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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

» February, 2008

Capcom sued by MKR over Dead Rising's "Thoughtful Social Commentary"

Submitted by Michael Mjanes

Despite Capcom’s pre-emptive attempt to have a court declare that the popular “Dead Rising” video game does not infringe any copyright or trademark, they were sued Monday by “Dawn of the Dead” owners the MKR Group. This follows a drawn-out dispute over whether the MKR Group holds the rights to the “zombies-in-a-mall” theme common to both works. According to Reuters, MKR’s legal filing states: “Both works are dark comedies. In both, the recreational activities of the zombies and absurdly grotesque 'kill scenes' provide unexpected comedic relief. Both works provided thoughtful social commentary on the 'mall culture' zeitgeist, in addition to serving up a sizable portion of sensationalistic violence."

In its earlier filings in support of its declaratory judgment action, Capcom has called the idea of humans battling zombies in a shopping mall “wholly unprotectible”.

Yarrrrr! Canada Teeming With Online Pirates, Warns ESA.

In its "Special 301 Report", filed with the U.S. Trade Representative, the Entertainment Software Association claims that online piracy is a persistent problem in Canada, China, Malaysia, Russia and other parts of Europe. The ESA urges those nations to bring their copyright and enforcent regimes up to international standards.

The report, which threatens potential trade sanctions, specifically criticizes the "legal and enforcement deficiencies in Canada".

Coverage at: Next Generation

Activision Sued by Investors

An interesting legal issue has arisen at Activision Inc. Specifically, Wayne County Employees' Retirement System of Wilmington, Delaware an investor in Activision, is suing the Company for failing to secure the best possible deal in its merger with Vivendi Games.

Under the terms of the proposed $18 billion merger, which was first announced in December, Activision would land up in a minority shareholder position in the merged entity. It was Activision’s alleged failure to secure a premium for agreeing to give up a majority position that motivated the lawsuit.

This type of legal action is not uncommon in large merger transactions but it will be interesting to see what impact it might have on the closing of the highly publicized merger.

More coverage at Delaware Online

Capcom Seeks Declaration over “Dead Rising”

Submitted by Michael Mjanes

Fans of zombie movies will undoubtedly recognize this old chestnut: a protagonist, barricaded in a curiously weapon-rich building, surrounded by zombies, must use any and all means available to stay alive. Sound familiar? Could be George A. Romero’s 1979 opus “Dawn of the Dead” (or its 2004 remake). It could be Peter Jackson’s 1992 gorefest “Dead Alive”, or 2004’s quietly brilliant “Shaun of the Dead”. In fact, it could be any number of re-tellings of that classic “man vs. the undead” narrative.

It could also be Capcom’s 2006 award winning game, “Dead Rising”. The game, in which a hero is stranded for three days in a mall infested with zombies, shares a number of similarities with Romero’s “Dawn of the Dead”. Too many similarities, charges The MKR Group, holder of the IP rights to “Dawn of the Dead”. Even prior to the release of “Dead Rising”, MKR approached Capcom and accused the game of infringing MKR’s copyright and trademark. The parties were unable to resolve the dispute and as a precaution, Capcom included a disclaimer on the front of its packaging stating: “this game was not developed, approved or licensed by the owners or creators of George A. Romero’s Dawn of the Dead.”

On February 12, 2008 Capcom filed for a declaratory judgment to prevent the MKR Group and New Line Cinema from asserting their intellectual property rights. In papers filed in the California District Court, Capcom claims that any similarities between the game and the movie are “based wholly on the unprotectible idea of humans battling zombies in a shopping mall.” Capcom goes on to say that there are “literally dozens of other video games featuring a protagonist battling hordes of flesh-eating zombies”, and neither MKR’s copyright in the film, nor any mark, is infringed by the game. Capcom further asserts that because of the disclaimer that accompanied the game, there was no confusion among consumers between the film and the game.

UK May Drop European Game Rating System

Submitted by Michael Mjanes

According to reports in both the Guardian and MCV, the soon-to-be released Byron Report is likely to recommend that the UK drop the European PEGI ratings system for video games in favour of the BBFC’s movie classification system. Currently the UK system is a hybrid of both the PEGI and BBFC ratings. Games which depict “gross violence”, sexual activity, or “techniques likely to be useful in the commission of offences” are classified under the BBFC’s film rating system. Otherwise, games retain their PEGI ratings.

Patrice Chazerand, Director General of the Interactive Software Federation of Europe, sent a letter to Prime Minister Gordon Brown calling the move a “mistake” and a “backwards step”. In an interview with MCV, Chazerand said that the current system is trusted and understood by parents and that a move away from the pan-European system ignores the global aspect of the game industry.

Dr. Tanya Byron, a clinical psychologist, is due to publish her findings next month. Last year she was tasked by the government to look at the potential risks and benefits to children and teenagers from new technology. Part of her review involves looking into the violence aspect of both videogames and the Internet.

“Earth No More” Creates Controversy for 3D Realms

Submitted by Michael Mjanes

According to reports, Duke Nukem developer 3D Realms is being sued for copyright infringement over an as-yet-unreleased game entitled “Earth No More”, due out in 2009. The suit was filed by Darin Scott and Edward Polgardy of Cinemagraphix Entertainment, who claim that they shopped a game called “Earth No More” to a number of companies, including 3D Realms, in 2005. Although that game was never picked up, the plaintiffs claim that 3D Realms (under the moniker Apogee Software) has created a game “virtually identical in substance”.

According to a forum posting from Scott Miller at 3D Realms, the company is fully innocent and has offered to meet with the plaintiffs “many times”, but have been rebuffed. Miller accuses Scott and Polgardy of “looking for a quick score”, and said that the settlement offer proposed is “far more than $150K” and includes a demand for 20% of future game revenues. 3D Realms intends to fight the case and not settle, he says.

In October 2007, 3D Realms/Apogee filed for a declaratory judgment that Realms’ “Earth No More” did not infringe any intellectual property.

CBA BarTalk talks about the Davis Video Game Law Blog

BarTalk recently published an article about blawging and had some kind words for our blog. Who wouldn't want to talk about video game lawyers and video game law, you ask? Definitely not the two or three of you in our Facebook fan group...

BarTalk coverage here.

Australia thinks Digital Extremes took it to the Digital Extremes

Australia’s Office of Film and Literature Classification has banned the sale of Digital Extremes' Dark Sector in Australia. The Office was particularly concerned about the game’s “high-impact violence”, which was particularly noticeable in some of the main character’s finishing moves.

The Office observed that “the finishing moves and most violent game play includes decapitation, dismemberment of limbs accompanied by large blood spurts, neck breaking spurts, neck breaking twists and exploded bodies with post-action twitching body parts. These moves are relatively easy to accomplish and once the player has mastered the moves and is able to get close to his foes, these violent moves can be executed.”

Digital Extremes is a Canadian company based in London Ontario, which appears to have been developing games for almost 15 years. Just last week the developer was one of two Ontario game developers awarded $500,000 by the Ontario Media Development Corporation to develop a prototype for a new game.

Dark Sector coverage here (Gamespot)

Square Enix Launches Lawsuit Over Counterfeit Final Fantasy Swords

Square Enix, the Tokyo-based creator of the Final Fantasy franchise, has filed a federal lawsuit for copyright infringement against four wholesalers whom Square Enix claims were selling unlicensed replicas of the swords used in the Final Fantasy games. The lawsuit is a result of the seizure of a crate of counterfeit swords by the US Department of Homeland Security and Customs and Border Patrol.

This lawsuit, filed in the Central District of California on February 12, follows multiple confidential settlements with various retailers of similar infringing items, each of which involved the payment of a substantial financial penalty. Additional defendants may be added to this lawsuit.

In a statement, Yasuhiko Hasegawa, Square Enix's General Counsel, said: "We are actively pursuing those who commit intellectual property infringement against our company. Any illegal activities, including the sale and distribution of unauthorized replica merchandise and counterfeit jewellery, and the unauthorized copying of Square Enix games, music, movies, images, and other intellectual property, will be prosecuted. While Square Enix appreciates the enthusiasm of its fans, and values its relationship with them, it is also obligated to protect its intellectual property rights or risk weakening or losing the very rights that enable the company to continue to provide its fans with an exciting entertainment experience."

Coverage here (GameDaily)

Contributed by Michael Mjanes, articled student.

Ubisoft Wins Bratz Arbitration

In 2002 Ubisoft signed a deal with MGA Entertainment to publish video games based on the Bratz doll IP. In 2003 MGA tried to terminate the contract on the basis that Ubisoft was not meeting its obligations. Ubisoft refused to re-negotiate, and litigation ensued.

Ubisoft now reports that it has been successful in the relevant arbitration proceedings, to the tune of more than $13 million.

Ubisoft's US lawyers have a press release here.

Other coverage at GameSpot and DigitalMediaWire.

IGE Lawsuit Reveals Some Inner Workings

This is not breaking news, but it's interesting nonetheless. A lawsuit filed last summer shows that one of the founders of the IGE (a virtual property business which lets customers buy and sell virtual property -- in-game currency, characters and items) has sued the other over various business issues. Given that IGE is one of the most well-known virtual property dealers out there (not necessarily in a good way, as it is also the subject of a class-action lawsuit by WoW players -- see our previous post), this lawsuit offers some interesting insight into the operation of a virtual property business.

Coverage at Virtually Blind.

Who gets the virtual property when the marriage ends?

Business in Vancouver recently ran an interesting article about virtual property and divorce. It includes quotes from one of our Vancouver video game lawyers, Chris Bennett.

Article here.

Fins get tough on games?

According to a weekend report from Afterdawn, the Finnish Christian Democratic Party (CDP) is pushing for a new domestic video game inspection regime. The CDP, which holds only 7 of the 200 seats in the Finnish Parliament, is also looking for more accurate and detailed descriptions about possible violence and erotic content in video game packaging.

But the proposal has garnered criticism from the Finnish Games and Multimedia Association (FIGMA) which was quick to point out that each video game in Finland is already vetted by the Pan European Game Information (PEGI) classification system. The PEGI classification consists of five age categories, 3+, 7+, 12+, 16+ and 18+. The games can also be reviewed by the Finnish Board of Film Classification (VET) if necessary.

In a statement, FIGMA claimed that an additional domestic examination would "decrease the number of released games, cause delays in release schedules, and increase the price of video games." FIGMA also claimed that a new system would likely give consumers a reason to buy their games outside Finland.

Coverage here.

Contributed by Michael Mjanes, articled student.

Silicon Knights Digs for Epic Contract Information

Silicon Knights and Epic Games have been embroiled in a lawsuit over the Unreal Engine 3 for some time now. According to recent reports, Silicon Knights has filed subpoenas on several Unreal Engine 3 licensees in order to see the terms of their confidential licensing contracts with Epic. Silicon Knights presumably hopes that the contracts will provide useful evidence in the dispute. Epic, on the other hand, would no doubt prefer not to have the details of its various licences made public -- it could rock the boat with its current licensees, and could make negotiations with future licensees more difficult.

If the contracts are disclosed, it's conceivable that they could be part of a sealed court file so that they do not become part of the public record -- that way they could be used in the Silicon Knights litigation, but not be revealed to the gaming industry at large.

Coverage at GameDaily.com.

Stranglehold Ad Banned in UK

The UK Advertising Standards Authority has ruled that a TV ad for Midway's "Stranglehold" cannot be shown on British television because the ad encourages and promotes violence. The decision was prompted by two consumer complaints.

The ad had been carefully prepared so that it did not depict bullets hitting anyone (since the game is associated with John Woo and his "bullet ballet" style of action, there's no question that it features plenty of bullets), and had been pre-cleared by the British NGO which approves ads (the Broadcast Advertising Clearance Centre). Nonetheless, the ASA felt that the ad's voice-over (which read "Honour is his code. Vengeance is his mission. Violence is his only option. John Woo presents Stranglehold. The next generation of action gaming has arrived.") suggested that revenge was honourable and that violence was an acceptable option.

Coverage at 1UP and Game Politics.

Roller Coaster Litigation Ends

In 2005 we reported that Roller Coaster Tycoon developer Chris Sawyer had sued Atari for US$5 million in respect of royalties he claimed Atari owed him. Sawyer also claimed that Atari breached a licensing agreement with him by failing to give him access to Atari’s accounts between 1999 and 2001. Atari counter-claimed that Sawyer induced developer Frontier to breach its agreement with Atari, when Sawyer engaged Frontier to create a Roller Coaster Tycoon demo.

According to Developmag, the parties have now settled the lawsuit, not long before the case was scheduled to go before the UK High Court. The settlement comes shortly after Atari hired David Gardner as its new CEO. The terms of the settlement have not been released.

Coverage here.

Leave No Child Inside

New Mexico’s 1% excise tax bill HB583 is presently under review by the House Business & Industry Committee. It is reported that, if passed, it will become law on January 1, 2009 and would result in taxes being paid on purchases of video games, consoles and televisions. Also known as the Leave No Child Inside Act, this piece of legislation is intended to fund outdoor education programmes for school children.

coverage at GamePolitics