Game::Business::Law 2010 and Other 2010 Events

I wanted to take a moment to remind you that Game::Business::Law 2010 is coming up in January, and seats are limited. More details can be found here, and I will be moderating what is shaping up to be an excellent panel on the intersection of legal and financial issues on digital distribution. The panel includes speakers:

Robin Bynoe, Senior Counsel, Charles Russell, LLP
Sean F. Kane, Kane & Associates LLC
Jeffrey A. Levenstam, Partner, International Tax Services, Ernst & Young, LLP

Game::Business::Law was outstanding last year, and I expect it will be excellent this year as well. If you are interested in attending, please be sure to register soon as space is limited.


2010 is looking to be a busy year for speaking, and more details on other 2010 events will be posted on Law of the Game as details become available. I certainly hope to see at least some readers at all of the conferences throughout the year, including GDC2010 where I will be presenting at both the Social and Online Game Summit and the iPhone Games Summit.

And, as a note from me to all of you, I sincerely hope you all have a happy holiday season and a great new year.

LGJ: IP Police, Arrest this man, He talks in torrents

This week's LGJ goes into the reported 'Pirate Finder General' in the UK and what could follow in the US.

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LGJ: Gaming's professional plaintiffs and class actions

This week's LGJ explores the idea of professional plaintiffs in gaming and class action lawsuits.

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LGJ: Read the fine print!

This LGJ speaks to contracts and the "fine print" in the wake of the recent disputes over the use of musicians in rhythm games.

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LGJ: Revenge of the Regulators

This week's LGJ dissects 'ecogenerism' as it applies to regulating video games based on a new paper from Michigan State University School of Law.

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LGJ: 3D Dot Game Infringement

In this LGJ, I talk about the allegations of 'copyright infringement' in 3D Dot Game Heroes.

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Game::Business::Law 2010 is Official

I wanted to take a moment to post the following press release. Last year's event was outstanding, and I think the upcoming conference will be even better. I will be a speaker again this year, and hope to see some readers in the audience. Registration is limited, so be sure to secure a spot soon.

News Release

Registration for 2010 Game::Business:: Law Summit Now Open via game-business-law.com
2nd Annual International Summit on the Law and Business of Video Games to be Held January 27-28, 2010 at SMU

SMU/Dallas-October 5, 2009- Registration is now open for the 2010 Game::Business::Law Summit, the second annual international summit on the law and business of video games, to be held January 27-28, 2010, at Southern Methodist University.

Hosted by SMU Dedman School of Law, The Guildhall at SMU, and The Center for American and International Law, the summit will once again bring top game industry leaders, developers, publishers, lawyers and members of the venture capital and financial industry from around the world to discuss current business trends and legal issues in the games industry.

“If you are a business development person, a member of the legal affairs team or financial staff of a video game studio or publisher, you really should attend this conference,” Zack Karlsson, senior director of business development at NAMCO BANDAI Games America, said. “What makes this conference so great is the strong interaction of the audience with the panel members. It is really more like a discussion of key issues affecting the growth of our industry rather than a series of presentations and lectures.”

In order to foster the interactive nature of the conference between the audience and speakers, space will be limited. Attendees are encouraged to sign up early.

In response to the success and feedback from the 2009 Game::Business::Law Summit, organizers have announced an initial slate of notable speakers:

• John B. Attanasio, Dean, SMU Dedman School of Law
• Keith Boesky, Principal, Boesky & Company
• Robin Bynoe, Senior Counsel, Charles Russell LLP (London, UK)
• Roxanne E. Christ, Partner, Latham & Watkins
• Ken Doroshow, Senior Vice President and General Counsel, ESA
• Zack Karlsson, Senior Director of Business Development, NAMCO BANDAI Games America, Inc.
• Joseph Olin, President, Academy for Interactive Arts and Sciences
• David McCombs, Partner, Haynes and Boone, LLP
• Shane McGee, Partner, Sonnenschein Nath & Rosenthal, LLP
• Mark Methenitis, Electronic Entertainment Section, The Vernon Law Group, PLLC
• Xuan-Thao Nguyen, Professor, SMU Dedman School of Law
• Dr. Peter E. Raad, Executive Director and Founder, The Guildhall at SMU
• J. Paul Raines, Chief Operating Officer, GameStop Corporation

For more information on registration, tuition and making a reservation to attend the event dinner, visit www.game-business-law.com

For additional information on the conference and possible sponsorship opportunities, contact Ron Jenkins, Deputy Director, The Guildhall at SMU, at jenkinsr AT smu dot edu or (972) 473-3546.

About The Guildhall at SMU:
The Guildhall at Southern Methodist University is the premier graduate video game education program in the US. Many of the school’s founders are industry icons, and classes are taught by industry veterans. In six short years, over 300 Guildhall graduates have worked at more than 80 video game studios around North America. SMU offers both a Master’s degree and a graduate Professional Certificate of Interactive Technology in Digital Game Development, with specializations in art creation, level design, and software development. For more information, visit www.guildhall.smu.edu.

About Dedman School of Law at SMU:
The Dedman School of Law at Southern Methodist University enjoys a strong national and international reputation, having produced successful leaders who live in the Dallas/Fort Worth area, throughout Texas, across the United States, and in more than 70 countries. Dedman Law is among the top 25 most selective of law schools for admission in the United States. With a small entering class size in the day and evening programs, an outstanding teaching faculty with superb credentials, and numerous distinguished guest lecturers, we forge an invaluable link between legal theory and the reality of legal practice––providing one of the best legal educations in the country. For more information, please visit www.law.smu.edu.

About The Center for American and International Law:
The Center is a nonprofit institution founded in 1947 and dedicated to the continuing education of lawyers and law enforcement officials in the United States and throughout the world. Tens of thousands of lawyers and law enforcement officers from all 50 states and more than 125 countries have participated in its programs. The Center for American and International Law is located at 5201 Democracy Drive at Legacy Park in Plano, Texas. For more information about The Center, please visit online at www.cailaw.org.

LGJ: Products LiabilODST

This week's LGJ looks at warranties and products liability in a gaming context.

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LGJ: Come As Your Avatar, Smells Like Lawsuit? Nevermind

In the latest LGJ, a discussion of the right of publicity as it relates to the Kurt Cobain in Guitar Hero 5 dust up.

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LGJ: You down with FCC?

In this LGJ, a discussion of the role of the FCC and a little talk about the idea of universal ratings.

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LGJ: Welcome to the Big Leagues of Deception

This week's LGJ is all about the fun trickery we lawyers use to keep deals and filings secret. It's probably only 'fun' in the most generous sense of the term to most people.

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LGJ: First Sale and Digital Distribution

This week's LGJ takes a look at the interplay of first sale and digital distribution while also examining the ownership versus licensing argument.

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Online Video Game Gambling Still Questionable

In the past few weeks, a lot of sites have had coverage of BringIt.com, a new site purporting to allow you to wager on games like Halo 3 and Madden NFL 10. I've talked about some systems like this before, and one fact still seems to be lost in the shuffle: the legality of these sites is questionable at best and consumers should proceed with caution. I've reviewed the BringIt.com terms and FAQs (though I have not registered for nor tried the functionality of the site), and to illustrate my point, I'm going to use my home state of Texas as an example. BringIt.com says it is perfectly legal in my state, but a simple review of the Texas gambling statutes indicates otherwise, though the risk is much higher for the website than for the gambler. Let me again preface this by saying that this is simply my opinion on the matter, and it is possible that the purveyors of BringIt.com have received an attorney general opinion which they base their business upon in some or all states. More importantly, none of this post should be considered to defame or disparage the owners or attorneys for BringIt.com, it's simply a disinterested arms length commentary on the system in question, of which BringIt.com is a prime example.

For those unfamiliar, a good summary of Texas gambling laws exists here. On the face of it, anyone participating in the site is a gambler, and the site itself is a bookmaker. There are a number of ways this violates the letter and spirit of the Texas laws. First and foremost, by collecting bets, the site is almost certainly a bookmaker by statute. And this activity is almost certainly the offense of gambling, defined as being committed when someone 'makes a bet on the partial or final result of a game or contest or on the performance of a participant in a game or contest.' And more importantly, it satisfies the test for gambling in Texas, since the answer woudl certainly be yes when asking 'does it encourage the gambling instinct?' (see Callison v. State, 172 S.W.2d 772, 774.)

More importantly, Texas has an explicit prohibition to internet gambling, which is defined as multiple people using multiple computers to play a game and bet on the outcome. In my view, this spells out exactly what we have here, and that sentiment is clearly echoed in a 1995 Texas Attorney General Opinion. This system is no different than the third question presented, using a bulletin board to facilitate online card games.

While this may look one sided, there are often exemptions in the law. So, is there an exemption, though, that the site can rely on? The 'social game' exemption is certainly inapplicable because BringIt.com is making money on the transaction. The exclusion of awards for certain contests of skill from the definition of 'bet' basically only includes certain kinds of prizes for contests, not one on one 'challenges' that are wagers by another name.

This, of course, ignores the fact that many EULAs and TOS (both for the games and for services like Xbox Live) may explicitly bar this kind of behavior. To that end, not only could the consumer be penalized, but BringIt.com could be presented with a suit not unlike the Glider case, and we all know how that turned out.

That's not to say the whole site has no legal factors in Texas. I have some questions to the legality of the online element, but land-based cash game tournaments have been legally run in Texas, with MLG events and QuakeCon being two of the most well known. Assuming the rules are being followed appropriately, at least the multiplayer bracket portion might be legal in Texas.

Of course, this opens the larger question: If there's on state with these kind of questionable issues, what about the other 38 the site allows play in? And what about the Unlawful Internet Gambling Enforcement Act, which bars most of this activity nationwide regardless? And is the site complying with the IRS rules regarding reporting of winnings? I don't want to nay-say the concept, but it certainly leaves me with questions based on my own analysis. Granted, I would greatly prefer a unified Federal stance on online gambling both legalizing and regulating the industry, and I would certainly support sites like this were the legal landscape clearer in that regard. For now, however, I would certainly proceed with caution.

LGJ: Fan Sequel? Still not legal.

This week's LGJ talks about fan sequels, fan art, fan fiction...basically a ton of different kinds of derivative works.


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LGJ: And still, they want to take away our games

This week's LGJ address some possible alternate routes the government might use to regulate video games, rather than the typical violence argument.

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The Debate Video - Now Available

I'm sure many of you have been waiting for the video of my debate with Jack Thompson from SGC. Well, there's now both an unedited version and a 16 minute edited version available from ScrewAttack.

With that now up, some of my commentary from Late Nite JengaJam may make more sense in context.

It's been interesting to keep track of the comments and see what people take away from the video. It surprises me just how many people are taking unexpected points away from the debate, from stances I didn't think were represented, to contradictions that weren't stated, to issues with the formal debate style and issues with the format of responses (primarily responding to the question versus responding to the other party). I'm particularly confused as to why many people were critical of the fact that I didn't address the Saw game when it's basically impossible to comment on content of a game that isn't released yet. Certainly, it's interesting that the game is being released, but it's impossible to say whether the content there will be as graphic as the movies when the game isn't released yet.

In any event, enjoy the video.

The Thompson - Methenitis Debate Video is Forthcoming

I know many folks on the internet are waiting for the video of the debate I had with Jack Thompson last weekend on the 4th of July at the ScrewAttack Gaming Convention in Dallas. I've been told by some of the folks at ScrewAttack that both an edited and an unedited version of the video will be up on their site next week.

In the mean time, I did find this seven minute clip from the latter half of the debate. I also did some post-debate commentary on this week's Late Nite JengaJam. Hopefully those two will tide everyone over until the full video is available online.

For those who didn't make it out to SGC, the event was outstanding, and the entire ScrewAttack crew deserves any and all praises you may have seen on their forums about the event. I also really appreciate Jack for making the trip out to the convention and participating in the debate.

As soon as the debate footage is available, I will make sure to post the appropriate links here on Law of the Game.

More on China's Virtual Currency Regulations

CNN.com put up an article (which quotes me) on the Chinese virtual currency rules mentioned earlier this week on Law of the Game. GamePolitics has also posted two pieces on the rule, with different takes on the issue. It will certainly be interesting to see how this all plays out in practice.

LGJ: The new meaning of 'player vs player'

This week, we talk about lawsuits between players. A new Craigslist-based verdict puts a serious damper on many possible avenues.

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China Bans Use of Virtual Currency for Real Goods

News reports have come out that China has both defined 'virtual currency' and barred the use of that currency for purchase of real world goods. In theory, this is to combat certain underground uses of vitrual money by limiting their use to the purchase of virtual items. In practice, however, it could prevent the spread of virtual worlds like Second Life into China. Based on the Chinese definition of 'virtual currency,' the Linden Dollar used in Second Life is undoubtedly covered, and thus the interplay between the Linden Dollar and real currency would likely be problematic, though the use of Linden Dollars to purchase in-world goods may not be. It will be interesting to see how this continues to play out, especially in view of last year's finding that a virtual seizure had a real world value in China.

Reminder: The Big Debate is This Weekend!

I just wanted to take a moment to remind everyone that the big debate between Jack Thompson and me is this coming Saturday, July 4, 2009, at 4 pm in Dallas, TX, at the ScrewAttack Gaming Convention. The convention is at the Westin Dallas/Ft. Worth Airport, starting this Friday and ending on Sunday.

They've updated the event page to note that it will be on the main stage in Trinity VI. Be sure to get there early, space is limited. I'm looking forward to seeing all the g1s at the event. I'm still waiting to hear from Craig, but I imagine I will be around the convention on Friday and Saturday before the debate.

Class Action Against SquareEnix Targets More Than Fees

It's been on the major news sites that a class action has been levied against SquareEnix for fees associated with Final Fantasy XI, the company's MMORPG. However, there's more to it if you look at the filing posted by GamePolitics.

News sources have been quick to point out that the monthly fee is clearly stated on the Square website, as most MMORPGs with a monthly subscription plan do. Looking at the pleading, though, the main monthly fee isn't the crux of the complaint. I think the stronger complaint lays with the penalties and interest for late payments, and 'charges while the online game account is suspended,' if that means the monthly fee is continuing to toll. This case may not be about the base monthly fee at all, but rather what happens if you don't pay.

More troubling still are facts 11 i and vi, which essentially challenge the software licensing model as a whole. Fact 11i reads 'Licensing of the online games software disguised as a sale;' while count 11vi reads 'Termination of the right to use the online games for late payment of fees.' To me, this reads that they're challenging traditional software retail and MMO sales as a deceptive trade practice because buying the game doesn't actually purchase a copy of the game nor the right to play. The latter is certainly the weaker point, as I'm fairly certain the box references the required monthly subscription. Normally I wouldn't put stock in an attempt to redefine the entire software industry, especially in California where so much software is developed, but the California courts have been known to issue unusual decisions and have long favored consumer protection.

Count vii, which contests the terms of use, seems like a dead end unless the entire software licensing model is shot down by the court. The Terms of Use are an extension of the license, and if the license is upheld, then the terms of use will be. Other cases have failed to strike down either (other than with regard to things like arbitration provisions), so I doubt this will be successful.

It will certainly be interesting to see the claims in the suit fleshed out further. Based on the information available, this looks like a case of 'I bought the game, didn't pay my monthly fees, and are mad that you won't let me play and are charging me interest on the fees I owe you.'

LGJ: If 24 songs = $1.9 million, then 1 game = ?

On this week's LGJ, a discussion of the RIAA's recent victory and what it may mean for statutory damages across the board.

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LGJ: The Anti-Trust Game

Does the game industry have some reasons to worry about anti-trust? Perhaps. Check out this week's LGJ to learn more.

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A Video and An Announcement

First, I wanted to let everyone know that video from the Play-Machinima-Law conference at Stanford Law School is now available online. For those looking to view the panel I was on, here is the direct link.

Second, some of you may have noticed a few small changes on Law of the Game, and they hint at the announcement that I'm formally making in this post. The Vernon Law Group has officially joined Munck Carter, LLP. I had been waiting for the press release to appear, but now that our bios have been at least partially moved to the new site, I thought it was appropriate to make an 'official' announcement on Law of the Game. For those who may be concerned about the move's impact on this blog, rest assured Law of the Game and LGJ will continue in essentially the same manner they have in the past.

LGJ: Is the NDA still viable?

In what's becoming a bit of an E3 tradition, the latest LGJ talks a little more about the non-disclosure agreement, and some of its shortcomings.

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SGC Ticket Presale Ending Soon

For those of you who want to catch "The Debate of the Century" and haven't purchased your SGC tickets yet, I wanted to remind you that you only have until June 19 to purchase pre-sale tickets at $40. After that, tickets at the door will be $50.

The debate is set for July 4, 2009, at 4:00 PM.

Tickets (convention badges) are available at the ScrewAttack Gaming Convention website.

Virtual World Money Laundering

A few months back I posted a link to a gold farming study by Myke Sanders, a fellow Dallas IGDA board member. Well, Myke just forwarded me his new article on the use of virtual worlds for money laundering. A full PDF is available here.

When I had envisioned use of a virtual world for money laundering, I had always anticipated use of a front business in, say, Second Life such that 'dirty' money is used to buy Linden Dollars that are used to buy virtual goods, and then the front business cashes out the Linden Dollars for 'clean' money. Use of things like prepaid debit cards could even facilitate the laundering of dirty cash.

Myke has a background in credit card processing, however, and came up with an entirely different mechanism based on where the transactions couldn't be traced. While it could also use prepaid cards, it could also be used to generate cash from stolen cards.

As an interesting sidenote, Myke and I were discussing this very topic, and he suggested that the same methodology described in this paper could be used to put gold farmers out of business based on the number of chargebacks they would receive. Of course, that would be highly illegal.

In terms of solutions, I'm not sure his suggested idea of tracking transactions in virtual goods is practical, and even if it were, I don't know that it would be applied to item drops later picked up by other players. More importantly, as Myke pointed out to me, what if an organized crime group created their own MMORPG which they used for laundering, and simply didn't track transactions for that reason.

It's certainly an interesting issue to think through, and I'm not sure there's a readily available answer. I've seen other papers propose all sorts of solutions to the more traditional laundering I've mentioned in the past, but this newer methodology Myke describes is much harder to deal with.

LGJ: Supreme Court Decision Doesn't Bode Well

This week's LGJ gets into a recent US Supreme Court decision and how it may offer a glimpse of how the court could potentially treat similar issues in games, future interactive broadcast TV, and even a bit about potential new justice Sonia Sotomayor.

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Feature on State Bar of Texas Blog

A recently posted article on the State Bar of Texas blog about Machinima Law features me fairly prominently. While there is a bit of a misquote with regard to the origin of machinima (it should say Quake, not Halo, though Halo certainly popularized it), it's an interesting piece. I really do think Texas is the unofficial machinima capital, since id and RoosterTeeth (the source of Quake and the most successful machinima studio) are both based in the state.

Check it out.

LGJ: A case of tortious interference

This week's LGJ is a little primer on tortious interference.

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Virtual Currency

CNN.com ran a piece on virtual currencies today, which includes a quote from me. I thought you all might find it interesting.

Article on CNN.com

Intellectual Property 2.0: Convergence of Copyright and Trademark

In discussions I’ve had with various others in all aspects of the intellectual property realm, I’ve continually run across points where the law has lagged behind the practicality of intellectual property management. This has been an ongoing problem in the IP realm with respect to issues created by technology, but issues do extend into other areas as well. In order to outline some of these issues and possible solutions, I will be occasionally posting articles in my Intellectual Property 2.0 series.

I can’t imagine that those who created our copyright and trademark laws envisioned the world we live in today, where the entertainment industry has become a megalith dominated by ongoing brands as much as it is by individual works. It is to this end that we have seen some unforeseen consequences. Copyright continues to be extended, negating much of the original intent that works pass to the public domain. However, should these works ever pass into the public domain, a new issue would immediately be born. To the extent that many of these works are also the matter of trademark for the company, they are, in essence, still not in the public domain. By the same token, should Congress continue to extend copyright, they never will be. But is there a solution? Within the practical bounds of intellectual property as we know it, not exactly. However, if the legal system is willing to move forward into a more modern intellectual property scheme, then we can solve both issues simultaneously.

This new idea is something I would refer to as ‘Copymark.’ In short, to the extent a copyrighted work is also the subject of a registered trademark, the copyright remains intact until the trademark lapses. By creation of this new category of intellectual property, you resolve two issues. One, copyright need never be extended for a concern related to the ‘brand.’ Two, those with copyrights that overlap with their trademarks no longer need to be concerned with the fate of the brand once the copyright expires. In order to balance rights, though, there would of course be a catch. To register for copymark, one must forego traditional copyright and trademark filings, and as a result, should the copymark lapse, the work would go immediately into the public domain regardless of the ‘life of the author plus 70 years’ or other expiration provisions of copyright law. More than likely, copymark status would be a filing once both the trademark and copyright are established, and the filer would have to forego their existing copyright and trademark rights in order to secure the new registration.

The concept would really only have appeal or application to those within the entertainment realms. After all, the IP is only applicable to instances when both copyright and trademark to the same IP. Unless you are already in an industry which deals in copyrighted works, then the copymark would never even be an issue. Conversely, unless you develop products and a brand that associate with a copyright, then copymark would never be available. Whether or not a ‘famous’ element would be a consideration is yet to be seen. In short, this is more or less a solution for the Disneys, the Microsofts, the Nintendos, and other big players whose copyrighted characters are also synonymous with the brand itself.

Taking a practical example from the world of gaming, let’s look at Mario. Mario is the subject of many of Nintendo’s trademarks and is more or less synonymous with the Nintendo brand, much like Mickey Mouse and Disney. Well into the future, is there any major benefit for the original Super Mario Brothers to pass into the public domain when the original Mario 8-bit sprite is still the subject of trademark? Similarly, would it be practical for Steamboat Willie to enter the public domain while Mickey Mouse is such a closely protected trademark? From a practical standpoint, not really. Assuming the rights holder is looking to aggressively protect the brand, use of the public domain character would be attacked on trademark grounds, and potentially with good reason. Any game you encounter with Mario in it is expected to be a Nintendo creation. Brand identity has moved beyond traditional trademark notions with respect to entertainment properties. Copymark resolves the incongruity of copyright and trademark with respect to entertainment products.

I can only imagine that many on the intellectual freedom side would, on principal and face value, oppose this idea. However, it is worth pointing out that much like the source intellectual properties, copymark would require fair use provisions. What exactly those provisions would entail would likely be the subject of a lengthy debate, however, elements of both copyright and trademark fair use theory would need to be present. Elements like critique, news reporting, and brand identification would be easily preserved under a copymark regime. In fact, it may even be an opportunity to introduce newer fair use provisions that are appropriate to these IPs.

It may be expecting a lot to see a tectonic shift in well established intellectual property regimes, but it is inevitable that new problems will require new solutions. The entertainment brand as we know it did not exist decades ago, but it is a near certainty that it will continue in this manner for decades to come. The printing press gave rise to copyright, and the guild system gave rise to trademark. It only seems to follow logically that the changes to the entertainment ‘brand’ would give rise to a new intellectual property regime, since intellectual property is the backbone of the industry itself. I can only imagine that companies like Microsoft and Disney might jump at the opportunity to see some of their most prized IPs protected throughout their useful life, rather than having to re-lobby Congress before certain copyrights are set to expire. It's difficult to predict whether an idea like this might ever truly be implemented, but unless people are willing to think outside the traditional intellectual property box, problems like these will be perpetual.

Reminder: Speaking at Play-Machinima-Law Conference at Stanford

As a reminder, I've been invited to speak on a panel at the Play-Machinima-Law Conference at Stanford on April 24-25, 2009. I will be on the The Rules of Play: The Role of the EULA and other issues in Machinima Creation and Distribution panel, which is at 1:15 pm on Friday, April 24th. If you're in attendance, please come by and say hello.

GameStop Follow-Up Post

I wanted to post a short follow-up to my GameStop Employee Checkout piece, based on some comments I've received. I did first want to point out that GameStop is evidently reviewing its policies in this regard, so I doubt we've heard the last about this.

First, my suggestion to reprint box art has been brought up a number of times, and I wanted to point out that I expressly said 'with permission.' I can't imagine publishers having issue with the proposed practice, as it would be to sell their products. Additionally, I only mentioned making dummy boxes as one potential solution, albeit one with a high upfront cost to outfit each store with a set of blank boxes and the ongoing cost of reprinting paper inserts as new games are released. Another, possibly more cost effective solution would be to create cardboard cards with the front and back of the box replicated on the cardboard. I have no idea which would cost more, or what other solutions might work, but the point was to suggest a solution by which no new games would need to be opened and gutted or placed outside the safety of the behind the counter locking cabinet.

Second, I can certainly understand why people would be upset to receive an open game, or even be unable to accept one in certain circumstances (i.e. gift giving). However, I still think that if the plastic seal is not a major issue, there is no difference in the game experience between a perfect condition new disk and a perfect condition disk played once by an employee, besides the potential public relations issues. Of course, when I say perfect condition, I mean everything: kept in a smoke free environment, free of dirt, not kept in direct sunlight or damaging temperatures, etc. I believe that's a major factor as to why the GameStop employees I've known are far more likely to check out a used title than a new one.

Finally, for the record, I do shop at GameStop frequently, largely because it's the only retailer where I have been able to consistently pre-order and pick up on release date high demand titles, limited edition titles, obscure titles that don't tend to show up much if at all in big box stores (i.e. new releases by NIS), and new hardware. I haven't personally had any problems with the stores I've frequented over the years, including the GameStop store near my home I currently use. Perhaps this, like other situations, varies a lot based on individual store management, but it's difficult to say.

Speaking at Play-Machinima-Law Conference at Stanford

I've been invited to speak on a panel at the Play-Machinima-Law Conference at Stanford on April 24-25, 2009. I will be on the The Rules of Play: The Role of the EULA and other issues in Machinima Creation and Distribution panel, which is at 1:15 pm on Friday, April 24th. If you're in attendance, please come by and say hello.

LGJ: Is game censorship the new trade barrier?

This week's LGJ examines using 'censorship' as a ruse for protectionism. It's a fun trip down international trade lane with a stop at freedom of speech road.

Read on!

GameStop's Employee Checkout and Deceptive Trade Practices

Kotaku recently ran a piece noting that the FTC may be interested in the 'employee check out' policy in terms of a deceptive trade practice. The article goes into some detail about the ability of GameStop employees to check out titles from the store on a temporary basis, and in the event these titles are 'new,' then they are brought back in and resold as new. It certainly poses an interesting question: is that a deception to the consumer?

Before talking about substantive law and my take on the issue, I did want to point out one particular clause in the policy, as posted by Kotaku: "If the product is returned in unsellable condition, or if anything is missing from the package, or if the product is not returned, the Associate must purchase the product at the current price less Associate discount." As I have known quite a few GameStop employees over the years, I know that this part of the policy greatly deters the checking out of new games in favor of used ones. After all, even the slightest inclination that a new game isn't 'new' will more than likely force the employee to buy the game, which many of these employees can't afford. A used game has an expected level of wear and tear, so the bar is much lower for the return to store condition.

So, back to the point at hand: is this a deceptive trade practice? There's both a legal and a pragmatic approach to the answer of this question. From a legal standpoint, ignoring any pragmatic analysis, it certainly seems that way from the letter of the law. Certainly, it's something the FTC could investigate, but more practically, it may be a matter for state deceptive trade practices law. In Texas, for example, it is a deceptive trade practice if you are "representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand."

Of course, the law does not exist in a vacuum, and from a practical standpoint, I'm not sure what GameStop is doing is as nefarious as some people seem to think. The resale of used goods as new rules had a simple policy argument: when they were implemented, practically all goods had a limited useful life, and any use of them would lessen that useful life. If I re-sold a used console, the console's useful life has diminished. If I re-sold a used TV, that TV's life has diminished. That's not exactly the case with a DVD based media. DVDs do in fact deteriorate, but that's something with a clock that begins from production based on normal biodegrading. If a disk has been properly used in a machine and properly handled, has its life been diminished? I haven't seen any data to suggest that it's anything at all, much less anything significant.

Obviously, if the disk, packaging, or other materials are damaged in any way, or if one-time use download codes are used during the check-out, there is no question that reselling that as new would likely be a deceptive act. Of course, the damages would be relatively minute ($5 or so based on the average new release's used price), which could provide difficulty in generating an actual lawsuit over the issue. However, when the disk is cared for and no damage comes to any aspect of the product, has its value actually been reduced? No, and the content of the product is still 100% present. It's a little more nebulous with respect to DS games, as the last of the cartridge systems. I don't know if they have a useful life as determined by play time or not.

From a practical standpoint, I still don't see why GameStop hasn't moved to reproducing cover art with publisher permission and just re-using empty cases so that no titles have to be opened. Granted, that would basically limit employee check out to used titles, but I'm not sure that's a huge loss to the average employee as many new releases are in short enough supply to prevent check out by the policy as reported by Kotaku anyway. It will certainly be interesting to see if the FTC takes any action on this matter, but from a pragmatic standpoint, I'm not sure they will based on the facts.

[EDIT: I've posted some follow-up commentary here.]

The Thompson - Methenitis Debate

It's official. I will be debating Jack Thompson in Dallas, TX on July 4, 2009. The ScrewAttack Gaming Convention (July 3-5) has politely agreed to play host to the event, which was announced this morning. So, start making your plans to join us in Dallas for what is already being billed as "The Debate of the Century," not to mention participate in the rest of SGC, which has some other great guests lined up. The video announcement can be seen below.

LGJ: Serious Games with serious regulations

This week's LGJ is a look at serious games and export controls. It doesn't necessarily apply to all serious games, but the closer you get to certain applications for the games, the more relevant it becomes.

Read on!

Reminder: Law of the Game at GDC2009

Reminder, I will be speaking at the Worlds in Motion Summit at GDC 2009. The current session details can always be found here.

Here's the information as it stands now:
(306) How to Avoid New Legal Pitfalls in Virtual World Design and Policy
Speaker: Mark Methenitis (Attorney, The Vernon Law Group, PLLC)
Date/Time: Tuesday (March 24, 2009) 3:15pm — 4:00pm
Location (room): Room 132, North Hall
Experience Level: All
Track: Worlds in Motion Summit
Format: 45-minute Lecture

Session Description
There are always new legal pitfalls and challenges emerging in relation to virtual worlds, especially as the field continues to grow. This lecture gives attendees an opportunity to hear from a foremost legal scholar on virtual world legal issues and discuss new areas of concern, including updates on well known cases. The focus of the lecture will be an exploration of recent cases and emerging legal issues involving game and virtual world producers with an emphasis on �lessons learned,� including areas such as user disputes with virtual world owners, intellectual property enforcement, in-world gambling, and privacy concerns. Mark Methenitis will also be open to audience questions about virtual world concepts and design elements that may have unforeseen legal consequences.

LGJ: Unlicensed games and the DMCA

On last week's LGJ, some talk about the unlicensed games from days gone by and how the DMCA would have treated them.

Read on!

LGJ: The Flash game quandry

This week's LGJ looks at the right of publicity vs. free speech in the context of Flash games.

Read on!

LGJ: Piracy and the economy

In the last LGJ, a discussion of Piracy as it relates to the economy.

Read on!

Game::Business::Law Conference Audio/Video Now Available

I was just forwarded a press release (which appears below) notifying me that all of the sessions from the Game::Business::Law Conference are available for download via iTunes, or can be requested on DVD from the Guildhall at SMU. The iTunes U link is: http://deimos.apple.com/WebObjects/Core.woa/Browse/smu.edu.1925295653
(requires Apple iTunes be installed, available for free at Apple.com). The iTunes downloads are available at no charge, so enjoy! If you are looking for my portion of the presentation, download the 'Games and Gaming Litigation' segment (Direct Links: Video and Audio).


Press Release

Second Game::Business::Law Summit Slated for January 27-28, 2010 in Dallas at SMU
DVDs and Audio Downloads of 2009 Panel Sessions Now Available at www.guildhall.smu.edu

SMU/Plano-February 23, 2009- The success of this year’s Game:: Business::Law, an international summit on the law and business of video games, has prompted sponsors of the event to begin planning for next year’s event by announcing its conference date of January 27-28 in Dallas.

The event was hosted by SMU Dedman School of Law, The Guildhall at SMU and The Center for American and International Law. A group of approximately 165 game industry leaders, developers, publishers, lawyers and members of the venture capital and financial industry were on hand to discuss in depth the latest business trends and legal issues of the game industry.

“The conference exceeded our expectations,” Dr. Peter Raad, executive director, The Guildhall at SMU, a graduate video game development program, and co-chair of the summit. “It looks like the conference fulfilled a need for the business and legal side of the game industry to get together and take a long, hard and personal look at our future.”

“Attendees came from all across North America and as far away as Asia and Europe. We were glad to see representation from major game publishers such as Activision and EA as well as independent studio business development leaders and their attorneys. In addition, we had good representation from a nationally known research analyst and venture capitalists,” Dr. Raad added.

The Guildhall at SMU has made it possible to download the Game:: Business::Law Summit video and audio through the program’s website at: www.guildhall.smu.edu.

On the home page, under Guildhall Journal, are instructions and a link to hear the individual summit’s keynote speakers and panel sessions through SMU’s iTunes U. Alternatively, if you would like to order a complete DVD set of the Game:: Business::Law Summit keynote speakers and panel sessions, there is a link on the home page as well.

Notable speakers at the Game:: Business::Law Summit included:
• Chris Baker, Wired Magazine
• Zach Bishop, Hunton & Williams
• Edward A. Cavazos, Fish & Richardson P.C.
• Roxanne E. Christ, Latham & Watkins
• John W. Crittenden, Cooley Godward Kronish LLP
• Dan Ferguson, Blockdot, Inc.
• J. Holt Foster, III, Thompson & Knight LLP
• Richard Garriott, Astronaut and Game Industry Legend
• Christian S. Genetski, Sonnenschein Nath and Rosenthal LLP
• Dan Hewitt, Entertainment Software Association
• Mike Hogan, GameStop Corporation
• Jason Holtman, Valve
• Zack Karlsson, Sr., NAMCO BANDAI Games America, Inc.
• Michael Klotz, NPD Group
• Mitch Lasky, Benchmark Capital
• David L. McCombs, Haynes and Boone, LLP
• Mark Methenitis, The Vernon Law Group
• Steve Nix, id Software, Inc.
• Xuan-Thao Nguyen, SMU Dedman School of Law
• Joseph Olin, The Academy of Interactive Arts & Sciences
• Patrick Pugh, PricewaterhouseCoopers
• JJ Richards, Microsoft Corporation
• Barry Seaton, Barry C. Seaton, P.C.
• Rob Seaver, Vivox
• Colin A. Sebastian, Lazard Capital Markets
• Greg Short, Electronic Entertainment Design and Research (EEDAR)
• Edward Williams, BMO Capital Markets
• Michael Yatsko, PricewaterhouseCoopers
• Jerry Zhang , Shanda Games

About The Guildhall at SMU: The Guildhall at Southern Methodist University is the premier graduate video game education program in the US. Many of the school’s founders are industry icons, and classes are taught by industry veterans. In five years, the program has graduated over 250 students and alums have worked at more than 80 video game studios around the world, with several graduates now serving in leadership positions. SMU offers both a Master’s degree and a graduate Professional Certificate of Interactive Technology in Digital Game Development, with specializations in art creation, level design, and software development. For more information, visit guildhall.smu.edu.

Contact: Ron Jenkins, jenkinsr at smu.edu, 972.473.3546

The Right to Hyperlink

A case that could have not only impacted the game industry, but every gamer, blogger, and person who ever put any content on the internet, has just been settled. The settlement concerned the use of hyperlinks on the internet, and it's one of those rare cases that had the potential to impact everyone. However, since the gaming crowd tends to be more internet-driven than others, it truly had the potential to impact us. Thankfully, because it settled out of court, there was no legal precedent set. Despite that, the outcome is one that casts a dark cloud over the internet, and it's one that should offend most anyone.

Here's the short version of the facts: A real estate web site BlockShopper.com posted notices of the sales of certain properties. Those sale notices often listed the purchaser, and in the case of these specific purchases, the purchasers were attorneys with the law firm Jones Day. In those sales posts, BlockShopper linked to the attorney profiles of the purchasers. The purchaser's name was hyperlinked directly to the Jones Day attorney profile. Jones Day sued, alleging that this made it appear as though Jones Day was somehow affiliated with the site or otherwise diluted its trademark. BlockShopper, not having the money to defend a suit like this, settled out of court and removed all such hyperlinks. You can see how absurd this case is, and arguably, I'm violating the same principal by linking to the firm as I did in this very paragraph. No, this isn't a joke, and the original pleadings are available online.

I cannot fathom how this case was not rejected outright, but more importantly how anyone could possibly have come up with this claim in the first place. Text-based links are a cornerstone of the internet. They act like footnotes, allowing someone to reference something without interrupting the natural flow of the text. More importantly, it is obvious when these links move away from the actual site. First, most browsers display the full URL of a hyperlink when it's hovered over, and certainly once it's clicked on. More importantly, the URL is hard coded into the site. The only way it would be possible for consumers to be confused by a hyperlink is if either the URL or the linking site itself attempted to mimic the site that's being linked to. There are, literally, thousands of examples where similar domain names were quashed due to trademark issues because of actual or potential confusion or dilution of the brand -- examples we've discussed previously on LGJ.

This case, though, fails to present any evidence of actual confusion or even the potential for confusion. No average internet user would have been confused by the use of hyperlinks. More importantly, the allegation in the case that there is some unlawful action by means of a "link to web sites owned by others," is absurd. More importantly, the alleged "wrongdoing," that is, listing these employees as Jones Day employees and linking to their profiles, is one of the most clearly defined fair uses in trademark law. Would Nintendo object if an eBay re-sale of a Wii included a link to Nintendo's website? No. Has anyone objected when news sites like Joystiq link to the companies they are reporting on? No. Do I object when people link to my articles? Of course not. There's no content being taken for a copyright claim, and there's no likelyhood of confusion because people understand how links work.

This lawsuit basically alleges the internet shouldn't be allowed to operate. After all, these "links" might confuse people, and linking to things people make available to the public on the internet should be as strictly controlled as possible, right? Of course not. That's why this case was described as a "new entry in the contest for 'grossest abuse of trademark law to suppress speech the plaintiff doesn't like.'" Should this legal precedent have been established, rather than settling out of court, it would potentially bar pretty much everyone from using text-based links in favor of forcing the use of complete URLs throughout normal paragraphs, something that I can only describe as hideous as a writer, blogger, forum user, and internet resident.

Thankfully, a private settlement sets no such precedent, other than demonstrating that people without the resources to fight such suits may be the subject of bullying. I can only imagine that any subsequent such action would be the object of a greater movement by those on the internet with the resources and abilities to pursue a more comprehensive legal strategy. I also can't imagine, though, that many other people would take the position that a hyperlink can be viewed as trademark infringement. I do foresee that, as a result of this action, more disclaimers will clearly state that links to other sites should not imply association with or approval of content, even though this fact is obvious to the overwhelming majority of internet users.

For the time being, at least, we're all still free to link to sites without having the exact format of those hyperlinks dictated to us. I, however, wouldn't assume this issue will just vanish, either. If you thought net neutrality would be a rallying cry for many internet users, I can only imagine the response if the freedom to hyperlink were to be challenged again, and perhaps publicized better.


This site and its content has no association with Jones Day.

Law of the Game at GDC: Speaking Engagement

I wanted to take a moment to mention that I will be speaking at the Worlds in Motion Summit at GDC 2009. Information about my session, "How to Avoid New Legal Pitfalls in Virtual World Design and Policy," can be found here. As it currently stands, here is the session information:

(306) How to Avoid New Legal Pitfalls in Virtual World Design and Policy
Speaker: Mark Methenitis (Attorney, The Vernon Law Group, PLLC)
Date/Time: Tuesday (March 24, 2009) 3:15pm — 4:00pm
Location (room): Room 132, North Hall
Experience Level: All
Track: Worlds in Motion Summit
Format: 45-minute Lecture

Session Description
There are always new legal pitfalls and challenges emerging in relation to virtual worlds, especially as the field continues to grow. This lecture gives attendees an opportunity to hear from a foremost legal scholar on virtual world legal issues and discuss new areas of concern, including updates on well known cases. The focus of the lecture will be an exploration of recent cases and emerging legal issues involving game and virtual world producers with an emphasis on �lessons learned,� including areas such as user disputes with virtual world owners, intellectual property enforcement, in-world gambling, and privacy concerns. Mark Methenitis will also be open to audience questions about virtual world concepts and design elements that may have unforeseen legal consequences.

Hope to see some of you there! Please feel free to come up and say hi if you're a Law of the Game or LGJ reader.

Gold Farming Study

A colleague and fellow Dallas IGDA board member, Myke Sanders, recently forwarded me a data analysis he did on the habits of players who purchase gold from gold farmers. It's a really fascinating bit of data, one that may give developers some revised perspective on how to combat the gold farming issue while continuing to avoid micro-transactions, implementing real money auctions, and/or monetizing the currency. While this isn't an overly legal issue, I still wanted to take an opportunity to comment on the findings. The full piece is available here (PDF).

Myke notes two specific spikes on each graph: There were spikes at single and highly repetitive (12) transactions within the 90 day window of the study. There was also a large spike of people making high value transactions. I would be interested to see a correlated data set of these two, but based on Myke's analysis, there were basically two groups of people: those buying a huge amount of gold once in 90 days, and those who bought almost weekly but for a much smaller sum. He reasons that the first group might be making purchases for a single, say, epic mount or piece of equipment while others might be buying to supply a weekly raid. He goes on to theorize that a loan system might satisfy the former while non-transferable buffs that are a better alternative to disposable equipment might satisfy the latter.

In general, I would tend to agree. It's almost surprising there hasn't been a 'Bank of WarCraft' to date, though I would have to say that it would need to be operated by Blizzard rather than by players (i.e. virtual loan sharks). Of course, Blizzard may need to employ an economist to at least design the system such that we don't end up with an financial meltdown in Azeroth. It would be very easy to over saturate the market with a virtual currency, which would lead to inflation and thereby throw off the balance of the game between the bank and random drops. It would also be interesting if you could actually earn interest on gold deposits. Another alternative might be a virtual credit market, but that gets even more complex. I guess the real questions is whether players want their virtual world to mimic the real world more or not.

The solution for the second group tends to be a little more complex, as it would take likely a pretty good revision to the overall mechanics of the game to get the kinds of buffs being proposed, or at least a major change to the game as it's currently available. Granted, this is not impossible, but I imagine the sudden change in strategy might not go over well with many players (a la the New Game Enhancements in Star Wars Galaxies) and may be better suited as an approach for developers of future games.

As a side note, it will be interesting to see if developers take advantage of the wide latitude granted by the Glider decision in order to go after gold farmers in a similar manner. The recent DMCA applications won't apply, but it is a similar inducement to break the EULA/TOS of most games.

I certainly hope that this will be the first of many studies into actual buying habits of those who utilize the services of gold farmers and even virtual commodity salespeople. While there has been plenty of anecdotal evidence over the years, only actual data like this will provide enough information to actually combat the problem, if your game is designed to avoid such outside monetary influences, by changing certain game design elements to be more in line with the way people want to play. Similarly, if you're looking to start a game that encourages monetization of one sort or another, this is likely a good source of information for your design decisions as well.

LGJ: Jack Thompson's Utah 'game bill'

The latest LGJ is a more in-depth look at the bill Jack Thompson was behind in Utah and some of its major flaws.

Read on!


In the period of time between my writing that piece and its publication, GamePolitics has published another commentary on the issue. While I don't necessarily disagree with the intent theory posed there, I believe the state would argue (and I'm certain Jack would argue) that by showing a pattern of 'mistakes' based on a series of stings, that the retailer has no intent to follow through on their advertised policy. In the alternative, I could see the argument being made that while most false advertising is a specific intent offense, this type of goodwill based advertising is not given that it's not targeted to a specific event or sale but rather to artificially boost the store's reputation at large. I do think the noted 'fallacy' of tying the advertising to subsequent conduct isn't a fallacy insomuch as it is valid if the court wanted to accept this offense as one of strict liability, which is what it appears the goal of the provision is. This also completely invalidates the concept of intent, as strict liability requires no intent only that the conduct occurred. It would be an interesting new realm, as this would be a sort of self imposed strict liability in that it only applies to the extent the seller represents that they act in this manner.


Regardless of the outcomes of the attempts to invalidate the statute legally, my main objective in my column was to demonstrate the fact that from a practical standpoint, the statute can be completely avoided without much difficulty.

Speaking at Dallas IGDA Panel: “START-UPS: ARE THEY WORTH IT?”

Just a note for my Dallas-Ft. Worth area readers:

I will be on the Dallas IGDA panel “START-UPS: ARE THEY WORTH IT?” this coming Wednesday, February 11. The event is at 7 pm at the DeVry campus in Richardson. If you're a Dallas IGDA member, an IGDA member, or just interested in the topic (and possibly becoming an IGDA member), come out an join us.

More information can be found here.

LGJ: More game laws?

This week's LGJ is a survey of a number of proposed game laws, including a new proposal from Jack Thompson.

Read on!

LGJ: FTC could target EULAs

This week's LGJ focuses on the FTC potentially targeting the EULA.


Read on!

LGJ: Virtual Taxation

This week's LGJ revisits the always popular topic of taxing virtual worlds.

Read on!

LGJ: Pirates are grumpy, underutilized customers?

As the first LGJ that's been 'on site' from a conference, this week's column makes some commentary on a statement Jason Holtman, Director of Business Development / Legal Affairs for Valve, made at the Game::Business::Law Conference:

Most pirates are grumpy, underutilized customers.

Read on!

LGJ: Here Comes the FTC

This week's LGJ focuses on the announcement that the FTC is considering consumer protection related to digital rights management and what that could mean for consumers and developers.

Read on!

Speaking at Game::Business::Law Conference

There has been a slight change in the speaker line up for the Game::Business::Law Conference within the past 24 hours or so. I will now be participating in Panel V on Thursday, January 15, at 1:15 pm.

Anyone in the Dallas area should consider attending, and registration is still available online for the bargain rate of $200 for the general public and $75 for students.

Please feel free to come say hello if you are in attendance at the conference.