licensing

Some thoughts on game trademarks, King and Candy Crush

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This blog (and Gamer/Law generally) represents my personal views, not that of my employer.

The games press and sections of the games community has got hot under the collar (again) over trademark law.  This time around, it’s about news that King.com, maker of Candy Crush Saga and other games, is seeking to trademark ‘Candy’.  Cue lots of (to put it charitably) loose talk about ‘monopolies’ and even ‘patent trolling’.  I’m going to try and talk some sense about this topic. (more…)

Games law update, October 2012

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Hi everyone – I’m sorry there’s been a few months gap since the last games law update, but it’s been pretty busy in my personal life and I’m afraid my assiduous squirreling away of useful links for you suffered.  Here’s October 2012 in brief to help make amends… (more…)

Don’t leave money on the (legal) table

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When you’re contracting with someone else, think wider than your product’s immediate revenue stream potential. That’s what I want to write about in this post. We see too many contracts where the product owner is partnering up with another guy without thinking as far as he/she could about what the value they’re giving away. Let’s say that it’s a games developer partnering with a publisher, or a software developer signing a distribution agreement with a distributor. They could be leaving money on the table by not thinking wider (and being sharper in the contract, which is what it all comes down to). (more…)

Interplay’s gamble: the Fallout lawsuit continues

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We now have confirmation that the lawsuit between Interplay and Bethesda over the Fallout IP has not been quietly settled (thanks to The Vault).  In fact, it seems to be hotting up.
The story so far…
Longtime readers will know this already from my previous posts (see here and here), but here goes:
Interplay sold the post-nuclear dystopian games series Fallout to Bethesda in 2007, as part of which they agreed that Interplay would retain certain licence rights, including the right to develop a Fallout MMO.  In 2009 Bethesda commenced this lawsuit, claiming that Interplay had breached that agreement, infringed Bethesdra’s trademark rights in the Fallout series and that, as a result, Interplay has forfeited all remaining rights in the Fallout IP.  Interplay denied Bethesda’s claims and counterclaimed that it still has rights in the Fallout IP, including the right to create a Fallout MMO (then known, rather mysteriously, as “Project V13”).
At the end of 2009, Bethesda unsuccessfully applied to court for a preliminary injunction effectively prohibiting Interplay from doing anything with the Fallout IP until the resolution of the lawsuit.  A month later, Bethesda launched an appeal against the court’s refusal to grant that preliminary injunction, which it later dropped.
Then it got a bit mysterious: at around the same time, a beta sign-up page for Fallout Online appeared, which appeared to suggest that Bethesda and Interplay were cooperating notwithstanding the litigation (the bottom of the sign-up page reads:
 
Fallout® is a registered trademark of Bethesda Softworks LLC, a ZeniMax Media company, in the U.S. and/or other countries, and is used by Interplay under license from Bethesda Softworks LLC. All Rights Reserved.”

Which suggests ofc that perhaps Bethesda and Interplay are cooperating over Fallout Online after all…which made me wonder if maybe there had been a handshake and the lawsuit had quietly been settled?

What has happened now?
In fact, the lawsuit continues – and how!  The Vault, a Fallout wiki, has received a further batch of court documents which both confirm that the lawsuit is ongoing and highlight some of the recent developments.  Now, I don’t yet have access to those court documents,  so I can’t establish myself exactly what is going on and how it relates to Fallout Online.  However, we do know that:

(1) Bethesda is continuing to argue that it owns all the IP rights in the Fallout series.

(2) Bethesda is now also arguing it gave Interplay rights over only the Fallout trademark and nothing else.  In other words, Bethesda argues that Interplay has no rights over any other Fallout IP, including for example artwork artwork (e.g. weapon art) or game concepts (e.g. the (in)famous “PIP Boy”), all of which Bethesda says it purchased from Interplay in 2007.

The practical effect of that argument (if successful) is that it would make it extremely difficult for Interplay to use much of the previous Fallout games in Fallout Online at all, which would be both a creative and commercial headache for Interplay.  Example off the top of my head: Interplay couldn’t, for example, just import Megaton (either nuked or not nuked, natch) into Fallout Online, at least as it is shown in Fallout 3 anyway. 

(3) Bethesda is also apparently taking other steps to make life difficult for Interplay, including demanding that Interplay provides it with access to its internal Fallout Online design document wiki as part of the litigation (which Interplay is refusing on the basis that it contains trade secrets).

So what?

Drawing all the above together, I think this is what has happened:

  • The reference to Bethesda on the Fallout Online beta sign-up site does not mean that there has been any deal between Bethesda and Interplay.  We know this now because the litigation is ongoing: Interplay and Bethesda cooperating over Fallout Online would only make sense if they had settled the lawsuit.
  • IF that’s right, then Interplay has taken advantage of Bethesda’s setbacks in the litigation by forging ahead with Fallout Online as a solo project.
  • And, IF that’s also right, then Interplay is running a serious gamble that it will win the lawsuit and therefore be able to release Fallout Online itself…
  • …BECAUSE, if Bethesda wins the lawsuit it would in principle have the ability either to shut Fallout Online down or to demand that it be transferred to Bethesda’s ownership.
  • It would also mean that Bethesda has uncontested control over the Fallout IP in the future.
  • Ouch.

I can see the commercial benefits of what Interplay is trying to do (if in fact I’m right on the above): get the game as far developed as possible, both as a bargaining chip with Bethesda in any negotiations and because, if Interplay wins, it already has a game ready to go.  On top of that, the Interplay Fallout MMO is now probably regarded by fans, gamers and the games industry as the Fallout MMO regardless of this lawsuit – so Interplay has won the PR contest there.  So it seems like a smart move in those respects…if it wasn’t for the legal risk that it could all be taken away from them.

That said, it’s worth remembering that ultimately all of this remains to be tested in the litigation, so the ownership and the future of the Fallout IP is still undecided.  
It also means I’ve stopped making any predictions about what or may not happen in this case – I’ll write another update when there’s another turn in this roller coaster…
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[Image source: Wikipedia]

Interplay and Bethesda quietly settle Fallout lawsuit?

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For much of this year, Interplay and Bethesda have been at each other’s throats in a lawsuit over which of them owns the IP in the Fallout series of games (more on that here).  Earlier this year, Bethesda tried but failed to secure a preliminary injunction blocking Interplay from doing any further Fallout-related work, including work on Interplay’s rumoured Fallout MMO.  This was a severe, but not fatal, blow for  Bethesda in the lawsuit.
Then, not much seemed to happen.  Until, in June this year, details of a new Fallout MMO began to trickle out.  Did this mean they have done a deal?  As far as I can see, no formal announcement of the settlement of the lawsuit had been announced.
Now, TVG has spotted that the new Fallout MMO website includes the following text at the bottom of the page:
Fallout® is a registered trademark of Bethesda Softworks LLC, a ZeniMax Media company, in the U.S. and/or other countries, and is used by Interplay under license from Bethesda Softworks LLC. All Rights Reserved.”
This suggests very strongly indeed that a settlement has in fact been reached, with Interplay acknowledging Bethesda’s ownership (at least in part) of the Fallout IP, in return for which Interplay has been granted a licence to exploit the Fallout IP in relation to the Fallout MMO and possibly beyond. 
If so, it’s good to see that Bethesda and Interplay have been able to resolve their differences, but why not make a public announcement to capitalise on the new goodwill?  Also, what does this mean in terms of Bethesda’s creative/commercial involvement in Fallout Online – are they involved at all?  One would also imagine (and hope) that both sides have had their lawyers go over a new suite of agreements to ensure that the working relationship between them does not break down in the future.  Here’s hoping…
Image credit: WikiMedia
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Games Law History: the Tetris saga

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Legal battles have been (and still are) integral to the development of the modern video games industry.  So, I thought that I’d write a periodic series of posts looking at major legal battles in the industry, kicking off with the Tetris saga between Nintendo and Atari, which started around this time in summer 1989. 

A quick summary of Tetris:

 
This is Tetris (specifically the Gameboy version, chosen because it was the first Tetris game I ever played).  If you do not recognise it immediately, then you can read more here (while putting in your fingers in your ears to block out my loud tutting at you).
The facts
I’d love to give you the full and torturous facts of the long-running Tetris saga, but Atari HQ have already written it up here.  The (legally) interesting fact that emerges is that the battle over the Tetris IP was not an intellectual property issue at all – this was a fight over contracts and contractual interpretation.  I’ll try to summarise it briefly below (with the proviso that the facts are incredibly complex, so if anyone has any corrections/insights into all this, let me know):
  • In June 1985, Alexey Pazhitnov created Tetris on an Electronica 60 while at the Moscow Academy of Science’s Computer Center.  It was soon after ported to the IBM PC and then to the Apple II and Commodore 64.
  • During the mid 80s, the game found its way to the West, where a UK developer tried to acquire the rights to Tetris and (even though he was unsuccessful) he ‘sold’ the rights on to Mirrorsoft in the UK and Spectrum Holobyte in the USA (both companies were controlled by the infamous Robert Maxwell).  The game was released in the West to rave reviews.
  • In 1988, Mirrorsoft sub-licenced Bullet Proof Software to make Tetris games in Japan, while Spectrum sub-licenced Atari with the same rights for Japan and North America.  Cue infighting between the two Maxwell companies (which reportedly Maxwell himself had to be involved in to sort things out).
  • Atari’s subsidiary Tengen released arcade and NES versions of Tetris (known as “TETЯIS: The Soviet Mind Game”).  Bullet Proof also released a Tetris game for the Famicom (the Japanese version/name for the NES).  Nintendo became very interested in releasing Tetris for the forthcoming Gameboy and in controlling Tetris on the NES, too.
  • There was by this stage a big licensing mess over who controlled which rights in the Tetris game across different platforms.  In early 1989, all the interested parties started negotiations with each other and with the Russian entity (known as Electronorgtechinca, or Elorg) which now asserted it owned all the Tetris rights.  Various offers were put forward to control the Tetris IP.
  • Nintendo cut the Gordian knot by reportedly making a massive offer to Elorg for all the rights in Tetris (as well as Elorg’s support in the inevitable future lawsuits).  Elorg accepted.
  • In March 1989, Nintendo then served a cease and desist letter on Tengen to force it to stop selling its versions of Tetris on the NES.  Tengen responded in kind.
  • Tengen, Atari and its parent (the Maxwell empire) didn’t take this lying down.  They began lobbying for control of the IP and, at the same time, Tengen applied to register its copyright of the Tetris IP.  
  • April 1989: Tengen sued Nintendo of America (NOA), and NOA countersued, over the issue of ownership of the Tetris IP.
  • June 1989: the Tengen v NOA court case began in the USA.  The issue essentially was the proper interpretation of one of the original contracts signed by Elorg which licenced out some of the Tetris IP rights.  
  • The US court decided that, since Mirrorsoft nor Spectrum never had held rights in the Tetris IP (see above on that one), they did not have any Tetris rights to grant to Atari/Tengen.  The court therefore found in NOA’s favour and granted an injunction requiring Tengen to halt sales of its Tetris games.
  • July 1989: Nintendo released Tetris for the NES and (soon after) for the Gameboy.  The Gameboy version alone sold over 33 million units.  In financial terms, Nintendo had comprehensively won the battle for Tetris.
  •  
  • The legal issues dragged on for some time, focusing in particular on Atari’s release of a Tetris arcade machine.  Other game companies also came on to the scene from time to time (such as Sega’s release of a Tetris game for the MegaDrive) but over time the link between Ninteno and Tetris became well-estabished.
  • A quick footnote: in 1996 Pazhitnov, who famously had made virtually no money from the exploitation of Tetris so far, put together The Tetris Company LLC to control the Tetris IP going forward.  It still operates today (most recently, it forced Google to remove Tetris clones from the Android market).
 
Was this a once-off, never to be repeated kind of battle?
  
No.
The Tetris battle came at a formative time in the modern video games industry and helped to shape the fortunes of Atari, Nintendo and other games giants.  It was also largely a product of the confused way in which legal matters were sometimes handled in the games industry at that point. Since then, the games industry has of course become a lot smarter at handling control of games IP from both a contractual and IP perspective. 
But, that doesn’t mean that the legal issues raised in the Tetris saga have been put to rest.  Contractual disputes are endemic in all industries, including the games industry.  In fact, since Tetris, there have been huge numbers of contractual disputes over games and they will keep on arising in the future, since all contracts for particularly valuable products become particularly susceptible to abuse.  
Need an example?  Here you go: Jason West and Vince Zampella v Activision.  This is an ongoing US legal battle for the control of the Modern Warfare IP and, in legal terms, it is a contractual battle just like the Tengen/Nintendo lawsuit.  Clearly, there are factual differences between the two lawsuits, but maybe not as much as you might think: imagine if West and Zampella had released their own competing version of Modern Warfare after they left Activision, meaning that a judge would have to decide whether the IP resided with West/Zampella or Activision (just as the judge had to do between Tengen and Nintendo).
More generally, bear in mind also that the games market is still fragmented over multiple platforms and there is therefore a real potential for different companies to release very similar games over different (or even the same) platform in the future – in fact, we can already see this happening in the mobile and social games sectors of the games market.
So, with that in mind…
 Lessons learned from the Tetris saga:
  • PROPER LICENCING IS ESSENTIAL.  The problems arose largely because several people realised that Tetris was hot stuff at the same time and tried separately in different ways to get the rights, which resulted in differing agreements saying different things.  Cue legal uncertainty -> lawsuits.
  • What should have happened: the first person on the scene or the highest bidder (as appropriate) should have secured a comprehensive and exclusive licencing agreement, covering all territories and all platforms using a combination of specific and general language, stating expressly what the licencee can and cannot do, setting out clearly the operative provisions (royalty payments etc), a dispute resolution mechanism and – crucially a series of warranties, representations and indemnities to give the licencee comfort that he has an exclusive licence and can sue both the licencor and the third party if any other licences are handed out without his approval.
  • If you do find that an infringing licence has been granted, or that a third party is straightforwardly knocking off your IP without a licence, then – as Nintendo did here – you will need to take legal action promptly to protect your IP/contractual rights.
  • Leaving the legal battle to one side, make sure you win the financial battle (selling more units of your game than the other guy does with his) as well as the PR battle (making sure everyone knows the game is yours, not his).
Image credits:
– Pic 1: Grebz.fr
– Pic 2: Loot Ninja
– Pic 3: WikiMedia
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Fallout MMO details published – have Interplay and Bethesda done a deal?

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Duck and Cover reports that Interplay have released a lot of new material on their Fallout MMO, named “Fallout: Online”, including a new website.

I’ve discussed on this blog several times previously the lawsuit between Interplay and Bethesda with the future of the Fallout IP (including Interplay’s Fallout MMO project) at stake.  So far, there has been no publicised resolution of that dispute.  So, either:

(1) Interplay is forging ahead with its MMO project despite the litigation – which could be risky if the lawsuit goes against Interplay (though it may be that Interplay was emboldened by Bethesda’s failure to obtain a preliminary injunction barring Interplay from using the Fallout IP pending resolution of the lawsuit); OR

(2) There has been an unpublicised settlement enabling Interplay to go ahead with its MMO (though one would imagine Bethesda would fight hard for Fallout MMO rights, given the value of that IP). 

So what has happened?

(Image credit: Wikimedia)

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Bethesa vs Interplay: the Fallout lawsuit isn’t over

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Reports that Bethesda and Interplay have reached a settlement in their long-running US lawsuit over the Fallout series are incorrect.  All that has happened is that one element of the lawsuit has been dropped by Bethesda.  Until we hear differently from the companies themselves, the rest of the lawsuit seems very much alive.
A quick summary of the events so far: Interplay sold the Fallout IP to Bethesda in 2007, as part of which it is said that the parties agreed that Interplay would retain certain license rights, including the right to develop a Fallout MMO.  In 2009, Bethesda brought a lawsuit claiming that Interplay is in breach of that agreement, has infringed Bethesdra’s trademark rights in the Fallout series and that, as a result, Interplay has forfeited all remaining rights in the Fallout IP.  Interplay denied Bethesda’s claims and counterclaimed that it still has rights in the Fallout IP, including the right to create a Fallout MMO (known mysteriously as “Project V13”.
At the end of last year, Bethesda unsuccessfully applied to court for a preliminary injunction effectively prohibiting Interplay from doing anything with the Fallout IP until the resolution of the lawsuit.  A month later, Bethesda launched an appeal against the court’s refusal to grant the preliminary injunction.  
Now it appears that the parties have agreed some sort of deal which involves Bethesda dropping its appeal over the preliminary injunction – this is the “settlement” that the internets have been talking about today.  You can see an extract from the court order at Duck and Cover.
BUT – this is the crucial point – as a matter of law that deal does not affect the key issue in the lawsuit, i.e. who actually owns the Fallout IP.  Unless that wider issue is also settled, then the ownership of the Fallout IP will in principle have to be determined at trial.  And we’ve seen nothing public about such a wider settlement so far.
That said, legal rules aren’t the only factor at play here.  Bethesda forced an early trial of strength by seeking a preliminary injunction, which led to the court weighing the strength of its case and finding it wanting.  Now Bethesda has abandoned its appeal against the refusal to grant the preliminary injunction.  After two legal defeats, Bethesda must be considering its options.  Perhaps it will fight on to trial.  Or, maybe we will see a real comprehensive settlement being reached in the near future – though clearly for a legal settlement to work there would first have to be a commercial agreement between Interplay and Bethesda over what they will do with the Fallout IP.  One obvious solution to this would be for Bethesda to buy Interplay, but that may be so commercially undesirable/impossible to the parties that that there is no choice but to fight on…
For the moment, we just don’t know what is happening in the wider litigation for sure.  That said, Gamespot reports that Interplay has made a SEC filing in which it stated “Interplay will continue to defend its rights and to pursue its Counter-Claims against Bethesda, for among other things, Breach of Contract and Declaratory Judgment and an award of damages, attorney fees, and other relief.” 
That doesn’t sound too hopeful for a quick settlement, but you never know.  Watch this space, readers…
[Image source: Wikipedia]
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