Davis LLP - Video Game Law Blog

MumboJumbo Award Increased in PopCap Lawsuit

Fri, 05 Feb 2010 08:39:00 EST

As a follow up to our January 27, 2010 blog post entitled "MumboJumbo Awarded Damages in Lawsuit Against PopCap", it has been reported that the payout awarded to MumboJumbo in this lawsuit has been increased from $4.6 Million to $7.3 Million. PopCap has reportedly been required to pay $2.7 Million to MumboJumbo in lawyers' fees, thereby increasing the total award of damages and fees to be paid out. The initial $4.6 Million award was granted by a jury who reportedly found PopCap liable for fraud, tortious interference and breach of contract.

Mike Richardson, an attorney from legal firm Rose Walker which represented MumboJumbo in the trial, reportedly stated the following: "We are happy to see the court award these fees. MumboJumbo shouldn't have to bear the cost of proving that PopCap breached the contract here."

Coverage at Gamasutra.com.

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Proposed new tax credits for video game development in BC

Thu, 04 Feb 2010 08:46:00 EST

The British Columbia government just announed a proposed new tax credit for the BC film and video game industries. The proposal includes:

* a credit for video game development, of 17.5% of qualifying BC labour costs

* a 33% credit on labour costs for foreign productions

* a VFX tax credit bonus of 17.5%

* a qualified BC labour expenditures cap of 60% of production costs

If passed, the credit for the video game industry would apply to game development that begins after August 31, 2010.

The purpose of the credits is to help BC compete with other provinces and countries who have actively supported the games industry.

BC government news release is here.

Our previous coverage of Ontario tax credits is here.

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Casual Gamers Beware!

Wed, 03 Feb 2010 16:42:00 EST

You know that casual gaming is on the upswing when Facebook gamers initiate class action lawsuits on the basis of "misleading ads" associated with social games that use Facebook as a platform. In November of 2009, Rebecca Swift filed a class action lawsuit against Facebook and Zynga (the latter being a developer of social games on Facebook and MySpace). Allegedly, Ms. Swift ordered a "risk free" trial of green tea supplements in order to obtain "YoCash" (virtual currency) to "buy" various in-game items for use in Zynga's YoVille. Ms. Swift claims that when she attempted to cancel the order within the "risk free" trial period, the supplier of the supplements failed to honour her request and her credit card was charged.

Ms. Swift has since dropped the lawsuit against Facebook, but is continuing with her action against Zynga.

There is an obvious moral in all of this for social game aficionados that are concerned about being possibly ripped off by "misleading ads": stop playing social games, not so much because of the possibility of liability, but more so because they suck. Do yourself a favour and pick up a 360 or a PS3.

Coverage at Industry Gamers

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Jellyvision Sues Aflac Alleging Infringement of its Copyright in "You Don't Know Jack"

Wed, 03 Feb 2010 09:12:00 EST

Back in 1995, Jellyvision developed and released its comedic interactive trivia game You Don't Know Jack. Indeed, in 2001, it was apparently briefly made into a game show that aired on ABC. It is still available online today. Aflac, a Fortune 500 company that provides supplemental insurance recently developed a campaign called You Don't Know Quack, which encourages consumers to interact and respond to (three) trivia questions designed to provide information about the company's products and services. In addition to this recent campaign, Aflac has also used such slogans as Don't Let "em See you Quack.

Critics argue that Jellyvision is taking advantage of an opportunity to garner publicity because Aflac is a known, established company with strong brand identity; however, legally speaking, if confusion can be proven exists between the two brands, and Aflac has received an economic benefit as a result of its You Don't Know Quack campaign, Jellyvision could have a case.

According to sources, the parties are looking to settle the matter amicably.

Coverage at: Gamasutra.com and the Ledger Inquirer.

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Microsoft Motion to Dismiss

Tue, 02 Feb 2010 16:43:00 EST

According to Gamasutra, in October 2009, Microsoft removed support for third-party memory cards on Xbox 360 through a software update. As a result, it is reported that Datel, a memory card maker, filed an antitrust lawsuit against Microsoft alleging that said lock-out is deliberately harming competition. Microsoft is reportedly arguing that the lock-out was implemented to prevent cheating and to maintain tighter control over compatibility, safety and compliance and that it has a right to do so.

It has been reported that Microsoft recently filed a motion to dismiss the antitrust suit, using a precedent set by Apple to build its case. Apple sued Psystar last year for having manufactured devices that ran Mac OSX without Apple's authorization and was reportedly successful, despite Psystar's allegations of antitrust. It appears that Microsoft's argument is that, just as the Court ruled that only Apple machines can run Mac OSX, so should Xbox 360 consoles only use first-party accessories.

Microsoft has apparently also taken exception to Datel's definition of the field in which it claims anti-competition because it has only included Xbox 360 and PlayStation 3 and fails to include the Nintendo Wii, the Nintendo DS, the Sony PSP and Sony PlayStation 2 in its definition of "Multiplayer Online Dedicated Gaming Systems". Microsoft is allegedly arguing for the inclusion of the Wii, inter alia, in the category, because it has outsold both the Xbox 360 and the PlayStation 3, which may weaken the antitrust claims.

Coverage at: Gamasutra.com

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Court Upholds a Ban on Fantacy Games in Wisconsin Prisons

Thu, 28 Jan 2010 13:44:00 EST

On January 25, 2010, the 7TH U.S. Circuit Court of Appeals upheld a ban on Dungeons & Dragons in Wisconsin prisons.

The suit was brought by an inmate by the name of Kevin Singer who is serving a life sentence for first-degree homicide in Wisconsin's Waupun prison. In 2004, Waupun prison officials confiscated Singer's collection of game manuals, dungeonmaster notes and other paraphernalia. Prison officials argued that Singer could not keep the materials because Dungeons & Dragons promoted, inter alia, competitive hostility, addictive escape and violence. Thereafter, the prison adopted a ban on all types of fantasy games.

Singer argued that the ban violated his First Amendment rights. The Court ruled that the prison's policy was reasonable and did not violate Singer's rights.

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MumboJumbo Awarded Damages in Lawsuit Against PopCap

Wed, 27 Jan 2010 17:31:00 EST

It has been reported that MumboJumbo, a Dallas-based worldwide publisher, developer and marketer of premium casual games for PCs and various game consoles such as "Midnight Mysteries: The Edgar Allan Poe Conspiracy" and "Luxor Adventures" has been awarded $4.6 Million in a lawsuit against its former business partner PopCap.

The lawsuit opposing the parties allegedly originated from a 2006 game retail distribution agreement whereby MumboJumbo undertook to produce, distribute and sell certain PopCap games in North America. However, it was reportedly found that PopCap breached the contract by deciding to sell and market its games on its own. MumboJumbo's lawyers also reportedly showed that PopCap committed fraud and tortious interference by damaging MumboJumbo's relationship with a key retailer.

Beyond the $4.6 Million in damages that was awarded to MumboJumbo, it has been reported there will be another hearing to decide on the quantum of the attorneys' fees to be added to the damages.

Furthermore, PopCap has reportedly indicated that it intends to appeal the decision in question.

Coverage at PRNewswire.com, Gamasutra.com and Edge-Online.com.

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PS3 gets hacked

Wed, 27 Jan 2010 11:10:00 EST

According to Edge, the "unhackable" PS3 has been hacked, with details to follow, apparently.

This is timely, with the latest round of Anti-Counterfeiting Trade Agreement negotiations underway now in Guadalajara, Mexico. Those negotiations cover a wide range of copyright-related topics including anti-circumvention. One proposal is for civil and criminal penalties for breaching anti-circumvention provisions. The US has also proposed that anti-circumvention provisions be expended to cover technology that prevents access to a work (in addition to preventing reproduction of the work)

The US, of course, has anti-circumvention legislation as part of its DMCA. Canada has no such legislation, but for years has been been debating the appropriate Canadian approach to circumvention of copyright protection.

Edge article here.

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Ontario Government announces new source of funding

Tue, 15 Dec 2009 12:41:00 EST

Ontario Government announces new source of funding*

Making good on its March budget-time promise, the McGuinty government announced that the Ontario Media Development Corporation (the "OMDC") has $10 million to dole out grants to creative companies under what is being called the Intellectual Property Development Fund (the "Fund"). Video game companies are specifically included given the requirement that the recipients be screen-based.

Who can apply?

Ontario-based existing companies. This Fund is available to Ontario (or Federal) companies with establishments in Ontario focussed on screen-based content products. Start-up or emerging companies are not shut out by the requirement for the applicant to have been in business for one year; such companies can piggy-back on their principals experience, if it qualifies of course. There are certain exclusions that are described in the IP Fund Guidelines found here: http://www.omdc.on.ca/Page5575.aspx (The exclusions for interactive digital media products are found on page 5 of the Guidelines.)

What is being financed?

Eligible expenditures in early stage activities. "Eligible expenditures" means labour expenditures, non-labour expenditures and overhead expenditures incurred over the course of the taxation year for which the applicant has applied to the Fund. In the case of interactive digital media products, "early stage activities" means any activity necessary to bring closer to the completion of a functioning prototype or market ready stage.

When can one apply?

January 2010. The applications were posted today and can be found here: http://www.omdc.on.ca/Page5575.aspx. Applications will be accepted until July 31, 2010 (if there is any money left). The timeframe for expenditures is as follows: those incurred after March 31, 2009 (notice the retroactivity) up to and including March 31, 2010, and paid no later than 60 days after the applicant's corporate fiscal year end will be considered eligible.

How can one get more information?

Aside from the FAQ and Guidelines, the OMDC is holding info sessions in January/February; details can be found here: http://www.omdc.on.ca/Page5575.aspx

The key here, as with other similar initiatives, is to apply quickly (and correctly) as the Fund will be allocated on a first come, first served basis.

*While quantities last. There is a cap of $10 Million and no applicant can secure more than $150,000, which means there will be at least 66 successful applicants. The individual cap would have to be shared amongst "associated" company applicants (the test for being associated is as found in the Income Tax Act).

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What's in a Website?

Tue, 15 Dec 2009 09:55:00 EST

In its December issue, the National published the results of its nationwide survey on the best Canadian law firm websites. The survey involved a panel of nine legal technology professionals who ranked and commented on Canadian law firm websites within different categories, including Blogs, Student/Recruiting and Multimedia, among others.

Some of the key factors considered by the panelists when ranking the websites were:

1. The website's simplicity;

2. The website's "curb appeal";

3. Whether the website posted any blogs;

4. Lawyer biographies;

5. Whether the lawyers' photos were professionally produced and present lawyers as being "real" and "approachable";

6. How clearly appropriate contacts were identified; and

7. Whether the website effectively merged various technologies such as Twitter, videos, blogs and web copy.

Davis LLP was the co-winner for the best website in the Blogs category (this category only included law blogs created and maintained by law firms), along with Clark Wilson LLP. Davis LLP's blogs received particular praise for social media best practices, including RSS feeds, Twitter connections and regular updates. Furthermore, Davis LLP's Video Game Law Blog was specifically recognized as an example of a "team blog" since it features multiple contributing lawyers.

Winners in other categories included Ogilvy Renault for the best website within the category of a Large/ Multi-Jurisdictional firm and co-winners Hyndman Law and Neff Law Office for the best website within the category of Small/Solo firm. Hull & Hull LLP was rated the best website in the Multimedia category and Bull Housser & Tupper LLP was ranked the best website in the Student/Recruiting category.

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Opening the XBOX FloodGates

Mon, 07 Dec 2009 10:35:00 EST

Wow, talk about litigious. In an earlier posting we reported about gamer-turned-litigator, Erik Estavillo. He sued Nintendo because he says a Wii update that limits cheating is "interfering with certain players pursuit of happiness". He's also suing Sony and Activision Blizzard.

Recently he sued Microsoft for $75,000, claiming pain and suffering resulted from the death of his XBOX 360. He says the XBOX is one of the only ways he socializes because he has agoraphobia. He also can't afford to get a new 360 or to replace the data he lost on his old one.

As part of his lawsuit he's subpoenaed Bill Gates. Apparently he wants to find out the number of XBOX 360s that have experienced the Red Ring of Death, and how many of those XBOX 360s Microsoft has repaired. Oh, and on another note he wants to know how many XBOX Live users have been banned for piracy in the last year. You never know... that info could come in handy, eh?

Coverage here.

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Unsatisfied gamer sues Activision Blizzard

Wed, 02 Dec 2009 16:12:00 EST

Erik Estavillo, the same man who has previously sued Sony Computer Entertainment America (SCEA), Microsoft and Nintendo, has allegedly filed another lawsuit in the Civil Division of the Superior Court of California. This latest suit was filed against Activision Blizzard over the game World of Warcraft.

According to Gamerant.com, Mr. Estavillo sued SCEA after he was banned from the Playstation Network for « inappropriate behaviour ». His lawsuit against Microsoft was for the failure of his Xbox 360 system, which he claims had to be replaced after it displayed the "red ring of death" and he allegedly sued Nintendo for having disabled unauthorized third party programs on the Wii.

It appears that he is now suing Activision Blizzard because he claims that the calculated slow pace at which the player walks or runs in the game leads to longer play time, which then leads to higher subscription revenue for Activision Blizzard, a practice that Mr. Estavillo has allegedly called "sneaky and deceitful practices".

Gamepolitics also reports that Mr. Estavillo, who claims to suffer from Obsessive Compulsive Disorder, Agoraphobia, Panic Disorder, major depression and Crohn's disease, alleges that he relies heavily on video games for the "little ongoing happiness he can achieve in this life" and does not want to end up like other gamers in similar situations who take their own lives.

Escapistmagazine.com reports that Mr. Estavillo is asking the court to order that the game be "fixed", as well as an award of one million dollars in punitive damages "for creating a game which hurts gamers rather than being a bridge of entertainment for them to pursue happiness."

Mr. Estavillo has allegedly also subpoenaed Martin Lee Gore of the band Depeche Mode and Winona Ryder to testify on his behalf regarding the subject of alienation. According to GamePolitics, Mr. Estavillo is claiming that Gore will be testifying with regards to alienation because his song lyrics show that he himself has been alienated and Ryder is to explain the significance of alienation in the book The Catcher in the Rye, for which she has apparently shown an interest, and Mr. Estavillo allegedly expects her testimony to explain how alienation in The Catcher in the Rye can tie to alienation in video games like World of Warcraft as well as in real life.

Coverage at GamePolitics.com, Escapistmagazine.com, and GameRant.com

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Human Rights Violations are No (Video) Games

Wed, 02 Dec 2009 10:56:00 EST

A study conducted by two Swiss human rights organizations, Trial and Pro Juventute, has reportedly found that some video games depict actions that would constitute violations to international human rights laws in real life. More precisely, the researchers focused on International Humanitarian Law (IHL), basic norms of International Human Rights Law (IHRL) and International Criminal Law (ICL). The study was reportedly conducted as follows: gamers played 20 different games, while three attorneys observed the games in order to pinpoint which actions violated armed conflict rules and regulations.

It has been reported that the organizations in charge of the study have made the following statement: "The practically complete absence of rules or sanctions is nevertheless astonishing: civilians or protected objects such as churches or mosques can be attacked with impunity, in scenes portraying interrogations it is possible to torture, degrade or treat the prisoner inhumanely without being sanctioned for it and extrajudicial executions are simulated." The groups also reportedly noted that there were a few games that reprimanded the killing of civilians and that rewarded strategies aimed at preventing damages.

However, the organizations behind the study have allegedly stated that the study's purpose was not to prohibit the games or to make them less violent but rather, on a going forward basis, to have developers observe human rights laws and make it clear to gamers that human rights violations cannot be tolerated, even in a game setting.

Coverage at News.cnet.com

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Some Xbox 360 users losing their memory

Tue, 01 Dec 2009 13:21:00 EST

Microsoft locks out aftermarket Xbox 360 memory units; Datel objects, launches antitrust lawsuit

Are you one of thousands of Microsoft Xbox 360 users that have recently purchased a third-party memory unit for the Xbox 360 to store data and saved games? If so, you are likely suffering from memory loss. As a consequence of a recent mandatory update of Xbox 360's firmware, all third-party memory units have been disabled by Microsoft. Datel Design & Development ("Datel"), for one, is not taking this development sitting down. Having sold over 50,000 of its Memory Max cards to Xbox 360 users since May of 2009, Datel has responded by initiating a an antitrust lawsuit pursuant to the California Unfair Competition Law alleging that Microsoft has unfairly targeted Datel and its customers, and that permitting Microsoft to go ahead with its lock-out will "forestall innovation, and deprive future consumers of the benefits of competition."

It will certainly be interesting to see how this battle plays out in the courtroom; though I'm rooting for the little guy, my money's squarely on Microsoft. Check back regularly for further updates.

Gamasutra coverage here

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Don't You Wish You Were an Activision Shareholder Now?

Wed, 18 Nov 2009 15:29:00 EST

Set to be the most successful video game of all time (according to press releases anyway), Activision paired up with retailers like Game Stop and Best Buy to ensure that shelves were fully stocked for stores open late to receive the throngs of gamers vying to be among the first to claim the latest version of its earlier hit Call of Duty, "Call of Duty: Modern Warfare 2".

If what analysts have been saying has any truth to it, this game should pull in upwards of $700 million U.S. dollars by the end of 2009. Other analysts (are these "analysts" like Call of Duty is likely to account for a sizable chunk of Activision's profits in the fourth quarter, analysts say, so there is plenty at stake in the launch."

Well, clearly the analysts were on to something. Kids across Canada lined up to try and secure a copy of the much anticipated game, including the son of a friend of mine who lives in British Columbia, who saved up his money and insisted on camping out early to wait for the store to open. I'm very happy to report that he got a copy which I'm sure he has already tormented his parents by playing constantly and not sharing with his siblings (well, that's what I would do anyway).

As for Activision, in its first week, well, first 5 days actually, Call of Duty 2 managed to post record sales of $550 million coming very close to what analysts had predicted late last week. Activision has also managed to come out ahead of its rival Electronic Arts, as its shares rose by another 5 cents.

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Modern Censorship in Russia

Wed, 18 Nov 2009 08:01:00 EST

Folks in Russia weren't impressed with a scene in Call of Duty: Modern Warfare 2 where a Russian terror cell shoots up an airport full of civilians. After threats of government bans or recalls, Activision has reportedly decided to remove the offensive scene from the Russian version of the game.

Russia has no formal ratings board for video games, so the approach to game review in Russia is different. Equally effective, though, it would appear...

Gamasutra coverage here.

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"Hot Coffee" Dispute Changes Industry

Mon, 26 Oct 2009 11:39:00 EDT

It has been reported that the class-action lawsuit opposing Take-Two and its shareholders has now been settled for $20 million. The dispute allegedly began when it was discovered that a sexual minigame hidden in the code of Grand Theft Auto: San Andreas could be unlocked by a downloaded hack. This discovery reportedly lead to the game being re-rated to "Adults Only", to copies being removed from store shelves and to a drop in stock price for the company.

The scandal was allegedly named "Hot Coffee" because the minigame was initiated by the game character agreeing to enter a woman's house for a cup of coffee.

Take-Two was reportedly accused of several missteps in this case, namely that its management was not cooperating or assisting with the company's audit committee, that its management was failing to keep the board of directors informed of important issues or failing to do so in a timely manner, that inventory and software development costs were misstated, that it did not have the ability to accurately report its financial results due to failing and deficient internal controls and procedures and that it lied about where the content of the game came from. It has been reported that a new management team was installed in 2007 as a result of these missteps.

Despite the end of this particular dispute, some have stated that the gaming industry has been forever changed in the way games are rated, because all of the content on a game disc now has to be disclosed and rated.

Coverage at Arstechnica.com

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What can a team of two accomplish?

Mon, 26 Oct 2009 10:18:00 EDT

A lot, apparently, if you the Krabbits on your side.

Indie developer Krabbitsoft has done what some thought was impossible, developing and releasing an exciting, graphics-laden Action/RPG based on their own IP. In their words: "Hack n' slash combat focused, KWO now includes Battle Modes for those too twitchy to satisfy with Story Mode. New dash attack and combat magic jump & multi-shoot level the playing field for earthbound and aerial battler alike. Not for the faint of heart, not for the weak in spirit, for you will be pwned."

Gamespot listing is here.

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Left 4 Dead 2 Appeal Unsuccessful

Mon, 26 Oct 2009 10:12:00 EDT

Valve to issue heavily edited version to satisfy Australian censors

It appears that Australian fans of Valve's critically acclaimed Left 4 Dead survival horror franchise will have to miss out on much of the blood n' guts that the rest of us have been eagerly anticipating in its latest installment, Left 4 Dead 2. On October 22, 2009, Australia's Classification Review Board unanimously upheld an earlier decision of its ratings board to refuse classification to the unedited version of Left 4 Dead 2, citing its frequent and often gratuitous violence. As a result of this decision, unedited versions of the game will not be available for sale in Australia. Gamers down under will instead have to settle for a toned down version of Left 4 Dead 2 that does not contain "depictions of decapitation, dismemberment, wound detail, or piles of dead bodies lying about the environment" and which has received an MA 15+ rating by Australian censors. Yawn.

Coverage from Gamespot.com here

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Messy Fallout

Fri, 23 Oct 2009 14:12:00 EDT

Interplay Entertainment Corporation ("Interplay") has reportedly obtained a ten day extension to answer a preliminary injunction filed by Bethesda Softworks LLC ("Bethesda") in a court battle involving its licensing agreement with Bethesda for the rights to Fallout 3, Fallout 4 and Fallout 5. According to Gamepolitics.com, Bethesda is contesting the fact that Interplay sold the original Fallout games after the release of Fallout 3, while Interplay claims that it retained the rights on the previous Fallout games when it contracted out the rights to the subsequent Fallout games to Bethesda. It is also reported that Interplay is countersuing Bethesda over statements that it allegedly made to third parties which were harmful to Interplay's business. According to the Raging Bull forum, Interplay is also claiming that Bethesda is in breach of the contract, thus making it null and void, and that said breach of contract means that Interplay owns the franchise again. Interplay allegedly is also arguing that instead of owing Bethesda royalties for the upcoming Fallout MMORPG, Bethesda should pay Interplay royalties for Fallout 3 and damages for the injury it has caused to Interplay's name. Further developments will surely follow upon expiry of the aforementioned ten day extension.

Coverage at Gamepolitics.com

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