Games Law Update: April 2012

Hi everyone – here’s your dollop of games law news over the last month, curated by yours truly…


Second hand sales and the law:

Are grey imports legal or illegal in the USA?  The US Supreme Court is set to rule on this issue after accepting the appeal of a a Thai-American man sued for copyright infringement after he bought textbooks from overseas and sold them in the USA.  The defendant is argued that he is protected by the first sale doctrine, which holds that a rights holder loses its rights to control distribution of a product once it has already been put on sale in a country.  On the other hand, the publisher is arguing that the sale of its products without authorisation constitutes copyright infringement which it is entitled to stop.  As I understand it, the case will come down in part to analysis of the relevant US legislation, which is unclear on the matter.  At the same, in the EU there has just been an opinion released suggesting that rights holders can control resale of their products using their IP rights: in other words, rights holders can stop second hand sales of their products.  I’ll be writing about this separately soon, so watch this space…

Apple, antitrust and ebooks:

The US Department of Justice is making moves towards suing Apple and ebook publishers over price fixing.  This is interesting for a number of reasons:
(i) There have been very few examples of governments using antitrust powers over digital content – this is one of the most high profile.
(ii) It illustrates how quickly a monopoly, or at least dominant distributors, can begin to build in digital content distribution
(iii) The consensus seems to be so far in favour of Apple and the ebook publishers settling with the DoJ pretty soon if not straight away – this won’t be a protracted lawsuit.  As a result, in the near future it will be interesting to see what measures this will lead to the ebook publishers accepting and therefore what impact it has on both price and access restrictions.  Which is a long way of saying: maybe this is the beginning of the end of expensive, walled garden ebooks?
(iv) In case it wasn’t obvious where I was going with this: what will this mean for the games industry? Publishers have very wide control over price and access of digitally distributed games – could these kinds of moves weaken that control?  Will any of the games distribution platforms themselves come under a regulator’s eye in the way Apple has?  I think so, eventually…

And the rest…

Jonathan Newth of Tenshi writes a very savvy feature about the evolution of indie funds and whether really they’re just publishers by another name.

Johnny Minkley asks the (provocative?) question about how seriously the UK government is taking child safety in games, given its continuing failure to implement the PEGI age rating system.

As a result of the settlement of a Californian class action lawsuit against Gamestop, there will now be DLC warning labels placed on second hand games in Californian Gamestop stores warning consumers that DLC for the game may not be available (due to its second-hand nature).  Speaking personally, I feel rather divided about this decision.  On the one hand, it’s a victory for any consumers who were genuinely misled about what they were buying as well as for the Californian class action system generally.  On the other hand, publishers ofc aren’t particularly keen on second hands sales since it savages their profit margins.  At which point, cue the debate about whether second hand sales are good or bad…

Zattikka, a UK games fund/publisher, went public – it plans to use monies raised from its flotation to set up a portfolio of investments and acquisition in studios worldwide – you can’t fault their ambition.  Will this provoke more games businesses to think about going public…?

Ars Technica has an interview with Kevin Dent of Tiswas about the dark side of Kickstarter – an interesting read if you want to hear about some of the downsides of crowdfunding.  I think that Kevin’s absolutely right – there are a lot of things to get right with crowdfunding and a lot of things that can go wrong.  Sooner or later, lawyers are going to get involved to ensure that financial regulation and consumer protection laws are being observed.  Even so, there’s a few nasty shocks coming that risk bursting the optimism around crowdfunding, as awesome as it is…Here’s one example already, where fans found that a Kickstarter project was actually a hoax using stolen concept art.

19 thoughts on “Games Law Update: April 2012”

  1. I thought the UK BBFC regulations covered video games sales so they don't need to implement PEGI ratings?

  2. They do apply at the moment, but the games industry and government decided they prefer PEGI over BBFC, basically.

  3. You've likely got a much better understanding than me but my key take away from that opinion was that there's no difference between software purchased in a box and software bought digitally – so first sale doctrine/principle of exhaustion of rights would apply to both versions?

  4. The Kevin Dent interview link is mixed up. Its currently pointing off to gamasutra's article about Facebook credits.

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