Articles Posted in Video Games


NOW AVAILABLE — Pillsbury’s Social Media, Entertainment & Technology Team recently finalized a white paper on legal issues with social games and gambling.

Gamblification! This is not yet a household word but  we use it to describe the intersection of social media and gambling. It is a play on the concepts of gamification and gambling. While gamification relates to using game mechanics for non game purposes, we use gamblification to refer to the use of gambling mechanics for non gambling purposes (ideally!). Given the complexity of the legal issues around this concept, it is not always easy to ensure that one does not cross the line.

Many social media companies are leveraging gamblification to capitalize on individuals’ gambler instincts. One example of this is the use of gambling-like activities in social games.  Many social games are designed based on gambling-related activities, such as Zynga poker.  In this example, the game itself is centered around playing poker for Zynga poker chips. It differs from real gambling in that you buy chips but can not redeem them. Other social games are leveraging gamblification by including minigames or features within non-gambling related social games and MMOs.  For example, some social games include features that enable users to exchange virtual currency for a chance to win one of a number of virtual goods that can be used in game. The apparent randomness of which item a user will obtain (or whether they will obtain one) has an element of surprise that makes it fun for users. Other platforms, such as Virgin Gaming, enable console game players to wager against each other on the outcome of playing a video game.

Other non-game social media sites are using gamblification as well to drive user engagement with offers and promotions. For example, Cash Dazzle is a platform that drives users to engage with a variety of promotional offers in exchange for tokens that can be used to spin a wheel for a chance to win cash prizes.


Online casino games is  a new battlefield, pitting social game companies against traditional, land-based casino operators and the Indian tribes. The battle is for control of new channels (social and mobile channels) for casino games and other online gambling related activities. This battle is already playing out in a big way. Traditional gambling equipment provider IGT spent $500 million to buy Double Down, a maker of casino games for Facebook. Shuffle Master, Inc., a leading global gaming supplier, has agreed to acquire Ongame Network Ltd., one of the world’s largest poker providers to online gaming operators. Betfair, one of the largest players in the European Internet betting exchange, has invested in one of the fastest growing US social game companies.

Gamblification is also driving a need for new types of data that identify the “whales.”

These games and other “gamblified” applications are tremendously popular and the use of gamblification is very likely to increase. There will be huge business opportunities around the gamblification movement that is afoot. However, businesses leveraging gamblification need to be certain that they don’t leverage gambling mechanics in a way that crosses the line into illegal gambling.

A variety of factors are relevant to the legal analysis in the US. One is that gambling is largely regulated by state law. In some states there are gambling-specific laws and/or other laws relating to contests, sweepstakes and lotteries. Yet, there is great disparity among the various states regarding what is legal. Add to this historical problem the fact that there is a flurry of new online gambling legislation due to a recent change in position  by the DOJ that has permitted states to legalize online gambling (except for sports betting).

Additionally, many activities that some online operators believe will avoid triggering gambling laws may not actually be in compliance. Some of the activities use virtual currency as the means by which users get a “seat at the table” or a “spin of the wheel.” While many virtual currency based models may be legal, the use of virtual currency alone does not necessarily ensure that there is no risk of running afoul of legal issues. One of the key issues with that is whether the virtual currency has value. In the Zynga poker example, the argument is that because you can not cash out the chips they do not have value, within the meaning of the gambling laws.

The increasing use of gamblification is going to continue to push the envelope of what is and what is not legal. Understanding the complexities surrounding these issues can be challenging for new entrants due to the lack of specific precedent that addresses many of the techniques that are proliferating in the social game and promotional arenas.

Additionally, even if certain “gambling-like” activities are legal, certain state laws may require that the operators go through a licensing process analogous to what land-based casinos currently do.



A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.





Epic Games to make government training games

Of all the companies you’d expect to announce a big government partnership, a major video game studio is probably not at the top of your list. Nevertheless, Epic Games announced Tuesday that it has entered into a “long-term, multi-platform” deal with a division of Applied Research Associates to license the Unreal game engine for government use.

Royal Canadian Mint unveils MintChip virtual currency

Having revealed plans to ditch the Canadian penny last week, the Mint is continuing its assault on physical cash with MintChip, which it describes as the “evolution”
of currency. The system brings all the benefits of cash into the digital age,
claims a dedicated Web site, providing users with instant, private and secure access to their money.

Social Gaming Key for Advertisers in 2012

Did you know Internet marketers will spend upward of $271 million on social gaming ads in 2012? In-game advertising is the next big trend in the industry,
with analysts expecting ad spend on social games to reach $900 million annually in less than three years. The stakes are higher than ever for brands as they budget ad spend on laptops, mobile devices, and consoles.

Gamification Platform BigDoor Raises $5 Million From Foundry Group

White label gamification platform BigDoor has raised $5 million in new funding led by existing investor Foundry Group,
bringing BigDoor’s total funding to $13 million. BigDoor’s gamification platform essentially allows online publishers to add game mechanics to web interactions and engagements. BigDoor helps companies build game-like mechanics and loyalty programs into their sites or apps by enabling points, badges,
levels, leaderboards, virtual currency and virtual goods.

NRDC, Opower, & 16 Utilities Team Up to Create Social Gaming App

“With an initial reach of 20 million households, the effort is one of the most significant to date, enabling people to take action and become more energy efficient,” NRDC said in a statement today. “Leveraging the Facebook platform, the app allows people to quickly and easily start benchmarking their home’s energy usage against similar homes, compare energy use with friends, enter energy-saving competitions, and share tips on how to become more energy efficient.”

Google Glasses Face Serious Hurdles, Augmented-Reality Experts Say

When Google officially unveiled
Project Glass — the company’s bid to develop Terminator-style augmented-reality glasses — we saw a provocative glimpse of the future. The video Google released yesterday showed us the point of view of someone wearing the glasses, with icons, maps and other graphical overlays appearing over the user’s complete field of vision.


On March 30, 2012 the California federal judge hearing the lawsuit initiated by a putative class of retired NFL players against Electronic Arts Inc. denied EA’s motion to dismiss the suit and to strike the complaint.  The Court ruled that the retired players’ allegations that EA’s unauthorized use of their likenesses in the “Madden NFL” video game was not trumped by First Amendment protection because the video game does not pass the transformative use test.  Specifically, the court held that “[a]lthough EA appears to claim that its mere projection of plaintiffs’ likenesses into avatar figures, capable of manipulation by gamers, is sufficient to confer constitutional protection, another way to see this supposed transformation is as a relatively literal, if skilled, translation of plaintiffs’ conventional images into the medium of the video game”.

This begs the question of what is transformative use?  Generally, the courts have defined transformative use as a use that “adds new material that reflects critically on the original”.  Traditional categories of transformative use are for purposes of criticism, commentary, newsreporting and parody.  Therefore, EA’s argument relies on its ability to fall within one of these traditional categories or to convince to court to create a new category which is more reflective of the current world and the available technology.   

EA argued in its motion to dismiss the case that it’s “Madden NFL” video game should be granted the same First Amendment constitutional protection as any book or movie.  This argument is founded in the recent Supreme Court decision in Brown v. EMA which clearly granted First Amendment protection to video games.  However, the current Court took the position that the transformative use test focuses on the reproduction of the plaintiffs’ likenesses, not merely the inclusion of expressive elements in game as a whole.  The decision stated that “[i]f, as EA urges, any expressive elements within the larger work were somehow to ‘transform’ an otherwise conventional use of a celebrity’s likeness, the right of publicity would effectively be eviscerated”.

That said, this decision is merely one battle in an ongoing war.  It is not dispositive on whether EA or the putative class of retired NFL players will ultimately be successful in the suit.  Moreover, EA recently was successful in dismissing a similar lawsuit in another jurisdiction alleging the misuse of college players’ likenesses in its “NCAA Football” titles.  In this case the Court agreed with EA’s argument that its First Amendment protections overruled the publicity rights of players.  Therefore, with these conflicting decisions in the circuits it is uncertain in which way the current state of the law will head.  

If you would like to read more about right of publicity and video games, please see our recent Client Alert.


On March 21, the Entertainment Software Association filed a petition seeking a waiver from the Federal Communications Commission’s recently adopted rules that would impose certain disabilities act requirements on providers of advanced communications services (ACS) — which could include video games that allow voice or text communications during game play. The petition notes that while communications may be integrated into video games, it is not the primary purpose of the games, and therefore should be eligible as a class for waiver.  The waiver request included the following three classes of video game industry products and services: Game consoles and their peripherals; game distribution and online game services; and, game software.   (See our recent client alert: Telecom Monitor). ESA asked the FCC to rule on the petition within 90 days.

ACS includes interconnected VoIP, non-interconnected VoIP, electronic messaging service and interoperable video conferencing services, which are defined as:

  • Non-interconnected VoIP: a service that (i) enables real-time voice communications that originate from or terminate to the user’s location using Internet protocol or any successor protocol; and (ii) requires Internet protocol compatible customer premises equipment” and “does not include any service that is an interconnected VoIP service.
  • Electronic Messaging Service: “means a service that provides real-time or nearreal-time non-voice messages in text form between individuals over communications networks. This service does not include interactions that include only one individual (human to machine or machine to human communications).
  • Interoperable Video Conferencing Services: services that provide real-time video communications, including audio, between two or more users. This service does not include video mail. The Commission has sought additional comment, pursuant to the Further Notice of Proposed Rulemaking, regarding the definition and application of “interoperable”.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.


The Virtual Military

While much of the international system remains mired in the economic doldrums, many global military powers continue to increase defense budgets focused upon the research and development of simulation technologies. As part of our week-long focus on the importance of games to international relations and security, today we consider how Russia,
China and the United States are using virtual simulators to train its armed forces.

Social game Idle Worship takes Facebook gaming to new level

Idle Games is launching a next-generation social game today dubbed Idle Worship. The title opens up a new genre on Facebook — the once popular “god game” — and it has an interesting and witty approach to social gameplay. Founded by former ad executive Jeffrey Hyman, San Francisco-based Idle Games is in a “holy war against games that suck or aren’t actually social.”

TrialPay and TubeMogul Introduce Real-Time Bidding for Virtual Currency and Social Video

a leader in transactional advertising, and TubeMogul, a media buying platform for brand advertising, announced a partnership that brings real-time media buying to social video advertising for the first time today.

Illinois legislation to ban employers from asking for social network passwords hits snag

Legislation that would prohibit employers from seeking job applicants’ social network passwords is on hold in the Illinois House. Democratic Rep. La Shawn Ford’s measure would allow job-seekers to file lawsuits if asked for access to sites like Facebook. Bosses could still ask for usernames that would allow them to view public information on the sites.

 Smithsonian Art Of Video Games Exhibit Opens With Gaming Festival

The exhibit is curated by Chris Melissinos of Past Pixels, a group charged with the preservation of video game history. Over the past year, Melissinos — aided by a board of advisors that includes Double Fine’s Tim Schafer, text adventure veteran Steve Meretzky, and Penny Arcade team Jerry Holkins and Mike Krahulik — designed an exhibit that encourages visitors to make what Melissinos calls “a deeply personal decision” of whether video games are art. The exhibit offers five eras of video games with both playable demos and self-playing videos,
showcasing everything from the Atari 2600 to the PlayStation 3, from the traditional platforming of Super Mario Bros. to the more experimental play of Flower.

Navy Pursues a Better Attack Submarine Virtually

Technical advances in the field of virtual reality, also known as virtual worlds (VWs), are making it possible for the U.S Navy to tap into the collective expertise of its best submariners to design and build the next generation of attack submarines. At the Naval Undersea Warfare Center (NUWC) in Newport, Rhode Island, designers are able to create collaborative environments for submarine development using a fully immersive virtual reality application similar to the popular Second Life environment, which enables them to interact with one another both audibly and visually. Numerous participants at remote sites worldwide are linked to one another through the Defense Department’s secure computer network.



On Monday March 19, 2012 a
bill was submitted to the U.S.
House of Representatives by Reps. Joe Baca
(D-Calif.) and Frank Wolf (R-Va.) which, if
passed, will require most video games to include a warning label that
states: “WARNING: Exposure to violent video games has been linked to
aggressive behavior.”

H.R. 4204, entitled “The Violence in Video Games Labeling
Act”, is a reaction to what its sponsors say is increasing evidence that
playing violent games can have a serious, long-lasting impact on children, which
should require a health warning to consumers. 
However, whether v
iolence in video games promotes real world consequences has been a
contentious issue for decades.  Advocates of regulation of violent video games
attribute aggressive behavior to exposure to video games. However, proponents
of less video game regulation point to the studies that have shown video games
can improve cognitive skills.

proposed bill would require the Consumer Product Safety Commission to
release rules, within 180
days, requiring that most
games display the warning label. Included amount this would be all video games
rated by the Entertainment Software Ratings Board
“E” for everyone, “E10+” for everyone 10 and older, “T” for teen, “M” for
mature or “A” for adult.  Only video games rated “EC,” or “early childhood”, would be exempt
from the labeling requirement.

It is possible that this requirement of near-universal
labeling is an attempt to avoid the recent Supreme Court decision in Brown v.
EMA holding that video games are subject to First Amendment Protection and
finding that a California “violent” video game labeling requirement was “widely
underinclusive” and merely disfavored a certain viewpoint rather than protecting
a valid state interest.


As a general rule, the name, image or likeness of a living person–not necessarily just a celebrity–cannot be used for commercial purpose without his/her written consent. Some jurisdictions have extended the coverage to provide additional protection to such elements as signature, voice, mannerisms or even expressions. Unauthorized use of an individual’s name, likeness or image may violate his/her right of publicity, which is currently recognized by statute, common law, or a combination of both in 31 states.1

However, as each state’s law evolved separately, there are often significant differences in the coverage provided. Specifically, New York and California, the key states for rights of publicity due to their many celebrity residents, protect different rights and are diametrically opposed on whether these rights extend beyond death.

In the past few years we have seen a paradigm shift in the
technology used to create video games. The current video game iterations allow for nearly photo-realistic imagery and, in some cases, use this
to allegedly depict real people in the games. However, not all of these
video games have entered into licensing arrangements with the parties
allegedly depicted. From this we have witnessed the commencement of a
new body of case law involving right of publicity claims against video
game makers. The video game companies have countered the claims by
alleging, among other things, that video games are creative works and
protected by the First Amendment.

To learn more about this emerging issue, please click HERE.


A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.


Gaming is a top priority for mobile-tech makers

“Gaming is now a ‘need to have’ category, not a ‘nice to have’ category for mobile devices, whether they be tablets or phones,” said PJ McNealy, videogame analyst at Digital World Research. “The days of a single-function mobile device are long gone.”

PixyKids raises $3M for a social media platform just for kids

PixyKids has raised $3 million to develop its social platform for kids ages six to 12. It is built on the idea that kids want to socialize, even though they’re too young for Facebook. Kids can join PixyKids under their parents’ supervision and can share experiences and pictures the way that adults do on Facebook. The company is betting that social networks, not virtual worlds or education sites, will resonate most with kids.

FanCake Debuts as First Live Social Gaming Experience for Sports Watching

Kwarter, a mobile application factory building apps that lie at the intersection of the social, mobile and TV spaces,
announced today the launch of its first app, FanCake. FanCake turns live televised sporting events into interactive and social games, connecting millions of sports fans, teams, broadcasters, brands and athletes to enhance the game watching experience.

LVFH Launches Real Vegas Casino on Facebook

Las Vegas From Entertainment Inc. is pleased to announce the launch of its social casino product, Real Vegas Casino,
on Facebook to the general public. It is expected LVFH will launch more games under the Real Vegas Casino brand shortly, coinciding with a specialized marketing campaign.

 French City Implements Virtual Currency to Avoid Financial Ruin

The French city of Nantes has plans to introduce its own virtual currency as a complement to the euro. By 2013,
participating local businesses will be able to pay, or be paid in virtual currency units called “Nanto.”

Olympic stars brought to life in world’s first ‘augmented reality hotel’

From today, guests at the Holiday Inn London Kensington Forum will be able to use their smartphones or tablets to see athletes in virtual action in the reception, corridors and bedrooms. When the devices are pointed at specific sites in the hotel, the athletes will appear on the screen. BMX World Champion Shanaze Reade can be seen performing tricks on her bike in the lobby, while Paralympic table tennis world number one Will Bayley hits table tennis balls behind reception.  Meanwhile, UK long-jump record holder Chris Tomlinson can be seen to jump in a corridor. And leading windsurfer Dempsey will – somewhat bizarrely – do his thing in the hotel’s bedrooms using a bed sheet.



On March 7, 2012, in our San Francisco office, Pillsbury hosted a discussion with prominent industry players from
Electronic Arts, Zynga, Lightspeed Venture Partners and KlickNation
(acquired by EA in 2011) to discuss all aspects of the process
surrounding video game company acquisitions. Topics included: how
deals are sourced in the video game space, how to decide whether or not
to sell, how to shop your company and how to negotiate deal value and
other key terms. Panelists came from both sides of the table to provide
insights as to how deals work from the perspective of the strategic
buyer and the founder/VC investor.

To read about the top takeaways from the event, visit Inside Mobile Apps.


Gametek has filed a complaint for patent infringement against a large number of game and game-related companies over a virtual goods payment patent

The patent issued based on an application originally filed September 29, 2000, and claims priority to a provisional application filed June 20, 2000. The patent issued July 11, 2006. We are happy to provide you a copy of the extensive prosecution history, but it is too large to provide a link here.

One of the independent claims recites as follows:

15. A method of managing the operation of a game which includes a game environment, and is programmed to control a gaming action of at least one of a plurality of users, said managing method using a programmed computer to effect the following steps: a) tracking the activity of the at least one user in the course of the gaming action; b) creating an account for the at least one user for maintaining a balance of the at least one user; c) enabling the at least one user to select at least one of a plurality of game objects; d) setting the purchase price of the at least one game object; e) comparing the account balance with the set price of the at least one game object and, determining if the user’s account balance is not less than the set price, then the at least one user is eligible to purchase the one selected game object; f) presenting to the at least one user an offer to purchase the game object dependent upon a group of game parameters comprising the tracked activity of the at least one user, and an indication of whether the at least one user has made a commitment of consideration to purchase the one selected game object; g) ordering the at least one selected game object without interrupting the gaming action of the at least one user; and h) supplying the selected one game object to the at least one user without interruption of the gaming action of the at least one user and incorporating the game object into the game.

The basis for the patent being granted is set forth in the Examiner’s reasons for allowance [Click here for a copy]. In part, the examiner refers to console-based games but noted that none of these “disclose offering a game object to a user for a price and allowing the user to access and incorporate said object in a game without interrupting the game.” The examiner also referred to other prior art and said “the instant invention is distinguished from the prior art…as the system tracks a user’s gaming actions…determines where a user is eligible to purchase a game object based on the user’s account balance…presents and offer to the user to purchase the game object based on …[the] tracked gaming action, [where] the user purchases and is supplied with the game object without interrupting the gaming action, and the object is incorporated into the game.”

Does anyone think that the use of player accounts to enable in-game purchases was new in 2000?

We have collected prior art that may impact the validity of this patent. We have been in touch with some companies and are reaching out to others regarding a potential joint defense group. Even companies who have not yet been sued may be interested in monitoring this case and/or helping to invalidate the patent.

We will provide additional postings here. Please check back.

If you have information to share or have additional questions, please contact us at: Virtual Goods Payment Team