Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

West and Zampella Sue Activision

Jason West and Vince Zampella, co-founders of Infinity Ward, have allegedly filed a lawsuit against Acitivision Publishing Inc. claiming breach of contract, breach of the implied covenant of good faith and fair dealing, wrongful termination in violation of public policy and declaratory relief.

West and Zampella reportedly served as president/game director and CEO of Infinity Ward following its acquisition by Activision in November 2003. Their employment was allegedly terminated by Activision weeks before they were to be paid substantial royalty payments as part of their existing contracts for Modern Warfare 2. This reportedly follows claims of Activision having investigated charges of insubordination, breach of fiduciary duty and breach of contract by two senior employees at Infinity Ward, which allegedly became grounds for West and Zampella's termination on March 1, 2010. Activision is said to be moving ahead with the Call of Duty franchise, despite this turn of events.

Coverage here, here, here and here

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).

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.

MumboJumbo Awarded Damages in Lawsuit Against PopCap

It has been reported that MumboJumbo, a Dallas-based worldwide publisher, developer and marketer of premium casual games for PCs and various game consoles such as "Midnight Mysteries: The Edgar Allan Poe Conspiracy" and "Luxor Adventures" has been awarded $4.6 Million in a lawsuit against its former business partner PopCap.

The lawsuit opposing the parties allegedly originated from a 2006 game retail distribution agreement whereby MumboJumbo undertook to produce, distribute and sell certain PopCap games in North America. However, it was reportedly found that PopCap breached the contract by deciding to sell and market its games on its own. MumboJumbo's lawyers also reportedly showed that PopCap committed fraud and tortious interference by damaging MumboJumbo's relationship with a key retailer.

Beyond the $4.6 Million in damages that was awarded to MumboJumbo, it has been reported there will be another hearing to decide on the quantum of the attorneys' fees to be added to the damages.

Furthermore, PopCap has reportedly indicated that it intends to appeal the decision in question.

Coverage at PRNewswire.com, Gamasutra.com and Edge-Online.com.

Online game company sues bot software company and wins

Submitted by Dr. Andreas Lober

In an unprecedented case in German jurisprudence, the operator of an online game sued the provider of a bot software, and won. The court granted a cease and desist order, so the bot must no longer be distributed.

1. Facts of the case:

The plaintiff developed and operates one of the worlds most popular massively multiplayer online brower based strategy games. The plaintiff's online game is free to play in a basic version, but requires purchasing so called premium functions in order for the user to be able to use special and enhanced features of the game. The Terms of Service of the game expressly prohibit the use of cheating software or bot software.

The defendant offered a bot software on the Internet by using a website which was available in German and various other languages. The bot software was specifically configured to interfere with the plaintiff's online game. By using the bot software, the user was enabled to use game functions which the plaintiff's online game either did not have at all or which were only available in the game as a so called premium feature with costs. Therefore, the use of the bot did not only extensively interfere with the gameplay and the game balance of the defendant's online game, but also caused a potential loss of income for the plaintiff because users of the bot did not have to purchase the plaintiff's premium functions anymore.

The use of the defendant's bot software was free for a trial period, but required a license for a valuable consideration after that. On its website, the defendant used the plaintiff's registered trademark and also graphical material which was taken from the plaintiff's online game.

2. The court's decision:

The court held that offering and selling the bot by the defendant constitutes an illegitimate exploitation of the plaintiffs reputation in the sense of "selling of compatible products that interfere with a third party line of products" and an unfair interference with the plaintiff's business model under Section 4 No. 9b and Section 10 the German Unfair Competition Act.

The court was of the opinion that the defendant intentionally undermines the plaintiff's business model which - since the basic version of the game is free to play - is based on selling premium functions for the online game. Users of the defendant's bot software would stop purchasing premium functions for the plaintiff's online game if such functions were also available by using the bot software.

Further, the plaintiff's Terms of Service for the online game expressly prohibit the use of cheating software or bot software. Consequently, the court held that the defendant entices the users of the plaintiff's online game to breach their respective contract with the plaintiff over the use of the game by offering prohibited software and enabling such breach of contract.

Lastly, the court held that by using the plaintiff's trademark and graphical material on the website, the defendant infringes on the plaintiff's trademark rights and on the plaintiff's copyright.

Duke Nukem Forever or Never?

It has been reported that Take-Two Interactive Software Inc. ("Take-Two") has filed a lawsuit against Apogee Software Ltd. because of the developer's "continually delayed" delivery of the game Duke Nukem Forever, a project that has been ongoing since 1997 . Publisher Take-Two had purchased the publishing rights to the game in 2000 for over $12 million dollars.

It is to be noted that Apogee Software Ltd. is a 3D Realms-related entity and is a different entity than Apogee Software LLC who is the developer behind the Duke Nukem Trilogy.

It has been reported that the complaint states that "Apogee repeatedly assured Take-Two and the video-gaming community that it was diligently working toward competing development of the PC Version of the Duke Nukem Forever." However, despite these assurances, it has been reported that 3D Realms has shut down its doors. It has also been reported that Take-Two had offered cash incentives to 3D Realms for the completion of the game. Nevertheless, it seems that the developer is now out of money and may owe more than expected.

Coverage at Kotaku.com, Gamasutra.com and Gamedaily.com.

Konami Drops Six Days in Fallujah_

Submitted by Sylvie Lang
Japanese video game publisher Konami has decided not to publish the controversial game Six Days in Fallujah, developed by Atomic Games. The game re-enacts the Second Battle of Fallujah which took place in late 2004 during the Iraq War. The battle caused considerable human and physical damage. From the onset, both anti-war and pro-military groups have criticised the game, saying that it was too soon after the War to release it. Six Days in Fallujah was developed in conjunction with US Marines who took part in the actual battle and is intended to give players a sense of what it was actually like to fight in the conflict. Atomic Games has not yet said whether it will try to find another publisher.
Coverage at Developmag
Coverage at Gamedaily
Coverage at Gamasutra
Coverage at LA Times Blogs

Empire Interactive Shuts Down

It has been reported that Empire Interactive, a U.K. based publisher of nearly two decades, is shutting down its operations. The closure has been announced to the employees located in its London offices while all other employees are currently being liquidated.

Approximately two weeks ago, KPMG, an administrator, was asked to find a purchaser for the enterprise. Although two potential buyers expressed interest, no deal was reached.

Coverage at GameDaily.com.

Scratch DJ Game Itching for Damages and Injunctive Relief

It has been reported that Scratch DJ Game ("Scratch"), a joint venture between Genius Products ("Genius") and Numark Industries, has filed a lawsuit against publisher Activision, former partner and game developer California 7 Studios ("7 Studios") and its CEO Lewis Peterson, claiming that Activision has "engaged in intentional interference with contract, breach of contract, conversion and misappropriation of trade secrets obtained from Genius to purchase 7 Studios, which is under contract to develop the much anticipated new Hip Hop video game, Scratch: The Ultimate DJ." Scratch has also alleged that Activision and 7 Studios have deliberately hindered the release of Scratch: The Ultimate DJ in order to allow the future release of Activision's own prospective game, DJ Hero, to grab the spotlight.

Scratch has explained that while Activision had offered Genius to acquire Scratch: The Ultimate DJ, this offer was refused. It is at that point that Activision began to look to purchase Genius' product developer, 7 Studios, despite a non-disclosure and confidentiality agreement with Genius. Scratch has also alleged that Activision and California 7 studios conspired to impede the release Scratch: The Ultimate DJ.

It is reported that Trevor Drinkwater, President and CEO of Genius, has stated that "We believe that Activision and 7 Studios have improperly used confidential information obtained from Genius and 7 Studios to interfere with our efforts to complete the game. In short, we believe that Activision is attempting to sabotage the release of our much anticipated game and prevent it from getting to market prior to the release of DJ Hero."

Apparently, Scratch is not only seeking damages, but also an order to have the game returned to it immediately, as well as other injunctive relief.

Meanwhile, in response to these allegations, Activision has reportedly issued a statement, denying that there is any truth to these allegations and claiming that the Los Angeles Superior Court "found that there was no evidence of any wrongdoing by Activision and refused to grant any restraining order against Activision." Activision has also claimed that Scratch has made these allegations "to place blame for the game's delay, as well as to divert attention from the cash flow, liquidity and revenue challenges Genius detailed in its March 30, 2009, SEC filing." Finally, Activision also claimed that it acquired 7 Studios to increase its development capabilities, which did not interfere with 7 Studios efforts to complete the game, as it provided much needed financing to the developer.

However, it has been reported that Genius and Numark have claimed that they were the ones to prevail in Court, rather than Activision. The transcript from the Los Angeles Superior Court hearing has been made public by the companies and although the judge began by stating that there was no evidence against Activision and no reason to restrain it from doing anything, the judge went on to say that 7 Studios "has a duty to return the work product, source code, and software of the plaintiff [Genius]." The judge then stated that Activision had to turn over the source code and should it want it back, that it could argue its case during a hearing set for May 6. The judge also ordered a wall-off between 7 Studios and Activision, preventing the two companies from sharing any trade secrets that 7 Studios may have learned from Genius.

The next step in the case is a May 6 hearing, regarding the damages that Genius is seeking.

Coverage at GameDaily.com, Gamasutra.com, GameDaily.com and Gamespot.

Tecmo’s legal woes

Submitted by Tania Da Silva, Articled Student

On June 17, 2008, it was reported that two of Tecmo’s employees, Team Ninja developers Hiroaki Ozawa and Tatsuki Tsunoda, were filing a class action lawsuit with the Tokyo District Court, on behalf of themselves and 300 other employees, against the company for 8.3 million Yen in unpaid overtime (approx. $77,000). Tecmo allegedly placed workers in a “flexible hours” work scheme, thus underpaying them for overtime hours for the past four years. Tecmo is denying rumors that up to 300 of its employees are involved and have reportedly stated that only two employees are seeking legal action. They are also denying rumors of mass resignations occurring as a result of the suit. Reports indicate that, according to Tecmo, employees affected by unpaid overtime have been notified that they will be compensated and that the company will resolve the issue.

The news of this class action follows the resignation of Tomonobu Itagaki, head of Team Ninja. Mr. Itagaki has also filed suit against Tecmo. Rumors indicate that he is seeking approximately 1.4 million dollars in damages for unpaid completion bonuses for the development of Dead or Alive 4 for Xbox 360. It has also been reported that a court order was granted to Tecmo prohibiting Mr. Itagaki from directly or indirectly making statements about the company, its products, practices or employees.

Read more about the story here.

GTA Movie Situation

There have been a number of movies in recent years based on video game properties (e.g, Hitman, Doom, etc.) Even though Take Two's Grand Theft Auto series of games is wildly popular, however, it's unlikely that there will be a "Grand Theft Auto" movie based on the game.

The reason is that Fox Atomic owns the rights to a 1977 movie (directed by Ron Howard) called "Grand Theft Auto". And an agreement between Fox and Take Two says that Fox will not make a video game based on its movie property, and Take Two will not make a movie based on its video game property.

Of course, this is probably just a straight branding issue -- Take Two can probably make a movie based on GTA IV so long as it's not called "Grand Theft Auto".

This is not breaking news, but the situation highlights how complicated branding, cross-marketing and derivative work issues can be in the video game and entertainment media context.

Coverage at GameDaily.com.

Guitar Hero Suit Comes, Goes

On March 10 Harmonix Music Systems, Inc., filed a lawsuit against Activision for unpaid royalties relating to "Guitar Hero". Harmonix developed the first two "Guitar Hero" games and the "Rock Band" game, and claimed that Activision owed it more than $14 million in royalties related to "Rock Band III" and related spin-offs because Activision used Harmonix' technology.

Harmonix claimed that its agreement with the publisher Red Octane (now owned by Activision) sets a higher royalty rate if any "Guitar Hero" sequel uses or is derived from Harmonix' property, and that Activision was only paying royalties at the lower rate. Activision, not surprisingly, said in a statement that it had paid the correct royalties.

Late on March 11, Harmonix' owner Viacom announced it was withdrawing the suit because the parties were engaged in out-of-court discussions.

This episode demonstrates how filing a lawsuit can be an effective negotiating tool, or at least a way to bring both parties to the table. It's not clear whether there had been previous discussions, or whether Harmonix approached Activision with its concerns before starting the action.

Coverage at Variety and Gamasutra. Variety has a copy of the lawsuit here.

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.

Ginko Financial Could Be In Hot Water Again

Following its demise this summer, “self-styled” virtual bank Ginko Financial was thought to have disappeared into the ether - literally. It appears to have indirectly reared its less than popular head - on eBay no less. According to Ginko’s own site, it is selling a “1U Rackmount Xeon 5160 Server” on eBay to the tune of $3200USD. Apparently the“1U Xeon server works great”. No bids however had been received as of the day of this posting.

Many believe that Ginko’s failure in Second Life is the reason Linden Labs instituted its policy, to take effect today, regarding the removal of “virtual ATMs [and] other objects that facilitate the operation or in-world banking” (see previous post).

For those looking to collect on Ginko’s bad debts - chasing down hardware being sold off on eBay probably won’t bring them much joy. I also wouldn’t be comforted by the claim (on the eBay ad) that “hard disk drives will be erased”.

Coverage at Virtually Blind

Second Life Patent and Trade-Mark Office: It was only a matter of time really...

Two brave entrepreneurs have finally ventured into the frontier of virtual intellectual property protection and have opened a “Second Life Patent and Trademark Office” at www.slpto.com. It was only a matter of time really, so what are the real world implications? In some ways, it is anyone’s guess; however, I can’t resist being an armchair critic and throw out a few initial thoughts. Plus, as a lawyer and trademark agent in the real world, how could I ignore a comment like this:

“It is our goal to provide the tools to allow you to protect your intellectual property, without expensive attorney's fees or long, drawn out processes.”

But can they do what they claim and “protect your intellectual property?”

Seriously though, I promise I’m not being “sour grapes” about this. I have an avatar (albeit, I admit, with a totally lame handle) in Second Life who resides in our virtual Davis LLP office, so clearly I think this is really exciting stuff! I think the SLPTO project is quite provocative and has at the very least, sparked some interesting debate (amongst types like me anyway) if not opportunity for its creators. For instance, if I can sue for trademark and copyright infringement that takes place in Second Life, in the real world, on the basis of real-world registrations - why would I apply/register in Second Life when I can apply/register at say, the Canadian Intellectual Property Office (CIPO) or the United States Patent and Trademark Office (USPTO)? Apart from the fact that it is free of course. With no legal standing and no statutory rights to enforce, how big could the SLPTO’s teeth really be? On the other hand, could a registrant in Second Life rely on evidence submitted to the SLPTO to enforce real world rights? Surely, the question of common law rights (in Canada and the U.S. anyway) would arise because of use - even if it is use in the context of a three-dimensional virtual platform. So maybe it is worth a try - if only to create an evidence trail at common law - for free. And for fun of course… which is what this is really about, right?

For my part, I’m not convinced that “Real Protection for Virtual Assets” is much more than a couple of clever and adventurous guys trying to take advantage of a potentially lucrative opportunity in cyberspace. But hey - you can’t blame them for trying. It isn’t as though it didn’t cross our own minds.

Caveat Emptor - Or Not... Linden Labs To Shut Down "Banks" In Second Life

In the wake of the collapse of “Ginko Financial” in August 2007 and a significant number of Resident complaints that in-world “banks” are defaulting on their promises, Linden Labs has decided to break with its tradition of not interfering with “in-world” activities by prohibiting in-world companies from offering interest or any direct return on investments in Second Life.

Starting January 22, 2008, Linden Labs will be removing from Second Life “any virtual ATMs or other objects that facilitate the operation or facilitation of in-world “banking,” i.e., the offering of interest or a rate of return on L$ invested or deposited”. Linden Labs has indicated that after January 22, 2008, it will have the right to sanction companies offering so-called banking services by means of “suspension, termination of accounts, and loss of land”.

The policy does not appear to extend to companies that submit appropriate, approved documents from a regulatory authority qualifying them as a “[chartered or registered] bank” or to companies that do not accept payment in exchange for investments - but “who are merely conducting marketing or education”.

This is not the first time Linden Labs has stepped in. It took a similar position in the past with respect to gambling in Second Life. So what about in-world “lawyers”? Has this latest issue about in-world “banking” possibly brought to light issues of broader application, for instance, in respect of “professional” designations/organizations operating in Second Life?

Coverage at Second Life Blog

Answers to FAQs regarding Linden’s policy at Second Life

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.

Comcast slapped with net neutrality lawsuit

A San Francisco Comcast subscriber is suing Comcast,the US' No. 2 broadband carrier, for breach of contract and bad faith dealings, claiming Comcast is violating net neutrality principles by slowing or blocking broadband access to P2P fileshare sites.

The subscriber is asking the court to certify the matter as a class action suit on behalf of all Comcast subscribers.

Comcast has already been the subject of consumer complaints to the FCC regarding the carrier's alleged violation of net neutrality.

Atari May Lose Important Licence

Game publisher Atari Inc. has announced that it is in danger of losing its licence to the Dragonball Z franchise.

In a recent filing with the Securities and Exchange Commission, Atari disclosed that FUNimation Production, Ltd. (“FUNimation”) delivered a notice to Atari purporting to terminate the licences granted to Atari to distribute Dragonball Z titles.

FUNimation has reportedly accused Atari of breaching the terms of the licenses granted to it.

While Atari is disputing the purported termination, it acknowledges that if FUNimation is successful in terminating the licenses this could have a material adverse effect on Atari’s operations and financial position.

Coverage at Gamasutra and Gamedaily.

Linden Introduces Out-of-Court Settlement Procedure to Second Life to Head Off Resident Lawsuits

In the wake of several virtual property-related disputes in Second Life, Linden Lab has beefed up its Terms of Service to include an out-of-court settlement procedure in the hopes of reducing dispute resolution costs to both Linden and Residents. The new Terms of Service, which were announced September 18 and which all Residents will be required to agree to before their next log-in, provide that a Resident who has a dispute with Linden who is claiming less than USD$10,000 may opt for "binding, non-appearance based arbitration." In selecting this option, a Resident will have to indicate their choice of an Alternate Dispute Resolution provider (a list of accredited arbitration centres, such as the American Arbitration Assocation and the National Arbitration Forum, are provided, although a Resident may make any "reasonable" request with respect to their arbitrator), and must indicate whether they'd like to appear at the arbitration by telephone, online, or through written submissions. Once both parties agree to appear before the arbitrator, both Linden and the Resident will be bound by the arbitrator's decision.

Linden Lab is hoping this process will provide a "cost-effective" dispute resolution process for Second Life. Those Residents with a bone to pick with Linden who are not so hot on the arbitration mechanism (and cash for legal costs to spare) may still sue in a San Francisco court.

Source: Official Linden Blog

New deal for music in games

The American Federation of Musicians, a musicians’ union, is allowing its officers to enter into agreements with video game publishers to use video game music in trailers, advertisements, soundtracks and for other purposes outside of the games. Traditionally publishers have been reluctant to use unions’ in-game music for these other purposes because it required the payment of additional royalties. The AFM hopes the new arrangement will encourage publishers to use more music from its unionized members.

Coverage here. (GameDaily)

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:

• WOW EULA
• GAME INDUSTRY
• THE REGISTER

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

UFC Parent Lays the Legal Smackdown on Take-Two

Zuffa, LLC, the company behind the Ultimate Fighting Championiship has filed a suit against Take-Two Interactive, alleging that Take-Two sold UFC games - namely, UFC: Sudden Impact, a PS2 title - after Take-Two's right to distribute such games had expired. Zuffa further claims that Take-Two is cybersquatting in respect of the website www.ufcvideogame.com.

The distribution rights for UFC games currently belong to THQ, Inc.

Coverage at: Advanced Media Network

CONTRACTS IN THE MMO WORLD

We recently co-authored an article on MMO contracts with German lawyer Andreas Lober. The article was published in the CBA National Magazine's Addendum. For your reading pleasure, here's the link: http://tinyurl.com/2yxrsz

The Ups And Downs Of Litigation

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.

Now the UK High Court has agreed to hear the case. The interesting part of the story is that under current UK law, Atari’s claim will fail. However, the UK’s highest court (the House of Lords) is considering two other cases dealing with inducement under UK law. If the House of Lords upholds the decisions in these cases, there’s a good chance that Atari will drop its counterclaim.

Coverage here: http://tinyurl.com/2o6wj5 (gamesindustry.biz)

WoW LAWSUIT OVER BOT SOFTWARE

A flurry of legal activity has erupted over a piece of software called WoWglider. The software (see here) will play your World of Warcraft character for you while you do other things. WoWglider's FAQ states bluntly that using the software is a violation of WoW's terms of use, and that your WoW account may be closed if you are caught using it. However, the FAQ also points out the various steps taken to make WoWglider difficult to detect.

When the creator of WoWglider, Michael Donnelly, received notice that Blizzard and Vivendi considered WoWglider to be a copyright infringement and a violation of the Digital Millennium Copyright Act, he decided to strike first and commenced a lawsuit seeking a declaration that WoWglider does not infringe any rights.

Blizzard and Vivendi have now filed a countersuit claiming various infringements, including violation of WoW's terms of use, copyright and trade-mark infringement, violation of the DMCA (by circumventing copyright protection), unfair competition, and tortious interference with contractual relations. The countersuit alleges that by creating and distributing WoWglider, Donnelly's company is encouraging and enabling WoW subscribers to breach their contracts with Blizzard.

Coverage at: http://tinyurl.com/25h3kp (Gamasutra)

and at: http://tinyurl.com/2m2hys (Game Politics)

WoWglider's Complaint here; Blizzard and Vivendi countersuit here.

EULA's Under Attack!

(This posting was written by Andreas Lober at Schulte Riesenkampff in Germany).

Leading computer gaming producers are under attack in Germany! The so-called "Verbraucherschutzzentrale" - a Consumer Protection Organisation - claims that the EULAs of Electronic Arts, Blizzard, and Take 2 are illegal because they prohibit gamers from making backup copies of games for private use. The organisation threatens to go to court if the publishers do not change their EULAs.

Many publishers have complied with this request, but the case is debateable: In Germany, backup copies for private use are legal, but software designed to crack copy protection mechanisms is illegal. Therefore, the German Association of game publishers (Bundesverband Interaktive Unterhaltungssoftware) has criticized the Consumer Protection Organisation for its claims.

As Consumer Protection Organisations and Competitors may issue warning letters and seek injunctive relief based on EULA clauses which have never been applied, North American game companies should keep in mind that simply translating EULAs into various languages is dangerous. Within the European Union, many of the relevant competition rules are unified, but not all are. And North American laws often do not match their European counterparts.

Coverage (in German) at: http://tinyurl.com/ywz7e8

ACTIVISION DEVELOPMENT AGREEMENT WITH SPARK

In an earlier posting , we reported that Activision and new developer Spark Unlimited were involved in a lawsuit regardingCall of Duty Finest Hour. 

Today Gamasutra published a feature on the contract and the dispute. The feature includes some comments from us, and (perhaps more interesting for you) also includes a copy of the actual development agreement between the parties. 
The feature is available here  http://tinyurl.com/wpx8j  (Gamasutra)

PS3 SCALPING

Recently several listings appeared on eBay for PS3 pre-orders. The owners of the listings, who claimed they had secured PS3 pre-orders from various retailers, were offering the pre-orders for sale at inflated prices. eBay removed the listings, presumably because the listings violated eBay's requirement that the pre-ordered product be available within 30 days.

This is only the start of PS3 availability issues.  We're particularly interested in seeing how Sony handles the initial sales of its PS3s--in light of how Sony dealt with the launch of the PSP.

Sony's release of the PSP happened in selected countries, which meant the PSP wasn't initially available in some areas such as in Europe. Sony tried to preserve its scheduled launch dates by taking a hard approach against European sales.  In fact, Sony went as far as to sue several retailers who were selling imported PSPs in the UK. These unauthorized sales are called 'parallel importing"? or 'grey marketing"?, and each country deals with them differently.  We understand that EU law might actually allow manufacturers to stop any these sales if the products were originally sold in countries outside the EU.  The question is  will Sony take the same approach with the release of the PS3?     
Coverage of eBay auction here   http://www.shorl.com/fesirajipipru (Gamespot.com)

THE FUTURE IN-GAME ADS

In what is said to be the first such deal of its kind, Double Fusion has partnered with Emergent for the integration of their in-game ad technology to Gamebryo Element game engine and toolkit. Double Fusion's stated goal is to allow advertisers to "move 'beyond the billboard' to employ 3D interactive objects, video, interactive ads, and other exclusive and unique advertising formats". 

Certain Canadian jurisdictions have enacted legislation prohibiting traditional commercial advertising directed at minors (the notion of what is a minor is specifically defined in said legislation - for example, in Quebec, the trigger age is 13). 

To determine whether or not an ad is directed at a minor, legislators have taken into account several factors including 

 (a) the nature and intended purpose of the goods advertised; 

 (b) the manner of presenting such advertisement; 

 (c) the time and place it is shown. 

We will certainly keep an eye on how legislators and the courts deal with this new form of advertising. 
coverage at  http://shorl.com/jamubrubrebryve (GameDaily)

SQUARE-ENIX SUED FOR ROYALTIES

Reputedly the largest Chinese video game publisher, Soft-World International has sued Square-Enix for reimbursement of US$3.78 million in paid royalties based on the alleged breach of a MMORPG distribution contract.

 
coverage at http://shorl.com/behustabryfreti (gameindustry.biz)

TAKE-TWO TROUBLES

Take-Two should be celebrating last quarter's jump in its net revenue to $240 million. Instead, Take-Two is reported to have announced the delay of its final earnings report due to an internal investigation into its granting of stock options. Moreover, the company is also said to have disclosed having received additional grand jury subpoenas issued by the District Attorney of the County of New York 'requesting documents...regarding stock options and other equity-based compensation."

coverage at http://shorl.com/degrovimubregre (Gamespot)

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)

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

TABLE OF VIDEO GAME CASE LAW

We're pleased to report that our blog now contains a table of video game law cases.  It's a work in progress (we have a bunch more cases to add) but we're so excited that we just can't wait to share.  So here's the link  http://www.davis.ca/community/blogs/video_games/files/blogtable.htm

Keep checking back for updates.  There's also a link on the homepage of the blog. 

TAKE-TWO SUED BY ACTOR

Take-Two Interactive is reported to have been sued for $250,000 by actor Roger Hill for the unlawful use of his likeness in The Warriors, a game based on the film by the same name. He is also seeking an injunction to bar the use of his likeness. Mr. Hill claims that he turned down an initial offer made by Take-Two for the use of his name and voice in the game and that they never followed up. Take-Two has dismissed Mr. Hill's claims as groundless and affirms having the right to use his likeness as portrayed in the film.

 
coverage at http://shorl.com/gigrepistekogry (gamespot)

SQUARE ENIX CRACKS DOWN ON REAL MONEY TRANSACTIONS

Square Enix is taking steps to stop the trading of in-game currency (called "gil") from Final Fantasy XI online multiplayer game for real money (artfully referred to as Real Money Trading, or RMT). The game's user agreements expressly prohibit players from engaging in RMT activities.

According to Square Enix, a detailed investigation identified a group of players who were using 'illicit methods"? to produce large amounts of gil and then selling that in-game currency for real-world money. As a result, Square Enix has terminated 250 user accounts and removed more than 250 billion gil from circulation.

Square Enix announcement at http://shorl.com/dotubrostutuse

Square Enix statement about RMT (December 2004) at http://shorl.com/fusafastosodra

Coverage at http://shorl.com/byrutogijusti (GameSpot)

BLOCKS FALL INTO PLACE FOR THQ/TETRIS SETTLEMENT

THQ and The Tetris Company have settled a dispute over licensing rights to Tetris. As a result, THQ has acquired the rights to publish a Tetris game for the Xbox 360 in North America and other territories (a Tetris game for the 360 was published by AQ Interactive in Japan).

The legal dispute between THQ and The Tetris Company started in 2005, when THQ accused The Tetris Company of breaching an existing licence and preventing THQ's planned release of a Tetris game for the Nintendo DS. In the interim, Nintendo published a successful Tetris game for the DS. It's not clear whether the new settlement agreement will also give THQ the right to publish Tetris games for the DS; THQ may have to be satisfied with limiting itself to the Xbox 360.

Coverage at http://shorl.com/dugrilifrinopo (GameSpot)

and at http://shorl.com/dodrifepromomo (Gamasutra)

WWE Vs THQ, CONTINUED...

The WWE and THQ aren't the best of friends. THQ has a merchandising licence from the WWE, but the WWE says it was obtained by commercial bribery. In 2004, the WWE sued THQ and its joint-venture partner Jakks Pacific Inc., seeking to nullify the licence. Then, last year, the WWE came off the top rope and body-slammed THQ CEO Brian Farrell by adding him as an individual defendant. 

THQ appears to be unscathed. It recently announced a long-term multi-platform deal with Yukes to produce further WWE games. THQ said the lawsuit was not a factor in the deal.
Coverage here  http://www.shorl.com/gatrepylotapro (gamesindustry.biz)

GAMER SUES SECOND-LIFE PUBLISHER

A gamer has sued Second-Life publisher, Linden Lab, after his online game account was shut down. The gamer claims this resulted in the lost of $3,200 in virtual property. He is now demanding $8,000 in damages.  Linden Labs says it shut down the account after the gamer participated in a suspicious auction where he purchased several plots of land at very low prices. 

This move follows Blizzard's announcement last month that it had banned 5,400 World of Warcraft players and suspended a further 10,700 for participating in activities that violate the game's Terms of Use, including using third-party programs to farm gold and items. 

These cases raise an interesting issue for video game lawyers  to what extent can online gaming companies be held liable for damage or destruction caused to online players or their virtual property? The answer to this question will depend (at least in part) on whether the publishers' licence agreements and online terms of use agreements adequately deal with potential liability issues such as cheating, hacking, viruses and service interruptions.
Linden Lab coverage here http://www.shorl.com/filepedropifo (Joystiq)

INJUNCTION ISSUED AGAINST FORMER UBISOFT BOSS

Martin Tremblay, formerly the head of Ubisoft in Quebec, now the President Worldwide Studios of Vivendi Games, has been provisionally enjoined by Mongeon J.C.S. of Quebec's Superior Court from, directly or indirectly, competing with Ubisoft and ordered to immediately cease working, directly or indirectly, within Canada, the United States and Mexico, for himself or any third party, in any business which manufactures or commercializes video products that may compete with products sold, manufactured or developed by Ubisoft. The provisional injunction was issued based on Martin's contract with Ubisoft, which contained a non-competition covenant.

Unless it is renewed, or an interlocutory injunction or safeguard order is issued, the provisional injunction will only remain in force until 5:00 PM on Tuesday May 9, 2006. 

The irony of it is that Tremblay was the principal supporter behind Ubisoft's recent clashes with EA over the use of non-competition clauses.  

coverage at http://shorl.com/dururededrehy

EA LICENSES WORLD CUP

Electronic Arts has announced that it will launch2006 FIFA World Cup in April, in anticipation of the World Cup which begins this June. This will be the only officially-licensed videogame based on this year's World Cup tournament. The game will be available on all platforms, including the XBOX 360.

Coverage at http://shorl.com/hirobrygrogrovu (Gamasutra)

REFLECTIONS FOUNDER SETTLES WITH ATARI

Martin Edmondson, the founder of Reflections Interactive (a UK development studio owned by Atari) has dropped his unfair dismissal claim against Atari. Mr. Edmondson resigned in December 2004, and documents show that he brought a lawsuit against Atari in March 2005 alleging constructive dismissal due to Reflection's breach of his employment contract. However, Mr. Edmondson dropped the claim in August 2005 after settling with Atari for shares and a cash payment.

Coverage at http://shorl.com/bubahisehila (GamesIndustry.Biz)

WILL VISUAL SCIENCE SUE VIVENDI?

Scottish developer Visual Science has recently gone into creditor protection. The company blames its financial woes on Vivendi Universal Vivendi recently terminated its development agreement with Visual Science. Visual Science says it plans to use its remaining cash to sue Vivendi. Bring on the lawyers"?
Coverage at  http://www.shorl.com/fatevebrupudy

ENTERPRISE VS. STAR DESTROYER, PART II

In an earlier post some of us speculated that the USS Enterprise could defeat an Imperial Star Destroyer. (To be fair, it wasn't an a unanimous judgment, but we cleverly neglected to post the dissenting opinion).

Well, the debate has reopened--now that developer Bethesda Softworks has announced that it owns the exclusive licence to develop Star Trek games in all formats. 

This is interesting for two reasons first, it's unexpected because just last year, Activision (the previous licensee) settled its dispute with Viacom. The prevailing wisdom at the time was that Activision would keep the licence for several more years. 

The other reason this development is interesting is because Bethesda's exclusive licence apparently does not include MMORPGs.  And (here's the interesting part), this appear to be a trend. According to Gamasutra, other licensors are taking a similar approach and treating MMORPG licences separately from other game licences. 

Coverage here  http://www.shorl.com/jebrojuganodu

UBISOFT TAKES THE TURTLES

Ubisoft has signed an exclusive worldwide licence agreement to develop and publish Teenage Mutant Ninja Turtle video games based on the upcoming feature film (expected to be released in early 2007). Konami had the original licence to produce TMNT games, but Ubisoft has now taken its place.

The upcoming film, and the related video games, are said to be in more in line with the original TMNT comic books. This is welcome news for those of us who read the comics, which were darker, grittier and more violent than the world of pizza-eating, surfer-talking turtle dudes that are the mainstream ninja turtles.

Coverage at http://shorl.com/dyvofegregoga

SYSTEM SHOCK TM SIGN OF THINGS TO COME?

Take-Two Interactive recently purchased Irrational Games, who developed the well-known System Shock 2 game. That game was published by Electronic Arts. Take-Two has announced that it will publish Irrational's next game, BioShock, which is touted as the 'spiritual successor"? to System Shock 2 (although it is not a sequel).

Perhaps in related news, EA recently filed a US trade-mark application for SYSTEM SHOCK. Whether this means that a sequel to System Shock 2 is in the works remains to be seen.

Coverage at http://shorl.com/jepybreketega

and at http://shorl.com/bygrarilytujy

WoW CRACKDOWN CONTINUES

We reported several months ago (see post ) about how Blizzard was scanning the hard drives of World of Warcraft players, trying to prevent hacking and cheating. Blizzard is obviously keeping on top of things, as it has announced that over the past three months is has permanently closed more than 18,000 WoW accounts for violating the Terms of Use.

Most of the closed accounts were using third-party programs to collect gold and items for sale in the real world.

Blizzard's report at http://shorl.com/fastynobrobradri

Coverage at http://shorl.com/hagrivakedygro

EA, NHLPA, NHL AND Take-TWO IN LICENSING DUST-UP

A detailed article on www.eahockey.com (which is not an official EA web site) describes a licensing tangle involving EA, the NHL, the NHL Players' Association, and Take-Two Interactive. Shortly before the end of last season's lockout, the NHLPA entered into an exclusive licence with EA, meaning that starting in 2006, EA would have exclusive rights to use NHL player names in its games. The article says that the agreement involved EA paying the NHLPA $44.2 million over six years.

However, the NHL was not pleased with this arrangement "? it prefers not to have exclusive licences, was not happy that the NHLPA would receive the majority of the income from the EA licence. The article states that the NHL said that it would not extend EA's existing licence with the NHL (i.e., which lets EA use team trade-marks, etc.) unless Take-Two Interactive (which publishes the NHL 2K series) also receives a licence from the NHLPA.

Apparently this threat brought all the parties back to the table, and the NHL has said that it is close to announcing licence deals with both EA and Take-Two.

EA and Take-Two have clashed over professional sports licences before "? last year EA signed an exclusive deal with the NFL, and Take-Two fought back with its own exclusive MLB agreement. If things pan out as the article suggests, however, it looks like the companies will be sharing the next NHL licence.

Coverage at http://shorl.com/hetuprelesoja

and at http://shorl.com/balopromustugry

Jamdat Not Acquired So Ea-sily

As previously reported (see  here ), EA has entered into an agreement to acquire mobile gaming provider Jamdat for an estimated US $680 million. However, a Jamdat shareholder is suing to prevent the sale, alleging that Jamdat's directors did not attempt to find the highest price reasonably available for the company, and employed a process which would tend to result in Jamdat's acquisition by EA. Although financial analysts have categorized EA's offer as generous, the issue of whether others had an opportunity to make any offer is apparently live.

Coverage at http://www.shorl.com/jekijohesugi

Electronic Arts' Empire Goes Wireless

Just when you thought monolithic publishing emperor EA couldn't get any bigger, it goes and purchases mobile gaming company Jamdat for a reported $680 million, or USD $27 per share. Jamdat, created in 2000, will add a significant mobile gaming component to EA, which has thus far been unable to create a dominant position for itself in that area. It is expected that Jamdat will benefit from EA's host of gaming rights, EA will benefit from Jamdat's technical expertise and strong position in the mobile space, and cell phone users everywhere will benefit from having Madden with them during awkward visits from in-laws.

Coverage at http://shorl.com/duprobudyfrasty

Vivendi Allows Fans To Create King's Quest Sequel

Vivendi Universal Games, the holder of the rights to the King's Quest games (which were created by Sierra in the 1980s), has allegedly granted a 'fan license"? to Phoenix Online Studios to create "The Silver Lining," which was previously entitled "King's Quest IX Every Cloak has a Silver Lining."  Details of the license are not available, but Vivendi has apparently responded to fan requests to grant the license after Vivendi ordered Phoenix to stop development on the title a few months ago. This appears to be a winning move for Vivendi the fan project could breathe new life into the stagnant King's Quest world, fans of the games get a new title to enjoy, the brand "King's Quest" doesn't get watered down (at least, not by the title of the game), and Vivendi has undoubtedly earned some new fans by this generous move. Who said the adventure genre is dead?

Coverage at http://www.kqix.com/home.php

The Adventures Of Mary Kate&ashley Could Be Yours!

The trustee for the bankrupt publisher Acclaim Entertainment, Allan B. Mendelsohn, has put the rights to more than 200 video game titles up for auction in Oceanside, New York. Famous titles such as 'Crazy Taxi,"? 'Re-Volt,"? and"? 'The Adventures of Mary Kate& Ashley"? are on the block, though Mendelsohn has admitted that he hasn't done complete due diligence on the properties, and thus some of the IP rights may be incomplete or nonexistent. For example, a game that included licensed properties may lack the license to continue using such properties, making the game itself a risky or worthless investment. It's strictly buyer beware, but then again, when has buying a game from Acclaim ever been any different?

Coverage at http://www.shorl.com/hidamejygryny

See the auction site at http://www.maltzauctions.com/acclaimip.htm

LIABILITY IN THE MMO WORLD

We just published an article in theLawyers Weeklyregarding unexpected potential liability in the online gaming world. 

Here's the link  http://www.shorl.com/gorufebradrome

DEVELOPER SEEKS TO WIND UP DIGITAL JESTERS

DogTag developer, KaosKontrol, has terminated its publishing agreement with Digital Jesters and is trying to wind-up Digital Jesters (i.e., shut it down). This follows yesterday's allegations by other developers who claimed that Digital Jesters engaged in 'highly suspicious"? behaviour. Other lawsuits are apparently pending against Digital Jesters, as we reported in a previous posting .
Coverage at http://www.shorl.com/dolehovukade

DEVELOPER SUES ATARI, CLAIMING UNPAID ROYALTIES

Roller Coaster Tycoon developer Chris Sawyer has sued Atari for US$5 million in respect of royalties he claims to be owed by Atari. Sawyer also claims Atari failed to give him access to Atari's accounts between 1999 and 2001.

The case will be tried in London (at Sawyer's request) rather than in New York (which is where Atari wanted to try the case. 
Coverage at  http://www.shorl.com/dystastiputydy

THE FROG'S OUT OF THE BAG DEVELOPERS SUE DIGITAL JESTERS

At least two three developers (Frogwares, Cyanide and Nadeo) and one publisher (Focus Home Interactive) have publicly claimed that UK publisher Digital Jesters have engaged in 'highly suspicious"? behaviour involving reporting, payment and corporate organization. The complainants claim that some developers have sued Digital Jesters, while others are considering their options. These claims were made in response to Digital Jesters' assertion that its cashflow problems were recently resolved by an infusion of cash. 
Coverage at http://www.shorl.com/byfupahostopra

WHAT HAPPENS IF YOU KILL AN MMO GAME?

EA Japan has decided to stop supporting Star Wars Galaxies in Japan. Gamers in Japan can apparently transfer their accounts to other servers; however, the shut-down still raises an interesting question what would happen if a game company were to completely kill an MMO game?

Game companies need to plan for this possibility before launching an MMO game. The concern is that gamers spend money on the games--expecting to be able to play them online. This expectation might be factored into the purchase price of the game. 

In addition, gamers spend money each month to gain access to the online portion of the game. They also spend countless hours building up virtual property in the game (which has a real world value and can be sold on online auction sites).

The loss of the MMO portion of the game could therefore result in the loss of gamers' time and money. And this could result in a damages claim against a gaming company.

That's why it's important for gaming companies to deal with this possibility in advance. End User Licence Agreements and Online Terms of Use should address MMO termination. It would also be a good idea to discuss this possibility in the user documentation for the game. 

Star Wars Coverage at  http://www.shorl.com/gygrestitejose

EA PHONE HOME

Director Steven Spielberg, who has directed such movies asET,JawsandSaving Private Ryan, has agreed to develop three video with for EA. This move demonstrates again the increasing ties between Hollywood and video games in today's world, where movies are based on games and games are based on movies.

Spielberg has previous video game involvement, including work on EA's Medal of Honour.

Coverage at http://shorl.com/jadryfregradroki

Don't Mess With Texactivision

Looks like the giant woke up. As previously reported, Spark Unlimited launched a lawsuit against Activision, alleging that Activisionfailed to pay promised royalties for the first title developed under that deal (the console edition of Call of Duty Finest Hour), and took Spark's proposals for a sequel and gave them to its own developers.. Now, Activision has filed a counter-suit against Spark, allegingfraud, breach of contract, trade secret misappropriation, trademark infringement, false designation of origin, and false advertising. In a lengthy statement of claim, Activision refutes virtually everything alleged by Spark, and paints an interesting alternative perspective of Spark's claims. Activision also argues that Spark's refusal to return Activision development kits, mixed with the fact that Spark is generating new content for Atari, may result in Atari unwittingly violating Activision's intellectual property. Ultimately, Activision has requested that damages be calculated through a full trial, which indicates a potentially lengthy (and potentially difficult for Spark to finance) legal battle between the two companies.

Coverage at http://shorl.com/fetanihirete

Previous Coverage at http://www.davis.ca/community/blogs/video_games/archive/2005/08/30/283.aspx

TRUMPET OF DOOM FOR Id?

Earlier this year Adrian Carmack, one of the founders of id Software (but no relation to co-founder John Carmack), left the company, and it was presumed that he had retired voluntarily.  That seems not to be the case. Carmack has sued his former co-owners, claiming that they forced him out in order to gain his 41 percent of id's shares for a relatively small amount ($11 million). That doesn't seem small, you say? Well, it is small compared to what the shares will be worth if id is ever purchased by a third party. Apparently this manoeuvre was prompted by various recent offers by Activision (reportedly of $105 million to buy id outright, and $90 million to purchase the rights to Doom, Quake and Castle Wolfenstein). Carmack claims that his co-owners deliberately rejected these offers so that they could force him out and acquire his shares on the cheap, and then presumably reap a windfall in the event of a third-party purchase.

Carmack is also seekingto have the contract that requires him to sell his shares back to id for $11 million if he leaves declared void (i.e., so he can retain his 41 percent shareholding).

It is a good idea to have a strong shareholders agreement place when establishing a small company, for two important reasons to specify permitted exit strategies in case things fall apart, and to restrict the shareholders' abilities to sell their shares to outside interests. However, the Carmack lawsuit shows that even a shareholder's agreement won't always save the day.

Coverage at http://shorl.com/durabrebredrefre

and at http://shorl.com/hugehodifrimy

GUY GAME INJUNCTION STANDS

In an earlier posting we reported that an anonymous teenager had won a temporary injunction against Topheavy for including topless footage of her in The Guy Game. She had been videotaped while competing publicly in a topless contest during spring break. The problem was that she was a minor at the time of the contest, so her lawyers are arguing that the waiver she signed was void (despite the fact that she provided ID at the time which showed she was an adult).

Topheavy appealed, arguing that the plaintiff lied about her age and then willingly participated in the contest knowing she would be asked to flash her breasts in public. However, the Court of Appeal recently upheld the injunction.

The Court of Appeal ruled that there was at least a possibility that the plaintiff could eventually win her lawsuit against Topheavy. The court also ruled that the U.S. First Amendment doesn't give Topheavy the right to use the plaintiff's likeness to promote a commercial product if the plaintiff didn't consent to it (and of course, the real issue in this case is whether the plaintiff's consent was legal).

Topheavy Studios v. Doe
September 14, 2005 3rd Court of Appeals, Texas
Tex. App. LEXIS 6462
KEYWORDS: injunction - consent - likeness - minor
Summary by Chris Bennett

FULL-PACKAGE LAWSUIT AGAINST MICROSOFT

There are reports that Glud and Marstrand, a Scandinavian packaging company, has sued Microsoft for breaching non-disclosure agreements and misappropriating confidential information.

G&M claims it developed technology for metal DVD/CD containers that are designed to open and lay flat like a book. G&M and Microsoft entered into discussions about video game packaging; after getting its NDA signed, G&M says that it provided confidential information concerning the packaging to Microsoft.

Microsoft eventually issued a request for proposal for a metal case for Halo 2, and then rejected G&M's proposal and went with different firm (Viva). G&M now claims that Microsoft passed on confidential information to Viva, that the Halo 2 case made by Viva for Microsoft uses G&M's proprietary technology, and that Viva has filed patent applications based on that technology.

Protecting confidential information while exploring business opportunities is always tricky, as it is difficult to generate business relationships without giving the other party a look at your technology. If your technology has not yet been patented (either because you haven't gotten that far, or because it may not be patentable), using techniques such as non-disclosure agreements is crucial. However, you have to be willing to act decisively, as G&M appears to have done, if you suspect that your NDA has been breached and that an unauthorized party is using your technology.  Time will tell whether there is merit to G&M's claims.

Coverage at http://shorl.com/bitranefraprimy

GIZMONDO DEVELOPMENTS

Tiger Telematics Inc., whose subsidiary and main business enterprise is Gizmondo Europe (the maker of the handheld Gizmondo game console) has put one lawsuit to rest and started another.

In 2004, Jordan Grand Prix Limited sued Tiger Telematics for breaching a sponsorship agreement relating to advertising Tiger's Gametrac device on Formula 1 racing cars. According to documents recently filed with the US SEC, Tiger settled that dispute out of court for a cash payment and an issue of shares in its restricted common stock.

Tiger has also begun another lawsuit by suing software developer Integra SP for the return of a $1.47 million loan. Tiger commenced the acquisition of Integra, but the transaction has not yet closed because (according to Tiger), Integra has failed to meet various closing conditions.

The SEC documents also reveal that Tiger has sold approximately 1.8 million shares, and that it will use the approximately $17.5 million in purchase revenues to buy 'critical game content"? for its Gizmondo handheld.

Coverage at http://shorl.com/dybrofakosysto

STARGATE CONFUSION CONTINUES

We reported last month about a dispute between developer Perception and publisher JoWood over the development of a Stargate SG-1 game. JoWood terminated Perception's development agreement, and questioned Perception's ability to develop a quality product.

Perception turned around and petitioned to have JoWood (who is in the middle of a financial restructuring) declared bankrupt. That petition was rejected recently by a Vienna judge.

This decision has not resolved another major issue, however "? both parties still claim to be the sole rights-holders in the game. The only sure things seem to be that a complete game cannot be expected any time soon, and that further legal wranglings seem inevitable.

Coverage at http://shorl.com/gikalavogrugry

DON'T BE HACKING BATTLE.NET

Last year we reported that Blizzard Entertainment had won its lawsuit against Internet Gateway Inc. and various individuals who reverse engineered Blizzard's software and protocols to create the bnetd project, a free and unregulated alternative to Blizzard's Battle.net arena.  The lower court ruled that the defendants' activities violated US copyright law and also violated Blizzard's software licences and online terms of use. The Court of Appeal (8th Circuit) upheld this decision yesterday.

When the defendants agreed to Blizzard's Terms of Use and End User Licence Agreement, the defendants contractually agreed not to reverse engineer any of Blizzard's software. The Court of Appeal ruled that this contract was binding and enforceable, and that the defendants had breached it. Also, the Court of Appeal ruled that the defendants had breached the DMCA's anti-circumvention provision (by allowing gamers to play unauthorized copies of Blizzard games on bnetd) and one of the DMCA's anti-trafficking provisions (by developing the bnetd emulator for the purpose of circumventing Blizzard's copy protection). 

The decision is available here http://www.shorl.com/hegrysorarufa

Sparks Fly At Activision

In April 2003, Spark Unlimited announced that it and Activision Inc. had entered into an exclusive publishing deal pursuant to which Activision would publish three console games developed by Spark. Now, Spark has filed a $10,000,000 suit against Activision, alleging that the publishing giant has failed to pay promised royalties for the first title developed under that deal (the console edition of Call of Duty Finest Hour), and took Spark's proposals for a sequel and gave them to its own developers.

This is not the first time Spark has been involved in a legal dispute. In April 2003, Reuters reported that Electronic Arts had settled a lawsuit against the 23 former employees who formed Spark, part of which allegedly included a confession by those employees that they improperly took internal EA documents and game code with them to Spark.

On March 4, Atari announced that it had entered into an exclusive agreement for worldwide publishing rights to all future titles developed by Spark Unlimited; between that and the lawsuit, it seems unlikely that future Spark titles will sport the Activision logo any time soon.

Current coverage at http://shorl.com/gufrogryprikege

Historical coverage at http://shorl.com/dogiluhykobry and http://shorl.com/hebrinofidroho

A BLIZZARD OF PRIVACY QUESTIONS

Blizzard Entertainment is receiving flack from some players for scanning players' computers for illegal cheats and hacks relating to the massively multiplayer online game World of Warcraft. Some players claim that preventing cheating and hacking is not a sufficient excuse to impinge on their privacy. Blizzard, on the other hand, says that looking for hacks in the actual game itself is not unreasonable, and points out that World of Warcraft's end-user licence agreement (which players must review and acknowledge before playing) explicitly states that Blizzard reserves the right to scan for hacks and cheats.

Putting information about the scans in the EULA is a good move (Sony ran into trouble with Everquest players because it performed similar scans without giving notice to its players), and this story highlights the importance of actually reading software licence agreements instead of just scrolling through and hitting 'I accept"?.  Personal hard drives are increasingly open to prying eyes "? readers may recall that Microsoft generated much discussion when it announced new measures to verify that users seeking upgrades actually had legitimate copies of its operating system -- and it is a good public relations move to be as open about such activities as possible.

Coverage at http://shorl.com/bogatygravuge

STARGATE DISPUTE TURNS UGLY

Video game lawyers around the world are no doubt on stand-by now that Australian developer Perception has accused publisher JoWood of libel. JoWood terminated Perception's development agreement and publicly questioned Perception's ability to develop a quality Stargate SG-1 game.

The interesting twist is that Perception claims to be the official MGM licensee of the Stargate SG-1 rights, so Perception will continue the project despite the termination. We must admit, we're scratching our heads on this one. We've reviewed plenty of licence agreements and development agreements and can't figure out why this is even an issue just look on the first page of the contract and figure out who is the licensee!

In any case, it sounds like a lawsuit is imminent.
Coverage at  http://www.shorl.com/gevyrenudropre

Video Games Get More Annoying

Massive Inc., a New York-based company which places ads in video games, has developed technology that downloads full-motion video ads from the internet and inserts them automatically into a certain PC game (Anarchy Online). Video game ad insertion has traditionally been problematic because ads would need to be integrated into the game's code, leading toward logo or brand placement instead of current ad campaigns or timely offers; however, because Massive's technology permits ads to be constantly updated via the web, ads can be current, timely, and frequently changed. Although currently a PC trend due to the broad-based availability of the internet for PC gaming, the next generation of consoles' drive for ubiquitous online availability means no one will have to wait long for their electronic avatars to be assailed by constant commercialization. Just like the real world, only with anti-aliasing!

Coverage at http://www.shorl.com/hogrykifrastyso

Japanese Gaming Industry To Self-regulate

Amid concerns over recent video-game related violent incidents in Japan, the Japanese gaming industry is rolling out a video game ratings system. The system asks retailers to not sell over-18 rated games to minors unless they are accompanied by an adult, but retailers are under no legal obligation to comply. It's been speculated that this is a move by the Japanese gaming industry to forestall government regulation on video game content, in light of the recent move by Kanagawa prefecture to ban the sale of Grand Theft Auto III to minors. Whether this move will be enough to keep the government out of gaming is an open question; the North American ESRB ratings system, which itself was set up by big gaming companies to avoid government regulation, is presently being eroded by recent government bans on the sale of games to minors, and by Ms. Hilary Clinton's actions in the wake of the Hot Coffee fiasco.

See article at http://www.shorl.com/bygrinetratiri

BLAM! POW! SONY AND MICROSOFT IN SUPERHERO SHOWDOWN

Microsoft has joined forces with Marvel Enterprises to develop a massively multiplayer online game featuring Marvel's cast of superheroes (which includes Spider-Man, the Hulk, the Fantastic Four and the X-Men). Not surprisingly, this is a response to a similar deal reached last month between Sony and DC Comics (whose superhero stable includes Batman, Superman and Wonderwoman)

The entertainment industry is starting to recognize the commercial potential of MMOs, and these agreements reflect that understanding. Currently, the most successful MMOs are PC-based and generally require powerful (and expensive) home computers. However, both Sony's and Microsoft's next-gen consoles will support MMOs, and breaking into that market (especially in Asia, where MMOs are hugely popular) is an important part of their marketing strategy.

Coverage at http://shorl.com/dodrojanemoje

EA WINS RACIAL LAWSUIT

Steve Neal is an African American male and former football player for Western Michigan University. He's also a Caucasian player for the New England Patriots.

Oh alright, they're two different football players with the same name.

EA used Western Steve's photograph in Madden NFL Football 2005, but (oops!) paired it with New England Steve's statistics. Western Steve sued EA for invasion of privacy "by appropriation", invasion of privacy "by false light", and defamation. In a recent decision, the US District Court ruled in favour of EA.

The court concluded that Western Steve had licensed the use of his photograph Western Steve had signed a contract with the NFL Players Association giving the Association the right to licence third parties (such as EA) to use his likeness and name. The Association sublicenced that right to EA. Therefore, Western Steve lost the invasion of privacy "by appropriation" argument.

The court also concluded that EA hadn't placed Western Steve in a "false light" by using his likeness as a representation for a Caucasian player. To win on this point, Western Steve had to show that EA's actions were highly offensive to a reasonable person. The court didn't think that portraying an African American player as a Caucasian player met the test (although the court might have come to a different conclusion if dancing were a larger part of football). For the same reason, the court concluded that EA hadn't defamed Western Steve by attributing the wrong biographical information to him.

The case is available here http://www.shorl.com/bubrajujymihe

The citation is Neal v. Elec. Arts, Inc., [2005] U.S.Dist. LEXIS 12324 (June 1, 2005).

 

BATTLENET APPEAL

You can stop holding your breath today's the day that the Battlenet appeal gets heard in St. Louis. 

As we reported last year, Blizzard Entertainment won its lawsuit against Internet Gateway Inc. and various individuals who reverse engineered Blizzard's software and protocols to create the bnetd project, a free and unregulated alternative to Blizzard's Battle.net arena.  The court ruled that the defendants' activities violated US copyright law and also violated Blizzard's software licences and online terms of use.

Now the bnetd folks are appealing, claiming that the decision "could dramatically impact consumers' ability to customize software and electronic devices and to obtain customized tools created by others". 

It's true this is an important decision. Stay tuned for the results.
Coverage at  http://www.shorl.com/gigalapranyjo

NVIDIA LICENCE SIGNALS SOME XBOX BACKWARD COMPATIBILITY

Microsoft has licensed NVIDIA technology to allow some backwards compatibility in the Xbox 360. The licence is necessary because the ATI chipset isn't compatible with current Xbox games, so the Xbox 360 will need to emulate NVIDIA's chip. However, it's still not clear whether all Xbox games will be playable on the Xbox 360.

Coverage at  http://www.shorl.com/fosybrakugrivy

HASBRO GIVE AND TAKE

Five years after licensing the digital gaming rights to various toy brands to Infogrames in 2005, Hasbro has now re-acquired them in a $65 million deal. In connection with this deal, Hasbro re-licensed 10 popular franchises, including Dungeons and Dragons and Monopoly, back to Infogrames.

Coverage at http://www.shorl.com/gobrepepebromi

GAMES KEEP TALKING

The Screen Actors Guild and the American Federation of Television and Radio Artists have agreed to a deal with video game publishers, ending the threat of a strike by video game voice actors. The new 3 and a half year deal includes a 36% pay raise for voice actors and improved benefits, but the issue of residual payments was dropped to facilitate the deal. The deal has yet to be ratified by the unions.

Coverage at http://www.shorl.com/gokisihufrymo

Previous coverage here

A HANDFUL OF LAWSUIT

Developer Handheld Games has filed suit in Seattle against Gizmondo Europe and Tiger Telematics for breach of contract. HHG alleges that it entered into an agreement to develop a video game for Gizmondo, but that Gizmondo has not provided the necessary licences and software development kits and equipment. HHG also claims that Gizmondo has begun developing the game with another developer.

Coverage at http://shorl.com/dagaprelyjoji

 

SLIPPERY SLOPE FOR VOICE ACTORS?

As previously discussed , the Screen Actors Guild is in discussions with video game makers about the proper remuneration for voice actors in video games. The talks have stalled again, and on June 6, 2005 the SAG will announce whether there will be a strike.

The sticking point is whether voice actors should share profits in successful games. This simple-seeming question actually opens a large can of worms "? who should be able to share in video game profits? The video game makers claim that allowing voice actors to share in profits would cause other parties in the production chain (e.g., programmers and animators) to demand the same. And with the costs of making video games constantly rising, game producers are reluctant to make any concessions that will cut into their profits.

On the flip side, the movie and television industries routinely use profit-sharing schemes so that various participants receive bonuses if their product sells well. The video game companies say that their industry is different, but that claim is questionable given the monstrous successes of recent video games and the increasing number of links between video games and movies.

In any event, keep an eye on this stand-off it will potentially define how video game contracts work in the foreseeable future.

Coverage at  http://shorl.com/gubastidrytradi

THERE'S A STORM BREWING ON BATTLE.NET

Blizzard has shut down over 50,000 Battle.net accounts for cheating. It also suspended over 8,000 CD keys and permanently banned over 3,000 CD keys.

Cheating is no fun for gamers, so it's obviously bad for business. It's also an area of potential liability for gaming companies who are easier to sue than the cheaters.
Coverage at http://www.shorl.com/hyjastegrifuha

DO EXCLUSIVE LICENCES VIOLATE US ANTITRUST LAW?

Maybe.

For many years, American Needle was a non-exclusive licensee of the NFL and was permitted to sell hats bearing the names and logos of NFL teams. But recently, the NFL stopped granting non-exclusive licences, opting instead to give Reebok an exclusive licence. (Sound familiar?) So American Needle sued the NFL, Reebok and other related parties, claiming that the exclusive licence violates US antitrust law. 

The NFL and the other defendants applied to dismiss the lawsuit, claiming that there were no legal grounds to proceed with the lawsuit. The court disagreed and allowed the lawsuit to proceed.

EA is probably following this case with great interest, given its recent acquisition of several long-term exclusive licences with the NFL, AFL and ESPN. 

Coverage at  http://www.shorl.com/hirevagesovi

 

NO MORE GRAVY

After nearly three years of court battles, Valve and Sierra have settled their dispute regarding the distribution of Valve's games. Valve claimed that Sierra had been unlawfully distributing Valve's games through cybercafes. Valve also claimed damages from Sierra's parent, Vivendi, for delaying the release of Counter-Strike Condition Zero. 

As a result of the settlement (a) Vivendi will no longer distribute packaged versions of Valve's games, (b) Vivendi will notify former licensees that only Valve is authorized to distribute Valve games through cybercafes, and (c) all former licences granted by Vivendi to cybercafes are now void.

Coverage at  http://www.shorl.com/jefehorijuma

NO LOST VOICES -- YET

A recent post mentioned that the actors who provide voices in video games may soon be on strike, and that the old contract expired last Friday, April 15.  Gamerswill be relieved to know there has been a short reprieve the parties (the Screen Actors Guild and the American Federation of Television and Radio Artists, plus various large game publishers) entered a new agreement today that extends the contract deadline to May 13 (a Friday "? apparently the parties aren't superstitious).

Coverage at http://shorl.com/gytopogomyma

Gamestop To Acquire Eb Games

A few years ago, PC game boxes were shrunk and standardized so game stores could cram more of them onto their tiny shelves.  But today, one game retailer has grown so large that its inventory could be sold on punch cards stuffed in refrigerator boxes and still have enough room for copies of Steel Battalion for everyone.

America's largest video game retailers, GameStop Corp. and Electronic Boutique Holdings Corp., have signed a Definitive Merger Agreement under which GameStop will give EB shareholders $38.15 in cash and 0.78795 of a GameStop Class A common share in exchange for each share of Electronics Boutique. This consideration represents approximately $55.18 per EB share, which is a 34.2% premium to the company's closing price last Friday.

By 2006,GameStop will be the world's largest video game retailer, with over 3,800 stores - and thousands of unsold copies of Daikatana - worldwide.

Coverage at  http://www.shorl.com/jehatatidrily

VOICES IN THE WILDERNESS?

As if labour problems in the hockey world weren't enough!  US video game voice actors, who are represented by two different unions (the Screen Actors Guild and the American Federation of Television and Radio Artists), may be ready to strike. The current contract between the two unions and the major video game publishers expires on Friday, and if negotiators can't get a new agreement in place a strike could be imminent.

Apparently a key issue is that of residuals "? the current contract does not allow voice actors to share in the profits of a successful game, but instead sets out a fixed payment scale. Given the blockbuster potential of video games (Halo2, anyone?), the unions are obviously interested in tying some remuneration to game profits. This contract negotiation could mark a new industry mindset, where more parties start to jostle for pieces of the newly-lucrative video game pie.

More and more well-known actors are contributing their voices to video games "? GTA San Andreas includes the voices of Samuel L. Jackson, James Woods and Peter Fonda; EA's Godfather game includes the voices of original cast members Marlon Brando, James Caan and Robert Duvall. And, as mentioned in a recent post , Sean Connery is lending his Scottish brogue to an upcoming James Bond game.

Coverage at http://shorl.com/bobyjahedohe

EA WINS LICENCE-EATING CONTEST

Electronic Arts has shored up the long-term exclusive video game rights to yet another major sports licence, adding to its impressive roster which includes the NFL, Arena Football League, and ESPN.This time, EA has penned a six-year deal with the Collegiate Licensing Company for the exclusive video game rights to NCAA football. With this move, EA has effectively locked down "football" - not only for the tail end of current consoles, but for most, if not all, of the lifespans of next generation consoles as well.Although critics have argued that EA's long-term exclusives will stifle competition and lead to stagnation in EA's titles, these pundits should remember that the other football developers, including Take-Two Interactive, are still free to create games with all those generic team and player names that nobody else wants to play with.Full coverage at http://shorl.com/debolumustydy

THE PSP HAS BEEN HACKED!

In almost no time, the new PSP has been hacked to allow web browsing additions, IM and TiVo playback abilities (among other things).

Hacks such as these often violate copyright law.  They might also be a breach of contract  some companies specifically prohibit hacking in their End User Licence Agreements. 

But regardless of whether Sony can legally stop the hackers, there's a business decision to be made regarding whether Sony should even try. 

Sony hasn't had much luck cracking down on hackers in the past. For example, it once sued one of its customers for hacking Aibo, the company's robotic dog toy. This strategy backfired when fans started boycotting the product.

The other downside, of course, is that hacking can raise interest in a product and help promote product sales. 

Coverage at  http://www.shorl.com/gomytrejabrigri

CONNERY SAYS “YESH” TO BOND GAME

Actor Sean Connery is providing the voice for EA's latest James Bond game, From Russia With Love. The game will also feature the likeness of Connery as he was at the age of 33 when the film was made (he is now 74).

Using celebrity voices and likenesses in video games is nothing new (PC gamers may recall Mark Hamill's voice in the later Wing Commander games, for example). However, that Connery is willing and eager to participate in video games when his film career is still going strong indicates, once again, the emergence of video games as a dominant player in the entertainment industry.

Coverage at  http://shorl.com/fusestotranypru

WWE CONTINUES TO BRING THE PAIN

WWE sued publisher THQ and its joint-venture partner Jakks Pacific Inc. last fall . Early this week, WWE came off the top rope to body slam THQ CEO Brian Farrell by adding him as an individual defendant.

The lawsuit involves claims of commercial bribery connected to WWE merchandising licences, and WWE seeks to nullify its video game licence with THQ and Jakks.

THQ and Jakks have indicated that the addition of Farrell as a defendant does not change their position on the proceeding, and that they are continuing to operate under the existing licence.

Coverage at http://shorl.com/daritrabohytu

Hey Sam… Holster The Gun And Pick Up An N-GAGE!

We just learned that Ubisoft signed an advertising deal with several companies including Nokia. Under the agreement, Ubisoft agreed to place the companies' products in Ubisoft's latest release, Splinter Cell Chaos Theory.

In-game advertising is really catching on. The NBA , Pizza Hut and Reebok have all signed big contracts to advertise their products in newly released games.  We thought about jumping on the bandwagon and adding a "dial a video game lawyer" feature to the next hot release, but we're a little worried about what the modding community might do to us... 

Coverage at  http://www.shorl.com/dasidubefrapu

BSA BS?

The Business Software Alliance (BSA) has withdrawn its lawsuit against Project Entropia creator MindArk Studios.  The lawsuit alleged that MindArk used unlicensed versions of Microsoft, Adobe, Macromedia and Autodesk software to develop Project Entropia. It turns out the software was licensed afterall. (Oops.)

Predictably, the dispute doesn't end there. MindArk is preparing a countersuit claiming damages caused by the original lawsuit.
Coverage at  http://www.shorl.com/jelitojugajo

NBA STARTS FIVE

The NBA is the most recent professional sports league to enter into new large-scale licensing arrangements with game publishers. However, instead of giving one publisher exclusive rights to use NBA properties (as the NFL did with Electronic Arts), the NBA has entered into non-exclusive licence deals with five different publishers Electronic Arts, Take-Two Interactive, Midway Games, Sony, and Atari.

The NBA says that this approach will keep the quality of the games high and will maintain a diverse range of NBA video games. It also cited the importance of in-game advertising, and how the new licences will give it increased 'virtual signage"? to sell to advertisers.

Coverage at http://shorl.com/fohojobrybide

And at http://shorl.com/gagufamavevo

I STILL SAY THE USS ENTERPRISE COULD TAKE A STAR DESTROYER

Activision and Viacom recently settled their Star Trek dispute. Sadly, the dispute has nothing to do with whether the USS Enterprise could defeat an imperial Star Destroyer. We would have loved to get a court ruling on that one.

The dispute was regarding the diminished value of Activision's Star Trek game licence. Activision claimed the loss in value was caused by Viacom's failure to promote the existing TV show and make new movies.  I'ma little upset about that too it's high time for a new movie.

 
Coverage at  http://shorl.com/domubegypraje

NOT NEARLY FRIGHTENED ENOUGH

Peter Jackson, who directed the Lord of the Rings movie trilogy and is currently remaking King Kong, has sued New Line Cinema for a greater share of licensing profits from the LotR movies. One of his specific claims is that New Line did not pay for scripts and song lyrics used in an unspecified Electronic Arts video game.

Although the full details of the claim are not clear, the action highlights a couple of points. First, video games are clearly an important source of potential licensing revenue for content creators, and it is crucial to address them explicitly in licensing transactions. Second, on a related point, video game creators must be very sure that they have the right to use every bit of third-party content included in their games.

Coverage at http://shorl.com/fifregrakohisto

And at  http://shorl.com/gogyfrinedeke

TAKE TWO ROUNDS THIRD

Take Two Interactive has entered into further semi-exclusive baseball agreements by signing long-term deals with MLB Properties and MLB Advanced Media, two key Major League Baseball licensing firms. These deals, which come shortly after Take Two's deal with the MLB Players' Association, give the game publisher rights to the brands of all the clubs and ball parks in the league. As before, Take Two acquires exclusive rights among third party publishers, but video game system manufacturers will still be able to develop and publish baseball games.

Coverage at http://shorl.com/fuvodrobrostyti

TAKE 2 TAKES TWO, GETS ON BASE WITH MLB

Take 2 Interactive has reached an agreement in principle with the Major League Baseball Players Association to develop and publish baseball video games. Under this seven-year deal, Take 2 will have exclusive rights among third-party publishers to develop and market baseball video games. Video game system manufacturers will still be able to develop and publish baseball simulation games for their own platforms. Given recent similar agreements between EA and the NFL, ESPN, and Reebok, it seems like there are few professional sports leagues left without exclusive contracts with game developers. But here's a free tip: we hear curling is still up for grabs...

Coverage at http://shorl.com/guminafipryvu

Exclusive curling licences at http://www.curling.ca

AS IS ESPN

Electronic Arts continued its trend of signing exlusive licence agreements with everyone under the sun (except for us, apparently, but we haven't given up hope) by announcing an unprecedented 15-year agreement with ESPN that gives EA exclusive first rights to all ESPN content for simulation sports games.

Coverage at http://shorl.com/bybebuposypru

REEBOK IS IN THE GAME

Sports giant Reebok has signed a multi-title sponsorship agreement with Electronic Arts, under which Reebok's products will be included in various EA sports games. Reebok sees this as a natural expansion of its branding campaign; EA is downplaying the marketing overtones by saying that the agreement will add "authenticity" to its games. Regardless of the spin it's given, the sponsorship agreement demonstrates how video games are coming into their own as branding and marketing platforms.

Coverage at http://shorl.com/dubrojolyjypu

REVERSE ENGINEERS LIABLE

(This is an archived case summary)

Davidson & Associates v. Internet Gateway, et al
US Court of Appeal for the 8th Circuit (2005) No. 04-3654

The plaintiffs do business as Blizzard Entertainment, and make and sell computer games such as StarCraft and WarCraft. Blizzard launched an online service, Battle.net, that allowed gamers to play with each other over the Internet. Blizzard has valid copyrights on all of its games.

Blizzard took steps to avoid piracy by creating various safeguards in its software. For example, when a user connects with the Battle.net server, the server performs a "secret handshake" with the game to verify if the game is an authorized version. Furthermore, in order to play a Blizzard game users must install the game and agree to comply with the End User Licence Agreement and Terms of Use (both of which prohibit reverse engineering).

The defendants created a similar server to Battle.net and reverse engineered the Blizzard software to allow users to play both real and pirated versions of the Blizzard games online. The most significant difference was that the defendants' server read every code as an "ok" when performing the "secret handshake" and allowed users to log on regardless of the status of their software.

The Court of Appeal upheld the District Court's finding of copyright infringement, circumvention of copyright protection systems, trade-mark infringement and breach of the user agreements.

WWE AND THQ GET READY TO RUMBLE

World Wrestling Entertainment has sued video game publisher THQ and its joint-venture partner Jakks Pacific Inc. in response to what the WWE calls a "commercial bribery scheme". WWE is seeking to nullify its content licence with the defendants.

Coverage at http://shorl.com/futovograbojo

      

 

MODELS FOR MORTAL KOMBAT

(This is an archived case summary.)

Three individuals modelled for Midway, which designs, manufactures, and sells video games including “Mortal Kombat” and “Mortal Kombat II”. The individuals brought an action against Midway, Nintendo, Sega and others for using their names, images and likenesses in an unauthorized way. The individuals had all signed releases, but claimed that they signed because they were told they would receive great benefits. Also, they thought they were modelling only for the coin-operated video game, not the subsequent home video, home computer, and hand-held versions of the game.

The plaintiffs lost on all counts because they had all consented to the videotaping and because the choreography and choice of movements used in the game were not jointly “authored” by the individuals.

Ahn v. Midway Mfg Co., et al.
May 28, 1997
US Dist. Ct., ND Ill
965 F. Supp. 1134
Keywords: copyright - Mortal Kombat - modelling - joint authorship
Summary by: Chris Bennett

NINTENDO ANTITRUST SETTLEMENT UPHELD

(This is an archived case summary)

Numerous states sued Nintendo under antitrust laws. The parties agreed to settle, and drafted a settlement agreement. The Attorneys General of all 50 states objected to certain provisions in the settlement agreement, and brought this action. In the agreement, Nintendo had agreed to give $5 coupons to every person who bought a Nintendo game between June 1st, 1988 and December 31st, 1990. Nintendo would also pay monetary damages in the order of $3 million to the Attorneys General for use in antitrust enforcement, as well as $1.75 million in administrative costs. The Attorneys General also relinquished their rights to sue Nintendo for antitrust infringement during the relevant time period.

The court concluded that the settlement agreement was fair due to the fact that the negotiations had been conducted in good faith and at arms length.

State of New York v. Nintendo of America, Inc.
1991, US Dist. Ct., SD NY
775 F. Supp. 676
KEYWORDS: anti-trust - Nintendo - settlement
SUMMARY BY: Byron Yep

DSI Outruns Accolade

(This is an archived case summary)

Accolade and the defendants entered into a licence agreement under which the defendants were to develop the video game "The Duel -- Test Drive II". The licence stated that Accolade was to own the copyright and the rights to publish and distribute the game. The defendants subsequently developed the video game "Outrun" for Sega. Accolade alleged that the defendants violated its copyright by using computer code from "The Duel" in "Outrun".

The District Court interpreted the licence agreement and held that Accolade owned the copyright in the concept and design of the game but not in the underlying source code. The court found that the games were not substantially similar and that only routine library commands were duplicated between the games. On balance, the court held that the defendants had not violated Accolade's copyright in the game.

Accolade, Inc. v. Distinctive Software, Inc.
1990, US. Dist. Ct., ND Cal.
1990 US Dist. LEXIS 14305
KEYWORDS: licence - copyright
SUMMARY BY: Chris Metcalfe