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Davis LLP Web Logs or "Blogs" are intended to provide general comments on developments in the law. They are not intended to be a comprehensive review nor are they intended to provide legal advice. Readers should not act on information in the blogs without seeking specific advice on the particular matter. Please contact a lawyer listed on the blog pages for additional details, or to discuss how blog information is relevant to a specific situation.

Video Game Law Blog

» June, 2007

Piracy of Video Game Films

Thinking of turning your hot new game into a movie? You'll be happy to know that Canada is getting tough with the pirates who would steal your booty. We recently published an article in the CBA Addendum regarding Canada's new anti-piracy efforts in the movie industry. The article is available here.

World of Warcraft EULA - Will it be enforceable? Are end-users at risk?

Read Section 5 of the WOW EULA (End-User License Agreement) and you might be concerned about allowing Blizzard Entertainment to "monitor" your machine for "unauthorized" third party software. Read Section 11 of the WOW EULA and you might be even more concerned because Blizzard seeks to limit its liability to "the total fees paid ... to Blizzard during the six (6) months prior to the time such claim arose". It remains to be seen whether clauses of this nature are in fact enforceable.

The question really is - has Blizzard gone to far in its efforts to prevent cheating? Gary McGraw (CTO of Cigital Inc.) and Greg Hoglund (CEO of HBGary Inc.) seem to think so. In the meantime, in response to the "monitoring" software Blizzard calls "The Warden", McGraw and Hoglund have released their own piece of software they call "The Govenor". Their software "closely monitors The Warden and curtails activities the authors deem invasive".

And so the war between cyber-defence and spyware continues.

References:

Game Bill Agreement

The senate and assembly of New York have apparently reached an agreement regarding video game legislation. The legislation would make it a felony to sell violent games to minors. Also, console manufacturers would be required to include parental-control devices in the consoles, and retailers would be required to label violent and obscene games. The legislation has not yet been passed, but should be soon.

Coverage here (Gamepolitics.com)

Manhunt 2 further developments

We discussed yesterday how Manhunt 2 has been banned in England and Ireland and has received an AO rating from the ESRB in North America. The consequences of these events are becoming clearer, as both Sony (provider of the PS2, PS3 and PSP systems) and Nintendo (provider of the Wii) will not license AO-rated games to play on their systems (we're not sure about Microsoft's policy with respect to the Xbox console).

So, what's left for Rockstar? It could conceivably try to sell a PC version, but would still face the problem that many major retailers (including WalMart) will not stock or sell AO games. This means its choices seem limited to (1) changing the game so that it qualifies for an M rating rather than AO; or (2) dropping the game altogether.

Coverage here (GamePolitics).

Gold Farming: A day in the life

Gold farmers generally have a bad reputation in the world of on-line games. However, Julian Dibbell (the author of "Play Money: Or How I Quit My Day Job and Made Millions Trading Virtual Loot") has written an interesting and insightful article for the New York Times titled "The Life of the Chinese Gold Farmer", which takes a look at gold farming from the perspective of those who spend 12-hour shifts playing WoW to earn miniscule amounts of money. Regardless of where you stand on the issue, the article should be an eye-opener.

The article was published on the New York Times site on June 17, 2007. Registration is required to view the NY Times site.

Manhunt 2 Woes for Take-Two, Rockstar

The original "Manhunt" game caused its share of controversy when it came out. Its sequel (artfully named "Manhunt 2") is experiencing similar problems, so much so that the game's future seems in doubt.

Trouble first arose in Great Britain. The UK's classification board (the BBFC) refused to issue a certificate for the game, meaning that Manhunt 2 cannot be sold in the UK. The BBFC cited the game's "unremitting bleakness and callousness of tone", its "unrelenting focus on stalking and brutal slaying" and its "sheer lack of alternative pleasures on offer to the gamer" in finding that issuing a certificate for the sale of the game would involve a "range of unjustifiable harm risks".

The next blow came from the ESRB, which applied an AO - Adults Only rating to Manhunt 2 in North America. Since most major retailers refuse to carry AO games, it seems that Rockstar and Take-Two are faced with the prospect of limited sales in North America.

Ireland has joined the fray too -- the Irish Film Censor's Office has also banned Manhunt 2, citing its "gross, unrelenting and gratuitous violence".

Rockstar and Take-Two have some available options, including challenging the ESRB's AO classification or modifying Manhunt 2 to bring it within a less onerous (and less controversial) rating level. It's not yet clear whether the game makers will try either of those tactics.

Lots of coverage here , here, and here (GamesIndustry.biz), here (Gamasutra), here and here (GameDaily.com) and, finally, here (GamePolitics).

Immersion Sued By Microsoft For Breach Of Contract

In 2002, Immersion Corporation sued Microsoft and Sony for infringement of its "haptic or force feedback" tactile response technology patents. The 2003 settlement reached between Immersion and Microsoft included the acquisition of licensed rights to use Immersion's technology for $26 million and a stake in Immersion. The case with Sony had not settled at the time the Microsoft suit was settled.

In the complaint filed by Microsoft yesterday (June 18, 2007) for breach of contract, Microsoft claims that Immersion has not lived up to certain terms under the settlement arrangement, specifically, for not paying Microsoft a "refund" payment if Immersion were to settle its case with Sony. In the settlement agreement with Microsoft it was stated that:

"... if Immersion settles the Sony Lawsuit ... for an amount up to $100,000,000, Immersion shall pay Microsoft the sum of $15,000,000. If Immersion settles the Sony Lawsuit for an amount between $100,000,000 and $150,000,000, Immersion shall pay Microsoft an additional amount equal to 25% of the amount of the settlement in excess of $100,000,000. If Immersion Settles the Sony Lawsuit for an amount in excess of $150,000,000, Immersion shall pay Microsoft an additional amount equal to 17.5% of the amount of the settlement in excess of $150,000,000..."

Under the settlement agreement between Sony and Immersion, Immersion provided to Sony a "worldwide, non-transferable, non-exclusive, license under the Immersion Patents" for which Sony agreed to pay Immersion $22.5 million. Additionally, Sony further provided for an "additional option", which if exercised by Sony, would give Sony a further license in respect of non-PlayStation games with a payment to Immersion and a royalty fee for each game sold. This, on top of the over $90 million paid to Immersion in March 2007 by Sony as a result of the 2004 ruling against Sony.

According to Immersion, "[t]he Company has determined that the conclusion of its litigation with Sony Computer Entertainment does not trigger any payment obligations under its Microsoft agreements". According to Microsoft associate general counsel Steve Aeschbacher however,"Microsoft licenses technology both in and out and relies on these agreements to be honored and enforced. Our request to the court is that ... the binding agreement we signed with Immersion be honored".

Coverage at: Todd Bishop's Microsoft Blog and GameSpot

Sony Apologizes but Church Continues to Demand Video Game Recall

Sony has apologized to the Church of England over the inclusion in Sony's title, Resistance: Fall of Man of a violent gunbattle in Manchester Cathedral. In its letter to the Cathedral's dean, Sony has also offered to meet with Church officials.

Though the Church has accepted the apology, it continues to demand that Sony withdraw the video game from the market. The Church is also asking that Sony contribute to the Church's anti-gun violence campaign.

Coverage at: Allheadlinenews.com

Nintendo Sued For Patent Infringement, Again

Last week in the Federal District Court in Tyler, Lonestar Inventions LP sued Nintendo for patent infringement. Lonestar claims that the Wii uses Lonestar’s patented structure of lining up capacitors in parallel conducting strips. Lonestar has apparently sued other companies for patent infringement (including Texas Instruments and Broadcom) and negotiated licence agreements with each of them.

Just last year Nintendo was sued by Interlink Electronics, Inc. for allegedly violating one of Interlink's patents in the design of the Wii's controller. And there have been plenty other patent lawsuits in the gaming industry lately, including Paltalk's suit against Microsoft regarding Xbox Live, Red Octane's suit against Ant Commandos regarding wireless guitar controllers, and of course Immersion won a $91 million judgment against Sony regarding the force feedback feature of Sony’s Dual Shock Controllers.

Lonestar coverage here (Toronto Star).

Activision Investigated for Backdating Options

Activision has confirmed that it is the latest video game company to be formally investigated by the U.S. Securities and Exchange Commission ("SEC") for allegations of backdating stock options. As part of the formal investigation, the SEC has the right to subpoena witnesses and require Activision to produce documents. Previously this year, the SEC announced a similar formal investigation into whether Take-Two Interactive had engaged in backdating options.

Coverage at: Gamasutra

Church of England threatening legal action over depiction of Manchester Cathedral in video game

The Church of England has expressed moral outrage over the inclusion of a seeming replica of Manchester Cathedral in Sony's first-person shooter Resistance: Fall of Man. More specifically, the Church has demanded that Sony apologize and pull the game from shelves as a result of a violent gun battle that is depicted in the game as taking place inside the famous cathedral.

The Church claims that Sony failed to obtain permission to include a virtual version of the Cathedral in the game, while Sony contends that it obtained all the permissions it was required to. It is not clear how Sony designed the virtual cathedral - including whether or not it based the virtual design on photos taken inside Manchester Cathedral - or how closely the virtual cathedral duplicates the physical one.

Aside from the moral question of whether Sony acted appropriately, the dispute raises a number of legal issues including whether the Cathedral, or its image, is protected by copyright or trademark and, if it is, whether Sony infringed such rights, whether Sony may have trespassed on Church property in designing the game, whether the depiction of the Cathedral is defamatory, and whether the representation amounts to a false endorsement of Sony. It is not clear, however, that any legal arguments the Church might raise would be successful. In any event, the Church appears to be approaching the issue more from a moral perspective than a legal one.

Sony's initial response was that the game is entertainment and not based on reality at all and that, in any event, it had sought permission where necessary. More recently, Sony has confirmed that it is in talks with the Church but has declined to make further comment.

Coverage at:

The Guardian

Joystiq.com

Gamesindustry.biz

NY: NO DEPRAVED VIOLENCE FOR YOU, JOHNNY

The New York Assembly has passed legislation which will make it a felony to sell or rent games to minors if the games contain depictions of depraved violence and indecent images. The legislation will also ban sales of consoles that don’t allow parents to restrict the content available through the consoles. The race will no doubt be on to challenge the constitutionality of the legislation. Coverage available at Gamespot.