Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

Guitar Hero Injunction Denied

A US district court has denied an injunction application that would have stopped the sale of "Guitar Hero Encore: Rock the 80s". The application was brought by The Romantics, who sued Activision last month on the grounds that the cover version of "What I Like About You" in the game is too similar to the original (see our previous post here).

The injunction was denied in part because The Romantics had not shown a substantial likelihood of succeeding on the merits of the case (in other words, the judge felt that the claim likely won't be successful even if the full case is heard).

Since an injunction application is heard with limited evidence, and is decided on a specific injunction test rather than the full merits of the claim, the injunction decision does not necessarily reflect what will happen in the case as a whole. However, Activision's lawyers say that Activision will likely move to have the case dismissed on the basis of the injunction decision.

Coverage at Detroit Free Press.

Gaming Website Charged with Failing to Protect Minors

An interesting story out of Texas where GamesRadar has been charged by the Texas Attorney General with failing to protect the privacy and safety of children.

The charge stemmed from an alleged breach of the Children’s Online Privacy Protection Act. Specifically, GamesRadar is accused of “unlawfully collect personal information such as names, ages, and home addresses from children [under 13]”.

The charge shows the importance of taking precautions to either restrict access by minors to a Web site or, alternatively, taking special precautions to account for them.

More coverage at fuglore.net

Game Counterfeiter Busted in Vancouver

A game counterfeiter in Richmond B.C., a suburb of Vancouver, has plead guilty to counterfeiting video games for a variety of game systems.

The counterfeiter was fined $25,000 and was forced to give up his counterfeiter equipment.

The amount of the fine was subject to criticism from the software industry who have pushed for harsher penalties for game counterfeiters.

More at the Province

Lawsuit Tests "Sound" Legal Principles

Activision is facing another lawsuit over its Guitar Hero game. Recall that The Romantics sued Activision over "Guitar Hero Encore: Rock the 80s" back in November (see our post here). Now a new class action suit alleges that the Wii version of "Guitar Hero III" does not support Dolby ProLogic II surround sound, even though the game's box says that it does.

The suit claims that Activision has engaged in unfair or unlawful business practices and unfair, deceptive, untrue or misleading advertising with respect to GHIII, and that the representative plaintiff would not have purchaed the game (or would not have paid so much for it) had he known that it would only output mono sound.

Activision has promised to send out replacement discs which support Dolby ProLogic II, but that it will not do so until 2008.

This is a straightforward claim -- the product doesn't do what Activision says it does. Whether a class action lawsuit is required to fix things is another question, but as video game lawyers we probably shouldn't answer that.

Coverage at Wired and at GameSpot.

Wired has a link to a PDF of the complaint here.

Square Enix protects its IP

The Seoul Central District Court recently issued copyright infringement sentences to the producers and directors of a music video for Korean singer “Ivy”. The video used portions of the storyline, setting and character styles from Final Fantasy VII Advent Children without Square Enix's permission.

In the words of Square Enix’s General Counsel: “This judgment by the Seoul Central District Court is stringent in comparison to other copyright infringement cases in South Korea, and we appreciate that the maliciousness of this infringement has been recognized in a public forum. Square Enix will continue to take decisive action against any infringements upon the Company's intellectual property, recognizing that this property is one of our most crucial resources.”

The total damage awards were small (approximately $11,000 against the producer and $6,500 against each of the directors), but sometimes the certainty of a small penalty can be a more effective deterrent than the uncertainty of a large penalty. Also, Square Enix’s civil lawsuit is still pending and might result in an additional damage award.

Square Enix’s press release is here.

Atari borrows further $4M, settles license dispute, announces release of Dragon Ball Z game

In separate press releases, Atari has announced a settlement of its dispute with FUNimation over licensing of the Dragon Ball Z name as well as its further borrowing of $4M from BlueBay.

The $4M from BlueBay is in addition to $10M in credit that Atari arranged for in October in order "to meet its holiday season financing needs." Among the conditions of this latest borrowing, Atari has terminated its existing distribution agreements with Infogrames and created a new agreement to cover all of North American distribution of Infogrames games for three years.

The dispute with FUNimation involved alleged breaches by Atari of a license agreement between the two companies. With Atari's payment to FUNimation of $3.5M (being a $2.7 million cash payment and a $0.8M reduction in royalty advances), the legal dispute has been resolved and Atari has announced the release of Dragon Ball Z: Budokai Tenkaichi for Wii and PS2.

Coverage at: Gamasutra

Press Releases at Atari Release 1 and Atari Release 2.

CBC Article - Davis Video Game Lawyers in Second Life

The CBC recently published an article on Canadian businesses in Second Life. The article, written by Luigi Benetton, mentions Davis LLP's office in Second Life and features some spunky quotes from our Sarah Dale-Harris and Chris Bennett.

The article is available here.

Manhunt 2 Given Go-Ahead in UK

Rockstar's difficulties with Manhunt 2 have been widely reported. The game was initially banned in the UK, and Rockstar appealed that decision (see our previous post).

Today, the 7-person UK Video Appeals Committe announced its 4-3 decision that Manhunt 2 should be given a classification and released in the UK. This decision dealt with the modified version of the game, which has already been released in other markets.

At the appeal hearing, Rockstar argued that Manhunt 2 was being singled out, even though it was no more violent than other games sold in the UK.

The British Board of Film Classification, which initially banned the game, can appeal the most recent decision if it wishes.

Coverage at GameSpot.

Apple Files Gaming Interface Patent Application

Apple has recently filed US patent application no. 20070279394 for "Techniques for Interactive Input to Portable Electronic Devices." The application discloses a technology that will allow users to play games using the touch screens on iPods, iPhones, etc., and also to use the same touch screen to control non-game functions nearly simultaneously.

Coverage at Maxconsole.
For those who enjoy reading patents, the patent application is here.

Gold Farming Lawsuit

A US law firm has filed a class action lawsuit in the US on behalf of certain shareholders of Giant Interactive Group Inc., the game company in China that operates ZT Online.

The lawsuit claims that earlier this year Giant sold more than 57 million shares in its IPO, raising more than $886 million; however, Giant’s registration statement and prospectus for the IPO contained untrue and misleading statements.

For example, the plaintiffs say that Giant’s claims of “strong growth” in playing players and average revenues per user were inaccurate, in that Giant did not disclose a recent rule change aimed at curbing gold farming on ZT Online. The plaintiffs say that as a result of that rule change, the number of average concurrent users and peak concurrent users dropped in the third quarter of 2007.

A copy of the Plaintiff’s Class Action Complaint is available here.

Virtual Property Lawsuit Settles

We reported back in November about a lawsuit by a group of Second Life merchants against Thomas Simon ("Rase Kenzo" in SL) and for making and selling unauthorized copies of the plaintiffs' virtual products (see our previous post).

The parties have now filed a consent judgment to end the lawsuit. The consent judgment, which still has to be approved and entered by the court, contains the following key points:

- The defendant will pay $525 as restitution for profits derived from the "unauthorized copying and distribution of plaintiffs' merchandise".

- The defendant represents, under penalty of perjury, that he acted alone in the unauthorized copying and distribution, that he derived a total of $525 from his activities, and that he has destroyed any remaining copies of the plaintiffs' merchandise in his possession.

- The defendant is permanently prevented from copying, displaying, distributing and selling any of the plaintiffs' merchandise without permission.

- If the defendant uses SL by way of an alternate account, he will tell the plaintiffs the name of that account.

The use of the term "merchandise" in the judgment is interesting, as it suggests that the virtual items in question are actual property. The lawsuit was based on trade-mark and copyright infringement, and the judgment still refers to "unauthorized copying", but the portrayal of the subject matter as "merchandise" rather than some form of copyrighted software could be an important development in virtual property law.

Coverage at Virtually Blind.
Virtually Blind also has a link to the consent judgment here.

Financial Post Business Magazine Coverage

Here's a profile of video game and intellectual property lawyer Chris Bennett that recently appeared in the Financial Post Business Magazine. It's apparently the side profile...

Court Orders Nintendo to Remove Press Release

A Hong Kong court has ordered Nintendo to remove from its website a press release relating to litigation between it and Supreme Factory Limited ("Supreme"). Supreme has been accused of infringing Nintendo's intellectual property rights by making mod chips.

Specifically, the Court found that Nintendo's release incorrectly stated that a final, substantive judgment on intellectual property right infringement has been handed down by the Court against Supreme. The Court further concluded that, by issuing the release, Nintendo had breached an implied undertaking not to use information and/or documentation obtained as a result of a search order carried out on Supreme's premises except for the purposes of the proceeding.

Coverage at: Destructoid

Second Life Currency Open to Theft

A pair of white-hat hackers claim to have found a vulnerability in Second Life (through an issue with QuickTime, which is used to stream videos in SL) that allows them to lift Lindens (SL's in-game currency) from SL residents. This is important because Lindens can be bought and sold for real money, and many (real) people make decent (real) money through SL activities.

The hackers have reported the glitch to Linden Lab, and expect that a simple patch will fix things. Linden Lab has notified SL users, but the fix may depend on Apple changing the QuickTime software rather than Linden Lab fixing SL itself.

Coverage at the San Jose Mercury-News and at Game Politics.

Wii Leads to Divorce?

A US man says that his Wii provided evidence of his wife's improprieties. Here's the story: When the man returned home from serving in Iraq, friends and family told him that his wife had cheated on him. His wife claimed that she had only interacted with the "other man" once. However, when he started digging around on his Wii the man found a "mii" (a character avatar) of his wife's alleged partner, and (through the Wii's calendar), found that his wife had gamed with the other man many times. The man has filed for divorce.

Assuming this story is true, the Wii evidence will not necessarily be the turning point of the case. That being said, however, the story demonstrates the many ways that personal information can be recorded and shared through technology, and how this can result in interesting sources of evidence in litigation. For example, FaceBook postings have also turned up as evidence in matrimonial disputes, and blog entries and networking sites sometimes turn up in wrongful dismissal suits. Now we can video game systems to sources of potential evidence.

Coverage at: GamePro and Destructoid.

Activision and Vivendi Games to merge, Voltron-like, forming Activision Blizzard

The merger between Activision and Vivendi's game division (which includes Blizzard Entertainment), will create a challenger to Electronic Arts for the title of world's biggest publisher. Though Vivendi will have 52 percent ownership of the new company, Activision Blizzard will be run by Activision's Robert Kotick.

The transaction, valued at $18.9 billion, has been approved by the companies' boards, but is still subject to certain closing conditions as well as the approval of Activision shareholders, neither of which are expected to be problematic.

Of note, Blizzard Entertainment will continue to operate with relative independence. Mike Morhaime will continue as President and CEO and, as its own website announces, there will be no management changes at Blizzard Entertainment, nor will Blizzard share a development team with Activision. Why the independence? It might have something to do with the incredible success of Blizzard's World of Warcraft which, with over 9.3 million subscribers, has projected 2007 revenues of $1.1 billion, and approximately $520 million of operating profit.

Coverage at: Gamedaily News and Gamasutra and (and many other places besides).