Addressing legal issues with the latest technological developments and social media trends.
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Pillsbury attorney, Sean Kane, serves on the Governing Committee of the ABA as the Licensing, Merchandising and Branding Division Chair. Sean is participating in the 2013 Annual Meeting of the American Bar Association Forum on the Entertainment and Sports Industries as the moderator for a discussion titled, “PLENARY: Rights of Publicity for Entertainers and Athletes.”

The mission of this Forum is to educate attorneys about the legal issues that pertain to practices in the entertainment, arts and sports industries, and to foster excellence in the practice of law in these fields.

This year the division leadership and planning committee have designed a program of topics and mentoring workshops that provide high level discussion and discourse on hot topics in entertainment and sports as well as seminars on basic principles and mentoring for younger lawyers or lawyers new to these industries. The Annual Meeting is another high level opportunity to present to the membership excellent speakers on cutting-edge issues; you will not be disappointed. We have a number of plenaries on topics that run across all platforms. In addition, panels will explore such hot topic issues as Unpaid Internships in the Sports and Entertainment Industries; A Litigation Update for 2013: Applying Old Law to New Media and Technologies; Moving Money Across Borders: International Tax Considerations for Sports, Media, Talent and Production and the Impact on Net Profit and Cash Flow; and the Impact of Digital Media and Distribution on Film, TV, Music and Other Content.

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A recent spate of cases has generally upheld, on First Amendment grounds, a developer’s right to include unlicensed trademarks in video games. However, until the body of case law becomes so prevalent that trademark owners recognize that they cannot possibly succeed in an action involving use in a video game, it may be wise for developers to be circumspect in what they include. In many cases, the costs of licensing a trademark may be much less than demonstrating rights under the First Amendment.

For more information, please read our Client Alert.

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king-social-games-observer.jpgKing.com, maker of some of the most popular Facebook and mobile games, filed a complaint in the Northern District of California Tuesday, claiming competitor 6Waves cloned King’s Pet Rescue Saga and Farm Hero Saga games in developing its own Farm Epic and Treasure Epic titles.  King is also the maker of “Candy Crush Saga,” which is currently the most popular Facebook game.  

King alleges a number of similarities that it claims go beyond “the product of two games working within the same genre.”  For example, similarities between Farm Hero Saga and Farm Epic allegedly include the “highly similar tutorials;” a similar “yellow-gold ‘Goals’ banner before each level; the “highly similar placement of exactly 5 boosters (the first of which is a shovel) [] with functionally similar boosters being earned in a similar order;” that both games “introduce these boosters at the center of a yellow starburst graphic;” and the layout of the game map including that “the nodes used to represent the individual levels in the map are substantially similar, including a green three-dimensional disc with contraposed placement of a level number and stars-earned per level.”

King also alleges a number of similarities between Pet Rescue Saga and Treasure Epic, claiming that even though “6Waves chose not to copy the exact theme of Pet Rescue Saga in Treasure Epic, its copying of Pet Rescue Saga’s copyrighted expression is, in many ways, even more brazen.”  Including similar allegations to those above, King also noted that both games include “an irregular, off-centered design with some blocks pointing straight ahead, some to the right, and some to the left;” that the tutorials “are all but identical in appearance, progression, text, and placement on the screen,” including that a “similarly shaded turquoise-blue pop-up banner appears with a character often on the left-hand side of the banner raising their left hand and giving instruction;” and the fact that “In both games, the first time a trapped pet or lost treasure, respectively, is introduced is at Level 4” and “Both games also employ special ‘bomb’ blocks that explode and destroy surrounding blocks. Again, both are introduced in Level 11.”

King included a number of side-by-side images comparing the various elements of the games in question.

6Waves denied the allegations in a statement by spokeswoman Sharon Lau to Law 360, claiming that “Puzzle solving games and themes like farming and jewels are not unique and have been created by many other companies.  Such popular gameplay and themes cannot be copyrighted.”

Recall that 6Waves was also sued for cloning last year – a point that King does not fail to mention.  In 2012, Spry Fox accused 6Waves of cloning Triple Town (which 6 Waves had access to under an NDA) in creating its own Yeti Town game.  There, after the court denied 6Waves’ motion to dismiss, the parties settled, with Spry Fox gaining all of the Yeti Town assets.

King has sued for preliminary and permanent injunctions, actual damages, and 6Waves’ profits.

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.

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On August 29, 2013, Gov. Chris Christie signed New Jersey’s social media privacy law, making New Jersey the twelfth state to enact such laws governing employers.  (Various states have enacted similar laws governing institutions of higher education.) 

Christie’s signature ends an approximately year and a half long legislative process:  the bill was first introduced on May 10, 2012.  As discussed in prior posts on this blog (New Jersey Assembly Unanimously Passes Revised Social Media Bill, New Jersey Senate Unanimously Passes Revised Social Media Bill), the bill was conditionally vetoed by Christie in May of 2013, then passed again by the Assembly in May and the Senate in August.

New Jersey should be the last state to enact such a law until the various state legislatures begin their next sessions.  But with 24 states having proposed – but not enacted – social media laws in 2013, more can be expected in the future.

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MP900449113.JPGA weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

Microsoft Points Retired
The latest Xbox 360 system update has retired Microsoft points and now all transactions on the platform will make use of local currency.

Software Patent Mess Hits High Court with WildTangent Case
In what attorneys hope will be the first step toward clearing up the muddled legal standard for when software is patent-eligible, WildTangent Inc. asked the U.S. Supreme Court on Friday to address a question it said the Federal Circuit had left in “complete disarray.”

9th Circ. Weighs in on Player Likeness in Video Games
On Wednesday, July 31, 2013, the Ninth Circuit issued two opinions assessing the parameters of use of individual player likenesses in video games in two highly watched cases.

Foursquare deal could be a goldmine for Yahoo
Yahoo and Foursquare are in talks for a data partnership.

‘Candy Crush’ Maker Accuses Rival of Cloning its Games
Facebook game developer King.com Ltd., creator of the popular “Candy Crush Saga,” launched a suit in California federal court Tuesday accusing rival 6 Waves LLC of infringing its copyright on two online games.

Facebook wins final approval for ‘Sponsored Stories’ settlement
The social network pays out $20 million and adds more controls to settle a lawsuit over a feature that publicized users’ “likes” on advertisements without permission or compensation.

Facebook: Actually, here’s how we’re using your data for ads
In proposed terms of service, the social network illustrates how member data is used as a part of Sponsored Stories – because a court ordered it to do so.

 

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Gamification has become pervasive in many every day activities, including health and wellness programs. For companies involved in these activities, you should make sure you are aware of the final Affordable Care Act (“ACA”) regulations on wellness programs. These come into effect in 2014.

Gamification refers to the use of game mechanics for non-game purposes. It is often used to provide incentives for people to take certain actions. The mecahnics often include a combination of things such as rewards, status, levels, exclusive content or other incentives to shape user behavior. Airline frequent flyer programs are a great example – to gain repeat business and customer loyalty, airlines provide points (redeemable for flights and other things), status (priority boarding), premier or executive levels, exclusive content and offers, etc.

Many health and wellness programs use similar mechanics to incent users to engage in healthy activities and/or refrain from unhealthy ones.

Gamification in general can create a host of legal issues of which companies should be aware. The recently finalized ACA regulations, summarized in Pillsbury’s recent Client Alert entltled “Final Wellness Regulations Create New Program Categories and Complications,” identify some specific to wellness programs.

If you have any questions on this or other gamification issues, our Social Media and Games Team has extensive experience in this space.

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On August 19, 2013, the New Jersey Senate passed – by a vote of 36 to 0 – a revised bill barring employers from seeking access to employees’ social media accounts. The bill was previously approved by the New Jersey Assembly on May 20, 2013, as discussed in a prior post on this blog.

A prior version of the bill also passed both houses but was conditionally vetoed by Gov. Chris Christie, who expressed concerns about some of the bill’s employee-friendly provisions. Among Christie’s recommended changes was the removal of a private cause of action by employees.

The bill now awaits Christie’s signature. Though the legislature adopted all of the Governor’s recommendations, it remains to be seen whether Christie has additional concerns about the new law.

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bitcoin_euro.pngOn July 23, 2013 the Securities and Exchange Commission (“SEC”) announced it was bringing charges in a Texas federal court against Trendon Shavers for allegedly using a Bitcoin Ponzi scheme to defraud investors between September 2011 and September 2012.  For those who may not know, Bitcoins are anonymous, decentralized, non-government-backed electronic currency.  Bitcoins were originally created by an unknown hacker in 2009 as a worldwide payment method with low processing costs and have become a much ballyhooed currency among the Technorati.  

The SEC is accusing Mr. Shavers, using the online handle “pirateat40,” of advertising the Bitcoin Savings and Trust and accepting 700,467 Bitcoins, worth approximately $4,592,806, as investments while promising a 7% weekly return.  Mr. Shavers allegedly promised to pay such returns to investors by trading the Bitcoins online.  In the SEC’s Complaint Mr. Shaver is alleged to have instead used funds from new Bitcoin investments to pay out the promised returns to older investors.  Additionally, the SEC alleged that he converted roughly $147,000 worth of the Bitcoins in order to pay personal expenses including “rent, car-related expenses, utilities, retail purchases, casinos, and meals.

Concurrent with the filing of the SEC’s Complaint, Andrew Calamari, director of its New York office, was quoted as saying. “[f]raudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws.”  The SEC also recently  issued an investor alert warning of scams involving virtual currencies, stating “[w]e are concerned that the rising use of virtual currencies in the global marketplace may entice fraudsters to lure investors into Ponzi and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions.”

Shavers quickly moved to dismiss the SEC’s Complaint and argued that the SEC has no authority to bring this action, as the Bitcoins linked to his website were not securities because “Bitcoin is not money, and is not part of anything regulated by the United States”. In response the SEC said the investments were both contracts and notes, and so were securities that can be regulated, according to regulatory documents.  Judge Amos Mazzant of U.S. District Court in the Eastern Division of Texas, disagreed with Mr. Shavers’ arguments and found for the SEC in a ruling on August 6, writing, “[i]t is clear that bitcoin can be used as money” and “[t]he court finds that the [Bitcoin Savings & Trust] investments meet the definition of investment contract, and as such are securities.”.  Therefore, this historic SEC case will continue. 

Ironically, individuals who had simply bought and held Bitcoins from September 2011, without relying on Mr. Shavers services, would have made significant returns.  The average Bitcoin value from September 2011 to September 2012 was approximately $6.56 but thereafter skyrocketed to a high of $266 before settling down to the current value of approximately $95.30.   In fact, the700,000 Bitcoins at issue in this case are arguably worth around $65 million at their current value.

 

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Sean F. Kane, Pillsbury special counsel, will participate in PLI’s Think Like a Lawyer, Talk Like a Geek 2013: Get Fluent in Technology seminar by co-presenting during the “Virtual Games and Virtual Currency” session on Monday, November 18, 2013 at 11:30am.

This unique program will present extraordinary sessions combining experienced technology lawyers with industry hi-tech experts. You will hear simple and direct explanations of current technologies.

What you will learn:

  • How every company and individual is a target for international hackers
  • How cloud computing is displacing traditional software applications
  • How social networks are monetizing the detailed data they collect
  • The techniques used by mobile networks to track consumers
  • How online and virtual games have incorporated “virtual currency” into their platforms
  • Best practices for software project planning, implementation and negotiation
  • Establishing a corporate policy in creating and using Big Data

This event will also be webcast on November 18, 2013 at 9:00am.

SPEAKERS
Sean Kane, Pillsbury special counsel

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On July 30, 2013, the Florida Judicial Ethics Committee issued an opinion stating that a judge running for re-election may create a Twitter account for campaign purposes, but warned of potential pitfalls surrounding social media.

The opinion resulted from an inquiry submitted by an anonymous judge who plans to use a Twitter account to tweet about judicial philosophy, campaign slogans, and the candidate’s background. While the opinion is permissive, it also explains that many of Twitter’s features “could prove problematic” as a judge’s campaign tool:

  • Blocking specific followers;
  • Re-tweeting and marking tweets as favorites;
  • Creating lists of users and subscribing to lists created by other users;
  • And direct messaging that could result in ex parte communications.

To avoid these problematic aspects of Twitter, the Committee suggests that the “most sensible way” to use a Twitter account would be for the judge’s campaign manager to create and maintain the account.

The Committee’s concerns reinforce a 2009 opinion regarding the use of social networking sites such as Facebook and LinkedIn. In that opinion, the Committee stated that judges may post comments and other material on their social networking sites, but that judges are prohibited from becoming “friends” with lawyers who may appear before them.

As discussed in a previous post on this blog, opinions such as these represent the more restrictive views of social media. Earlier this year, the American Bar Association issued an opinion giving its stamp of approval to these kinds of online relationships.