law-of-the-game posts (Subscribe to this feed)
LGJ: The new meaning of 'player vs player'
by Mark Methenitis { Jul 1st 2009 at 9:30PM } 
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
Terra Nova recently posted a note about a Craigslist case that could have some impact on the gaming space. It relates to theories about how players could sue other players, which is something that briefly came up in a World of Warcraft suit two years ago (which settled before going to court). The result of the case was, in no uncertain terms, that a lawsuit under a third-party beneficiary theory could be entirely blocked by a well written Terms of Use. That's not to say that all cases involving third parties are barred, as another World of Warcraft legal battle, the Glider case, was successful; though primarily based on tortious interference. So, while some potential sources of player-versus-player lawsuits may be now foreclosed, I still think there's a range of potential suits that could become prevalent.
Of course, this theorizing requires a basic understanding of third party-beneficiaries, and that goes all the way back to the basics of contracts. In a simple contract, there are generally two parties. A basic sales transaction is probably the simplest contract. Say you go to GameStop to purchase inFAMOUS: You give the clerk your $59.99 plus tax, and he gives you the game and a receipt. That was a basic contract for the sale of goods, and the receipt is evidence of some additional terms of the contract for sale, such as the return policy.
Of course, this theorizing requires a basic understanding of third party-beneficiaries, and that goes all the way back to the basics of contracts. In a simple contract, there are generally two parties. A basic sales transaction is probably the simplest contract. Say you go to GameStop to purchase inFAMOUS: You give the clerk your $59.99 plus tax, and he gives you the game and a receipt. That was a basic contract for the sale of goods, and the receipt is evidence of some additional terms of the contract for sale, such as the return policy.
LGJ: If 24 songs = $1.9 million, then 1 game = ?
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
Maybe you heard about the verdict that just came out in one of the music file-sharing cases: $1.9 million for 24 songs. So, what does this have to do with gaming? More than you would probably imagine, since this gets to the root of copyright and statutory damages. In fact, EFF legal scholar Fred von Lohmann posted an interesting piece on whether the penalty is even Constitutional. Whether this is the suit that breaks the back of statutory damages has yet to be seen, but it's something that any media producer or consumer should be keeping an eye on.
Of course, much of that may be getting ahead of the issue of explaining this decision in greater depth so that everyone can understand what the actual problem is. We've talked about copyright infringement and piracy at length on LGJ, and the issue here is what comes after someone is found to have infringed on a copyrighted work: damages. Specifically, we're talking about statutory damages, which something a lot of people may not be very familiar with at all.
Of course, much of that may be getting ahead of the issue of explaining this decision in greater depth so that everyone can understand what the actual problem is. We've talked about copyright infringement and piracy at length on LGJ, and the issue here is what comes after someone is found to have infringed on a copyrighted work: damages. Specifically, we're talking about statutory damages, which something a lot of people may not be very familiar with at all.
LGJ: The Anti-Trust Game
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
I've mentioned before that both in the latter years of the previous administration and under the new administration, certain kinds of enforcement actions were increasing in number. Past commentaries in LGJ have focused on trade, but another one of those areas is anti-trust. What got my attention in this regard was a conversation I had the other day with a partner in the firm who has dealt with a number of anti-trust issues. We were discussing the game industry, and he asked what the price range was on games these days. My response was a range, with the caveat that for pretty much all new PS3 and Xbox 360 games, the price was $60. His thought was that had to be on someone's radar screen to investigate, even if there's no actual anti-trust violation going on.
Given the investigative climate, I would tend to agree, though based on what I know in the industry, I don't think there's any actual collusion going on. Instead, we likely have a case of 'conscious parallelism,' which isn't illegal per se, though a government official looking for their "big break" might just take on this case hoping to see a shift in the law from the higher courts. I'm getting well ahead of myself, though, since a better background in anti-trust needs to be set out before getting into the specifics.
Given the investigative climate, I would tend to agree, though based on what I know in the industry, I don't think there's any actual collusion going on. Instead, we likely have a case of 'conscious parallelism,' which isn't illegal per se, though a government official looking for their "big break" might just take on this case hoping to see a shift in the law from the higher courts. I'm getting well ahead of myself, though, since a better background in anti-trust needs to be set out before getting into the specifics.
LGJ: Is the NDA still viable?
by Mark Methenitis { Jun 10th 2009 at 6:33PM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
It was about E3 time last year when I gave an overview of our old friend (or enemy) the non-disclosure agreement. After all, it's those NDAs that are responsible for keeping the surprises as surprises. This year's E3, however, was a solid demonstration of the failure of the surprises mentioned last year, with Sony bearing the brunt of the leaked information. While I don't think this is necessarily an indication of the health of the NDA concept, it is a good opportunity to showcase some of the weaknesses of the NDA.
I'm willing to assume that most people have heard the term "iron-clad contract." In that regard, I have some unfortunate news: there's really no such thing. Even a perfectly drafted contract that addresses every possible contingency still requires that the parties hold up their ends of the bargain. Otherwise, you're going to have to go down an enforcement route like litigation. The idea is to make the penalties for violation of the agreement something people want to avoid to encourage compliance with the agreement, and in the game industry context, as well as much of the tech sector, certain kinds of disclosures are simply difficult to deal with.
I'm willing to assume that most people have heard the term "iron-clad contract." In that regard, I have some unfortunate news: there's really no such thing. Even a perfectly drafted contract that addresses every possible contingency still requires that the parties hold up their ends of the bargain. Otherwise, you're going to have to go down an enforcement route like litigation. The idea is to make the penalties for violation of the agreement something people want to avoid to encourage compliance with the agreement, and in the game industry context, as well as much of the tech sector, certain kinds of disclosures are simply difficult to deal with.
LGJ: Supreme Court Decision Doesn't Bode Well
by Mark Methenitis { May 30th 2009 at 1:00AM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
The recent FCC v. Fox decision seems to have gone relatively unnoticed in the gaming press. Yes, the case at hand was about broadcast media and the FCC, and yes, the makeup of the court is now certain to change since the decision came down. However, neither of these potentially distracting facts should take away from what this decision really is: yet another expansion of the government's censorship power over the public. If there is anything the gaming public should be paying attention to, given the continued anti-game activism, is successful control over other media. And there are really three major concerns that come from this ruling.
First, I want to make it clear what this ruling is not. The ruling is not an actual victory for game opponents. While it makes some suggestions, the precedent can't be directly applied to the game industry at this time. After all, there is no governmental body to control game releases because those releases are not being made over licensed broadcast spectrum. After all, the government only controls TV broadcasts because the government owns the airwaves. More importantly, this ruling is not purely about censorship or the First Amendment. A significant part of this case is administrative law, and for those same reasons, it's not applicable to the game industry.
First, I want to make it clear what this ruling is not. The ruling is not an actual victory for game opponents. While it makes some suggestions, the precedent can't be directly applied to the game industry at this time. After all, there is no governmental body to control game releases because those releases are not being made over licensed broadcast spectrum. After all, the government only controls TV broadcasts because the government owns the airwaves. More importantly, this ruling is not purely about censorship or the First Amendment. A significant part of this case is administrative law, and for those same reasons, it's not applicable to the game industry.
LGJ: A case of tortious interference
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
No, it's not a symptom of the dreaded Swine Flu, but there has been a seeming rise in disputes concerning "tortious interference" in the games industry as of late. The most notable example being the Scratch: The Ultimate DJ dispute. Of course, from the first appearance of that curious word "tortious," there's been much confusion; be it over the term's actual meaning or it being incorrectly interchanged with the non-legal word "tortuous" (meaning winding or twisting).
The word "tortious" comes from "tort," which is a civil wrong that results in damages. So, "tortious interference," from a definitional standpoint, is when someone intentionally interferes in someone else's business or contractual relationship and causes civil damage. These two varieties of tortious interference are not the same on a more detailed level, however.
The word "tortious" comes from "tort," which is a civil wrong that results in damages. So, "tortious interference," from a definitional standpoint, is when someone intentionally interferes in someone else's business or contractual relationship and causes civil damage. These two varieties of tortious interference are not the same on a more detailed level, however.
Judge says Sumner Redstone treated Midway 'like a toy'
As the publisher's set to run out of money by June, various creditors are in court fighting over the company's remaining assets and, in the process, Judge Gross is reviewing the somewhat dubious sale of Midway to the aforementioned Mark Thomas. To help put the court proceedings into perspective, we contacted Joystiq Law of the Game writer (and total lawyer) Mark Methenitis, who said, "The Midway sale circumstances are the type of facts that often make a court suspicious. Even though NAI's business justification of the sale does seemingly make sense, the sale of a company that size with debts that large for a net amount so small is suspicious to say the least."
There's only a few months left until June so we're sure to see the results of this bankruptcy case play out in no time at all. Here's hoping the one profitable team at Midway can save themselves before the whole ship sinks.
LGJ: Is game censorship the new trade barrier?
by Mark Methenitis { Apr 10th 2009 at 4:35PM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
Thinking about the recent rash of international game censorship issues, I noticed a pattern: Games banned abroad are almost exclusively American (having, at least, significant ties to US companies). Games don't tend to be banned in the countries where their respective developers and publishers are located. So, does this speak to the attitudes of the country and free speech? Or, is it a ruse for creating a trade barrier? More importantly, could an entire trade war arise from video game content restrictions?
There's a fair amount of groundwork that goes into understanding this discussion, unfortunately, but it's a topic that needs to be discussed.First, there are two major areas of the law that need to be understood: international free speech regulations and international trade regulations. I know regulatory discussion is less than fascinating, so allow me to present you with the short and sweet version.
There's a fair amount of groundwork that goes into understanding this discussion, unfortunately, but it's a topic that needs to be discussed.First, there are two major areas of the law that need to be understood: international free speech regulations and international trade regulations. I know regulatory discussion is less than fascinating, so allow me to present you with the short and sweet version.
LGJ: Serious games with serious regulations
by Mark Methenitis { Mar 25th 2009 at 7:30AM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
One of the areas in which the law firm I work for focuses on is international trade, which many of us might assume doesn't have a significant impact on the video game industry. Surprisingly, there is a growing sector of the industry that has a great potential for international trade problems. That sector is often referred to as "serious games" (or games with a purpose other than pure entertainment). In fact, there are a few specific areas that serious game developers need to be particularly wary of to avoid problems with US Customs.
Before getting into the specifics,let's delve into a brief overview of international trade regulation. After all, the new administration has noted trade enforcement as a top priority, so it could potentially impact many different people in the community; like it impacted the mod chip importers not too long ago. In short, the primary areas of trade regulations are on imports and exports, although other related areas like the Foreign Corrupt Practices Act are starting to get a lot more attention. Imports (in other words, anything you bring into the country) have to be classified so that the proper taxes can be paid on the goods. Exports (anything you send out) have to be classified so that the government can track and prevent certain products from going to certain people and places. These are two different concerns, but if you don't follow the rules, it can land you stiff fines, penalties, and even a prison sentence.
Before getting into the specifics,let's delve into a brief overview of international trade regulation. After all, the new administration has noted trade enforcement as a top priority, so it could potentially impact many different people in the community; like it impacted the mod chip importers not too long ago. In short, the primary areas of trade regulations are on imports and exports, although other related areas like the Foreign Corrupt Practices Act are starting to get a lot more attention. Imports (in other words, anything you bring into the country) have to be classified so that the proper taxes can be paid on the goods. Exports (anything you send out) have to be classified so that the government can track and prevent certain products from going to certain people and places. These are two different concerns, but if you don't follow the rules, it can land you stiff fines, penalties, and even a prison sentence.
LGJ: Unlicensed games and the DMCA
by Mark Methenitis { Mar 9th 2009 at 6:29PM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
Fans of retro games or even just videos about retro games are familiar with the "unlicensed" games that existed on bygone systems like NES and SNES. These titles include a number of "Bible games" and more risque offerings like Bubble Bath Babes (box art pictured above). What's of particular interest to me, though, is how unlicensed games were ever "allowed" in the first place, and how more recent legal requirements more or less eliminate the possibility of new unlicensed titles in the retail marketplace.
We can trace unlicensed games back to the US game industry's so-called "crash" in the early 1980s. At the time, the console market was basically an open playing field. If you wanted to make a game for an Atari console, you just made it. This led to the widely publicized over-saturation of low quality titles, which killed consumer confidence in the home games market. Remember, back then, there was no Joystiq.com -- let alone the other copious resources used to research a game before purchasing. So, when Nintendo came to the US and almost single-handedly brought the video game industry back from the dead, the company decided to take certain quality control measures to prevent repeating Atari's mistakes.
We can trace unlicensed games back to the US game industry's so-called "crash" in the early 1980s. At the time, the console market was basically an open playing field. If you wanted to make a game for an Atari console, you just made it. This led to the widely publicized over-saturation of low quality titles, which killed consumer confidence in the home games market. Remember, back then, there was no Joystiq.com -- let alone the other copious resources used to research a game before purchasing. So, when Nintendo came to the US and almost single-handedly brought the video game industry back from the dead, the company decided to take certain quality control measures to prevent repeating Atari's mistakes.
LGJ: The Flash game quandry
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
We're all somewhat familiar with the endless stream of Flash games featuring some famous person: Presidential Paintball, Super Obama World, Whack Britney Spears, Paris Hilton Jail Escape, etc. An interesting question was posed to me the other day about these games: Is there a quarrel over the right of publicity related to Flash games? Obviously, retail games featuring certain public figures, such as professional athletes, are paying for the use of those celebrity likenesses. Flash games, however, are positioned much differently, and it's one of the more complex relationships between differing legal theories I've seen in the gaming sphere.
While we've discussed the right of publicity before, it's worth reiterating that the concept is basically the equivalent of a trademark for a famous person's likeness. Think of it like a brand name helping to sell a product. A lot of people will buy a game just because it's made by Nintendo. Similarly, a lot of people might buy a game that appears to be created or endorsed by someone; be that a particular game developer or a celebrity. How many people initially bought Madden Football because of Madden's attachment to it? Probably quite a few. There's certainly a good strategy in using celebrity to sell a product.
We're all somewhat familiar with the endless stream of Flash games featuring some famous person: Presidential Paintball, Super Obama World, Whack Britney Spears, Paris Hilton Jail Escape, etc. An interesting question was posed to me the other day about these games: Is there a quarrel over the right of publicity related to Flash games? Obviously, retail games featuring certain public figures, such as professional athletes, are paying for the use of those celebrity likenesses. Flash games, however, are positioned much differently, and it's one of the more complex relationships between differing legal theories I've seen in the gaming sphere.
While we've discussed the right of publicity before, it's worth reiterating that the concept is basically the equivalent of a trademark for a famous person's likeness. Think of it like a brand name helping to sell a product. A lot of people will buy a game just because it's made by Nintendo. Similarly, a lot of people might buy a game that appears to be created or endorsed by someone; be that a particular game developer or a celebrity. How many people initially bought Madden Football because of Madden's attachment to it? Probably quite a few. There's certainly a good strategy in using celebrity to sell a product.
LGJ: Piracy and the economy
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
We stand in an unusual and unprecedented place in history. We face a global economic crisis and are simultaneously in the latter stages of a technological revolution that started with the internet explosion of the 1990s. Because of present circumstances, we have the potential to fall into a piracy cycle that will hurt both the industry and the consumer. I'm hoping that this column will, at a minimum, expose the potential issues concerning this cycle, so that people can consciously avoid taking a dangerous path. We're already seeing increased talk about piracy and actions against "pirates," but I don't think we're anywhere close to hitting rock bottom.
Obviously, a down economy means people are more concerned about their money, have less money, and, in many instances, have lose their sources of income all together. On the opposite side of the table, the loss in spending leads to a loss of revenue for companies, which leads back to job loss. So how does piracy fit in? Many people may turn to piracy to get the content they no longer can afford, or take the opportunity to take something for free to save their money. On the converse, companies in the intellectual property realms, like game developers, may see the opportunity to increase some revenue through enforcement actions against pirates. And here's where the cycle begins.
Obviously, a down economy means people are more concerned about their money, have less money, and, in many instances, have lose their sources of income all together. On the opposite side of the table, the loss in spending leads to a loss of revenue for companies, which leads back to job loss. So how does piracy fit in? Many people may turn to piracy to get the content they no longer can afford, or take the opportunity to take something for free to save their money. On the converse, companies in the intellectual property realms, like game developers, may see the opportunity to increase some revenue through enforcement actions against pirates. And here's where the cycle begins.
LGJ: Jack Thompson's Utah 'game bill'
by Mark Methenitis { Feb 12th 2009 at 10:15PM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
Right on cue, after this week's previous LGJ, Jack Thompson's Utah bill finally made its public appearance. Surprisingly, the bill amounts to only 4 lines of text that will be edited into Utah's existing Truth in Advertising Act, a form of deceptive trade practice regulation. The entire relevant text of the statute is:
So what does this mean for the industry? I believe this bill has far more bark than bite, but it's more complex than a simple analogy. There are some potential consequences for electronic retailers based on this new potential regulation, but it also looks like this provision leaves a number of major loopholes that retailers can take advantage of. As the bill hasn't passed yet, this all may be moot if the Utah legislature opts against the regulation, but it's certainly worth analyzing in the interim.
13-11a-3. Deceptive trade practices enumerated -- Records to be kept -- Defenses.
(1) Deceptive trade practices occur when, in the course of a person's business, vocation, or occupation that person:
(u) (i) advertises that the person will not sell a good or service labeled with an age restriction or recommendation to a person under the age restriction or recommendation; and
(ii) sells that good or service to a person under the age restriction or recommendation.
So what does this mean for the industry? I believe this bill has far more bark than bite, but it's more complex than a simple analogy. There are some potential consequences for electronic retailers based on this new potential regulation, but it also looks like this provision leaves a number of major loopholes that retailers can take advantage of. As the bill hasn't passed yet, this all may be moot if the Utah legislature opts against the regulation, but it's certainly worth analyzing in the interim.
LGJ: More game laws?
by Mark Methenitis { Feb 9th 2009 at 10:00PM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
It's early 2009, we've just elected a new President, and there are quite literally a mountain of problems to be addressed on Capitol Hill. Our economy has been in substantial turmoil for roughly six months, with some problems stretching back for years. Many states are at or near bankruptcy. This economic crisis has, by now, hit every country on the planet to some degree. So, our legislators have spent the last two months rushing to put together proposals to regulate video games. No, no one's undivided attention has been on the economy during this complete mess. Instead, since the start of the year, it seems there has been an explosion of potential new video game regulations, from Jack Thompson's bill in Utah, to New York, to the US Congress, to Australia -- just to name a few. And that's in addition to issues like the FTC's rumblings about DRM, which I've mentioned previously.
While this boom in regulations and potential enforcement may be great news for sites like GamePolitics, it's potentially bad news for game developers and consumers, not to mention the taxpayers who are footing the bill for all of this. Of course, these laws are also coming from a number of different directions and under different theories, so I thought it might be a good time to give a short take on each and predict which directions things could be going.
While this boom in regulations and potential enforcement may be great news for sites like GamePolitics, it's potentially bad news for game developers and consumers, not to mention the taxpayers who are footing the bill for all of this. Of course, these laws are also coming from a number of different directions and under different theories, so I thought it might be a good time to give a short take on each and predict which directions things could be going.
LGJ: FTC could target EULAs
by Mark Methenitis { Jan 30th 2009 at 11:00PM }
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
A few weeks back, I mentioned that the FTC was looking into regulating DRM. Well, in part on some discussions at the Game::Business::Law Conference, I have a sneaking suspicion that the FTC likely won't stop with DRM. In fact, I would be willing to guess that within the next few years, the often maligned End User License Agreement ("EULA") may fall into the realm of being regulated as further "consumer protection." Is it necessary? Well, that's a matter of opinion, really. The only certainty is that it will be able to bring in additional revenue for the government, which is certainly short on cash these days.
If the FTC opts to regulate EULAs, I see three probable scenarios to accomplish its goal. Before I get ahead of myself, I should describe what the theoretical goal of consumer protection is: to prevent companies from taking advantage of consumers. Generally, though, it isn't necessarily the average consumer who's seeing the greatest benefit from the regulations. Often it's the most uneducated consumer, which usually means the regulations tone things down to a level of near absurdity.
If the FTC opts to regulate EULAs, I see three probable scenarios to accomplish its goal. Before I get ahead of myself, I should describe what the theoretical goal of consumer protection is: to prevent companies from taking advantage of consumers. Generally, though, it isn't necessarily the average consumer who's seeing the greatest benefit from the regulations. Often it's the most uneducated consumer, which usually means the regulations tone things down to a level of near absurdity.
