Games/Law digest, March-April 2011

It’s been a busy time in the games/law world over the last couple of weeks. Here’s some highlights:

(1) Sony settles with George Hotz

Back in January this year, news broke that a group of hackers, led by George Hotz, had jailbroken the PS3. Sony were unhappy bunnies, so they sued Hotz and the other hackers. There followed a series of legal skirmishes, including jurisdictional challenges by Hotz and attempts by Sony to gain data from third parties like Twitter and Google on users of the hack. Now it seems that Sony and Hotz (plus presumably the other hackers) have settled their dispute. The terms of the dispute were not made public, but I would guess were fairly favourable to Sony since Hotz was in a relatively weak legal and tactical position. It will very likely have included Hotz having to promise not to distribute or encourage the PS3 hack, and may even go so far as Hotz helping to eliminate or at least neutralise the hack altogether.

In any event I think was a win for Sony, whose objective was clearly both to try to stop the hack as well as to send a message that it will not accept this kind of behaviour. Clearly people have different views as to whether litigation was the right route to take (my original post on the subject raised some of those views in the comments), but from my perspective Sony did the right thing here.

Mind you, Mr Hotz doesn’t appear entirely reconciled with Sony – he has apparently donated $10k to the EFF and made comments such as “At the end of the day, something I take comfort in. The PS3 got OWNED.”

(2) Class action lawsuit against Apple over in-app purchases

This is very interesting indeed. Apple is facing a lawsuit for alleged failures to exert proper controls over in-app purchases with the effect that unauthorised persons (including children in particular) can run up substantial unauthorised bills. The lawsuit is reportedly being brought by a US individual who is seeking class action status (which would basically mean that everyone in the US who is affected by the issue joins the lawsuit).

Make of that lawsuit what you will, but there clearly has been a rising tide of concern regarding the controls on in-app purchases. News reports of children running up huge bills began to surface last year, which was followed by a US congressman making public comments about his concerns with this issue. This was then followed earlier this year by the FTC announcing it would investigate the issue. In responses, Apple has already introduced new changes, such as requiring a password to be entered within an app for a purchase to be processed.

In legal terms, in-app purchases raise a whole can of worms which I’ll have to write a separate post about. But in a nutshell the problem is something like this:

  • Apple has a contractual relationship with the iOS device owner, pursuant to which that owner is given an iOS account and password.
  • When the owner uses that device to purchase an app or to make an in-app purchase that constitutes a separate contract between the owner and Apple.
  • At the moment, that contract is meant to be evidenced by the owner inputting his/her account name and password – but historically Apple has only required them to be inputted periodically rather than every time anything is purchased. This is what it is now tightening up.
  • If the account name/password has to be input every time a purchase is to be made, in principle that will stop any random person/child from purchasing an app/virtual goods without authorisation.
  • But what about where a child or other person has the owner’s account name and password already? The owner doesn’t actually know that he/she has purchased anything and therefore complains to Apple. On the other hand, Apple has no way of knowing that this is not a legitimate purchase. 
  • The strict legal answer to this problem is not clearcut. On the one hand, you could argue that there is no contract here because the legitimate owner has not entered into the purchase. Or you might point to specialist legal doctrine like mistake to say that the purchase should not go ahead. On the other hand, Apple could argue that if the owner gives his/her details to a third party, even to a child, then it has authorised that third party’s conduct and should be bound by their actions.
  • While the FTC and others like me are grappling with the legal issues of course, Apple is no doubt working on technical solutions to the problem. And, in the long run, technology may well provide a definitive answer – biometric scanning being one example.

Zooming out a little, to my mind this is really just one strand of a larger legal issue which has been lying latent for some time: the legal regulation of apps (and, by extension, virtual goods). Other strands which have yet to be explored include age ratings for apps and (my favourite subject) the legal status of virtual goods. Another, which we’re beginning to see more about now, is how far the terms and conditions of the different app stores can stand up to scrutiny. For example, just last week IGDA published formal complaints about the Amazon Appstore terms and conditions . I think we’re going to see more on these topics in 2011…

(3) More tech company patent battles

Patents seem to be at the forefront of the minds of a number of different tech giants at the moment. Earlier this year a legal a legal battle erupted between LG and Sony over Bluray technology, including in the PS3. Nokia has also sued Apple. Apple has sued HTC. Now Apple has sued Samsung, alleging both patent and trade mark infringement (of what it’s not clear at the moment, since I’ve not seen the court documents published yet).

In a way, all of this was to be expected really. Software developers still have relatively interest in patents, which are really still designed for industrial applications (notwithstanding movements afoot in Europe, and rules already in place in the US, to encourage software patents). But for hardware manufacturers patents are a very important part of their IP arsenal. And when very lucrative new technology comes out like the recent boom in smartphones and now tablets, you can be sure patents will figure in everyone’s calculation. These tech companies want to ensure there really hasn’t been copying of their products by their rivals, plus there is always the lure of commencing a tactical patent infringement lawsuit as a business weapon against your rivals.

So, we can expect more of these lawsuits in the future and, at some point, some of them will probably get to trial and we’ll see if any legal fireworks are let off at that point…

(4) ESRB changes age rating process

I understand that the ESRB – the games classification system in the US – has been amended in two important ways. First, a new automated online form has been released. Second, and more interestingly, apparently there is now a new rating process for console DLC.

Historically, ESRB ratings have only been required for ‘full’ games and any retail expansion packs – not downloadable DLC. However, the distinction between expansion packs and DLC has of course become largely academic in the modern day – which has led to a gap in the child protection rules for game content. That is what the ESRB is now seeking to plug.

BUT, really I think this is another can of worms for the following reasons:

  • How is DLC actually to be rated? Will it use exactly the same rules as with games? 
  • What happens if the DLC has a different rating to the game itself?
  • How will the third party download platforms, like Xbox Live, be involved to make sure the DLC age ratings are made sufficiently prominent?
  • Who is going to pay for all of this and how will the ESRB cope with the additional regulatory responsibilities?
  • What does “DLC” actually mean for these purposes? Does it mean all episodic content, however small? What about, say, map packs? What about virtual goods purchasable within the game?
  • Most importantly, console DLC is all very well – but what about the vast casual and mobile games world?  More regulation is needed there, too.

The original post is a little inaccurate – sorry.  I understand that actually ESRB regulation already covers console DLC when necessary.  The official ESRB guidance is that “Downloadable content…that will be appended to an existing, previously-rated product need only be submitted to ESRB for rating if its content exceeds that which is in the existing “core” product.”  So, as long as the DLC is of the same standard as in the original game, then no additional ESRB rating is required.

The new changes discussed in the original post actually apply just to digital games bought through console storefronts like Xbox Live, where the ESRB has now implemented a new streamlined process.  That said, as I understand it at the moment that changee does not extend to non-console casual games or mobile games (e.g. iOS or Android games – albeit both have their own ratings systems already.

I’m now thinking that hopefully you guys would find it helpful to have a slightly more in-depth look at how ESRB regulation works, so expect another post on the subject soon…!

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