Microsoft has acquired Twisted Pixel Studios, according to a recent Microsoft press release:
As a step in continuing to deliver Microsoft Studios’ innovative game and entertainment offerings, Microsoft has announced the acquisition of Austin, Texas-based game developer Twisted Pixel, the creative minds behind Xbox LIVE Arcade titles such as “Splosion Man” and the recent Kinect for Xbox 360 title, “The Gunstringer.”
Twisted Pixel joins other globally-recognized game creators such as Lionhead Studios and Rare Ltd who have also been acquired by Microsoft.

Attention Patent Arcadians!!! (I just made that up)

I am writing to request your vote for as one of the blogs to be included in the ABA journal's annual list of the 100 best legal blogs. The contest is referred to as Blawg 100 Amici.

As many of you know, I created this blog about 5 or 6 years ago to discuss the cross section of intellectual property law and video games. The Blog/Blawg offers news and updates regarding video game IP law, cases, and patents. Our index of lawsuits is a primary resource for law students, journalists, and attorneys alike. Our index of video game patents continues to develop, with more patents being added routinely.

Please vote for the blog (blawg) and spread the word about the contest (and the blog) to folks in the legal industry. There is a form that has three questions (name, e-mail, and why you are a fan) to be completed. The forms are due (on-line) by September 9. The form is at this site (also linked throughout this post).
The criteria include that you believe other lawyers should know about it, the author is recognizable as a lawyer in the vast majority of his posts, the blog is written with an audience of lawyers or law students in mind, and the blog does not promote the author's products and services. Additional information is provided on the ABA Journal's website.

Hidden Image Technology Solutions v. Thomas L. Barnhart
U.S. District Court, Northern District of Georgia
Case No. 11-cv-02415, Filed July 22, 2011

Hidden Image Technology Solutions, a Georgia company, has sued Thomas Barnhart asserting that he falsely promotes himself as the sole inventor of several patents, and has profited from this false promotion. The lawsuit seeks to remove Barnhart as an inventor of those patents, and to instate his co-inventor, Joel Brooks, as the sole inventor of the patents. The patents in question are:

6,296,900: “Method of making hidden image game piece.” Granted 10/2/2001.
5,984,367: “Hidden image game piece.” Granted 11/16/1999.
7,747,472: “Hidden image game piece.” Granted 6/29/2010.
6,629,888: “Hidden image game piece.” Granted 10/7/2003.

These are physical game patents, consisting of printed pieces, that when held against pre-programmed colors on a television or computer screen, reveal hidden messages. The first use of this patent by Brooks, in the early 1990s, was for a hidden printed message distributed in newspapers, called the “Red Reveal Game Piece.” When held against a red part of the screen set to appear during a Dallas Cowboys football game, the game piece would reveal a hidden message or advertisement. The idea garnered interest from television outlets like MSNBC, and Brooks also worked to adjust the invention to the growing opportunity of the internet. Brooks developed a WebDecoder® based on the patents above, and shared his idea for marketing it with Barnhart. According to Hidden Image’s complaint, Barnhart cajoled himself into the position of co-inventor of these patents by convincing Brooks that this was necessary for Brooks’ own “protection.” In reality, according to Hidden Image, Barnhart was not an inventor of the patents, and Brooks was the true sole inventor.

The complaint alleges that Barnhart not only forced his way into the co-inventor position on three of the patents, but without Brooks’ knowing, he had himself listed as the sole inventor of the ‘888 patent. Barnhart also attempted to license these patents giving Brooks only 10% of the royalties. Brooks in 2003 licensed his rights, title and interest in these patents to a subsidiary of Hidden Images. Hidden Images now seeks to have Barnhart’s name stricken from the records of the USPTO, and to instate Brooks as the sole inventor of all four patents. Hidden Images also seeks an injunction barring Barnhart from using the patents, and to recover damages, profits, and attorney’s fees.

Because this is a physical game patent, we won’t follow this one further. You can learn more about the case filings at PriorSmart.

Ross A. Dannenberg publishes new book: “The American Bar Association’s Legal Guide to Video Game Production

The American Bar Association’s Legal Guide to Video Game Development is published by the American Bar Association (ABA), and is the authoritative handbook on developing a video game. Included in each chapter are the relevant forms, agreements, and contracts for that phase of production, as well as tons of helpful tips on negotiation and decoding legalese. Written by experienced lawyers who work closely with software and video game developer clients, this is the inside guide to the process of taking an idea and creating a product, from beginning to end. You'll learn the in's and out's of the legal aspects of video game production including:
  • Patents, Copyright and Trademarks
  • Business and Finance Issues
  • Risk and Insurance
  • Intellectual Property Agreements
  • The Children's Online Privacy Protection Act
  • Publishing Your Game
  • Licensing and Open Source Material
  • EULAs and Terms of Use
It's a practical, prescriptive book perfect for entertainment and intellectual property lawyers; video game developers; art, design, trade, and law schools; or just burgeoning artists with an idea.

About the author/editor: Ross A. Dannenberg is a shareholder in the Washington, DC office of Banner & Witcoff Ltd., and handles a wide-range of intellectual property issues, with experience in Internet, e-commerce, telecommunications, computer software and video game-related issues. With a background in computer science, Mr. Dannenberg has prepared and prosecuted hundreds of patent applications in a variety of technical fields, including mobile and traditional telecommunications, computer software, video games, and Internet and business method inventions. He has substantial experience with intellectual property protection of video games, including patent and copyright protection, copyright clearance and licensing, and has experience with entertainment, copyright, trademark and domain name related matters.

Mr. Dannenberg is an adjunct professor of copyright law at George Mason University School of Law. Mr. Dannenberg is also the Editor-in-Chief of the Patent Arcade website, a legal blog discussing intellectual property protection of video games.

Please click here for information on ordering The American Bar Association's Legal Guide to Video Game Development.

While not a video game case per se, this will likely affect patents claiming video games because the Federal Circuit (a US appeals court for patent matters, among other things) strikes down a computer readable medium claim (aka, Beauregard claim) as non-eligible subject matter for a patent. They don't strike down ALL Beauregard claims, but they do draw a line in the sand where you simply put a computer-readable medium preamble on an otherwise non-technological method. Relevant text appears below. Claim 3 was a method claim that the court first addressed and found unpatentable under section 101. Claim 2 was the beauregard claim:

Regardless of what statutory category (“process, machine, manufacture, or composition of matter,” 35 U.S.C. § 101) a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information. This case is thus similar to In re Abele, 684 F.2d 902 (CCPA 1982). In Abele, claim 5 of the patent at issue recited “[a] method of displaying data” comprising the steps of “calculating the difference” between two numbers and “displaying the value.” Id. at 908. The court concluded that claim 5 was not directed to patent eligible subject matter because it claimed an abstract idea. Id. However, claim 7 was argued to be different because it recited an “[a]pparatus for displaying data” comprising “means for calculating the differences” between two numbers and “means for displaying the value.” Id. at 909 (emphases added). Though claim 7 literally invoked an “[a]pparatus,” the court treated it as a method claim for the purpose of its § 101 analysis. Due to its “broad” and “functionally-defined” nature, the court found that treating claim 7 as an apparatus claim would “exalt form over substance since the claim is really to the method or series of functions itself.” Id. (citation omitted). Accordingly, the court placed “the burden . . . on the applicant to demonstrate that the claims [were] truly drawn to [a] specific apparatus distinct from other apparatus[es] capable of performing the identical functions.” Id. (citation omitted).
In the present case, CyberSource has not met its burden to demonstrate that claim 2 is “truly drawn to a specific” computer readable medium, rather than to the underlying method of credit card fraud detection. To be sure, after Abele, we have held that, as a general matter, programming a general purpose computer to perform an algorithm “creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.” In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994). But we have never suggested that simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind falls within the Alappat rule. Thus, despite its Beauregard claim format, under Abele, we treat claim 2 as a process claim for patent-eligibility purposes.

The court went on to analyze claim 2 as a process and held it unpatentable under 101. Among other useful info, the court stated:
  • The mere manipulation or reorganization of data, however, does not satisfy the transformation prong.
  • As we stated in Bilski, to impart patent eligibility to an otherwise unpatentable process under the theory that the process is linked to a machine, the use of the machine “must impose meaningful limits on the claim’s scope.” In other words, the machine “must play a significant part in permitting the claimed method to be performed.”
  • Abele made clear that the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium. Thus, merely claiming a software implementation of a purely mental process that could otherwise be performed without the use of a computer does not satisfy the machine prong of the machine-or-transformation test.
The court went on to contrast this case to SiRF Tech. and Research Corp. Tech. v. Microsoft, where in each case the claims at issue could not have been performed wholly within a human mind, and were upheld as patent eligible under 101. There is much to learn here.

Here is the full opinion: I'm sure many people will be commenting on this case.

In a previous post we reported on the internet buzz surrounding the issuance to Facebook of U.S. Patent No. 7,669,123, entitled “Dynamically Providing a News Feed About a User of a Social Network.” Many users were outraged that the patent system would allow businesses to register such patents. You can read our analysis here.

Facebook has certainly continued to legally enforce its patents, and last November it filed suit against Phoenix Media, a Boston-based alternative newspaper publisher, for infringing one of its database search patents. The patent-in-suit is U.S. Patent Number 6,199,157, which covers a system for configuring an item such as a machine that can have a multitude of optional components. Facebook claimed that Phoenix Media infringed the patent by operating websites that allowed users to search for information by filtering data according to multiple criteria.

Last Friday, July 29th, 2011, Phoenix Media asked a Massachusetts federal court for summary judgment in the case, arguing that the '157 patent is invalid. According to Phoenix, the technology claimed by the patent was widely in use when the patent application was filed in 1998. According to Phoenix's motion, " least in the area of database searching (the field at issue in this case), such methods are anything but novel. The prior art shows they were known and in use long before the application." Phoenix cites several articles that described similar systems before the application for the Facebook patent was filed, including one from 1996 discussing features of then-popular search engines AltaVista and Lycos Inc.

Since this isn't strictly a video game patent case, we won't follow it further, but if you'd like to learn more, visit Law360.
Lodsys LLC. V. Combay Inc. et al.

United States District Court, Eastern District of Texas

Case No. 11-cv-00272, Filed May 31, 2011

Previously, we reported on the ongoing battle between Apple and Lodsys over licensing to app developers. Lodsys claims that its agreement with Apple did not give third-party developers free rein to use the patented technology while Apple insists that the license does cover its app developers. Now, Lodsys has added its most prominent (app developer) defendants yet to the complaint: Rovio Mobile Ltd. (the maker of “Angry Birds”); Electronic Arts, Square Enix, Atari, and Take-Two Interactive.

The lawsuit accuses the mobile app developers of violating two patents that cover a technology which allows users to make in-game purchases through the application. They are U.S. Patent Numbers 7,620,565, titled “Customer-Based Product Design Module,” and 7,222,078, titled "Methods and Systems for Gathering Information from Units of a Commodity across a Network". The '565 patent was issued in November 2009, and the '078 patent was issued in May 2007.

The original lawsuit followed some back and forth between Lodsys and Apple over licensing permissions. There had been private negotiations on the matter, but Lodsys took the issue to court following a letter from Apple apparently asking Lodsys to ease off app developers for the iPhone. It is worth noting that the present suit includes not only developers for the iPhone, but also app developers for Android. "Angry Birds," and another game cited in the complaint, "Labyrinth", both run on the iPhone as well as Android platforms. There has been no word yet from Google on the matter. Lodsys is seeking injunctions, treble damages, and attorney’s fees as relief. For more coverage of this case, see Law 360.
Walker Digital LLC. v. 2K Games Inc. et al

U.S. District Court, District of Delaware

Case No. 11-cv-00649, Filed July 22, 2011

Earlier this year we reported on Walker Digital’s suit against 2K Games, filed April 25, 2011. Walker voluntarily dismissed the April claims against 2K Games and all other defendants on April 28 and May 4. Only to sue them again.

In the present suit, filed July 22, Walker alleges that Take-Two Interactive Software, three subsidiaries, 2K Games Inc., 2K Sports Inc,. and Grand Theft Auto-creator Rockstar Games Inc., infringe on patents for technology enabling electronic tournament game play for multiple players and storing player information for future use.

The patents-in-suit are U.S. Patent Numbers 6,224,486, issued in 2001 and titled "Database driven online distributed tournament system"; and 6,425,828, issued in 2002 with the same title. Walker alleges that at least three video games sold by the companies, Bioshock 2, Top Spin 4 and Red Dead Redemption, infringe the two patents. These are the same patents that were cited in the April 25 complaint.

This suit continues the onslaught of litigious activity unleashed by Walker this year. On April 25, 2011, Walker also filed suit against Google, Amazon and Yahoo alleging infringement of a patent for modifying and displaying a merchant's advertisement to users by associating a data pattern with the merchant. The suit claims that the companies’ advertising programs infringe U.S. Patent # 7,933,893 which had been issued the day before, on April 24, 2011. This follows a January 3, 2011 suit against Activision et al, and Walker’s filing of 15 different suits against 100 different companies on April 11, 2011.

The present complaint echoes previous filings in describing Walker Digital as “a research and development laboratory consisting of a diverse group of innovators who study human behavior and utilize modern information technology to design novel solutions to business problems.” The company says in its complaint that it is named on more than 500 issued and pending patents. These patents cover technology for gaming, publishing, retailing, education and other industries. Walker has supposedly generated more than $200 million in licensing revenue from its patents. The company is headed by Jay Walker, who, according to the complaint, has “twice been named by the editors of Time magazine as one of the 50 most influential business leaders in the digital age.”
A big thank you from the Patent Arcade blog to Maryam Henson, who has been our research intern this summer. Maryam is an evening law student at Georgetown and works full-time training fellowship applicants at Georgetown University. In addition to all of that, this summer she's kept our blog updated by researching cases and writing articles. Maryam also revised our Patent and Lawsuit sections -- we now have searchable tables, with links to patent and lawsuit summaries. We appreciate her hard work and intiative on the blog this summer, and all our best wishes for the coming Fall semester!
Pyramid Holdings, Inc. v. Giant Interactive Group, Inc.
S.D.N.Y., filed Nov. 26, 2007
Case No. 07-CV-10588

I. Nature of the Case

This case is a federal securities class action on behalf of a group of Americans who purchased American Depositary Shares (“ADSs”) from Giant Interactive after the company’s initial public offering (“IPO”) on or about November 1, 2007 through November 19 2007. The group alleges violations of Sections 11 and 12(a)(2) of the Securities Act of 1933.

Giant Interactive is a developer who operates online games in the People’s Republic of China. The company’s most popular games are MMOs. It offers three successful MMO games: 1. Zheng Tu Online (“ZT Online”), a free-to-play RPG set in ancient China where players develop skills, use magical weapons, and team up with other players to fight monsters and players from other kingdoms; 2. ZT Online PTP, where players assume one of five different roles in 10 different kingdoms. PTP requires players to purchase physical or virtual prepaid game cards on an official website or Internet cafes; and 3. Giant Online, where players may assume one of 14 different roles spanning numerous regions. In this game, a player guides his or her character to develop skills and is encouraged to cooperate with other players to fight against players from other regions.

Two of the metrics that Giant Interactive reported for its games were the number of average concurrent users (“ACU”) and peak concurrent users (“PCU”). The rules of Giant Interactive’s games are material to investors because they impact the game play and the company’s ACU and PCU figures. The case here concerns a failure of Giant Interact to disclose a significant rule change to ZT Online (its most popular game).

On September 30, 2007, Giant Interactive completed its third fiscal quarter. A month and a half later (but before the company was required to publicly announce its third quarter earnings), Giant Interactive completed the IPO where the company sold 57 million ADSs, raising more than $886 million. The company announced that the underwriters had exercised their over-allotment option and purchased and sold an additional 8.6 million ADSs at $15.50 per share for an additional $133 million. Its total sales equaled $1.2 billion.

The Registration Statement, which incorporated a Prospectus, was issued in connection with the IPO, but, according to the complaint, contained inaccurate statements of material fact, and misrepresented or omitted the significant rule change to ZT Online that had resulted in declining ACU and PCU figures in the third quarter as opposed to the second quarter of 2007.

The Plaintiffs brought this class action seeking damages and recovery for the investment they had made as a result of Giant Interactive’s concealment of its declining figures because of the rule change. The Plaintiffs, as a class, presented the following questions of law and fact:
  1. Whether the federal securities laws were violated by Defendants’ acts

  2. Whether the Prospectus and Registration Statement issued by Defendants to the investing public in connection with the Offering omitted and/or misrepresented material facts about Giant Interactive and its business

  3. Whether Defendants’ statements issued during the Class Period were materially false and misleading; and

  4. The extent of injuries sustained by members of the Class and the appropriate measure of damages
II. Substantive Allegations

In the Registration Statement and Prospectus filed by Giant Interactive on October 31, 2007, Giant Interactive reported its ACU and PCU figures as increasing when, in fact, they were in the decline. The decline in ACU and PCU was attributable to a significant rule change implemented by Giant Interactive. The rule change discouraged “gold farming activities” in ZT Online. Gold Farming occurs when a MMO player attempts to acquire (‘farm’) items of value within a game, usually by performing some task for an indeterminable amount of time (e.g., killing an important creature). Generally, gold farming is conducted by companies that hire people to play these online games so they can generate online currency which they can then sell to third-party websites for real cash to actual players who will then use the gold coins in the game.

The Plaintiffs alleged that the Registration Statement for the third quarter did not explain or describe the gold farming rule change, did not highlight the negative trend in ACU and PCU, and did not disclose that the negative impact the rule change was having at the time of the IPO. They also claim that the Registration Statement was materially misleading because it omitted the significant effect gold farming activities had on Giant’s previous statistics despite the company’s knowledge of the pervasiveness of the activity.

While the Registration Statement did describe the gold coin currency system in ZT Online and alluded to the company’s efforts to “restrict” the ability of players to sell their gold coins, it failed to disclose that the company had changed the rules to restrict gold farming. In the Risk Factors-Risk Relating to Our Business and Industry-section of the Registration Statement the company described the negative effects of a rule change, but not the rule change relating to gold farming. The excerpted part read:

“To discourage this behavior, which we believe is inconsistent with the basic principles of our gameplaying environment, in May 2007 we changed the rules governing one of our popular promotions that enable a player to purchase virtual “insurance policies” for his or her character that would pay out virtual gold coins valued at up to five times the purchase price of the insurance policy once his or her character reached a predetermined experience level. Some players would use gold coins earned from these pay-outs to obtain virtual products, and then sell these virtual products to other players using auction websites. We changed the rule so that related pay-outs consist primarily of gold coin vouchers, which can only purchase virtual products that are non-transferable. We believe that this change was the main reason for the subsequent decrease in our monthly average concurrent users, which fell by 14.9% from 553,784 in May 2007 to 471,428 in June 2007.”

The Plaintiffs claim that under SEC rules, the Registration Statement was required to disclose that the company had materially changed the rules in ZT Online and that the rule change impacted the company’s continuing operations.

On November 19, 2007, Giant Interactive issued a press release announcing its financial results for the third quarter of 2007. The next day, in a Form 6-K, the company attributed the decrease in ACU and PCU to the June 2007 “gold farming rule.” That same day, Giant Interactive held a conference call with analysts and investors in which it attributed the decline in the third quarter to the rule change. Following the conference call, the price of Giant Interactive ADSs dropped from $14.88 to $11.10.

III. Count I—Violations of Section 11 of the Securities Act

The Plaintiffs alleged the following:
  • The Registration Statement for the IPO was inaccurate and misleading, contained untrue statements of material facts, and omitted necessary and material facts

  • Giant Interactive was responsible for the contents and dissemination of the Statement and the Prospectus and, as a result, were strictly liable for the misstatements and omissions

  • None of the Defendants made a reasonable investigation or possessed reasonable grounds for the belief that the statements in the Registration Statement were true or were not misleading
IV. Count II—Violations of Section 12(a)(2) of the Securities Act

The Plaintiffs, pursuant to Section 12(a)(2) of the Securities Act, 15 U.S.C. §771 claimed:
  • The Registration Statement contained a Prospectus which was used to induce investors to purchase Giant Interactive’s ADSs

  • That Giant Interactive solicited purchases for their personal financial gain through the preparation and dissemination of the Prospectus

  • The Prospectus contained untrue statements of material fact and omitted facts necessary to make the statements not misleading

  • That Defendants were obligated to make a reasonable and diligent investigation of the statements contained in the Prospectus to ensure that such statements were true

  • None of the Defendants made a reasonable investigation or possessed reasonable grounds for the belief that the statements contained in the Prospectus were accurate and complete
V. Prayer for Relief

The Plaintiffs sought the following judgment:
  1. Awarding Plaintiffs damages together with interest (for purchase of the ADSs)

  2. Awarding Plaintiffs their costs and expenses of litigation

  3. Awarding Plaintiffs further relief as may be just and proper under the circumstances
The Plaintiffs also asked for a jury trial. We will continue to track the case as it progresses.

If you are interested in learning more about the ZT Online, there is an interesting article written for the website DanWei that described the underpinnings of the game and the real-life gambling involved when playing. Also, an article on PlayNoEvil delves deeper into the way ZT Online differs from the normal MMO genre. It, too, was a fascinating read.
We've been working on a renovation of our PATENTS link, as well as additional content, which is now live. It's a bit cumbersome, but there is a lot more information there now. We'll continue to work on making it more user friendly. Check it out and let us know if you have any suggestions.
Sega Enterprises Ltd. v. MAPHIA et al.
857 F. Supp. 679 (N.D. Cal. 1994)

The defendants in this copyright and trademark infringement case operated an electronic bulletin board service called “MAPHIA” which allowed for, and actively encouraged, the upload and download of unauthorized versions of copyrighted Sega video games. Sherman, the owner and main operator of MAPHIA, profited from those services by selling game copiers which allowed for game play. Moreover, the court found that many of the games were located in files on defendants' computer bearing the name Sega, and the SEGA trademark also appeared when a Sega game downloaded from the bulletin board was run. Sega brought this action against the defendants, charging them with federal copyright and trademark infringement, unfair competition, and false designation of origin, as well as the violation of a series of California statutes.

I. Copyright Infringement

A. Direct Infringement

MAPHIA violated Sega’s copyrights when its users uploaded the games to its bulletin boards (BBs) and allowed the public to download them. However, Sherman, owner and operator of MAPHIA, could not be found directly liable for copyright infringement. The court relied on Religious Technology Ctr. v. Netcom On-Line Communication Serv., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), which “found that the Internet provider was not directly liable for copyright infringement of a copyrighted work posted and distributed through its system. Netcom, 907 F. Supp. at 1368-70.” The court found this to be the case even when the defendant had knowledge of potential copyright infringement by its subscribers. Id. at 1372-73. “While Sherman's actions in this case are more participatory than those of the defendants in Netcom, the Court finds Netcom persuasive.” Sega failed to show that Sherman himself “uploaded or downloaded the files, or directly caused such uploading or downloading to occur,” so Sherman could not be found directly liable.

B. Contributory Infringement

The court found Sherman liable for contributory copyright infringement because Sega established “that the users of Sherman's MAPHIA BBs directly infringed Sega's copyright… [and] that (i) with knowledge of the users' infringing activity, (ii) Sherman induced, caused, or materially contributed to their infringing activity.”

As noted above, the uploading and downloading by MAPHIA BB users constituted illegal copying. Through evidence such as print-outs of upload/download statistics and Sherman’s admissions, it was clear that Sherman had knowledge of the copying that was occurring. Sherman contributed to the infringing activity by “provide[ing] the site and facilities for the known infringing conduct. He actively solicited users to upload unauthorized games, and provided a road map on his BBs for easy identification of Sega games available for downloading. Additionally, through the same MAPHIA BBs medium, he offered copiers for sale to facilitate playing the downloaded games

C. Fair Use Defense

Sherman affirmatively asserted a fair use defense stating there was no evidence that subscribers were playing the games outside their own homes or further distributing the games, but the court rejected the defense. The four non-exclusive factors that the court considered in determining whether the use was fair were:

1. Purpose and Character of Use: The bulletin boards were intended to induce users to purchase defendants’ game copiers to play the games they downloaded from the boards, costing Sega customers who would otherwise have bought their game cartridges. This for-profit use at Sega’s expense weighed against accepting a fair use defense.

2. Nature of the Copyrighted Work: The Sega games are for entertainment use and are creative rather than informational works, which leans against a finding of fair use.

3. Amount and Substantiality of the Copyrighted Work Used: The court found that the users’ copying of entire copyrighted games without providing any public benefit weighed heavily against, but didn’t preclude, fair use.

4. Effect of the Use upon the Potential Market for the Copyrighted Work: The court weighed this factor most heavily. The court determined “whether unrestricted and widespread conduct of the sort engaged in by the defendant would result in a substantially adverse impact on the potential market for the copyrighted work.” Here the court found that even if users only played the games in their own homes and didn’t further distribute them, Sherman’s conduct of allowing users to avoid paying for games would, if widespread, adversely impact the market for Sega games.

The court found that these four factors weighed against the application of the fair use doctrine, so Sherman was liable for contributory copyright infringement.

D. Willfulness

Because Sherman intentionally contributed to the users' infringement of Sega's copyright (by uploading to BBs, encouraging downloads, selling copiers, using and allowing others to use Sega’s trademarks) with the intention to profit, the court found that he “willfully infringed upon their copyrights, which would entitle it to greater damages.”

II. Federal Trademark Infringement

Sega alleged that Sherman infringed on its trademark by knowingly using the Sega name & mark in connection with the unauthorized games. But Sherman argued that using the Sega name to identify file contents and the “SEGA” trademark incidentally showing on the screen when the games were played wasn’t a violation.

A. Prima Facie Case

The court noted that a “prima facie case for trademark infringement under the Lanham Act is established by a showing that (1) the mark is owned by or associated with a particular plaintiff, and (2) the defendant's use of the mark is likely to cause confusion or mistake among the public as to the origin of the goods. New West Corp. v. NYM Co. of California, Inc., 595 F.2d 1194, 1201-02 (9th Cir. 1979); see also Jockey Club, Inc. v. Jockey Club of Las Vegas, 595 F.2d 1167 (9th Cir. 1979).”

1. Ownership: Sega owns and has exclusive rights to the registered SEGA trademark.

2. Likelihood of Confusion:

a. Proximity of Goods: The games downloaded from the BBs are “substantially identical” to Sega’s games.

b. Similarity of Marks: The marks in the counterfeit games are identical to Sega’s trademark.

c. Intention in Adopting the Mark: Sherman intended to use the SEGA mark to show that the game available for download was associated with Sega.

d. Actual Confusion: Sega didn’t show any actual confusion, but the court notes that this evidence isn’t absolutely necessary for proving likelihood of confusion.

Based on these factors, the court found “that there is a likelihood of consumer confusion regarding the sponsorship and origin of the game files available on the MAPHIA BBs.” The court thought it was likely that anybody logging onto the BBs or playing a game using a game copier would think the counterfeit games and the use of Sega's name and trademark on the BBs was affiliated with or supported by Sega.

B. Use of the Mark

Sherman knew about the SEGA mark in the counterfeit games and used the Sega name to identify the game files on the BBs.

C. Conclusion

The court found that Sherman’s willful use of the Sega name and trademark in the counterfeit games was likely to lead to “consumer confusion as to whether Sega endorsed or sponsored the games appearing on or downloaded from MAPHIA. Accordingly, Sega has established a prima facie case that Sherman's use of Sega's trademark on virtually identical Sega game programs constitutes counterfeiting.”

III. False Designation of Origin

To prevail on this Lanham Act claim, Sega again needed to show that the public would likely be deceived or confused by the similarity of the marks. “For the same reasons set forth regarding Sega's trademark infringement claim, Sherman's use of the Sega trademark is likely to be confusing and to cause damage to Sega and, therefore, Sega is entitled to summary judgment regarding Sherman's liability under 15 U.S.C. § 1125(a).”

IV. California State Law Trade Name Infringement Claim

“Sega claims that Sherman is liable for California trade name infringement under Cal. Bus. & Prof. Code § 14401 et seq.” The court also found for Sega on this claim because, once again, Sega needed and was able to show “that a likelihood of confusion exists with the use of Sega's trade name on Sherman's BBs."

V. California State Law Unfair Competition Claim

Lastly, the court granted Sega summary judgment on this California state claim of unfair competition for the same reasons stated above because “[u]nfair competition claims made pursuant to Cal. Bus. & Prof. Code § 17200 et seq. are substantially congruent to claims made under the Lanham Act.”

VI. Remedies

The court granted injunctive relief and awarded Sega $10,000 in damages plus attorney’s fees for the copyright infringement claim. For the other claims, the court said that Sega was entitled to treble damages or profits if it could prove either, but it hadn’t done so yet.

Read the full opinion here.
Atari Games Corp. v. Oman
979 F.2d 242 (D.C. Cir. 1992)

I. Background

In 1989, Atari brought an action against Ralph Oman, the Register of Copyrights at the time, that challenged his decision not to grant Atari a copyright on its video game entitled BREAKOUT. The Register, in a letter, denied the copyright registration saying that the “wall, ball, and paddle were ‘simple geometric shapes and coloring’ which ‘per se are not copyrightable.’” Viewing BREAKOUT as a whole, the Register found “no original authorship in either the selection or arrangement of the images or their components.”

At the trial level, the United States District Court for the District of Colombia granted the Register’s motion for summary judgment and denied Atari’s motion for summary judgment. Atari appealed the district court’s decision, and the Court of Appeals reversed and remanded the case (Atari Games Corp. v. Oman, 888 F.2d 878 (D.C. Cir. 1989)(hereinafter “Atari I”)). On remand, the Register again refused registration and once again Atari filed suit in the District Court. The District Court again granted summary judgment in favor of the Register, and once more an appeal was taken to the Court of Appeals.

II. Analysis

To be copyrightable, a work must be “fixed, original (i.e. not copied), and a “’work of authorship’” 17 U.S.C. §102. The dispute before the D.C. Circuit was whether BREAKOUT qualified as a “work of authorship.”

BREAKOUT was presented to the court as an audiovisual work, defined as “consist(ing) of a series of related images which are intrinsically intended to be shown by the use of machines or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds . . . .” 17 U.S.C. §101.

In Atari I, the court asked the Register whether a different level of creativity was required for video games than for other works of art. The Register responded that “[t]he Copyright Office [was] applying the same creativity standard to the videogame ‘BREAKOUT’ as it would to any type of work . . . .” The court, using previous case law, determined that the Register had failed to considered BREAKOUT’s artistic merits on the same level as it would other forms of art.

In an earlier Supreme Court case entitled Feist Pub’lns, Inc. v. Rural Tel. Serv. Co., Inc., the Court concluded that the requirement to fulfill the creativity standard is “extremely low; even a slight amount [of creativity] will suffice.” 499 U.S. 340 (1991). When using this standard, courts are required to look at the product “as a whole” and should not focus on individual elements.

In Atari I, The Court stressed that while individual graphical elements of each of BREAKOUT’s screens are not copyrightable, the images, when taken together as a whole, constitute a copyrightable work of art. The D.C. Circuit felt that the Copyright Office had failed to uphold its duty and “focus[ed] on the individual screens, rather than the flow of the game as a whole.”

The Register also suggested that BREAKOUT was too trivial for protection. Counsel for the Register, during oral arguments, argued that BREAKOUT’s resort to nonrepresentational images showed a lack of creativity, stating: “The idea . . . could have been expressed in expressive ways. They could have added graphics to it. They could have had a brick wall that looked like a brick wall. They could have added ivy that was expressive.”

Circuit Judge Ruth Bader Ginsburg, who would go on to become a Justice of the Supreme Court, rejected this assertion, stating that “the ball’s path in BREAKOUT varies depending on which of four sections of the paddle it hits. Its trajectory does not follow from the laws of physics.” Using the Feist standard, Ginsburg concluded that the choice of motion used in BREAKOUT could not be characterized as “mechanical,” “garden-variety,” “typical” or “obvious,” or as projecting “age-old practices, firmly rooted in tradition and so commonplace that the combination of elements has come to be expected as a matter of course,” or as “practically inevitable.” Thus, because of the complicated and variable trajectory the ball in BREAKOUT was designed to take depending on which part of the paddle it hit, the D.C. Circuit identified BREAKOUT as creative and remanded the case back to Register for renewed consideration consistent with the opinion.

III. Conclusion

While the D.C. Circuit’s opinion should not be taken as holding that all video games are per se copyrightable, it did reaffirm the holding in Feist that “the vast majority of works make the copyright grade quite easily.” In addition, the Copyright Office must use the Feist standard for any work of art whether it is video games or something else. All forms of art should receive the same creativity standard in the eyes of the Register. A final point of interest is that this case suggests that individual elements of any video game might not be copyrightable in and of themselves, though when taken together, the combination of elements may be copyrightable.
On July 15, 2011, Activision filed a complaint with the National Arbitration Forum in an attempt to get control of the domain name The website, which uses visuals from Activision’s Modern Warfare 3 game, and which at first glance appears to be related to Modern Warfare, actually directs to users to a site in support of Electronic Arts’ competing Battlefield 3 game. Of late the website has also hosted videos with titles like “Modern Warfare 3 is a Joke.”

The National Arbitration Forum administers the Uniform Domain Dispute Resolution Policy which was established in the late 1990s to protect trademark holders from third parties that registered a domain name that could be construed as being an official source of information. Here, the domain was registered by an unnamed person on March 26, 2009, via—long before Modern Warfare 3 was announced by Activision. In its complaint, Activision argues that the Modern Warfare brand was famous prior to the registration of the domain name, and at that time the brans was already a highly distinctive and famous trademark that symbolized substantial goodwill. As such, even though Modern Warfare 3 was not yet launched, the brand itself was famous enough to establish Activision’s trademark rights to related domain names.

Under the rules of the UDRP, Activision must establish that the domain is identical to a trademark it has the rights to, that the person who registered it has no rights to the domain name, and that the individual in fact is using it in bad faith. The first two factors appear to hold in Activision’s favor. As to the third factor of bad faith, Activision's complaint says that "it appears that the [site owner] supports the game Battlefield from the game developer Electronic Arts," citing that not only did the domain at one time redirect to the Battlefield website, it also urged visitors to "grow up and forget about Modern Warfare 3 (because it looks just like Modern Warfare 2) and buy Battlefield 3 instead," all while having the logos and appearance of a Modern Warfare 3 site that Activision says was confusing to consumers. In addition, Activision asserts that the site hosted advertisements, indicating that the unknown owner was profiting from their trademarked brand. Activision is asking that the National Arbitration Forum give it ownership of the domain name immediately. We note that, as of July 20, 2011, the site is no longer loading.

Fantasy Flight Publishing, Inc. v. Puffin Software et al.
U.S. District Court, District of Minnesota
Case No. 11-cv-01928, Filed July 15, 2011

Fantasy Flight Publishing, owner of the war strategy board game BattleLore, has filed suit against European company, Puffin Software, for copyright infringement and unfair competition. Puffin allegedly sells a computerized version of a game almost identical to BattleLore online, through Apple’s App Store and its own website. According to the complaint, BattleLore was created by famous board game designer, Richard Borg, and Fantasy Flight acquired all copyrights in the BattleLore game from him in September 2008. Fantasy Flight registered its copyright to the game with the Copyright Office on June 15, 2011, one month before filing this suit.

According to Fantasy Flight, Puffin through its owner Johannes Paivinen, created the electronic game “Viking Lords” as an iPad version of BattleLore under a different name. Fantasy alleges that Paivinen previously admitted as much in public, and that the substantial similarity between the games was likely to lead to confusion in the marketplace. Fantasy goes on to say in its complaint that it is common for many board games, like Monopoly and Scrabble, to launch online versions, and the average consumer, familiar with this practice, is likely to confuse Viking Lords with the board game BattleLore because they are nearly identical, though in different mediums. In addition, Fantasy Flight asserts that its BattleLore game is highly successful, and has a large following both online, and in the real world, making confusion all the more likely.

Both games are set during a European medieval period, but Puffin’s version limits troops to Vikings. In addition, both games have three sectors at the player’s left, center and right, and the abilities of the troops or Vikings are determined by a color-coding system: green for fast, blue for average and red for strong, according to the complaint. Fantasy claims that Paivinen first approached them with a prototype for a computerized version of BattleLore, but when they were slow to respond, he went ahead and created his own version, launching it on the App Store.

In addition to copyright infringement, the suit raises claims of unfair competition under the Lanham Act and deceptive trade practices and unjust enrichment under state law. Fantast Flight asserts that it asked Puffin to cease and desist from its infringing activities, without success. It claims the unlawful activities are putting its reputation at risk because it has no control over the nature, quality and direction of the computer adaption of the game and how the unauthorized work is developed or distributed. Fantasy is seeking a permanent injunction, damages, pre- and post-judgment interest, and attorneys’ fees and costs.
Impulse Technology Ltd. v. Microsoft Corporation et al
U.S. District Court, District of Delaware
Case No. 11-cv-00586, Filed July 1, 2011

Impulse Technology, an Ohio-based company, sued Microsoft Corp in Delaware yesterday, alleging that the Xbox Kinect game console infringed on seven of Impulse’s patents for technology that tracks users’ movements and lets them play video games without a controller. The patents in suit are U.S. Patent Nos. 6,308,565; 6,430,997; 6,765,726; 6,876,496; 7,359,121; and 7,791,808 describing a “System and method for tracking and assessing movement skills in multidimensional space,” and U.S. Patent No. 6,749,432 covering an “Education system challenging a subject’s physiologic and kinesthetic systems to synergistically enhance cognitive function."

The complaint alleges that Impulse informed Microsoft of their patents before the suit, and told them that these patents covered a “wide variety of games where the movement of a player is tracked in three dimensions ... and certain exercise games where the motion of the player is tracked to effect movement of a virtual avatar, and the exertion of the user is monitored, including where the tracking of the player is done by use of a camera.” The suit claims that Microsoft is willfully infringing these patents, and alleges direct, inducing, and contributory infringement.

In addition to Microsoft, a slew of other companies who make games for Xbox were named as defendants. Eight video game makers, including EA, Sega, and Konami, stand accused of making exercise games, sports games and other games designed for the Kinect system that violate Impulse’s technology. Impulse alleges that like Microsoft, these companies are guilty of making, selling and importing into the U.S., games that infringe several of their patents.
Impulse is seeking a permanent injunction, damages, treble damages, interest, attorneys’ fees and costs. According to Law360, a representative for Microsoft said the company is reviewing the complaint and had no comment.

Robert W. Cabell v. Sony Entertainment Pictures, Inc. et al
United States Court of Appeals for the Second Circuit
Case No. 10-2690-cv, Filed February 20, 2009

As comics often serve as sources for developing video games, we note with some interest a ruling by the second circuit on Friday, June 24, 2011, concerning whether the 2008 film You Don’t Mess with the Zohan infringed a comic book creator’s copyright in his story. Robert Cabell filed suit in 2009 alleging that his comic character, Jayms Blonde, a gay ex-US Navy SEAL wielding an Uzi disguised as a hair dryer, was the unauthorized basis for the film’s Zohan character, a former Israeli counterterrorism agent who leaves the Mossad to become a hairdresser.

A district court in New York had granted summary judgment to the defendants on May 26, 2010. The court found that at the base of both works was the unprotectable idea of a crime fighting hairdresser, and any protectable expression of that idea was only superficially similar between the characters concerned in the suit. The district judge elaborated that the characters were easily distinguishable beneath the surface-level similarities. For example, while the Jayms Blonde comics were rife with humor “based on gay double-entendre,” Zohan “derives much of its humor by exaggerating Arab and Israeli stereotypes." Also, while both works were filled with sexual humor, in Zohan the character’s exploits with members of the opposite sex, and the “average lay observer would not mistake Zohan’s escapades with his elderly female clients for any of Blonde’s amorous activities.”

Campbell tried to prove that Adam Sandler, the film’s star and co-writer, had access to his work because they were MySpace friends. The judge found the submitted evidence, a screenshot of a MySpace page displaying an Adam Sandler profile picture, to be unconvincing as many MySpace users frequently put up publicly available images to impersonate celebrities. In addition, Sandler said in a sworn declaration that he never had a MySpace account. Judd Apatow, who wrote the screenplay, also swore that he finished the screenplay in July 2000, well before Cabell’s comic was published in 2002.

In a summary order on June 24, the 2nd Circuit affirmed the lower court’s order of summary judgment as “thorough and well-reasoned.” The 2nd Circuit opinion reiterated that “aside from the unprotectable ideas of brandishing a blow dryer as a weapon, and the characters’ fighting poses, there is no plausible basis for a reasonable jury to find that the parties’ respective expressions of the concept of a crime fighting hairdresser are substantially similar.”
Wildcat Intellectual Property Holdings, LLC v. 4Kids Entertainment, Inc. et al
U.S. District Court, Eastern District of Texas
Case No. 11-cv-305, Filed July 1, 2011

Wildcat, a Plano, TX based intellectual property holdings company has filed suit in court against a slew of game developers, including Sony, EA, Konami, Nintendo and Zynga, for alleged infringement of a patent for electronic trading cards. U.S. Patent No. 6,200,216 (the ‘216 patent), issued March 13, 2001, outlines a “system for the application of a trading card metaphor to a dissociated computer program… taking the traditional trading card metaphor and uniquely updating and enhancing it for application in consumer digital media.” The patent is not only an electronic card making application, but “the card format supports both scarcity and authenticity, which are essential to card collecting and trading, within a dissociated computer code segment.”

Wildcat’s complaint alleges that a number of video games and online trading card games infringe the ‘216 patent. These include EA’s Battleforge, Konami’s Marvel trading card game, Nintendo’s Pokemon trading card game, and Zynga’s Warstorm. The complaint alleges that the defendants not only directly infringe the patent, but that they knowingly induced infringement by making these games available to their customers online, and/or by importing these games to the United States and making them available here. Wildcat requests relief in the form of a permanent injunction, damages, costs, expenses, and attorney’s fees. We’ll keep an eye on this case and keep you updated.
SocialApps LLC v Zynga Inc. et al
U.S. District Court, Central District of California
Case No. 11-cv-00919, Filed June 17, 2011

SocialApps, a California company that develops, posts, and maintains online social network games for sale, has sued online social gaming giant Zynga alleging copyright infringement, violation of trade secrets, breach of written contract, breach of implied-in-fact contract, and breach of confidence. SocialApps owns the copyrights and source code to "myFarm." The company’s complaint, filed in court on June 17, 2011, alleges that its direct competitor Zynga, cajoled it into sharing its source code with promises of compensation and recognition, and then ran once they got the secret.

Plaintiffs claim they invested substantial time, resources and funds to develop myFarm-- the first farming social network game that allowed players to create their own virtual farms, raise virtual produce and animals, and harvest their virtual farm goods to trade with or sell to other players. They first publicly released myFarm on Facebook in November 2008. In May 2009 Zynga approached SocialApps to acquire intellectual rights and source code for myFarm. The companies entered into a Letter of Agreement for the source code and, SocialApps was under the impression that Zynga would compensate and credit them for any use of myFarm. The complaint alleges that after Zynga got confidential source code, SocialApps never heard from Zynga again and couldn’t get in touch with them when they tried. Zynga released its own farm-based social game, Farmville on June 19, 2009. SocialApps believes Zynga, having had access to, and knowledge of, their source code then used it to create Farmville, without ever compensating them or receiving their permission.

SocialApps formally registered myFarm or its source code with the Copyright Office until June 13, 2011, shortly before filing this suit against Zynga. SocialApps asserts that Zynga deliberately sought to divert revenues from them, and that they’ve suffered damages in excess of $100,000. They are seeking permanent injunction, statutory and punitive damages, and attorney’s fees. They are also seeking Zynga’s profits and gains from Farmville since these are in excess of $500,000. SocialApps also believes Zynga is using its source code to generate other popular virtual world games like FrontierVille, CityVille and FishVille.

United States District Court for the District of Montana

Case No. 09-cv-00039

Case Update:

This case was closed on August 19, 2009. Plaintiff Gametech filed a voluntary dismissal of the case under FRCP 41(a) 1. FRCP rule 41 allows for the plaintiff to dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment. In this case Grand Vision had not responded to Interlink’s suit with any court filings before Interlink filed the voluntary dismissal. Given the short space of time between filing of the suit, and its dismissal, it is likely that the parties begain settlement talks shortly after the suit was filed.

Original Post:

GameTech International, Inc. is a supplier of electronic bingo equipment, including hand-held bingo units, fixed-base units and turnkey account and management software. Tim Carson and Merle Frank apparently used to work for GameTech, but left to start their own competing company Grand Vision Gaming. GameTech alleges that the defendants took GameTech's IP when they left, including source code and other trade secrets, and GameTech filed this lawsuit on April 15, 2009, alleging copyright infringement, misappropriation of trade secrets, unfair competition, breach of duty of loyalty, and breach of contract (based on employment agreements). This appears to be a straight up software-based copyright infringement case, but we will track it nonetheless and let you know if anything interesting comes of it.

The case is 1:09-cv-00039-RFC, filed April 15, 2009, in the Billings division.

Achates Reference Publishing, Inc. v. Symantec Corporation et al.
U.S. District Court for the Eastern District of Texas
Case No. 11-cv-00294, Filed June 20, 2011

Achates Publishing, a Texas enterprise, has sued a slew of companies, including Symantec, Electronic Arts, and Valve LLC, alleging patent infringement. The patents in question are U.S. Patent Numbers 5,982,889, titled “Method and Apparatus for Distributing Information Products,” and 6,173,403, a continuation-in-part of the ‘889 patent, titled same. The patents describe methods for authenticating and activating software in a way that distributes “information products without many of the costs and restrictions associated with techniques in the prior art.”

Especially relevant to video games are the claims that EA’s Sims games and Valve’s Left4Dead and HalfLife games infringe these patents. Achates alleges that “defendants have infringed the '889 patent and the '403 patent by making, using, selling, and offering for sale software that uses the product activation technology described and claimed in the '889 and '403 patents, without authority of Achates.”

This is the third time in four years that Achates has brought suit to defend these patents. The first suit, in November 2007, was brought against Microsoft, and was dismissed in December 2008, at request of the parties. The second suit was filed in November 2009 against nine software companies, including McAfee and Intuit. Those cases were all dismissed by August 2010, again by request of the parties, after they reached an undisclosed agreement.

In this latest suit, Achates is seeking a determination of infringement, treble (triple) damages for willful infringement, attorneys’ fees and a permanent injunction. This case isn't exactly focused on video games, so our updates may be minimal.

For more on this case, visit Law360.
Zynga Inc. v. Vostu USA Inc.
United States District Court, Northern District of California
Case No. 3:11-cv-02959-MEJ, Filed June 16, 2011

Zynga, arguably the largest presence in online social gaming today (and who recently filed for a $1B IPO!), has sued the Brazilian social gaming company Vostu for copyright infringement of its CityVille game. According to Zynga’s complaint, Vostu’s MegaCity blatantly copies every aspect of CityVille… right down to the mistakes and bugs in the game that Zynga never got around to correcting! Zynga also alleges that Vostu exists almost solely for the purpose of copying every Zynga game down to every game mechanic, virtual item, and storyline. The complaint says “Vostu's business model is simple: copy Zynga's successful games. While imitation may be the sincerest form of flattery, the copying of valuable intellectual property rights is theft.” Zynga even submitted a side by side comparison of a number of games for which it alleges infringement in the lawsuit.

Zynga itself is no stranger to defending allegations of copyright infringement from other game developers (we recently posted on a lawsuit brought by SocialApps accusing Zynga of having copied source code for games like FarmVille and CityVille) Zynga alleges here though, that Vostu’s infringement crosses the line from “inspiration” to copying every detail of the games. Vostu, in a sharply worded response, appeared to view this as hypocrisy. According to Vostu spokesman, Davidson Goldin, “Zynga has been accused of copying so many games that they’ve sadly lost the ability to recognize games like ours that are chock full of original content and have been independently created.”

You can read more of Vostu’s public statement here. No response has yet been filed in court, but we’ll monitor the case and keep you updated.
Keller et al. v. Electronic Arts, Inc. et al.

U.S. District Court, Northern District of California

Case No. 09-cv-1967

Case Update:

When last we checked in on this case (02/08/2010), plaintiffs had survived motions to dismiss the case from both EA and the NCAA. On May 2, 2011, Judge Wilken dismissed claims that EA, along with the NCAA, conspired to avoid paying student basketball and football players for the use and sale of their likenesses in popular NCAA-themed video games. However, plaintiffs were given two weeks to amend their anti-trust allegations, and the court refused to throw out any right-of-publicity claims.

The publicity claims accuse EA of using the players' images without their permission, and the NCAA of turning a blind eye to EA's actions in order to reap substantially higher royalty rates, given the greater popularity of games showing players that look like the real student-athletes. These claims are now set to move forward into discovery.

For more details on developments on both the antitrust and rights of publicity fronts, see Law360.

Original Post:

On Monday, February 8, 2010, the U.S. District for the Northern District of California ruled on a motion to dismiss filed by Electronic Arts (“EA”), the National Collegiate Athletics Association (“NCAA”), and the Collegiate Licensing Company (“CLC”) in Keller v. Electronic Arts, Inc., Case No. 09-cv-01967-CW.

While the court granted the defendants’ motion to dismiss as to some of Keller’s claims, the court denied the motion to dismiss as to some of Keller’s claims against EA.

Keller, a former starting quarterback for the Arizona State University (“ASU”), filed this lawsuit last May against EA and the other defendants, alleging that EA used his likeness without his consent and that the NCAA enabled this use. Among the various claims that Keller asserted against the defendants is a claim against EA for alleged violations of California’s statutory and common law rights of publicity.

In this round of motions, EA argued that Keller’s claims were barred by the First Amendment and other possible defenses under California law.

As to EA’s First Amendment argument, the court stated that “[a] defendant may raise an affirmative defense that the challenged work is protected by the First Amendment inasmuch as it contains significant transformative elements or that the value of the work does not derive primarily from the celebrity’s fame. . . . The defense poses what is essentially a balancing test between the First Amendment and the right of publicity.” Slip. Op. at 6-7 (internal quotes and citations omitted).

With this standard in mind, the court determined that “EA’s depiction of [Keller] in ‘NCAA Football’ is not sufficiently transformative to bar his California right of publicity claims as a matter of law.” Slip. Op. at 9. In arriving at this conclusion, the court noted that the quarterback for ASU in the game shares many of Keller’s characteristics, as the in-game ASU quarterback wears Keller’s jersey number, has the same height and weight, and is purportedly from the same home state. Id.

In addition, in ruling that EA was not entitled to the “public interest” and “public affairs” defenses, which EA asserted under California law, the court noted that EA’s game goes beyond mere reporting of “just the players’ names and statistics; it offers a depiction of the student athletes’ physical characteristics and, as noted, enables consumers to control the virtual players on a simulated football field.” Slip Op. at 13; see id. at 13-15.

We will continue to follow this case.
Don Rubin v. Apple Inc. et al

United States District Court for N.D. Cal.
Case No. 3:09-cv-02607, Filed June 9, 2009

Case Update:

After surviving Apple's motion to dismiss, on September 8, 2009, this case was sent to ADR. After several months of mediation, this case was fully and confidentially settled as to defendant Apple, on May 18, 2010. The case was dismissed with prejudice as to defendant Apple on July 21, 2010. As to the other two defendants named in the complaint, they never responded, and default judgments against them were entered on September 28, 2010.

Original Post:

A puzzle inventor has filed suit against Apple for allegedly using one of his puzzles as the basis for an iPhone application without authorization.

Don Rubin, dubbed by The World Almanac as “America’s premiere puzzlemaster,” contends that Apple has infringed on one of his copyrighted puzzles with its iPhone app ParkingLot. According to the complaint, Rubin created and published the original sliding block parking lot puzzle (see image at left), titled Lots of Luck, “on or before October 1, 1977” and since then came up with five derivative versions of the game. The complaint further states that the puzzle has been registered with the Register of Copyrights as a contribution to a serial publication and in various other forms numerous times since 1977. The puzzle and its authorized derivations have been published in hundreds of periodicals worldwide since its creation. Rubin asserts that his weekly puzzle column entertained 15 million readers from 20 countries per week and led to a volume of responses so overwhelming that the U.S. Post Office in Chicago “gave Don his own zip code.”

According to the grandmaster of sliding block puzzles, Edward Hordern, “[a] sliding block puzzle consists of a group of pieces of any shape(s) enclosed within a confined area, in which the purpose is to rearrange the pieces either into a certain order or to get a particular piece to a specified position. This is accomplished by sliding the pieces or “blocks” —hence the name sliding block puzzles — usually one at a time into areas not occupied by other pieces. The lifting of pieces is never allowed — nor must they hop or jump over other pieces.”

The complaint alleges that the ParkingLot application, introduced on January 1, 2008 and now one of the iPhone’s best-selling apps, copies Rubin’s puzzle “in all material respects.” Both Lots of Luck and ParkingLot are restrictive movement sliding block puzzles set in a parking lot, the complaint states. In both games, players work to move the arrangement of cars in a grid, or “parking lot,” to free a main target car so it can exit the lot.

Rubin is requesting a preliminary and permanent injunction to enjoin Apple from infringing the copyright, thus preventing publishing, selling, marketing, or otherwise disposing of copies in any format of the game. Rubin is also seeking damages from the infringement to account for gains, profits and advantages that Apple received through its use of ParkingLot.

As another piece to the puzzle (pun intended?), the complaint also names as a party of interest. A quick search of revealed that Quetouch is the developer of ParkingLot. According to its website, ParkingLot was “[i]nspired by Mr. Yoshigahara's invention.” After further investigation, it turns out Mr. Nobuyuki ‘Nob’ Yoshigahara, a famous puzzle columnist from Japan, was the inventor of the game Rush Hour. Both Lots of Luck and Rush Hour require a user to move car pieces backwards and forwards to clear a path for the target car to exit the grid, but Rubin’s game takes the form of a picture puzzle while Rush Hour is a physical version of the sliding block puzzle. Rush Hour, produced and marketed by Thinkfun (formerly Binary Arts), was supposedly created by Nob in the late 1970’s and introduced into the U.S. in 1996. Nob commercially licensed Rush Hour and other puzzle designs to Thinkfun. Click here to see the design patent issued to Thinkfun in 1998 regarding Rush Hour.

The blog Puzzling iPhone shows that there are many apps besides ParkingLot that are restricted movement sliding block puzzles. Perhaps Rubin focused on ParkingLot because it has earned more revenue as one of the most popular apps and that may result in him receiving larger monetary damages. The blog also mentions the issue of sliding block iPhone app developers not acknowledging the original designer of the puzzles the games are based on. But in its push for attributing credit to the real creator of the game, the site refers only to Rush Hour and Nob, not Rubin’s picture puzzle. So where did the idea for a puzzle based on maneuvering a trapped car out of a parking lot truly first originate?

All of this might not even matter, depending on where you draw the line between an idea and an expression of that idea. Copyrights only provide protection for actual expression of an idea; not to the underlying idea itself. This is rooted in the First Amendment and freedom of expression. If there was any copying, a court will likely consider whether the alleged infringer actually copied artwork and graphics, or did the alleged infringer merely use the IDEA of a sliding block puzzle in the theme of a parking lot, yet create new artwork and source code to implement that IDEA? Also keep in mind that copyrights provide NO protection for functional or utilitarian aspects of works, so the plaintiff will have a hard time relying on any similarity of rules, placement of vehicles, possible moves, etc., because those are likely to be considered functional considerations.

Read the full complaint, which includes an example of Rubin’s puzzle, here.
Datel Holdings Ltd. v. Microsoft Corporation
United States District Court, Northern District of California
Case No. 2009-cv-05535, Filed November 20, 2009

Back in 2009, Microsoft issued a remote update that stopped third-party accessory maker, Datel’s, memory cards from working on Xbox consoles. These cards are used to store game data when gamers play online. Microsoft sells its own line of data cards for Xbox. Datel sued and in its complaint alleged that Microsoft’s actions were anticompetitive because the disabling of the cards was intended “to perpetuate Microsoft’s market power.” Microsoft response countered that its actions were protected by the Digital Millennium Copyright Act because Datel’s memory cards were circumventing an Xbox memory card authentication sequence—a sequence that allows limited access to copyright game data such as gamer profiles and Xbox Live achievements.

This case concerns an area of law in relation to the DMCA that it still in flux—can there be a breach of the DMCA even though the circumvention in question had no infringing intent or purpose? One major case on point is the Lexmark decision coming out of the Sixth Circuit, where the court found that a company that made microchips unlocking Lexmark printers to enable them to use unauthorized ink cartridges, was not liable under the DMCA. Another major case, going in the opposite direction, was the World of Warcraft case coming out of the Ninth Circuit where the court found that a bot that automatically played the lower levels of WWC for the user was a violation of the DMCA because the bot circumvented a measure that “effectively controls access to a copyrighted work” even though the circumvention had no infringing purpose. The distinction, however, is that in Lexmark the alleged infringer was producing a compatible product, whereas in the WoW case the alleged infringer only produced software that allowed you to cheat the game.

On June 15, 2011, the Electronic Frontier Foundation filed an amicus brief in support of Datel. EFF believes that letting users use a third party memory card does not put Microsoft at risk of copyright infringement, and their brief alleges that Microsoft is misusing the DMCA to quash competition in the Xbox 360 memory card market.

For its part, Microsoft indicated in its filings that Datel’s source code used for the chip authentication is strikingly similar to Microsoft’s, and that if the Datel devices are found to be infringing, “Datel can claim no antitrust injury with respect to them.” In a related suit, Microsoft is also suing Datel for patent infringement over an Xbox accessory controller.

Square Enix Limited v. Does 1-15
U.S. District Court, Western District of Washington
Case No. 11-cv-01045, Filed June 22, 2011

Square Enix has filed a new lawsuit against unknown Italian individuals who infiltrated its preview of the new “Deus Ex: Human Revolution” game, downloaded the game, and distributed the preview to third parties.

According to the complaint, and as is common in the video game industry, Square Enix arranged a limited preview of an unpublished version of the game for select members of the video game press. These selected entities could access the game distribution platform through a secret, protected Internet portal. The reviewers were required to sign non-disclosure agreements, prohibiting any distribution of the game preview, and limiting the information they were allowed to disclose about the game.

One of the video game reviewers authorized to view the game preview was an Italian video game review magazine, GMC. Unknown individuals logged into the restricted internet portal to view the game preview using GMC’s access information. According to the complaint this was done without the permission or knowledge of the GMC reviewer, and came from an IP address not associated with GMC. The unknown defendants then proceeded to copy the game preview, and distribute it to other unknown third-party defendants using peer to peer file sharing.

Square Enix is claiming direct, contributory, and vicarious copyright infringement. It has also brought claims under the Computer Fraud and Abuse Act, citing a provision that allows for claims against unlawful access to information on a “protected computer” used in interstate or foreign commerce. Square Enix contends that its protected internet portal satisfies the description of “protected computer” found in the act. They cite damages in excess of $5000, and are seeking a permanent injunction of copying and republishing against defendants, as well as actual and statutory damages, and attorney’s fees and costs. We’ll update you on future developments in this case.

Tomita Technologies USA LLC v. Nintendo Co.
U.S. District Court, Southern District of New York
Case No. 11-cv-04256, Filed June 22, 2011

A technology company based in Japan and the U.S. brought suit against Nintendo for allegedly infringing on their stereoscopic (3-D) patent with its new 3-D gaming system. According to the complaint, Tomita Technologies was founded by a former Sony engineer, who after retiring from Sony after 30 years, went on to research and invent nearly 70 patents, and over 100 patent applications, since 2002. Among these inventions is U.S. Patent No. 7,417,664 (the ‘664 patent) titled “Stereoscopic Image Picking Up and Display System Based Upon Optical Axes Cross-Point Information.” According to the complaint, the ‘664 patent deals with “technology relating to displaying stereoscopic images on-screen for viewing with the naked eye, i.e., without utilizing glasses or other devices.”

Tomita alleges that Nintendo's 3DS system, which launched in the U.S. in March, infringes on the ‘664 patent. The 3DS system allows for gameplay featuring real 3-D graphics, with no need for special glasses. According to the Sony website, as cited in the complaint, 3DS achieves this by using two outer cameras to see the world in 3-D, mimicking the human eye. Tomita alleges that Nintendo is willfully infringing on its ‘664 patent in order to make 3DS possible. The complaint does not detail how 3DS, a hand-held gaming system, infringes the patent.

According to the complaint, Tomita applied for the patent in 2003 and the U.S. Patent and Trademark Office issued it in August 2008. This is not the first time Nintendo's DS series of hand-held systems has attracted attention from other patent litigants. Law360 reports that, in late May, Japan-based Milestone Co. sued the company over the camera lens system its DSi system. And, in February, a Texas patent-holding company accused Nintendo of infringing a patent on motion-sensitive video game controllers.

Take-Two Interactive Software, Inc. v. Apogee Software, Ltd.
United States District Court for S.D.N.Y.
Case No. 1:2009-cv-05054, Filed May 11, 2009

Case Update:

This case was dismissed with prejudice on May 28, 2010, pursuant to a confidential settlement agreement by the parties. The parties agreed to bear their own costs of litigation, and not to seek any costs or sanctions.

Original Post:

Take-Two is a publisher, developer and distributor of video game software, hardware and accessories for PCs and game consoles including the Grand Theft Auto series.

Apogee, also known as 3D Realms, develops and publishes video games such as the Duke Nukem franchise.

In 2000, Take-Two entered an agreement giving it publishing and distribution rights to Duke Nukem Forever (DNF), a game that began development in 1997. Take-Two claims to have paid $12 million for those rights. Take-Two and Apogee formed another agreement in 2007 under which Take-Two advanced $2.5 million to Apogee to aid in development. According to Take-Two, the agreement guaranteed the game would be done by 2012, otherwise the advance would immediately become due.

In early 2009, Take-Two informed Apogee it wanted to exercise an option to develop a console version of DNF for Xbox 360 and wanted Apogee to do that development. Apogee insisted that Take-Two provide the funding for the project, but Take-Two was wary of putting more money into development and so proposed various funding/development milestones. Apogee rejected the proposal and negotiations came to a standstill.

Take-Two claims Apogee consistently gave assurances of near completion but then shut down its studio, halted development on DNF and laid off its staff on May 6, 2009 without Take-Two’s approval. Take-Two further alleges that Apogee has sufficient funds to cover its outstanding obligations in an off-shore account.

Take-Two brought this lawsuit against Apogee for breach of contract related to Apogee’s alleged continual delays and failure to complete the game. To hammer home the effect of the delays, the complaint states that “[t]he protracted development of the game was well-publicized and became the subject of ridicule. For example, in a 2007 article entitled, ‘The Most Delayed Games Ever,’ an industry columnist remarked that ‘[elither this is the longest game ever in production or an elaborate in-joke at the expense of the industry.’” Take-Two seeks to recover its advances and to have Apogee deliver the source and object code already developed (to independently develop the game for Xbox 360) and wants Apogee's cooperation in future endeavors to finish the game. Take-Two also wants to enjoin DNF developers from further leaking any art or code from the game which Take-Two says interferes with its “exclusive rights to publish, exploit and control the DNF brand.”

Shacknews reports that after the lawsuit was filed, Apogee founder Scott Miller said, “Do readers here realize that filed lawsuits are entirely one-sided statements, based on knee-deep BS and with more spin that[sic] a top? 3DR has been in nearly a dozen lawsuits (including against Warner and Fox). We're always innocent, and we always win. This one is no exception. Give it a year, then the truth will come out.”

In response to Take-Two's suit, Apogee filed an answer and counterclaim on June 19. In its answer, Apogee states the development of DNF was largely self-funded and that the company invested $20 million of its own money. Apogee claims DNF had no deadline for completion. According to the answer, the option to develop DNF for Xbox 360 only becomes exercisable after the release of the PC version which hasn’t occurred, so Take-Two allegedly has no right to the source code until the game is completed. Apogee’s answer also mentions that Take-Two’s advance would be paid back with royalties Apogee would receive from a new Duke Nukem-based game supposedly also in development by another developer and due by 2010. Apogee claims Take-Two knew for weeks that the DNF team would be laid off if a funding agreement wasn’t reached.

Apogee brought a counterclaim against Take-Two for breach of contract. Apogee claims that in the 2007 agreement, Take-Two agreed to hire a third-party developer to create a new game based on the Duke Nukem franchise (“Duke Begins”). Apogee retained development approval rights, including right to approve the development schedule. Apogee’s counterclaim echoes Take-Two’s complaint in that Take-Two was entitled to royalties from Duke Begins to recoup the advance it paid. Apogee claims Take-Two halted the third-party developer's work on Duke Begins indefinitely in April 2009 in order to delay its release, limiting Apogee’s ability to pay back Take-Two’s advance on time. The counterclaim alleges that Take-Two is “taking such actions with a goal of pressuring Apogee to sell the Duke Nukem franchise rights to Take-Two for less than their true value.” Apogee is seeking monetary damages.

So it appears that twelve years after first announcing the development of Duke Nukem Forever, the game still faces many hurdles and may never be completed. Still, in Apogee’s answer it alleges “that it has continually worked on the development of the DNF for many years, and continues to do so" - signaling that development is ongoing, but with only the few DNF team members remaining. Given that Wired News created the Vaporware Lifetime Achievement Award exclusively for DNF, maybe fans shouldn't hold their collective breath.

It’ll be interesting to see how this one plays out and whether DNF or Duke Begins will ever come to fruition. We’ll keep you posted.

The case was initially filed in state court in the Supreme Court of New York on May 12, but was transferred to the U.S. District Court for the Southern District of New York on May 29.

Read Take-Two’s complaint here and Apogee’s counterclaim here.

Zynga Game Network, Inc. v. Playdom, Inc.
United States District Court for N.D. Cal.
Case No. 3:09-cv-02748-EMC, Filed June 19, 2009

Case Update:

This case was dismissed on November 18, 2010. On January 8, 2010, the court referred this case to mediation. After several months in ADR, Zynga filed for voluntary dismissal of the case under FRCP 41(a). Rule 41(a)(1) allows for the plaintiff to dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment.

Original Post:

We recently wrote about Zynga, the developer of online social games, bringing a claim in the beginning of June against John Does 1-5 because of the defendants’ use of a domain name that allegedly infringed on Zynga’s trademark. Zynga has filed a similar suit, this time against Playdom for trademark infringement of one of Zynga’s most popular games, Mafia Wars. Playdom is also a social gaming company with its game Mobsters being the top game on MySpace.

According to the complaint, on June 12, 2009, one of Zynga’s employees came across an advertisement on Facebook that was marketing Playdom’s game Mobsters using the Mafia Wars trademark. The advertisement in controversy says in large text: “Like Mafia Wars?” and beneath that shows a picture of a gangster with small text saying: “Click here to play Mobsters. Its [sic] got henchmen, mini games, message boards and sophisticated style.” The complaint states that the ad doesn’t display the Playdom name or trademark and doesn’t make clear whether the ad is for Mobsters or Mafia Wars. If a user clicks anywhere on the ad, including on the name Mafia Wars, a window opens to install the Mobsters game, but nowhere is the Playdom name or trademark shown. Zynga apparently contacted Playdom after learning of the ad and asked them to stop using the Mafia Wars trademark. Playdom changed the ad to say “Like Mafia Games?” for some period of time but then changed it back to the original and has refused to take it down.

Zynga alleges that the ambiguity of the ad may cause users confusion about which game is being advertised and may lead users to believe that Zynga endorses or sponsors Playdom. The complaint states that Playdom has intentionally acted to deceive the public and divert business away from Zynga. Zynga claims relief for Trademark Infringement, False or Misleading Designation of Origin, and False Advertising under the Lanham Act as well as False Advertising and Unlawful Business Practices under the California Business & Professions Code. Zynga is seeking an injunction to stop Playdom’s use of its trademark, “corrective advertising to dispel the confusion” created by use of the trademark, and a monetary award for lost profits and Playdom’s “ill-gotten” gains.

Read the full complaint here.

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