MAGfest 8

So we’ve survived yet another set of panels, this time at MAGFest 8, which was an utter blast. Destructoid has a rundown on what you missed if you didn’t go, but let’s face it, you all know that I’m the only important thing on that list, right?

Right?

Looking forward, we’ll be expecting to hear a final confirmation on the third iteration of “Legal Issues in Gaming” at PAX (East) some time in the next couple of weeks, and we’ll get that information out to you as soon as it comes in and we finalize the panel attendees.

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Hasbro sues Atari over D & D IP

It almost rhymes, doesn’t it? Just before Christmas, Hasbro sued Atari over the licensing rights for video games based on the Dungeons and Dragons IP (owned by Wizards of the Coast, a Hasbro subsidiary). According to Wizards, they’ve been negotiating with Hasbro for months to no avail. Hasbro filed the complaint in the U.S. District Court for the Rhode Island district, prompting this response from Atari:

“Hasbro has resorted to these meritless allegations, in an apparent attempt to unfairly take back rights granted to Atari [...] Atari has sought to resolve the matter without cooperation from Hasbro. We regret that our longtime partner has decided to pursue this action.”

Atari denies the allegations (though to date they have not filed a response or a MTD on the case, it’s far too early for that). Hasbro is seeking both pecuniary damages and an injunction ending the licensing agreement.

I think this is the start of a long and bitter battle over a very very valuable IP. They’ve apparently been negotiating for months before the suit, and the wording and timing don’t appear to be that of getting a complaint in the door before a statute of limitations — it legitimately appears like a rancorous disagreement between the parties, meaning it’s distinctly possible this one will achieve some level of litigation before settlement becomes likely (if settlement even happens; Atari is being unusually vocal in asserting that the claims are meritless). The timing, just before Christmas, is also a slap in the face, especially as a potential blow to holiday financials….the whole thing just comes off as very spiteful. We’ll keep track of this dispute as it progresses.

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Atkinson: “You don’t need to play this game”

Michael Atkinson, the rabidly anti-gaming Attorney General for South Australia, completely crossed the line into outright censorship in defending his decision to refuse ratings classification to Aliens vs. Predator, essentially banning the game. While the AG has long been the sole obstacle towards Australia gaining an 18+ mature game rating, he has always couched his arguments in that tired trope, think of the children.

Until now. Atkinson now believes that he should be the sole arbiter of what games you get to play on purely moral grounds. He recently proclaimed “You don’t need to be playing a game in which you impale, decapitate and dismember people.”

Atkinson’s hypocrisy really knows no bounds. On the one hand, he says “This is a question of a small number of very zealous gamers trying to impose their will on society. And I think harm society. It’s the public interest versus the small vested interest,” but on the other hand, he himself is the small vested interest that is imposing his will on the broad public. How many millions of dollars has Atkinson cost the Australian economy, by lowering sales of “altered” games like L4D2 (sending further sales overseas), or forcing publishers that show a backbone to outright refuse to sell in Australia?

Atkinson outright admits that the problem he forsees doesn’t even exist yet. “I accept that 98 per cent, 99 per cent of gamers will tell the difference between fantasy and reality, but the 1 per cent to 2 per cent could go on to be motivated by these games to commit horrible acts of violence,” ….note the emphasis. Could. Not “have”.

Despite the fact that Australians are allowed to watch violent movies with an 18+ classification, games unfortunately don’t get the same treatment. Unfortunate for the industry as a whole, not just Australians.

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Abington May Sue Over Xbox Live Bannings

Joystiq reports that IP boutique Abington is considering a class action on behalf of Xbox Live subscribers banned recently from the service for using modded consoles. The firm alleges that the bans came as a money grabbing move timed after players would have purchased Halo 3:ODST and would have pre-ordered Modern Warfare 2. Mark Methenitis, over at Joystiq’s Law of the Game blog, astutely points out that this is probably a cash grab, but notes that there is a chance that there might be a kernel of legitimacy in the claim.  Let’s mark this one up in the “probably not going anywhere” category.

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WoW Shut Down in China?

GamePolitics reported earlier this month on the battle between China’s Ministry of Culture and their General Administration of Press and Publication over control of the online game industry.   According to reports, the GAPP has banned Chinese WoW operator NetEase from running The Burning Crusade in China, and is requiring that they stop taking new subscriptions and cease current subscription fees. Most previous regulation, including censorship, of the industry has recently come from the Ministry of Culture, and this appears to be a major turf war between the two organizations. The Ministry of Culture has approved WoW in China, launched this September, while the GAPP did not.  For their part, NetEase has issued a press release stating that they believe they are in compliance with PRC law, and doesn’t indicate that they will be ceasing any operations. It also notes that they haven’t had any official “notice” of the ban, and that the announcement came from the GAPP’s website (rather than an official determination.) Earlier in the year, China banned FDI (foreign direct investment) into the gaming industry, and has increasingly cracked down on what it views as an opportunity for the expression of dissident viewpoints and “undesirable content.”

On a related note, I’m putting the finishing touches on a journal article regarding an international framework for protecting human rights in virtual worlds and MMORPGs. With this news, the topic only seems more relevant.  Chinese gamers should be entitled to express dissident viewpoints in a virtual world without fear of censorship, and without fear that their avatars and virtual property will be at risk of seizure or deletion. Similarly, virtual worlds operators should be entitled to profit from their businesses without fear of government crackdowns like this. I’ll post the article here once the publication process is complete.

The NetEase press release reprinted in full below.

NetEase.com Announcement Regarding Statement by the General Administration of
Press and Publication With Respect to World of Warcraft(R)

BEIJING, Nov. 2 /PRNewswire-Asia/ -- NetEase.com, Inc. (Nasdaq: NTES), one
of China's leading Internet and online game services providers, today
announced that the General Administration of Press and Publication ("GAPP") of
the PRC government has posted on its official website a statement that the
current operation of the World of Warcraft(R) in China by NetEase's affiliated
company, Shanghai EaseNet Network Technology Limited ("Shanghai EaseNet"), is
being conducted without proper approval from GAPP. The statement further
indicates that GAPP is returning Shanghai EaseNet's application for approval
and Shanghai EaseNet should suspend charging users to play the game and not
allow new account registrations. GAPP also notes in its statement that it is
evaluating whether to impose administrative penalties on Shanghai EaseNet. As
of the time of this press release, neither NetEase nor Shanghai EaseNet has
been officially notified of GAPP's determination. Shanghai EaseNet licenses
World of Warcraft(R), a massively multi-player online role-playing game, for
operation in China from Blizzard Entertainment, Inc.
    NetEase and Shanghai EaseNet believe that they are in full compliance with
applicable PRC laws and are currently seeking clarification from the relevant
governmental authorities regarding this statement by GAPP. NetEase will
provide further updates on the statement by GAPP as appropriate.
    About NetEase
    NetEase.com, Inc. is a leading China-based Internet technology company
that pioneered the development of applications, services and other
technologies for the Internet in China. NetEase's online communities and
personalized premium services have established a large and stable user base
for the NetEase websites which are operated by its affiliates. In particular,
NetEase provides online game services to Internet users through the in-house
development or licensing of massively multi-player online role-playing games,
including Fantasy Westward Journey, Westward Journey Online II, Westward
Journey Online III, Tianxia II and Datang, as well as the licensed game World
of Warcraft(R).
    NetEase also offers online advertising on its websites which enables
advertisers to reach its substantial user base. In addition, NetEase has paid
listings on its search engine and web directory and classified advertising
services, as well as an online mall, which provides opportunities for e-
commerce and traditional businesses to establish their own storefront on the
Internet. NetEase also offers wireless value-added services such as news and
information content, matchmaking services, music and photos from the Web which
are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
    Other community services which the NetEase websites offer include instant
messaging, online personal advertisements, matchmaking, alumni clubs and
community forums. NetEase is also the largest provider of free email services
in China. Furthermore, the NetEase websites provide various channels of
content. NetEase aggregates news content on world events, sports, science and
technology, and financial markets, as well as entertainment content such as
cartoons, games, astrology and jokes, from over one hundred international and
domestic content providers.
    Safe Harbor Statement
    This press release contains statements of a forward-looking nature. These
statements are made under the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes," "estimates" and
similar statements. The accuracy of these statements may be impacted by a
number of business risks and uncertainties that could cause actual results to
differ materially from those projected or anticipated, including risks related
to:  the risk that Shanghai EaseNet will not be able to continue operating
World of Warcraft(R) or other games licensed by it for a period of time or
permanently due to the position of GAPP or other governmental actions; the
risk that Shanghai EaseNet or NetEase will be subject to penalties or
operating restrictions imposed by governmental authorities in the PRC
resulting from the operations of their online games, including suspension of
their Internet service or other penalties; and other risks outlined in
NetEase's filings with the Securities and Exchange Commission. NetEase does
not undertake any obligation to update this forward-looking information,
except as required under applicable law.
    For further information, please contact:

    NetEase.com, Inc.
     Brandi Piacente
     Investor Relations
     Email: brandi@corp.netease.com
     Tel:   +1-212-481-2050

     Li Jia
     Email: liddyli@corp.netease.com
     Tel:   +86-10-8255-8208

SOURCE  NetEase.com, Inc.

Brandi Piacente, Investor Relations, brandi@corp.netease.com, +1-212-481-2050;
or Li Jia of NetEase.com, Inc., liddyli@corp.netease.com, +86-10-8255-8208

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Pending Supreme Court Case US v. Stevens Has Implications for the Game Industry

Most attempts by state legislatures to censor the game industry involve statutes which prohibit the distribution of ”violent video games” to minors. However, these statutes have invariably been stricken down by federal courts because they sought to restrict distribution of games, the contents of which fell into a category of speech (violence) that is protected under the First Amendment and the respective states could not show the requisite danger of imminent lawless action that the First Amendment requires in  order to restrict speech that is protected(1).  Very recently in VSDA v. Schwarzenegger, the Ninth Circuit struck down one such statute for that reason(2). Through this and other examples, we see that courts are loathe to create new categories of unprotected speech, or to expand the categories that are already unprotected(3). On October 6th, the Supreme Court heard oral argument in US v. Stevens, which challenges the Constitutional validity of a federal statute that prohibits the creation, sale, and possession of depictions animal cruelty. Due to the insight into the new Court roster’s attitudes on First Amendment issues that Stevens will offer, we are watching closely.  Hit the jump for an in-depth analysis. Read the rest of this entry »

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Gamefly Action vs. US Postal Service

Back in April, Gamefly filed a complaint against the US Postal Service, claiming that Netflix and Blockbuster’s DVD-by-mail services are receiving preferential handling of discs in transit. Gamefly alleged that their discs are being stolen, and that Netflix and Blockbuster are getting manual processing to prevent breakage. According to Gamefly, the USPS breaks 1-2% of the nearly 600,000 games shipped each month, which accounts for up to $295,000 per month in loss. Note that as best we understand, this is not a formal lawsuit, but rather an administrative complaint with the Postal Regulatory Commission.

In their latest filing, Gamefly points out that Netflix in particular has benefited from unauthorized “Netflix only” slots in the post offices– slots that the USPS claims that they don’t know exist, but if they did would be against policy. Something tells me that this case is going to likely progress beyond the administrative stage, but we’ll of course keep you updated as new developments are announced.

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Playstation Network: Not a Company Town

Late last month, the Southern District of California held in Estavillo v. Sony that the Playstation Network does not qualify as a “company town”, and therefore not eligible for protection under the First Amendment. By extension, this strikes a blow to virtual worlds exceptionalists, who have long argued that virtual worlds ARE company towns; including notable theorists like Prof. Jack Balkin.  Already a heavily limited doctrine, the court held that it doesn’t apply to virtual worlds because “[i]n providing this electronic space that users can voluntarily choose to entertain themselves with, Sony is merely providing a robust commercial product, and is not “performing the full spectrum of municipal powers and [standing] in the shoes of the State.”

Now, to be fair, the hordes of fanbois on internet forums that rage about their First Amendment rights being violated when their posts are deleted (or they get banned) probably didn’t even know about the company town exception to the state action requirement of the First Amendment. Just the same though, this predictable decision puts a fairly solid nail in their coffin.

Eric Goldman has an interesting opinion on the decision:

Nevertheless, this case could have significant import for academic discourse about the virtual worlds. I believe this is the first ruling to squarely conclude that an online game/virtual world isn’t a company town. As a result, this opinion emphatically rejects a meme that has become pretty popular among virtual world exceptionalists. Some exceptionalists have favored the company town analogy because it enable virtual world customers to reduce an operator’s ability to run its business capriciously.

At the same time, as I explain in my 2005 article, importing constitutional doctrines into paying vendor-customer relationships could have untold detrimental effects on the entire online industry. This efficient ruling will hardly be the last word in that debate, but it should take a little wind out of the sails of the virtual-world-as-company-town meme that gets invoked so frequently in virtual world exceptionalist circles.

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Marvel/Disney Served with Copyright Termination Notice by Kirby Estate

In breaking news, the estate of Jack Kirby, co-creator of a range of successful comic franchies from Captain America, X-Men, Hulk, The Fantastic Four, and more, has served notice to Marvel and Disney, and their film studios (Sony, Universal, Paramount, and 20th Century Fox) terminating their copyright in these IPs. The estate has also retained veteran IP litigator Marc Toberoff to go after any future claims.

There doesn’t appear to be any immediate danger for EXISTING games based on those IP’s, however, future games might be in jeopardy. According to comic news outlet bleedingcool, his copyright claim would exist from 2014. This would mean Marvel Ultimate Alliance 2 is safe, but look out Marvel Ultimate Alliance 4.  Toberoff has experience in this realm, he’s been successful on an identical claim on behalf of the Siegel estate, regaining copyright in Superman material. This is something we’ll obviously be following very closely, as the financial implications from forced licensing (let alone the IP issues) could have huge effects on some very popular game franchises.

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Paltalk Sues Sony, NCsoft, ActiBlizz, Turbine, and Jagex for Patent Infringement

Boston.com (via Ars Technica) reports that Paltalk Holdings, (which patent-savvy readers may remember forced Microsoft to settle a patent lawsuit in 2006 over the Halo series), has launched another round of lawsuits for patent infringement, this time covering a bevy of top name MMOG producers. Naming Sony, NCsoft, Activision Blizzard, Turbine, and Jagex as defendants, the complaint alleges infringements of patents covering “sharing data between computers that are connected together so users see the same digital environment”. The patents were purchased in 2002 from a company called HearMe. Shadows of Worlds.com rising? Paltalk is alleging that any MMO game in which players “have to see the same environs simultaneously” would infringe the patent. More accurately, it seems from the Boston.com article that it involves the process for synchronization between the different player’s screens. Given that presumably Runescape (Jagex), World of Warcraft (Blizzard), and Guild Wars (NCsoft) all use different methods of communications and display, from instancing to open-world MMO, to server-side-only calculations, this seems like a stretch, but we’ll withhold judgment for now.

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