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LGJ: The PRO-IP Act and Gaming

Mark Methenitis — 2008-10-10T08:00:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:

Congress has recently passed the Prioritizing Resources and Organization for Intellectual Property Act (the "PRO-IP Act"). While it has not been signed by the President yet, it seems as it's only a matter of time before the Act has the force of law. The PRO-IP Act does three things, generally: 1) it increases the penalties for infringement by expanding what is considered a 'work;' 2) it broadens the ability of the government to permanently seize goods; and 3) it creates an Intellectual Property Enforcement Coordinator, a new cabinet position whose sole job is to increase intellectual property enforcement. In short, it's a load of bad news for consumers, but really, it's not that much good news for many intellectual property owners either, as I'll explain. Because this act is so broad and will be applied in so many ways, I'm actually writing two articles about it. Here on Joystiq, I will be covering the PRO-IP Act as it relates to gaming while on Law of the Game, my blog, I've (shameless plug) posted an article discussing the act as it applies to other media.

I consider myself to be in a pretty neutral position with respect to weighing the pros and cons of various IP regulations. I'm a consumer, I represent producers, and as a writer, I'm a producer myself. Being in that position, I've always admired the game industry for typically not being in favor of or enforcing the most draconian regulations to their fullest extent. In that respect, many game companies and gamers seem to understand that their relationship is symbiotic. Without one, the other would not be able to function. And with that understanding, the majority of gamers and game producers see the need for some intellectual property protection but also see the need for reasonable protection to balance the interests of the producer and consumer. And in that respect, the PRO-IP Act starts to shift the balance in ways that aren't necessarily desirable for either, but are certainly not desirable to the consumer.

The impact to the consumer is obvious. The simple fact of the matter is that I doubt there is a consumer anywhere in the US who has never downloaded or otherwise acquired a single thing in violation of someone's copyright. What this now means is that, for consumers, more or less anything that has come into contact with that pirated item can be seized by the government. The statute is worded in such a broad manner that it would be theoretically possible to seize all of the computers in a home or office if one pirated MP3 or piece of software was present. More importantly, the penalties have changed so that individual elements are now imputed as works. For example, before it was considered to be downloading a 'work' to download an entire CD. Now, each individual track would be considered a 'work,' so one CD is now ten or more times the penalty that it once was. Similarly, if you copied a magazine with 100 photographs in it, you would now be liable for each copywritten photograph and article separately.

"The piracy of a game could now also potentially be considered the piracy of the licensed music."

It's this clause that actually presents a potential problem for the producers of mixed media works, like games. It will be up to the courts to draw the appropriate lines, but based on this new definition of 'works,' a game with a licensed soundtrack may be multiple works, and older games of this nature likely haven't contractually dealt with this idea in a way to account for the PRO-IP Act. For example, let's say someone is pirating Madden 2002. It might not be worth EA's time or trouble to go after those pirates, since their real concern at this point is Madden 2009, but the piracy of that game could now also potentially be considered the piracy of that music. It's unclear whether the musicians would be able to pursue this separately or whether they would have to work with EA as the owner of the overall 'work.' Assuming the action has to be brought by EA on their behalf based on the license, it's possible EA could be sued for failing to do so. By expanding the definition of a 'work,' a quagmire has been created that will impact many producers, at least until the court irons out the default rignts in these cases.

This could also take the publicity decisions out of the hands of the game publishers. Typically, the game companies haven't used the tactic of suing 8 year old Timmy who downloaded one ROM of an NES game. However, depending on who has the power to sue based on the noted issue above, it's possible the RIAA could start forcing the hand of game developers when licensed music is involved depending on how the license is drafted or depending on how the court interprets who has what rights under the PRO-IP Act.

"I hesitate to think what might happen if a machinima is made from a game using the licensed soundtrack."

As you can imagine, this could also cause all sorts of problems in the Machinima world. As you keep moving downstream and adding elements, more and more people have potential interest in enforcement. I hesitate to think what might happen if a machinima is made from a game using the licensed soundtrack in absence of a Machinima Rule from the developer. Not only could the machinima maker be looking at issues from both the game developer and the musicians, but so could anyone who downloads the video.

Of course, it's entirely possible the courts will substantially limit what is written into the act, making most or all of these points moot. In that case, we'd be more or less where we are today, except with higher potential penalties for piracy.

I've always admired the game industry for its generally reasonable stance on piracy, despite the fact that demos and readily available game rentals make piracy nearly inexcusable. For their part, they have largely followed the strategy that I've long believed provides the best answer to piracy: Pursue the large scale distributors of pirated material, not your own customers. That strategy, in general, keeps the IP balance of rights in check. The PRO-IP Act hasn't been signed by the President yet, and may very well be ignored until the new President is sworn into office in January.

Mark Methenitis is the Editor in Chief of the Law of the Game blog, which discusses legal issues in video games. Mr. Methenitis is also a licensed attorney in the state of Texas with The Vernon Law Group, PLLC and a member of the Texas Bar Assoc., American Bar Assoc., and the International Game Developers Assoc. Opinions expressed in this column are his own. Reach him at: lawofthegame [AAT] gmail [DAWT] com.

The content of this blog article is not legal advice. It only constitutes commentary on legal issues, and is for educational and informational purposes only. Reading this blog, replying to its posts, or any other interaction on this site does not create an attorney-client privilege between you and the author. The opinions expressed on this site are not the opinions of AOL LLC., Weblogs, Inc., Joystiq.com, or The Vernon Law Group, PLLC. As with any legal issue that may confront you in a particular situation, you should always consult a qualified attorney familiar with the laws in your state.

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Counting Rupees: Feeling used

Jeff Engel — 2008-10-07T19:00:00+00:00

Filed under: Features, Business

Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

Bungie audio director Marty O'Donnell recently made some controversial remarks regarding used game sales. To quote, "It seems to me that the folks who create and publish a game shouldn't stop receiving income from further sales." Of course, this seems laughable to all of us who have bought and sold used games for years. It's my property, I can do what I want with it, right? This doesn't have any place in the industry, does it?

Legally, perhaps not. According to the first sale doctrine in copyright law, copyright holders are expected "to obtain all financial benefit for the article or product embodying the intellectual property at the time of the sale, and prohibits placing limitations on purchased items." This basically means that, once you purchase an item, the intellectual property cannot prevent you from doing whatever you want with the item so long as you don't violate copyright (by, say, copying it and then selling it -- otherwise known as pirating).

"GameStop relies on you for its supply."

But, of course, herein lies the problem. A used game sale really is not much better for an intellectual property owner than a pirated game. A used game sold at GameStop provides absolutely no monetary benefit to the game's creators, but a significantly higher profit margin to GameStop than a new game sale. This is, unfortunately, why GameStop employees are always badgering you to trade in your games. Rather than calling up its supplier for more new games from the publisher, GameStop relies on you for its supply. It's a strategy that's been working quite well for the company, to the tune of $1.8 billion in sales in the last quarter. It has to be painful for a publisher and developer to watch a good portion of that money go to used sales instead of more orders to replenish new stock. Doesn't the publisher and developer deserve a piece of that pie?

There's not a lot of precedence for something like this. Certainly, other forms of media don't currently have equivalents. Buying a used book or DVD doesn't send money back to the publisher and creator either. However, the movie rental industry, or at least Blockbuster, does provide royalties to movie studios. This is despite the fact that, by law, Blockbuster does not have to provide any royalties to studios. Instead, Blockbuster has contracted with movie studios to give them extremely cheap movies in exchange for a cut of the rental fees. This is obviously a bit different from selling used games, as the publishers don't provide the inventory (customers do), but something similar could potentially work. For instance, game publishers could give a discount to retailers like GameStop for new games in exchange for some royalties from resold used games. This would increase the margin on new games, which are, of course, necessary to sell (whether through GameStop or elsewhere) in order to create GameStop's preferred wares: used games. While publisher's would love this, it's doubtful this would be an appealing deal for GameStop.

"There's no inherent value in buying a new game over the same used game."

Would something like this be good for the industry, though? Gamers are finicky about this, as they like a good deal, but also like to reward developers (and publishers) for creating something that they like. More money for the developers would also mean more opportunities for these studios to create new games and take more chances. Unfortunately, cheaper games and rewarding developers are basically in direct opposition to each other, since you'll save some money buying used games, but then you won't be rewarding the companies that created them. The problem is that, for the most part, there's no inherent value in buying a new game over the same used game, assuming it's in relatively decent condition. Both of them will provide the exact same experience, as they're both the same data on a disc. So the question becomes, if you're paying for the same experience, shouldn't the company that created that experience be rewarded for each person that they share that experience with? And since GameStop's primary business is to sell used games, shouldn't the content creators that it relies on receive some of the benefit of the secondhand business?

If a system like this were to be implemented, it's quite possible that GameStop would respond by simply raising the prices of used games to cover royalties. Of course, this is already becoming a moot point, since game companies have already figured out a way around retailers and used game sales: user accounts and downloadable games. On the PC, Valve, for instance, requires that its games be tied to a Steam account when installed. While this lets owners play their games on any computer that they can log in to Steam with, reselling the game would be worthless since the CD key has already been registered to another account. Additionally, downloadable games both on consoles and PCs are obviously non-transferable. Sony is already selling full-sized games on PSN, and it's safe to assume that digital distribuition will continue to grow on PlayStation 3 and expand on futute consoles. But just in case it doesn't, Sony did register a handy, little patent that, in a nutshell, prevents games from being played on more than one console. Didn't think that could happen? It already has.

As co-editors of A Link To The Future, Geoff and Jeff like to discuss, among many other topics, the business aspects of gaming. Game companies often make decisions that on their face appear baffling, or even infuriating, to many gamers. Yet when you think hard about them from the company's perspective, many other decisions are eminently sensible, or at least appeared to be so based on the conditions at the time those choices were made. Our goal with this column is to start a conversation about just those topics. While neither Geoff nor Jeff are employed in the game industry, they do have professional backgrounds that are relevant to the discussion. More to the point, they don't claim to have all the answers -- but this is a conversation worth having. You can reach them at

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LGJ: Mo' Madden madness

Mark Methenitis — 2008-10-03T18:30:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:

New developments in the Madden franchise's ongoing legal troubles have provided a unique opportunity to talk about the so-called "right of publicity" that has become an issue with retired NFL players. As reported by GamePolitics, there are allegedly documents showing that EA altered aspects of Madden to keep from having to pay the NFL Player's Association (NFLPA), which kept the NFLPA from having to pay all of the former NFL players that appear in the game. The lawsuit is by the players toward the NFLPA to recover royalties for the use of their likenesses. The idea that EA would have to pay the NFLPA and the NFLPA would have to pay the players for the use of retired players likenesses rests in the "right of publicity."

The right of publicity is rooted in the concept of privacy, and has evolved in part from the ideas of libel, slander, and "passing off," which is often associated with a trademark-like protection. The basic concept is that you alone have the right to profit from the use of your likeness, which may include your name, physical appearance, voice, personality or other defining characteristics. So, if Nintendo wanted to make "Super Mark-io Brothers" with me as the main character, then they would have to pay me royalties. But it gets a lot deeper than that.

Before we get into too many details, I want to point out that the causes of action (more commonly referred to as potential lawsuits) that fall under the "right of publicity" umbrella are all state-level actions. What that means in the US is that there's no common law from state to state, so I'll be speaking generally with some occasional examples from specific jurisdictions.

So, when someone's likeness is used, a royalty has to be paid. This is pretty obvious in situations like the Madden franchise, where Mr. Madden himself is paid for the use of his name, likeness, and voice. However, the right to publicity can extend well past the obvious. In Midler v. Ford, Bette Midler sued when Ford used someone who sounded like her for music in a commercial. However, there are two cases which take things much further than that. Both cases are from California, and they're colloquially known as the "robot cases." Specifically, they are White v. Samsung and Wendt v. Host International.

"Could the use of Leeroy Jenkins be protected under right of publicity?"

In the White case, Samsung made an ad with a futuristic looking Wheel of Fortune like set where a robot was pointing at a letter tile on a wall. Vanna White sued successfully, with the decision holding that that shot alone was enough to reference Vanna White and her likeness. The Wendt case is about Host International looking to open a series of Cheers themed bars. In those bars, they wanted to have two animatronic characters on stools at the bar saying lines similar to those Cliff and Norm said on the show. The characters would not look like Cliff and Norm, nor would they be using actual lines from the show. However, the court felt that this was still enough to infringe on the rights of publicity for Wendt and Ratzenberger. These cases show that the line for what is allowable can be much further out than one would expect.

However, the right of publicity is not an absolute right. It can be preempted by other rights, primarily copyright and contractual agreement. For example, if I were a famous singer, but the copyright to all of my songs was owned by someone else, then I couldn't use the right of publicity to keep the copyright owner from using those songs in advertisements. Similarly, many of the professional sports leagues address the right of publicity in certain circumstances, allowing the league to use the athlete's likeness and removing the ability of the athlete to object.

So, based on all of this, what's the likely result in the Madden case? Well, I would think that if the alleged documents are real and authentic, then things don't look good for the NFLPA. However, if those documents aren't what they seem, then the retired players may not have much to stand on. Why? There are only so many ways to present players in a football game, and so if the players' likenesses and numbers aren't used in the specific positions, I'm not sure EA is profiting from the likenesses, which means that the NFLPA isn't entitled to a royalty. It's hard to tie the numeric values assigned to player abilities to specific players or their likenesses, so absent something identifiable like a face, voice, or number at a specific position for a specific year's team, I'm not sure there's an actual case. Some of this may still rest on specifics related to the contracts between the players and the NFLPA, but that's my opinion based on the facts available.

Of course, this could be a bigger issue as more and more "real people" make their way into gaming. It would be interesting to see the result of newer, recognizable online personas having their "publicity" used in a game without permission. For example, could the use of Leeroy Jenkins be protected under right of publicity? It's definitely something interesting to think about, and it may become a real issue in the not too distant future.

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Law of the Game on Joystiq: Rare footage of the DRM in its natural habitat

Mark Methenitis — 2008-09-19T19:00:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

Digital Rights Management (or "DRM" for short) is back in the news in a big way with the recent Spore fiasco. DRM, much like a Spore creature, is a quirky animal, with legs of technology, a torso of law, and arms of business, but it doesn't always have a head on its shoulders. But like so many other things that potentially put consumers and producers at odds, the viewpoints on DRM are extremely polarized with almost no middle ground. So this week I wanted to take a look at DRM, why it exists from a legal and economic viewpoint, and most importantly, try to get hold of that slippery middle ground.

Thinking back to the days of the floppy disk, piracy wasn't yet an overwhelming concern. Yes, it was easy to bypass the write protection on a floppy, but without an internet, you had to find someone who had an existing copy in real life. For the majority of the population, this wasn't an option. Then we entered the initial CD-ROM phase, and at the time, the CD-ROM was a pretty secure media. The idea of a low cost home CD burner and blank CDs were years off, and the Internet was still in its infancy, so CDs were pretty safe from piracy well into the 1990s. It was the proliferation of CD burners, high speed internet connections, and peer to peer file sharing (Hi Napster!) that made software license security a big issue for all software companies in the late 1990s, and things haven't slowed down since.

It's those factors which gave rise to DRM, in addition to the simple fact that, unlike analog media, digital copies don't lose quality over time. For example, if you re-record an audio CD to a cassette tape, the quality degrades. But when you copy a digital file, the secondary file has no quality loss from the first. So, not only were game developers looking for an easier way to protect their products, but other media developers were as well. And by "protect," we've hit the legal element: DRM is essentially about an easy way for developers to protect their intellectual properties.

DRM is a simple alternative to traditional protection of intellectual property. If your only concern is to protect your intellectual property, you can go the traditional route and have an attorney write cease and desist letters and file lawsuits (assuming you can even track down the culprits), or you can create some mechanism by which to either discourage piracy, like a DRM system. Not that use of a DRM system precludes the use of the traditional legal avenues, but the idea is that it can substantially reduce the need for them because fewer people will either be able to or be willing to go through the trouble to pirate the product.

Of course, companies who opt for DRM can be walking a very fine line. I'm sure many people remember debacles like Sony Rootkit, where damages caused by the DRM could leave the publisher liable. Overly burdensome DRM can lead to bad press and lost sales. And, of course, there are a number of shortcomings to DRM technologies.

"The less piracy, the less need for over-the-top DRM."

It's worth mentioning here that piracy can affect both copyright and trademark. Copyright is a pretty clear cut issue: those who own the copyright for a given product have the right to license and distribute as they see fit. What's not as obvious is the potential trademark impact in this kind of scenario. It can actually be damaging to a trademark if a pirated version of a software gets out that includes a major virus or bug as a result of the cracking. When those kind of things make the news or are spread on message boards, it can actually hurt the brand.

The history of DRM and piracy has led to a fairly polarized stance on the matter, with one end demanding a completely DRM-free world and the other looking to lock down media in every conceivable way. Either of those options is a win-lose, with consumers on one end and content creators and publishers on the other. More importantly, to be realistic, neither option is really feasible, as a completely secure DRM system has never been created and a DRM-free world would put an enormous burden on the publisher, one that would likely increase cost to the consumer.

So, is there a middle ground solution? If there were a simple one, it would likely already be in place. Besides hoping for DRM that manages licenses effectively without burdening the consumer, it's possible a completely revised business model may emerge. Digital distribution is already hinting at one kind of model, whereby your licenses are linked to your account and/or system, but it's still not yet a flawless system.

In the meantime, both consumers and producers can try to make the system we have work to the best of its ability. I know it's tiresome to hear, but consumers shouldn't pirate content. The less piracy there is, the less need for over-the-top DRM solutions there is. And producers can combine a reasonable DRM solution with efforts to curb those who actively distribute large volumes of pirated media. After all, if the biggest sources aren't there, then the rate of piracy will go down. Hopefully there will be a time in the future where producers and consumers can coexist in some sort of middle ground where everyone is satisfied, but it may take some innovation in order to get to that point.

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Law of the Game on Joystiq: Tournamentality

Mark Methenitis — 2008-09-12T20:00:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

I get a surprising number of questions about video game tournaments and whether those constitute gambling. So today I'm going to discuss the matter specifically. I want to state up front that because this varies from state to state, please consult an attorney before attempting to set up a tournament. If you can't figure out what the laws in your state are, check with the state's Attorney General. Even if you have seen other tournaments in your area, you need to know what rules you have to play by to host your own. It's far better to be cautious than to be in jail. You've been warned. Now, back to our discussion...

Professional sports are legal and gambling (in general) is not in the United States. Video games, however, seem to be consistently stuck between the two. Part of this is due to video games being, in relative terms, the new kid on the block. And part of this comes from the structure of the tournaments themselves. The last bit comes from the skill-chance continuum that games are placed on. But let's take each of these issues one at a time.
In an ideal world, we'd have a true gaming league and none of this would be an issue. However, since games are relatively new, no such league has risen to the level of the sports leagues that exist. The league model has many issues, largely with anti-trust, but it doesn't face a gambling issue. The potential gambling issue comes from the typical tournament model that works well for a "new" sport: pay to play.

That's not to say there aren't other models. Free tournaments with donated prizes would likely be governed like giveaways and sweepstakes rather than gambling, and those are legal most everywhere. Pay-to-play charity events with token prizes are governed under an entirely different set of rules, and while more allowable, have to follow those rules to avoid being accidentally labeled gambling. Charity poker tournaments and charity casino nights face a similar problem.

"The American attitude is it's better to be able to bet on something involving skill than on chance."

But it's this pay-to-play model, where the winnings are based on the actual entry fees, that can become problematic. Let's be clear: If there's outside wagering on the tournament, there's no question that's illegal in most places, just like betting on sporting events or horse races. It all has to do with what are considered the three elements of gambling: consideration, chance, and prize. Consideration means you're giving up something of value. Your consideration is for a chance to win a prize. The American attitude toward wagering in this way tends to be: it's better to be able to bet on your own performance (but only that you'll win) than on someone else's performance; and it's better to be able to bet on something involving skill than on chance.

So, this typically comes down to the local opinion on video games. There are very few pure skill games in the video game arena, as even the concept of random re-spawns can introduce an element of chance. However, by and large video games have more skill elements than they do chance ones. I have yet to see a district draw any lines within the "video game" realm, making tournaments of one game type legal and another not legal, but it's entirely possible.

Again, the first rule is to check with local authorities before hosting a tournament. Depending on the type of tournament you want to hold, different rules may apply. I should also mention that online tournaments can also bring federal law in the US into play, and international law into play if you aren't thoroughly screening the players. Until the point that there's some sort of uniform federal gambling regulation (other than an outright ban), I would use far more caution in organizing an online tournament for a prize than I would with a local one.

However, this isn't always the case. The most analogous sport to professional gaming is, in my mind, golf. In fact, in solo games or team games, it would be pretty easy to create a professional league that mirrors the PGA. (For the unfamiliar, the PGA in a nutshell: each player is an "independent contractor" subject to a series of restrictions, but also eligible for some group benefits, such as the pension fund. Your ability to participate is largely governed by your performance. You either play in or out. Open events allow outsiders to play too, but there is a registration fee. The PGA pays out winners based on its revenues.) The difficulty is a game league has to rise to the level of having enough revenue to support this model. After all, the PGA pays a hefty sum to tournament winners. If someone can find a marketable model for televising gaming matches that draws in viewers, then gaming would certainly graduate to the "major leagues." In fact, it seems to be more of a matter of when than if.

So, what is the downside of tournament violating laws? Well, fines and jail time are the typical result of illegal gambling. It varies from state to state whether the organizers or the organizers and players can be held liable for the activity. If you frequently play in pay-to-play tournaments, it might be in your best interest to check your local laws on player liability for gambling. Ideally, someday someone will make an online resource that simplifies researching this issue in your state, but for now, just play it safe.

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Law of the Game on Joystiq: Trademark infringement

Mark Methenitis — 2008-09-04T22:00:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

There's been a lot of talk about copyright piracy lately, largely from a few high profile convictions. What we've been short on lately is some high profile trademark infringement suits, but trademark piracy in the gaming world can and has been as rampant as copyright piracy. In fact, the concept of what all constitutes trademark infringement isn't even as well known as copyright infringement. Everyone knows about Napster and warez, but these are all copyright issues. So I'd like to take some time to talk about trademark infringement and piracy.

We've been through the basics of trademark before, and that's a good place to start if you're a complete trademark neophyte. However, with a basic understanding of what is trademarked, it's easy to see the areas where trademarks can be infringed. Basic infringement is based on the idea that someone will take advantage of a trademark to confuse the consumer into purchasing their product based on the reputation of the trademark they're infringing. Put into simpler terms, if you believe Nintendo is a good brand, then you'd be likely to buy a Nintendo product. Therefore, if I make a product and put "Nintendo" on it, then you'd be likely to buy my product because of the illusion that it's a Nintendo product. I get the benefit of selling more product by infringing Nintendo's trademark, so if there wasn't a penalty, trademarks would be infringed on a regular basis.

Of course, not all forms of trademark infringement are as obvious as labeling a product with another brand name. Taking another example, the company who makes the cardboard boxes that Xbox 360 is shipped and sold in has a license from Microsoft with respect to the trademarks on the box. If I were to reproduce that box without permission, I would be infringing on the trademark. This actually happens often in the electronics world, especially with cellular phones. People who sell refurbished phones want boxes, and they do not always get the boxes from a licensed provider.

"If I made a 'Sorny GameStation,' it's likely that that product would be considered to infringe."

Another common form of infringement is to make something with a name that is "confusingly similar" to an existing product. This is the "likelihood of confusion" standard, and it's the most common infringement claim and available as a Federal suit. In summary, it's the idea that a consumer would be confused into thinking a product is made by someone else. For example, if I made a "Sorny GameStation," it's likely that that product would be considered to infringe on the Sony and PlayStation trademarks. Likelihood of confusion is a little more complex than that, however, as there have been a number of factor based tests for whether or not something is confusingly similar. Commonly used are the Polaroid factors, which are: strength of the mark (based on the scale discussed previously), the proximity of the goods in the marketplace, the actual similarity of the marks, any evidence of actual confusion, the similarity or commonality of marketing channels used, the degree of sophistication of the purchaser, and the alleged infringer's intent.

Proximity pertains to where the goods are actually sold. For example, if two things are both sold at an electronics store, then confusion is more likely, where as a frozen onion ring branded Halo wouldn't be sold anywhere near Halo (the game), so confusion is unlikely. Actual similarity of the marks can be based on use of the same name, names that sound the same, or logos that look the same. Any level of similarity is possibly confusing. Evidence of actual confusion could be based on surveys of potential buyers or anecdotal based on actual experiences. Similarity in marketing channels is much like proximity, but focuses on where the products are likely to be advertised. The sophistication of the buyer is basically a question of how much caution the average buyer would exercise. Basically, if the average purchaser tends to be someone who would know that the other product isn't related, then the likelihood of confusion is low. For example, given that Disgaea 3 is a fairly niche game, the average purchaser would be likely to know a lot about the game and wouldn't likely be confused by another product with the Disgaea brand name. Finally, there's intent, which is straight forward. If the infringer was infringing with the purpose of benefiting from the other brand, then they are more likely to be punished for infringement.

"I could be sued for tarnishment if I made a sex toy called the 'PlayStation.'"

The other major Federal infringement action is based on dilution, but at a federal level this is limited to "famous" marks. Acording to the law, "famous" is determined by: "The duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties; The amount, volume, and geographic extent of sales of goods or services offered under the mark; The extent of actual recognition of the mark; and Whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register." For the most part, however, a mark's status as famous is fairly apparent. Nintendo, Microsoft, Sony, Bungie, Blizzard, EA, Ubisoft, Activision, etc. are all famous. I've talked about one form of dilution before, known as blurring, in regard to the Wiimote controversy. I haven't previously touched on tarnishment, however. Tarnishment is where a mark actually makes the original, famous mark worth less or damages its reputation. This can be by offering a shoddy product under a similar name or by offering a product under a similar name that is associated with what can be considered "undesirable" contexts, such as sexual, illegal, or obscene activities. So, I could be sued for tarnishment if I made towels under the name Microsoft that were just poor quality or if I made a sex toy called the "PlayStation."

There are also a variety of state-level claims, but these vary between states, in addition to international trademark infringement protections based on treaties, most notably the Paris Convention and TRIPs. Generally, however, it's either a federal claim for infringement or dilution that is brought in these cases, especially with respect to products that are sold on a national or global level like video games. Trademark suits are often brought to "defend the mark," as a trademark can be canceled or declared invalid unlike a copyright. As a trademark owner, you have to protect your trademark or potentially lose it, so it's often the case that trademark based cease and desist letters and lawsuits are much more quickly set loose than copyright ones.

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Law of the Game on Joystiq: The evolution of Pub Games

Mark Methenitis — 2008-08-27T18:50:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

Despite the relatively small amount of time I've had to play them, I've so far enjoyed Fable II's Pub Games, especially Fortune's Tower (pictured above). The idea of minigames has been around for ages, but Pub Games adds deeper elements than the norm, as well as pre-release hype for Fable II. Of course, this begs the question: Is this a sign of things to come?

I could certainly see other RPGs following suit, pre-releasing a related Xbox Live Arcade, PlayStation Network, or WiiWare game that interacts with the core game, like a Final Fantasy XIII card game stand-alone. If this becomes a trend, then developers will be looking to the next evolution of this idea. I would imagine the next step would be external games that affect MMO environments; and beyond that, perhaps gambling with real currency. Think of the evolution this way: You start with a game like Texas Hold 'Em, where your play only affects that game, then the next logical step is something like Pub Games, which affects you alone in a virtual environment. From there, the evolution would logically move to impacting a multiplayer virtual environment and, ultimately, to affecting a real world environment, specifically your bank account. It's these last two steps that present some legal issues.

The key fact is that the UIGEA killed online gambling in the US.

As gaming has become a global industry, the legal issues presented become quite complex. Today's discussion will primarily be from the US perspective, where the final evolution I posed would require an actual change in the law. From a US perspective, the concept of using Xbox Live or PSN for gambling is, in short, out of the question under the current laws, assuming they are enforced. Specifically, the Unlawful Internet Gambling Enforcement Act ("UIGEA") would, in summary, act to bar credit card transactions to those services if they were to attempt to provide gambling. The specifics of the UIGEA are probably too complicated to discuss in depth here -- and they aren't terribly interesting. The key fact is that the UIGEA, for the most part, killed online gambling in the US, and this would likely be rolled under that umbrella.

However, the issue is by no means settled. There are, by my last count, close to a half dozen pieces of legislation on the table that either act to repeal or replace the UIGEA with a more concrete, structured approach to legalizing and regulating online gambling. For those who are wondering how Congress can pursue either option, look under the commerce clause. Specifically, online gambling is fairly clearly in the realm of an interstate transaction, given the movement of data in the activity, and so that activity would be within Congress's realm of control, despite the likely outcry from states who have banned casino gambling in their borders. So if and when the law changes, this evolution may become a reality.

The MMO arena, however, gets to be a far more complicated one. Since to date there has not been a console MMO tied directly to real currency, a la Second Life, I'll skip over that potential permutation of the facts. Imagine, instead, a console MMO more like Final Fantasy XI with Tetra Master type tie-in on XBLA. People simply interested in the card game could forgo the MMO aspects all together, given that multiplayer would be a likely element of the card game. Now, let's say that the betting in this Tetra Master game was changed to the MMO currency from the card-based betting system used before.

At this point, the game includes an interactive betting experience with no real value. It's no different than going into debt in Texas Hold 'Em (for XBLA) or Pub Games. While everything stays on this side of the line, there's no potential for problems. There is no restriction on gambling in a completely money-free environment. Things fall into a much grayer area, however, if the money or items in-game are being sold, even if it's not specifically authorized. Think of it this way, if you're betting 1,000 gold pieces on a card game, and you know you can go buy those 1,000 gold pieces on IGE (an in-game currency seller) for $4.00, then isn't that the same as betting $4? Of course, the key here is that you have to be able to "cash out," i.e., resell the gold for some value. The act of gambling essentially goes out the window when there's no chance for you to win a prize.

This still doesn't speak to tournaments, or what the implication of various proposed laws would be based on the skill and chance elements in the tie-in games, but each of those topics is complex enough to be an article of its own. Needless to say, it's likely that this tie-in gambling won't stop with Pub Games, and I'm interested to see how other developers decide to take advantage of the potential links between downloadable add-on games and their primary game. But for the time being at least, those tie-ins have to steer clear of the UIGEA in the US, and tread with caution in other regions like Europe and Asia, which tend to be more open to gambling.

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Law of the Game on Joystiq: Let the punishment fit the crime

Mark Methenitis — 2008-08-14T20:00:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

We've be hearing a lot about the Thai cabbie killing lately and how it was (or wasn't) caused by Grand Theft Auto. In the wake of that tragic murder, there have been two major groups of outcries. The first has been the call to regulate games; one we have heard all too often. The other has been a call to revise criminal penalties; one which is not only new, but speaks to the core theory behind criminal law: the theory of punishment. Criminal law theory is something that is universal in all of our criminal codes, but isn't often discussed. It's this "theoretical" approach that we'll look at today. You may agree or disagree with my particular thoughts on the theory of criminal law, but it's more important for everyone to understand a theoretical approach to criminal law so that we can come to our own conclusions about true "justice."

The concept of criminal law starts with some basic political philosophy. In order to have a society, there has to be a set of rules by which that society operates. Whether you want to view this as the social contract in a Locke/Hobbes/Rousseau manner or through some other philosophical lens, the basic need for rules and order in a society is more or less the same. This need for rules gives rise to the concept of the law, and one of those concepts is the boundaries of behavior that stray into what we, as a society, feel need to be punished. This is the basis for all criminal law, be it a crime against a person or a crime against property.

Once you've placed theoretical constraints on acceptable behavior, you have to decide what are acceptable punishments. There have been, over time, many theories on which punishment is based. One of the oldest is athe classic "eye for an eye," but more modern interpretations have attempted to balance the idea of actual punishment with the idea of deterrence, the concept that the threat of punishment will keep many from committing crimes altogether.

There is also the question of whom to punish and to what degree should all involved parties be punished. Remember, the actual criminal actor is not always the only one punished. This is the basis behind accomplice charges, among other criminal penalties that involve far more complex issues of mitigating and aggravating circumstances, or particular factors that make the punishment more or less severe. Which brings us back to Thailand and two particular thoughts I've seen presented with respect to game-related violence: games as a mitigating or aggravating factor; and liability for game manufacturers for crimes that copy games.

"Both of these ideas border on lunacy."

Both of these ideas border on lunacy. First, games as an aggravating or mitigating factor in deciding punishment seems to be a loss. Does it make sense to punish a gamer more because he or she killed someone in a way based on a game? Of course not. The fact that the perpetrator is a gamer doesn't make the victim any less dead, nor does it make the crime any different from any other murder. So there's no benefit to giving the perpetrator an extra 40 years because they acted out a game. From the opposite approach, should a gamer be able to claim that the game made them do it? I say this is equally pointless unless it is tied to some concrete mental illness that would otherwise give rise to a potential insanity defense. If you can tell right from wrong (generally the standard for insanity), exposure to a particular game doesn't make right any less right or wrong any less wrong; it's just an excuse to attempt to reduce punishment.

The secondary thought, applying liability to game manufacturers for "copycat" crimes committed by those who play their games is a blatant contradiction to free speech in the US. That's not to say it can't happen in other countries, but the law is relatively clear in the US. In fact, the Supreme Court specifically invalidated hate crime laws that were in conflict with free speech in R. A. V. v. City of St. Paul. More importantly, speech has traditionally only been limited in the case where the speech itself presents imminent lawless action, such as yelling "Fire!" in a crowded theater, or consists of "fighting words," or words likely to instigate a fight. To think about this from another perspective, if game makers are allowed to be held accountable for the actions of players, then why not movie makers? Or authors? Catcher in the Rye has been tied to several people who have committed criminal acts, and yet not only is it still sold freely, to my knowledge no one has ever brought suit against J. D. Salinger, the publisher, or the book seller.

More importantly, these two ideas tie together. If you don't believe that the perpetrator should be able to claim the "game made him do it," then why should the game's maker be liable? On the contrary, if the game maker isn't responsible for what people do with their game, then does it really matter if the game motivated the crime in someone who can tell right from wrong? Doesn't the idea of free speech in and of itself demand some personal responsibility from those who are in their right mind?

These finer points of criminal theory are ones you have to resolve within your own mind, not just with respect to these proposed game laws but with respect to all criminal laws. It's a legal area that few people analyze thoroughly, but everyone should have thought about as it should shape your personal and political actions. After all, if you disagree with a candidate's particular theory of criminal punishment, shouldn't that be a factor in deciding whether to vote for that person, just as you would likely consider the candidate's stance on video games in making an educated decision on whom to vote for? Hopefully much of the fervor will die down as more time passes from the tragic murder in Thailand, and as that dies down so will the hasty calls to revise the criminal system based on games.

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Law of the Game on Joystiq: Trademark infringement? Not like-wii

Mark Methenitis — 2008-08-04T17:20:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

GamePolitics recently posted a piece on Forbis, the makers of the weemote, and an issue that is all too familiar in Trademark law: trademark infringement. To summarize the GamePolitics piece, Forbis Technologies trademarked "weemote" in the year 2000 for a children's television remote. According to a Time piece on the weemote, sales have fallen considerably since the Nintendo Wii was released. The blog-o-sphere coined the term "Wiimote" soon after the Wii hardware was announced, and the term has stuck ever since. Nintendo, however, does not have a trademark on the term "wiimote," only on "wii."

Forbis is hoping to enter into a business arrangement by which it can re-brand its product and Nintendo can take control of "wiimote" and "weemote" (pronounced the same) because, as they put it, "the damage has been done here (whether intentional or not)." In fact, in cases of possible infringement between a significantly larger player and a smaller one such as this, a settlement of this nature would not be unusual. Even if Nintendo believes it would be successful in an infringement suit with Forbis, this may be the far cheaper option to resolve the issue. After all, the weemote brand had minimal value before the introduction of the Wiimote based on the company's self-described weak sales. Nintendo has thus far declined to purchase "weemote." But stopping at an out-of-court settlement wouldn't do much to illuminate the legal points that exist here, so let's take a look at this as if it were going to go to trial.

"'The damage has been done here,' says Forbis"

What Forbis is alleging, in general, is known as trademark dilution. Dilution, in short, is where the value and uniqueness of a trademark is lessened because of another party's use of a similar or identical mark. This is where things get complex, as "dilution" gets divided into "blurring" and "tarnishment." Tarnishment is something that harms the reputation of a trademark. Blurring, on the other hand, is by most accounts almost indistinguishable in analysis from the concept of a "likelihood of confusion" at common law and in many states.

There is a Federal Trademark Dilution Act (FTDA), which sets out a three part test for a Federal protection with regard to dilution. Under the FTDA, it must be proven that the initial mark is famous, that the second mark was adopted after the first one, and that the second mark blurs the strength and uniqueness of the first mark. I believe on a FTDA claim, the weemote would fail the first test. By the time the Wiimote was released, the weemote had not become famous and likely the term "weemote," when used in a survey of the public, would not be identified with any product.

In the Mead Data Central v. Toyota Motor Sales case, the court sets out a six part test for dilution by blurring that almost exactly mirrors many of the tests for confusion. The test is similar to what is used in many states (even though Mead is a federal case), and it has been applied for fact finding even in FTDA cases, like Ringling Bros. v. Utah Division of Travel Development. These factors are (quoting Mead):

similarity of the marks
similarity of the products covered by the marks
sophistication of consumers
predatory intent
renown of the senior mark
renown of the junior mark

These elements are considered as a whole in order to determine dilution by blurring. Looking to the facts in the "wee/wiimote" dispute, the case for blurring is not as strong as you might imagine. For the purpose of this analysis, just imagine that Nintendo did actually use the term "wiimote," and had a Wiimote logo that used the wii font. The first element, similarity, is limited more or less entirely to sound. The text is similar, but the stylized logos are quite different. Even granting similarity here, the remaining factors seem to fall flat. The products covered by the marks, while both being electronics that exist in the living room, look quite different and have very different functions and relative levels of technology. In fact, only the weemote DV, first available on Amazon December 2007, has the color white on it, while the Wiimote is available in white only. This simple color difference, in addition to different shapes, button layouts, design styles, and decades of technological differences, put these products in very different places. In fact, they would be on opposite ends of your local electronics store.

The sophistication of consumers is harder to judge on the weemote, and I'm sure the company would be able to speak better to this than I would. However, I imagine the market for the weemote is limited to parents of very young children who have some difficulty with the parental controls already built into their TVs, cable boxes, sattelite recievers, and TiVo units. Wii consumers, on the other hand, I would imagine are fairly sophisticated (yes, even grandma). They know exactly what they want and what it looks like. It is unlike a Wii purchaser would buy a weemote by mistake. Conversely, a weemote purchaser might pick up Wiimote by mistake, but even a short glance at the packaging would likely show them this is not the correct product.

"The internet has grown to the point where it can more or less create a term that becomes ubiquitous overnight"

The final three factors all have to do with the marks themselves. Predatory intent could speak to two different attitudes by the junior mark user, in this case Nintendo. First, it would be predatory to want to use the Wiimote to put the weemote out of business. I have seen no indication that this is the case. In the alternative, it may be predatory to try to use the weemote's populatiry to sell Wiimotes. Given that the company admits weak sales in the six years preceding the Wii's release, this also seems unlikely. The last two factors speak to the fame of each mark. Clearly, the weemote hasn't attracted much mainstream fame, while the Wiimote enjoys the fame and recognizability on top of the gaming world, and perhaps even comes close to the level that the iPod has reached.

There is an additional factor that can also be introduced: actual confusion. If there was evidence of consumers actually confusing the weemote and Wiimote, this would be evidence that could support dilution. The more frequent the confusion, the stronger the evidence.

Of course, all of this circumvents a threshhold issue: Nintendo doesn't call the Wii controller a Wiimote, nor does it have a trademark for "wiimote." In fact, it doesn't even seem that Nintendo came up with the term Wiimote. That alone seems to indicate a lack of predatory intent. But this is also, to some extent, the point Forbis is making. The internet has grown to the point where it can more or less create a term that becomes ubiquitous overnight, and that term may or may not be destroying the trademark of a business that's just trying to get started. Given that it is the responsibility of the trademark owner to police for possible infringement of its mark, many small businesses are faced with the nearly impossible task of policing the internet. And in the rare instance where the internet creates a term like "wiimote" that steamrolls an existing product, there isn't much the trademark owner can do.

Trademark laws, as they exist now, don't address issues such as this, and to my knowledge, the case law doesn't exist on a fact pattern like this. Really, there is a greater policy question as to if, or how, to even attempt to resolve these kind of issues. Should Forbis be entitled to protection because they came up with weemote first? Or should the fact that the brand didn't gain much, if any, traction in 6 years and the internet's adoption of the term "wiimote" be evidence to Forbis that it's time to re-evaluate its marketing strategy and brand? There is no easy answer to this question, and it's one that is likely to happen more frequently in today's internet-driven world.

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Law of the Game on Joystiq: Non-Disclosure Agre3ments

Mark Methenitis — 2008-07-21T19:20:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

As we wrap up our E3 2008 coverage here at Joystiq HQ, I thought it might be a good time to take a look at what makes many of E3's big surprises possible: the non-disclosure agreement. Non-disclosure agreements, or NDAs, are common not only in the gaming industry but in virtually all industries, and I've drafted my fair share of them. However, they are exceedingly prevalent in the game industry because of their application to not only game company employees but also members of the press who are given early access to titles subject to media blackouts, which are just another form of non-disclosure agreement.

So, what is an NDA? At the simplest level, it's just another contract, but one that limits someone's ability to share certain information, sometimes with anyone and sometimes with certain designated people, for a set period of time. The NDA arose because companies have to share information with employees and outsiders, and those companies need to manage the risk of having that confidential information leaked to the public or to competitors. NDAs may be stand alone contracts or provisions of larger agreements, largely depending on the context in which they are needed.

"Violation of NDAs often leads to termination."

Because there are so many applications for NDAs, they come in many shapes and sizes. However, there are four that come up the most often in a gaming context: employment, business, testing, and press. Each of these has some of its own common features. First, employment NDAs are what are signed, typically on the day of hiring, between a developer or publisher and a new employee. Because developers and publisers operate at different stages of production, the specifics of what cannot be disclosed may vary to some degree, but generally these NDAs are going to be fairly expansive. These are the people who are commonly thought of as "insiders," the people whose leaks and rumors can often play huge spoiler to, say, a big E3 press conference. Generally speaking, these agreements are tied to employment in a number of ways. First and foremost, violation of said agreements often leads to termination or some other negative job-related consequence. Secondly, the term is generally for the entire period of employment plus some amount of time afterward; 2 years not being unusual. The other unique feature of employment NDAs is they're often coupled with non-competition agreements. A non-compete is another agreement by which you're agreeing not to work in certain designated companies for a reasonable period of time after you leave your present job. Those companies may be named by name, designated by geography, designated by industry, or any other criteria which is reasonable, but the particular limitations on non-competes are more complex than I'd like to discuss here.

NDAs in the "business" of gaming are more often small parts of larger agreements, but do also appear as independant agreement. They appear in a lot of different contexts. NDAs may be in place for a developer to show a new concept to a potential publisher, or for a hardware manufacturer to show new hardware to developers. These are just two examples. Any time something confidential is being shared between parties, an NDA may very well be appropriate.

One specific business-related NDA is the testing NDA. These accompany early stage testing builds of games sent to those not covered personally under other NDAs and operate to theoretically keep testers from leaking images, videos, or other information. However, as we saw recently with the EndWar leak, this isn't always 100% effective. The general idea is that you need to bring in people beyond the normal employees, but also want to retain control over information flow to the public at large. Obviously, not all tests are controlled in this way, and many times it's the exact opposite, with beta testers encouraged to share their experiences with a rabid fanbase. These agreements often aren't as valuable as they seem because the consequence of someone breaching the agreement is simply being ejected from the test group. In cases where more severe penalties are in the agreement, the NDAs are generally more effective.

"NDAs are forever going to be a part of the game industry."

The final NDA is the one applied to the press, often referred to as a "media blackout" or "media restriction." This is just another form of non-disclosure, but one that has its own set of rules. Generally, these restrictions are much more short-term, and the potential loss for the media members upon breaking the agreement is the ability to get more information in the future, even from other publishers. Given that game websites and magazines depend on having access to information, the threat of loss here is pretty significant.

There are a few other important things to know about NDAs. First, they can be applied to pretty much anything that isn't public knowledge; this could be a plot for an upcoming game, or a particular piece of code for resolving a certain in-game issue, or a new piece of hardware. On a related note, NDAs theoretically terminate when the knowledge covered by the NDA is made public. The information that is being protected has to be something private and new to the recipient of the knowledge. That also means NDAs can't be enforced if the person already knew what was being disclosed through another source. Finally, NDAs are critical for the protection of trade secrets. In trade secret cases, NDAs generally operate to show additional evidence of the protection of the secrets, which is a critical element to being able to enforce trade secret protections.

So, that's the NDA in a nutshell. It's the one agreement that allows for us, as gamers, to receive big surprises, as well as major annoyance at the lack of information on certain titles. In fact, I'd be willing to bet there's an NDA involved in the cancellation of Bungie's announcement, and they're almost certainly responsible for the lack of Kid Icarus Wii and Kingdom Hearts III information. Love them or hate them, NDAs are forever going to be a part of the game industry.

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Law of the Game on Joystiq: Time for Trademarks

Mark Methenitis — 2008-07-09T19:00:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

A few weeks ago, I received an e-mail request to cover the basics of trademark as it applies to the gaming world. Given that E3 is next week, we're all likely to see many new uses for old trademarks and new trademarks surfacing from many of the industry's power players. Surprisingly, this isn't just as simple as picking a name and going with it. In fact, there's a lot of the 'trademark' game, and hopefully this week's column will give you a better-than-Wikipedia level background in what the game makers go through to get their hands on names like Crash Bandicoot, apparently the most desired piece of E3 news according to Joystiq readers.

Trademark is probably the most well known of the three unfair competition concepts, and its origins trace back to the guilds in England, although the idea of placing an identifying mark on something goes back as far as human history. In fact, the first trademark laws in England were passed in 1266. The basic concept is a fairly straightforward one: Someone who makes something should be able to have a mark that identifies that persons products for consumers, and that mark should be limited to use by that one producer. This idea benefits both the consumers, by allowing them to identify reputable products in the marketplace, and producers, by allowing them to build reputations for their products and preventing others from taking advantage of their reputations.

So, what is a trademark, exactly? It can be a word or a logo that identifies the product, and it has to be for a product in the marketplace; unless it's a filing for a product coming to the marketplace in which there is a time limit to have the product released. A "servicemark" is the technical name for a trademark that applies to a service rather than a product. There are also trademarks for slogans, combinations of words and logos, and even shapes and colors as they relate to certain products. Trademarks exist whether they are filed for or not, but the level of protection is significantly higher for a registered trademark. Trademarks can be registered in the US at either the state or federal level, but generally people referring to trademarks are referring to federal marks on the principal register. The principal register is the list of trademarks issued in the US which have the complete rights granted by law. While there is a supplemental register, its only real purpose is to allow international registration, as it does not confer any of the legal protections of the principal register.

To cut to the chase on registration, if you want to have a fully protected mark in the US, you need to register it with the US Patent and Trademark Office, and they impose a threshold for trademarkability, much like there were rules for patentability. In the simplest terms, to get a trademark, the mark must be distinctive and not infringe on an existing mark. The first element touches on a concept in trademark law that can be confusing called the 'strength of the mark.' If you think of trademark strength like a line, on one end would be generic and on the other end would be arbitrary or fanciful, with distinctive being at the midpoint in the line. (See the crappy MS paint diagram to the right.) Generic marks are what they sound like. You couldn't register Video Game, Inc. as a trademark for a video game publisher. These are the least strong trademark terms. Descriptive trademarks are still not strong enough to be registerable, but can become 'distinctive' if enough people recognize the mark with relation to that product. Take, for example, Holiday Inn. Holiday Inn has become distinctive because people identify the hotel chain, but as a trademark, it is really just descriptive of what it is. Suggestive marks are always on the distinctive end of the spectrum. PlayStation is an example, because while it suggests what the product does, it doesn't simply describe it. Arbitrary or fanciful names are ones that have nothing to do with the product, and are considered the strongest type of trademark. An arbitrary mark would be like Apple for computers, which is the use of a word which has nothing to do with the product, whereas a fanciful mark would be like Verizon, which is basically a made up word.

So, assuming your mark satisfies the distinctiveness test, it still can't infringe on another existing mark. There are basically two considerations for infringement: confusion and dilution. Confusion, while a straightforward concept, is generally the one that becomes difficult to establish one way or the other. It boils down to a number of factors that were established in the US in the In re E.I. du Pont de Nemours & Co. (476 F.2d 1357) case, which essentially boil down to how much possible confusion is likely between the products based on their relative places in the market and their relative fame. There are 13 total factors are used by courts to determine likelihood of confusion, but it's important to not that this isn't a score card concept. Each factor may be weighted according to the circumstances so it's possible that even in a case where only one or two factors show a likelihood of confusion that the mark would still be unregisterable. For example, if I had a company named Bungie Advanced Technologies that made routers and switches, it would be potentially confused with Bungie Studios. On the other hand, if I started Bungie Rent-A-Car, then that would be unlikely to be confused. Famous marks associated with large companies, like Nintendo or Disney, are often found to be confusing even in unrelated industries as famous marks are afforded extra protection based on their notoriety.

Dilution, on the other hand, it where a mark diminishes the distinctiveness or value of the mark. Dilution is typically blurring, something which makes the mark less distinctive, or tarnishment, something which makes the mark less valuable or damages the reputation of the mark. Dilution can be exceedingly complex, but I will try to give a few examples that fall under the dilution umbrella. For example, the Philips CD-i Zelda games could be seen as a dilution of the Zelda brand, if they weren't licensed. As another example, if someone opened a Play Station Amusement Park, this would dilute the PlayStation brand. Finally, if someone opened Xtreme Boxing Live and went by X-Box Live, that would likely be dilution.

There is one other, much rarer, reason for rejection. Trademarks cannot be functional. This generally applies to cases where a specific color or shape is the trademarked item, like a Coke bottle or the color pink for insulation with Owens-Corning. If the trademark at issue is somehow functional, then it cannot be a trademark. However, in those cases, the shape and color are not functional, so they are trademarkable. As far as I'm aware, there hasn't been a functional trademark case in a game context.

Once the mark passes muster with the trademark examiner, then there is a public comment period where others can object to the mark. Typically, these are other companies that feel the mark infringes on their mark or the mark is not distinctive and its registration will hurt their line of business. Once this process is over, the mark is registered. Registration can continue infinitely, in theory, so long as the business continues to renew the registration and the products remain in the marketplace.

Assuming the mark is registered, then you are afforded some specific protections. Marks on both the principal and supplemental register can use the R logo, as the TM logo doesn't have any legal significance. More importantly, placement on the principal register affords additional protections in court, including the presumption of ownership of the mark and its validity, presumption that all parties have actual notice of the use of the mark, the exclusive right to use the mark in the US, and the right to bring an action in Federal court to stop use of the mark or otherwise protect the mark. The most important benefit, however, is incontestable status for a trademark. If the mark, after being registered, goes 5 years without having its validity contested, then it can be classified as incontestable (though I won't detail the process), which means that it cannot be attacked in court for validity other than on the grounds it has become generic, been abandoned, was obtained through fraud, or a few other limited issues. The important part of the status is that the mark cannot be challenged on the grounds that it is not distinctive, is confusingly similar to someone else's mark that was in use when the registration occurred and is still in use, or is functional.

This is just a pretty simplistic overview of trademarks, and there are many specifics and technical details I didn't touch on in the interest of time and length. I've also basically skipped over the entire concept of trademark infringement as a private cause of action, which could be an entire article to itself. In any event, I hope this has given you a little more insight into the basics of trademarks, and you can be fairly certain that there will be more trademark issues covered in this column in the future. As for next week's trademark marathon, there's really one trademark in particular I'm hoping gets revived: Kid Icarus.

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Law of the Game on Joystiq: No Freedom of Trash Talk

Mark Methenitis — 2008-06-25T17:45:00+00:00

Filed under: Features

Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games:

In a recent Sessler's Soapbox, Adam took the opportunity to comment on some of the trash talking on Xbox Live. During the course of that diatribe, he mentioned that he thought the First Amendment argument was a "crock of s***" with respect to trash talking. Well, as the resident lawyer here on Joystiq, I'd like to take this opportunity to explain the First Amendment argument is just flat out wrong. In fact, it's one of my greatest pet peeves that the First Amendment gets thrown about as an excuse for most everything that is said in the realms of gamer culture, from trash talking in online matches, to posts on forums, to comments on gaming blogs.

In case you're one of the thirty-four people worldwide who has never experienced the phenomenon in question, this is essentially what's being talked about: Typically, someone will do something offensive online, be that posting something in a forum or saying something on Xbox Live. Then, someone in power will either reprimand that user, often through censoring, or banning for the behavior. This is typically either followed by that user or some other user decrying this exercise of authority as a violation of their 'rights.' The responses do vary, but as a moderator of one of the biggest forums on the internet, I've seen everything from 'OMG U R VIOL8ING MY FURST AMNDMT RYTES!!!11!' to some very lengthy and polished answers. The only commonality between these varying levels of responses is that they are all wrong.

There's one other point of clarification that goes along with this particular discussion, and that's the 'First Amendment' reference. For those of you abroad who aren't as familiar with the American system, people are referring to the First Amendment to the Constitution of the United States. The text of the first amendment reads: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. Shortened to the relevant portion for this discussion: Congress shall make no law ... abridging the freedom of speech. Beyond the fact that this right is more or less limited to applicability in the US, the text of the amendment itself is a huge hint as to why this argument is doomed to fail.

In short: Any claim to freedom of speech being abridged online in the forums we're discussing isn't by act of government. Xbox Live, message boards, and blog comments are all activities on what amounts to the digital equivalent of private property. Think of it this way: If you were to go down to your local mall and start shouting things that offended other mall patrons, would the mall be able to force you to leave the premises? Of course they would. Your right to free speech is limited while you are on private property, be that real world property or someone's digital network. US courts have generally held that digital property is analogous to private property and thus have found against free speech in a number of cases, mostly on the issue of spam.

"In short: Any claim to freedom of speech being abridged online in the forums we're discussing isn't by act of government."

But there are two other fundamental reasons why speech can be limited on private digital networks. First, based on the Prodigy case, there is precedent that the owner of the network can be held liable for the content put on that network. Secondly, and more importantly, all of these relationships are governed by contract, and those usage contracts almost always have clear rules as to what is or is not acceptable behavior on that network. There are clear content rules on Xbox Live and most of the major message boards. Abiding by these rules is part of the terms of service that you agreed to in order to participate in that forum.

There are, of course, other laws beyond the US. Far be it from me to ignore three other potential sources of a right to freedom of speech, which are: the Universal Declaration of Human Rights, the European Convention on Human Rights, and the United Nations International Covenant on Civil and Political Rights. The text of each is as follows:

Universal Declaration of Human Rights
Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

European Convention on Human Rights:
1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.

2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.

International Covenant on Civil and Political Rights
Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of his choice.

"Calling people names after they stick you with a grenade in Halo 3 is not political speech. "

Ultimately, though, I would expect that these would be interpreted much the same way as the First Amendment is, requiring that the censorship be some governmental action. More importantly, these declarations, especially the United Nations ones, have a significant problem with enforcement. There would be a far greater chance of enforcing the European Convention through the EU than there would be utilizing the UN measures. I'm not aware of any precedent for utilizing UN conventions to enforce free speech on private networks, much less on something that is as trivial as trash talk.

And in the grand scheme of things, trash talk is trivial speech. Freedom of speech has its roots in political speech, which in the US receives the highest protections from the courts. Calling people names after they stick you with a grenade in Halo 3 is not political speech.

Ultimately, content restrictions and behavior rules ensure that the online community can be enjoyed by the largest possible audience. While I'm not personally bothered much by the things people say online, I know a lot of people are. Even though I'm not bothered, there is a substantial amount of time when I didn't even bother to wear a headset, because I know most of the chatter is meaningless. Ultimately, that is what online play has become in the vast majority of matches. We, as a gamers, could have much more meaningful in-game interaction and build a much greater sense of community in online play if we wanted to. Maybe the better solution is to subdivide Xbox Live based on preferences like these, but that could create even more complications in online play. I would expect that even some of the most ardent supporters of freedom of speech online would likely be worn down if subjected to the dregs of in-game chatter for a few hours.

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