Articles Posted in IP Ownership

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MP900439452.JPGFacebook has previously filed over 80 trademark applications on variations of its name and other terms such as “POKE”, “WALL” and “LIKE”.  Facebook now seems to be attempting to claim some level of ownership/protection over the word “book” as well.  In a recent revision to Facebook’s “Statement of Rights and Responsibilities,” which is the agreement all users must accept when accessing Facebook, language was inserted which states (emphasis added) “[y]ou will not use our copyrights or trademarks (including Facebook, the Facebook and F Logos, FB, Face, Poke, Book and Wall), or any confusingly similar marks, except as expressly permitted by our Brand Usage Guidelines or with our prior written permission.”

While there is no record of a current US trademark application on “BOOK”, Facebook does have a pending application in the European Union’s trademark database.  Moreover, Facebook has brought several suits against online sites incorporating the word “BOOK” in their domain name, with mixed results.  Several of these suits have settled while others are still pending.  Under US law a certain level of trademark protection can be gained merely by use of an unregistered mark.  Generally, such unregistered use is referred to as having “common law” trademark rights.  While these “common law” rights do not provide the same level of protection as a registered mark, they are still quite useful.  Moreover, including the above-referenced clause in its “Statement of Rights and Responsibilities” could provide Facebook with ammunition for future suits against any of its users who attempt to wrongfully use the “BOOK” mark.  Given that approximately 50% of all internet users have registered for Facebook, this provides Facebook with fairly wide-reaching (but not all-encompassing) protection.  
Historically, Facebook hasn’t shied away from protecting what is seems to consider its right in the term “BOOK”.  Only time will tell how Facebook plans to utilize any new rights it has gained from users by updating the “Statement of Rights and Responsibilities”.

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

The Virtual Military

While much of the international system remains mired in the economic doldrums, many global military powers continue to increase defense budgets focused upon the research and development of simulation technologies. As part of our week-long focus on the importance of games to international relations and security, today we consider how Russia,
China and the United States are using virtual simulators to train its armed forces.

Social game Idle Worship takes Facebook gaming to new level

Idle Games is launching a next-generation social game today dubbed Idle Worship. The title opens up a new genre on Facebook — the once popular “god game” — and it has an interesting and witty approach to social gameplay. Founded by former ad executive Jeffrey Hyman, San Francisco-based Idle Games is in a “holy war against games that suck or aren’t actually social.”

TrialPay and TubeMogul Introduce Real-Time Bidding for Virtual Currency and Social Video

TrialPay,
a leader in transactional advertising, and TubeMogul, a media buying platform for brand advertising, announced a partnership that brings real-time media buying to social video advertising for the first time today.

Illinois legislation to ban employers from asking for social network passwords hits snag

Legislation that would prohibit employers from seeking job applicants’ social network passwords is on hold in the Illinois House. Democratic Rep. La Shawn Ford’s measure would allow job-seekers to file lawsuits if asked for access to sites like Facebook. Bosses could still ask for usernames that would allow them to view public information on the sites.

 Smithsonian Art Of Video Games Exhibit Opens With Gaming Festival

The exhibit is curated by Chris Melissinos of Past Pixels, a group charged with the preservation of video game history. Over the past year, Melissinos — aided by a board of advisors that includes Double Fine’s Tim Schafer, text adventure veteran Steve Meretzky, and Penny Arcade team Jerry Holkins and Mike Krahulik — designed an exhibit that encourages visitors to make what Melissinos calls “a deeply personal decision” of whether video games are art. The exhibit offers five eras of video games with both playable demos and self-playing videos,
showcasing everything from the Atari 2600 to the PlayStation 3, from the traditional platforming of Super Mario Bros. to the more experimental play of Flower.

Navy Pursues a Better Attack Submarine Virtually

Technical advances in the field of virtual reality, also known as virtual worlds (VWs), are making it possible for the U.S Navy to tap into the collective expertise of its best submariners to design and build the next generation of attack submarines. At the Naval Undersea Warfare Center (NUWC) in Newport, Rhode Island, designers are able to create collaborative environments for submarine development using a fully immersive virtual reality application similar to the popular Second Life environment, which enables them to interact with one another both audibly and visually. Numerous participants at remote sites worldwide are linked to one another through the Defense Department’s secure computer network.

 

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On December 6, 2011 Zynga settled its copyright suits against Vostu USA Inc. and others.  The first suit, case number 5:11-cv-02959,
filed in the U.S. District Court for the Northern District of California back in June, alleged that several of Vostu’s games infringed Zynga’s copyrights.
Specifically, Zynga had alleged, that Vostu’s MegaCity, Cafe Mania, Pet Mania, Vostu Poker and MiniRazenda games are merely clones of Zynga’s popular titles.
Zynga followed this suit with another one in Brazil claiming copyright infringement and unfair competition.  Vostu initially responded to the suits asserting that its games were non-infringing but has ultimately agreed to settle the US and Brazilian matters by compensating Zynga and altering some of its games.

The parties have issued a joint statement that “Zynga and Vostu have settled the copyright lawsuits and counterclaims against each other in the United States and Brazil”.
Additionally, “[a]s part of the settlement, Vostu made a monetary payment to Zynga and made some changes to four of its games” but the parties did not elaborate on the amount of the payment or the nature of the changes.

This settlement followed (and may have been prompted by) some early success in the cases by Zynga.  Zynga was able to obtain a preliminary injunction from the Brazilian court ordering Vostu to cease making the challenged games available.  In response Vostu initially convinced a U.S. District Judge to grant a temporary restraining order prohibiting Zynga from enforcing the Brazilian court’s order; however this TRO was quickly dissolved.  The Brazilian order was stayed by the appeals court pending Vostu’s appeal.

This settlement is a good example of how IP rights can be used to protect a video game from being cloned.  There is a history of successful games being the subject of imitation which goes back to the earliest days of the industry.  Many companies have come to believe that cloning is just part of business and there is nothing that can be done to stop it.  However, this is not entirety true.  Copyright, trademark,
trade secrets and patent rights can all provide differing levels of protection for games.  Copyright can protect a game from literal duplication or use of its protected images, code, literary elements, music, etc.  Trademark can protect the actual name, logo or certain other identifying elements from a competitor’s potentially confusing use in a game (or elsewhere).  Additionally, trade secrets can be used to protect a company or game’s “secret sauce” from being co-opted.
Finally, patents may be used to protect features and functions of a game, including game mechanics, business methods and other functionality and processes.

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The Supreme Court has validated the ability of software developers to prevent customers from owning the copy of software they acquire. Because software developers can limit the customers rights to a mere license, they can impose restrictions that can prevent the customer from reselling the software. This is a huge win for software companies as it limits the resale market, which cuts into sales of new software. This ruling may also benefit the virtual goods industry which also commonly uses a licensing vs. sale model. However, it is important to note that in order to get the benefits of this decision, the software distributor must carefully craft their End User License Agreement.

On October 3, 2011, the U.S. Supreme Court declined the petition for certiorari regarding the Ninth Circuit Court of Appeals decision in Vernor v. Autodesk,
Inc. As we outlined in a previous post, the Vernor decision held that software developers can grant mere licenses and that doing so does not violate the First Sale Doctrine,” which states:

“[T]he owner of a particular copy…lawfully made under this title…is entitled,
without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy…”

This doctrine applies if the initial distribution is a sale. As the Ninth Circuit held in Vernor, software developers can legally prevent customers from owning (and distributing) the copies of software that they purchase. This is accomplished by drafting software purchase agreements (e.g., End User License Agreements) in a way to avoid the first-sale doctrine, such as by structuring the agreement as a license or placing valid restrictions on the customer’s use of the software. Under such an agreement, software developers can retain ownership in the copies they distribute and customers merely have a license to use the software.

Extending the Vernor holding to virtual goods and currency, this ruling seems to provide additional ammunition for the validity of merely licensing virtual items to users instead of selling the items. This approach is commonly used with virtual item models.  In light of Vernor, it is clear that the “license” which is included in the terms of service must be carefully drafted.  But if done properly,
this can help prevent unauthorized resale of virtual items via secondary markets or otherwise.

For more information on the legal issues with virtual goods, click here.

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Copying within the games industry is prevalent. Some people attribute this to the fact that this is just the way it is and has always been within the industry. This is often premised on the notion that the “idea” for a game is not protectable. But as the game market grows, so to do the losses from copying suffered by the game innovators.

One of the biggest factors contributing to this is that many game developers do not develop comprehensive strategies for protecting the valuable intellectual property that they create. This is generally due to several reasons. One is that historically, intellectual property has just not been a big focus for many in the industry. The other is that many people are not aware of the range of options available for protecting IP in the game space and what aspects of games are protectable. This is often due to some common misunderstandings about intellectual property, particularly with respect to the patentability of game features.

While it is true that one can not protect the “idea”
for a game, this does not end the inquiry. Many aspects of games are protectable by patents, copyright and trademarks. Of these, patents are probably the most overlooked and least understood. While this applies to all types of games, there are particularly compelling opportunities to patent many of the innovative aspects of social and online games. This is due in part to the many recent developments in the relevant technology and business models for these games. Prudent developers and publishers will seize these opportunities to develop a comprehensive IP protection strategy.

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In the fast and furious world of app development, time is of the essence. So claims the Plaintiff YoHolla in a lawsuit against an app developer Pinwheel Designs Corp. and its subcontractor Burton Design Group (BDG). Allegedly the defendants’ inability to produce a bug-free app in a timely manner delayed YoHolla’s launch of its social network.

This case involves a classic fact pattern of a development contract gone awry. YoHolla claims that BDG missed several deadlines for completion of an Iphone and Android app, that what BDG produced was riddled with bugs and required additional payments well beyond the initial estimates. YoHolla further alleges that the contract stated that TIME WAS OF THE ESSENCE and that these delays caused delay of YoHolla’s planned launch of its social network and over $550, 000 in delay damages.

After things escalated, YoHolla went elsewhere to get the development finished and formally terminated the development contract.

BDG demanded final payments and ordered YoHolla to cease and desist from use of any source code developed by BDG, alleging that such use would constitute copyright infringement (despite an apparent assignment of all rights to YoHolla in the contract).

Where this gets more interesting is that BDG contacted Apple and alleged that YoHolla’s iphone app infringes BDG’s copyrights. After 3 or so rounds of “he said, she said” regarding copyright ownership, to no avail, YoHolla filed suit.

The Yohalla Complaint raises claims for declaration of ownership of copyright and non-infringement, breach of contract, tortious interference with a business relationship (for BDG’s allegedly false notices to Apple), defamation and a claim for indemnification against Pinwheel.

This will be an interesting case to watch.

 

 

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Gibson Guitar Corp. recently filed suit in the U.S. District Court for the Middle District of Tennessee alleging that Seven45 Studios’ video game “Power Gig: Rise of the SixString,” infringes Gibson’s concert simulation patent.  Gibson filed its complaint againgibson.jpgst 745 LLC (d/b/a Seven45 Studios) asserting “Power Gig” violates its U.S. Patent Number 5,990,405, titled “System and method for generating and controlling a simulated musical concert experience.”  The claims center on “Power Gig” and its related components, which includes a guitar-style controller.  Gibson is claiming that the game, in conjunction with a gaming console (Sony’s Playstation 2 and Microsift’s Xbox 360), contains elements that infringed its rights under the ‘405 patent.  In addition to a claim for direct infringement, Gibson alleges contributory patent infringement and inducement of infringement.  Gibson is seeking a preliminarily and permanently injunction, treble damages and attorneys’ fees. 
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In October, tech media sources, such as CNET, were reporting that Facebook had acquired part of Zenbe’s intellectual property portfolio, in addition to hiring some of Zenbe’s key engineers. While Zenbe will stay intact, Zenbe Mail has been shut down, and the associated intellectual property, has been acquired by Facebook.  

Zenbe is just one in a long list of recent acquisitions by the social networking giant that have focused primarily on the value of intellectual property assets. Some of those acquisitions include: Divvyshot, Hot Potato, NextStop, Drop.io and FriendFeed. This underscores to critical importance of a sound intellectual property strategy that helps protect your product development and is aligned with your overall business goals.

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In a very significant decision, the 9th circuit Court of Appeals ruled that software developers can legally prevent customers from owning the copies of software that they pay for. Instead, if the software license agreement is properly drafted, the software developer retains ownership in the copies they distribute and the customers merely have a license to use the software.

This is significant for many reasons. The first is that this means the “first sale doctrine” does not apply. Under this doctrine a copyright owners rights are extinguished in a particular copy of the software after an authorized first sale. As a result, the customer can rightfully sell the software if they no longer need/want it. In contrast, with a license that restricts transfer this is not permissible.

This ruling by analogy may be applicable to virtual goods as well. Many terms of service specify that virtual goods are merely licensed and not owned by customers.

Vernor 

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An appellate court ruled that an employee’s agreement to assign “inventions” to Mattel may not cover “ideas” the employee had for the Bratz line of dolls. This ruling may impact many companies ownership of certain rights if their IP or invention assignment agreements are not clear enough.

In vacating the lower court ruling, the court stated:

Prior to trial, the district court held that Bryant’s employment agreement assigned his ideas to Mattel, and so instructed the jury. What was left for the jury to decide was which ideas Bryant came up with during his time with Mattel. It found that Bryant thought of the names “Bratz” and “Jade” while he was employed by Mattel, and that MGA committed several state law violations by interfering with Bryant’s agreement as well as aiding and abetting its breach. After trial, the district court imposed a constructive trust over all Bratz-related trademarks….

The appellate court added that:

A constructive trust would be appropriate only if Bryant assigned his ideas for “Bratz” and “Jade” to Mattel in the first place. Whether he did turns on the interpretation of Bryant’s 1999 employment agreement, which provides: “I agree  to communicate to the Company as promptly and fully as practicable all inventions (as defined below) conceived or reduced to practice by me (alone or jointly by others) at any time during my employment by the Company. I hereby assign to the Company . . . all my right, title and interest in such inventions, and all my right, title and interest in any patents, copyrights, patent applications or copyright applications based thereon.” (Emphasis added.) The contract specifies that “the term ‘inventions’ includes, but is not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, whether patentable or unpatentable.” The district court held that the agreement assigned Bryant’s ideas to Mattel, even though ideas weren’t included on that list or mentioned anywhere else in the contract.

In its legal analysis the appellate court stated:

Mattel points out that the list of examples of what constitutes an invention is illustrative rather than exclusive. Ideas, however, are markedly different from most of the listed examples. Cf. People ex rel. Lungren v. Superior Ct., 926 P.2d 1042, 1057 (Cal. 1996) (courts avoid constructions that would make “a particular item in a series . . . markedly dissimilar to other items on the same list”). Designs, processes, computer programs and formulae are concrete, unlike ideas, which are ephemeral and often reflect bursts of inspiration that exist only in the mind. On the other hand, the agreement also lists less tangible inventions such as “know-how” and “discoveries.” And Bryant may have conveyed rights in innovations that were not embodied in a tangible form by assigning inventions he “conceived” as well as those he reduced to practice.

As a result the court concluded that the agreement could be interpreted to cover ideas, but the text doesn’t compel that reading and that therefore the district court thus erred in holding that the agreement, by its terms, clearly covered ideas.

This case will get sent back to the District Court for further determination. However, regardless of the result, it may be a good “idea” to consult with an IP attorney to make sure that your IP assignment agreements give you the maximum benefit and ownership of all rights that you want to own.

Mattel Bratz Decision