Addressing legal issues with the latest technological developments and social media trends.
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Pillsbury is a proud sponsor of and contributor to the upcoming Gamification Summit on January 20 and 21 in San Francisco. Day 1 includes a Conference that will feature top thought leaders in game mechanics such as Gabe Zichermann (author, Game-Based Marketing), Amy Jo Kim (Gamification guru), Jane McGonigal* (TED fellow, author debuting her new book) and many more leaders in this space. In addition to the Conference, there is a Workshop on Day 2.  The Workshop is a hands on experience that will legamification-summit-logo.jpgad you through the strategy and problem-solving cycles of building an engagement loop and Gamification architecture. Members from Pillsbury’s Virtual Worlds and Social Media team will be speaking on both days.

 

If you would like to attend the Summit, please be sure to get your tickets soon–early bird deadline of November 30th.  Past Workshops in NYC and San Francisco sold out completely with a stretched out waiting list.  Tickets can be purchased at http://gsummit.com where you can also review the entire agenda for the Summit.  To receive your Friend-of-a-Speaker-Discount, please enter promo code “speakerfriend10” upon checkout.

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Microsoft, Nintendo, Sony and Valve have been sued for patent infringement over two patents relating to purchasing products relating to games. The suit, filed by Olympic Developments AG, LLC, involves US Patents  5,475, 585 (“Transactional Processing System”) and 6,246,400 (“Device for Controlling Remote Interactive Receiver”). The ‘585 patent was issued way back in 1995 and the 400 patent in 2001.

We will monitor the case. Check back for significant developments.

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Our Virtual Worlds & Social Media team is leading the way in understanding and addressing legal issues for a number of cutting-edge interactive and immersive technologies, including augmented reality. Some of our team members recently outlined IP, privacy and liability issues in a Q&A on Augmented Planet, a popular news site for the developer industry. However, the technology’s legal issues are increasingly relevant to all companies.

Augmented reality technology blurs the line between what is real and what is computer-generated by enhancing a real world view with text, images, graphics or other media. Many businesses are already using augmented reality to market services and goods. Use of this technology will exponentially increase in the very near future.

Our team engages with both augmented reality technology developers and brands and businesses using the technology. We advise the developers at an early stage, advising on business model and technology design issues for a service or application before too much time and financial resources is spent on programming and development. We advise businesses using the technology on an array of legal issues to help protect their brands and minimize liability.

The Augmented Planet Q&A is here.

 

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Microsoft recently agreed to buy Canesta, which makes gesture control technology. This appears to be part of a roll up strategy by Microsoft having purchased 3DV Systems and licenses from GestureTek and PrimeSense.

A recent article in Venture Beat speculates that Microsoft may be close to having ownership of or license to most of the major patented technology relating to gesture recognition.

Microsoft is leveraging these acquisitions in connection with its Kinect technology, Microsoft’s motion-controlled system for Xbox 360.

The fact that Microsoft is opening its corporate coffers to acquire patent rights is powerful example of the power of patents relating to games and emerging technologies. Yet, we continue to see many companies overlook the value of patents in these areas. Comprehensive patent protection can be both an offensive tool and a defensive weapon and can create significant business value as apparently Canesta, GestureTek and PrimeSense have realized.

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Everglades Interactive, LLC has filed a patent litigation against a number of social game companies for alleged infringement of USP 6,656,050. The patent is entitled “Odds Accelerator for Promotional Type Sweepstakes, Games, and Contests.”

A sample claim of the patent is as follows:

A method enabling at least one player to increase a likelihood of winning at least one of a collect-and-win game and a match-and-win game promotion while simultaneously increasing an appeal of said game to the player and thus making a substantially more valuable system for a promoter, comprising the steps of:
providing at least one game piece to at least one player;
applying said game piece to an appropriate game board at a game site;
making game piece information available to said player, said game piece information indicative of needed game pieces needed to complete a winning combination of game pieces to thereby win said game, whereby the player may share or trade game pieces with at least one other player,
enabling said player and said other player to easily and securely store said game pieces for future use.

The patent is based on a provisional application (2001/0028708) which was filed on August 4, 2000, and a utility application (09/920,940) which was filed on August 3, 2001. Based on our preliminary research, this patent will be heavily attacked for invalidity based on prior art that easily predates this patent. It will also face challenges for failing to constitute patent eligible subject matter under Section 101 under the recently announced test in the Bilski case.

The number of social game-related patent applications and patent lawsuits being file is increasing. Yet, many companies in this space have not focused much on patents. This and other recent activity, such as Zynga‘s attempt to patent aspects of using virtual currency (see our prior blog post), should be catalyst to cause more companies to ensure that they are considering patent protection for their social games offerings and taking steps to minimize liability for infringement of others’ patents.

E-mail us for a free guide on patent and other IP strategies for social games companies.

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There has been much buzz about Zynga’s attempt to patent virtual currency. As is often the case with patents, there is much hype, many misconceptions and little focus on the actual facts. Here are the facts.

1. Zynga does not have a patent on virtual currency. It has applied for a patent, the application has been published but has not yet been examined. It will be some time, if ever, before a patent will issue. The published application is 2010-0227675. Here is a copy of the Zynga Application.

2. Zynga is seeking protection for various aspects of virtual currency, particularly in the context of “gambling” games. The following is an example of one of the claims:

A method, comprising:receiving, at a server, a purchase order for virtual currency from a player, wherein the purchase order was made with legal currency, and wherein the virtual currency is usable within the context of a computer-implemented game;crediting an account of the player with virtual currency, wherein the virtual currency is not redeemable for legal currency;receiving a second purchase order for a virtual object within the context of the computer-implemented game from the player,
wherein the second purchase order was made with virtual currency;
and debiting the account of the player based on the second purchase order.

3. This claim appears to be seeking protection using real money to buy virtual currency, precluding redemption of the virtual currency for real money but enabling it to be used to buy virtual objects in the game.

4. The patent application was filed

03-03-2010 and claims priority to a provisional application 61/158,246 filed March 6, 2009.

5. We will monitor the status of this application as it is examined and any rejections are made.

While many believe that this patent application will be rejected due to prior art, the most important take always are these:

  • MANY ASPECTS OF SOCIAL GAMES ARE POTENTIALLY PATENTABLE
  • ZYNGA (AND OTHERS) ARE PURSUING MORE PATENTS IN THIS SPACE
  • IT IS WELL KNOWN THAT THERE IS A LOT OF “BORROWING” OF IDEAS FROM COMPETITORS IN THE SOCIAL GAME SPACE
  • THIS HAS BEEN FACILITATED BY LACK OF ATTENTION TO IP PROTECTION
  • IT IS CRITICAL FOR ANYONE OPERATING IN THE SOCIAL GAMING SPACE TO DEVELOP A COMPREHENSIVE IP PROTECTION STRATEGY,  INCLUDING PATENTS, COPYRIGHTS AND TRADEMARKS

E-mail us for a free guide on patent and other IP strategies in the social game space.

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whatis_gallery_slide120100901.jpgApple recently announced a hockey-puck-size AppleTV device. Early adopters seem to love the video-management and TV program and movie download features. But what may be even more important in the future is a feature called AirPlay.This feature essentially turns the AppleTV into a gaming console that can compete with the Sony (SNE) PS3, the Microsoft (MSFT) XBox and the Nintendo (NTDOY) Wii, among others. At $99 and over a quarter of a million units sold in 2 months, it seems to have some momentum. This will be an interesting development to watch as the gaming space continues to evolve.

 

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EA has defeated Edge Games’ attempt to broadly assert rights in the word “EDGE” in connection with video games. Edge sued Electronic Arts for trademark infringement, alleging that EA’s use of “MIRROR’S EDGE” for video games infringed its trademark rights. EA countered that Dr. Langdell and Edge committed fraud on the USPTO by submitting false/doctored specimens of use and making false representations regarding use of its marks. The U.S. District Court for the Northern District of California denied Edge’s motion for a preliminary injunction, finding that all of Edge’s “representations regarding the validity and use of the asserted marks are infected by evidence of deceit.” Edge Games, Inc. v. Electronics Art, Inc., Civil Action No. c10-02614 WHA (N.D. Cal. October 1, 2010).

The case promptly and on October 10, 2010, the Court entered a Final Judgment (here) and an Order approving the parties’ stipulation regarding the disposition of the claims (here). In the Judgment, the Court ordered the USPTO to cancel five registrations owned by Edge. The Order required Edge to notify its licenses that the marks [sic] have been cancelled, and to provide them with a copy of the order denying Edge’s motion for preliminary injunction.

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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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Target’s recent launch of a program to sell gift cards redeemable for Facebook Credits or in the virtual world Poptropica towards either membership fees or the purchase of virtual currency further blurs the line (to the extent there still was one) between in-worldfacebookx-large.jpgcurrency and real-world currency. Facebook and Zynga agreed earlier this year that players of Zynga games (such as Farmville) can use Facebook Credits to buy virtual goods, but there is no reason why real-world retailers looking to attract Facebook users and create online buzz couldn’t set up exclusive deals for Facebook Credits. Steve Richards has an interesting post at ecoconsultancy.com on just that topic – he even questions how long it will be before sites that enable you to buy, sell and trade virtual currencies become regulated exchanges.

As the line between virtual and real-world currencies disappears, there are a host of legal issues that virtual world operators will need to deal with. As we noted in this post, because of laws like the CARD Act and various state, local and even international laws and regulations related to the use of stored value cards and accounts, it is important to ensure that if you are offering virtual currency as part of your business model, you verify that you are in compliance with federal, state and international laws.

For more information on legal issues with virtual currencies see our

Overview of Legal Issues with Virtual Currencies.