Gamer/Law

Judge dismisses God of War copyright lawsuit against Sony

noreply@blogger.com (Jas Purewal) — Fri, 12 Mar 2010 11:16:00 +0000

A US judge has rejected a lawsuit claiming that Sony's God of War infringed copyright in a series of film scripts written by two Californian screenwriters.

The screenwriters, Jonathan Bissoon-Dath and Jennifer Dath, claimed they had written two treatments and two screenplays concerning a Spartan attack on Athens and other events in ancient Greece, which they claimed were copied by Sony in making the God of War game (source: THR).

God of War is of course an PS2 action game set in ancient Greece in which the hero Kratos, a Spartan, kicks various classical ass on the way to replacing Ares as the eponymous god of war.

The case

The writers commenced legal action against Sony and one of its developers, David Jaffe, in February 2008, but subsequent attempts to settle the lawsuit failed. Sony clearly felt that they had a strong case, because they then applied for summary judgment. In other words, they argued that the court should rule in their favour and dimiss the lawsuit because the writers had no legal case to stand on (in the words of the judge, there were "no genuine issues of material fact" and the applicant is "entitled to judgment as a matter of law").

The trial before Judge Marilyn Hall Patel focused on the writers' copyright infringement claim, for which the judge said that they had to show:

(1) that they had created and owned valid copyright works; and

(2) protected elements of those works had been copied by Sony.

The writers had to prove this by: (i) presenting direct evidence of copying by Sony, or (ii) by showing that Sony had access to their works and that there is a substantial similarity between the writers' works and God of War.

In order to establish these arguments, both parties took Judge Patel through their respective works, meaning presumably she had the opportunity to play God of War all the way if she so chose, though actually it seems that she just relied upon the lawyers' legal submissions rather than cracking through the game herself. Shame. (Actually, it seemed reasonably clear that Judge Patel was not familiar with games when she initially described God of War as a "multi-hour video game". A what?)

Having gone through the evidence, the judge found in favour of Sony. She said that:

"An examination of articulable similarities between the plot, themes, dialogue, mood, settings,

pace, characters and sequence of events of God of War and plaintiffs’ works reveals far less
similarity than would be required to overcome summary judgment, even if plaintiffs had proven access [to the scripts]".

She acknowledged that "there is some degree of similarity between the plots at an extremely generalized level" - the main similarity being that both were set in Ancient Greece and dealt with a battle between men and the Greek Gods. However, citing previous caselaw she said “No one can own the basic idea for a story. General plot ideas are not protected by copyright law; they remain forever the common property of artistic mankind.” (This is of course an appliation of the basic principle that copyright law protects the expression of ideas, not the ideas themselves.)

As a result, she held that "No reasonable trier of fact could conclude that God of War is substantially similar to any of plaintiffs’ works" and therefore dismissed the lawsuit against Sony.

No doubt this will come as a great relief to Sony, which of course is about to release God of War III.

Legal thoughts

Reading the judgment, it seems that this was an ambitious claim by the writers from the outset. They had written film scripts about events taking place in Ancient Greece and sought to argue that Sony had copied those scripts when it developed God of War even though the judge went on to find that:

There was no evidence of direct copying by Sony
There was no evidence that Sony had even access to the scripts
The writers sought to bring the claim based on "general plot ideas" and "stock elements that have been used in literary and artistic works for years, if not millennia", none of which are capable of being protected by copyright law
In fact, there was little similarity in the "plot, themes, dialogue, mood, settings, pace, characters and sequence of events" in the scripts and God of War.

Perhaps the writers thought the lawsuit would settle early on, but as it turned out it fought all the way to trial (which is admittedly fairly rare, certainly in the UK anyway). The judgment does not disclose what the writers actually wanted from Sony, but I would imagine that it included substantial financial damages as well as (potentially) a temporary or permanent injunction against future sales of God of War. Well, no chance of that now (unless they appeal, of course).

Lessons from the lawsuit

The lawsuit reinforces some important lessons about copyright law and how far it goes to protect any copryight work, including games:

Firstly, copyright law exists to protect the expression of an idea, which you have created through your own skill and labour. It does not give you any ownership of the idea itself. So, writing a script based on an ancient Greek story gives you copyright over that script but does not give you copyruight over the underlying ancient Greek story.
Secondly, even if you do have a copyright work and you think it has been copied, you have to prove to a judge that there has been "substantial copying" of your copyright work.
Thirdly, copyright lawsuits are exercises in detail and precision. The claim for copyright infringement needs to be established in very precise, concrete terms by reference to specific elements of your work. Just generic references to similarities (in this case, to plot, themes, dialogue, mood, settings, pace, characters and sequence of events) generally won't cut it.
Fourthly, copyright lawsuits can be much more complex even than this case. For example, although this lawsuit didn't get that far, there are entirely separate issues regarding defences to copyright infringement and how to assess loss.

And there's also some lessons about lawsuits generally here:

If you think you have a lawsuit against someone, or might be defending one from someone else, then consider your options seriously and get legal advice early on.
Your lawyers will then be able to advise you on your legal prospects of success and what steps you can take to protect your position. In this case, Sony's lawyers advised them to apply for summary judgement to get the case disposed, and it seems that was the right route to take.

We've written more about games lawsuits and what you can do about them here.

The views expressed in this post are the author's own personal views and not his employer's!

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here

Gamer/Law Weekly Newsletter, 1-5 March 2010

noreply@blogger.com (Jas Purewal) — Fri, 05 Mar 2010 18:40:00 +0000

Here's our round-up of games news and games/law developments over the last week. Enjoy!

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here

Venezuala bans violent videogames and toys

noreply@blogger.com (Jas Purewal) — Fri, 05 Mar 2010 15:00:00 +0000

Venezuala has apparently passed a law banning "video and war games and toys prompting violence to help improve child education and prevent misconduct".
According to the Prensa Latina site (via Slashdot and TorstenFo), the new law "imposes a fine and 2-5 years in prison on the import, production, distribution, sale, hiring and use of video games and toys inciting violent behaviour".

Further, "this legislation defines as aggressive every audiovisual material promoting and inciting violence, the use of weapons and toys imitating weapons or stimulating violence and hate."

Obviously there isn't nearly enough detail in this press release to have an informed view as to what this new law does or doesn't do. BUT, it is interesting that the release is phrased in a way that suggests Venezuala has banned "violent video and war games" per se. The approach in the US and Europe is rather different: games are age-classified but (other than the most extreme games) no games are banned just for being violent. So, for example, Modern Warfare 2 was PEGI rated as 18+, making it appropriate for 18 year olds and over, but it wasn't simply banned just for being "violent".

In the US, games classification is adminstered under the ESRB system and the majority of Europe now uses the PEGI system (the UK is due to adopt the PEGI system in the near future).

How would the Venezualan system work and under whose control? So far, the only information we have seen about that is the Slashdot source, which said: "Alberto Federico Ravell, former director of opposing news network Globovision, has already come on twitter denouncing the authorities for seizing imported Gameboy, Wii and PlayStation 3 consoles, due to considering them violent". Which, if true, speaks for itself really.

If anyone has any further info on the new Venezualan law, please get in touch. In the meantime, here again is our summary post on censorship and classification in 2009.

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here

Digital Economy Bill may become law before election

noreply@blogger.com (Jas Purewal) — Fri, 05 Mar 2010 10:22:00 +0000

A quick one: the Guardian reports that "senior media industry figures believe" that the Digital Economy Bill will become law before the forthcoming general election (expected in April/May 2010).

Interesting to speculate who these unnamed sources are, or why they think the Bill will be pushed through soonish. To us, at the moment, there seems to be a healthy amount of opposition to the Bill in the House of Lords, and it hasn't even got to the House of Commons yet - all of which suggests it may take longer than expected for the Bill to get through. Still, the point is that the Bill genuinely could become law in the next few months. Our thoughts on the Digital Economy Bill and its implications for games are here. Since we wrote that post, matters have moved on somewhat, since the controversial clause 17 has been voted down. This has led to fresh controversy however over whether its replacement is even worse!

We'll report more on the Bill and games as and when there is a further, more 'final' version of the Bill (and once it becomes clearer if the Bill is actually like to become law before the next election).

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here

[image author: Andrew Dunn, obtained via Wikipedia]

Former Infinity Ward Execs Sue Activision

noreply@blogger.com (Jas Purewal) — Thu, 04 Mar 2010 10:10:00 +0000

NOTE: this post seems to have received a deal of media interest, so just to make clear: these are just the personal views of Gamer/Law. Also, we do not have any relationship with anyone involved in the litigation! Thanks.

Original post:

Former Infinity Ward executives Jason West and Vince Zampella have launched a lawsuit against former employer Activision for "substantial royalty payments" relating to Call of Duty: Modern Warfare 2.

The lawsuit follows a great deal of controversy and rumours over the last few days, which saw Westand Zampella fired from their jobs at Infinity Ward, the games studio which developed the billion dollar grossing Modern Warfare 2. West and Zampella co-founded in 2001 and sold it to Activision in 2003. At the time they were fired, Activision made a SEC filing in which it indicated that an investigation was being conducted into their "breaches of contract and insubordination". They say they were weeks away from being paid royalty payments over MW2.

In a nutshell, West's and Zampella's argument appears to be that these allegations of "breaches of contract and insubordination" were unsubstantiated and put forward to justify Activision firing them before their royalty payments became payable. Their press release said:

"Activision has refused to honor the terms of its agreements and is intentionally flouting the fundamental public policy of this State (California) that employers must pay their employees what they have rightfully earned," said their attorney Robert Schwartz. "Instead of thanking, lauding, or just plain paying Jason and Vince for giving Activision the most successful entertainment product ever offered to the public, last month Activision hired lawyers to conduct a pretextual 'investigation' into unstated and unsubstantiated charges of 'insubordination' and 'breach of fiduciary duty,' which then became the grounds for their termination on Monday, March 1st."

"We were shocked by Activision's decision to terminate our contract," said West. "We poured our heart and soul into that company, building not only a world class development studio, but assembling a team we've been proud to work with for nearly a decade. We think the work we've done speaks for itself."
Zampella added, "After all we have given to Activision, we shouldn't have to sue to get paid."

Modern Warfare 2 is arguably one of the most successful games in history and together with Call of Duty, has generated more than $3 billion in sales for Activision. In addition, Activision seized control of the Infinity Ward studio, to which Activision had previously granted creative control over all Modern Warfare-branded games. The suit was filed to vindicate the rights of West and Zampella to be paid the compensation they have earned, as well as the contractual rights Activision granted to West and Zampella to control Modern Warfare-branded games.

The suit includes claims for breach of contract, breach of the implied covenant of good faith and fair dealing, wrong termination in violation of public policy, and declaratory relief."

Legal thoughts

The issues

From what we know so far, it seems the legal crux of this litigation will be whether West and Zampella were really in breach of contract to the extent that Activision was entitled to fire them in the manner it did. West and Zampella, who are bringing the lawsuit, will need in effect to prove that Activision's claims regarding their "breaches of contract and insubordination" are wrong or, even if they are right, were not sufficiently serious to warrant them being fired (more on that below). Several sensitive issues would have to be aired in court if this got to trial:

The West and Zampella employment arrangements with Activision, including their remuneration structure
Details regarding the commercial and personal relationships between West, Zampella, Infinity Ward and Activision
Infinity Ward's and Activision's business and management structures/practices
Details regarding the development of Modern Warfare 2 and its royalty arrangements
The alleged "breaches of contract and insubordination" - and Activision is going to need to explain exactly what it means by "insubordination" (which, as far as I am aware, has no specific legal meaning in either UK or US law)

In addition to the legal arguments, all of this will have to be backed up by disclosure of Infinity Ward/Activision documents and witness statements from West, Zampella, Infinity Ward and Activision personnel. You can see that this is not going to be pretty.

A third way?

The wording of the last paragraph in the press release is interesting, because it refers to "breach of the implied covenant of good faith and fair daling, wrong termination in violation of public policy".

In my view, this suggests it is possible (but no more than that at this stage), that West and Zampella may have an alternative legal argument, i.e. that even if Activision is right regarding their "breaches of contract and insubordination" it was still legally unfair for Activision to fire them just before their royalty payments were due to be paid. If that argument has legal force under Californian law, and is accepted by the Californian court, then in principle West and Zampella could seek to claim their royalty payments even though Activision may have been right to fire them.

What does this mean for Modern Warfare?

The press release also states the lawsuit was commenced to "vindicate...the contractual rights Activision granted to West and Zampella to control Modern Warfare-branded games."

This is potentially explosive: West and Zampella are arguing they have contractual creative control over the Modern Warfare brand. The details will have to come out in the litigation, but it will be interesting to see how aggressively West and Zampella pursue this claim: if they have a good legal basis for their argument, you could even see them (though it would be difficult) seeking an injunction against Activision until this lawsuit is resolved. Bear in mind though that it would be a difficult argument to run.

What does this mean for Activision?

The short-term prognosis at this very early stage looks challenging. Activision faces a high-profile, high-value lawsuit from hostile plaintiffs which is likely to stay in the spotlight for some time. Worse, unless it can get rid of the lawsuit quickly, Activision faces lingering doubt as to whether West and Zampella retain creative control over Modern Warfare. And, worst of all, this will mean the industry watching very carefully what it does next and how it relates with developers in the future.

On the other hand, it's quite possible that Activision could score a convincing and early legal victory (and in that regard, Activision has recently released a statement commenting on the lawsuit as "meritless" and stating that the duo did not "honor their obligations" to the publisher).

What next?

In the meantime, this lawsuit isn't likely to go anywhere anytime soon. We can expect to receive a rival press release from Activision in the near future, following which the next stage will be the parties preparing their detailed legal cases (which will also probably be made public).
UPDATE: Activision has commented on the lawsuit and West/Zampella have released their legal complaint. We'll write a follow-up analysis once we've had a chance to look over it.

Follow us at http://www.twitter.com/gamerlaw%20or subscribe to our weekly email newsletter here

Activision and Infinity Ward fall out, Mr Lawsuit beckons?

noreply@blogger.com (Jas Purewal) — Tue, 02 Mar 2010 11:41:00 +0000

2nd UPDATE 03/03/10 at 14:02

More info here and here. The current position seems to be:

Activision has confirmed that Zampello and West have left Infinity Ward. MCV reports that chief technology officer Steve Ackrich will replace the now departed West and Zampella as head of Infinity Ward on an interim basis.
Sledgehammer Games, a new Activision internal studio, are being brought into the CoD picture, apparently to "extend the franchise into the action-adventure genre". Not clear what that really means.
Activision says that Infinity Ward will remain a key part of CoD, but again it's not clear how
No word yet as to any legal action by Activision against the former Infinity Ward execs or vice versa

UPDATE 02/03/10 at 15:30

According to BingeGamer (via VG247):

Activision has not yet paid Infinity Ward any royalties for Modern Warfare 2, and
Infinity Ward's contract with Activision ends in October 2010, but the rights to the Call of Duty IP are split between them
Infinity Ward may have been in discussions with a possible future publisher (not Activision)

It's worth stressing that all of this derives from BingeGamer's sources and remains to be verified. Moreover, Activision has yet to make any statement setting out its side of the story.

BUT, if those three points above are true, then it could mean that Infinity Ward has a royalties claim against Activision and there is the possibility of either a big deal or a big lawsuit over the ownership of the highly lucrative Call of Duty franchise. Then, on top of that, there are the allegations regarding Activision and Infinity Ward's management (see below).

Curiouser and curiouser...

ORIGINAL STORY:

Rumours are rife that something big is happening between Activision and the current management of Infinity Ward, developers of Call of Duty: Modern Warfare 2. From what we can piece together from the games blogosphere:

G4 reported (which came to us via VG247) that, in an Activision SEC filing, Activision stated it was carrying out "a human resources investigation into 'breaches of contract and insubordination by two senior employees at Infinity Ward.'". It continued: "This matter is expected to involve the departure of key personnel and litigation," read the filing...At present, the Company does not expect this matter to have a material impact on the Company."
At around the same time, G4 said "Infinity Ward studio heads Vince Zampella and Jason West reportedly met with Activision this morning and have not been seen by Infinity Ward staff members since".
Later that same day, "a bunch of bouncer types" showed up at Infinity Ward's offices
A screen shot then surfaced from Infinity Ward CTO Jason West's Facebook page at Kotaku with the status update "Jason West is drinking. Also, unemployed."
Similarly, G4 said that West had updated his Linkedin profile to appears to reflect a change in employment

Unresolved questions:

What are the "breaches of contract and insubordination"? Will/when will litigation be started and against whom?
Will it be against Zampella and West? Why did they leave?
Why is all this happening now?
Most importantly, what impact will this have on Activision's share price and plans for future Call of Duty titles?

Watch this space...

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here

Teen admits crashing Playstation site in banhammer revenge

noreply@blogger.com (Jas Purewal) — Mon, 01 Mar 2010 13:06:00 +0000

Thanks to Kotaku for this one: a US teen has pleaded guilty to criminal offences over his hacking and crashing of a Playstation web site in 2008, which he did in revenge for being kicked out of a tournament for the PS2 game SOCOM US Navy Seals for using a cheat mod.

Apparently, he carried out his attack by infecting the site's servers with a virus. Clearly, he was savvy enough to carry out the attack, but not savvy enough to hide his tracks, meaning that he was found out and has now pleaded guilty to four felonies: unlawful use of a computer, criminal use of a computer, computer trespassing and the distribution of a computer virus (this was part of a plea bargain and prosecutors have therefore dropped 11 other counts in exchange for the four guilty pleas). Silly boy.

The case gives us an opportunity to remind everyone of the legal position in the UK. The Computer Misuse Act 1990 is the principal legislation for hacking and it criminalises the following main actions:

(i) Intentional attempts to cause a computer to perform any function with intent to obtain unauthorised secure access to a computer or data on it (e.g. phishing),

(ii) Same as (i) but with the intent to carry out a further criminal offence (e.g. hacking a PC in order to commit fraud), or

(iii) acting in any way which causes the unauthorised modification of the contents of any computer, with the intent to impair the operation of any computer/programme or to hinder access to data on any computer (e.g. uploading a virus to a PC or server).

This Act was most recently used publicly by the UK police to swoop in on a group of Runescape players who had been hacking/phishing Runescape accounts for criminal purposes (more on that, and the Computer Misuse Act, here).

This is one of those posts when the legal lesson of the day seems blindingly obvious, but here goes anyway: hacking someone else's computer or web site is a criminal offence, so don't do it!

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here

Activision pwns King's Quest fan sequel = important lessons for fan mods and sequels

noreply@blogger.com (Jas Purewal) — Mon, 01 Mar 2010 12:41:00 +0000

In a nutshell: the King's Quest games series was in games limbo, some fans tried to rescue it and make a fan sequel, they did it in the right way legally, but Activision has now decided to shut them down. Shame. Still, this is another example a simple but useful lesson for anyone wanting to make a fan-mod/sequel for a game: you have to seek the rights holder's approval before you make the mod/sequel. Read on for more... (sources: Joystiq and SPONG)

The background

Remember seminal adventure game series King's Quest by Sierra? It was awesome, but as with so many games in the Nineties, somehow it fell into games limbo. Sierra went through various corporate shenanigans and by the early Noughties ended up being owned by Vivendi, which sat on the King's Quest IP.

Then, along came Phoenix Online Studios, who wanted to make a King's Quest fan sequel eventually called The Silver Lining. They could have just started making the game themselves, as so many modders/fans do, but unless you first have the rights holder's approval then making a fan sequel/mod means you open yourselves up to an IP infringement lawsuit (there may be IP defences available in your jurisdiction, e.g. fair use, but that wouldn't necessarily cover you completely and, anyway, why take the risk?) It seems that initially Phoenix did just that, working away at The Silver Lining and presumably hoping to get away with it. But, in 2005, they received a cease and desist letter from Vivendi. So, Phoenix then did the right thing legally by asking Vivendi's consent for them to make The Silver Lining. This led to an arrangement being reached with Vivendi that would allow the game to go ahead. So far, so win.

Activision, it say NO!

But, fast forward to the present day (ish) and we remember of course that Vivendi had a $18bn merger with Activision, meaning it no longer called the shots in the Sierra titles. Activision later said that it wasn't particularly interested in the Sierra legacy titles it had acquired, including King's Quest.

It seems that Phoenix tried to negotiate with Activision for the future of Silver Lining, but it didn't work out. As Phoenix announced today:

"After talks and negotiations in the last few months between ourselves and Activision, they have reached the decision that they are not interested in granting a non-commercial license to The Silver Lining, and have asked that we cease production and take down all related materials on our website."

This suggests that the non-commercial licence that Vivendi had granted to Phoenix terminated on the Vivendi/Activision merger (this may have been an express term of the licence, or possibly was a side-effect of a corporate reorgnisation following the merger). Either way, Activision considered itself no longer bound by the licence and decided, as it is entitled to do as the King's Quest rights holder, not to renew the licence. This of course means that Phoenix cannot continue to make The Silver Lining without the risk of an Activision lawsuit. So, hence Phoenix Online decision that:

"Sadly, after eight years of dedicated work and even more dedicated fans, The Silver Lining project is closing down.

What the future holds for us, as individuals or a team, we cannot say. We have an amazing development team, however, filled with talented and hard-working individuals, and we hope the teamwork and rapport we’ve developed won’t go to waste. We hope that when we do know what the future holds for us, our fans will be there to enjoy what we can give them still.

Again, thank you all so much for everything. This has been a long and crazy road, full of more twists than we could’ve anticipated, but more triumphs and wonderful memories than we could’ve ever hoped for. And for that, to all of you and to everyone on our team, we will always be grateful."

We can only guess why Activision refused to grant a licence to Phoenix. The most likely reasons imo are:

Activision and Phoenix just couldn't agree the terms of the licence
Activision may have been looking for a royalty, which Phoenix couldn't/didn't want to pay
Activision has its own plans for King's Quest
Activision didn't want to open the floodgates for all the other legacy titles it is sitting on
Activision just didn't like The Silver Lining or Phoenix Online enough
Activision wants no further King's Quest titles

These kinds of factors are always going to come up in situations where any dev/publisher holds the rights and a third party wants to use them, even if it's for the non-commercial purpose of making a fan-sequel/mod just for the love of the game. Think about it from the right's holder perspective: even if you're not doing anything with the title, why would you give control of it to someone else over whom you have limited control and probably don't expect to get any money? It's a shame, and no doubt the King's Quest fans and gamers generally are disheartened at Activision's decision, but when games, law and business collide, you don't always get the result you might have hoped for.

Still, that doesn't mean that every attempt to make a fan-mod or sequel will go the same way...

Lessons for fans who want to make a fan-mod or sequel of a game:

Copying, decompiling, modding or in any way interfering with a game, or using game characters/names/concepts/images/sound/video etc without authorisation, opens you up to the risk of a lawsuit from the rights holder. Don't assume that you will be covered by a 'fair use' defence - that depends entirely on the law of your jurisdiction as well as what you actually do with the game (e.g. are you making a sequel for commercial or non-commercial purposes? Are you passing off aspects of the game as your own, rather than the rights holder's?)
If you are in any doubt as to the legality of what you are proposing to do, have a chat with a friendly lawyer. We don't bite and some of us even like games...
Even if you don't seek legal advice, the safe course is to seek the rights holder's consent before you do anything - that's the surest way to stave off a lawsuit. The rights holder will be able to tell you whether or not it is happy for you to go ahead and, if so, on what terms.
At that point, it's down to you to get the best deal you can. Again, if in doubt, have a chat. Friendly developers or games business folk all may be able to give you a few pointers. And, again, if in legal doubt, ask a lawyer.
But, if you don't get the approval from the rights holder, for goodness' sake don't go ahead and make the game anyway. You'll just be back at square one and begging Mr Lawsuit to steamroller you.
That's a positive note to end this post on, isn't it?

Follow us at www.twitter.com/gamerlaw or subscribe to our weekly email newsletter here!

Gamer/Law starts weekly email newsletter

noreply@blogger.com (Jas Purewal) — Sat, 27 Feb 2010 23:58:00 +0000

Here at Gamer/Law we don't think you get enough games and law goodness. This makes us sad. So, we're now launching a weekly email newsletter! Go here to subscribe and get a weekly dose of games/law news and analysis direct to your inbox forever more. Good, eh?

Gamer/Law weekly newsletter, 22 - 26 February 2010

noreply@blogger.com (Jas Purewal) — Fri, 26 Feb 2010 16:27:00 +0000

A9UTS5QTU9V4
Here's our round-up of games news and games/law developments over the last week. Enjoy!

GAMES/LAW:

GAMES INDUSTRY:

Warner/Rocksteady acquisition: http://www.gamesindustry.biz/articles/warner-acquires-majority-stake-in-rocksteady-studios and http://www.vg247.com/2010/02/23/batman-bought-warner-acquires-rocksteady/
Disney launches new MMO based on its Cars IP: http://www.latimes.com/business/la-fi-ct-disney24-2010feb24,0,5262369.story
BBC talks about its potential mobile games: http://www.guardian.co.uk/media/2010/feb/25/bbc-worldwide-smart-phone-apps
Sony to restructure its entertainment business: http://www.edge-online.com/news/sony-to-restructure-networked-services-business
Asda/Tesco to enter second hand games market: http://www.mcvuk.com/news/37714/ASDA-and-Tesco-enter-pre-owned-market
GameStop CFO resigns and joins Walmart: http://www.edge-online.com/news/gamestop-chief-financial-officer-resigns
(Walmart has been trying hard recently to get into the US second hand games market, in which GameStop is currently the leader)
EA acquires mobile developer Ironmonkey: http://www.edge-online.com/news/ea-acquires-mobile-dev-ironmonkey-%E2%80%93-report
ngmoco acquires mobile developer Freeverse: http://www.gamesindustry.biz/articles/ngmoco-buys-freeverse-completes-USD25m-funding
UK developer Rebellion's latest game Aliens v Predator reaches top of the charts: http://www.develop-online.net/news/33958/Rebellion-elated-with-AvP-sales-wants-sequel
New venture fund Ergo Media Capital to fund games projects: http://www.gamesindustry.biz/articles/ergo-to-fund-videogame-projects
GAME group to close 43 stores and cut 247 jobs: http://www.gamesindustry.biz/articles/game-to-close-43-stores-axe-247-jobs

GAMES/TAX:

Gordon Brown "back on charm offensive" re games: http://www.develop-online.net/news/33965/Brown-back-on-game-charm-offensive
Tom Watson MP starts cross-party motion for a UK games tax break: http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=40546&SESSION=903
Ed Vaizey reiterates support for UK games tax break: http://www.gamesindustry.biz/articles/industry-support-is-number-one-priority-vaizey

VIRTUAL GOODS/MONEY:

Fascinating Wired article on virtual currency and the future of money: http://www.wired.com/magazine/2010/02/ff_futureofmoney
Games company launches scheme exchanging virtual goods for ad viewing: http://www.bizreport.com/2010/02/wildtangents_brandboost_exchanges_virtual_goods_for_viewing_ads.html
(Another example of the very wide potential applications for virtual goods!)
MMPORG.com claims US lagging behind UK in virtual goods uptake: http://www.mmorpg.com/showFeature.cfm/feature/3973/Richard-Aihoshis-Free-Zone-Virtual-Goods-Sales-2009-and-ChinaJoy-2010.html

MMOs/VIRTUAL WORLDS/SOCIAL GAMES:

Zynga's Farmville now has 80m Facebook users: http://www.edge-online.com/news/study-farmville-serves-80-million-facebook-users
CCP, developer of Eve Online, to open UK office: http://www.gamesindustry.biz/articles/eve-online-developer-ccp-opens-uk-office

GENERAL:

EA talks about consoles and pricing in the next generation: http://www.edge-online.com/news/ea-talks-console-price-cuts-next-generation
Edge analysis: music industry is the better model for games than films: http://www.edge-online.com/blogs/you-can-keep-the-popcorn
Pachter claims Microsoft will sell Project Natal hardware at $50: http://www.edge-online.com/news/pachter-natal-to-launch-at-50

Nintendo 'wins' Australian modchip lawsuit, but are modchips actually illegal Down Under?

noreply@blogger.com (Jas Purewal) — Mon, 22 Feb 2010 16:34:00 +0000

GamePolitics reports that the Australian Federal Court "has ordered RSJ IT Solutions, operators of the website GadgetGear, to stop selling R4 mod chips for the Nintendo DS and to pay Nintendo $520,000 AU in damages".

You might fairly assume from that headline that modchips are illegal in Australia. Not so. When we previously discussed the legality of modchips previously at Gamer/Law, we saw that in the last-reported Australia case on modchips, the Australian High Court ruled that modchips for the Playstation 2 were not illegal. As I understood it, the Court's reasoning was that, since the Playstation 2 technology had only ever sought to stop players playing unauthorised games but had not sought to stop them copying those games, a modchip which assisted players to play but not copy unauthorised games was not an attempt to circumvent "technological protection measures" under Australian law.

Does this Nintendo case overrule that law? Apparently not. According to Australia's ITNews, the Nintendo case was actually settled out of court, meaning that all the Court was doing in the order which GamePolitics referred to was setting out what RJS IT Solutions had agreed to pay to Nintendo in the settlement. It would not therefore mean the court has changed Australian law. If that's right, then it seems to me that modchips are presumably still legal in Australia (although, of course, Nintendo may well have had powerful arguments in the litigation that the law should actually be changed - modchips are illegal in the UK and USA after all). Glad to hear from anyone with greater Australian legal experience who knows different...

Follow us at www.twitter.com/gamerlaw!

SouthPeak loses in further CDV/Gamecock legal battle

noreply@blogger.com (Jas Purewal) — Mon, 22 Feb 2010 15:53:00 +0000

A UK High Court judge has found games publisher SouthPeak liable for inducing copyright infringement in a long-running legal battle between CDV, a German distributor of games including Velvet Assassin and Pirates vs Ninjas, and Gamecock, a SouthPeak subsidiary. The judgment follows a November 2009 Court ruling which saw CDV win a breach of contract claim against Gamecock and SouthPeak.

Background: the legal battle between CDV and Gamecock

The root of the battle lies in a 2008 distribution agreement between CDV and Gamecock, under which Gamecock agreed to license exclusively to CDV seven games ("Dementium", "Insecticide", "Mushroom Men", "Velvet Assassin", "Hail to the Chimp", "Pirates vs Ninjas" and "Stronghold Crusader Extreme").

CDV claimed that it had paid Gamecock advances of over $7 million but that, contrary to their agreement, four of the games were not delivered in time for a pre-Christmas 2008 release. CDV therefore gave a notice to part-terminate its agreement with Gamecock and subsequently sued Gamecock for damages for breach of contract, as well as arguing that SouthPeak was liable for inducing copyright infringement and breach of contract. Gamecock and SouthPeak defended the lawsuit, arguing that CDV had no right to terminate the contract.

In November 2009, Mrs Justice Gloster published her judgment which found in favour of CDV on the breach of contract claims for three of the four games. However, she reserved her judgment regarding CDV's claim against SouthPeak for (i) inducing copyright infringement; (ii) inducing breach of contract; and (iii) legal costs.

The new judgment

In her second judgment published on Friday, Mrs Justice Gloster ruled as follows:

(1) SouthPeak liable for inducing copyright infringement

Mrs Justice Gloster ruled that she was:

"Satisfied, on the basis of the evidence before [her] at trial, that CDV has established on the balance of probabilities that SouthPeak US has both participated in, and authorised, the infringing activities in relation to the making, distribution, and sale" of the four CDV games in question.

In a nutshell, the legal reasoning went like this: Gamecock had licensed games to CDV, but when Gamecock breached its agreement with CDV it forfeited those rights to CDV and therefore the copyright in the games became CDV's. However, Gamecock refused to admit this and tried to sell the games itself, which constituted copyright infringement. SouthPeak, as Gamecock's parent, was found liable for inducing that copyright infringement.

(2) SouthPeak not liable for inducing breach of contract

CDV had claimed that SouthPeak, as Gamecock's parent, had induced Gamecock to breach its contract with CDV and should be liable for damages. Mrs Justice Gloster ruled that CDV failed in this argument.

Legal nutshell: if Alan has a contract with Bob and Chris persuades Bob to breach that contract, then Alan can sue Bob for breach of contract but can also potentially sue Chris for inducing the breach of contract. However, case-law states that Chris has to intend to induce a breach of contract. There is no liability if Chris didn't realise he was inducing Bob to breach the contract with Alan.

Here, Mrs Justice Gloster held that SouthPeak did not realise it was acting wrongly, in fact its witnesses gave evidence "to the effect that they believed that they were entitled to act as they did" and there was nothing "which suggested that they did not genuinely believe that Gamecock and the other defendants were entitled to act in the way which they did". Therefore, CDV lost its claim for inducement of breach of contract.

(3) SouthPeak liable for CDV's legal costs

Mrs Justice Gloster ruled that "SouthPeak US must, jointly and severally with the other Defendants, pay the Claimant's costs of the claim and of the counterclaim, including any reserved costs". We do not know exactly how much those costs were (yet), but they are likely to be substantial.

Lessons to be learned:

If you need your contractual partner to complete its side of the contract by a specified time, make sure you draft that clearly in the contract and specify exactly what steps you will be entitled take to ensure the timeframe is met and, if not, what compensation/alternative action you can take (example clauses you might want to think about: 'time of the essence', liquidated damages, interest, specific or alternate performance clauses). And, if they let you down, you may need to get down to Court fairly quickly (which is apparently what CDV did).
If your contractual partner claims to terminate a games distribution contract with you due to your breach, then you also run the potential risk of a copyright infringement action if you keep performing the
contract by marketing/distributing/selling his products/games.
It is also possible in these circumstances that your parent group/publisher could face an inducement to breach of contract claim, but any such claim would need to meet strict legal criteria to success.
If in doubt, take legal advice from commercial dispute lawyers. As we always say at Gamer/Law, a little legal advice early on can save a lot of time and money down the line.

Confused? Want to discuss further? You know where to find us...

Thanks for 1709 for the initial heads-up!

Need to Know: Games and the Digital Economy Bill

noreply@blogger.com (Jas Purewal) — Mon, 22 Feb 2010 10:58:00 +0000

The UK Digital Economy Bill has real implications for all UK creative industries, including games, meaning gamers and the UK games industry should be paying attention to the Bill's progress through Parliament. This post summarises what the Bill is and why it matters.

What is the Digital Economy Bill?

The Digital Britain Bill ("DEB" for short) is essentially the UK Government's attempt to bring UK technology/IP law up to speed with the challenges of modern technology, particularly online piracy. The Government's Explanatory Notes give further helpful background here.

DEB actually covers a whole range of reforms, from IP to digital infrastructure to digital radio switchover. But the aspects of DEB which are most relevant to games, and which also happen to be the most controversial generally, are these:

A new online copyright infringement regime (known popularly as Three Strikes, but it's not really - see below) and
Proposed new Government powers to amend copyright laws without Parliament's prior approval

DEB also proposes a new games classification system – more on that here.

New copyright infringement regime

The old deal...

Under the existing law right now, if a dev/publisher (i.e. the rights holder(s) for a game) wants to take legal action against a illegal downloader of that game (call him/her 'X'), very basically the dev/publisher needs to:

Identify how and where the illegal downloading took place;
Find out the IP address of X;
Get a Court order forcing the relevant ISP to disclose the account details for that IP address, so that it can work out who X actually is; and
Commence legal action against X and prove to a judge that s/he did the illegal downloading and therefore infringed its copyright.

This can be expensive, difficult and lengthy because: (i) ISPs have historically refused to help rights holders to sue their own customers (hence the need for a court order); and (ii) actually finding the illegal download requires the rights holder to expend IT resources. (It is mainly for this reason that the music industry in particular has tried to use these kinds of lawsuits to make examples of high profile pirates, rather than trying to sue everyone who downloads copyright materials illegally).

The new deal...

DEB now proposes a new legal regime which would go something like this:

When a rights holder (i.e. the dev/publisher) believes that an ISP customer has infringed copyright (e.g. by downloading a pirated game), the rights holder can send a "copyright infringement report" to the suspected pirate's ISP.
The ISP will then send a notification letter to the account holder and must add that account to a register of customers who are believed to have infringed copyright.
The Government would then be able to require ISPs to take "technical measures" against the suspected pirate. This seems likely to include wide reaching action like broadband throttling or ultimately even account suspension (though the Government doesn't intend to specify exactly what "technical measures" means or how they will actually work until after DEB has become law).

This proposed new regime is meant to be easier and cheaper because: (i) rights holders and ISPs work together; and (ii) a lot more action can be taken against pirates, potentially even suspending their net access altogether. However, there is no suggestion that the Government is proposing a 'three warnings and then we cut you off' scheme. So DEB does not = Three Strikes; it's more complicated/nuanced/vague than that.

Anyway, the proposed new regime has caused a great deal of controversy in both mainstream media and teh internets, to say the least…(that much is clear from a quick Google of "Digital Economy Bill" if nothing else). Here's why…

Practical issues

How exactly would the new 'technical measures'/three strikes regime work?
How will rights holders actually find pirates? If it is through technology like deep packet inspection, that will itself cause a lot of controversy (remember BT and Phorm?)
Who will pay for all of this? The rights holder or the ISP, or both? What about the legal costs if cases are taken to court?
Even if you can get the address of the account from which the piracy took place, how do you prove on the evidence who the person in front of the pc actually was? (Remember the complaints against Davenport Lyons?)
What rights of compensation (if any) will customers have, particularly if technical measures are taken against them wrongly?
What impact will this have on rights holder/ISP/customer relations in the long term?
How will the 'technical measures', like broadband throttling, actually work? Who will be accountable for their use?

Humans Rights issues/The right to a fair hearing?

How is the customers' side of the story to be heard when 'technical measures' are taken against him/her? The right to a fair hearing is a fundamental human right and is given legal force in the UK by the Human Rights Act 1998 and European Convention on Human Rights, but - so far - DEB has little to say about this. This report from Parliament's Joint Select Committee on Human Rights explains the issue succinctly:

"We do not believe that such a skeletal approach to powers which engage human rights is appropriate. There is potential for these powers to be applied in a disproportionate manner which could lead to a breach of internet users' rights to respect for correspondence and freedom of expression. We set out a list of points that the Government should clarify in order to reduce the risk that these proposals could operate in a manner which may be incompatible with the [European Convention on Human Rights..."

And:

"There is little detail about the right to appeal in the case of copyright infringement reports or decisions about the inclusion of certain individuals' information on copyright infringement lists. We consider that statutory provision for a right to appeal to an independent body against inclusion on any infringement list would be a human rights enhancing measure."

In fairness, we should point out that attempts have been made to address these issues so far; it is not at all as if DEB has sailed through Parliament so far. For example, Lord Lucas in the House of Lords has been active in trying to reform DEB generally, and particularly regarding this new 'technical measures' regime (more here).

Changes to copyright law

DEB also proposes to give the Government the power to amend copyright law through a shortcut procedure that bypasses Parliamentary scrutiny (this proposal is known popularly as 'clause 17'). The Government's reasoning seems to be that it needs to be able to act fast in order to meet the increasing technological challenges to copyright protection. Example off the top of my head: the Government changes the law to make it easier to sue and heavily punish people who attempt to circumvent DRM protection.

This proposal has also come under heavy fire, so much so that the Government has had to back down and water down its original proposals. Even so, it is not enough for some. Again, the Joint Select Committee summarises the issue:

"The broad nature of this power has been the subject of much criticism. In correspondence with us, the Secretary of State explained that the Government intended to introduce amendments to limit the power in Clause 17 and to introduce a 'super-affirmative' procedure. The Government amendments would limit the circumstances in which the Government could use their powers to amend the Act by secondary legislation and would provide a system for enhanced parliamentary scrutiny."

Despite the proposed amendments we are concerned that Clause 17 remains overly broad and that parliamentary scrutiny may remain inadequate. We call for a series of clarifications to address these concerns."

What next for the Digital Economy Bill?

DEB isn't going anywhere anytime soon: it is still being debated in the House of Lords and it may be a while yet before it goes to the House of Commons (the final stage before it either becomes law or fails). As DEB develops, we'll keep you lucky G/L readers posted. That said, there is widespread media speculation that DEB may not become law at all before the next general election is called (perhaps April 2010 onwards?) Maybe so, but one or the other, the issues it raises are going to have to be dealt with Parliament at some point soon now – either by the Labour government or a new Conservative government.

Why is this important for the UK games industry?

The games industry will be at the forefront of these developments. If the UK Government adopts via DEB a legal regime that permits technical action to be taken against the net access of suspected online pirates/copyright infringers, it would give the UK games industry a powerful weapon to deploy against games piracy/copyright infringement - which is of course often said to be the single greatest threat that the industry faces. So, in principle it would be possible to deploy 'technical measures' against individuals who repeatedly download and distribute illegal copies of games – which could for example prevent a repeat of Spore, said to be one of the most pirated games in history.

In fact, it may cover rather more than that - in principle, it may in the future be possible to take technical measures against all forms of online copyright infringement relating to a game, including individuals who distribute unauthorised game modifications (eg additional game levels or a total conversion mod) and/or who create user-generated content relating to games (eg unauthorised in-game footage posted on YouTube).

So the person who distributes a brilliant but unauthorised mod of a defunct but well-loved game, or the person who repeatedly posts unauthorised footage of upcoming or released games online, could potentially face technical measures against his/her internet access in the future. Obviously, the devil would be in the (legal) detail but, clearly, if this kind of action was possible it could transform the games industry.

BUT, and it's a big but, time and again gamers have shown themselves to be hostile to what can be seen as attempts by the games industry to impose limitations on the way in which they can play and interact with games (as seen recently for example the continuing DRM saga or the reactions to the recent Pirate Bay case). The games industry would likely have to tread a fine line between relying on technical measures to protect their games but, at the same time, not alienating their customers or stifling the enjoyment and innovation derived from the creation and use of mods and other post-release user generated content. It's worth noting on that front that many games industry figures have already spoken out in favour of market-driven solutions to games piracy for example, rather than just relying on a legal regime. But, one way or the other, in an industry which depends heavily on the loyalty and enthusiasm of its customers, this is likely to become an issue of great importance in the future.

Ultimately, the question for the games industry may not be whether they can legally deploy these strategies to defend their games, but whether commercially they can risk it.

[image author: Andrew Dunn, obtained via Wikipedia]

Stargate studio goes bankrupt, or What is Chapter 11?

noreply@blogger.com (Jas Purewal) — Mon, 22 Feb 2010 10:14:00 +0000

Gamesindustry.biz reports that US developer Cheyenne Mountain Entertainment has filed for Chapter 11 bankruptcy protection. The developer group is known chiefly for its Stargate licence (it has already made Stargate Resistance and is apparently continuing work on the forthcoming MMO Stargate Worlds).

This news itself comes from a statement made on CME's Stargate forum, which is here. Contrary to what Gamesindustry says, it is not actually clear from the statement whether CME has entered Chapter 11, or just its subsidiary Firesky, the actual developer of Stargate Resistance (if it turns out just Firesky is in Chapter 11, we'll update this post). Leaving that to one side, the statement is a useful summary explaining what Chapter 11 bankruptcy protection actually is and why a company would need it:

"Cheyenne Mountain's corporate structure has undergone some dramatic changes in the last few weeks, and that has resulted in various actions such as the filing for Chapter 11.

"Certain parties believed that was the right thing to do, other parties do not and this is still being evaluated and may be rescinded. Even if the bankruptcy should go through, however, Chapter 11 simply allows a company to restructure its debt to a manageable plan approved by the courts. It does not absolve a company of debt, and it does not shut it down or otherwise affect its daily operations.

"This will all be sorted out in the legal and proper manner, and all of us on the development side of things hope it's done as quickly as possible. That said, our entire staff is in-house working on upgrades and expansions for Stargate Resistance, and we continue to be motivated and excited by the response we've received from our customers."

So:

'Chapter 11' is a form of bankruptcy protection for the company
In other words, it permits the company to restructure its debts while still 'trading through' its financial difficulties.
Chapter 11 does not of itself kill off a company, nor does mean it can renege on its debts or other liabilities. The whole point of Chapter 11 is that it is a measure of last resort to enable a company to survive tough circumstances (although a company may come out the other side looking very different)
That said, if a company cannot survive even in Chapter 11, then sometimes it may need to enter more serve insolvency proceedings

The closest UK insolvency procedure to Chapter 11 is called administration (more info at Wikipedia, with the usual Wikipedia caveat), another statutory scheme intended to help a company in financial difficulties to trade through its problems and come out the other side. Example: last year UK developer Oxygen Games went into administration.

As always, happy to discuss furth if anyone is so foolish as to want more information, do let us know...

In the meantime, here's hoping Cheyenne can indeed trade through and keep up work on Stargate Worlds (they'd probably get my subscription if they did, plus plenty of folks too I imagine...)

Post-script: Cheyenne Mountain Entertainment to sue its former Chairman

CME has also decided to sue its former Chairman & CEO, Gary Whiting, according to a statement on its web site:

"Mr. Whiting and Garvick [a company controlled by Whiting] purchased various securities from the Company and its subsidiaries and has failed to honor the terms of these purchases and has failed to pay the payments when due; therefore, the Company and its subsidiaries have foreclosed on the collateral securing Mr. Whiting’s and Garvick’s obligations including all shares and units owned by Garvick and Garrick Enterprises, LLC.

The shareholders and board of the Company have removed Mr. Whiting as a board member and as an officer and terminated his employment with the Company and any of its subsidiaries. The Company has joined the litigation against Mr. Whiting for alleged wrongdoing."

Oh dear. So the allegation seems to be that Whiting used his position to purchase company assets either personally or through his company Garvick, or in somehow made Cheyenne responsible for his/Garvick's liabilities, which somehow Cheyenne has now found out about. This of course raises the question as to why Whiting would have been removing company assets, which hopefully the litigation will explain in due course.

One final point: the press statement also says "It is uncertain at this time what the affect of Mr. Whiting’s actions and the pending litigation will have on the Company’s operations and financial condition." But the press statement we talked about about said "the company" was going to enter Chapter 11. So is Cheyenne in Chapter 11 or not?

Gamer/Law Weekly Newsletter, 15 - 19 February 2010

noreply@blogger.com (Jas Purewal) — Sun, 21 Feb 2010 21:54:00 +0000

Here's our roundup of interesting games news over the last week...

GAMER/LAW WEEKLY FEATURE:

Games, Disability and Anti-Discrimination Laws: http://www.gamerlaw.co.uk/2010/02/games-disability-and-anti.html

GAMES INDUSTRY:

Atari revenues down: http://www.gamesindustry.biz/articles/atari-announces-revenue-decline
VentureBeat article on kids/toy companies and games: http://games.venturebeat.com/2010/02/17/online-firms-and-toy-companies-clash-over-kids-virtual-worlds/
(Interesting commentary on Disney's aspirations)

VIRTUAL GOODS:

Interesting E&Y analysis on virtual goods and accounting: http://abovethecrowd.com/2010/02/08/virtual-goods-accounting-and-the-power-of-the-rental-model/
GMG to expand virtual currency sales to UK (apparently, high street chain WH Smith will sell their virtual currency cards): http://worldsinmotion.biz/2010/02/gmg_expands_virtual_currency_o.php
Paypal to integrate with Facebook: http://www.theregister.co.uk/2010/02/18/paypal_on_facebook/ (This has obvious implications for making the sale of virtual goods easier through Facebook)

GAMES/TAX:

PWC overview of tax break system in Canada: http://www.pwc.com/ca/en/entertainment-media/film-video-tax-incentives-canada.jhtml

MMOs/VIRTUAL WORLDS:

Statistics on virtual worlds accounts: http://www.kzero.co.uk/blog/?p=3943
(Interesting stuff - apparently there are now 803m virtual world accounts, of which the greatest age range is 10-15 years olds at 392m. There are only 39m accounts for 25+ year olds.)

SOCIAL GAMING:

Survey on social gamers: http://www.wired.com/gamelife/2010/02/social-gaming-survey/ and http://www.wfxg.com/Global/story.asp?S=11997515
(This article contains some really interesting statistics about social gaming, the fastest growing games sector. Example: the average social gamer is a 43 year old woman.)

Forbes article on social games companies and virtual goods: http://www.forbes.com/2010/02/17/farmville-facebook-zynga-technology-business-intelligence-virtual-goods.html

Pieces: on Zynga (also contains some useful intel on fast-growing Indian games market):
- Zynga opens Indian studio: http://www.edge-online.com/news/zynga-opens-indian-studio and http://www.develop-online.net/news/33931/Special-report-Zyngas-fearsome-expansion-enters-India
- GI.biz piece on Zynga's strategy: http://www.gamesindustry.biz/articles/metrics-the-key-to-successful-social-game-design-zynga
- Zynga could be worth $3bn on a IPO: http://www.bizjournals.com/sanfrancisco/stories/2010/02/15/daily56.html

GENERAL:

Interview with President of Disney's Interactive Media Group: http://www.gamesindustry.biz/articles/wadsworth-interactive-entertainment-has-never-been-so-robust
(again, more evidence Disney wants to move more into games and VWs in particular)

Sky says games industry (and everyone else) is behind its 3D TV project: http://www.gamesindustry.biz/articles/sky-everyone-is-behind-3
(So add a forthcoming 3D games revolution to the Natal, social gaming, GAAS revolutions...?)

Follow us at www.twitter.com/gamerlaw

Games, Disability and Anti-Discrimination Laws

noreply@blogger.com (Jas Purewal) — Wed, 17 Feb 2010 20:51:00 +0000

Sony succeeded last week in defeating a lawsuit by a disabled US gamer, who had claimed last year that Sony games like EverQuest violated the Americans With Disabilities Act by denying him "full and equal enjoyment" to the games. The gamer, Alexander Stern, who apparently has impaired vision, argued that Sony should provide him with "auxiliary aides and services" so that he could enjoy the games fully and compete with other gamers equally. This has got me thinking about an interesting issue: should gamers be protected by anti-discrimination laws?

So what do anti-discrimination laws do?

The key purpose of anti-discrimination laws is to ensure that employers/providers of services in the public sphere cannot discriminate against a person on the basis of his/her personal characteristics (e.g. physical disability, belief, gender, nationality, ethnicity etc). In the UK, the principal legislation which sets out these protections are the Equality Act 2006 and the Disability Discrimination Act 1995.

The 'public' element is critical: anti-discrimination laws generally only cover things that happen in public. So, for example, it is generally illegal to refuse someone else access to a restaurant based on their nationality, but you could refuse them access to your home for pretty much any (peaceful) reason.

It’s important to bear in mind that anti-discrimination laws do not generally apply between private individuals. If person A makes racist comments to person B, that’s not a matter for anti-discrimination law (it might be a race-related offence in your jurisdiction, though). In other words: discrimination laws only kick in where you need something from someone, but they won’t give it to you because of your personal characteristics.

Why should games be protected by anti-discrimination laws?

The Sony case itself shows that there is a need for games companies to take discrimination of disabled gamers seriously, even if the discrimination was inadvertent. Similarly, consider the following hypothetical examples:

A MMO bans men from playing as women and vice versa
Another MMO bans gay people from playing it
A game is released in a multilingual country (e.g. India) in only one little-spoken language
A game is released on terms that it can only be sold to a particular ethnic group

Seem far-fetched? One of them (the first) has already happened. In each of these situations, there would be an argument that gamers are discriminated against. Unless they have legal protection, the only real way they could respond would be to vote with their feet by leaving the game, which for many would be unacceptable.

That said, on the other hand games companies would no doubt be understandably concerned at the cost that all of this could involve (for example, the cost of making an AAA game fully accessible to both fully and partially sighted gamers). So clearly there would have to be a balancing exercise, with protection for gamers but not at extortionate cost to games companies. A legal regime could help to resolve this situation - hence the argument that anti-discrimination laws should protect gamers.

Do anti-discrimination laws already cover games?

Following the Sony case, the answer for the USA seems to be: no. Judge Percy Anderson ruled in this case that Alexander Stern’s claim failed because US case law had already established in 2000 that the anti-disability discrimination law on which he relied (the Americans with Disabilities Act) only applies to “places of public accommodation”, which the judge said means actual physical places and not games.

Therefore, the judge said the US anti-discrimination laws would cover Stern if he was unable physically to enter one of Sony's games conventions, but would not cover Stern being unable to play Sony games themselves. As a result, the judge did not go any further into how games could be protected by anti-discrimination law (and, in particular, whether game playing is 'public' or 'private' - more on that later on).

That decision seems effectively to exclude US gamers from the protection of anti-disability discrimination laws. This is a pity, particularly since the learned judge seems to have taken a pretty unenlightened approach to online games, even if he was required to follow the established case law.

But, other countries have not adopted that same legal analysis. The UK analogy to the Americans with Disabilities Act (called the Disability Discrimination Act 1995), for example, does not have the same express US requirement that the discrimination must take place in relation to a physical place. So, leaving aside the slightly odd idea that discrimination has to have occurred in relation to a physical place, I ask…

How should games be protected by anti-discrimination laws?

The basic framework is already there in the US and UK laws (i.e. the Americans with Disabilities Act and the Disability Discrimination Act 1995):

(i) Prove there was actually discrimination; and
(ii) Prove it took place in the public sphere.

Whether there was actually discrimination will always depend on the facts of the case, so not much more I can say about that. The interesting question though is whether game playing takes place in the public or private spheres.

Is playing games a private or public activity?

I think there is a good argument that game playing is a public activity simply because games are open to absolutely everyone, assuming of course gamers have the minimum level of hardware and have paid for the game of course. The argument is strongest for multiplayer games, especially MMOs, where gamers are encouraged to make the game as public as possible (by that logic though, playing single player games is less likely to be a public activity).

Take a real world parallel: going to a theme park. You have to pay to get in, but otherwise you are pretty much free to go on the rides and play the games as you wish, with whoever you wish. To my mind, that is no different to playing a multiplayer game with your friends. Therefore, if entry to theme parks is covered by anti-discrimination laws, why not playing games too?

Conclusion: there is a good argument that playing games does take place in the public sphere, and so we pass the first and main hurdle for anti-discrimination laws and games (the idea that games take place in the public sphere has a much wider application of course, but that's a topic to discuss on another day...)

Now, in relation to discrimination such as arbitrarily banning certain people from playing your game, the response would then be straight-forward: you are legally prohibited from doing it. But disability discrimination and games could be harder to deal with, because at that point we get into a balancing exercise between protecting disabled gamers but not to the extent of bankrupting the games companies or ruining games for everyone else. In particular, games companies would have a strong argument that the simple reality is that some games simply cannot feasibly be adapted for disabled gamers. Getting the balance right would be difficult, yes, but just because it is difficult doesn’t mean it should be ignored.

Of course, the Sony case seems to settle the position in the USA for the foreseeable future and, unless and until there is a court challenge in the UK or elsewhere, we don’t seem likely to see any movement towards a more explicit way of helping disabled gamers, or protecting gamers from discrimination more generally. This is yet another growing legal issue in gaming about which we will have to watch, wait and see…

News source: THR, via Virtual Policy Network

Follow us at www.twitter.com/gamerlaw!

Gamer/Law's weekly games news roundup, 8-15 Feb 2010

noreply@blogger.com (Jas Purewal) — Mon, 15 Feb 2010 11:27:00 +0000

Here's our roundup of games news over the last week (8-15 Feb 2010) for our lucky readers (this is the first time we've done this on G/L, so let us know if you like it...)

INDUSTRY:

Results

Activision-Blizzard sales up significantly: http://www.gamesindustry.biz/articles/activision-blizzard-financials-better-than-expected and http://www.industrygamers.com/news/wow-call-of-duty-drive-activision-blizzards-sales-to-428-billion-in-09

EA sales down but digital distribution revenue up 30%: http://www.industrygamers.com/news/game-sales-dip-in-eas-holiday-quarter-as-digital-revenues-climb-30/ (more on EA below)

UbiSoft sales down: http://www.industrygamers.com/news/ubisofts-holiday-sales-decline-publisher-refocusing-on-high-end-games/

Square Enix sales up significantly: http://www.industrygamers.com/news/square-enix-09-sales-soar-on-dragon-quest-final-fantasy-and-batman/

Disney sales down: http://www.gamesindustry.biz/articles/game-revenues-down-at-disney

NCSoft sales double and profits up 11 fold: http://www.gamesindustry.biz/articles/ncsoft-experiences-1-fold-profit-increase-in-q4 (thanks to their MMOs' performances)

Viacom profits up but sales down on poor Rock Band performance: http://www.gamesindustry.biz/articles/rock-band-sales-sting-viacom

General:

"Disney, Warner, Viacom pose 'serious threat' to publishers", says Screen Digest report: http://www.gamesindustry.biz/articles/disney-warner-viacom-pose-serious-threat-to-publishers and http://www.gamesindustry.biz/articles/us-media-companies-present-multi-faceted-competition-for-games-publishers
(Nutshell summary: "Big Media" like Disney/Warner/Viacom is investing heavily in games and is now focusing on developing own IP (rather than licencing it out) across different platforms. Screen Digest predicts they will "command a significant portion of the market by 2013". So farewell then, licencing deals?)

Business Week article on EA's problems and investors' lack of confidence: http://www.businessweek.com/magazine/content/10_08/b4167064465834.htm

GameFly launches $50m IPO: http://www.gamesindustry.biz/articles/gamefly-files-USD50m-IPO
(is secondary retail seller GameFly a bit late to the party, given the current buzz is about secondary digital sales?)

CASUAL GAMES:

Zynga acquires Serious Business: http://techcrunch.com/2010/02/11/zynga-serious-business/ and http://www.industrygamers.com/news/zynga-get-serious/

UK/French/German casual games market is worth $14bn: http://www.industrygamers.com/news/casual-game-sector-in-uk-france-and-germany-sees-14-billion-in-revenue/

BigPoint opens new US studio: http://www.gamesindustry.biz/articles/bigpoint-opens-san-francisco-studio

LEGAL:

G/L on games lawsuits and what you can do about them: http://www.gamerlaw.co.uk/2010/02/games-lawsuits-and-what-you-can-do.html

Proposed Brazil games classification law still in the background: http://gamepolitics.com/2010/02/08/distributors-retailers-react-proposed-brazilian-game-ban [our thoughts on games censorship/classification in 2009 are here]

EA self-censors Dante's Inferno in non-Middle East release: http://gamepolitics.com/2010/02/08/dante%E2%80%99s-inferno-banishes-itself-middle-east

WoW China continues to be affected by local politics: http://www.gamesindustry.biz/articles/local-politics-hits-world-of-warcraft-china-again

VIRTUAL GOODS:

Report on UK casual games market: http://news.bbc.co.uk/1/hi/technology/8507813.stm

Article highlighting the convergence between virtual goods sales and Facebook Credits: http://www.virtualgoodsnews.com/2010/02/facebook-credits-boosting-virtual-goods-sales-by-25.html (no surprised here, since it is widely predicted that Facebook Credits are going to mean big boosts for virtual goods sales generally...but virtual goods still remain entirely untested legally...)

Follow us at www.twitter.com/gamerlaw!

Ten Things You Don't See In Games Anymore

noreply@blogger.com (Jas Purewal) — Wed, 10 Feb 2010 14:52:00 +0000

When we're not thinking big serious thoughts about games and law, there's nothing we enjoy more here at Gamer/Law than taking things a bit retro. From the load up sound effects on our first Spectrum to the utter uselessness of R.O.B., we're always happy to get misty eyed over the golden age of gaming and here we present ten things that we've noticed you just don't see in gaming these days. Some we miss, others we're happy to see the back of, but all of them were features of our lives back in the day.

So, Dan of Gamer/Law (with some dubious additions from Jas and Mike) lets the nostalgia commence...

1) Unbelievably Aggressive Difficulty Curves

Maybe it's because gamers aren't the hardened, battle-gnarled bunch they used to be. Maybe it's because we all have less free time and give new games less of a chance. Maybe it's because game developers stopped employing card-carrying sadists in the early 90s. Whatever the reason, games these days are nowhere near as difficult as they used to be.

Think that Modern Warfare 2 on veteran is tough? Psssht. You don't know you're born marine. Rainbow Islands – now THERE was a challenge. Don't be fooled by the sugary visuals, the jaunty theme tune and the name, there's nothing cute about ten levels of raw frustration, limited extra lives and rising water levels that drown you if you dawdle.

Games from the old school showed no mercy. You rarely saw the end of them (in fact, in many cases you rarely saw beyond the first level) and some of them were clearly designed to break the human spirit entirely. To this day, prisoners at Guantanamo Bay are forced to spend 10 hours a day playing Contra. And if they somehow complete that, they're moved onto Gauntlet (a game so eye-bleedingly tough that rumours circulated it didn't have an ending).
(Mike: and another thing, what about games that literally took months to master? Anyone remember Sensible Soccer? Spent A LOT of time on that ball bending masterpiece when I were a lad.)

2) Screen-filling Bosses

Okay, there are a few modern exceptions to this one (the recent Demon's Souls in particular boasts some gigantic bosses), but let's be clear, nothing - and by that we mean nothing - in modern gaming measures up to the shock and awe of being confronted by the great behemoths of yesteryear.

We're talking R-Type. We're talking Super Ghouls and Ghosts. We're talking 2D, side-scrolling games with screen-height enemies. Boss fights with opponents who literally take up 30 or 40% of the available playing area, and are ugly as sin to boot.

(Jas: We want games developers to be more ambitious with the technology now available: why not bosses who are 500% your screen size? Of course, that would mean you could only attack his/her/its knee, but so what?)

Facing these beasts down was never a fun time, but there was something awesome about the feeling that the game was throwing everything at you that it could possibly muster.

3) No Saving

Closely related to point one, modern games seem to insist on giving you chance after chance to atone for your errors.

Back in the day, this kind of thing was simply unthinkable. Instead, you'd spend 5 or 6 hours carefully navigating your way through a tricky game only to reach the final level with one life remaining. You'd then either fail to make a pixel-perfect jump or be so shocked by the sudden appearance of a screen-filling boss (see point 2) that you'd lose that life and sit in silence, reflecting on what could only be viewed as a day wasted entirely.

There was no option to simply return to the last checkpoint. No chance to redeem yourself. Instead, you'd put down the joypad, take some time to deal with your emotions, and then try again, all the while cursing your own ineptitude and vowing revenge. (Jas: remember the old MegaMan games on the NES? Fiendish.)

This is what real gaming is about – a harrowing and confidence-sapping voyage of self discovery with zero margin for error and no respect for human weakness.
Dead Rising had a stab at bringing this one back into fashion a couple of years ago by cruelly spacing out its save points and forcing you to replay the game if you'd missed certain events. It's not the same though.

4) Nerdy Lead Characters

Guybrush Threepwood, Roger Wilco, Larry Laffer. Time was, the lead characters in games were heroic losers, rather than the barrel-chested, cigar-chomping death machines popular today.
It's to the detriment of modern titles that this nerd factor seems to have slipped from fashion. We’re not saying that Gears of War would be a better game if Guybrush were the lead, but let's just consider it for a moment. He could trade insults with a brumak. He can spit further than Marcus Fenix. And he doesn't wear a bandana (as much). We rest our case.

Now, we know what you're thinking here: what about Gordon Freeman? Let's get one thing straight – anyone who beats aliens to death with a crowbar and slices zombies in half with buzz saw blades is not a nerd. He may have glasses. He may have a science background. But don't be fooled - he's not a nerd. He doesn't even speak.

(Jas: And that's another thing about Gordon Freeman: how comes he manages to lead a rebellion against the Combine/save the world/make friends for life/get jiggy with Alyx (nearly), right, when he doesn't even speak?)

5) Loading Stress

Incredible as it may now seem, gamers did not always demand, let alone receive, the instant thrills which accompany modern titles. In an era before the CD and cartridge became commonplace, we found ourselves struggling to force games to load at all, and nowhere was this a greater risk than when faced with that most unpredictable and malevolent nemesis: the tape.

Few things in life teach a young man patience like sitting staring at a computer screen as colours flash and dance, all the while praying to whichever is his chosen god that the damn thing is going to work. Along for the ride would invariably be the synapse-shredding squawks and squeals which were the critical feature of tape loading, and which served as the true acid test: how much do you really want to play this game?

About 40% of the time, a moment would arrive when it became clear that something had gone wrong. The noises would stop, or the screen would freeze. It would usually take some time to admit to yourself that it wasn't going to happen. And then it would be time to repeat the process again. In many ways, it was a lot like love. And no less painful when it all went wrong.

Still, things aren't that different now that we have our friend Mr BSOD to help out. Thank goodness for him.

6) The Complete Product

No patches, no updates. The games of yester-year were, as a rule, delivered to the consumer in their complete form.

On the upside, this meant that you were spared the experience of excitedly booting up a new title only to find it ruined by a game-breaking glitch which the developers figured they could fix at some point in the week following release.

On the downside, this meant that your copy of Superman 64 was never going to get any better than it was on day one.

7) Button Bashers

Okay, so this term lives on in relation to beat-em ups, but we're not talking about your mate who can't dragon punch here. Oh no – we're talking Track and Field.
Somewhere back in the mists of time a developer asked themselves the question – how can we most closely recreate the sense of competing in sports at the highest level? And the answer they came up with was button bashing.

The premise was simple: whatever sport you're competing in, whatever Olympic event, the control method is the same. There are two buttons, and you must batter them. Not in any sequence, not with any finesse. Just batter them. For several minutes. Until you or they break.

And you know what? For the first 10 seconds it's great fun – your sprite comes racing out of the blocks in the 400 metres and takes what looks like an unassailable lead. It's only at about the 20th second of continuous button bashing, shortly after carpal tunnel syndrome sets in and with at least another minute of similar agony to go, that you realise what you've let yourself in for. And by then it's too late.

There are echoes of this unique experience in certain modern games – Through The Fire and Flames on expert on Guitar Hero, the swimming relay on Mario and Sonic at the Olympic Games, but these are just pale imitations of the real thing. If you want to know what running a marathon feels like, you need to play Track and Field. With your mates. And pride at stake.

(Jas: once long ago my best friend and me were playing 1v1 Counterstrike and he kept on using a wallhack to kill me even though I told him to stop being such a noob, but he didn't stop, which got me so irate that I rage-quit, took my keyboard over to his house, and hit him with it. Does that count as 'button bashing'? Maybe not)

8) The Gaming Press

Not that we don't love Edge, Games TM, Penny Arcade and the myriad websites and blogs we spend our lives perusing, but the golden age of gaming was accompanied by a golden age of games journalism.
Your Sinclair, Ace, Zero…. these weren't just magazines. They were a window into an alternative way of life, populated by strange men with ridiculous barnets and an epic willingness to spend every waking hour playing the games they loved (and many they didn't).

With no PR machine and comparatively little hype surrounding the games releases of the day, these heroes were free to do as they pleased, dispensing their views pure and untainted to anyone who would listen in an environment which called to mind the classroom left unattended.

Younger readers, meanwhile, were left to wonder at it all. Were these guys really getting paid actual money to write about games?

9) Side-scrolling beat 'em ups

Many happy hours used to be spent with mates battling through gangs of street thugs on games like Teenage Mutant Ninja Turtles and Streets of Rage (what a great name for a game: "Streets of Rage").
The premise was simple – you started at one end of a long stretch of road/lab corridor and you strolled forward cracking skulls until you reached the other end, usually with a second player along for the ride. Gaming in its purest form.

Who can forget the shock and horror of being forced to face down your own brother at the end of Double Dragon? Or the incredulity we all felt at being told that Final Fight's Haggar really was the elected mayor of Metro City? (Jas: you know way too much about side-scrolling beat 'em ups, Dan).
Not Gamer/Law, that's for sure. And yet, astonishingly, these games are now deeply, deeply unfashionable.
Was it 3D graphics that put paid to the side-scrolling beat 'em up? Or maybe the arrival of Street Fighter II? We'll never know for sure, but what we can say with absolute certainty is that we miss them.

10) Code Meddling

Back in the day, before developers decided to just offer you up the whole candy store from day dot, gamers would often invent sneaky backdoor tricks to enable themselves to get beyond the first level.

The attractions on offer were vast: infinite lives, infinite health, infinite time. The mind boggled. And it boggled even further when you discovered what you would need to do to get the cheat to work.

We Gamer/Law folks cannot be the only people who recall the heady days of cheats for the ZX Spectrum – 2 or 3 pages of computer code which had to be laboriously inputted so that Robocop would have infinite ammo. Space shuttles have been launched with less prep time (and certainly with less tears of rage). Things improved somewhat in the 90s with the arrival of stalwarts like Game Shark and Action Replay. Cheating was still not a simple affair – it now involved the purchase of additional kit and still required code
inputs - but the range of available options was far broader. Suddenly we were walking through walls,
jumping tall buildings in a single stride and accessing hidden levels.

These were real, honest to goodness cheats. Gamers messing with the game's very coding to get what they wanted. It went up about as far as Quake, which had at least one secret comedy-themed room you could only access via a no-clip cheat, but since then it seems to have died out. You might see something a bit similar nowadays, maybe a Team Fortress 2 server or two with the gravity turned off, but it doesn't have quite the same air of renegade cool.

Even if it's something as simple as accessing the code on your mate's copy of Champ Manager and rewriting the match commentary to deliver frank home truths about his personal hygiene, we miss the good old days when you could get under the hood and mess about. These days it's all hardware based, with some gamers messing around with modchips (which are very illegal of course)

Gamer/Law's detailed, reasoned conclusion:

It's just not the same anymore, innit?

Follow us at www.twitter.com/gamerlaw!

Erik Estavillo + lawsuits = fail + legal costs

noreply@blogger.com (Jas Purewal) — Tue, 09 Feb 2010 23:19:00 +0000

So, we hear that Erik Estavillo, the serial plaintiff against games companies, has dropped all of his lawsuits against companies including Microsoft, Sony and Activision-Blizzard. He became known late last year for these rather creative lawsuits, which involved some pretty odd actions like suing Blizzard for his character moving too slowly and his claims that he would subpoena celebrities including Bill Gates and Winona Ryder. Now it seems that his claims will never go before a judge.

Victory of course for the games companies, who we would guess have been able to ignore Estavillo entirely (standard practice with these kinds of lawsuits) to date anyway. Of course, it would have been perfectly possible for their lawyers to go straight off to court and seek to swat Estavillo's lawsuits out of the sky with 'strike out' applications (i.e. to argue to the judge that Estavillo's claims are completely hopeless and should not proceed any further), but that would (i) have cost money; and (ii) would have given Estavillo more publicity.

The difficulty for Estavillo now is this: if the companies which he sued HAVE incurred legal costs in defending his lawsuits, then in principle they would be entitled to sue him for payment of those costs. This is the 'loser pays costs' principle, a key aspect of litigation in England and most other common law jurisdictions. Its main objective is to deter claimants from bringing hopeless claims by making them face the risk of later having to pull the claim and pay both their and the other guy's legal costs.

Of course, whether or not anyone actually goes after Estavillo for legal costs will depend on three things:

(i) Whether the civil procedure in the appropriate US state permits it (and it's worth bearing in mind that generally the USA is less in favour of the 'loser pays costs' principle)

(ii) Whether Estavillo could pay up anyway

(iii) The publicity that going after Estavillo would generate.

On balance, we think it's unlikely any of these companies would actually sue for their costs, but it is always possible. Anyway, the point of this post is that Mr Estavillo's case is a great example of the golden rule in litigation: choose your legal battles carefully.

Source: GamePolitics

Follow us at www.twitter.com/gamerlaw!

Games lawsuits and what you can do about them

noreply@blogger.com (Jas Purewal) — Tue, 09 Feb 2010 22:56:00 +0000

This is a post for games developers and publishers about lawsuits and what you can do when you face one.

Lawsuits are a fact of life in all businesses, the games business included. Lawsuits can come out of virtually anywhere: a disgruntled consumer, a rival looking to get ahead, a business partner who thinks you've breached your contract with them, the list goes on. If you are very lucky, you might avoid having to have anything to do with a lawsuit, but it's more likely than not that at some point you will have to get involved. If so, then you might find useful the following summary about what to do and what to think about. It's primarily aimed at what to do if you are faced with a lawsuit, but it applies just as well if you are thinking of bringing a lawsuit against someone else.

So, what do you do?

(1) Get legal advice early

There's no way around it: the only sure way to know if you are facing a strong or weak lawsuit is to talk to a lawyer about it (preferably a disputes specialist).

Yes, that involves some money, but experience shows that a little legal advice early on could save you a lot of money later on. Besides which, some lawsuits can be a serious threat to a business and so they should be treated as such.

Of course, maybe the lawsuit is obviously without merit or has a small monetary value, meaning that throwing a lot of money at the lawsuit may not be worth it financially. If so, then perhaps it can be handled by a lawyer on a reduced-rate or possibly even pro bono basis (if yours is a sufficiently worthy case) or, failing that, perhaps it could be dealt with by someone on the business side who has some legal experience (though that's not ideal, given how high-stakes and complicated litigation can be).

(2) Legal issues to discuss

Your lawyer will be able to advise you on:

(i) the legal strength of the lawsuit against you and what it could mean for your game/product/business.

(ii) the jurisdiciton for the lawsuit (i.e. in which country will the lawsuit take place and under what country's laws - this is pretty important, given today's globalised games industry and playerbase).

(ii) the prospects of success and your best/worst case scenario in terms of the possible outcomes.

(iv) how best to respond to the other side and what to say.

(3) Working out your strategy

Your lawyers will be able to work with you to figure out whether you should fight the lawsuit, stonewall it or settle it. Some key issues to discuss with them when formulating your strategy:

What is the cost/benefit analysis? In other words, what is going to cost the most - fighting, ignoring or settling the lawsuit?
Is there some commercial solution you can propose that will defuse the row? Would an early face to face meeting help?
If you're going to fight, have you got any counterclaim against the claimant? Could that give you any financial upside to the lawsuit?
Is there any 'floodgates' risk if you lose/settle the lawsuit (i.e. could more people come after you over the same issue?)
What is the commercial risk if you lose the lawsuit? (e.g. impact on trading partners or consumers)
What are the PR risks? Would it be a problem if/when the lawsuit became public and, if so, do you need to have a parallel PR strategy in place?
What resources would you need to devote to the lawsuit? In particular, would management need heavily to be involved?
If you are considering a quick settlement, when would be the best time to make the offer and what will you offer?
How are you going to keep control of your legal costs expenditure? (more on that below)

(4) The litigation process

Litigation goes through broadly three stages:

(i) initial phase/setting out the legal case;

(ii) second phase/evidence gathering, including document review, witness evidence and possibly the use of experts; and

(iii) third stage/preparing for and going to trial.

If and when it comes to the legal fight, your lawyers will be able to advise you what legal weapons are available to you. For example, if the lawsuit against you clearly has no merits at all, then you may try to have the case thrown out of court (known as 'strike out'). Or, if the lawsuit clearly has some muscle, then you might want to take steps to try to settle the claim early.

More generally, a lawsuit can go through many twists and turns during the litigation process (hence why litigation is often compared to a rollercoaster). Experienced litigators will tell you about unlikely cases that were ultimately won and of sure-fire lawsuits that somehow never made the grade. All of this means that litigation can be RISKY, so you can never take the result absolutely for granted (for this reason, many cases settle using ADR - more on that below). On the other hand, a judgment from a court is the best way of settling a dispute, particularly if it is a real threat to your business.

(5) Alternative dispute resolution ("ADR")

ADR is the title given to different methods of settling disputes without having to go court. The classic example is mediation, where both sides sit down in a room with an independent mediator to try to settle their differences. Another example is expert determination, where both sides put their cases to an independent expert who decides which one has the better case (this can work well in intellectual property disputes). ADR is popular for good reasons: it is cheaper than full litigation, can be kept confidential and has a good success rate at settling disputes.

So, if you do end with a lawsuit on your hands, it's worth thinking carefully about trying to settle the dispute using ADR, rather than going to court.

(6) Costs

Control of legal costs is key for any business involved in litigation, because litigation tends to be expensive. In fact, in drawn out litigation you can even see the legal costs exceed the money being argued over!

Points to think about:

Discuss costs early with your lawyers and establish who will be working on the case, what they will be doing and how much they propose to charge.
You may want to ask the lawyers to prepare a costs estimate (often this comes together with the lawyers' initial legal advice on your legal strengths and weaknesses)
If the dispute looks likely to fight, you may be able to enter into some form of costs arrangement with your lawyers. For example, some jurisdiction permit 'no win, no fee' deals in which you pay no costs if you lose the lawsuit (but the lawyers can claim an uplift on their fees if you win). In the US, contingent fee arrangements are widespread (where lawyers are paid through a share in the moneys recovered in the litigation).
Insurance: your insurance policies may cover your legal costs in a dispute, usually on the basis that you notify the insurer as soon as possible once you are notified of a dispute.

(7) Summary

Take threatened and actual lawsuits seriously: they can have a real impact on your business
Speak to your lawyers: a little legal advice early on could save you a lot of money later on
Work out your legal strategy with your lawyers and stick to it. You may want to fight the lawsuit, stonewall it or settle it.
Keep a close track on your legal costs.

Any questions? Need a hand?

Drop us a line here if you have a disputes problem, or would like to talk over any of the above.

Legal MumboJumbo and Popcap Games

noreply@blogger.com (Jas Purewal) — Thu, 28 Jan 2010 00:16:00 +0000

Earlier this week it was reported that casual games developer MumboJumbo had succeeded in its legal action in Texas against fellow casual games developer Popcap Games, with the jury awarding MumboJumbo damages of $4.6m. More on the case below...

FYI, MumboJumbo is the creator of "such popular games as 'Midnight Mysteries: The Edgar Allan Poe Conspiracy,' 'Luxor Adventures,'and 'Samantha Swift and the Mystery from Atlantis' ('fraid I've not played them).

What do we know about the case?

The litigation stemmed from a 2006 contract under which MumboJumbo agreed to produce, distribute and sell certain PopCap games in North America. The jury reportedly found that "PopCap breached the contract when it went behind MumboJumbo's back and decided to market and sell its games on its own". The case involved findings of breach of contract, fraud and tortious interference on PopCap's part against MumboJumbo (serious stuff). The press release states "central to proving that portion of the case were PopCap's own internal e-mail messages, which showed the company employed a calculated use of false and misleading statements in order to sour that business relationship". Serious stuff.

The jury awarded $4.6m in damages. Separately, there will be another court hearing to work out the lawyers' costs (which is standard practice in England and could add a fair bit on to the $4.6m for which Popcap already has to cough up).

According to Gamesindustry.biz, Popcap's VP of public relations Garth Chouteau said of the judgment: "PopCap continues to believe that it did nothing wrong in this case, and will vigorously pursue its claims and defend itself through the appeals process." Which, it seems reasonably safe to assume, means that Popcap will be mounting an appeal against the decision.

What does all that legal mumbojumbo (ahahaha) mean?*
* sorry, couldn't resist the weak pun

The judgment in the case has not been released, so there is very little to go upon at present unfortunately. But I thought it might helpful, in very general terms (based in English law, which is very similar to US law in these respects), to give the lowdown on what those legal findings of breach of contract, fraud and tortious interference mean:

Breach of contract

A contract is an agreement (whether written or verbal) between two or more persons which has four basic characteristics: (i) an offer, (ii) acceptance of that offer, (iii) consideration (i.e. something of value in return for what is being offered) and (iv) intention to create legal relations (i.e. meaning to enter the contract). Example: Ann buys from Bob a copy of Half Life 2 for £10 following an verbal agreement between them.

The 'contract' will contain the key elements of the deal (these are the 'Terms and Conditions' you hear about, plus other stuff), which both sides are meant to respect. But if one of side breaks the deal, then in principle that entitles the other side to go off to court, provided you can prove:

(i) there is a specific enforceable term in the contract on which you can rely (e.g. Ann promised to buy Half Life 2 from Bob)

(ii) breach of that term (e.g. Ann took the game but refused to pay Bob)

(iii) loss (e.g. Bob lost out financially as a result of the breach of contract)

The basic way you calculate the loss is this: how much would you have gained had the contract been properly performed? In the above example, Bob would have earned £10 had the contract been performed so that is the measure of his loss. Obviously, with large contracts like the one that MumboJumbo and PopCap entered into, the amounts at stake - and therefore the potential contractual damages - can be very large and difficult to quantify exactly.

Note: one important point of difference between England and the USA is that, in England, breach of contract cases are decided entirely by a single judge, who will determine how much damages should be paid if any. However, in the USA there is still jury trial available in breach of contract cases, in which case the jury determines the damages to be paid out (this is said to be one of the reasons that you see larger contract damages paid out in the USA than in England).

Obviously, real breach of contract cases are generally far more complicated than that. There are often difficult arguments as to what the contract actually said, what constitutes a 'breach' anyway and what the innocent party is entitled even if he/she is in the right. Then, on top of that, sometimes the innocent guy doesn't just want compensation but also wants some protection that the wrongdoer won't do it again...But you get the gist of it.

Fraud

Fraud is fairly simple to explain: it is any act by Ann which is intended to deprive Bob of a benefit or to cause him harm, for the enrichment of Ann herself. The above example, where Ann takes the game but doesn't pay Bob, could potentially be fraud if there was the appropriate intention. Another example would be Ann impersonating Bob in order to get a whole bunch more copies of Half Life 2 at his expense. A yet further example would be Ann entering into a business deal with Bob with the hidden purpose of making money at Bob's expense or damaging his business in some way.

Fraud is one of the most serious legal offences around. As a result, the law treats it pretty seriously and so it can have both civil and criminal consequences (i.e. you can sued for lots of money AND face criminal prosecution potentially). If Ann was found liable for fraud, she could find herself having to (for example): compensate Bob for his loss; pay over to Bob all of the profit she made at his expense; give disclosure as to exactly what she did and how; and potentially face other legal/regulatory/professional proceedings depending on what she does for a living.

Tortious interference

This is difficult to summarise because it is not clear exactly what kind of 'tortious interference' Popcap was found liable for. But, in very general terms, English and American law recognises the concept that a person can deliberately do things which are intended to disrupt other people contracting with each other or break their existing contracts with each other. For example, Ann finds out that Carl has contracted with Bob and offers Carl incentives/bribes/whatever in order to persuade him to contract with Ann instead. Obviously, in that kind of situation Ann may just be a good businesswoman and no harm in that, but sometimes it goes beyond that and the law needs to step in to stop someone deliberately encouraging the breaking of contracts.

If and when more details about the MumboJumbo/Popcap case are released, then hopefully we will able to apply some of the above to the actual facts. Now, that's the end of Civil Law 101 for today, kids...

Follow us at www.twitter.com/gamerlaw!

[Image credits: Popcap Games ]

Games developer fails in court claim over copying himself

noreply@blogger.com (Jas Purewal) — Sun, 24 Jan 2010 23:56:00 +0000

You'd think the last thing a games developer should be worried about is copying his own work, right? Wrong. Last week, the High Court published its judgment of a claim brought by a games developer against his employer over a games concept which the developer had created when he was freelance but which later he copied and effectively pitched to his employer as a new company project. The developer later sued for breach of copyright and confidence, in which we now know he was unsuccessful. Read on for more details...

The story in a nutshell

The case went like this: a freelance developer created a games concept, later joined a games development company and copied his earlier work in order to prepare a highly similar games concept for the company, without telling anyone about the copying (so everyone else thought this was a brand new idea). The development company took on the 'new' concept but ultimately it went nowhere and another company took over. Subsequently, the developer sued for copyright infringement for the copying of his original concept. The court held: no copyright infringement because no one had known the developer had already come up with the games concept when he was freelance so they had not 'copied' anything. The court also rejected a breach of confidence claim.

The case is one of the few recent times that a UK developer has been involved in a court battle. In fact, several of the UK games establishment were name-checked: the case involved evidence from Adrian Smith (former boss of Core Design, developer of Tomb Raider, and who was also a defendant in the case) and Sir Ian Livingstone OBE (founder of Eidos plc, which gave the development company some advice regading the development of the games concept) and also involved UK developers CiRCLE Studios and Crush Digital Media (both of which subsequently went into administration - see here and here).

Need to know points

You can read a summary of the case below, but here are some upfront thoughts on the need to know/best practice points for developers which came out of this case:

When a freelance games developer joins a new employer, discussing his/her existing games concepts at the outset and how they will be treated going forward should help to avoid any confusion as to who owns the IP later on.
If a freelance developer creates a game concept before he joins a development company, DOESN'T tell the company about this and subsequently pitches the concept to them as a company idea then, if the game concept is taken forward, there is a risk that the developer may lose any IP rights he may have in the concept.
The judge said game concepts discussed by a game developer with his employer are unlikely to be confidential as between the two of them, so a developer could not generally prevent his employer from for example pitching the concept to publishers (unless there is some express agreement to the contrary).
Review carefully the provisions of your employment agreements which deal with ownership of IP rights, because they could be important if there is subsequently a dispute between the developer and the development company over who owns the IP rights in a game concept.
Pick your legal battles carefully. Litigation is costly, lengthy and risky, as this case demonstrates. A little advice early on from experienced litigation lawyers about your prospects of success and the legal cost/benefit analysis can save a lot of time, money and stress down the line.

So what happened?

In around 1998 a then-freelance developer, Stuart Burrows, developed the concept for a game which came to be known as "Tracktrix", described in Court papers as follows: "Traktrix's gameplay is very simple: get the ball from one side of an environment to another and enter the "Finish Area" within a time limit. The player achieves this by laying a track in front of the ball as it progresses". Burrows himself desribed it as " 'Marble Madness meets Tetris/Wetrix and a Scalectric track' and 'Super Monkey ball meets Tetris' ".

Traktrix and Train Trax

Burrows later joined CiRCLE Studios as a senior games developer, but did not did not disclose to CiRCLE that he had already come up with the Tracktrix concept. He copied parts of his original work on Tracktrix in order to pitch a CiRCLE projet which was similar to Tracktrix, again without explaining that he had come up with Tracktrix before joining CiRCLE. CiRCLE then took the concept to publishers and, following the advice of Sir Ian Livingstone of Eidos, further developed it into a game concept known as "Train Trax".

But ultimately no one was willing to pick up Train Trax. CiRCLE later went into administration in 2007. However, CiRCLE boss Adrian Smith and industry veteran Martin Carr formed another games development company, Crush Digital Media, which bought up some of the now-bust CiRCLE's IP - including Train Trax. Crush then hired Burrows to work on Train Trax further and tried again to get publishers interested in, again without success unfortunately.

It seems that Burrows later began to argue that CiRCLE and Crush had infringed his copyright in Traktrix, and had breached confidence, by seeking to develop and market Train Trax. Lawyers were involved and the case went all the way to trial in 2009, despite Crush going the way of CiRCLE and entering administration in early 2009.

The High Court judgment

In a judgment published last week, Mr Justice Norris ruled that CiRCLE and its boss Adrian Smith had not copied Burrows' copyright works in developing Train Trax because they had not known there was anything to copy. As far as they knew, Burrows had invented the Traktrix concept (which became Train Trax) for the first time when he was a CiRCLE employee. The judge found that Burrows had created Traktrix before he had joined CiRCLE, had then copied his own work to create a similar concept for the company and this then became Train Trax. So it was Burrows himself, not anyone else, who had done the copying. That was the end of the copyright claim.

As for the breach of confidence claim, the judge decided that a developer pitching a game idea to his employer ordinarily was not confidential as between the two of them. He said: "Mr Burrows was employed as a senior games designer by Circle. It was his job to come up with ideas. If he came up with an idea and shared it with his employer he was doing what he was paid to do: the disclosure would not be in circumstances importing any duty of confidence owed by the employer to the employee."

Thoughts

The judge was pretty clear the case should never have got to trial (he referred to "the regrettable fact that the action reached trial at all"). That said, the legal issues in the case were fairly clear cut and he did not have difficulty in ruling in Smith and Crush's favour.

Still, to my mind there were no real winners here. Yes, the case established that effectively Crush still had the rights to Train Trax but no one wanted to buy it anyway, the game was never actually developed and Crush went into administration in early 2009 anyway. As for Burrows, he was left emptyhanded and probably in fact received a substantial legal costs order against him (though it is always possible he may try to appeal). Not a great result.

(Case name: Burrows v Smith & Another [2010] EWHC 22 (Ch))

Follow us at www.twitter.com/gamerlaw!

[Image credit: Mike Reeve http://en.wikipedia.org/wiki/File:Royal-courts-of-justice.jpg]

Thoughts on the Westminster eForum

noreply@blogger.com (Jas Purewal) — Fri, 22 Jan 2010 11:38:00 +0000

The Westminster eForum discussion in London on 20 January 2010 went over a lot of ground, from digital distribution to games education to tax breaks. UK games classification got a special mention, with Keith Ramsdale of EA Northern Europe making a special plea to the government to "just hurry up and make PEGI law" (the current UK games rating system is being reviewed at the moment and may or may not become law before the next election).

It was well attended by industry figures, including David Braben (of Elite fame) and Ian Livingstone of Eidos as well as representatives from EA, Codemasters and Unity to name but a few. Also attending was gaming champion Tom Watson MP (Labour), who chaired the first half of the session, and Ed Vaizey MP (Conservative), the Shadow Minister for Culture and the Creative Industries.

My thoughts on the highlights below...

Tax breaks

There was a lot of discussion about the need for a tax break for the UK games industry. Richard Wilson of TIGA in particular put forward a strong argument for the tax break (and separately Mike Rawlinson of ELSPA has done the same). Keith Ramsdale of EA Northern Europe argued that last year games made 44% more than films and music put together, but attract far less government support. Overall, the consensus was that the UK games industry punches above its weight, but without government tax breaks to match those being offered in competitor countries like France and Canada, it will decline (some predict that the UK will drop from its current place as the third-largest producer of games to sixth in the coming years).

There was also an interesting presentation from Dustin Chodorowicz of Nordicity regarding the Canadian experience of games tax breaks and the lessons the UK could learn from it. Unfortunately, with the present Labour government having refused a games tax break in this term, and Ed Vaizey's rather blunt assessment that a future Conservative government would not introduce a games tax break in the next 2-3 years, all of this will have to remain on the backburner for a while to come.

Digital Distribution

The discussion about digital distribution was interesting, if not ground-breaking. The discussion ranged back and forth regarding the pros and cons of digital distribution, the consensus from the industry bods on the panel being that digital distribution would continue to expand rapidly in this and coming years, but there will still be a place for the retail market for some time to come.

One crucial issue which wasn't discussed at all though is the secondary market in retail games and the total absence of a secondary market in digital distribution (or, put simply, I can buy Half Life 2 boxed second hand but I can't buy it off Steam second hand). There is a lot of money to be made in second hand sales - for example, the UK's only games retail chain GAME reported in 2008 that fully a quarter of its income derived from second hand sales.

All of this fundamentally derives from (i) gamers wanting to play games but not wanting to play full whack for them; and (ii) gamers wanting to make some money back from games they have played but don't want to keep. So it seems likely that sheer consumer demand will mean that at some point a secondary market in digitally downloaded games will have to develop. Obviously though, this presents real commercial issues (why allow a digital game to be sold secondhand online for $10 when you can sell it firsthand online for $30?) - so whether or not a digital second hand sales market will survive is another question altogether.

In fact, there have already been a few isolated instances of gamers trying effectively to establish their own second hand market in digitally downloaded games (for example, last week a guy tried to sell his Steam account for $1,000), but they are pretty much doomed to failure as long as download platforms stick to their current legal structure in which they can stop and unwind any attempt to sell to someone else any games downloaded them from.

It seems to me that the change could come in one of two ways. Firstly, a legal challenge against the Terms of Service/Subscriber Agreements that the current download platforms make gamers agree to at the outset, on the basis that such contracts contain numerous unfair contract terms which should be struck down by the court (which I'm going to blog about separately). Secondly, and probably more likely, someone figures out a new model for profiting from digital second-hand sales and make a popular download platform out of it.

Games education

The discussion regarding games education was also interesting. The consensus from industry figures in the panel discussion was that the UK's universities are not doing enough to prepare students for entry into the games industry. For example, David Braben of Frontier complained "we are getting far fewer people with computer science skills. We're having to recruit people from abroad" and Ian Livingstone of Eidos worried that university courses have "dumbed down" recently (a constant refrain in UK papers for some time now).

But there were no figures from the education establishment on the panel to respond to those complaints. If there had been, I think they would have said that the issue is complicated and affects multiple industries, so a simple claim that universities don't do enough isn't particularly productive. But one big problem which does affect the games industry specifically is the perception among universities that universities simply don't take games-focused courses seriously (according to one university lecturer who I spoke with) . That, it seems to me, is something that the games industry can and should help to remedy. (Clearly there is enough for a forum discussion on this issue alone!)

And, yes, Keith Vaz didn't show up

Lastly, and most infamously, there was gaming opponent Keith Vaz MP's no show. More on that here.
All in all, a great session, and I look forward to the next gathering on Monday 25th Jan at the Houses of Parliament for "Taking Games Seriously"...

Follow us at www.twitter.com/gamerlaw!

UK games tax break not Tories' top priority

noreply@blogger.com (Jas Purewal) — Fri, 22 Jan 2010 09:59:00 +0000

At the Westminster eForum meeting in London yesterday on the state of the UK games industry (which I attended), Ed Vaizey, Conservative shadow minister for culture and the creative industries, made it quite clear that if a Conservative government comes into power this year the UK games industry is unlikely to see any movement towards a UK games tax break for 2-3 years. He said that a tax break for the UK games industry is simply not one of the Tories' top priorities, compared to the challenges presented by the present recession. (In December 2009, the present Labour government confirmed it has no plans to introduce a UK games tax break in this term).

In a wide-ranging panel discussion, Ed Vaizey also covered:

his hopes for the industry bodies TIGA and ELSPA to work together, or even be merged, in the future
the controversial possibility that the UK Film Council could adopt a role in representing the games industry (and possibly the games industry could thereby obtain access to National Lottery funding - an important source of film financing)
Conservative plans for broadband penetration in the next few years (he compared the current Labour plans of universal 2mbps by 2012 rather unfavourably to curren broadband already available in Asia)

My thoughts more generally on the Westminster eForum, which went over a lot of ground from digital distribution to games education to tax breaks, are here.

Bethesda vs Interplay: Bethesda appeals over Fallout litigation

noreply@blogger.com (Jas Purewal) — Sun, 17 Jan 2010 23:37:00 +0000

The Fallout litigation continues with Bethesda reportedly going to the US Court of Appeal over its claim for a preliminary injunction to restrain Interplay using the Fallout IP, including developing 'Project V13', Interplay's rumoured Fallout MMO. Bethesda's original claim for a preliminary injunction was rejected in December 2009 (our summary of the dispute is here).

We have not yet seen any information regarding the grounds of the appeal, though no doubt they will emerge on the blogosphere in due course, at which point we will be able to have a closer look at the legal arguments.

In the meantime, Duck and Cover has released partial transcripts of Bethesda's last attempt to secure the preliminary injunction - which do not appear to have been particularly successful. The court's formal judgment on the matter has not been released as far as we are aware, but from the transcripts of the actual arguments before the judge, it seems that Bethesda ran into difficulties with the judge over the exact reasons it sought a preliminary injunction. The judge's reasoning appeared to be that the purpose of a preliminary injunction is to prevent one party from doing something until the court has time to establish whether it is legally entitled to do that thing or not - but if Interplay is not actually working on its Fallout MMO project then logically there would be nothing to temporarily ban them from doing. There were also issues regarding Bethesda's claim of trademark infringement, which Interplay argued has no merit because there was never any breach of contract by Interplay and therefore it always owned the Fallout trademarks.

Now, some bloggers have derived from the above that Bethesda's lawyers did not understand the purpose of preliminary injunctions. That is of course possible, but also seems somewhat unfair. A more likely explanation (assuming US preliminary injunctions are anything like their English counterparts, which seems very broadly right) is that they understand exactly what a preliminary injunction is for, understand that it could be an uphill struggle to win it at court, but they also understand that if they did win they could inflict serious damage on Interplay by effectively stopping them from doing anything with the Fallout IP for potentially quite a long time. In fact, in some cases obtaining preliminary legal relief from the court can bring the other side to the negotiating table or even cause them to fold altogether (although obviously that doesn't necessarily mean that Interplay would have done either).

So it may simply be that Bethesda gambled and lost the first time around. Now, clearly, they would like another bite at the preliminary injunction cherry. It will be interesting to see if they fare any better this time around...

Follow us at www.twitter.com/gamerlaw!

[Image source: Wikipedia]