Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

ARE FANTASY SPORTS LEAGUES “GAMBLING”?

Earlier this month we reported on a US district court ruling that fantasy baseball leagues can use player names and stats without permission from Major League Baseball because MLB doesn't own any intellectual property in the names or stats. Another pressing issue is whether fantasy sports leagues violate criminal gambling laws. 

In Canada, for example, agame is illegal in Canada if

(i)   the contestant must pay to play,

(ii)  success is based (at least in part) on chance, and

(iii) the winning contestant wins goods, wares or merchandise.

Many fantasy sports games meet the first and third requirement. The real issue is whether they meet the second element too. We may soon find out (at least in the US).

A lawyer in Colorado has filed a lawsuit claiming that various Fantasy Sports providers (including ESPN and CBS) are violating gambling laws. The defendants have not yet commented.
Coverage is here  http://www.shorl.com/fakydokavepu (law.com)

THQ Inc. Directors And Executives Sued By Shareholder On Behalf Of Company

The complaint, filed with the Los Angeles Superior Court on August 25, 2006, alleges improprieties in the video game maker's issuance of stock options. Both current and former officers are named.

The shareholder complaint follows an August 7, 2006 request by the U.S. Securities and Exchange Commission for documents and information regarding THQ's stock option grant practices.

Coverage at http://www.shorl.com/fukerajifipi (Reuters)

MUCH ADO ABOUT EXCLUSIVITY

There has been some recent hubbub over whether Konami's Pro Evolution Soccer 6 will be exclusive to the XBOX 360. Microsoft has announced that the game will be a 360 exclusive in Europe for the first year of its release; Konami, on the other hand, says that it will be releasing the game on multiple platforms. It's not clear why the parties aren't all on the same page, but the situation demonstrates that exclusivity is an important issue when it comes to licensing software and products.

Generally speaking, in Canada licences can be non-exclusive, exclusive, or sole.  In a non-exclusive licence, the licensor retains the right to use the licensed property and to grant licences to other parties. An exclusive licence means that only the licensee is able to use the licensed property "? the licensor cannot use it or license it to others. A sole licence allows the licensor to use the licensed property, but prohibits the licensor from licensing to other parties. Other jurisdictions may use different terms, or give different meanings to these terms.

Exclusivity is a key point in any licence agreement. Obviously licensees prefer exclusive licences, as that gives them a lock on the particular content or technology. Licensees expect to realize more return from an exclusive licence, because they will not have to compete with others using the same matter. The flip side, of course, is that licensors expect to be paid more for an exclusive licence because their income stream is limited to the single licensee.

Exclusive licences can be restricted in different ways. For example, an exclusive licence can be limited to a certain geographical area (e.g., North America, Europe). This gives licensors the flexibility to parcel out rights as they see fit.

The video game industry has seen some huge exclusive agreements in recent years. For example, EA has obtained exclusive video game rights to the NFL, NCAA football, and ESPN (see here ).  There is concern that exclusive licences like this might diminish the quality of games by reducing the number of competing games (for example, buyers are more likely to buy a football game using real NFL players and teams than one that does not), and there have even been claims that exclusive licences are anti-competitive (see here ). Some organizations take a different approach "? last year, for example, the NBA entered into non-exclusive licences with five different game publishers (see here ).

Coverage of the PES6 issue http://shorl.com/hinolydetejy (GamesIndustry.biz)

Bully Avoids MA15+ Rating In Australia

The Rockstar game, due for an October, 2006 release, has been awarded an M rating by Australia's OFCL, thereby avoiding the MA15+ rating which could have effectively banned the game in that country.

Though little of Bully's gameplay has been seen to date, Bully has come under fire from anti-bullying groups as well as anti-video game campaigners such as Jack Thompson.

Coverage at http://shorl.com/hugrytytaseno (gamesindustry.biz)

THEY FOUGHT THE LAW, BUT THE LAW WON

Two Bristol men have been sent to jail for large-scale copying operations, which included the creation and sale of pirated games. The men have been convicted under the UK Trade-marks Act and Video Recordings Act, and proceeds of crime investigations have also begun.

Coverage at http://shorl.com/dynehubrybopu (BBC)

and at http://shorl.com/hupustalivysy (Myth-Games.com)

USS ENTERPRISE VS. IMPERIAL STAR DESTROYER

As you might know, there is an ongoing debate in our Video Game Law group regarding which vessel would win in a head-to-head battle the USS Enterprise or an Imperial Star Destroyer.

One of our students jumped into the fray and has come to (what he thinks is) the definitive answer. His memo to us on the topic is here

http://www.davis.ca/community/blogs/video_games/files/enterprise_memo.pdf

As you can see, the memo is well-researched and well-written. It's just too bad it comes to the wrong conclusion.

INJUNCTION ISSUES AGAINST LOUISIANA

District Judge James Brady has issued a parish-limited preliminary injunction against the State of Louisiana's Violent Game Law. Judge Brady found that "social science evidence demonstrating that violent video games are harmful" to be "tenuous and speculative" and stated that without the injunction "the statute will have a chilling effect on both video game developers and retailers."
 The Entertainment Merchants Association is reported to have said about the injunction

"We are gratified that Judge Brady has granted a preliminary injunction effective in the East Baton Rouge Parish to protect retailers from this blatantly unconstitutional law ["?] We are optimistic that District Attorneys throughout the state will follow the constitutional guidance in Judge Brady's decision and abstain from attempting to enforce this law pending further action in this case."?

coverage at http://shorl.com/fyvyhujoristi (Gamasutra)

MICROSOFT HUNTS DOWN XBOX36COM.COM

Microsoft has filed two lawsuits (one in Utah and one in California) against four defendants it accuses of cybersquatting and typosquatting. Microsoft claims the defendants have registered hundreds of domain names with the intent of driving Microsoft-based traffic to their websites. 

Some of the domain names look like could be legitimate Microsoft domain names (such as msnfinance.com). Others (such as xbox36com.com) are intended to snare surfers who have problems typing. Personally, we can't see how that could possibly w0rkcom.
Coverage at http://www.shorl.com/jevojavygibro (siliconvalley.com)

Microsoft Security Engineer Warns "Those Of You Who Are Working On MMOGs, Organized Crime Is Already Looking At You!"

More than a little distress was caused this week when Microsoft security development engineer Dave Weinstein told developers at the Microsoft Gamefest that criminal elements are hacking into MMORPGs, stealing MMORPG account information, and selling it on the black market, effectively kidnapping and killing characters.

Weinstein outlined the following modus operandi taking advantage of chinks in a game's security software, criminals acquire account information and then illegally access accounts. Then, either the account information is sold on the black market or, more commonly, coveted in-game items and currency are stolen and turned into actual cash via online auction sites.

Virtual 'muggings"? also appear to be a problem in some MMOGs, where the aggressor uses software "bots" (thus making himself unbeatable) to beat up and then subsequently rob characters. The stolen virtual possessions were then exchanged for real cash. (see example here ). This, of course, is only possible in games where the victor of a fight can take the items of a fallen character, such is the case with Lineage II.

MMOG and MMORPG players spend at lot of time creating and building up their characters. With monthly subscriptions to games like World of Warcraft (paid) and Guild Wars (free) bringing an unending flow of new adventures, players spend hundreds of hours completing quests, accumulating experience, and acquiring gold and items. "For a lot of the customers out there, there is more store value on their MMOG characters than there is on the credit card with which they pay for the account.", Weinstein said.

Though most MMOG publishers are aware of such problems, Weinstein underscored the fact that real-world authorities are often unresponsive to in-game theft. "The police are really good at understanding 'Someone stole my credit card and ran up a lot of money,'" he said. "It's a lot harder to get them to buy into, 'Someone stole my magic sword.'"

Late last year, Square Enix dealt with a similar issue by banning 800 people from playing Final Fantasy XI, after it was found out that they were auctioning 'stolen"? items.  Another good way for online gaming companies to protect themselves is to ensure their license agreements and online terms of use agreements adequately deal with potential liability issues such as cheating, hacking, viruses and service interruptions.

Coverage at http://shorl.com/gigudatarudru

The Legal Fun Never Ends For Take-Two And Rockstar Games

Florida lawyer and anti-video game crusader Jack Thompson has filed a petition with the 11thJudicial Circuit Court asking for Take-Two Interactive Software and Wal-Mart to supply him with an advance copy of Bully - the upcoming game from Take-Two and Rockstar. Thompson has criticized both Wal-Mart and the ESRB for the fact that Wal-Mart has been taking advance orders for Bully even though the ESRB, which has had the game for over a year, has yet to rate it. In the result, Thomson says he plans to have an independent third party play the game in order to determine if Bully would constitute a public nuisance in the state of Florida.

Thomson, who likens the situation to a pharmaceutical company selling a drug that has yet to receive FDA approval, has accused Take-Two of instigating 'a new wave of successfully orchestrated harassment" against him. This harassment apparently consists of phone calls received by Thompson earlier this week from a caller identifying himself as 'Peter"?, who called Thompson a sexual deviant and threatened his life. This is not the first time Thompson's life has been threatened - in December of 2005, a 16-year old gamer was charged with harassing communication for threatening to kill Thompson.

Take-Two has not yet commented on Thompson's petition.

Coverage at http://shorl.com/demubredykegri (Gamespot)

Thompson's petition at http://shorl.com/ferejupridufi

UK Woman Faces Large Fine And Time In The Clink For Videogame Piracy

A woman who had previously served 12 months in a British prison for videogame piracy has now had almost $500,000 in assets seized for further piracy, after being found in possession of pirated PS2 and XBox games.  After an investigation by the Entertainment& Leisure Software Publishers Association (ELSPA), Susan Roach was found to have made profits of more than $1.6 million dollars from her videogame piracy business, and was ordered under UK Proceeds of Crime legislation to pay $500,000 of these proceeds to the court.  If she doesn't pay the fine within imposed time limits, she could face more jail time.  The UK has been cracking down on videogame piracy of late, with several high-profile piracy and mod chip prosecutions.

ELSPA http://www.elspa.com/

Source http://shorl.com/bimypinygrofo

HUMAN RIGHTS TRIBUNAL RULES AGAINST EA

The British Columbia Human Rights Tribunal has awarded almost $150,000 to a former EA employee who claims she was unjustly fired after a suffering a breakdown. The worker's health deteriorated as her workload increased, and when she informed EA that she would be taking indefinite stress leave on her doctor's recommendation, she was dismissed (with an offer of a lump-sum severance payment). Although the Tribunal noted that it was not a case where the employee was 'worked to death"?, it stated that EA did not attempt to accommodate the employee's need for leave.

The monetary award includes amounts for injury to the worker's dignity, feelings and self-respect; health care costs; legal expenses; out-of-pocket expenses; lost value of stock options; and severance.

It is not known whether EA will appeal the Tribunal's decision.

Coverage at http://shorl.com/godyhipavubro (Vancouver Sun)

BC Human Rights Tribunal Decision at http://shorl.com/febreprogrydadru

ILLINOIS GETS SPANKED

The Entertainment Software Association has announced that the video game industry was successful in forcing the State of Illinois to pay its legal bill for challenging a law that the judge said it knew to be unconstitutional from the outset. Kennelly J. issued the order against Illinois "for its unconstitutional effort to enact a law banning the sale of violent video games".

The Judge is further reported to have stated "As we said from the outset of this debacle and repeatedly since then, instead of squandering taxpayers' money on frivolous lawsuits and attempting to enact clearly unconstitutional laws, we encourage policymakers to focus their resources on a cooperative effort with industry, retailers, parent groups and health groups to work together to educate parents about the Entertainment Software Rating Board (ESRB) ratings and content descriptors, and the parental controls available in all next generation consoles to help parents make sound choices about the games their kids play."

The total bill?  US$510,528.64.
coverage at http://shorl.com/gimigrostubrojy (GameDaily)

But Can The ESRB Get Past The Big Boss On Level 12? It Had Better, According To Proposed Law

The ESA, which established the ESRB, contends that a proposed bill - the "Truth in Video Game Rating Act" (HR 5912) - requiring the ESRB to play through every single video game it rates is not sensible. ESA president Doug Lowenstein responded to the proposed bill by defending the current ratings system and noting that games can take over 100 hours to complete and to do so would often require the skills of a professional gamer. Such gamers, he went on to say, are not likely to be representative of the mainstream American parent.
Coverage at http://shorl.com/duhahokepregro (GameDaily)

GAMESTOP SUED OVER TIME

Six managers have filed a class action suit for unpaid overtime, under the Fair Labor Standards Act (FLSA). They seek to have managers denied overtime since 2003 because they were classified under the FLSA as 'executive, administrative, or professional capacity" to opt into the class action and obtain redress (including overtime, interest, damages and lawyers' fees).  They claim to have been forced to work 50 to 60 hours a week without proper compensation.

GameStop has asked that the lawsuit be dismissed because of a similar 2004 case pending against Electronics Boutique.
coverage at http://shorl.com/basahalesara

JUDGE SAYS PRO PLAYER STATS CAN BE USED WITHOUT LICENCE

A US district court judge in St. Louis has ruled that fantasy baseball leagues can use player names and stats without permission from Major League Baseball because MLB doesn't own any intellectual property in the names or stats. The lawsuit was filed after MLB refused to grant CBC Distribution and Marketing Inc. a new licensing deal for the use of pro ball player stats. 

You can expect the MLB to appeal this one pro licensing deals are worth millions. 

The ruling of course does not affect any personality rights that individual players may have, so sports games developers and publishers will still need licences from player associations to use player likenesses in games. They'll also need trade-mark and copyright licences to use team and league logos in games. 

Also, in some countries (such as Canada) privacy laws might prohibit gaming companies from using personal information about players in games without their consent. 

Coverage here  http://www.shorl.com/bulygynopriho (SI.com)

A copy of the case is here  http://www.davis.ca/community/blogs/video_games/files/show_case_doc.pdf

MS DEPLOYS COUNTER HACKING EFFORTS IN KOREA

Microsoft is confident that the DVD firmware hack will be countered by its Xbox Live updates.

Sales of security upgraded consoles in Korea have increased over the past month after hackers tinkered with the embedded DVD software drive to allow copied CDs to run on the machine. Xbox is confident that the problem will be 'neutralized"? through software updates (detected and prompted for installation upon connecting to Xbox Live).

Apparently more consumers are attempting to bypass Xbox's security in order to be able to use cheaper pirated software. The additional cost for a modified console is said to be approximately KRW 70,000 (60 Euro) and users are tempted by the saving of about KRW 25,000 (21 Euro) from the purchase of pirated software.
coverage at http://shorl.com/gybrestigribinu

GTA DOES NOT INFRINGE STRIP CLUB'S RIGHTS

We're all aware of the difficulties that Rock Star and Take Two have experienced in relation to GTA San Andreas, but this one takes the cake Rock Star was sued by an LA strip club for trade-mark infringement. The real-life PlayPen Gentlemen's Club claimed that by including a virtual strip club called the 'Pig Pen"? in GTA SA, Rock Star had harmed PlayPen's reputation and infringed its trade-mark. The judge, however, found that there was no infringement "? the virtual strip club in the game was 'artistically relevant"? and not "explicitly misleading"?. The PlayPen club apparently intends to appeal.

We discussed issues relating to the use of real-life settings in games back in July (see here ). This case deals with the same point "? by including real-life settings or locations (or ones that clearly are based on real-life locations), do game designers risk litigation like this? Does the increase in in-game advertising mean that game players are more likely to assume sponsorship or endorsement when they see real-life establishments featured in video games?  These are all interesting questions.  For now, the only conclusion we can draw is that Rock Star is probably relieved to have won a GTA battle.

Coverage at http://shorl.com/bokebafrifruki (Mercury News)

TRUTH IN VIDEO GAMES?

US Representative Cliff Stearns has introduced a new bill (HR 5912) titled the 'Truth in Video Game Rating Act"?. The bill, which is directed at the Federal Trade Commission, prohibits activities such as rating games only on partial content (i.e., the ESRB will have to play games in their entirety before rating them), withholding content for rating, and gross mischaracterization of content. It also calls for a study of the ESRB's rating system, whether there should be an independent rating system, etc.

The Text of Bill HR 5912 is here .

OK, So Maybe The Name Is A Little Similar...

Eidos, makers of theTomb Raiderseries, are contemplating legal action for copyright infringement against Ozura Mobile, who are marketing a new game for mobile handsets called "Lava Kroft."  I'm not sure what all the fuss is about...surely these similarities are just coincidence
Main Character inTomb RaiderLara Croft, Lady Abbingdon, a buxom brunette beauty.  Main Character inLava Krofterr, Lava Kroft. A buxom, brunette beauty. Description of Lara Croft's raison d'etre"archeological wunderkind," "credited with the discovery of some 16 archeological sites of international significance." Description of Lava Kroft "a new age woman who has an exceptional thirst for discovering some of the most intriguing and mystical treasures in the world."More words of wisdom on Lara Croft's life her "exploits...invariably involve the unexplained or the outright unbelievable."  On the mystery that is Lava Kroft she suffers "an addiction to danger."Key Wardrobe Pieces for Lara in latestTomb Raidertitle, "Legend" a black tank top.  InLava Krofta white tank top.
See?! Innocent coincidences and not even that similar...black and white couldn't be more opposite, could they? And, I mean, Lava Kroft hangs out in volcanoes, according to Ozura Mobile's press release, available at http://shorl.com/fupytrafodrufro .  Lara Croft is the TOMB RAIDER, people, not the VOLCANO RAIDER.  These are two entirely distinct dark, shadowy crevasses.  I'm sure it will be fine.  Nooooo copyright infringement here, no siree.  I don't know what Eidos is getting all upset about.

Coverage at GamesIndustry.biz http://shorl.com/hibrobedidreko

Lara Croft information courtesy http://www.tombraider.com

 

MINNESOTA GAME LAW BLOCKED

Back in May, Minnesota introduced a law making it a petty misdemeanour for a person younger than 17 to rent or purchase a video game with an M or AO rating (see here ). As it has done in many other states, the ESA soon brought a constitutional challenge to the new law (see here ).

A US court has now blocked the law, saying that it violates freedom of speech rights. The judge also commented that Minnesota did not provide 'empirical proof"? that violent video games cause psychological harm to minors.

Coverage at http://shorl.com/fadrodabomyfa (Game Spot)

Game Politics has a link to the decision here .