I was thinking about this issue the other day as a potential blog posting, but now that I've sat down to write the post, this may be deserving of an entire paper.
Clickwrap/browsewrap/shrinkwrap agreements all have the same fundamental characteristic: "automatic" consent to the terms of the agreement as a condition to use the product. The documents are generally non-negotiable. The quid pro quo is that a software vendor would have to double, triple (or more) the software license fee if it were required to negotiate each agreement with each customer. While initially controversial, these form of agreements have become the accepted manner of entering into agreements in the software (and video game) arenas.
As software delivery continues its shift to the internet, the issues of the legality and enforceability of clickwrap agreements may end up being revisited.
The thing that brought this to mind is the latest version of the iPhone. First, Apple acts as a gatekeeper between the game vendor and the end-user, which starts the battle of contracts. Who is liable for errors in the game? What about IP claims against the game itself? What about IP claims against the game in combination with the iPhone?
Then, who enters into the end-user license agreement? Is it Apple or the game vendor? How is the end-user acknowledging acceptance of the terms and conditions? Does the vendor ever know that Joe End-User clicked accept? How are in-game downloads handled?
While these are not unique questions in the software licensing area (or the software reseller/distribution area), the unique delivery mechanism of the iPhone, along with the micro-transactions concept brings these well-worn issues back to light for iPhone game developers.
Tuesday, June 30, 2009
Clickwrap Agreements and the iPhone
Friday, June 26, 2009
Rocket Jumping in Fallout 3?
A couple of days ago, we found out that legendary developer id Software has sold itself to ZeniMax Media Inc., the parent company of Bethesda Softworks. This means that the company that defined the PC shooter genre (and is responsible for me missing more than a few college classes) will now be owned by the current leader in role-playing games, with titles like Fallout and the Elder Scrolls series.
The sale marks the end of id’s long and impressive run as a stand-alone company (it was founded in 1991). id's press release said the deal will not affect its daily operations much, as it becomes one of four studios within the ZeniMax family. John Carmack, lighting effects genius and space rocket builder, will continue to head id as "Technical Director." It is unclear whether id will continue its unique policy of releasing the source code for its older games to the public under the GNU General Public License.
Wednesday, June 24, 2009
Xbox Live Targeted for Patent Infringement (again)
A patent infringement suit targeting Xbox Live that we’ve been keeping our eye on went to trial yesterday in the U.S. District Court for the Eastern District of Michigan. The suit was originally filed back in September, 2004, by two inventors claiming Xbox Live infringed two of their patents covering voice and data communications technology.
This case already produced some fireworks last month, when the judge overseeing the case threatened Microsoft’s counsel with sanctions for a "frivolous objection" to a discovery request. Microsoft’s counsel had objected to a request by the plaintiffs for a document relating to a “2008 deposition” of a certain Microsoft employee, when they meant to say “2009 deposition.” The judge asserted that Microsoft’s counsel improperly used a typographical error to raise an objection on the ground of vagueness. The judge also chided Microsoft’s counsel for producing over 140,000 documents without an index, saying the action demonstrated the pitfalls of playing fast and loose with rules of discovery and that Microsoft’s counsel must account for its misconduct.
Just this past Monday, the judge backed a motion made by the plaintiffs to adopt a claim construction over Microsoft’s objection. Previously, Microsoft had submitted a motion for construction of claim 39 of Patent Number 5,292,125, asking the court to construe the claimed “video game communications circuit” as separate and distinct from the video game computer attached to the circuit.
The judge referred the motion to a special master, who recommended rejection of Microsoft’s construction of “video game communication circuit” and that the phrase should instead be construed to mean “a circuit operatively associated with a local video game and at least one remote video game without limitation as to such circuit's physical location or attachment to the local video game.”
After nearly five years, it will be interesting to see how this one turns out.
Nintendo Granted Summary Judgment in V-Chip Lawsuit
Nintendo of America Inc., producer of the Wii home video game console, scored a victory on June 2, 2009, when a federal district judge in the Central District of California granted Nintendo’s motion for summary judgment, holding that the Wii does not infringe a V-chip censoring technology patent. Nintendo had asserted all along that the parental controls that allow Wii users to selectively prevent the play of games based on Entertainment Software Ratings Board (ESRB) classifications were fundamentally different than the technology taught by the patents, which are owned by Guardian Media Technologies, Ltd., a Texas-based limited partnership and non-practicing entity. The court’s findings of fact and conclusions of law, issued on June 8, 2009, identify such a fundamental difference and justified Nintendo’s opposition of a complaint that has already prompted several defendants settle with Guardian rather than see the matter through to trial. Not just a victory for Nintendo, the case serves as an encouraging example of a video game developer’s success in the face of a growing trend of non-gaming-specific technologies being alleged as the bases of patent infringement claims against video game products.
The case involves U.S. Patent Nos. 4,930,158 (the “‘158 patent,” which pertains to censoring of recorded video content) and 4,930,160 (the “’160 patent,” which pertains to censoring of broadcast content). Despite the Patent Office having pared-down the patents as a result of ex parte reexamination proceedings (initiated in connection with separate litigation), Guardian was evidently encouraged by the December 4, 2008 determination that at least a portion of the ‘158 patent is valid and, on December 22, 2008, proceeded to file suit against an extensive list of defendants that includes (in addition to Nintendo) corporate powerhouses such as Apple, Microsoft, Amazon.com, Best Buy, CostCo, DirecTV, Wal-Mart and Target. Each defendant is alleged to have made, used or sold products or systems that infringe one or more claims of the ‘158 patent and the ‘160 patent. (With respect to Nintendo, Guardian alleged only that the Wii infringes the ‘158 patent due to the device’s recorded content playback capabilities.)
Although Nintendo’s position is that virtually none of the limitations of the ‘158 patent are embodied by the Wii, the district court’s findings of fact and conclusions of law address a single limitation: detection of a code within a signal received from a storage medium. According to Guardian, the Wii’s parental controls infringe the claims of the ‘158 patent because the Wii compares the user-defined acceptable ESRB settings against the ESRB ratings embedded in games that are played on the Wii. However, the court agreed with Nintendo that the signal that is referred to by the ‘158 patent claim limitations necessarily means “signals representative of a video program,” which the court interpreted to mean “recorded movies, broadcast television programs, and cable television, regardless of the media on which they are recorded.”
The Wii’s parental controls are limited in scope to the checking approval/rejection of games based on their embedded ESRB ratings. Thus, because the Wii does not playback recorded movies, television programs or other video content via means that can be affected by the system’s parental controls, the Wii could not be held to infringe the ‘158 patent.
Nintendo’s victory against Guardian is significant not only with respect to the issue at hand, but also with respect to Nintendo’s recent litigation history. As we detailed earlier this year, Nintendo has faced several allegations that the Wii and/or its peripheral hardware infringe third-party patents that pertain to non-gaming-specific technologies. One example is Hillcrest Laboratories, Inc., a developer of media system technologies, which filed an infringement lawsuit against Nintendo in August 2008, alleging that the motion-controlled point-and-click system practiced by Nintendo’s Wii and Wii Remote infringes on four Hillcrest patents directed toward home media systems. Motiva LLC, another technology developer, followed suit in November 2008 and sued Nintendo for patent infringement based on alleged similarities between the Wii Remote control system and Motiva’s patent for a “human movement measurement system.”
Guardian, like Hillcrest Laboratories and Motiva, has no ties to the game development industry; however, Guardian's suit against Nintendo is one of the more significant actions initiated by a non-practicing entity, and its actions serve as a potent reminder that the incorporation of more advanced technologies into gaming platforms has created a whole new playing field for patent licensing and litigation. Many of the technologies that have only recently been introduced into gaming systems were developed in another arena, leaving open the question of how many more patent holders will similarly attempt to capitalize on the surging popularity of advanced gaming platforms that support a wide variety of media.
Additional Background
Although the suit against Nintendo was filed in December 2008, Nintendo’s dismissal from the proceedings represents a milestone in almost ten years of infringement allegations that began with two completely different sets of parties and has resulted in the litigation of two patents that have actually already expired.
In 1999, following the U.S. government’s mandate of parental code functionality in the majority of televisions, Australian inventor Peter Vogel began contacting major television manufacturers and alleging that the V-chip systems contained in their televisions infringed U.S. Patent Nos. 4,930,158 (the “‘158 patent,” which pertains to censoring of video recording content) and 4,930,160 (the “’160 patent,” which pertains to censoring of broadcast content), both of which were owned by Vogel, who filed the respective patent applications in 1988. Those contacted manufacturers that bothered to respond did so with the customary statements concerning questions about the validity of the patents and obviousness of the patent claims in light of prior art, and Vogel was never heard from again.
Vogel’s V-chip patents, however, would resurface in November 2003, when Vogel sold the patents to Guardian. Guardian wasted little time in contacting numerous television manufacturers, including Sony Electronics, Inc., Victor Company of Japan, Ltd. (JVC), Mitsubishi Digital Electronics America, Inc. and Matsushita Electric Industrial Co., Ltd., and engaging in a year-long pursuit of licensing arrangements with each, going so far as to offer discounted pricing to “early licensees.”
Not surprisingly, Guardian was largely ignored during the early stages of its campaign. However, following Guardian’s production of infringement analyses and a series of meetings between the various manufacturers and Guardian in June and July of 2005, the manufacturers named above abruptly filed a declaratory judgment action on September 14, 2005 in the Southern District of California.
Although the case remains bogged-down in procedural filings following trial- and appellate-level rulings pertaining to subject matter jurisdiction (per the United States Court of Appeals for the Federal Circuit, Guardian’s posturing and assertions were sufficient to create an actual case or controversy over which the district court has jurisdiction), the real significance of the case (with respect to the Nintendo lawsuit) is found in the reexamination proceedings that were requested in connection with the declaratory judgment action. In November 2005 and December 2005, the United States Patent and Trademark Office granted the manufacturers’ requests for ex parte reexamination of the ‘160 patent and the ‘158 patent, respectively. By early December 2008, the ‘158 patent was reduced to eight claims and all but six of the claims of the ‘160 patent had been cancelled (with review of those six still pending). It is the eight remaining claims of the ‘158 patent that Guardian sought to assert against Nintendo.
Monday, June 22, 2009
Massachusetts Data Security Regulations
Massachusetts is on track to became the first state to mandate that game companies (and other companies) storing the personal information of state residents must comply with specific data security practices. Massachusetts enacted a data protection statute on October 31, 2007, authorizing the Massachusetts Office of Consumer Affairs and Business Regulation (“OCABR”) to develop regulations implementing the statute. OCABR has now issued regulations set to go into effect on January 1, 2010. These regulations require game companies (regardless of where a company is located) to comply with certain administrative and computer security requirements when storing or transferring personal information that has been gathered from gamers or company employees living in Massachusetts.
Under the regulations, games companies must create and follow a security program that includes, among other things, assignment of personnel to oversee and update the security program, identification of all records containing personal information, identification of security risks to those records, development of safeguards against those risks, policies concerning physical and electronic access, storage, and transportation of records, employee training of the new security policy, disciplinary measures for policy violations by employees, and oversight protocols for third-party service providers who may have access to such records.
The regulations also require that game companies in possession of personal information must employ user authentication security protocols, restrictions and controls over user access to personal information (such as password controls and multiple login failure lockouts), monitoring of data systems for unauthorized exposure of personal information, installation and updating of computer firewall and security software, encryption of all records being transmitted wirelessly and/or across public networks, and encryption of all personal information stored on laptops or other portable devices (which appears to include PDAs, cell phones, CDs, DVDs, jumpdrives, etc.).
But, before everyone goes out to purchase new security software, be aware that a proposed Massachusetts Senate Bill (No. 173) would change the Massachusetts data protection statute upon which the OCABR regulations are based. If passed, the bill may cause OCABR to dilute the data security regulations currently set to go into effect. Senate Bill 173 proposes to eliminate any mandate to use specific technology or technologies, or any specific method or methods for protecting personal information. It is not clear whether the current requirement to encrypt personal information would be considered a forbidden specific technology/method, or whether the encryption requirement would survive passage of the proposed senate bill.
Tuesday, June 16, 2009
Tip: Video Game Copyright Registration
Most folks in the industry know about filing copyrights to protect their source code. One area of concern that I see, though, is a lack of awareness of the some of the Copyright Office requirements buried in the Copyright Office regulations.
When filing a copyright registration for a book, it is generally pretty easy to decide when to register (when the book is finished) and what to register (the book). However, software (and games, in particular) is a much more fluid situation. When is a game truly ever finished? And, if we don't know when the game is finished, what exactly do you decide to register with the Copyright Office?
More importantly...
...the Copyright Office requires that "each separately published version of a computer program that contains new, copyrightable authorship must be registered separately, with a new appliation and fee." (Circular 61)
So, now the question becomes, how are defining a separately published version of your game? If you release a "beta" version to test multi-player, then send version 1.0 out to the retailers, then offer a downloadable patch that upgrades it to version 1.1, and then a small patch to version 1.1.1, how are you handling the protection for your code. Then, you issue a free expansion pack that adds a few levels, and, then six months later, you send out a paid expansion pack. (Don't forget the different versions for each language). On top of the different versions, you may have different employees and contractors working on the different versions, so there may not be a common set of authors.
The moral of the story is, don't assume that by submitting a copyright application that you are fully protecting your code.
Thursday, June 11, 2009
Tip: Work Made for Hire vs. Get the Assignment
One of the more common missteps involving intellectual property is the concept of a work made for hire. This concept is defined in the U.S. Copyright Act and there is a lot of case law over the years regarding it.
Many people believe that "if Company A paid for Person B to develop The Thing, then Company A owns The Thing"... like all things lawyer, the answer is "maybe." If Person B was an employee of Company A and it was part of Person's B to develop The Thing, then The thing is a work made for hire.
There is a second concept for work made for hire...
...that is spelled out in the statute, but it requires many other extra hoops for The Thing to qualify as a work made for hire. However, as you can see, not every instance qualifies as a work made for hire. And, if The Thing does not qualify as a work made for hire, then Company A will have paid it, but won't have any rights to it.
So, if you are Company A, you cannot afford to assume that everything is a work made for hire. Make sure that your form employee (and contractor) agreements have a full-blown assignment to the company. Make sure that the assignment is a present (as opposed to future) assignment... but I'll blog on that another day.
Tuesday, June 9, 2009
Activision v. Double Fine
Another day, another publisher-developer lawsuit. This time, Activision filed a suit against Double Fine (headed by Tim Schafer, of Psychonauts and Day of the Tentacle fame) last week in an effort to prevent the release of the new game Brutal Legend. Activision claims it still has the rights to release Brutal Legend, which it acquired by way of its merger with Vivendi Games last year. In its complaint, Activision says that Vivendi Games invested roughly $15 million in Brutal Legend before the merger. However, Activision dropped Brutal Legend after the merger was complete, and didn't continue efforts to publish the title.
When a publisher loses interest in a half-finished game, developers can be left in limbo. At that point, publishers have invested money in the game, and usually have been granted certain rights in return. And without those rights, developers can have a hard time getting a new publisher on-board to finish the game. The best solution to an impasse like this is to have set out a contingency plan in the original development contract that would come into play if the publisher jumps ship. As we've seen, without such a plan, the parties often fall into expensive litigation.
Tuesday, June 2, 2009
Killer Hardware Can Trigger Killer Lawsuits
All three leading console makers previewed new motion-sensing controller technology this week at E3. With the success of the Wiimote, the industry may have realized that killer controller hardware can sell consoles just as well as killer game titles. Whenever a large company launches a significant new product like a game controller, there are numerous intellectual property “clearance” issues that play out behind the scenes. Not only does the company have to worry about protecting its new hardware design from infringers, but it simultaneously has to worry about infringing everyone else’s intellectual property.
Today at E3, Sony unveiled a motion-sensing system with a controller that can translate player movement as a sword, a bat, a gun, etc., while Nintendo announced a few technological tweaks to the Wiimote. Sony's and Nintendo’s unveilings came just a day after Microsoft announced that it developed a system that allows game control through tracking of players' body movements. I don’t see button and joysticks going extinct any time soon, but these simpler devices may entice a few more casual gamers or non-gamers to turn on a console.
For a variety of reasons, console controllers are especially prone to patent infringement lawsuits. Nintendo’s Wiimote has already been hit with at least three different lawsuits. And, as you'll recall, Sony had to redesign its old Dual Shock controller as a result of a patent infringement suit. Even Activision’s Guitar Hero controller has not been immune, as mentioned in a previous post here at LiaGW.
So how does a company reduce the risks of infringement lawsuits and allegations over a new hardware product? The most effective approach is to conduct a “clearance” search designed to find and analyze the most relevant patents, copyrights, trade dress, and trademark rights prior to launching the product. Before launching the next great piece of hardware, the time spent on reviewing the surrounding intellectual property landscape will often turn out to be the most valuable.
Bilski is going to the Supreme Court
The blogosphere is all abuzz about Bilski going to the Supreme Court. When Bilski was first issued, I didn't expect it to go to the Supreme Court -- but after seeing how broadly it has been applied and interpreted, I expected no less.
As the video game industry continues to evolve, patents are becoming more of an issue, both from an enforcement and defense position. A Supreme Court ruling could go a long way toward determining whether the software and business method patents obtained by software companies are a hollow or substantive asset.
