As we approach 2020, distributed ledger technologies (DLT) appear likely to have a far-reaching, comprehensive impact on our global economy. But core components of that economy—intellectual property rights in particular—sit in tension with DLT. Copyright owners learned this lesson with the advent of BitTorrent. Patent owners will face similar threats from DLT-based computing platforms executing programs referred to as “smart contracts.” To date, less than 500 U.S. patents have issued with the term “blockchain” in a claim, and none appear to have been litigated. As such, many nuances of DLT patent enforcement have not yet manifested. Nonetheless, even a cursory review of current case law reveals the road to a decentralized utopia is laden with patent-law potholes.
We recently wrote about a musician who got into some trouble with a court by using social media to flaunt images of hundred dollar bills after he had filed for bankruptcy. Now, an Atlanta-based rapper known as Rolls Royce Rizzy has been found to offend trademark laws through his use of social media. In January 2015, Rolls-Royce Motor Cars Limited and Rolls-Royce Motor Cars NA LLC (collectively, “Rolls-Royce”) filed a suit against Robert Davis (aka “Rolls Royce Rizzy”) for various claims, including trademark dilution, trademark infringement and unfair competition/false designation of origin under the Lanham Act.
The U.S. International Trade Commission (ITC) regulates U.S. trade and oversees Section 337 investigations that address unfair competition based on alleged infringement of intellectual property rights. The ITC has been a popular alternative to litigation in district courts because of the relatively swift resolution it provides. (Final phases of the investigations typically occur 12 to 18 months from initiation.) However, a 2015 Federal Circuit decision has limited the ITC’s authority to regulate “articles that infringe” U.S. intellectual property rights and that are imported into the U.S. In ClearCorrect v. ITC, 2014-1527, the appeals court held that the “articles that infringe” are limited to “material things” and thus do not include “electronic transmission of digital data.”
Oh, the once humble hashtag (or pound sign, number sign, octothorpe, etc.). For so long a symbol both ubiquitous and free from controversy, its new life as a go-to signifier of discussions and trending topics on Twitter has made it relevant in ways no one could have predicted a decade ago. For proof, one only need look to the courts, where a recent spat between two competitors highlights the interplay between social media symbology, such as the hashtag, and intellectual property laws (especially trademark law).
A federal court recently found copyright infringement based on a developers copying of aspects of the popular Tetris game, even though the code itself was not copied. This ruling confirms that IP can be used to effectively prevent certain cloning practices that are prevalent with online games. While this case focused on copyright infringement, a passing note by the court highlights how patents can be instrumental to a comprehensive IP strategy as well.
In this case, Tetris sued Xio Interactive Inc. over its game Mino. Mino is a falling block game which incorporates game-play rules similar to Tetris, as well as utilizing a similar playing area and geometric block combinations. In its opinion, the court stated that game developers are free to use others’ ideas, but not the expression of those ideas. The court noted that the idea-expression dichotomy in the video game world is “simple to state- copyright will not protect an idea, only its expression – but difficult to apply, especially in the context of computer programs.”
The court summarized the law by stating generally that game mechanics and rules are not entitled to copyright protection, but courts have found expressive elements copyrightable, including game labels, design of game boards, playing cards and graphical works. Significantly however, the court noted that game mechanics and other functional game features can be patented.
The court determined that Xio did more than just incorporate Tetris‘ underlying rules in Mino. In looking at the similarity of the look and feel of the two games, the court stated that “[t]here is such similarity between the visual expression of Tetris and Mino that it is akin to literal copying” regardless of the fact that Xio did not actually copy the underlying Tetris code.
If you are a game developer and want to maximize your ability to shut down clones, it is critical to have a comprehensive IP strategy that incorporates both patents and copyrights. If you rely just on copyright, a more skillful game cloner can change the expressive elements enough to avoid copyright infringement. But if you patent core mechanics of your novel game, you can prevent others from copying that functionality regardless of how different they make the expressive elements.
The number of lawsuits alleging copying of games continues to increase. In one of the latest such lawsuits, Seattle-based game developer Spry Fox filed a copyright infringement lawsuit
against 6waves Lolapps over Spry Fox’s Triple Town game. What exacerbated the issues here is that, apparently, Spry Fox shared information about the game under an NDA, prior to release of the game, when the parties were considering a business relationship.
Even giants like Zynga have been accused of liberally borrowing ideas for its games. NimbleBit, developer of the popular iOS game Tiny Tower, has pointed out the many similarities between their hit and Zynga’s upcoming Dream Heights game. NimbleBit recently sent an open letter addressed to all of Zynga’s 2,789 employees that points out the numerous similarities in the games, offering eight screen shots that show virtually identical features with only slight graphical differences.
These, and other suits that follow these fact patterns, highlight the need for game developers to take certain steps to protect their IP and minimize the need for lawsuits while maximizing the chances of prevailing if they must sue:
- Consistently use NDAs that prevent the disclosure or use of confidential information that you disclose to third parties, and try to include a provision that gives you ownership of any IP derived from the confidential information. Many NDAs do not include this.
- Maximize your IP protection with a comprehensive IP strategy that includes patents, trademarks and copyrights. Many game developers have misconceptions about what is protectable and therefore inadvertently forgo certain protection to which they might otherwise be entitled.
A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.
LinkedIn’s 2Q Earnings Soar as Growth Accelerates
The results announced Thursday provided the first update on LinkedIn’s progress since the company’s headline-grabbing initial public offering in May.
LinkedIn’s shares have more than doubled from their IPO price of $45, stirring a debate about whether investors are overvaluing Internet companies. LinkedIn earned $4.5 million, or 4 cents per share, in the April-June period. That contrasted with earnings of $938,000, or 2 cents per share, at the same time last year.
Competing OpenSim hosting companies are concerned that SpotON3D’s viewer plugin patent isn’t original, will hinder innovation, and that the company isn’t playing fair with the broader open source community. Other developers, however, say that SpotON3D’s innovation can help energize OpenSim adoption — and the patent, if it is granted, may not be that burdensome to the community.
For as amazing as Diablo II
was, the economy was rather quickly ruined by the sale of virtual items. Most of the better loot required a significant time investment – or luck – so many players naturally flocked to the more convenient option. Blizzard, being the savvy developers that they are, has come up with a work-around for that: A flood of reports are coming in that Diablo III
will feature an in-game auction house that will allow you to sell and buy virtual items (including virtual currency) for real cash.
Electronic Arts chief executive John Riccitiello said in a conference call today that the video game industry has fundamentally changed as gamers embrace new digital alternatives to console games – from mobile games to social games. And, he said, EA’s strategy is changing with it.
SAP Launches The Ultimate Travel Challenge Dashboard
I find the concept of gamification fascinating so when I heard that a fellow team at SAP was launching a game to showcase one of the company’s solutions it peaked my interest. The game was built on SAP Crystal Solutions and showcases how the product can help your business by simulating the pressure of making informed decisions in a face-paced environment.
Augmented reality leader Layar just took its system to a whole new level by installing a real-world object recognition protocol that’s a little like Google’s Goggles. In one swoop it may have turned AR apps from intriguing,
inspiring, and occasionally useful toys into serious tools for information discovery and, of course, advertising. Let’s call it hacking the real world.
which collects a lot of data on online payments, says the monetization of digital content has come a long way since the company was launched in 1998 and sold to eBay in 2002. Now it generates more than $1 billion in quarterly revenue and has more than 100 million active users.
The Digital Millennium Copyright Act, 17 U.S.C. § 512 provides many benefits to copyright holders. Add one more to the list. In Xcentric Ventures LLC v. Karsen Limited et al (2011), the court refused the let the Russian Defendant play hide-and-seek to avoid service of process and authorized the Plaintiff to effect service by email due to a provision in the DMCA.
Plaintiff XCENTRIC VENTURES is the operator of a consumer complaint website. It discovered that a website owned and operated by defendant allegedly contains certain copyrighted material. Pursuant to the DMCA, it sent a series of DMCA take-down notices to non-party Google, Inc. to remove the infringing content from its search index and inform defendant that it is infringing on plaintiff’s copyrights. Google complied. Pursuant to the DMCA, defendant responded by serving a counter-notice on Google to contest the accuracy of the initial notice. To be effective, the counter-notice must contain certain things including: “the subscriber’s name, address, and telephone number, and a statement that the subscriber consents to the jurisdiction of the Federal District Court . . . and that the subscriber will accept service of process from the person who provided notification under subsection (c)(1)(C)
or an agent of such person.” §
Plaintiff filed a suit alleging copyright and trademark infringement. See §
512(g)(2)(C) (stating that unless a party files an action seeking a court order to prohibit the infringing activity, the service provider can restore the removed material). Plaintiff attempted to serve defendant a copy of the summons and complaint via Federal Express delivery to the address provided in St.
Petersburg, Russia and via email. Delivery at the Russian address was unsuccessful because the address was “incorrect” according to FedEx.
On June 13, 2011, defendant emailed plaintiff in response to plaintiff’s emailed service of process. Defendant generally objected to the lawsuit and included a response, which it asked plaintiff to file with the court. In a later email correspondence, defendant argued that it never waived service of process and any service must be in compliance with the Hague Service Convention.
Plaintiff moved for an order determining whether it has effectively accomplished service of process on defendant Karsen or for leave to perform alternative service. Defendants did not respond or otherwise appear in the case.
The court found:
It is clear to the court that defendant has notice of the lawsuit and is evading service of process. By filing the counter-notice, defendant expressly agreed to accept service of process at its Russian address. Plaintiff attempted to perform service there but was unsuccessful. Defendant also purports not to understand the English language or the American court system, yet it corresponds sufficiently in English and appears capable of drafting a responsive pleading, as evidenced by the response it emailed plaintiff. Plaintiff has made other diligent, but unsuccessful, efforts to locate an alternative mailing address. In the absence of a correct address, plaintiff cannot personally serve defendant in Russia. It seems the only medium effective at reaching defendant is email.
We cannot, however, find that plaintiff has already accomplished service of process. While defendant did agree to accept service of process when it filed the counter-notice, plaintiff was unsuccessful in serving defendant by conventional means at its Russian address. [*3] Service by alternative methods, such as email, is only effective after court approval. See Rio Props., Inc. v. Rio Int’l. Interlink,
284 F.3d 1007, 1018
(9th Cir. 2002) (stating that email service is not available absent a Fed R.
Civ. P. 4(f)(3)
court decree); see also Fed.R.Civ.P. 4(h)(2)
(authorizing service of process on a foreign business in the manner prescribed by Rule 4(f)).
The court granted plaintiffs leave to serve defendant via email, stating “Service by email in circumstances where the defendant is evading service of process and it is the only method reasonably calculated to appraise defendant of the pendency of the action is permissible. See Rio Props., 284 F.3d at 1017 (approving an order granting leave to serve by email under similar circumstances); see also Liberty Media Holdings, LLC v.
Vingay.com, No. CV-11-0280-PHX-LOA, 2011 WL 810250 (D. Ariz. March 3, 2011) (permitting service by email). Moreover,
alternative methods of service in Russia, even those not required under the Hague Service Convention, are permissible, since Russia unilaterally suspended all judicial cooperation with the United States in 2003. See Nuance Commc’ns., Inc. v. Abby Software, 626 F.3d 1222, 1237-38
(9th Cir. 2010) (holding that a district court erred in requiring service upon a Russian corporation to be in compliance with the Hague Service Convention).
As the Ninth Circuit stated, “when faced with an international e-business scofflaw, playing hide-and-seek with the federal court, email may be the only means of effecting service of process.” Rio Props., 284 F.3d at 1018.
A recent lawsuit by SocialApps LLC (d/b/a take(5) social and playSocial) accuses Zynga of copyright infringement, theft of trade secret and various other acts concerning Farmville. Farmville is one of the most widely played and profitable social games, with around 80 million users and was released in June 2009. SocialApps allegedly developed and released “myFarm” in November 2008.
Did Zynga independently create Farmville or, as SocialApps alleges, did Zynga approach SocialApps using a ruse of due diligence in an attempt to acquire the IP rights and source code to get access to the details of myFarm?
Perhaps we will learn the answer as the suit progresses.
If SocialApps did indeed invent the game earlier, did they do all they could to protect the IP? Many companies in the online social game space do not.
For an overview of some of the ways that social game companies can protect their IP, see our previous post entitled “What You Don’t Know About IP Protection For Social Games Can Hurt You“.
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.