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.

Zynga Game Network, Inc. v. John Does 1-5
U.S. District Court, Northern District of California
Case No. 09-cv-02441, Filed June 2, 2009

Final Update:

This case was voluntarily dismissed without prejudice on October 26, 2009, pursuant to 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. In this case it appears that Zynga had some difficulty in finding the defendants to serve with process, and may have ultimately decided the effort was not worth the cost.

Case Update:

After getting our hands on the complaint for this case, we can update our previous entry concerning a suit brought by Zynga, a successful online social gaming company with over 75 million registered users.

Zynga filed the complaint against the registrants (of currently unknown identity, thus the John Doe aliases) of the website domain name for trademark infringement and unfair competition. Zynga has been using the trademark and service mark ZYNGA since its founding in 2007 and claims that the mark has become well-known by social gamers as a source identifier for Zynga’s games. Zynga currently has a trademark application for the mark. The complaint also notes that Zynga operates a Texas Hold’Em Poker game which uses virtual poker “chips.”

Zynga claims that the domain name is confusingly similar to the ZYNGA mark since it has no relation to Zynga and instead goes to a website that advertises for and/or hyperlinks to a variety of products and services. Zynga claims that a user looking for Zynga may land on the defendants’ website instead and click one of the links listed, thereby diverting the user’s attention from Zynga and costing Zynga an opportunity to interact with the user. Zynga further alleges that the defendants acted in bad faith, intending to profit from use of the ZYNGA mark.

Here are the specifics of the five counts of the complaint:

  1. False designation of origin regarding the mark ZYNGA (15 U.S.C. § 1125(a)):
    Here Zynga alleges that the defendants have used the mark to falsely represent that the defendants are affiliated with Zynga in a way that’s likely to cause confusion as to Zynga’s true association with the defendants and/or their products.

  2. Federal cybersquatting regarding the mark ZYNGA (15 U.S.C. § 1125(d)):
    Under this claim, Zynga alleges the defendants are liable because the ZYNGA mark is distinctive, is confusingly similar to that mark, and the defendants had a bad faith intent to profit from using the mark.

  3. California statutory unfair competition:
    Zynga claims that the defendants have acquired an unfair competitive advantage through the unauthorized commercial use of the mark in a willful attempt to trade on Zynga’s goodwill gained from the mark.

  4. California common law trademark infringement:
    Zynga claims that the defendants’ unauthorized use of the mark is trademark infringement likely to cause confusion, deception and mistake as to the source of, and authorization for the products and/or services sold by the defendants.

  5. California common law passing off and unfair competition:
    Lastly, Zynga alleges that the defendants’ actions constitute intentional attempts to pass off its products and/or services in such a way as to deceive the public into thinking they’re being offered by, or are affiliated with, Zynga in order to obtain an unfair advantage over Zynga.

Zynga is seeking equitable relief (including an injunction to prohibit defendants from using the ZYNGA mark in a way that may cause confusion as well as transfer of the domain name to Zynga) and monetary damages.

This appears to be a fairly straightforward trademark/domain name dispute, but we’ll keep you updated as the case progresses in case anything interesting happens.

Read the full complaint here.

Anyone who thinks games aren't big business, think again. Zynga today (July 1, 2011) filed for a $1 BILLION dollar IPO! Unlike many of its fellow much-buzzed-about Web upstarts, Zynga is solidly profitable. In 2010, the company had a $90.6 million profit on sales of $597 million, according to its SEC filing. In the first three months of 2011, Zynga earned $11.8 million on sales of $235.4 million.
Zynga said it has 60 million daily active users, who collectively spend 2 billion minutes each day playing its games.

Read more at CNN Money.
Patent Compliance Group, Inc. v. Activision Publishing, Inc.
U.S. District Court, Northern District of Texas
Case No. 10-cv-00288, Filed February 12, 2010

Original Post:

On June 1, 2010, PCG filed a notice for dismissal of the case under FRCP 41(a)(1). Rule 41 allows a 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 Activision had not responded to PCG’s suit with any court filings before PCG filed the voluntary dismissal. Based on the amount of time between the lawsuit being filed and dismissed, the parties likely started settlement discussions immediately after the case was filed, and PCG kept agreeing to delay the deadline for Activision to file its Answer to the Complaint in view of ongoing settlement discussions.

Case Update:

The immense popularity of musical video games such as Guitar Hero, Band Hero and DJ Hero appears to have generated some unwanted attention for Activision Publishing, Inc. ("Activision"). In particular, on February 12, 2010, Patent Compliance Group, Inc. ("PCG") filed a qui tam action against Activision, alleging that Activision has falsely marked many of its video games including Guitar Hero 5, Band Hero, DJ Hero and Guitar Hero Smash Hits (collectively "Activision video game products") as patented or patent pending. Specifically, PCG alleges that Activision has violated 35 U.S.C. 292(a), which states, in relevant part, that:

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word "patent" or any word or number importing the same is patented, for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public - Shall be fined not more than $500 for every such offense.

PCG's complaint makes the following specific assertions of false patent marking:

  • Activision's Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 5,739,457 ("'457 Patent").

  • Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,018,121 ("'121 Patent").

  • Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,252,153 ("'153 Patent").

  • Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,268,557 ("'557 Patent").

  • Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,369,313 ("'313 Patent").

  • Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,379,244 ("'244 Patent").

  • Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,429,863 ("'863 Patent").

  • Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,758,753 ("'753 Patent").

  • Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,769,689 ("'689 Patent").

  • Guitar Hero 5 and Guitar Hero Smash Hits video games are falsely marked with U.S. Design Patent No. D441,403 ("'403 Patent").

  • Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked as "patent pending" or "patent applied for."

Essentially, PCG is claiming that the scopes of the patents with which Activision's video game products are marked do not cover the methods or systems of the actual products. In addition, where Activision has marked products with "patent pending" or "patent applied for," PCG's position is that none of Activision's patent application has a potential scope of protection which would cover any aspect of the specified video game products.

Success in a qui tam action of this nature will depend heavily on whether PCG is able to show that the scope(s) of one or more of the specified patents do not cover the specified products as well as whether Activision had an intent to deceive the public with those markings. Generally, a simple denial of intent to deceive is insufficient to escape liability under section 292. However, Activision may avoid liability if it is able to sufficiently prove that it had a reasonable belief that the articles were within the scope of the patents with which the product were marked.

If PCG prevails on one or more of its false marking claims, the assessed damages may be astronomical given the number of copies of Activision's video game products that have been sold. Although in some cases, courts have attempted to reign in the potential for substantial sums of damages, the Federal Circuit recently held that damages for false markings are to be calculated on a per article basis. See Forest Group, Inc. v. Bon Tool Co., 2009 WL 5064353 at *4-5 (Fed. Cir., Dec. 28, 2009). However, a court may set the damages assessed to each article well below the $500 maximum in order to avoid what they might feel is an excessive penalty.

We will keep you posted.

This case is Patent Compliance Group, Inc. v. Activision Publishing, Inc., Case 3:10-cv-00288-B (N.D. Tex.).

Zynga Game Network, Inc. v. Duc Doan
U.S. District Court, Northern District of California
Case No. 09-cv-02958, Filed July 1, 2009

Case Update:

This case was dismissed on September 25, 2009, following a final judgment upon consent. Zynga received $45,000 in judgment, plus attorney’s fees and costs. The judgment has been satisfied as of September 29, 2009.

Original Post:

Zynga, the social game developer, filed two more lawsuits last week, both practically identical to Zynga v. John Does 1-50.

On Wednesday, July 1 the company brought suit against Phillip Labrasca for infringement of its trademark ZYNGA and violation of its Terms of Service for its Texas Hold ‘Em Poker game. The complaint alleges that Labrasca owns and operates thirteen websites using or connected to the ZYNGA mark in order to sell virtual poker chips to be used in its online poker game. The case is Zynga Game Network, Inc. v. Labrasca, N.D. Cal., Case No. 5:09-cv-02957-HRL. Read the full complaint here.

Zynga brought the exact same allegations on Thursday, July 2 against Duc Doan for his operation of two similar websites. That case is Zynga Game Network, Inc. v. Doan, N.D. Cal., Case No. 5:09-cv-02958-PVT. Read the full complaint here.

The seven counts of action Zynga alleges in each of these cases are the same as in John Does 1-50:

Trademark Infringement – False Designation of Origin Regarding the Mark ZYNGA: The complaint alleges that consumers may be confused or misled into thinking a connection exists between Zynga and the defendants by the defendants’ use of the ZYNGA mark.
Trademark Infringement – Federal Cybersquatting Regarding the Mark ZYNGA: The complaint alleges that the defendants registered domain names with the bad faith intent to profit from use of the ZYNGA mark.
California Statutory Unfair Competition: The complaint alleges that by using the ZYNGA mark and selling the virtual chips required for the game the defendants are attempting to trade on Zynga’s goodwill and have gained an unfair advantage.
Common Law Trademark Infringement of the Mark ZYNGA: The complaint alleges that the defendants’ use of the ZYNGA mark causes confusion or deception as to the source of, and authorization for, the defendants’ products in violation of California common law.
California Common Law Passing Off and Unfair Competition: Zynga is seeking punitive damages for the defendants’ allegedly intentional and malicious actions which Zynga says resulted in an unfair advantage.
Breach of Contract: Zynga claims the defendants agreed to be bound by the game’s Terms of Service by participating in the poker game. “By selling ‘chips’ for use in the Game through the Infringing Websites, and by using the Game itself to transfer the ‘chips’ they sell, Defendants have breached the Terms of Service, which specifically prohibit Game users from exchanging ‘chips’ “for ‘real-world’ money or otherwise exchange items for value outside of the Game.”
Intentional Interference with Contractual Relations: Zynga alleges that the defendants intentionally acted to induce consumers to breach their contracts with Zynga by selling chips without authorization at a lower price than Zynga offered and by distributing the chips in a manner prohibited by the Terms of Service.

Zynga is certainly making its intentions known, i.e., they take IP rights seriously! and they will protect their IP!
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