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Class Action against NCAA gets a Green Light

Ex- UCLA star basketball player Ed O'Bannon's class action suit against the NCAA (the "Class Action") got a green light from the U.S. District Court when it denied the NCAA's request to dismiss it. The Class Action suit was filed last year and alleges that the collegiate association misused the likeness of college athletes in videogames and a variety of other licensed materials.

GamePolitics notes that the U.S. District Court's ruling not to dismiss the Class Action will lead to a discovery process likely to shed light on the inner workings of the NCAA.

Accusations of Plagiarized Engines

According to Develop-online.net, GSC Game World ("GSC"), the Russian studio which developed the S.T.A.L.K.E.R. series, is alleging that Kiev-based studio 4A Games' proprietary engine has plagiarized its tech and that it is in fact copied from a pre-release version of its x-Ray code.

GSC's lead programmer and technology architect on S.T.A.L.K.E.R., Oles Shishkovtsov, allegedly left the company a year prior to its release to become the CTO of 4A Games, a fact which is apparently fueling GSC's allegations. However, Shishkovtsov reportedly claims that both firms' tech are incompatible and that it would not be feasible to port games to consoles using GSC's x-Ray code. Conversely, it appears that 4A Games' tech will power the upcoming Xbox 360 FPS Metro 2033.

Metro 2033's producer has reportedly said that 4A Games would not want to work on a pre-developed engine and that it doesn't make sense to do so when you have the technology to make your own.

Coverage at Develop-online

The Burning Crusade license granted

Last week, it was reported by Gamasutra.com that NetEase had suspended new user registrations due to its application to the Chinese government for a license to operate the World of WarCraft expansion pack The Burning Crusade. It appears that Chinese regulators are showing concern over the "undesirable content" of online games and are allegedly cracking down on foreign investments in its growing online gaming industry.

On February 16, 2010, Gamepolitics.com reported that China's General Administration of Press and Publication (the "GAPP") has granted the license permitting NetEase to operate The Burning Crusade. While the GAPP reportedly claimed to have previously suspended NetEase's permit for what it allegedly referred to as "gross violations" of regulations, NetEase appears to have always maintained that it did not violate any regulation. The GAPP has reportedly said that it granted NetEase the license because it had "taken necessary corrective measures."

Coverage at Gamasutra and Gamepolitics

Viacom wants a refund on Rock Band

Viacom agreed to pay Harmonix earn-outs if Rock Band exceeded certain financial targets. Viacom paid the earn-outs, but now wants a significant refund, based on lower earnings and an "adjustment clause" which would allow Viacom to correct any overpayments. However, given that Viacom owns Harmonix it's unlikely we'll see this case in court anytime soon.

Coverage here (Gamasutra).

Digital media tax credits spawning cottage industry in Ontario

Recall: Ontario has a tax credit of 35 or 40% for work done by companies (regardless of country of origin) using Ontario-based labour (and certain other expenses). These credits are charmingly called Ontario Interactive Digital Media Tax Credits (OIDMTCs). We discussed here that there are certain requirements to qualify for the credit.

A couple of clarifying points: there are eligible products and specified products that qualify for OIDMTCs. Eligible products are what you'd normally think about being eligible, like interactive games or websites and the credit is 40%; while specified products relate to the work done, perhaps by an external firm like yours, to produce "eligible products" and have credit rate of 35%. As between the firm producing and the firm selling the eligible product, the rights to the OIDMTC may (or should) be decided in your service agreement.

Importantly: these are refundable tax credits, meaning pre-profit firms can take advantage of them just as much as those in the black.

Also, while you can go back in time to catch past work, there's a limit to how far back you can go, namely 37 months.

For interested companies, there are accountants, like SBLR, who can assist in applying for the OIDMTC (no small feat) and financial institutions, like the Knowledge-Based Industries group at RBC, who would consider financing your endeavours.

Got $1.5 M to spare?

If so, keep it safe by making sure that Nintendo doesn't catch you pirating Wii games

Super Mario Bros. Wii was officially released in Australia on November 12, 2009. It turns out, however, that some fortunate Australian gamers may have had their hands on it as early as November 6, 2009. How did they get so lucky? As it turns out, an enterprising Aussie somehow managed to obtain, and then crack and upload said game, contrary (surprise surprise) to Australia's Copyright Act. Nintendo was not impressed, to put it lightly. As set out in an official Nintendo press release "[o]n 23 November, Nintendo obtained a Federal Court search order in respect of the individual's residential premises. This led to the seizure of property from those premises in order to gain further evidence against the individual." Presumably, due to the strength of the evidence obtained (or some really good lawyering), the "individual" in question ended up settling with Nintendo for $1.5 M (AU). Ouch.

GameSpot coverage here.

Claims Against Midway Directors Dismissed

For those of us who grew up with Mortal Kombat, or had a Bally/Midway pinball machine in our basement, it is sad to see the once great publisher fallen so low. Midway filed for Chapter 11 bankruptcy last February and since then has been having a fire sale, including selling its US assets to Warner Bros. Entertainment Inc. for $33 million last July. Midway's insolvency was due to mounting corporate debt, and exacerbated by Sumner Redstone's decision to sell his 87% stake in the company in November 2008.

Not surprisingly, Midway's creditors have gone to court to challenge the decisions of Midway's board of directors that led to the collapse. Last week, a U.S. bankruptcy judge dismissed the creditors' claims, and ruled that the former directors did not breach their duties to stakeholders or engage in fraudulent acts. According to Judge Kevin Goss, the directors could not be held "liable for decisions they [made] and actions they [took] in an effort to prolong the corporation's viability, even in the face of insolvency." However, the judge went on to add that his decision was "not an endorsement of any of the defendants' actions...The defendants oversaw the ruin of a once highly successful company, only to hide behind the protective skirt of Delaware law, which the court is bound to apply."

No word yet on any appeal. Coverage in Business Week is available here.

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