Thank you to everyone who joined us in both New York and Washington, DC for our Social Media Week events – Game On!
Special thank you to all of our panelists: Randy Leibowitz, Mike Scafidi, Tim Ettus, Lou Kerner, Peter Corbett, Jim Gatto, Sean Kane, Lauren Lynch Flick and Tina Kearns (many featured in the picture and video below).
According to a recent report, Instagram lost nearly 25% of its users (as tracked by AppData) nearly overnight. The cause is believed to be due to a very unpopular change to its Terms of Service. Prior to this, Instagram was one of the most popular and fastest growing social media sites.
Many companies overlook the importance of terms of service. They are, and always have been, critically important from a legal perspective. But so too are they important from a customer relations perspective as the Instagram incident illustrates. Many companies (and their lawyers) bank on the fact that most users do not read the terms of service. The problem with this approach is that some users DO read them. And more frequently, consumer watchdog groups do as well.
When someone flags a problem or change as occurred here, then the issue goes viral in a hurry. Ironically, the same advantages of the virality of social media that helped Instagram with its meteoric growth, were disadvantages when this news broke and apparently lead to an immediate 25% decline in users.
This is not the first company, and likely will not be the last, to have a fiasco due to issues with its terms of service and/or privacy policy. If you want to avoid being one of these companies, do it right! Get solid legal advice on your TOS and Privacy Policy and make good business choices that do not offend your customers. Contact us for additional information.
A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.
Bicycle card game owner to launch Zeniz mobile social casino games platform
Online casino games are hot. So much so that we’re renaming our site Casino GamesBeat. Just kidding, but The United States Playing Card Company (owner of the Bicycle playing card brand) and Digi117 aren’t. Those two companies are partnering to form Zeniz, a mobile social casino game platform.
The Enforceability Of Facebook’s Terms Of Service
In the recent online contracting case of Fteja v. Facebook Inc., a New York federal court held that a forum selection clause contained in Facebook’s statement of rights and responsibilities (the “terms”) was enforceable because the plaintiff assented to the terms when registering to use Facebook.
Beyonce Can’t Sidestep Suit Over Video Game Deal
Pop singer Beyonce’s attorney failed to convince a New York state judge Wednesday to throw out allegations that she violated a contract when she abruptly pulled the plug on a multimillion dollar video game development deal.
Augmented Reality Toys for iPhone and iPad: A Work in Progress
Can traditional toy makers capitalize on the rise of smartphones and tablets?
Wowwee Toys thinks it can. Next week, the company behind Paper Jamz and Lite Sprites is releasing its first toys in the AppGear line, which combine physical toys with companion smartphone and tablet apps.
Zynga Online Social Gambling
Zynga is known for its creation of a whole new breed of social games on cell phones and computers. They created social games that include gambling that is available for players to play on social networks, especially Facebook while being at home on their PC or outside through their cell phone. This creation has caused quite a stir in the world of gaming, as it made all of the console game companies such as EA forced to join this world so they don’t stay way behind.
Kids Play Educational Games And Win Real Prizes From Their Favorite Teen Celebrities At Club TUKI
Club TUKI has patented a process where kids play educational games,
earn a virtual currency called TUKI Moola, then bid or buy auction items in the TUKI auction. With the gaming platform now established, Club TUKI has launched Club TUKI News, a news site for kids that brings all of their favorite teen celebrities right to their fingertips.
Pinterest is one of the fastest growing social media sites. Pinterest enables users
to “pin” interesting things to a virtual pinboard to share with others. A pinboard is largely a collection of images organized by topic (home decorating, wedding planning, etc.).
A recent article calls into question the potential risks that users face by “pinning” third party content. As pointed out in the article:
YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW,
THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF THE SITE,
APPLICATION, SERVICES AND SITE CONTENT REMAINS WITH YOU.
You agree to defend, indemnify, and hold Cold Brew Labs, its officers,
directors, employees and agents, harmless from and against any claims,
liabilities, damages, losses, and expenses, including, without
limitation, reasonable legal and accounting fees, arising out of or in
any way connected with (i) your access to or use of the Site,
Application, Services or Site Content, (ii) your Member Content, or
(iii) your violation of these Terms.
Many people invest significant time, effort and in some cases real money to acquire virtual goods. There is great perceived value in these virtual goods. But there are a growing number of cases, where users have been the subject of hacking and other situations where they have had their virtual property stolen. See for example our prior blog entry on a massive theft of 400 billion poker chips from Zynga users.
Most game and virtual world operators try to shield themselves from claims of loss by their users through effective legal strategies embodied in their terms of service. In most cases, users are only granted a license to use the virtual goods, but they do not own them and the terms often make clear that there is no independent value to goods. Additional disclaimers and liability avoidance language may also be included. Yet, this has not stopped some users from suing for the loss of the perceived value of their virtual goods.
Given these potential claims, what else can companies do to protect themselves from such risks? Apparently, this risk may now be insurable – at least in China – thanks to a collaboration between Sunshine Insurance Group and Gamebar. According to a report, by China Daily a Sunshine Insurance spokesperson said “The insurance will help to reduce operating risks for online games
companies as the companies which purchase the insurance will be covered
to compensate customers in the event of lost or stolen property.”
It will be interesting to see if that catches on in the US and elsewhere, and if so, what will be covered and what will not. Check back for updates.
The EU “Cookie Rule,” which requires companies with European customers to get informed consent from visitors to their websites in order to use most cookies (other than those “strictly necessary” for the service requested by the consumer), went into effect on May 25. As an example of how they wanted websites to behave, the UK Information Commissioner’s Office put the following banner on their website:
Thanks to a Freedom of Information request from Vicky Brock, we can see the effect of the opt-in cookie requirement on tracked traffic to the ICO website:
Vicky has also made the underlying data available in a Google Docs spreadsheet.
While this does seem to pose a challenge for marketers, there are a couple of things about this data to keep in mind:
1) The UK ICO implemented the opt-in via a banner on the top of the page. People have grown so used to ignoring banners that they might not have even looked at the option being provided. Thus, another method for requesting consent might have a greater opt-in rate. Guidance from the UK ICO states that consent can be obtained via the following methods:
It is worth noting, however, that the guidance does not purport to be exhaustive. The ICO states that they will consider supplementing the advice with further examples of how to gain consent for particular types of cookies in the future. It goes on to say that the examples listed are not intended to be a prescriptive list on how to comply,
rather, that a website operator is best placed to work out how to get information to users and what users will understand. Each case will be facts-specific.
2)
Even for those who did see the banner, there isn’t really any incentive to opting-in. If a website makes a case for the opt-in by pointing out additional functionality or other benefits to opting-in, that may increase the opt-in rate.
Another issue for websites is that it is not yet clear whether the Cookie Rule applies to non-cookie tracking technologies like web beacons. Technically, the Cookie Rule applies to “the storing of information, or the gaining of access to information already stored, in the terminal equipment of a subscriber or user.” However, given the assertive position that many European Data Protection Authorities take towards the protection of personal information, it may be prudent to assume that anything that lets a website track users could require consent. In the case of web beacons, as well, since they could disclose a users IP address, which could be personally indentifying information, they might be subject to the general obligation to obtain user consent before collecting personal information,
anyway.
As we previously posted, Viacom is appealing to the Second Circuit its summary judgment loss to YouTube (and its parent Google) of a billion-dollar copyright infringement suit. Last June, the U.S. District Court for the Southern District of New York ruled that YouTube is entitled to safe harbor protection under the Digital Millennium Copyright Act (“DMCA”) and granted YouTube’s motion for summary judgment on the basis that it did not have sufficient notice of the specific infringements at issue.
At the crux of the court’s decision was “whether the statutory phrases ‘actual knowledge that the material or an activity using the material on the system or network is infringing,’ and ‘facts or circumstances from which infringing activity is apparent'” in 17 U.S.C. § 512(c)(1)(A)(i) and (ii) mean “a general awareness that there are infringements” as argued by Viacom, or instead mean “actual or constructive knowledge of specific and identifiable infringements of individual items,” as argued by YouTube. The court agreed with YouTube’s interpretation, ruling it was supported by both the DMCA’s legislative history and recent case law.
Both sides have submitted their appellate briefs, and the Second Circuit has received 28 briefs filed by amici curiae. Oral argument will likely be scheduled between late August and late September.
Originally posted on the Gamification Blog.
Many people are aware that in 2009,
the FTC implemented guidelines that addressed the use of endorsements and testimonials by bloggers. The main stream press highlighted just the part of these guidelines that require disclosure by bloggers of compensation received for recommending a product or service. However, the guidelines include some lesser known provisions which apply more broadly to consumer generated media and relate to gamification.
This is just one of many examples of little known laws that relate to gamification.
Despite supposedly having millions of users (to Facebook’s 3/4 of a billion), social networking pioneer MySpace appears to be headed out to pasture. Last week, the company laid off 47 percent of its workforce, lopping off 500 employees from its nearly 1,100-person payroll. Rumors that MySpace’s parent company News Corp. wants to sell are all over the tech and mainstream media. (see Link)
This is despite a widely publicized “redesign” intended to focus the site on “social entertainment.”
Assuming the redesign doesn’t provide the boost News Corp. (or a potential buyer) would be looking for, what will happen to all of the material on users’ MySpace pages if the service shuts down? A similar question faced users of Second Life’s Teen Grid when Linden Labs announced that portion of the virtual world would be shut down. (See Link).
But closing down Teen Grid doesn’t come close to the scale of shutting down MySpace. If done right (i.e.,
with plenty of notice and providing members a user-friendly option to export content), the passing of this early social media icon could be the model of the right way to wind things down.
The idea that a social media platform with millions of members (and millions more still joining),
could “go gently into that good night” should serve as a warning to those investing time, energy and money into virtual assets – if you’re on someone else’s platform, and you’re not big enough to get anything other than their standard user agreement, you need to plan for the day when your platform could turn off.
The Court of Appeals for the 9th Circuit ruled on the Blizzard v. MDY case, largely affirming the district court’s finding that MDY’s bot (“Glider”) for playing World of Warcraft (WOW) violates the WOW Terms of Use and violates anti-circumvention provisions of the DMCA. However, the 9th Circuit found that the violation was breach of a contractual covenant not a breach of a condition of the license and applied a somewhat different analysis to the DMCA claims. The net result still largely favors Blizzard and a permanent injunction was affirmed.
We previously prepared an advisory on the District Court decision.
The Court found that the use of Glider violated the Terms of Use prohibition on bots. However, unlike the district court, the 9th Circuit ruled that this was a breach of a contractual covenant not a breach of a condition of the license. One significance of this is the different remedies available for breach of contract and copyright infringement.
The DMCA claims related to whether Glider violates DMCA sections 1201(a)(2) and (b)(1) by circumventing WOW’s Warden, which is intended to detect bots. The Court ruled in Blizzard’s favor with respect to “dynamic non-literal elements” of WOW.
In reaching its decision, the Court refused to follow a Federal Circuit decision (in the Chamberlain case) interpreting the DMCA. The 9th Circuit ruled that Section 1201 (a) creates a new anti-circumvention right distinct from copyright infringement while section (b) strengthens the traditional prohibition against copyright infringement. In contrast, the Federal Circuit in Chamberlain found that the DMCA coverage is limited to a copyright owner’s rights under Section 106 of the Copyright Act, and required a “nexus” to infringement. The 9th Circuit refused to adopt any requirement for an infringement nexus. The tension between these appeals courts may set up a show down in the Supreme Court.
The Court went on to find that MDY did violate Section 1202 (a)(2) of the DMCA with respect to the dynamic non-literal elements of WOW. But the Court found that Glider does not violate DMCA Section 1201(a)(2) with respect to WOW’s literal and individual non-literal elements, because Warden does not effectively control access to these WOW elements.
The Court also found that the tortious interference with contract claims were not preempted by the Copyright Act, but that factual issues prevented a proper summary judgment finding. As a result, it vacated the district court’s summary judgment ruling on this issue and remanded the issue of personal liability for MDY’s CEO.
Perhaps serendipitously, the decision was handed down just days after Blizzard’s release of Cataclysm the third expansion of WOW. More than 3.3 million
copies as of Cataclysm were sold in the first 24 hours of release, which according to Blizzard, makes it the
fastest-selling PC game of all time.
Here is a copy of the 9th Circuit decision.
Internet & Social Media Law Blog