ups from DVDs, do not violate the DMCA's anti-circumvention laws.  While these exemptions might be of interest to the video games industry in certain situations, there is one exemption that is tailored just for us:

Video games accessible on personal computers and protected by technological protection measures that control access to lawfully obtained works, when circumvention is accomplished solely for the purpose of good faith testing for, investigating, or correcting security flaws or vulnerabilities, if:

(i)  The information derived from the security testing is used primarily to promote the security of the owner or operator of a computer, computer system, or computer network; and
 

(ii) The information derived from the security testing is used or maintained in a manner that does not facilitate copyright infringement or a violation of applicable law

If we unpack that statement a bit, it boils down to QA.  If your modding is done so you can test the security of the system used to protect the underlying work, then the modding is likely to be acceptable.  Other modding behavior, such as that engaged in by Mr. Crippen, is more questionable.

Then there is the overriding defense of fair use.  Fair use, as embodied in 17 U.S.C. 107, may seem easy to describe in the abstract, but it is difficult to grasp in its totality.  It basically says that certain activities, which in the abstract may meet the definition of copyright infringement, are nevertheless acceptable because of the good they do.  Examples of "classic" fair use activities involve teaching, criticism/commentary, etc.  However, each application of fair use turns on the facts at hand; there are no bright line rules when it comes to fair use - some commentary can still qualify as copyright infringement (see Gawker's battle with former governor Palin over her upcoming book).  So any modders hoping to rely on fair use should be wary of this strategy.  After all, fair use did not work so well for Matthew Crippen (PDF).

What, if anything, can be learned from this first modding trial?  First, modding is something that console manufacturers take seriously.  While modding may not turn into the same legal quagmire that file sharing has, it is still something that console devs take seriously.  And with both criminal and civil penalties available under the DMCA, anyone tinkering with console hardware or software should do the same.  Second, there is now one decision finding against fair use for modding-for-profit activities.  This is not an automatic bar for all future modding cases, but it does make a future defendant's case that much more difficult.

• Print
• Comments
• Trackbacks
• Share Link

A number of lawsuits and court decisions came to light today (at least, they came to light for me), but none of them merited a stand-alone post for this blog.  So in what may be a one-time phenomena (but hopefully will become a recurring post section), we're presenting the first Courtroom Roundup - a brief overview of interesting cases and decisions that in some (typically tangential) way impact the video games industry (if there was a direct impact, it would likely merit its own post).

With that being said, welcome to Courtroom Roundup: The Supreme Denial Edition

• IAC/Interactive Corp. et al. v. Cosmetic Ideas Inc. - What is required to sue for copyright infringement, filing an application for copyright registration, or having that application granted?

The first case - IAC/Interactive Corp. et al. v. Cosmetic Ideas Inc., case number 10-268 in the U.S. Supreme Court - concerned the question of whether someone can sue for copyright infringement after merely filing for registration, or whether someone must wait to file a lawsuit until the Copyright Office grants a registration. The question stems from the text of 17 U.S.C. 411, which states (in relevant part) "no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title." 

Some circuits - the Tenth and Eleven - have interpreted this statute as making registration - that is, registration granted by the Copyright Office - a precondition to filing a copyright infringement lawsuit.  (Ed. Note: there are some explicit exceptions to Section 411 for works refused registration and audiovisual broadcasts, but we're ignoring them for now).  Other circuits - the Fifth, Seventh, and Ninth - have interpreted Section 411 as requiring only that a registration be filed, not granted, prior to having the ability to sue for copyright infringement.

Bottom Line for the Games Industry: As of now, the circuit split stands.  Depending upon where you file suit, you may have to wait for the Copyright Office to grant a registration, which in some cases is taking more than two years to process (without paying special fees, that is).

•  Tiffany (NJ) Inc. et al. v. eBay Inc. - Should an online auction site be liable for trademark infringement committed by its users?

Our second case (also a denial of cert. by the Supremes) is Tiffany (NJ) Inc. et al. v. eBay Inc., case number 10-300 in the U.S. Supreme Court.  This case stems from the six year-long battle between Tiffany and eBay over eBay users selling knock-offs as "authentic" or "real" Tiffany jewelry.  The question raised by Tiffany's was whether eBay should be liable for damages caused by the sale of knock-offs.  To get to liability, Tiffany's raised several causes of action including contributory trademark infringement and false advertising.

At trial, eBay won on all counts because it showed that it took affirmative steps to remove infringing items once those items had been reported.  On appeal to the Second Circuit, the appellate court agreed with the district court as to trademark liability, but revived Tiffany's false advertising claim.  With the denial of cert. from the Supreme Court, the case (from the trademark side) has been effectively ended. (Ed. Note: the false advertising claim was recently rejected - again - by the district court.  See here).

Bottom Line for the Games Industry: When it comes to online portals and trademark infringement claims, potential plaintiffs should think of portals as falling into one of two buckets: those sites that play "above board" (that is, have procedures for dealing with infringements, and follow those procedures), and those that do not.  Compare eBay, with its infringement response protocols, to a bit torrent site like Pirate Bay, which typically does not.  While both may have generalized knowledge of infringements occurring through their online services, infringement actions against Pirate Bay-like entities are far more likely to success than those against eBay-like entities.  This is due in no small part to the eBay-like entities playing "above board."  So pick your targets carefully.

(Ed. Note: This is just a US perspective, though.  Recently, eBay was fined 1.7M Eur by a French court for failing to stop sales of fake Louis Vuittion items on its site.  So perhaps we should have a Bottom Line #2: the US is not the only law that should be considered when looking into infringement claims).

•  Harper v. Maverick Recording Co. et al. - availability of the "innocent infringer" defense to copyright infringement

As if you couldn't see this coming, the third case of this Roundup is also a denial of cert.  The case - Harper v. Maverick Recording Co. et al., case number 10-94 in the U.S. Supreme Court - concerns alleged copyright infringer and Kazaa-downloader Whitney Harper, and whether she can claim the "innocent infringer" defense.  The "innocent infringer defense" isn't really a "defense" at all since it does not mean the infringer is free from liability; rather, it just goes to reduce the amount of statutory that the infringer pays the copyright holder.  Under 17 U.S.C. 512(c), a court may reduce the statutory damage award to not less than $200 if the court determines that the infringer did not know, and had no reason to know, that the actions at issue constituted copyright infringement.  In Ms. Harper's case, the district court determined that she was an "innocent infringer" and reduced the damage award from $750 to $200 for each of the 37 works (that's a reduction to $7,400 from the minimum $27,750 that could have been obtained).

Upon appeal, however, the Fifth Circuit determined that the innocent infringer defense was foreclosed as a matter of law in this case under 17 U.S.C. 402.  This provision states (in relevant part) that the "innocent infringer" defense is not available if a copyright notice appears on the published phonorecord to which a defendant had access.  In other words, because record companies put copyright notices on physical CDs, and Ms. Harper could have accessed the CDs by visiting a retail store, she could not claim the "innocent infringer" defense.  By denying cert. in this case, the Supreme Court has upheld the appellate court's determination, which will raise the statutory penalties back into the $750 per work range.

Interestingly, Justice Alito dissented from the denial of cert. (he disagreed with the Supreme's decision to not hear the case), and wrote that since the law was drafted in 1988, before music downloading was a reality, there was an argument that Section 402 should not apply to music downloaders (an interesting point of view for this justice - it smacks a bit of the "living law" theory, doesn't it?).

Bottom Line for the Games Industry: Although this case dealt with phonorecords (that is, music), there is an analogous provision in 17 U.S.C. 401 - just replace "phonorecord" with "copy."  So putting copyright notices on physical copies of a game is not only a good idea, it can help forestall the application of the "innocent infringer" defense and thereby preserve a higher statutory damage award.  But unlike music, which cannot easily include a copyright notice within the work itself (imagine a HAL-like voiceover stating copyright notices for the first 4 seconds of every song), video games can.  There are load screens, transition screens, and other places where placing a copyright notice can be done without wrecking the gameplay experience.  And putting the copyright notice in the work itself can make it even less likely that the "innocent infringer" defense is available.  So in my opinion it's a good idea (and common practice) to include a copyright notice somewhere in-game.

• Print
• Comments
• Trackbacks
• Share Link

Last week Cryptic Studios announced a new feature for its Star Trek Online MMO: a significant user-generated content toolbox.  The new feature, dubbed "The Foundry" will allow users to customize pre-made assets like planets and star systems with their own content (e.g., encounters, objects, and stories) as well as author missions for other players to play.

According to the Foundry FAQ, "players can customize pre-made planet surfaces and star systems with their own encounters, objects, and story. They can also create their own star systems from scratch. More map features are planned for future updates."

"Cool," says the gamer in me.  This seems like a potentially solid strategy for addressing some of the complaints that the MMO has received (according to Gamasutra, Star Trek Online has received mixed reviews as critics cited issues with bugs, a lack of polish, and repetitive missions).  Put "mission control" into the hands of players, and crowdsource aspects of game development. 

"But wait," says the lawyer in me, "there are serious issues of copyright law to contend with here."  Analysis of the copyright law issues after the jump.

• Print
• Comments
• Trackbacks
• Share Link

For many gamers, Pacman (or PAC-MAN for the purists) was a critical first introduction to the world of video games.  Even today, the game still has a lot of cache - just ask Google, which recently commissioned a Pacman doodle to commemorate the 30^th anniversary of the game's US launch.

Well, it's to be expected that anything this popular will eventually turn up in a political campaign.  Music, videos, and TV news broadcasts have been used in political campaigns, without permission, often resulting in great legal expense.  Just ask Don Henley, Rush, or Fox News how use of their IP in political campaigns worked out.  So perhaps it's of little surprise that now, video games have been thrown into the mix.

Missouri Congressman Russ Carnahan (D) has developed a Pac-Man themed videogame in order to attack his Republican opponent Ed Martin.  According to GamePolitics, "Hackman" replaces the game's titular star with Martin's head, and has the head chase, and be chased, by four rotating gavels (in place of the traditional red, orange, pink, and white ghosts). 

This raises the question: what legal liability could Congressman Carnahan face for appropriation of the Pacman idea, game feel, and game play?

• Print
• Comments
• Trackbacks
• Share Link

If you are interested in video games and the law, then you have probably heard of the recent decision from the Ninth Circuit Court of Appeals in Vernor v. Autodesk.  This was a case about software, and whether software is "bought" or "licensed" for the purposes of the Copyright Act.  Many people have written excellent recaps of the case, so we won't repeat it here.  But if you're interested, see here, here, here, and read the full decision here.

The upshot of the case is that a software user is a licensee, not an owner of a copy, where the copyright owner:

1. Specified that the user is granted a license;
2. Significantly restricted the user's ability to transfer the software; and
3. Imposed notable use restrictions.

To see whether Autodesk met those requirements, the court looked to Autodesk's Software License Agreement ("SLA").  For those who won't read Autodesk's SLA or the full court decision, Autodesk met those requirements.

What does this mean for video games?  For gamers, it may mean that you cannot sell or purchase used games if the game company has properly created a license instead of a sale.  How does a game company create one or the other?  Through the video game equivalent of an SLA - an End User License Agreement (or "EULA").  So for game companies, the Vernor decision requires not only an assessment of whether a license or a sale is intended, but also an examination of the EULA to make sure that the document creates the sale or license (as may be appropriate).

Unfortunately, it is not at all uncommon for EULAs to be "adapted" from one game to the next.  However, a EULA written in 2008 may not be sufficiently clear to comply with the requirements of Vernor.  So this raises the following question for game companies: do your EULAs create the transaction you think they do?

• Print
• Comments
• Trackbacks
• Share Link