Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

MumboJumbo Award Increased in PopCap Lawsuit

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.

Proposed new tax credits for video game development in BC

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.

Casual Gamers Beware!

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

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

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.

Microsoft Motion to Dismiss

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

Court Upholds a Ban on Fantacy Games in Wisconsin Prisons

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.

MumboJumbo Awarded Damages in Lawsuit Against PopCap

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.

PS3 gets hacked

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.

Ontario Government announces new source of funding

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).

What's in a Website?

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.