We’ve written extensively on the still somewhat recent arrival of non-fungible tokens (NFTs) as both a potential revenue stream, caveat-filled investment destination and pop culture marker of the moment. Back in 2018, we wrote about the Los Angeles Dodgers giving away digital bobbleheads to fans, who could redeem a private hidden key to send the bobblehead to a personal cryptocurrency wallet or sell the unique serialized bobblehead to another fan. Later, we wrote about NFTs in the art world, from a burned Banksy to the record-setting sale of Beeple’s Everydays – The First 5000 Days, which sold for $69.3 million (including fees). Increasingly, the practical uses of NFTs are being examined in places beyond entertainment and IP portfolios, including the real estate market. Recently, Spanish airline Air Europa even sold the first NFT plane ticket, called a “NFTicket,” for just over $1 million.
In today’s News of Note, we explore ransomware-as-a-service profits, the continued untangling of IP issues with NFTs, the prospect of scented virtual reality experiences, the development of a humanoid robot, and much more.
For years, website owners have leveraged the federal Computer Fraud & Abuse Act (CFAA) as a tool to combat unauthorized scraping of data and other content from their websites. Due to a circuit court split on the interpretation of the CFAA’s “exceeds authorized access” provision, there has long been a legal gray area around the widespread practice of web scraping and whether scraping data from publicly accessible websites can give rise to liability under the CFAA. A set of closely watched, high-level court cases, however, may soon offer some long-awaited clarification on the reach of the CFAA to web scraping.
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.
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.