Category: Copyright

What does UK IP reform mean for the games industry?

This is a guest post by my friend and fellow lawyer, Jonny Mayner. IP law is pretty important to the games industry, since it governs the stuff that games are (legally) made of. Being a clever IP expert as he is, I thought I’d ask him to explain what the UK government is doing to update IP law… Continue reading What does UK IP reform mean for the games industry?

IP Round-up: Newzbin 2, Copyright Infringement and Stormtroopers

This is a post from Jonny Mayner with additional input from Jas Purewal.  The Star Wars’ theme to the post is the fault/genius of Jonny (depending on how you feel about Star Wars, ofc).

This is a quick post looking back on some high profile IP cases in the UK on which we saw rulings in the first half of this year.  Read on for a brief round-up of what the cases were about and how they’re relevant to games and tech. Continue reading IP Round-up: Newzbin 2, Copyright Infringement and Stormtroopers

A beginner’s guide to IP in games

Hi everyone.  Earlier this week I went along to Dundee, Scotland for the Digital Spark conference and delivered a session on a beginner’s guide to IP in games.  I made a Prezi for the session and thought you might like to see it, so here it is: http://prezi.com/ynsvjg5hgpc6/a-beginners-guide-to-ip-in-games-jas-purewal-osborne-clarke/.

Please feel free to have a look over it and by all means drop me a line if you have any questions, would like to use it, think it’s good/bad/awesome/needs work etc.

Cheers,

Jas


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Opinion: why PopCap had to say yes to Blizzard

Last month, news emerged that Blizzard will introduce an homage to Popcap’s hit game Plants vs Zombies in the forthcoming World of Warcraft expansion, Cataclysm.   Apparently there will be a Plants v Zombies themed quest chain in the game, including the ability to…well, fight zombies with plants.  It seems that Popcap had collaborated closely with Blizzard on the project.

All well and good.  But this got me thinking: what if hypothetically it had been reported that PopCap had known nothing of Blizzard’s plans and was unhappy with them?  What could Popcap have done then, legally?

My view is this: if Blizzard did it right, then PopCap couldn’t have done much legally – and I’ll explain why in this post. 

But first, a couple of caveats.  One: this is not a complete legal analysis – it is an opinion piece, in which I take you through my views of the key legal issues that would be encountered (though if you do want a careful legal analysis about these kinds of issues, let me know!)  Two: this is not intended to cast any aspersions on Blizzard or PopCap – I’m just using a convenient recent example to discuss the limitations of copyright and trademark law as regards games.  There is a tendency sometimes to think that, just because someone has copyright and trademark protection in their games, that somehow that makes them invulnerable to copying etc.  Not at all – as I’ll show you.

The basics

These are real basics: a game is really just a bundle of different components : images, audio, video, code, databases etc.  Virtually all those components are intellectual property (i.e. intangible stuff you can own, as opposed to tangible stuff you can own – such as a house) and therefore protected by intellectual property law.  The games components outlined above will usually be protected by a branch of IP law called the law of copyright (more on that below).  Told you it was the real basics…

Separately, your name, the name of the game and the names of some its key features (e.g. its characters) can potentially be protected by trademark law.  For example, Nintendo and Super Mario are trademarked terms (again, more on that below).

In addition, there can be a whole bunch of other intellectual property rights in or around your game – e.g. rights in databases forming part of the game or in its packaging or ‘get up’.  For the purpose of this post, they’re not as relevant so I won’t discuss them.

The copyright bit

As I said much of the game components, like audio and graphics, will be protected by copyright law.  But really that just protects the actual images you’ve drawn or audio you’ve actually recorded.  Copyright law does not give you a monopoly over every other kind of similar image or audio. 

Example: if Alan draws a picture of a fat grey zombie attacking a plant, then he can’t stop Bob entirely separately drawing and selling another image of a fat grey zombie attacking a plant.  This is a critical principle of copyright law: it protects the expression of an idea, not the idea itself.  Two people drawing that picture entirely separately have just drawn on a common idea, so neither of them has the right to stop the other from drawing or exploiting their picture.    Copyright law does this in order to strike a balance between rewarding hard work and protecting intellectual liberty.

Ah, you say, but what about if Alan saw Bob’s picture first?  That’s where it gets tricky.  If Alan can prove that Bob had access to his picture, and can prove that Bob made a replica picture that copies all or (to use some legalese) a “substantial part” of Alan’s picture, then in principle Alan could sue Bob for copyright infringement on the basis that Bob’s inspiration was Alan’s picture, not the abstract idea of a fat grey zombie attacking a plant.

BUT, suing for copyright infringement is not as easy as just looking at the two pictures.  Judges have to look very closely at every aspect of the two copyright works, comparing and contrasting every part of them in order to reach to a decision as to whether there are enough detailed points of similarity to justify a finding of copyright infringement.  This is a very, very hard test to meet.  On top of that, it is often hard to prove that the person who made the alleged replica work actually had access to, and copied, your copyright work.  All lawsuits ultimately involve a degree of chance, but copyright lawsuits often  go beyond that.

What about if there are no obvious technical examples of copying but there is overall a very similar ‘look and feel’ to the two works?  For example, what if there are two GUIs or menus that are not exactly the same but overall give the same or similar effect – could there be copyright infringement there?  Answer: it is going to be very, very hard under UK (and US for that matter) law to prove that someone has copied your game or any other copyright work just based on a similar ‘look and feel’. 

A good example of how hard all this is to prove is the Da Vinci Code case (aka Baigent and Leigh v Random House).  Two authors claimed that Dan Brown had plagiarised their book, The Holy Blood and the Holy Grail, when writing his massive hit The Da Vinci Code.  Brown quite clearly had taken a huge amount of inspiration and plot details from their book, but he was not found liable for copyright infringement because he hadn’t actually copied any text from Baigent’s and Leigh’s book.  There were not enough painstaking points of similarity between the two books, and any general similarities or ‘look and feel’ were not sufficient, to find Brown liable for copyright.

Another example:  Navitaire Inc v easyJet.  Navitaire had developed an airline booking system, which easyJet instructed software engineers to replicate down to the last detail, partly by reverse-engineering it through repeated use of the system.  Navitaire tried to sue for copyright infringement and failed because, even though easyJet it couldn’t show that the relevant copyright works had technically been copied in the word-for-word sense and its ‘look and feel’ argument failed.

That key point again: it’s actually quite hard to prove copyright infringement regarding software, including games.  Ever wonder why (naming no names) some social games look, sound and and have names remarkably similar to each other?  It’s partly because the above shows how hard a lawsuit over any alleged copying would be.


So that’s all very nice and academic, but what does it mean for PopCap and Blizzard?  Here’s my view:
  • Popcap will (unless it has assigned it to someone else) own the copyright in all the visual, audio, video, code etc in Plants vs Zombies
  • But that does not give Popcap a monopoly over the idea of a cartoony tower defence game in which the player builds plants to fight off zombies
  • Nor does it give Popcap a monopoly over the ‘look and feel’ of that kind of game
  • Done correctly, Blizzard could quite properly look at Plant v Zombies and – without actually copying any of the copyright works in that game – make its own version which looked very similar and played very similar
  • In other words, if Blizzard had decided to include a game-mode very like Plants v Zombies in its game, and did it correctly, I think Popcap would have great difficulty in arguing copyright infringement against Blizzard
Of course, there’s a BUT here.  None of this means that you have a licence to rip someone else’s game off without regard to copyright law, firstly because that’s just a bad thing to do but secondly because there’s nothing to stop the copyright owner commencing litigation against you anyway (even if the prospects of success are actually against it).

The trademark bit

So, copyright wouldn’t help (I think).  How about trademark?  Answer: I don’t think so, not if Blizzard was savvy.

Again, another bit of legal 101 first.  Trademarks are intended to give legal protection to the financial value of the name of your company and product, because otherwise it is very tempting to put together a similar product with a similar name and piggyback on someone else’s successful product.  This often comes up in cybersquatting cases, when a shady character sets up a website very similar in name to a popular website and tries to profit from misdirects (for example, Facebook recently successfully went after and shut down Facebok.com).  So, both ‘Popcap’ and ‘Plants v Zombies’ are (or should be) trademarked. 

The basic test for trademark infringement is fairly simple: if you use deliberately in your trade a name which is similar to a name trademarked by someone else and this is likely to cause consumer confusion between your name and the trademarked name, in principle you can be liable for trademark infringement to the trademark owner.

The solution is simple: use a name which won’t cause consumer confusion.  So, if Blizzard was to use a name sufficiently similar to Plants v Zombies to cause consumer confusion (e.g. ‘Zombies v Plants’) then in principle it would be liable for trademark infringement.  But what if Blizzard used a name like “Botanical Mayhem” or something? 

My answer: far less chance of  succesful legal complaint from PopCap, probably.  So Blizzard could take their own type of plant/zombie tower defence game, give it a non-trademark infringing name, and off they go.

Practical points coming out of this little thought experiment:
  • Having copyright and trademark protection for your game is helpful, but it doesn’t necessarily make it invulnerable to being copied/ripped off
  • Copyright protection isn’t going to be a complete shield if someone is determined to exploit your game cleverly
  • Trademarks won’t help you either if they deliberately call the game something else which is sufficiently different so that it wouldn’t cause consumer confusion
  • BUT, litigation isn’t just about winning a lawsuit when you’re absolutely right, it’s also about applying commercial pressure to the other side – so you shouldn’t necessarily be swayed by just these legal arguments
  • And don’t take of this as a licence to go ripping someone else off – obviously, it’s never a good idea to do that

Image credit: PopCap Games/Wikimedia

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What Vernor v Autodesk means for games

Edit: the case name is ofc Vernor v Autodesk, not Vernor v AutoCAD – thanks Brian!

The recent US case of Vernor v Autodesk has caused a storm of controversy over whether you actually own the software that you purchase, or just license it (meaning that you can’t then sell it on to others).  This has garned a lot of tech press attention, from Wired to Cnet. 

I spoke with Gamesindustry.biz last week about its (potentially significant) implications for the games industry, specifically the second hand sales market.  Here’s the original piece and here’s what I said: 
“A US appeal court’s decision to utilise a EULA to judge the legitimacy of second hand software sales could prove to be a crushing blow to the used games market if it serves as a precedent to the rest of the industry, GamesIndustry.biz has been told.

Gamerlaw’s Jas Purewal said that the use of the terms of an End User Licence Agreement to prevent the resale of second hand software could prove to be the crucial factor in the next stage of major publishers’ battle against the second hand market.

The US court of Appeals for the Ninth Circle recently reversed a decision to allow a man to sell copies of design program AutoCAD via his eBay business. Their decision was based on the exact terms of the EULA, which stated that what was being purchased was a licence to use the software, rather than the software itself, and that the licence was non-transferable. These terms are relatively common in videogame EULAs.
“EULAs have been coming under increasing pressure and scrutiny in recent years which is why they’re being more and more carefully drafted, and there’s increasing consumer pressure on EULA’s too,” Purewal told GamesIndustry.biz.


“It’s testing times for the EULA, but what hasn’t been tested is whether EULA’s can be used to prevent second hand sales in the UK altogether. Obviously the point in this case is that those arguments are now being made in the US – and the decision from the courts at the moment seems to be that a EULA can be used to prevent second hand sales, which has a very wide potential application, not just to games but to all forms of software, as well as to books and music.


“Very much the future of the second hand market lies in the balance…It’s very complicated and it’s very early. Certainly as an off the cuff observation, is that this sounds, potentially, like an absolute goldmine for the US games industry if they can actually use it and push for a stop to second hand sales, but that’s going to be incredibly litigious.”


Purewal was keen to stress that there is no immediate threat to the sector, however, as there is no way to directly transfer the ruling outside of the US.


“This is very much going in the states at the moment. The decision was made upon detailed provisions of US law, it relates to consumers who are buying software in the US, it has no bearing on people in the UK or Europe, although if there is any similar litigation on similar issues, brought here, then you could see similar arguments being made.


“Whether or not that would actually wash is far too much like gazing into the crystal ball. It’s far too premature. What I would say is that the consumer protection laws are much stronger in the UK than they are in the US, it may be that a more consumer friendly approach may be advanced. “


Game rental companies could potentially be affect by the longterm ramifications of the ruling, too, as they would be covered under the same EULAs as regular consumers.


“The American Library association, the Electronic frontier foundation and the association of college and research libraries all made submissions in relation to this litigation. They were essentially saying the same thing, that the precedent which this sets could be very harmful to all forms of resale, not just software, but books or any other kind of works because similar logic could apply,” Purewal argued.


“The court saw the force of those arguments but they said it didn’t affect the legal decision. What they usually mean when they say that is that it’s up to the legislature, congress in the states or parliament here, to actually decide the issue one way or the other.” 

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Games and the Digital Economy Act: an Update

Earlier this year I wrote about the impact UK Digital Economy Act, which was passed by the Labout government earlier this year, and the impact the Digital Economy Act will have on games once it comes fully into force.  Now that has taken a step closer.  Read on for more… 
So what’s going on?
The Digital Economy Act is (among other things) a big change to UK law on copyright infringement, because it mandates a new system in which rights holders (e.g. developers and publishers) cooperate with ISPs to locate, identify and take legal action against copyright infringers, such as people who download pirated games.  The most (in)famous aspect of the system is the threat that rights holders and ISPs would together be able to use ‘technical measures’ against infringers’ internet access, i.e. to throttle down or even cut off their internet access (although in the event this was toned down and now the Government effectively has the power to give those powers to Ofcom if it feels it necessary once DEA is fully in force).  Against a spirited resistance from a number of angles, the Labout government passed the DEA in its last days and left it to the UK telecoms regulatory body, Ofcom, and the Department for Business, Enterprise and Skills (BIS) to put together codes of practice/ that will actually govern how DEA would work (you can read the DEA itself here).
Now Ofcom/BIS are taking serious steps towards setting up that framework in which DEA will work.  Earlier this year Ofcom released a draft code of practice (which you can see here) and now BIS has released guidance on one of the most important/contentious issues: who is going to buy for all this anti-piracy action?
Over to Technollama, who gives a good summary of the key points:
  • “The notification costs of ISPs and Ofcom as regulator are to be split 75:25 between copyright owners and ISPs…
  • There should be no fee for subscribers to appeal against a notification letter. However the Government retains the power to introduce one at a later date should it become clear that a large number of vexatious appeals result.
  • The deadline for Ofcom to complete the initial obligations code will be extended by 3 months to reflect the need to notify the cost regulation separately under the Technical Standards Directive.”
So rights holders will have to stump up 75% of the costs, ISPs have to stump up 25%, and consumers pay nothing.  Which will be not enough for the rights holders, too much for ISPs and just about right for consumers (though they don’t really want the DEA anyway).  And we’re probably going to be talking about a fair deal of money here – it’s not cheap to locate, identify (through a Court process) and then sue illegal downloaders.

Oh and, as importantly, Ofcom is given another bit more time in which to finalise the actual legal framework in which DEA will have to operate.

What does this mean for games?
For the games industry, fundamentally the position remains the same: once DEA is fully operational (a gold star to anyone who spots the film quote there), it will become a powerful weapon for all rights holders – including developers and publishers – to use against content piracy.  Now we know that, if developers and publishers want to use that weapon, they will not only have to to identify and pursue the pirates (in accordance with the rules that Ofcom hasn’t finalised yet), they will have to pay 75% of the costs as well.  Whether that operates as a brake on using the DEA powers against games pirates, well, we’ll have to see.
One other point which I keep making, that we don’t know the answer to yet, is whether DEA can/should apply to ‘innocent’ copyright infringement, in particular fan mods or games UGC.  I think legally it does apply to that kind of content, but will devs/publishers actually use the DEA to take action against that kind of content?  Really that’s the classic question about third-party content: yes, on the one hand it acts as a homage to your game and can even drive traffic etc, but on the other hand it is content which is outside your creative, legal and financial control.  We’ll have to see.
As and when there are further developments (probably when Ofcom releases the next draft or the final code of practice), I’ll write another update. 
[image author: Andrew Dunn, obtained via Wikipedia]
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Blizzard wins $88m lawsuit against WoW private server owner

Blizzard Entertainment has just won a substantial lawsuit against WoW private server provider Scapegaming, including a crippling award of $88 million in damages. Read on for more on WoW private servers and this case.
What was Scapegaming?
Scapegaming was a WoW private server, which permitted players to play a modified version of WoW that was not under Blizzard’s control and for which players would pay the private server provider rather than WoW. For example, it seems that Scapegaming even featured a (real money) microtransactions system, which obviously WoW does not.  Vanilla WoW is just fine for me for me (my 80 Horde DK is doing ok thanks), but I can imagine that some gamers may find attractive the idea of playing a different, non-sanctioned version of WoW.
Private servers inhabit a pretty murky world (more on them below) and so not much is known about Scapegaming. However, from some investigation it seems clear that Scapegaming is/was one of a number of interconnected WoW private servers, who enjoy apparently quite substantial player bases.  For example, you can have a look at this Youtube video for some rather mysterious allegations about the various figures behind Scapegaming and its rivals.  One thing that does seem clear is that some point Scapegaming was shut down, though whether this was as a result of this lawsuit or other factors is unclear.

So, a bit about private servers
As I said, private servers permit players to play WoW without Blizzard’s supervision and which therefore gives them the ability to manipulate the game to an extent impossible in the official servers. BUT, private servers without the dev’s consent are quite clearly illegal. Why? Because if you reverse-engineer and make available to the public a modified version of someone else’s game without his/her consent, you are committing a range of IP infringements, particularly copyright and trademark infringement. Moreover, both making and using a private server would involve breach of the WoW terms and conditions, entitling Blizzard in principle to shut down WoW game accounts of both the private server providers and their users. In fact, if such servers are provided to the public for profit, then under many jurisdictions this could potentially be a criminal as well as a civil matter for the server providers. Beyond that, private servers cause commercial and creative problems for the dev because they are outside of his revenue stream or his creative control. In other words, they are pretty much always going to be BAD NEWS for developers.
Blizzard itself is certainly alive to the dangers posed by private servers. In around 2002, it took legal action against the owners of Bnetd, a reverse-engineered clone of Battle.net and therefore in effect a private server itself (you can read more on that here) http://en.wikipedia.org/wiki/Bnetd. Beyond that, Blizzard has taken legal action on a number of other occasions when third parties have attempted to introduce changes to WoW without its consent (see for example the WowGlider litigation).

So, at this point, let’s have a quick look at what we know of the Scapegaming case.

The case
In early 2010, Blizzard commenced the legal action in a Californian court directly against Alison Rees, apparently the owner/manager of Scapegaming. The details of Blizzard’s exact complaint were, as usual, set out in a formal Compaint (known as Particulars of Claim in England) – but unfortunately I don’t have access to it (yet). Still, one would expect that it gave set out the IP/contract arguments against Rees.
Then, it seems from the court record, Rees did…nothing. As seems often to be the case in clear IP infringement cases of this kind, Rees ing appears to have chosen not to respond to the lawsuit at all. As a result, it seems that Blizzard became entitled to default judgment (this is a legal procedure in which, if you start a lawsuit and the other side doesn’t respond within the requisite reply period, then you automatically ‘win’ the lawsuit because of the other side’s failure to engage in the process).
At which point the lawsuit seems to take another non-twist, because then Blizzard’s lawyers appear to have done nothing either. The lawsuit history is skimpy on detail and therefore difficult to follow at this point, but it seems that the court took a pretty dim view of this and therefore proposed to dismiss Blizzard’s lawsuit altogether because Blizzard had failed actually to ask for default judgment against Rees. Anyway, after a court hearing on the issues, the court (apparently quite begrudgingly) gave Blizzard a short period in which actually to seek default judgment, which it then did in mid June 2010. This then rolled on for some time until, in early August, the judge ruled that:
“Based on Plaintiffs evidentiary submissions, the Court concludes that Plaintiff is entitled to default judgment in the amount of $3,052,339 in disgorged profits, $85,478,600 in statutory damages, and $63,600 in attorneys fees…Plaintiff Blizzard Entertainment, Inc. shall recover $88,594,539.00, and post-judgment interest thereon at the rate provided by law until paid in full, from Defendant Alyson Reeves, d/b/aScapegaming.“
Let’s just pick the numbers apart for a moment. Blizzard is to recover $3m in “disgorged profits“, meaning that it was able to convince the court that Rees herself had made over $3m in profits from Scapegaming. That’s a serious amount of dough to earn from a private server. Then we have $85m in “statutory damages”, which is the amount awarded by the court to compensate Blizzard for the estimated loss caused by the IP infringements. Clearly this makes up the bulk of the award and is pretty nuclear all on its own (though NB that the amount of statutory damages awarded are often a target for an appeal later on). Finally, we have $63,600 in legal costs.
So what?
$88m in damages is a pretty crippling blow to bring against an individual and I would guess that, unless Rees is a wealthy individual living in the US (or she manages to win an appeal against that award – seems unlikely), then actually recovering anything like that sum of money may be difficult. However, the sheer size of the damages award certainly should send a clear message to other WoW private server providers (particularly any of those who have moved in on Scapegaming’s territory since the lawsuit began).
Which leads us to the last point for this post. What this case shows most strongly is that Blizzard views private servers as a sufficiently significant problem to merit lawsuits – particularly if other private server providers are earning anything like the $3m that Rees made from Scapegaming. Couple that with the fact that there are clearly other private server providers out there, and it suggests we will see more of this kind of action from Blizzard in the future. Watch this space…

Image credit: Activision-Blizzard/Wikimedia

Nintendo v Playables – the latest modchip case considered

It seems that Nintendo is on a mission to gun down modchip sellers at the moment. I posted in May 2010 that Nintendo was suing New York-based modchip seller NXP Games, Inc. The 1709 Blog has just reported that Nintendo has successfully just sued another modchip seller in Holland. And, last week, Nintendo won a UK High Court claim against modchip seller. This post is about the UK decision.

Here’s a quick summary:

Nintendo v Playables, the UK High Court decision on modchips delivered last week, was not a groundbreaking decision. It simply reinforces the fact that previous caselaw has already found that the sale and distribution of modchips breaches UK copyright laws and is therefore illegal. So, this decision did not make modchips illegal for the first time under UK law.  It is still an important decision, however, because it forms part of a continuing move in the US/UK towards outlawing modchips altogether – an approach which is not shared in certain other countries, particularly in Europe (more on that at the end of this post).

So, now read on the clever(ish) legal analysis. Oh, and for more background on modchips you can read my previous post ‘Are Modchips Illegal?’…

The story

Nintendo manufactures and sells its handheld Nintendo DS among other consoles. Playables, a UK company, imported and sold devices which when connected to a Nintendo DS could be used to play pirated games (either using inbuilt memory or through inserting memory cards into the device). In other words, Playables sold modchips.

HM Revenue & Customs and Trading Standards seized about 165,000 of these modchips en route to Playables, which led to Nintendo finding out about them and deciding to commence High Court proceedings against Playables and one of its directors. As it turned out, prior to trial Nintendo agreed a partial settlement with Playables (the terms of which are unknown and no doubt secret) but nonetheless sought summary judgment of the case to court in order to obtain legal vindication of its position.

Fundamentally, Nintendo argued that the modchips infringed its copyright in: (i) the source code for the boot up software; (ii) the Nintendo Logo Data File (which assist the DS to run); (iii) the Nintendo ‘Racetrack’ logo. In legal terms, the arguments being run were:


(i) circumvention of ‘Effective Technical Measures’ (essentially, they deliberately circumvented technology put in place by Nintendo to stop copyright infringement); and


(ii) pure copyright infringement.


More on that below.


The ETM argument


This is where we get a bit legal. Nintendo relied upon two provisions in the Copyright Designs and Patents Act 1988 (the “CDPA”), section 296 and section 296 ZD.


Section 296 prohibits anti-circumvention devices that have been applied to computer programs. To establish a breach of this provision, Nintendo had to prove that: 

  1. there was a “technical device” which had been applied to a computer program; and
  2. that the defendants had manufactured it/sold it etc for the sole purpose of the unauthorised removal or circumvention of the technical device.

In addition, for one of these sections Nintendo also have to prove that the defendants actually knew or had reason to believe the technical device would be used to make infringing copies.


Nintendo easily could prove Test (1), since the modchips physically are inserted into the Nintendo DS and can then be used to run pirated games etc.


As to Tests (2) and (3), Playables advanced the same arguments that pretty much all modchip sellers have advanced in these cases:

  • modchips are not just sold for circumvention purposes but can have legitimate uses, e.g. if you wanted to play your own game on the console; and
  • the modchip sellers don’t know that their devices would be used by people to make/use pirate games.

In the UK, these arguments had already been put forward (and failed) in several cases, in particular one called Sony v Ball and separately in R v Gilham (more on that below). Here, again, the judge gave these arguments pretty short shrift. He said “I do not think that the defendants have a realistic prospect of asserting that they did not know of the unlawful uses to which the devices would be put” and that Playbles had “no realistic prospect of success” in arguing the modchips were for legitimate purposes.


The Jurisdiction angle


One interesting/new question which came up during this part of the case was what happens when a modchip seller is exporting modchips outside the UK as well as selling them within the UK. Does just exporting modchips outside the UK fall foul of the CDPA as well?


Mr Justice Floyd said yes, it does. He said that one of the CDPA sections being relied on, s296 ZD, is concerned with dealings in the UK in devices capable of circumvention. Nintendo did not need to prove actual circumvention.


So what? Answer: on this reasoning, if in the future a modchip seller was to import modchips into the UK and then export them out (e.g. to Europe), that would be illegal even if the modchip is not actually sold/used in the UK. It also means that the claimant (in this case, Nintendo) could seek greater financial damages.


The copyright argument


As I said above, as well as an ETM argument, Nintendo also brought a plain old vanilla copyright argument, based on the DS source code, the NLDF and Nintendo’s logo (well, actually, Nintendo’s argument was that Playables should be liable for copyright infringement because its device authorised others to infringe Nintendo’s copyright, most likely because it would be hard to prove that Playables itself had actually infringed Nintendo’s copyright).  These arguments met with more limited success: Nintendo only won on the NLDF authorisation point.


The court’s judgment


We already know that Nintendo/Playables itself had settled but Nintendo wanted a judgment in its favour. So, it went off seeking summary judgment from Mr Justice Floyd, who found in its favour on the ETM argument and partially in its favour on the copyright argument. The Judge also found there was enough evidence to find Mr Chan, the Playables director, jointly liable with Playables.


Also, just to emphasise, the court’s judgment was directed at whether Playables had in fact breaches the relevant sections of the CDPA.  This case did not seek to establish as a general principle that modchips are illegal, as that had already effectively been achieved by a combination of the CDPA provisions and previous caselaw.  Obviously though this case will act as further precedent to be used in any subsequent cases against modchip sellers in the UK.


Analysis


As I said, this was not a groundbreaking decision, but it does have some interesting aspects:

  • It forms part of the continuing trend in the US/UK towards outlawing modchips altogether, by finding that they have no legitimate purpose other than to facilitate copyright infringement/games piracy. For example, the case follows hot on the recent UK criminal case of R v Gilham, in which a modchip seller was convicted of offences relating to his sale of modchips (you can read my thoughts on that case here).
  • It contrasts with the view on some other countries that in fact modchips can be used for legitimate purposes and that the games companies should not have ‘their own way’ of controlling the consoles in the way they want, rather than what consumers want. For example, you read here about recent modchip decisions in France and Spain which moved in that direction.
  • It shows that the directors and employees of modchip sellers can be personally liable, not just the company. Here, Mr Chan was found financially liable as well as Playables. In Gilham, Mr Gilham himself was prosecuted and convicted. This is must be a serious deterrant factor, but…
  • The fact that the case was taken all the way to judgment shows that the console manufacturers clearly do still regard modchips as a serious concern, so deterrants are needed.
  • HMRC were involved. We don’t know exactly how, but clearly there was (and has been for some time) cooperation between HMRC and the console manufacturers to tackle copyright infringement/piracy of all kinds, including modchips.
  • Why didn’t Nintendo go for criminal prosecution of Mr Chan and/or Playables? We know from Gilham that console manufacturers have done this before against modchip sellers. Instead Nintendo relied on a civil suit. Why? I can speculate, but really it’s a mystery…

So what next?

In the UK, Playables will likely be shut down, Nintendo’s position has been vindicated, now it and the other console manufacturers will need to focus on the next modchip threat.

However, modchips are used all over the world, with the console manfacturers being forced on jurisdictional grounds to fight legal battles under the legal systems of several different countries to outlaw modchips (for example the New York and Holland lawsuits mentioned above). It is by no means clear that the same result achieved here would be achieved in say France, China or Brazil. All of which unfortunately means continued legal expense and uncertainty for the console manufacturers.

Speculation alert: in the meantime, as far as I am aware there has been no or very little consideration of the use of modchips from a consumer law perspective in Europe, certainly in the UK. Perhaps a consumer law argument could help to change the nature of the argument away from pure copyright considerations? Sounds like a tough gig, but you never know. Watch this space…



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Games Law History: the Tetris saga

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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What happens if I delete your avatar?

I’ve thought for some time that it would be interesting to write a post about the legal implications if someone was deliberately to delete someone else’s avatar, or for that matter to steal it.

As it turns out, over at Terranova they’ve been having a similar discussion.  This from Richard Bartle:

“So, this is a video a woman made in which she deletes her boyfriend’s World of Warcraft characters. It rather upsets him.


So, if he sued her, what would the legal arguments involve?”


It’s well worth having a read of the comments if you are interested in the legal arguments regarding virtual goods.  I’ve previously discussed the legal debate over virtual goods ownership and will write another post when I’ve had a chance to digest this interesting Terranova discussion, so watch this space…




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