Joystiq

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.

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.

Permalink | Email this | Comments

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.

Permalink | Email this | Comments

Law of the Game on Joystiq: Let the payment fit the damages

Mark Methenitis — 2008-08-21T21:00:00+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 are a lot of theoretical claims an injured party could make against a game manufacturer, but the one I'd like to focus on is the world of products liability. After all, the crux of most of these claims is "this video game product caused this person to do this act, which resulted in damages." It would certainly be a novel claim, and one that tweaks the traditional definition of products liability, which surprisingly can be applied to video games outright in certain circumstances.

The reason I've picked products liability is because if the current laws were expanded to account for the kind of civil liability for game makers that has been talked about, then products liability would be a logical place to put the new causes of action. Not to get ahead of ourselves, it's probably a good time to explain what products liability is: Products liability is the area of the law where parties on the chain of a product, from the retailer to the manufacturer to the manufacturers of sub-assemblies or parts, can be held liable for damages caused by their products. So, if for some reason the video game console you're playing randomly exploded, this would be the theoretical means for recovery.

Of course, as usual, it's a little more complicated than that. Products liability rules vary by state, and some impose a negligence standard while others use strict liability. While I'm sure most people are familiar with negligence, strict liability may be a more foreign concept. In short, strict liability is liability without fault. Generally, it's applied to certain dangerous activities, the classic example being the use of dynamite. If you're using dynamite, you're responsible for anything that may happen as a result, foreseeable or not, intentional or unintentional. So, in some states, manufacturers are liable just by virtue of making the product.

There's only really one major element to prove in products liability, other than damages: that the product is defective. Being 'defective' can take any one of three primary forms: design, manufacture, or marketing. Defects in design are fairly straightforward, being that the product was designed in a way that doesn't work or only works in an unreasonably dangerous fashion. This would include things like certain car recalls, and possibly the "Red Ring of Death" or PS2 DVD drive failures. Defects in manufacturing, on the other hand, are where the product is made wrong and therefore some of the ones in the marketplace are faulty. You'd be hard pressed to find a product on the market that didn't have some percentage of defectiveness, most certainly in the video games industry, but not all defects cause damages beyond needing to replace the product, which is typically covered by a warranty.

"This is the reason you're told not to swallow DS cartridges."

The third defect is the one that typically makes the news. Defects in marketing are defects in labeling, improper instructions, or improper warnings that accompany the product. This is commonly called "failure to warn." It's because of this third category that practically every product in the US is covered with obscure and often obvious warnings. This is the reason you're told not to swallow DS cartridges, and it's the reason your Wii forces that irritating warning screen on you before each game you play.

It's arguably this labeling issue that could be morphed into liability for game developers, short of wholescale revision of the law. I can't think of any games that are labeled with a "may cause violent behavior" warning because the science behind that causality is murky at best. You'll notice games contain a litany of other warnings, from seizures to eyestrain, because these conditions have been more clearly demonstrated and the developers want to be protected from suits based on people recieving damages with regard to these proven potential harms. If someone who suffered a harm that could be directly tied to a game could present concrete scientific evidence linking the two, there's a chance they could succeed in a lawsuit. And because products liability brings in the entire chain, it's concievable that, in addition to the game developer, the publisher, retailer, and potentially (though a far more remote chance) even the maker of the console it plays on could be brought into the suit. Of course, a behavior impact warning would likely negate this claim, but at the same time, that would likely be seen as an admission that games do effect behavior, or in other words, an admission that "Jack Thompson was right."

The problem is that products liability is typically not successful against ideas presented in media. Whether the failure is on First Amendment grounds or a lack of causality, the overwhelming majority of suits, which have typically been against movie makers, have failed in court.

Taking the broader view, in the vein of last week's cries for criminal code reform, a revision to the statutes that govern products liability could defacto include behavior "caused by" media, although, again, singling out video games would likely be too narrow. And again, I would imagine a law like this would be held to fail under the First Amendment. As I've stated before, having free speech requires responsibility from society as a whole. It is not the speaker's fault if the listener uses that information to do harm to others. To say otherwise would mean that free speech would be, in essence, dead because no good-natured person would speak for fear of that speech being misused by listeners.

In short, it's unlikely that we'll see an establishment of civil liability for game makers that would be successful based on the current state of the law and research on game violence. The effect would be too great on speech to be sustainable. While the victims of acts that may or may not have been inspired by games certainly deserve our sympathy, it's unreasonable to make game developers liable for these occurrances simply because they have deeper pockets than the person who did the damage.

Permalink | Email this | Comments

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.

Permalink | Email this | Comments

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.

Permalink | Email this | Comments

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.

Permalink | Email this | Comments

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.

Permalink | Email this | Comments

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.

Permalink | Email this | Comments

Law of the Game on Joystiq: The Madden Suit

Mark Methenitis — 2008-06-18T20:00:00+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:

Summer is typically a "low season" for game releases, except for one particular annual tradition: new football games. As of late, those games have been all from EA, most notably the Madden and NCAA franchises. Last week it was made public that two gamers brought suit to disrupt EA's stranglehold over the football game market. Since the pleadings are online, I thought I would take the opportunity to offer some commentary on the issues presented. Of course, these are just my thoughts on the matter, not a prediction as to what result a trial may bring. EA's actual response may vary.

Professional sports are no strangers to antitrust and other anti-competition based legal actions. More or less every major professional sports league has faced these suits in the past, and some of them even hold specific anti-trust exemptions. For example, the Sports Broadcasting Act of 1961 is a specific anti-trust exemption for the NFL to be able to negotiate the broadcast rights for all teams. While none of the leagues have a true monopoly over the sports they represent, the barriers to entry are fairly great and most leagues are ultimately unable to compete (need I remind you of the XFL?). From the perspective of the NFL or MLB, exclusive licenses are likely viewed the way TV rights are, and I'm somewhat surprised that exclusivity has only become an issue in recent years.

"It wasn't about the efficiencies of competition; it was about breaking into the marketplace."

EA has a fairly solid position, and if I were in EA's shoes, there would be a few points I would want to make off the bat in terms of the factual issues brought up in the complaint. Specifically, the complaint alleges that there was a price hike on Madden 2006 to $49.95. Really, this whole pricing section is misleading in terms of the actual game market and is presented largely without context. Gamers know that prices of games drop over time, and it wasn't terribly surprising that the price of Madden 2005 dropped in November, about four months after the game came out. What was surprising was the amount of the drop, which was due in large part to Take-Two's bargain pricing of NFL 2K5. Take-Two was trying to attract gamers from the Madden series by pricing below the industry standard ($19.99), potentially at a loss. It wasn't about the efficiencies of competition; it was about breaking into the marketplace. We will never know what pricing would have come with NFL 2K6, but a $49.95 pricetag for a game is standard, and it's unusual for such standard pricing to exist in most markets.

The difficulty here goes into determining damages. Since the last NFL 2K game, we've seen Madden NFL 2006, 2007, 2008, and we will soon see 2009. Each of these games is priced at the standard game rate for each generation of consoles. More importantly, we have no idea if Take-Two would or could have sustained a budget price point for multiple years.

Another factual point left out of the complaint is that Madden was the only football game with any actual competitor. The AFL and NCAA Football leagues had no other games in production. Is it possible someone else would make an NCAA football game today, if the exclusive license weren't present? It is possible, but seems unlikely given the number of years where the license was available and no one took advantage of it. To the best of my knowledge, the Arena Football series has never enjoyed the sales of the other football titles, and it would be even less likely that a competitor would take advantage of that license.

Of course, there are a number of legal issues EA would be likely to present as well. First and foremost, the license with the NFL is legal. There's a solid argument to be made in that the NFL is violating anti-trust laws by aggregating its bargaining power for all the teams in the league in absence of a specific anti-trust exemption, as there is with TV rights. Beyond that point, EA is merely licensing the use of a trademark, something that happens daily in the video game world. That's the basis for all tie-in games, from movies to TV shows to sports leagues.

"Exclusive licensing is important to the gaming industry as a whole."

Exclusive licensing is important to the gaming industry as a whole, not to mention the concept of intellectual property rights as a whole. If you believe that someone should be able to protect their brand, then licensing is a necessary component. The NFL has an interest in being able to protect the its brand, and thus they can control who televises its games and what products bear its logo. While I haven't seen the NFL license agreement, I would not be surprised to find a quality control clause, so that if EA either fails to deliver a quality product or a product each season, then the license would terminate. It is also interesting to note that both the Madden and NFL 2K games had additional exclusive licenses, one for the use of Mr. Madden and the other for the use of ESPN.

More critically, there is not a viable alternative to allowing the NFL to exercise its license rights as they see fit. If exclusive licenses are banned, then what is to stop a company from simply only issuing one license? You can't force a company to license its product. Even if you were to say that sports leagues were themselves somehow an exception to exclusive licensing, there would be no practical, objective way to accomplish forced licensing to multiple parties while achieving brand protection. It's contrary to the fundamentals of trademark law.

Stepping back from the factual and legal to a more meta view, this is really par for the course with professional sports. In fact, it's all part of the same quagmire that the consolidation of pro leagues has consistently created. It's likely impossible to ever create a new football league to rival the NFL or a baseball league to rival MLB. The barriers to entry are simply too great, between the cost of establishing the teams, the difficulty in securing broadcast rights, and the immense reputation of the established leagues.

If this suit ends up being successful, then I would expect that the MLB license will be next. However, I don't see a practical way for a judge to reconcile the plaintiff's desires with the realities of trademark law. Even the idea that somehow money damages based on the price of future iterations of the game is difficult to reconcile. I would anticipate that EA's lawyers will likely make many of the points I've set out above, but until the response is filed and made public, we won't know what legal points they opt to focus on, be those ones I've set out or an alternative approach.

Permalink | Email this | Comments

Law of the Game on Joystiq: May the Enforce Be With You

Mark Methenitis — 2008-06-11T20:00:00+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:

Today we're going to discuss enforcement of intellectual property, which is a much deeper topic than simply "what is it going to cost me?" There are enforcement considerations on both sides of the issue, and it's often a rather sticky situation for the rights holder in a copyright scenario. Interestingly enough, there are some pretty important economic and public relations considerations with regard to enforcement as well as the legal ones.

There's a burden trademark owners face that isn't applied to copyright holders, specifically that those who don't protect trademarks lose them. Copyrights, on the other hand, aren't lost in this way. Theoretically, a copyright can only be lost once the time period for the copyright has elapsed, though recovery may soon be limited on so-called "orphan works" whose authors are difficult to locate. Alternatively, a copyright holder can formally release a work into the public domain, which is the equivalent of "abandonment" of a copyright.

This disconnect between the concept of abandonment in trademark and copyright can create a legal oddity for a game company. In some cases, for example where someone is distributing a pirated version of a game that includes a virus, it may be necessary to seek copyright enforcement in order to protect the trademark from tarnishment.

"The main purpose of enforcement is an economic concern, and the economics are convoluted."

There's also the matter of what can be recovered in a legal action, which may influence the decision process with respect to copyright protection. In general, a copyright holder can recover either actual damages or "statutory damages." Statutory damages are damages set by the statute, and they are generally between $750 and $30,000, but can be as high as $150,000 in a "willful" case. Because it is exceedingly difficult to prove actual damages -- as you will learn from my forthcoming economics discussion -- many opt for statutory damages. Of course, that is if the action goes through a trial, and given that many of these cases settle, the copyright holder is by no means always going to receive that amount. Given that recovery of attorney's fees and costs is not assured in these cases (it is left to the discretion of the judge), it's even possible that it would cost more to enforce the copyright than could be recovered in the case.

The main purpose of protection and enforcement is an economic concern, and the economics are relatively convoluted. The analysis has always started from a baseline: A creation is protected so that the author can profit from it, and anyone else who is distributing or using the product is violating that author's right. This was pretty straightforward with older media. If someone else is re-printing and selling my book without paying me for it, then that printer is making money from my work without my consent. Even if that printer is printing the book and giving it away for free, that is still, theoretically, hurting my sales. After all, who would pay for something they can get for free, right?

"If there's no reason to fear enforcement, then piracy will be rampant."

Well, in today's reality, this has become far more complex, and the arguments are numerous. The internet's distribution power and ease of replicating digital files has made piracy much simpler and also far more likely to be done for free. Some argue that rampant piracy is killing the industry, as no one would purchase products they can get for free. Others argue that having some content floating around may in fact entice additional people to purchase the product, which is often countered with the "demo" argument. Some argue that those who pirate wouldn't have bought the product to begin with, which is often touted by those who favor exposure of content to the maximum audience. This is often countered with the simple point that if they weren't willing to pay for it to begin with, why should they have the benefit of free use? Many of these arguments are circular, and looking to the practical economy, there seems to be some element of truth in most of it.

Then, there is the issue of public relations. The RIAA has taken a beating in the wake of their hard line approach to music piracy. On the other hand, if there's no reason to fear enforcement, then piracy will be rampant. It's a risk vs. reward analysis. If the risk is minimal compared to the reward, then people are likely to take the risk. On the other hand, if the reward is minimal for a substantial risk, then people are unlikely to take the risk.

Managing the various elements is a balancing act. Companies have to balance the cost of enforcement against the cost of piracy, as well as the risk of negative publicity against the risk of being perceived as a pushover. There's an awful lot to consider. The enforcement game will likely never end, as it's equally likely that piracy will never end. From the rights holder's perspective, it's the only way to be certain that you'll be the one to make money from your hard work, at least until someone finds a better solution.

Permalink | Email this | Comments

Law of the Game on Joystiq: Much Ado About Game Night

Mark Methenitis — 2008-06-04T20:00:00+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:

Ah, the library (the place with books, not the bar). The once quiet and relaxing readers' domain has moved into the digital age, now containing computers and video games. In fact, a number of non-profits, like libraries, churches, and schools, have all found video game based events worthwhile to attract players of all ages to their establishments, or to add more entertainment to an existing event. GamePolitics actually raised an interesting question I had also received from a reader related to library and church game nights, specifically: What are the potential ramifications of holding these events from a copyright and EULA perspective?

It's actually a very good question, albeit one with a fairly nebulous answer. As was pointed out by the GamePolitics piece, there are licensing services that will acquire the proper license for the public performance of a movie. Similarly, groups like ASCAP have well established licensing procedures for music. The reasoning is that public display and performance are within the bundle of rights a copyright holder has. Therefore, in order to publicly display something, you need to have the copyright holder's permission in the form of a license. Of course, if it were this simple, I wouldn't be writing a column about it.
I'm sure few will be surprised to find there is no such established licensing regime for the video game industry. And really, this shouldn't be surprising. Video games really haven't been much of a spectator sport in the US, and other than arcades, they've largely been confined to personal use. So where does that leave the library? Or on a more profitable note, where does that leave various LAN facilities that offer by-the-hour or by-the-day gaming for a fee?

That really leaves a paltry few options:

Keep going status quo and hope no one notices, but fear the potential legal ramifications if someone does.
Contact the rights holder and try to get a license and modified EULA.

Note that I don't include the option presented by the School Library Journal, as the thought of gaining a license by sending an e-mail that says "We assume we have permission if you don't respond" really isn't much different from option one. More importantly, if you can't verify that anyone with authority got the message, then you haven't gained anything at all.

You may have noticed that I also mentioned the EULA all of a sudden. Simply put: Most EULAs also restrict use to personal use. Of course, you would have to review the individual game's EULA to see what it says specifically. It's interesting to note that if the EULA explicitly grants the right of public use, then there is no concern over copyright issues because the EULA is the license. However, it's when the EULA is silent, unclear, or specifically forbids non-personal use that copyright issues apply as well as potential contractual ones.

To speak to another point that's been brought up often, EULAs have been both held enforceable and unenforceable in the US. I would generally assume that they are, in fact, enforceable with respect to reasonable terms. After all, most contracts have a severability clause; that is, a clause which states that any individual provision can be severed from the contract without invalidating the entire agreement. So, if an EULA has a number of unreasonable terms, those terms can be cut out of the contract, leaving the rest in tact. Hedging bets on invalidating the entire EULA is, in my opinion, an unwise course of action that is unlikely to be successful.

It's also important to note that being a non-profit organization doesn't provide a 'Get Out of Jail Free' card with respect to licensing. A public performance is a public performance, whether it's put on for a profit or otherwise. Being a non-profit may make the copyright holder more likely to grant permission for little or no cost, but that propensity doesn't chance the need for permission.

Assuming you decide on option 2, it doesn't need to necessarily be anything fancy. A simple, written statement saying it's alright to do whatever it is you're doing would suffice. For example, if you wanted to hold a Smash Bros. Brawl tournament at the library, a letter from Nintendo saying, "We don't object to you holding a Smash Bros. Brawl tournament at Anytown Library" would be fine, as would an even more generic "We don't object to the use of our software for a tournament at your library."

It's entirely possible that this situation may remedy itself as time passes. Either companies may choose to address the issues in the EULA, or they may opt to set up a public use clearing house of sorts like the movie industry has. Whatever the case may end up being, for now this is a yet another legal gray area in the video game realm.

Permalink | Email this | Comments

Law of the Game on Joystiq: Legal machinations of machinima

Mark Methenitis — 2008-05-29T18:00:00+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:

It's only fitting that during the same week Red vs. Blue: Reconstruction premiers, Law of the Game on Joystiq would finally get to the topic of machinima. The game-based machinima issue boils down to one of copyrights and licensing. To be more specific, there are issues of copyright involved in all machinima productions, which give a need for licensing; which are addressed by Microsoft and Blizzard by means of a "machinima policy."

For those of you who have been living in a cave -- on Mars! -- since 2003 (the year Red vs. Blue stormed the internet), machinima is the use of a pre-rendered engine to make a film. It's often been compared to digital puppetry. It's become a popular art form, in part because it minimizes production costs and requirements, and in part because it often utilizes games that people enjoy. Of course, because the art often makes use of someone else's game engine or game assets, there are a lot of copyright issues involved. Thankfully, both Microsoft and Blizzard have made many of these concerns much simpler by publishing machinima policies.

"If you want to make machinima, you need only locate the appropriate rules and follow them."

"Machinima rules" simplify the creation process. If you want to make machinima using one of the games covered by the rules, you need only locate the appropriate rules (i.e., Microsoft or Blizzard) and follow them, or use one of the contact links to discuss an alternate license agreement. Generally, these rules are pretty straightforward and allow many machinimists (or machinimators) to produce their products so long as they're not receiving revenue and follow a short list of rules. Microsoft's rules, for example, limit the types of content you are allowed to create by forbidding obscene material. It's also required that you grant Microsoft a license if your work tells a "back story" or "lost chapters" or other fan fiction-type themes related to Microsoft's characters and universe, which is generally to protect future games in case some story element happens to be similar to someone's machinima.

These companies are granting specific licenses for use of their copyrighted material. If your use goes beyond the borders of a license, then you will need a bigger license. For example, if you wanted to use one of the games from the Microsoft list to create a for profit machinima, you would need a license that allowed you to use the items commercially. That license would likely have to be negotiated with the company directly, and in the interest of simplifying that process, both the Microsoft and Blizzard guidelines have a contact e-mail.

So what about the rest of the machinima universe? This is where things get trickier, and given that there are hundreds of permutations of fact scenarios, I'll try to keep this as generic as possible. In general:

You own the copyright to things you create, but you won't own the copyright to elements you don't create without a license.
Your creation as a whole will fall somewhere on the derivative works scale, and without a license is generally going to be infringement.
Fair use may apply in certain situations, but to date it hasn't been relied on.
Regardless of all of the copyright issues, you may still be in violation of the End User License Agreement (EULA) or other terms governing your use of the game.

With any game based machinima, there are two major realms of components: things you create and things someone else creates. The first category will generally include the script, the voice acting, and sometimes the music. The second category includes, generally, the game engine, the game assets (character models, sound effects, etc.), and sometimes the music. The bit that falls into limbo is the actual video of the game being played, which you recorded, but is entirely derived from what falls into the second category. As we discussed two weeks ago, it's a derivative work, and therefore is under control of the copyright owner. Accordingly, it falls into the second category. The point of this categorization is that you can copyright things in the first category, but not in the second, without a license. There's one exception, and that is where the script is a derivative of another work. For example, if I took all of the lines from an episode of The Simpsons and re-recorded them with new voice actors to create a machinima, then that script isn't my work. In fact, even if I changed a few lines, it would still likely be infringement because of the substantial amount of cribbing. In sum, assuming the script is generally original, then it could be copyrighted as a written document.

A similar line of questioning I've seen presented a number of times revolves around the use of content creation tools. Specifically, if you're using the game engine, but you've re-skinned everything, made your own map, and used your own sound effects, is that machinima still a derivative? The best answer is that it is a derivative of a derivative, since the game mod is a derivative of the game and the machinima is a derivative of that mod. Think of this example: Back when Nissan released the Xterra, it was built on the same frame and with the same engine as the Frontier. You could think of the Xterra as a derivative of the Frontier. If you then took the Xterra and changed out a number of parts, like the bumper and wheels and tires, then your Xterra would be a derivative of the original Xterra. Similarly, the game engine is like the frame and engine, your mod is like the original Xterra, and the machinima would be your personally modified Xterra. (Of course, there aren't the legal ramifications involved with car modification.)

"Machinimists who are aiming to profit, will likely continue to face greater scrutiny."

The fair use issue comes up often, and while it was discussed at length last week, I'll try to summarize here. Essentially, unless you fall within the letter of the fair use rules, you're unlikely to be able to claim fair use. With regard to machinima, parody and satire are the most likely fair uses that can be relied on, but as I mentioned before, to date no one has attempted to do so on any commercial machinima. As to non-commercial machinima, most of the reliance on parody or satire has come under the already acceptable umbrella of the Microsoft rules.

Of course, much of this is irrelevant if the machnima violates the EULA for the game, and often times, it does. This question is entirely dependent on the game, however. The important first step is to review the EULA, and if there's any question as to whether the use violates the EULA, the safest approach would be to consult an attorney or attempt to get an answer from the game company (in writing!) about your particular planned use.

As machinima continues to gain popularity, it is entirely possible that other game companies will have their attorneys draw up machinima rules to follow the Microsoft lead. Rules like that would greatly simplify many of the issues facing those who wish to make machinima for fun. The machinimists who are aiming to profit, on the other hand, will likely continue to face the greater scrutiny of acquiring their own commercial licenses, a task that will require some very skillful negotiating.

Permalink | Email this | Comments