Articles Posted in Video Games


Date: March 6, 2012
Time: 8:00am – 7:00pm PT
Place: The Palace Hotel, 2 New Montgomery Street, San Francisco, CA

The ABA Forum on the Entertainment and Sports Industries presents Video Games and Digital Media Conference

Join Pillsbury as we co-sponsor this exciting and informative event in San Francisco! Learn about:

  • The Changing World of MMO Games
  • Relationships Among Console, Mobile and Casual Games
  • Investing Update
  • Social and Mobile Games
  • Emerging Business Models
  • Litigation Update

Keynote Address by Michael Gallagher, President and CEO, Entertainment Software Association

Special Offer
Blog readers will receive a special 15% discount on registration! Simply note on your registration form that you are registering via Pillsbury with the Pillsbury discount.

For more information, please click here!


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


Will 2012 be the year of virtual worlds?

What got me thinking about this was a blog post by Maria Korlova over at the HyperGrid Business Blog. In it, she maintains her firm conviction that businesses will soon come around to using these virtual worlds as business tools. Just as the nay-sayers were wrong about the Internet, Software as a Service, and Lady Gaga, we will eventually integrate this technology into how we work.

Courts, Sports And Videogames:
What’s In A Game?

Although one of the clearest legal thinkers, Louis Brandeis, conceived the modern right of publicity,[1]
“unclear” would be an adjective all lawyers would apply to the current state of right of publicity law, regardless of which side of the issue they usually argue. Indeed, although the right of publicity concept was further developed by another very clear legal thinker, William Prosser,[2] he himself alluded to it as the concept “that launched a thousand lawsuits,”[3] few of which can be reconciled with one another.

Insurers Can’t Join Coverage Suit Over Athlete Image Use

A Georgia federal judge said Wednesday that four insurers can’t intervene in a coverage suit in California over underlying antitrust class actions concerning the use of college athletes’ likenesses in video games.

What the Copycat Saw: Creative Theft in Mobile and Social Games

The distinction between theft and inspiration is often unclear in video games. Traditions are formed,
broken down, and remade every few years. The most successful ideas are eagerly absorbed by others, from regenerative health in first person shooters to the subdivision of platformer levels into world and stage.

Virtual worlds training for federal cyber pros in the works

After finishing a successful year of training the federal cyber workforce, the government is taking another step toward cultivating better-prepared digital defenders.


On December 6, 2011 Zynga settled its copyright suits against Vostu USA Inc. and others.  The first suit, case number 5:11-cv-02959,
filed in the U.S. District Court for the Northern District of California back in June, alleged that several of Vostu’s games infringed Zynga’s copyrights.
Specifically, Zynga had alleged, that Vostu’s MegaCity, Cafe Mania, Pet Mania, Vostu Poker and MiniRazenda games are merely clones of Zynga’s popular titles.
Zynga followed this suit with another one in Brazil claiming copyright infringement and unfair competition.  Vostu initially responded to the suits asserting that its games were non-infringing but has ultimately agreed to settle the US and Brazilian matters by compensating Zynga and altering some of its games.

The parties have issued a joint statement that “Zynga and Vostu have settled the copyright lawsuits and counterclaims against each other in the United States and Brazil”.
Additionally, “[a]s part of the settlement, Vostu made a monetary payment to Zynga and made some changes to four of its games” but the parties did not elaborate on the amount of the payment or the nature of the changes.

This settlement followed (and may have been prompted by) some early success in the cases by Zynga.  Zynga was able to obtain a preliminary injunction from the Brazilian court ordering Vostu to cease making the challenged games available.  In response Vostu initially convinced a U.S. District Judge to grant a temporary restraining order prohibiting Zynga from enforcing the Brazilian court’s order; however this TRO was quickly dissolved.  The Brazilian order was stayed by the appeals court pending Vostu’s appeal.

This settlement is a good example of how IP rights can be used to protect a video game from being cloned.  There is a history of successful games being the subject of imitation which goes back to the earliest days of the industry.  Many companies have come to believe that cloning is just part of business and there is nothing that can be done to stop it.  However, this is not entirety true.  Copyright, trademark,
trade secrets and patent rights can all provide differing levels of protection for games.  Copyright can protect a game from literal duplication or use of its protected images, code, literary elements, music, etc.  Trademark can protect the actual name, logo or certain other identifying elements from a competitor’s potentially confusing use in a game (or elsewhere).  Additionally, trade secrets can be used to protect a company or game’s “secret sauce” from being co-opted.
Finally, patents may be used to protect features and functions of a game, including game mechanics, business methods and other functionality and processes.



Given the great interest in “the cloud” from a business perspective, as well as Microsoft’s popularization of the concept with its “To the Cloud!” advertising campaign, it’s no wonder that many game providers are looking to the cloud as the next viable and profitable gaming platform. The cloud movement not only provides economic incentives through various subscription and pay-to-play models,
but also helps defeat piracy by locking down game code and other intellectual property from potential thieves.

Cloud game providers have a lot to gain from virtualization, but moving to a cloud-based framework raises potential legal issues that should be considered.


The first big issue for gaming providers considering moving to the cloud is both a practical one and a legal one – latency. Unlike digital downloads, streaming games require both down and upstream communications. Further, gaming often demands instant, real-time action, so any material latency will be noticed, especially for multi-player, FPS-type or other real-time games. Currently, some game providers have tried to satisfy gamers’ demand for real-time, low-latency play by operating in data centers that are physically close to the gamer. From a technical perspective, cloud gaming may present an issue because it could involve moving the game servers much farther away from the gamer, thus having the potential to lead to increased, or even significant latency. Another technical fix may be to use “tricks” similar to those used in non-cloud gaming to compensate for latency issues.

From a legal perspective,
however, the move to the cloud could bring such “tricks” into the realm of patents held by the gaming company OnLive–patents which cover “twitch gameplay” over a cloud-based system. When porting a game from client-server or mobile-based platforms to a cloud-based platform, game providers should be sure to investigate whether the conversion will expose them to potential infringement liability, including the OnLive patent portfolio.
This is especially important because most game providers are not the actual game developer, so game providers should also review their agreements with the game developer to understand whether indemnification or re-development are options. Further, if the agreement is with a small game developer, the developer may not have the financial resources to indemnify the game provider,
and thus the game provider should be aware of the potential risks before embarking on a cloud-based venture.

To read this publication in its entirety, click here.



The Supreme Court of the United States issued a long-awaited decision in Brown v. EMA. The decision authored by Justice Scalia (in which Justices Kennedy, Ginsburg, Sotomayor and Kagen joined and Alito and Roberts concurred) opined on the validity of California Assembly Bill 1179 (2005), Cal.
Civ. Code Ann. §§1746-1746.5 (“Act”). The Act prohibited the sale or rental of violent video games to minors and required packaging to be labeled ‘”18″ if the game included options for “killing,
maiming, dismembering, or sexually assaulting an image of a human being”
in ways that reasonably could be considered as appealing to “a deviant or morbid interest of minors” or is “patently offensive to prevailing standards in the community”.

The Supreme Court strongly held that video games qualify for First Amendment protection and that the “basic principals of freedom of speech . . . do not vary” with the creation of a new and different communication medium.  Specifically, the Court stated that “[l]ike the protected books, plays, and movies that preceded them, video games communicate ideas — and even social messages — through many familiar literary devices (such as characters, dialogue, plot and music) and through features distinctive to the medium (such as the player’s interaction with the virtual world).  That suffices to confer First Amendment Protection.”  The decision stated that the First Amendment protection is subject to only a few limited exceptions for historically unprotected speech, such as obscenity, incitement and fighting words and a legislature may not create new categories simply by deciding that such categories of speech do not have sufficient societal value.  Moreover, the Court’s decision stuck down the proffered argument that violence is a form of obscenity by holding that “[v]iolence is not part of obscenity that the Constitution permits to be regulated”.

The court did not remove the possibility of any sort of video game regulation and clearly understood California’s desire to protect its minor citizens.  “No doubt a State possesses legitimate power to protect children from harm . . . but that does not include a free-floating power to restrict the ideas to which children may be exposed.”  The Court found that if California could actually demonstrate that its Act passes the strict scrutiny test (i.e. justified by a compelling governmental interest and is narrowly tailored to serve said interest) it may be able to restrict the protected speech inherent in video games.  However, the Court opined that California could not meet this standard as its evidential psychological studies were flawed and its Act is “widely underinclusive” raising concerns that it is merely disfavoring a certain viewpoint rather than protecting a valid state interest.

“Here, California has singled out the purveyors of video games for disfavored treatment — at least when compared to booksellers,
cartoonists, and movie producers — and has given no persuasive reason why.”  Therefore, the Court felt that by limiting its purported regulation to the video game industry while ignoring other industries that make violent content available to minors, California demonstrated a unconstitutional bias.  Moreover, the court stated that the video game industry’s ESRB voluntary rating system already accomplishes one of the Act’s goals, that of assisting parents in restricting their children’s access to violent video games eliminating the compelling need for California’s Act.

While the Court’s decision did not put a final nail in the coffin of any future laws seeking to regulate video game content,
it did make it significantly more difficult to do so without meeting the strict scrutiny standard.


On April 12, 2011, the Massachusetts Department of Revenue issued Letter Ruling 11-4 holding that a product providing a customer access to information from a Taxpayer’s database is not subject to sales or use tax where the services provided do not involve transfers of prewritten software or a license to use software on a server hosted by the Taxpayer or a third party.

The Massachusetts Department of Revenue (“DOR”) issued Letter Ruling 11-4 addressing the issue of whether Massachusetts customers of a Taxpayer’s product, which provides employment application collection and selection services through proprietary software, are subject to Massachusetts sales and use tax.  The DOR held that sales of the taxpayer’s products to Massachusetts customers are not subject to the Massachusetts sales and use tax.  Massachusetts imposes a 6.25% sales tax on sales of tangible personal property and telecommunication services within the state including sales of prewritten (canned) software regardless of the method of delivery.  Also, the sale of a license or right to use software on a server hosted by a taxpayer or third party is taxable.  However, where there is no charge for the use of the software and the object of the transaction is acquiring the good or service other than the use of the software, sales or use tax on software does not apply.  See 830 CMR 64H.1.3(14)(a); LR 10-1.  In the instant matter, the provision of information services to customers based on data gathered from prospective employees and provided in a report by a taxpayer to its customers is not subject to tax.  The object of the customer’s purchase of the product is to obtain database access including reports prepared by the taxpayer, rather than use of the software itself.  The taxpayer customers do not have the ability to operate, direct, or control the software.  The DOR concluded that the services provided by the taxpayer do not involve transfers of prewritten software or a license to use software on a server hosted by taxpayer or a third party and therefore are not subject to sales and use tax.

The taxation of on-line services is evolving in many jurisdictions.  Jurisdictions without specific statutory or regulatory authority addressing such services look to existing provisions for information, telecommunication, data processing or software services in attempts to include some on-line services within their scope.  As the above ruling indicates, under existing sales and use tax principles such as true object of the transaction or primary purpose tests such efforts may not succeed.  However, every jurisdiction has is own statutory provisions and tests so one needs to review them in the context of the specific facts relating to the online game or other social media services.


Copying within the games industry is prevalent. Some people attribute this to the fact that this is just the way it is and has always been within the industry. This is often premised on the notion that the “idea” for a game is not protectable. But as the game market grows, so to do the losses from copying suffered by the game innovators.

One of the biggest factors contributing to this is that many game developers do not develop comprehensive strategies for protecting the valuable intellectual property that they create. This is generally due to several reasons. One is that historically, intellectual property has just not been a big focus for many in the industry. The other is that many people are not aware of the range of options available for protecting IP in the game space and what aspects of games are protectable. This is often due to some common misunderstandings about intellectual property, particularly with respect to the patentability of game features.

While it is true that one can not protect the “idea”
for a game, this does not end the inquiry. Many aspects of games are protectable by patents, copyright and trademarks. Of these, patents are probably the most overlooked and least understood. While this applies to all types of games, there are particularly compelling opportunities to patent many of the innovative aspects of social and online games. This is due in part to the many recent developments in the relevant technology and business models for these games. Prudent developers and publishers will seize these opportunities to develop a comprehensive IP protection strategy.


On of the announcements
coming out of E3 is that GameStop and Virgin Gaming have formed  a partnership to power online video gaming tournaments. According to the announcement, Virgin Gaming will be:

The preferred online tournament provider for featured console game releases sold in U.S.
GameStop locations and through GameStop will offer publisher partners unique, large-scale online tournaments to help market, sell and create deep player engagement for their games. GameStop customers will have the opportunity to win cash and incredible prize packages through the GameStop/Virgin Gaming tournaments, in addition to Virgin Gaming credits redeemable for games and other merchandise.

As online gaming continues to grow, companies are seeking various ways to create ancillary revenue and drive user engagement. Tournaments can be one way of doing that. Tournaments, if done right, can be legal. However, there are a number of legal considerations of which companies must be aware to avoid running afoul of various laws.


While the National Endowment for the Arts (“NEA”) is traditionally known for providing grants for various “traditional” artistic endeavors, a recent change in its eligibility requirements expands its coverage to certain categories of digital media as well. Specifically, the NEA has modified its mandate to include providing grants for innovative work in the video game design field.  Grants will be made available for the development, production, and national distribution of innovative video games about
the arts and video game projects that can be considered works of art on their own.

The eligibility changes are due in part to the NEA’s understanding that people can experience art in a number of ways outside traditional arts venues, including through video games. However, video games will need to comply with the same standard of artistic excellence and merit as works in any other medium.  While those are somewhat subjective standards, the NEA has asserted that its panels will have knowledge and experience in the relevant field to judge any applicants.

Grants may range from $10,000 to $200,000 (or more in some extraordinary instances), based on the platform, complexity and scope of the project.  However, applicants must be a 501(c)(3) nonprofit arts organization, or affiliated with one, to qualify for a grant of any size.  The application deadline date is September 1, 2011, for projects that start on or after May 1, 2012.