Right?

Looking forward, we’ll be expecting to hear a final confirmation on the third iteration of “Legal Issues in Gaming” at PAX (East) some time in the next couple of weeks, and we’ll get that information out to you as soon as it comes in and we finalize the panel attendees.

MAGfest 8 is a post from: gameslaw.net

“Hasbro has resorted to these meritless allegations, in an apparent attempt to unfairly take back rights granted to Atari [...] Atari has sought to resolve the matter without cooperation from Hasbro. We regret that our longtime partner has decided to pursue this action.”

Atari denies the allegations (though to date they have not filed a response or a MTD on the case, it’s far too early for that). Hasbro is seeking both pecuniary damages and an injunction ending the licensing agreement.

I think this is the start of a long and bitter battle over a very very valuable IP. They’ve apparently been negotiating for months before the suit, and the wording and timing don’t appear to be that of getting a complaint in the door before a statute of limitations — it legitimately appears like a rancorous disagreement between the parties, meaning it’s distinctly possible this one will achieve some level of litigation before settlement becomes likely (if settlement even happens; Atari is being unusually vocal in asserting that the claims are meritless). The timing, just before Christmas, is also a slap in the face, especially as a potential blow to holiday financials….the whole thing just comes off as very spiteful. We’ll keep track of this dispute as it progresses.

Hasbro sues Atari over D & D IP is a post from: gameslaw.net

Until now. Atkinson now believes that he should be the sole arbiter of what games you get to play on purely moral grounds. He recently proclaimed “You don’t need to be playing a game in which you impale, decapitate and dismember people.”

Atkinson’s hypocrisy really knows no bounds. On the one hand, he says “This is a question of a small number of very zealous gamers trying to impose their will on society. And I think harm society. It’s the public interest versus the small vested interest,” but on the other hand, he himself is the small vested interest that is imposing his will on the broad public. How many millions of dollars has Atkinson cost the Australian economy, by lowering sales of “altered” games like L4D2 (sending further sales overseas), or forcing publishers that show a backbone to outright refuse to sell in Australia?

Atkinson outright admits that the problem he forsees doesn’t even exist yet. “I accept that 98 per cent, 99 per cent of gamers will tell the difference between fantasy and reality, but the 1 per cent to 2 per cent could go on to be motivated by these games to commit horrible acts of violence,” ….note the emphasis. Could. Not “have”.

Despite the fact that Australians are allowed to watch violent movies with an 18+ classification, games unfortunately don’t get the same treatment. Unfortunate for the industry as a whole, not just Australians.

Atkinson: “You don’t need to play this game” is a post from: gameslaw.net

Desert Bus for Hope/Childs Play Charity is a post from: gameslaw.net

Abington May Sue Over Xbox Live Bannings is a post from: gameslaw.net

On a related note, I’m putting the finishing touches on a journal article regarding an international framework for protecting human rights in virtual worlds and MMORPGs. With this news, the topic only seems more relevant.  Chinese gamers should be entitled to express dissident viewpoints in a virtual world without fear of censorship, and without fear that their avatars and virtual property will be at risk of seizure or deletion. Similarly, virtual worlds operators should be entitled to profit from their businesses without fear of government crackdowns like this. I’ll post the article here once the publication process is complete.

The NetEase press release reprinted in full below.

NetEase.com Announcement Regarding Statement by the General Administration of
Press and Publication With Respect to World of Warcraft(R)

BEIJING, Nov. 2 /PRNewswire-Asia/ -- NetEase.com, Inc. (Nasdaq: NTES), one
of China's leading Internet and online game services providers, today
announced that the General Administration of Press and Publication ("GAPP") of
the PRC government has posted on its official website a statement that the
current operation of the World of Warcraft(R) in China by NetEase's affiliated
company, Shanghai EaseNet Network Technology Limited ("Shanghai EaseNet"), is
being conducted without proper approval from GAPP. The statement further
indicates that GAPP is returning Shanghai EaseNet's application for approval
and Shanghai EaseNet should suspend charging users to play the game and not
allow new account registrations. GAPP also notes in its statement that it is
evaluating whether to impose administrative penalties on Shanghai EaseNet. As
of the time of this press release, neither NetEase nor Shanghai EaseNet has
been officially notified of GAPP's determination. Shanghai EaseNet licenses
World of Warcraft(R), a massively multi-player online role-playing game, for
operation in China from Blizzard Entertainment, Inc.
    NetEase and Shanghai EaseNet believe that they are in full compliance with
applicable PRC laws and are currently seeking clarification from the relevant
governmental authorities regarding this statement by GAPP. NetEase will
provide further updates on the statement by GAPP as appropriate.
    About NetEase
    NetEase.com, Inc. is a leading China-based Internet technology company
that pioneered the development of applications, services and other
technologies for the Internet in China. NetEase's online communities and
personalized premium services have established a large and stable user base
for the NetEase websites which are operated by its affiliates. In particular,
NetEase provides online game services to Internet users through the in-house
development or licensing of massively multi-player online role-playing games,
including Fantasy Westward Journey, Westward Journey Online II, Westward
Journey Online III, Tianxia II and Datang, as well as the licensed game World
of Warcraft(R).
    NetEase also offers online advertising on its websites which enables
advertisers to reach its substantial user base. In addition, NetEase has paid
listings on its search engine and web directory and classified advertising
services, as well as an online mall, which provides opportunities for e-
commerce and traditional businesses to establish their own storefront on the
Internet. NetEase also offers wireless value-added services such as news and
information content, matchmaking services, music and photos from the Web which
are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
    Other community services which the NetEase websites offer include instant
messaging, online personal advertisements, matchmaking, alumni clubs and
community forums. NetEase is also the largest provider of free email services
in China. Furthermore, the NetEase websites provide various channels of
content. NetEase aggregates news content on world events, sports, science and
technology, and financial markets, as well as entertainment content such as
cartoons, games, astrology and jokes, from over one hundred international and
domestic content providers.
    Safe Harbor Statement
    This press release contains statements of a forward-looking nature. These
statements are made under the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes," "estimates" and
similar statements. The accuracy of these statements may be impacted by a
number of business risks and uncertainties that could cause actual results to
differ materially from those projected or anticipated, including risks related
to:  the risk that Shanghai EaseNet will not be able to continue operating
World of Warcraft(R) or other games licensed by it for a period of time or
permanently due to the position of GAPP or other governmental actions; the
risk that Shanghai EaseNet or NetEase will be subject to penalties or
operating restrictions imposed by governmental authorities in the PRC
resulting from the operations of their online games, including suspension of
their Internet service or other penalties; and other risks outlined in
NetEase's filings with the Securities and Exchange Commission. NetEase does
not undertake any obligation to update this forward-looking information,
except as required under applicable law.
    For further information, please contact:

    NetEase.com, Inc.
     Brandi Piacente
     Investor Relations
     Email: brandi@corp.netease.com
     Tel:   +1-212-481-2050

     Li Jia
     Email: liddyli@corp.netease.com
     Tel:   +86-10-8255-8208

SOURCE  NetEase.com, Inc.

Brandi Piacente, Investor Relations, brandi@corp.netease.com, +1-212-481-2050;
or Li Jia of NetEase.com, Inc., liddyli@corp.netease.com, +86-10-8255-8208

WoW Shut Down in China? is a post from: gameslaw.net

“Jennifer Strange’s death was a tragedy. Our hearts go out to all of her loved ones, including, in particular, her husband and children. While legal restrictions preclude us from commenting further on the verdict, we respect the jury’s decision and hope that it will assist the Strange family in coping with its loss.”

California Court Awards $16 Million in Damages for Fatal Wii Prank is a post from: gameslaw.net

The statute(4) at issue in US v. Stevensprohibits the creation, sale, and possession of “depictions of animal cruelty” with the intention of placing such depictions into interstate or foreign commerce for commercial gain. “Depictions of animal cruelty” are defined as those in which “a living animal is intentionally maimed, mutilated, tortured, wounded, or killed, if such conduct is illegal under Federal law or the law of the state in which the creation, sale, or possession takes place…” Additionally, the statute contains a safe harbor provision which is nearly identical to those seen in statutes that restrict obscenity, which is an unprotected category of speech.  In any content-restrictive statute in any state, the safe harbor provision will hold exempt from restriction depictions of obscenity which have serious political, religious, literary, scientific, educational, or artistic value.  This is the general gist of the safe harbor provision in the animal cruelty depiction statute, albeit w ith slightly different wording. However, we have seen that if a statute invalidly restricts the content of a protected category of speech, even a safe harbor cannot save it(5).

Though seemingly unrelated to the game industry, US v. Stevenswill no doubt be a landmark First Amendment case–the outcome of which will have lasting effects on state and federal attempts to regulate the content of games for years to come. After being convicted under the statute at issue for selling dog-fighting videos, the defendant Robert Stevens challenged the statute on its face, arguing that it is an unconstitutional infringement on the freedom of speech. The U.S. Court of Appeals for the Third Circuit agreed, declining to adopt the government’s reasoning that depictions of animal cruelty are akin to child pornography, and holding that such depictions are protected speech because they do not fall within any of the narrowly defined categories of unprotected speech. Regular readers of GamesLaw will recall that when a statute restricts the content of speech, it must be narrowly tailored to advance a compelling government interest and use the least restrictive means to do so(6). The Third Circuit held that though animal protection may be a noble moral interest, it is not sufficiently compelling as to “trump an individual’s free speech rights”(7). Further, the government failed to prove that the harms caused by cruelty to animals followed directly from the depictions of such(8). As for the safe harbor provision, if that alone were to render an otherwise unconstitutional statute valid, then there would be no limit to the speech that government could regulate(9).
 You can find the Third Circuit’s opinion here.  

Should the Supreme Court affirm the Third Circuit, this will have positive implications for the game industry. Because the states attempt to regulate the distribution of games based on content by analogizing violence to obscenity, to affirm US v. Stevens would strengthen the argument that this is not acceptable due to a lack of compatibility with the very narrowly drawn categories of unprotected speech. Reviewing courts have recognized time and again that a safe harbor provision (such as the one in the California statute stricken down for the unconstitutional restriction of depictions of violence in video games by the Ninth Circuit in VSDA v. Schwarzenegger) does not save an unconstitutional content-based restriction of speech(10). If the Court continues to do so and agrees with the Third Circuit, then the argument that the safe harbor clause in California statute does not render it valid will be easier still.

As we reported some time ago, California is appealing VSDA v. Schwarzenegger to the Supreme Court. Should the Court issue an opinion, it will become the leading case in First Amendment law as it relates to the game industry. Because states attempt to regulate the artistic content of video games by attempting to withhold Constitutional protection from depictions of violence, the industry can only benefit from the Court’s refusal to create new categories of unprotected speech.

Though very interesting and robust, the oral argument alone cannot be a predictor of the Supreme Court’s decision. We look forward to bringing you future developments and analysis.

No doubt what I have written tonight will cause a few sparks to fly, particularly among those who would support the statute at issue in Stevens. So I will leave you with the thought that no matter what morals we have, no matter our beliefs, the greatest test of our commitment to upholding, embracing, and appreciating the freedom of expression is our willingness to protect even the speech that we  hate.

1. See Brandenburg v. Ohio, 399 US 444 (1969)
2. See VSDA v. Schwarzenegger, 556 F.3d 950 (2009)
3. For an example, see Ashcroft v. Free Speech Coalition, 535 US 234 (2002), in which the Supreme Court held that while child pornography is outside of First Amendment protection, it refused to expand the prohibition to that pornography which lacks actual children.
4. 18 U.S.C. 48 (1999) http://www.law.cornell.edu/uscode/18/usc_sec_18_00000048—-000-.html
5. VSDA v. Schwarzenegger, 556 F.3d 950 (2009)
6. Brandenburg, 399 US 444 (1969)
7. US v. Stevens, 533 F.3d 218, 226  (2008)
8. Id at 228
9. Id at 232
10. See VSDA v. Schwarzenegger for one example

Pending Supreme Court Case US v. Stevens Has Implications for the Game Industry is a post from: gameslaw.net

If you look in the beginning, you’ll notice SoCal booming, as well as in Austin, with no major losses anywhere until the mega-red explosion from Katrina hitting New Orleans, but even there are no major losses. Up through the beginning of 2008, California begins shrinking, with losses starting to appear for the first times in SoCal (although ironically, the reverse is occurring in the Bay Area), but Texas and Seattle remain booming with tens of thousands of new jobs.

Then by mid-2008, the meltdown is in full swing. Starting in South Florida, SoCal, and Detroit, it quickly spreads over the next year to the entire nation. Interestingly enough, while in August 2008 Los Angeles was posting a -97,800 lost job rate for the previous 12 months and -20,000 in San Francisco, Austin was up by 18,100 jobs and Seattle was up by 17,200.

By November, that had turned into nearly -160,000 lost jobs in LA alone, while even Seattle was starting to feel the heat with -11,000 or so. Boston was down by nearly -20,000, and only Austin (as an industry hub) remained in the green.

Perhaps the most fascinating slide is the end, which looks like red nuclear explosions going off; but lets pay attention to what you CAN’T see on that last slide: Austin down by only -1,400 jobs that year (keeping in mind this is across ALL industries) compared to -240,000 in LA.

The website itself states “The animated map makes clear that this recession has not treated all regions equally.” Does this mean that Austin is a safe place to work to wait out the recession? That might not be a stretch of the imagination. Texas isn’t faced with nearly the same budget meltdowns as California, and aside from Houston and Dallas, hasn’t been hit with the same critical job loss that California has (though the site also notes that Texas remained solid in part due to a run-up in oil prices through 2008, and that the receding job growth in 2009 came from the energy and construction sectors.)

The time will come where development studios are going to have to think harder about where they set up shop — not just in terms of access to employment talent or favorable taxes, but economic solidity and risk of rampant unemployment in other critical sectors like public safety or education. Perhaps this map will highlight that for some studios.

Geography of Job Loss is a post from: gameslaw.net

In their latest filing, Gamefly points out that Netflix in particular has benefited from unauthorized “Netflix only” slots in the post offices– slots that the USPS claims that they don’t know exist, but if they did would be against policy. Something tells me that this case is going to likely progress beyond the administrative stage, but we’ll of course keep you updated as new developments are announced.

Gamefly Action vs. US Postal Service is a post from: gameslaw.net