Addressing legal issues with the latest technological developments and social media trends.
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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.

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A new survey by Interactive Age about the best law firms advising on video games and other interactive entertainment named Pillsbury one of the Top 3 firms in the nation.

According to the survey, more than 530 attorneys at 30 major law firms now practice in the area of video games, new media and interactive entertainment, so it is increasingly important to know which firms have the most experience and widest range of offerings. With over 30 attorneys on Pillsbury’s multidisciplinary team, it is also one of the largest and most diverse in the nation.

“The numbers indicate that big firms are staking a claim and operating significant video game practices. The appeal for these big firms is that this sector lets them leverage all of their expertise across the board for a single client,” said Interactive Age’s Evan Van Zelfden in the press release announcing the survey results.

“We are delighted that Pillsbury ranked among the foremost video game and interactive entertainment law firms in the United States, said Pillsbury partner Jim Gatto. “We have been involved in this space for a long time, but this recognition validates our firm’s decision to formally create and invest in the nation’s first multidisciplinary team focused on Virtual Worlds & Video Games more than three years ago, and our recent decision to expand the team to cover other aspects of Social Media, Entertainment and Technology.”

Pillsbury’s Social Media, Entertainment and Technology team includes the Virtual Worlds & Video Games team and also covers other emerging areas such as: Virtual Goods and Virtual Currency; Location-Based Services and Mobile Applications; Augmented Reality and Mirror Worlds and other aspects of social media and interactive technology.

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In Amaretto Ranch Breedables v. Ozimals, Inc., Case No. 10-05696, the Northern District of California granted a temporary restraining order enjoining Second Life from honoring Defendant’s take down notice under the Digital Millennium Copyright Act (“DMCA”). Defendant sells “ozimals” which are breadable “living” bunnies that users can purchase and take care of in the Second Life virtual world. Defendant sent Second Life a take down notice under Section 512(c)(3) of the DMCA, requesting that Second Life remove Plaintiff’s virtual horses based on the allegation that such horses infringed Defendant’s copyrights in its virtual bunnies. Plaintiff filed suit, alleging that it did not violate Defendant’s copyrights. Plaintiff also filed a request for a temporary restraining order, seeking to enjoin Second Life from removing its virtual horses from the virtual world, rather than enjoining Defendant from sending allegedly improper DMCA take down notices.

The court granted Plaintiff’s request for an injunction under Section 512(f) of the DMCA, which permits an injunction against complying with a take down notice if a party knowingly misrepresents that the material is infringing. Defendant’s take down notice alleged that the act of having a “live” virtual animal that needed food to “live” was protected by its copyright and was thereby infringed by Plaintiff’s virtual horses which needed virtual food to live. The court reasoned that Defendant was likely trying to protect the functionality of the virtual animal via copyright. However, copyright does not protect functionality. Because Plaintiff submitted declarations supporting that it did not copy Defendant’s code, which would have been a valid copyright violation, the court held that Plaintiff had “raised serious questions” as to whether Defendant materially misrepresented the likelihood of an actual infringement in the take down notice sent to Second Life. Thus, the court held that Plaintiff would likely be irreparably harmed if Second Life did take down its virtual horses, as Plaintiff would lose customers and income.

What is interesting about this case is the fact that the court enjoined Second Life, who was not a party and did not have a chance to litigate on behalf of itself in the proceedings. Thus, Second Life is apparently subject to an order to which it did not have a chance to weigh in on. The preliminary injunction hearing, to decide whether to maintain the injunction, is set for January 11, 2011.

This case also highlights the need for companies to understand the limits of the DMCA. Making overreaching statements in a DMCA takedown notice can lead to the copyright owner being liable.

 

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OnLive-Logo.jpgOnLive announced that it was awarded a patent that it alleges is a “fundamental cloud gaming patent.” The patent, USP 7,849,491, is entitled “Apparatus and method for wireless video gaming” was filed in 2002 but just issued in December 2010 after an 8 year battle with the Patent Office. According to a company press release:

Cloud gaming is a breakthrough technology where video games run on
remote servers, and users simply connect an Internet-connected device–be it a TV, PC/Mac®, iPad™, Android™ tablet, smartphone–and instantly are
able to play the highest performance, new-release games with no discs,
no downloads and no upgrades. OnLive’s patented and patent-pending
technology makes the games almost instantly responsive, providing a
gaming experience comparable to the games being played locally, even
though they may actually be running on servers 1000 miles away.

As often is the case with seemingly fundamental patents, there has been quite a bit of stir in the press.  Many non-patent attorneys have commented and opined on the patent which has fanned the fires. Not all of the commentary has been factually based.

A review of the file from the Patent Office reveals some interesting facts. The original patent had claims that focused mostly on a set-top box. For example, original claim 1 recited:

1. A set-top box comprising:
a slot with an interface that connects to a game card providing a platform to run a software video game, the game card outputting video game data through the interface; a unit to process the video game data for output to a display device; a wireless transceiver to receive the software video game via a wireless local area network (WLAN).

It also included a method claim as follows.

15. A method of operating a video game box comprising:
inserting a game card into a slot of the video game box;
downloading a software video game via a wireless transceiver;
running the software video game on the game card, video game data being output through an interface of the slot;
processing the video game data for output to a display device.

However, the claims that were granted by the Patent Office were different. For example, claim 1 of the issued patent recites:

1. A method of operating a video game box comprising: downloading a
software video game to a storage device via a wireless transceiver, the
software video game being compliant with a game platform standard; running the software video game on a game card
coupled to the video game box via an interface, the game card including a processor, a memory and a graphics engine, the game card providing a
game platform compliant with the game platform standard, high twitch-action video game data being output
through the interface; processing the high twitch-action video game
data for output to a display device; compressing the high twitch-action video game data with a latency of less than approximately 80 ms, but greater than about 5 ms; wirelessly
transmitting the compressed high twitch-action video game data to a
remote player via the wireless transceiver during interactive play of
the software video game, the remote player being located a distance beyond a transmission distance of the wireless
transceiver.

The patent includes other claims as well, which differ from those for which OnLive originally applied. In order to properly assess the scope of this (or any other) patent it is necessary to analyze the claims that were actually awarded. In many cases, awarded claims are not necessarily as broad as those a company originally pursued. Yet, commentators often overlook this, creating misconceptions about the scope of a given patent.

At least one of OnLive’s competitors says it is not concerned about the patent. Dave Perry, CEO of Gaikai, reportedly says his company isn’t worried about the fallout,
because its service operates in a different way. Both services do game rendering
on the server-side and then stream the images to the client, but Gaikai remains
confident moving forward.

If you have questions about the legal scope of a patent, it is advisable to consult with a knowledgeable patent attorney.

 

 

 

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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.

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brightkite.pngBrightkite has announced that it is rolling out a new business model focusing on group text and abandoning its check-in model. According to the Brightkite blog posting, its new  Android application can be your “default text messaging app, handling ALL your messaging from one app, saving you money with free texting while giving you many more
capabilities than regular texting.” It goes on to state that this will include Groups, Photos, Location sharing and more.

As for the stated reason behind this pivot, Brightkite said:

These features were the defining element to our company 2 and 3 years
ago, but we no longer believe they are sufficiently unique or defining
to be our focus, so we are dropping them.

The changes are expected to start taking place December 17. It is
offering users an option to back up old posts and check-ins by Dec 31.

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Viacom is appealing the decision of the New York Federal Court which granted Google’s (YouTube) motion for summary judgment that it was protected against claims of copyright infringement for videos uploaded to YouTube by the Digital Millennium Copyright Act’s safe harbor provisions. Viacom believes that Google is not entitled to the safe harboimage6611550g.jpgr shield due to Google’s so-called “intentional exploitation” of thousands of Viacom’s copyrighted works. Google believes that it is entitled to the safe harbor since it took down the copyrighted files when properly notified of their unauthorized postings. Interestingly, Viacom has apparently hired Ted Olson, of Bush v. Gore and the challenge to California’s Proposition 8 fame, to represent it on appeal.

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Motorola Mobility Inc. recently brought an action before the U.S. International Trade Commission (“ITC”) against Microsoft Corp. relating to the importation of the Xbox 360 console.  At the center of the controversy is the potential infringement of five patents covering digital video coding and transmission.  The case is In re: Certain Gaming and Entertainment Consoles, Related Software and Components Thereof, case number 337-2770.

Motorola has requested that the ITC institute a Section 337 investigation with allegations that various Microsoft consoles (specifically the 4GB Xbox 360S and 250GB Xbox 360S) infringe U.S. Patent Numbers 5,319,712; 5,357,571; 6,069,896; 6,980,596; and 7,162,094.

Motorola’s ‘712, ‘571 and ‘896 patents describe methods for protecting data streams and securing point-to-point communications in wireless communication and establishing connections between devices in a wireless peer-to-peer network.  The ‘596 and ‘094 patents describe frequency scanning paths for transform-based decoding of digital content as well as digital coding inventions that facilitate higher levels of compression of digital video content.

Motorola is seeking a permanent exclusion order to stop Microsoft from importing the allegedly infringing consoles, as well as an order barring their advertisement and warehousing.

 

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American-Express-031009.jpgAmerican Express has partnered with Zynga to allow American Express
Membership Rewards members to use their points to purchase goods in Zynga’s
games.

Membership Reward points are earned by using an American Express card for
purchases, as well as through various promotions such double points for
groceries or hotel stays.

Members will be able to use their points not only for
game cards and virtual currency, but also for exclusive virtual goods. For
example, a member can convert points to FarmVille cash or purchase an exclusive
FarmVille virtual good.

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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.