Does WOW Fan Game Guide Violate Publisher's Copyright?

Game Spot News reports about a 24-year old self-publisher filing a law suit CA federal court against video game publishing giant Blizzard Entertainment. 24 year old Brian Kopp sold an unofficial game guide titled, "The Ultimate World of Warcraft Leveling & Gold Guide" on Ebay for $15 a piece. World of Warcraft is Blizzard's epic Massive Multiplayer Online Role Playing Game (MMORPG) that has record sales and membership across the globe. Blizzard and Vivendi repeatedly filed to have the guides stripped from the bidding marketplace, to which Ebay complied. He also has an independent website that sells the guides.

According to Game Spot, "Weeks after his first auction went live, Blizzard, Vivendi, and the ESA began sending repeated takedown notices under the Digital Millennium Copyright Act (DMCA), asking eBay to yank the auctions because of copyright and trademark infringement concerns. The auction giant's general policy is to halt auctions when it receives such complaints and to suspend a user's account after it racks up a certain number of warnings." Kopp filed counter-notices protesting the take downs. In his complaint he alleges that the guide does not violate copyright laws b/c it has a disclaimer notice on the first page stating that it is an unofficial guide and it's use of selected screen shots falls within Fair Use.

Kopp seeks three forms of relief in his suit:

1. Compensatory damages to cover certain expenses including lost profits from halted sales
2. Injunction preventing others from interfering with his right to publish such guides
3. Declaratory judgment that his book is protected by the First Amendment

About this suit, Kopp's lawyer said: "In effect, if the video game industry's actions are upheld, 'then selling a how-to book about Microsoft Word would infringe Microsoft's copyright, especially if the book contained one or more screenshots of Word's user interface,' said Paul Levy of the public-interest advocacy group Public Citizen, which joined in filing the suit on behalf of Kopp. 'We think this cannot be the law.'"

To me the WOW suit smacks of the same kind of questions asked by Ty Inc. v. Publications Int'l Ltd. 292 F.3d 512 (7th Cir. 2002). In TY the defendant published two unauthorized texts on the popular Beanie Babies stuffed toys. One of the books, For the Love of Beanie Babies, was a full colored picture book with "silly" writing to describe the toys. The other one was a Beanie Babies Collectors Guide. The plaintiff had copyrighted each Beanie Baby toy as an individual sculpture subject to protection. It argued that the defendant's books were both unauthorized derivative works which infringed on their sole right to make such works. The defendant responded by citing the Fair Use doctrine.

Judge Posner opined that the defendant could only prevail on the fair use defense if they could show that their work was complimentary to the copyrighted material rather than a substitute for it. This idea is an economic one (surprise!) and Posner illustrated it by saying, "copying that is complementary to the copyrighted work (in the sense that nails are complements of hammers) is fair use, but copying that is a substitute for the copyrighted work (in the sense that nails are substitutes for pegs or screws) or derivative works from the copyrighted work is not fair use." (See Ty Inc. 292 F.3d at 517). He furthered the rationale by citing the distinction between parody and burlesque. A parody is a protected work, for the same reasons that a book review is, it makes an editorial and originally expressive comment on the original work w/o cutting into the demand for it. To do so such parodies must use enough of the original work to conjure up the image of it so the audience can understand the connection (and sometimes the criticism). A burlesque on the other hand, is not protected and seen as a humorous substitute that cuts into the demand for the original.

Therefore book reviews and parodies serve as examples of the types of work that may quote and even copy from copyrighted originals, yet remain a fair use b/c they are compliments of (even if sometimes negative) rather than substitutes for the original work. Even though the complimentary effect may be weak, "they are unlikely to reduce to the demand for the copyrighted work; nor dcould the copyright owner command a license fee" for such use. (See Ty Inc. at 518).

In striking the balance btw derivative works and fair use, Judge Posner made sure to note that a photograph of a Beanie baby is not a substitute for the toy, but they are derivative works. The analytical complication in this case was that both books embedded the photographs in original text. For the Love of Beanie Babies was found to be infringing and distinguished from the collector's guides b/c each picture, although accompanied by a brief commentary, was the main focus of the book, and the commentary "seems distinctly secondary to the [full page] photograph." (Id. at 519). The Beanie Babies Collector's Guide, although printing a photograph of the Beanie Babie on each page, also included "the release date, the retired date, the estimated value of the Beanie Baby, and other information relevant to a collector." (Id.). Judge Posner noted that some of the text was critical of Ty, and that Ty only granted licenses to "official" guides for those books that refrained from making such comments. Finding that the collectors guide did not "recast, transform or adapt" the Beanie Babies, nor did they fall into a categories from 17 U.S.C. 101, it was not a derivative work. Therefore, Judge Posner found the guide to be much like a book review, "which is a guide to a book and which no one supposes is a derivative work. Both the book review and the collectors guide are critical and evaluative as well as purely informational; and ownership of a copyright does not confer a legal right to control public evaluation of the copyrighted work." (Id. at 521).

In the WOW case we are dealing with a fan-created game guide. Game guides typically come in two varieties: commercial (offical) and fan-created. Commercial guides usually come out simulatanously with game releases, are licensed by the game publishers and provide players w/general information about the game, tips and tricks, hidden details, item info and step-by-step walk throughs that are complimented with screen shots of the actual game. Fan-guides are similar to commercial guides in the information provided, but differ in content, presentation and distribution (and often contain criticisms). Commercial guides usually retail for anywhere between $15 and $20, whereas fan-guides are typically posted on the internet for free.

I think that in looking at the fair use issue in the WOW case, a court would find the parallel to the fan-guide at issue to be the collectors guide in Ty. Both serve the function of being a compliment to the enjoyment of the original property, contain commentary that is independent and analytical of the original and do not recast, transform or adapt the original. Therefore, the fan-guide will likely be protected under fair use. However, the twist in this case is that the plaintiff is citing fair use as his justification for being allowed to market the guides on Ebay, rather than as a defense to an infringement claim by publisher Blizzard. Blizzard is defending (and hoping to dismiss and likely counter sue) based on the DMCA. As this unfurls and further actions are filed, we will approach these issues in further posts.

Police Officers Plea Against 25 to Life: when cops

Police officers and government officials across the nation have rallied an impressive, yet unfortunate call to arms to criticize and ban the mediocre thug dud 25 to Life. Despite critical panning, the game that pits players as either gangsters or police fighting out a customizing gang war was a top seller in January 2006 and remains a top rental. On the heels of video game laws and cries for Under 18 legislation preventing sales of mature content to minors comes a more passive, yet impassioned plea: don't buy this game. The Daily Press aptly titled their March 24th article covering the issue "Public Enemy No. 1". This is just a quick report to illustrate the hysteria that set a reputation rolling in the games industry that only ripens the fringes of the First Amendment for prompt picking by counter action. So get off of your couches gamers! Put down the wireless controllers and get pollitically connected. Game politics.org is a great place to start, as is the Video Game Voters Network. We'll keep you posted.

Second Life - Second Law?

Second Life is a cross polli(gon)nation of The Sims (highly popular game that pits players in a character's ordinary simulated life doing everyday things), a chatroom, a massive multiplayer online role playing game (MMORPG) and Ebay (online marketplace). The premise is simple: create your fantasy life and live, play and exist in an evolving online world with over 100,000 other subscribers.

This is the description on the site for what Second Life is about:

"Second Life is a 3-D virtual world entirely built and owned by its residents. Since opening to the public in 2003, it has grown explosively and today is inhabited by nearly 100,000 people from around the globe.
From the moment you enter the World you’ll discover a vast digital continent, teeming with people, entertainment, experiences and opportunity. Once you’ve explored a bit, perhaps you’ll find a perfect parcel of land to build your house or business.

• You’ll also be surrounded by the Creations of your fellow residents. Because residents retain the rights to their digital creations, they can buy, sell and trade with other residents.
• The Marketplace currently supports millions of US dollars in monthly transactions. This commerce is handled with the in-world currency, the Linden dollar, which can be converted to US dollars at several thriving online currency exchanges.
• Welcome to Second Life. We look forward to seeing you in-world!"

But how does it really play out? What are interactions like? In the words of the Second Life Community Page describing the ideology of the virtual world:

"We are a global community working together to build a new online space for creativity, collaboration, commerce, and entertainment. We strive to bridge cultures and welcome diversity. We believe in free expression, compassion and tolerance as the foundation for community in this new world."

It sounds like utopia. But what about the real world? How could someone afford to sit and play in the virtual one? While Second Life provides plenty of fantasy opportunities to make virtual money, some people take this a step further and translate their cyber-jobs into actual careers. Wired.com reports about Jennifer Grinell, the "Michigan furniture delivery dispatcher turned fashion designer in cyber space" who now makes four-times the amount of real U.S. dollars that she ever did working 9 to 5 in her old job. "Grinnell isn't alone," reports Wired, "Artists and designers, landowners and currency speculators, are turning the virtual environment of Second Life into a real-world profit center." A reported $5 million actual dollars were exchanged in Second Life in January of 2006 alone (about $38 dollars per user). That means big money, and where there is big money there is law.

What about the law of Second Life? Well, for creators of content, via individual users, Second Life leaves this comfort posted on their IP page:

"Linden Lab’s Terms of Service agreement recognizes Residents’ right to retain full intellectual property protection for the digital content they create in Second Life, including avatar characters, clothing, scripts, textures, objects and designs. This right is enforceable and applicable both in-world and offline, both for non-profit and commercial ventures. You create it, you own it—and it’s yours to do with as you please."

(Hey look! Virtual/real world infringement - Chasing Amy?)

It is this type of flexability and freedom that creates opportunities for people to make their money. The IP range is broad and includes such things as cyber-movies created for online characters (and real world players) to watch, cafes to dine in (trade dress rights apply), billboards to advertise on, car designs, building architecture, and anything else you could think of. Someone could even have rights in a video game they create in the video game (my head is starting to hurt thinking about the possibilities). This raises many IP implications, including how do statutory damages apply? How does likelihood of confusion play out for cyber-infringements of real world property in the game? Who has jurisdiction in a dispute btw Second Lifers? Real world people to Second Lifers? What about virtual disputes btw Second Lifers completely w/in context of Second Life (yes, there is actually a police blotter and penalties in Second Life for getting caught for things like using guns on other citizens and the like)? Some of these issues could be covered in the Terms of Service, but those terms are not binding on parties outside of the service agreement.

There is a darker side to all of this. Cyber porn profits are also part of the free-enterprise society of Second Life. Yes, dear readers, believe it or not, you can be a simulated smut purveyor in this alternate reality. What are the laws governing this kind of trade? Not much is written on it. This leaves one to wonder if things forbiden in the real world are permitted in Second Life. One may wonder if something as reprehensible as child pornography may be tolerated in Second Life's "tolerant" community. Could there be prosecution for, (Warning - sexually explicit cyber-content in next link) cyber-kiddie porn?

In Ashcroft v. Free Speech Coalition, 535 U.S. 234 (U.S. 2002) the Supreme Court struck down a law passed by Congress that would ban virtual child pornography. The Court found that representations of child pornography should not be criminalized like actual child pornography, b/c in doing so Congress would be simultaneously criminalizing protected expression. Strict liability statutes against kiddie porn are intended to shield victims (children) from the harm of sexual predators. Simulated child porn has no direct victim, and the Court found that the freedom of expression in creating visual digital images should not be curtailed for its subject matter by hiding behind the child porn laws. The Court noted that visual depiction of teenagers engaged in sexual activity has been a common theme among acclaimed artists of modern times and should be protected for its creative social commentary elements.

Does Second Life go a step further in providing a simulated sandbox to give potential predators practice in plying their trade? I often advocate that the issues surrounding video games and interactive entertainment are unlike other IP issues, mainly b/c of the interactive nature of this content. Is a child pornography game offensive enough to trump the free expression rationale of the Court in Free Speech Coalition? Let me take this a step further. Suppose an innovative capitalist from Second Life sees an opportunity to make the sexual encounters of players more authentic. They seek a licensing grant from Immersion (click link for Immersion v. Sony discussion) for the haptic feedback technology that causes interface devices to vibrate in real time to the images and action on the screen. They market such devices to be used for sexual encounters between players/characters of Second Life. Now the bar is raised in the child porn situation. Still no actual child victims, but something more than just expression happening in conjunction with sexually explicit images of adolescents. Would this be enough to outlaw the creation of virtual child porn?

Man and Superman - why George Bernard Shaw is turning in his grave over Marvel's TM claims

IP maven Ron Coleman's blog Likelihood of Confusion reported a story from BoingBoing.net about Marvel Comics "stealing the language." Allegedly both Marvel and DC, the two largest comic book publishers in the industry claim to own the word "superhero." For years they have placed the trademark symbol next to the word in various publications and advertising. The effect of such a practice is to signify to the world that they are the source of that term, and that all use of it by others violates their ownership rights.

While it appears that neither major publisher has filed a suit in any Federal or State court over this issue yet, both have registered it with the PTO. Under the first registration, they claim ownership over the term in conjunction with costume and masquerade association. The second registration claims ownership of the term in conjunction with publications and the illustrated form. It is generally easy to register a trademark. Defending it against judicial scrutiny in the event of a challenge, however, is not.

Trademarks consist of any word or words, shape, mark or device, (sometimes even smell, color or catch phrase), which serves to identify the source of a particular brand of products or services. When a junior mark surfaces that is similar to a prior registered mark (or if a large and powerful junior user seeks to blight the use of a smaller senior user) a suit is filed for a trademark ruling. The court will then evalute the strength of the mark in conjuntion with other factors. There are typcially four degrees of in the range of marks (here listed from weakest to most solid): (1) generic; (2) descriptive; (3) suggestive; and (4) fanciful. The qualities and defensability of each are as follows:

• Generic marks - these are marks that commonly name what a product is, rather than distinguishing it as coming from a particular source. The are very weak and do not provide their owner with much protection. Examples of this are "Lipstick" or "Video Games" or "Coffee".
• Descriptive marks - these are marks providing a bit more detail in addition to saying what the thing being trademarked is (think of generic marks + adjective - the Madlibs of TM). These types of marks are usually weak and do not achieve the level of imagination necessary for a stronger level of TM protection. Examples of this are "Red Lipstick" or "Cheap Video Games" or "Hot Coffee." In each case the merely descriptive modifiers seek to make the otherwise generic mark a bit more distinguishable. Regardless, these marks are particularly weak unless they take on secondary meaning associated with the source using them. Such a shift in public perception and identification would solidify the mark against other potential users. Examples of this are International Business Machines (IBM) or Atlantic Telephone and Technology (AT&T).
• Suggestive marks - these are marks that begin to climb the ladder of solid trademark protection. They require a creativity that makes them distinctive from descriptive marks in their subtle command of the consumers attention toward a specific source. Despite the function of directing perception through specified clues attached to ordinary words, suggestive marks retain a quality akin to generic and descriptive marks. Examples of these marks are "Microsoft" (software and microchips) or "Burger King" (hamburgers) or "Roach Motel" (roach and bug traps).
• Fanciful - these are words that are coined or created for the sole purpose of being a trademark. Rather than joining recongnizable, and sometimes seemingly unrelated words into a single phrase these are original works of authorship (shameless copyright analogy plug) and there is no equivalent for them in the English language. They are the strongest of marks and accorded the most protection under law. Examples of these marks are "Verizon" (celluar phone carrier) or "Xerox" (photocopier machines) or "Exxon" (oil providers).

Even the strongest of fanciful marks, however, have an Achilles heel. The irony of trademark is that if your product or service becomes so successful that it is completely absorbed into the lexicon of everyday speech as meaning something other than a designation to the target company's product, the looming threat of genericide rears its ugly head. Genericide is the process by which a brand name becomes an ordinary noun. Examples of once-upon-trademarks are "zipper" or "granola" or "asperin." These words have entered the public domain, and their designation as marks used by a particular company are long since forgotten. There are scores of marks, however, that teeter along the genericide border. Although not purely in ordinary parlance, they are so well known that they are generally thought of as generic trademarks, providing little protection to their owners. Examples of these are "Bubble Wrap" or "Q-tips" or "Superhero".

The popular use by the general public of the term "superhero" to describe a being with extraordinary powers who abides by a moral code to use those powers to help others has become so widespread that it is hard to imagine a court upholding any suit brought to protect it. Despite the fact that the characters of Marvel and DC are likely the most recognizable "superheroes," it is arguable that the costumed crimefighter from Invincible by Image Comics or the demon-spawn do-gooder Hellboy, by Dark Horse comics should have the ability to be marketed under this avitar as well. The archetype for superheroes might seem to be Superman (perhaps the most recognizable of superheroes), but the recent ad on NJ Transit busses comparing foster care parents to superheroes. Would anyone deny them this characterization? Maybe Marvel or DC if they ever got sinister enough to file.

IP Implications of Microsoft's Do-It-Yourself Video Game Kit

An exciting rumor passed on by Kotaku alleges that Microsoft will offer a developer's kit enabling individual private users to create their own video games for PC's and XBox 360's. First reported on CNET, this is an interesting opportunity for game development, which has been criticized for recycling the same old ideas. On the legal side of things this raises apparent issues in copyright and trademark. Some of the initial questions I can think of are:

1. If put online, who owns the content? (Since the tool is likely to be a drag and drop set builder, could private users claim originality in their "creations"?)
2. Could Microsoft incorporate something in their end user licensing agreement giving them a stake in content created with their tool?
3. Could Microsoft create a right to the content by virtue of giving creators the playground to work with? - kind of reminds me of those people who build incredible things out of Legos; of course traditional Legos are too similar to basic construction materials, but modern versions come w/pre-molded licensed characters. Would Microsoft's playground be akin to modern or traditional Legos?
4. Will Microsoft provide their original content or licensed character properties, such as Master Chief from Halo or Joanna Dark from Perfect Dark Zero, for people to build new adventures around? What would be the licensing and use implications of that?
5. How would individual users protect original content they develop with the tool, and will they go to the lengths to do it?
6. On a global scale, how will international protection issues pan out for both private users and Microsoft (WIPO)?
7. Could Microsoft be held liable for any infringements of the IP of others by users of their building set?
8. Could we see more "mod controversy" like the Hot Coffee incident?
9. Does digital distribution figure into this? Ex/I create a kick ass game, decide to distribute digitally - do I owe anything to anyone and who will come after me?

These are my brainstorms for the morning. Needless to say there is a lot to consider and I'm sure that if Microsoft issues this tool we will likely need to answer some of these questions. PC gamers will look at this and say "big deal - stuff like this has been around for years - their called mods." Mods are kits or alterations made to existing PC games. While it is true that gamers have had the ability to modify PC content for years, this is the first time that a comprehensive tool would be available to the more popular gaming public at a price that most could afford, $100. Such a tool would encourage gamers to play in Microsoft's sandbox and pump freshness into an industry that is swelling exponentially, both in revenue and recycling of material (Final Fantasy XII? Can't we find a new RPG cult sensation?) In anycase, I am excited about the possibility of this product and would pick it up if it ever comes out.

Bad Vibrations: Sony fails to overturn court ruling in Dual Shock Patent Infringement

Settling IP cases can often yield better circumstances then all-out litigation. For example, a federal district court ruled that Sony's use of vibrating controllers for its Play Station 2 infringed on the patent rights of a company called Immersion (see Immersion Corp. v. Sony Computer Entm't Am., Inc., 2005 U.S. Dist. LEXIS 4781 (D. Cal. 2005)). The case was filed in 2004 and is currently in the US Court of Appeals. Losing this appeal could cost Sony a total of $90 million in damages, including attorneys fees. A ruling on the appellate brief is likely to come down within the next few months.

Choosing to fight rather than settle, Sony has backed itself into a corner. Immersion seeks to protect its patent in haptic feedback technology, which is designed to create the "dual shock" effect in video game controllers. Such an effect causes the game controller to vibrate in real time with action on the screen. This interactive feature has become somewhat of a standard interface in the industry. While other companies, such as Sony competitor Microsoft and game controller maker Mad Catz have both opted to settle out of court, Sony decided to challenge Immersion's patent and lost to the tune of millions.

Meanwhile, the results of settlement for Microsoft cost a milder sum of $26 million, almost 1/4 of the potential Sony damages. Plus, for an additional $9 million dollars, Microsoft took a 10% stake in Immersion and have since brokered favorable licensing deals to use the haptic technology. In effect, Microsoft has now become an interested party in any subsequent litigation involving Immersion. One commentator has even smartly called the Sony/Immersion case "Latest Microsoft war-by-proxy". From a settlement standpoint, Sony stands to lose a chunk of revenue that it didn't have to lose; all it would have taken was a simple shift in perspective to view Immersion as an opportunity rather than an opponant. To add insult to injury, it is reasonable to view Immersion's potential/eventual collection of $90M from Sony, as a Microsoft gain of $9 million, since they are a 10% stakeholder in the company. Were we to take this economic diffusion rationale a step further, it could even be viewed that Microsoft's settlement arrangements should be accounted as $9 million less than they actually paid (of course I wouldn't report it to the IRS as such!). To further indulge this notion, if we consider a $90 million dollar payment to Immersion as a $9 million gain to Microsoft, we could infer that Microsoft actually got a 10% stake in Immersion for free, since it cost them $9 million to acquire it. Not a bad deal. Microsoft's willingness to settle and come up with creative remedy options has put them in a position to profit from future licensing deals and lawsuits that Immersion engages in.

An arrangement such as Microsoft's could be considered a win-win solution to what could have been a costly problem. While mediation and settlment don't always work out so well, results such as Microsoft's indicate that parties should always consider creative options before committing to fighting it out. Just how can parties achieve this? In the famous ADR book Getting to Yes, there are four core principles given for brokering any Appropriate Dispute Resolution.

1. Separate the people from the problem;
2. Focus on interests rather than positions;
3. Generate a variety of options before settling on an agreement; and
4. Insist that the agreement be based on objective criteria

Separating the people from the problem consists of three basic ideas: perception among the parties, emotions and communication. In looking a the Sony and Immersion case we could reasonably infer that Sony perceived haptic response technology as a freely usable industry standard since every other controller maker seemed to use it. Then, when Immersion began to initiate suits against infringers emotional pride could have spurred Sony to be combative. With a firm wall of pride erected, neither party could communicate alternatives to litigation. The first advice I would have given Sony would have been to look at Microsoft's favorable outcome, and suggest that we consider settlement options to form a similar alliance with Immersion.

Asking parties to focus on the interests rather than positions is one of the most powerful techniques in Getting to Yes. The adversarial nature of legal disputes tends to burrow parties into seemingly inapposite stances that they refuse to reconcile. However, taking a step back from a strong adversarial position often reveals common interests between the parties. Fisher and Ury explain, "[y]our position is something you have decided upon. Your interests are what caused you to so decide." [p. 42] In my own Mediation and Settlement class at SHU, Judge Hedges always reminds us to have clients distinguish between what they want and what they need. Often this will help them realize their true interests. This is the first step in building a valuable agreement. The parties must then communicate those interests to each other and clearly explain why they have these interests.

In Sony's case, it is likely that they had an interest in keeping their game system in step with the competition and providing their customers with a truly interactive experience. They likely hoped to remain profitable and at the front of the console maker's race. Immersion's likely had an interest in establishing an industry standard of supplying haptic feedback technology for all controllers, and brokering licensing deals with controller makers to use it. Also, Immersion likely wanted to continue to develop innovative technologies that pushed the boundaries of what an interactive gaming experience could be. At the heart of both companies' interests were making money to remain profitable. The bottom line is that instead of creating building blocks toward a mutually beneficial agreement, Sony failed to even lay a foundation b/c they took an aggressive and adversarial position.

The next thing that successful negotiation focuses on is the generation of options for settlement. With everyone's interests clear and hopefully commuicated, the parties can begin to form creative alternative solutions to what seemed like insurmountable obsticles. Getting to Yes identifies four obsticles in generating creative problem solving options:

1. Premature choosing of one option blinds parties to alternatives that may actually be better for them;
2. A drive to narrow options to finding a single answer can cause undue tension and delay action on either part;
3. Defining the problem in win-lose terms assumes that only one side can "win" while the other must "lose" rather than viewing the negotiation as an opportunity to generate mutually favorable relationships; and
4. Complacency - deciding that it is up to the other party to come up with the magic answer that will solve the current problem (usually this stems from assigning blame to another party for the conflict).

To avoid the failure of generating creative solutions, parties must separate the invention process from the evaluation stage so that they do not limit themselves. By encouraging a free and informal atmosphere for brainstorming (even if some ideas seem far fetched) parties to a negotiation can generate a variety of options. The book suggests clearly distinguishing between these four tasks:

1. Stating the problem;
2. Analyzing the problem;
3. Considering general approaches; and
4. Considering specific actions.

Partial solutions should not be overlooked. After all of the various proposals have been made, the parties can evaluate the proposed solutions, starting with the most promising proposals. As they begin to narrow solutions, the proposals can be refined and improved. Much as a sculptor starts with a big lump of clay and works her way down to a carved image, parties to a negotiation must begin their solution building by starting with a lump of options and carving their way down to a finely crafted agreement.

In Sony's case, there could have been many options offered. Perhaps Sony could have named a price to pay out in damages while simultaneously taking partial ownership in the company (much like Microsoft). Sony and Immersion could have entered a licensing deal. Perhaps Immersion would have preferred Sony (as the number one console maker) to Microsoft (number two console maker) and Sony could have brokered an exclusive deal, precluding competitor Microsoft from having the haptic feedback technology for such a bargain price. Maybe Immersion could have offered to develop haptic feedback support for Sony's popular handheld PSP, thus garnering more business for Immersion and a new interactive functionality for Sony's product.

The final basic suggestion from Getting to Yes involves basing any agreement on objective criteria. This limits parties from viewing the resolution of their dispute as driven by the will of any one party. When benefits of settlement are objectively demonstrated, the willingness of parties to negotiate increases. This technique provides a sense of fundamental fairness, even in cross cultural negotiations where there may be concerns of saving face from being taken advantage of (a likely issue in the Sony case, as saving face in Japan is a major concern of corporations). Three general rules of thumb should be applied in using objective criteria:

1. Issues should be viewed as mutual searches for objective criteria - this allows for parties to feel that they are truly participating in finding a common solution. A good technique is to ask for the reasons behind suggestions. When doing so remind the other party that you are not doubting their suggestion, but that it is better for everyone if all points are clear and openly stated;
2. Keep an open mind - bumper sticker say "minds are like parachutes; they only function when open." In negotiations the same principle applies. Close minded negotiating parties will be unlikely to consider anyone else's interests other than their own; and
3. Negotiators should remain reasonable, but firm - sometimes negotiation and settlement is seen as the soft option or weak route. Negotiators and parties to a negotiation should never play into this. While negotiation works on mutual building, negotiators (and parties) should not allow themselves to be bullied by an unreasonable party. The only thing that will come from that is a one-sided deal, likely to spur resentment and a subsequent law suit.

Sony and Immersion could have looked to the industry standards in brokering a settlement agreement. They could have referred to the Microsoft or Madcatz cases, as well as their subsequent dealings after settlement.

In sum there were many things that Sony could have done to avoid their current legal predicament that would not have involved a law suit. It is likely that they will lose on appeal if it is followed through to the end. At this point they would be prudent to look into any Appellate settlement options offered by the circuit court.

Video Games: My Anti-Drug

In a push to make a better image for the video games industry, Executive Director of the SILOE Research Institute John Geoghegan has issued a 12-Step self-esteem recovery program for the gaming industry. In his excellent presentation he calls on parents to be our biggest ally in monitoring the content that their kids purchase, rent and play. With the latest wave of video game "responsibility" legislation sweeping the nation, his plea to the industry comes at an opportune time.

There is no doubt that content is getting more realistic in all respects. The next generation of video games promises to not only deliver prettier graphics, but new interface opportunities and a level of game play that surpasses previous immersion attempts. Nintendo Revolution, coming at the end of 2006 promises to bring gamers to a new level of involvement with their games that has never before been attempted. With a controller that looks more like a remote control than a game pad or joystick, Nintendo is speculating that the gamer will need to do more than button mash or stick click. The new interface uses motion capture and will require movement by the player to work. For example, swinging a sword in a Legend of Zelda game would require the player to make slashes through the air. With this type of immersion video game critics will likely call for even more restraints against our industry.

Enter Mr. Geoghegan's proposal. The essence of his 12-steps is action. It is the responsibility of this industry to maintain standards that ensure it remains free to produce quality products that tell the stories that need to be told. Here I will restate the 12-steps for the video game industry, with my own comments (in blue) next to them.

1. Promoting the use of ESRB's ratings system [I agree with this proposal. The ratings system should function much like the one currently used by the movie industry. The trouble is that many parents overlook the ratings system nor are they aware that an "M" designation, really means mature. Perhaps an insert card in all video games explaining the ratings system would be helpful to promoting it]
2. Evangelize the benefits of video games [Ideally this is a good idea, but it sounds very unsubstantiated and much like conflicting doctor testimony that 1 -2 glasses of wine per day are good for you. Unless perhaps education embraces commercial video games as a way of teaching certain skills, this might be a hard sell. I would propose using things like Hexic, (a puzzle game on Xbox Live), to teach about geometry or even better Geometry Wars (also on Xbox Live) to teach about fracticals, chaos patterns and physics. Who knows? Perhaps a class in movement based on the fluid motion capture in Fight Night Round 3?]
3. Obtain Statistical Data from Harvard and MIT think tanks [Perhaps one of the best ideas on here. Nothing speaks better to anti-legislation than good hard data from the experts. How do we get them to do it? Offer incentives from large publishers through academic contests, sponsor symposiums and extend scholarships to students working in the field. It is in the publisher's best interest to do so as it may preserve a large market segment for them that some video game legislation might preclude.]
4. New media is never embraced (ex/Mozzart) [A great observation, but not entirely persuasive. Historical arguments tend to be weak in court and legislative debate (just look at any modern Establishment Clause case).]
5. Preach moderation and good parenting [The best monitor of a child's behavior is an involved parent. Not only does the video game industry need to encourage more active and responsible parenting, but it needs to realize and capitolize on the fact that many of the "new parents" are also in their largest demographic for playing video games. Perhaps a short video spot to parents at the beginning of games or on certain online services combined with a promotion for discounts on products (through links in the add) would help this. Remember, nobody likes to be blamed for the decaying morals of youth, so make an ally rather than point the finger.]
6. There is more violence, sex and gore in TV and movies than video games (we're not as cutting edge as we think [True, but movies and TV are a totally different form of entertainment than video games. A six-year old does not pull the trigger to kill the German soldiers in a movie like Saving Private Ryan, where they do in Call of Duty 2. The interactive nature of video games makes them a totally different animal. You are no longer a spectator free to form whatever association and opinion of the material you wish. With a video game you are a participant. While opinions may still be formed about the game the graphical representation of the action that comes from a player's interface means they have to play out the scenario to advance the story. With a movie you can close your eyes at the scary part. Here is one of the biggest hurdles for our industry.]
7. Embrace the Constitutionand the right to make and market content in an unregulated manner [Up to a point. This is often the argument of content purveyors, that they have a right to free expression, unfettered and untouchable. Ideally, expression is always protected, but it can be limited, especially when disseminating it publicly and commercially. Look at the FCC w/Howard Stern or child pornography cases or even just plain obscenity in certain circumstances. Now I am not saying that video games are on the level of child porn (where even the possession of such materials is criminal), but I merely seek to illustrate that there are times when content can be regulated (and even criminalized) irrespective of the First Amendment due to the nature of the material. To me this is one of the most fascinating aspects of video game legislation and free expression, and likely outside of the scope of this post (hell it could be a whole book).]
8. The need to lobby and make political donations [Absolutely. Sign me up! If we had a lobbying organization half as efficient as the NRA many of the fears that are being stirred up by video game litigation would be kept at bay. (BTW I am a card carrying member of the NRA)
9. Non-video game Spokespeople (like Spielberg) [As Hollywood embraces the video game this should see some more support. I think it would be helpful to see political figures also support the video game. This ties in to the lobby suggestion of Step 8. If we could land Oprah for our support we'd be golden!]
10. Creativity in games like Katamari and Guitar Hero [Creativity period would be nice. It seems that games have gotten stale as everything today is a port of a shooter or a sequal blockbuster franchise. As the market for games grows and the demographic changes more opportunities should be sought out. Just remember, Nintendogs (a game where you own virtual dogs) sold 2 million copies for the Nintendo DS so far)]
11. Statistical perspectives - M rated games are only a slice of what is out there [but they also tend to make the biggest splash publicly. Why aren't games like The Sims or Ratchet and Clank featured on shows like Good Morning America or others (MTV did a great spot on The Sims but how many parents saw it)? This kind of exposure, which could be granted through media relations btw video game publishers and those networks could make it happen. It would widen the demographic, help to raise awareness and accomplish many of the goals sought out by these steps.
12. (Marketing people) don't be ashamed to say you like video games [let's face it - for all the progress, video games still carry a stigma of dorkiness. This will subside in time, as it did for the computer, as our games get more sophisticated and the industry revenue grows.]

These comments are my general thoughts about John Geoghegan 12-steps for video game marketing. I think that if the image of video games changes (as it already is) then many of the legal issues and legislative challenges will also evolve. One of the best things the industry can do is show how video games can help kids avoid other dangers such as drugs, gangs and dangerous sex. Video games have future whether legislators like it or not. It is the scope and role that they will play in that future that remains TBD.

The Law of In Game Advertising

(Original image from: In Game Advertising) (aliens and Big Macs, yum!)

In game advertising is shaping up to be big business. Product placement in television shows and movies has already firmly secured its place as a huge revenue generator to circumvent channel surfing or late comers to the movie theater. With the video game industry topping sales of $9 Billion per year and growing, the field is ripe for the product purveyors.

Enthusiasm aside, in game advertising is not all wine and roses. On the consumer side, there are concerns of privacy. The interactive nature of video games and the identity and data comittment of gamers to such services as XBox Live or World of Warcraft MMORPG-type games, raises the possibility of abusive advertising practices, data sharing and even identity theft. Also, traditional advertising law issues involving legal concerns such as antitrust, fair competition, communications and technology are raised. At the core of all advertising law (in game and out) is intellectual property law, particularly in the use of trademarks and copyrights.

A good place to start in shaping the doctrine of in game advertising is to look at the basics of advertising law. But the video game industry is unlike other advertising media. In traditional television advertising, the advertiser pays an exorbitant per second price to be broadcast during a program. For internet advertising the advertiser has more options, but faces the annoyance factor. Many web surfers click through ads or disable them when possible, and these attempts to reach the public are often looked at as a nuisance rather than a consumer net. The in-game ad, however, has the power to become a viable avenue that makes products memorable, functional and usable.


Many ads in games are often felt to be a natural extension of the landscape. The product placement that is done well is noticed, but not obtrusive. A good example is Tom Clancy's Splinter Cell, by Ubi Soft, that has Sony Ericson phones as an in-game advertiser. This spy game involves using many high-tech gadgets, and Sam Fisher (the main character) can always depend on his trusty communicator, emblazoned with the word Ericson across it. This ad works (see to the right) and feels much more natural than ads for McDonald's in an alien shooter game or Starbucks in a 1930's gangster game (see both above).

A company that wants to place an ad in a game pays a hefty fee ($2 million split btw Nokia, Chrysler and Motorolla to advertise in Tony Hawk's American Wasteland), but the life of the ad is not tied to programming spots and can persist for much longer than other ad campaigns. Game publishers like it, b/c such advertising can offset the cost of production by as much as 10%. Also, the consumer interacts with the advertiser's products or signage in a way that doesn't happen with TV or print. A player can be outfitted in a manufacturer's clothes such as Everlast in Fight Night Round 3. The possibilities are endless and the liabilities are real.

(Original image from: The Consumerist - Shoppers Bite Back)

Certain online games are susceptible to third parties placing ads in the game w/o the game publisher's knowledge or consent. Certain MMORPGs create online worlds that can be affected by the gamer, while other publishers chose to put the online game hosting responsibilities on the private users, rather than control it themselves. Publisher Valve of the popular online special ops shooter Counter Strike found that a third party, unrelated to Valve, brokered a deal to place Subway Sandwich ads in the game. This violated Valve's IP and created a host of legal issues that were likely unconsidered prior to this happening.

This is just one example of the types of legal issues that will emerge as the industry grows and the advertising becomes more rampant. In future posts I would like to develop the doctrine of in-game advertising and find a method for analyzing these issue.

This Blog is Not a Spam Blog!!!

While I commend Blogger on its attempts to control spam through the use of their algorithim software and word verification procedures, I am a bit offended that I face the possibility of losing over two months of hard work and dedication (not to mention recognition that I have been building in my chosen field).

I write this in the hopes that the people "reviewing my blog today" will see it and realize that I do all my linking for the purpose of illustrating points that I am posting about. Please do not delete all of my hard work.

Walmart T-shirts and The Right to Criticize

Ran across an article on IP Frontline discussing Wal-Mart's cease and desist campaign against a computer store owner named Charles Smith. Smith has created T-shirts criticising Walmart that read: "I (heart) WAL*OCAUST. They have family values and their alcohol, tobacco and firearms are 20% off". Walmart said that it was required to protect its trademark. I guess they are going under the theory of tarnishment - (the article didn't specify).

In order to bring a trademark tarnishment cause of action, the owner must first show dilution of their mark under federal law. The threshold question in showing dilution is whether the mark is a "famous mark". To determine whether a mark is famous, a court will consider the following factors: "(1) the degree of inherent or acquired distinctiveness; (2) the duration and extent of use; (3) the amount of advertising and publicity; (4) the geographic extent of the market; (5) the channels of trade; (6) the degree of recognition in trading areas; (7) any use of similar marks by third parties; (8) whether the mark is registered 15 U.S.C. § 1125(c) that a trademark owner may take against a person using their mark" (from Overview of Trademark Law). The Harvard site lists Kodak, Xerox and Exxon as famous marks. It is almost obvious that Walmart is a famous mark as well. It is distinctive as a large retailer with low prices that has been in use for over 30 years. Geographically, the Walmart empire has been dominating the American landscape (a likely inspiration for Mr. Smith's t-shirt), and has received much publicity and criticism as a destroyer of American Main Street USA. It is widely recognized as a retail giant among others such as Target and K-Mart (a similar mark w/the use of a "Mart" conjunction), and it is registered under section 1125(c). Therefore Walmart is a famous mark.

Since the pre-requisites of dilution are met, Walmart can now bring an action against any use of the mark that dilutes the distinctive quality of it by either blurring or tarnishment. Blurring is not really an issue here, but tarnishment is the more likely candidate. Tarnishment occurs when the mark is cast in an unflattering light, usually connected with "inferior or unseemly products or services," (see Toys "R" Us v. Akkaoui ), and the inference is that the plaintiff's mark will suffer from the negative association.


The defenses to a tarnishment claim could include fair use, nominative use or parody. In a case such as this it is likely that a parody defense would be raised, along with the free speech concerns the defedant will promote as needing protection. Parodies of trademarks may be protected if they are not too closely tied to commercial use. Courts have applied the parody doctrine in different ways. Some of them look at the likelihood of confusion, while others balance the likelihood of confusion with the First Amendment added on to the Polaroid factors. Other courts find that First Amendment law trumps trademark law, but generally the trend has been to evaluate the parody - and courts tend to be more sympathetic to parodies w/o a commercial aim. So, as I have blogged about before, High Society magazine's pornographic parody of the L.L. Bean catalogue was found permissible, while posters with the Coca-cola ad altered to say "Enjoy Cocaine" were found to violate Coke's rights. I think that Mr. Smith's T-shirts are likely to be compared to the L.L. Bean parody, b/c they are an original work that only calls up the image of Walmart (by the use of the word "Wal*ocaust") to criticize social ills that Mr. Smith would like to address. Also the practice of Wal*obashing (please don't sue me too!) is a common one in America (as evidenced by the many books and articles written on the subject - see link above).

The only problem that I have with my analysis above is that for federal trademark infringement likelihood of confusion is not a necessary test. It seems to me then that the majority of courts that factor First Amendment into a likelihood of confusion analysis for a parody/dilution action are using the wrong kind of logic. Is there another doctrine for dilution cases rather than pulling out the First Amendment trump card? Is it dangerous to so?

Is the Death Nell Sounding for the Game Disc?

(Original image from: Oxford Museum of Natural History)

I blogged just the other day about the Tom the Video game lawyer's article about the benefits of digital media distribution in video games. Today I happily follow that post up with a discussion of this article from GI.biz discussing the possible extinction that looms for physical video game discs. In the article, Rob Fahey says:

"This isn't a minor upheaval in the business of getting content to consumers, it is a fundamental change to how that entire value chain works. Certainly, there are those who will argue that physical product is going to be important for decades until they're blue in the face, but it can be argued that this is simply because they don't understand the sheer scale of the change that this industry is about to witness."

As I write this, I am waiting for a demo to download via XBox Live. It is a 440.89 MB, fully playable version of The Outfit, set to hit shelves in three weeks. It is a game that I wouldn't have thought to buy, but thanks to digital distribution and the ease at which I can "try before I buy," I will likely consider a product I would not have bought before. This same strategy worked with Fight Night Round Three, a game I purchased the day it came out b/c I was so impressed with the online demo. Imagine how many more games will be bought in this fashion when we don't have to trudge out of of our cozy homes on launch day of a title, to fight a crowd at the store and face the prospect of having the game sold out b/c it wasn't reserved it at Game Stop or EB Games. I'll go through this antiquated exercise tomorrow, when I'll probably have to call about 3 or 4 different stores trying to find a copy of the highlly anticipated Ghost Recon Advanced War Fighter (and I still might not get a copy).

(Original image from: UB Simulation & Digital Entertainment)

The intellectual property point is this: when we stop fearing change and embrace the inveitable turning tides of technology, we see that new markets are created for the owners of that IP. Customers can be reached that would not have been reached before. Sure some people will still want to buy the physical discs themselves and relish the experience of "getting their hands on" the new game. But the future looks ripe for a world where there are less boundaries, more possibilities and bigger audiences. What does this mean for attorneys and the legal profession? A whole new body of law involving digital rights that touches commercial law (is a digital download a good under the UCC?), copyright, trademark (I'm a huge fan of in game product placement), patent, and more. There is so much to learn and discover, and I am excited to be a part of it.

Will EA Sports Lose Its Exclusive Licensing Deal w/NFL?

There are rumors that sports game mega-house EA Sports could be in jeopardy of losing their exclusive license with the NFL. Two years ago the video game publisher knocked the competition out of the box by brokering a five year exclusive license deal with the NFL so that their Madden series would be the only football video game permitted to use the team properties or likenesses of the players. This effectively precluded use of the official teams by such publishers as Take Two Interactive, whose NFL 2K5 was a refreshing and well made video game in the football genere.

It seems that problems between the NFL and the players league could spell trouble for EA. The deadline to extend the collective bargaining agreement ("CBA") which allowed for EA to secure its exclusive property has been extended to tomorrow Monday March 6th. At present there were disagreements about salary caps and player cuts.

Digital Distribution of Videogames

(Original image from: Gamasutra)

There is an article by videogame lawyer Thomas H. Buscaglia called: Game Law: The Good News About Digital Distribution. It touts the merits of this new delivery method of games to consumers. One of his main points is that digital distribution has an advantage over retail publishing b/c IP ownership issues are resolved in favor of the creators. The current trend is that digital distributors take no IP interest in the games they deliver.

He cites XBox Live Arcade as an example of the move towards digital distribution by the mainstream. XBox Live Arcade basically delivers very simple and small games to XBox Live subscribers (usually for a fee, but sometimes for free). It has been very popular as gamers wait for the bigger releases to hit stores. Another example of the move towards digital distribution is Game Tap. This is an online monthly pay service that allows users to access hundreds of classic and contemporary games from their PC. Likewise the current trend of developing games for cellphone download has created yet another digital distribution outlet and industry that Cingular wireless has tried to dominate.

So what does all of this mean for the owners of the IP of these digitally distributed games? According to Tom, the videogame lawyer, there are many incentives. For one thing, he says that the developer's royalties can be two to four times greater than the traditional publishing deal; "[t]his means you can sell fewer units and get by and if you get a hit, you get much more return, even at a significantly lower price point. Also, in most cases the developer retains the IP. This help builds long term value in the studio, something you cannot get otherwise unless you develop some sort of patentable technology or other licensable tools and technology while your making your game." Also he says that it opens the door to creative funding. A lot of games do not get made b/c of the strings that big publishers attach to the funding they provide for videogame development.

A parallel to this arrangement can be seen in print publishing. Often the royalty provided to an author ranges from 12 to 15% of net profits. As the publisher takes the financial risk, they get the biggest financial chunk. We currently see alternatives to traditional publishing popping up, via digitial distribution and even digital publishing arrangements. Sites like Lulu publishing allow creators to have their books published and via a fee arrangment. The distribution is more creator-generated, but the similarity in allow access to publishing shows that there is a trend towards widening the circle of published works and allowing more creator control in the process.

(Original image from: AnimeXplosion)

Finally, Tom says that the most important facet of digital distribution is that it "means more ways to get your games directly to the players with as little 'middle man' action as possible ... higher royalties, you get to keep your IP and direct access to your user base. " Time will tell whether this is a good thing that will spur creative and risky projects that might not otherwise get completed, or if we are just bombarded with lots of crappy titles.