UK Court of Appeals Rules PS2 is Not a Computer Eligible for Import Duties Rebate

Text of Decision
After a five year battle, the British Court of Appeal has failed to overturn a ruling that classified the PlayStation 2 as a video games console rather than a computer, thereby denying Sony a lucrative £34.2 million ($63m) import duties rebate in the United Kingdom. Lord Justice Chadwick also denied Sony the right to take the appeal to the European Court of Justice describing Sony’s lawyers’ arguments as exceeding “the bounds of propriety” and going “beyond what can be regarded as acceptable written advocacy”. The rebate was phased out in 2005 so this should not be an ongoing legal issue.

Sources: GameDaily.biz | GameIndustry.biz | Gamasutra | Next Generation | joystiq | GameSpot | Boomtown | IGN | Link | Link | Out-law.com | Geek.com | GameSHOUT

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Louisiana Violent Game Bill Signed Into Law – ESA Files Suit

Text of Violent Game Bill (HB 1381)
Text of ESA Complaint
This new bill (HB 1381) drafted by controversial Florida attorney Jack Thompson, allows a judge to rule on whether or not a video game meets established criteria for being inappropriate for minors. A person found guilty of selling such a game to a minor would face fines ranging from $100 to $2,000, plus a prison term of up to one year. The ESA immediately filed suit.

Dale’s Comment: Jack Thompson has drafted HB 1381 in a way that tries to respond to the First Amendment issues that brought down similar laws in other jurisdictions. It is drafted in such a way to use the same legal standard by which obscenity is determined – the Miller test. The Miller test defines obscenity as something that “by contemporary community standards appeals to the prurient interest; depicts sexual content specifically defined by state law in a patently offensive way; and lacks serious literary, artistic, political, or scientific value”. The Miller hasn’t, to my knowledge, been used in cases that attempt to uphold the constitutionality of legislation controlling depictions of violence.

Sources: Gamasutra | GamePolitics | GameSpot 1 | GameSpot 2 | Next Generation | Macworld | Reuters | GameDaily.biz | Muskogee Phoenix (Editorial) | ESA Press Release | joystiq | Link | Link | Advanced Media Network

GamePolitics Full Coverage of Louisiana Violent Game Law

Oklahoma ‘Games As Porn’ Bill Signed Into Law – ESA to Fight It

Text of Law (HB 3004)
Here we go again! This law redefines a list of items, such as hardcore pornography, which are deemed “harmful to minors”, to include video games which use “inappropriate violence”.The new law will make it a felony for anyone in Oklahoma to sell, rent or display games which contain inappropriate violence. Stores must keep such games hidden in a similar manner to pornographic magazines and videos. The law ignores the ESRB age rating for games, and instead makes its own definition of inappropriate violence. The law is due to come into force on November 1, 2006. The ESA has already launched a constitutional challenge to the law which is likely to succeed based on the experience of similar challenges in other jurisdictions.

Sources: Gamasutra | GamePolitics.com | Governor Henry’s Press Release | GameSpot | GameIndustry.biz | Next Generation | GameDaily.biz | joystiq
ESA to Fight: Gamasutra | GamePolitics.com | GameSpot | GameIndustry.biz | Next Generation | 1Up.com | ars technica | Business Week

Note: Oklahoma becomes the eighth U.S. jurisdiction to enact such a law. Previous laws in Washington State, Illinois, St. Louis, Indianapolis and Michigan were held unconstitutional. California’s video game law is currently under review. Minnesota’s bill was signed into law last week.

GamePolitics.com Full Coverage of Oklahoma ‘Games as Porn’ Law
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Blizzard/Vivendi Settle WOW Unofficial User Guide DMCA Dispute

Text of Complaint
In an out-of-court settlement, a 24 year old Florida man, Brian Kopp, who claimed last March that he’d been unlawfully blocked from selling copies of his unofficial “World of Warcraft” guide by the Blizzard and Vivendi, can resume his sales on eBay. The settlement does not provide for monetary compensation for Kopp. Blizzard and Vivendi agreed to withdraw their previous take-down notices and to drop their infringement claims. They also agreed to refrain from filing future DMCA take-down notices against the same items Kopp had already disputed through counter-notices. Kopp agreed to retain the book’s disclaimers about its unofficial nature and agreed not to include links or instructions on how to locate ‘cheats’ in the game.

Sources: CNet | Kopp’s Press Release | GameSpot | USA Today | Kotaku | GameDaily.biz | Gamasutra | EuroGamer | GamePolitics.com

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THQ Settles Tetris Rights Dispute

In 2005, THQ sued The Tetris Company, alleging breach of contract, claiming it it had met all the requirements of its deal to have their license agreement renewed until 2007. THQ was previously prevented from releasing a Nintendo DS version of Tetris when Nintendo published the title itself last April. Under the settlement THQ will publish a version of Tetris for the Xbox 360 in Europe and North America. Presumably THQ has no rights to publish Tetris in Japan or for the DS. Tetris was published last year by AQ Interactive on the Xbox 360’s launch date in Japan.

Sources: Gamasutra | GameSpot | EuroGamer | Ferrago | GameIndustry.biz

Take-Two/Rockstar Settle with FTC over Hot Coffee Mod

Text of Consent Agreement
Under a consent agreement, accepted by the FTC in a 5-0 vote, Take-Two and Rockstar Games will be subject to civil penalties of up to $11,000 per violation if they violate their agreement to: (i) “clearly and prominently disclose on product packaging and in any promotion or advertisement for electronic games, content relevant to the rating, unless that content had been disclosed sufficiently in prior submissions to the rating authority”; (ii) not misrepresent the rating or content descriptors for an electronic game; and (iii) “establish, implement, and maintain a comprehensive system reasonably designed to ensure that all content in an electronic game is considered and reviewed in preparing submissions to a rating authority.”

Sources: FTC Press Release | Gamasutra | ars technica | joystiq | GameSpot | Next Generation | GameDaily.biz | GamePolitics.com | ars technica | 1Up.com | CNet | San Jose Mercury News | TheStreet.com | CNN

New York Investigation:

LA Civil Suit:

FTC Investigation Related Posts:

Stanhouse Class Action Suit:

Cohen Class Action Suit:

Other Hot Coffee Related Posts:

ESA Files Suit Against Minnesota Game Law

ESA v. Minnesota (March 17, 2008 – 8th Cir Court of Appeals)
Click to hear Oral Arguments on Appeal (Feb 12, 2007)
Text of Appeal (Aug 29, 2006)
Permanent Injunction (July 31, 2006 – District Court)
Text of Complaint (June 6, 2006)
Text of Enjoined Bill (May 22, 2006)

As expected, the ESA has announced that it has challenged the Constitutionality of the new Minnesota bill that would fine children under age seventeen $25 for buying or renting video mature or adults only rated games – on the grounds that it infringes upon their First Amendment rights.

Sources: ESA Press Release | Gamasutra | GameDaily.biz | GamePolitics.com | Next Generation | Washington Post (Reuters) | ign.com | 1Up.com | GameSpot | GameIndustry.biz | ars technica

GamePolitics Full Coverage Of Minnesota’s Violent Video Game Law

Minnesota Video Game Bill Signed Into Law – ESA to Fight It

Minnesota’s new video game law provides a twist, in that it fines those under 17, $25 for purchasing or renting Mature and Adults Only rated games. Unlike laws from other States that failed to pass Constitutional-muster, it doesn’t punish retailers for selling or renting to minors, but it does require retailers to post a sign notifying customers of the fine. The law goes into effect on August 1, 2006. As usual, the ink wasn’t dry before the ESA vowed to fight it.

Sources: Gamasutra | GameSpot | Next Generation | GamePolitics.com | GameSpy | GameDaily.biz | Joystiq | 1Up.com | Team Xbox
ESA to Fight: Gamasutra | Next Generation | GamePolitics.com | GameDaily.biz | GameIndustry.biz

Text of Bill:

S.F. No. 785, 2nd Engrossment – 84th Legislative Session (2005-2006) Posted on May 22, 2006

A bill for an act relating to crime prevention; prohibiting children under the age of 17 from renting or purchasing certain video games; providing penalties; proposing coding for new law in Minnesota Statutes, chapter 325I.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:Section 1. RESTRICTED VIDEO GAMES; PROHIBITIONS.

Subd. 1. Definition. As used in this section, “restricted video game” means a video game rated AO or M by the Entertainment Software Rating Board.

Subd. 2.Prohibited acts; penalty. A person under the age of 17 may not knowingly rent or purchase a restricted video game. A person who violates this subdivision is subject to a civil penalty of not more than $25.

Subd. 3. Posted sign required. A person or entity engaged in the retail business of selling or renting video games from a location or structure with access to the public shall post a sign in a location that is clearly visible to consumers. The sign must display the following language in 30-point font or larger: “A person under the age of 17 is prohibited from renting or purchasing a video game rated AO or M. Violators may be subject to a $25 penalty.”

EFFECTIVE DATE. This section is effective August 1, 2006, and applies to violations committed on or after that date.

Dale’s Comment: Imagine a police officer writing-up a ticket to a 13-year-old violator? “May I see your library card and hall-pass please?” Or better yet, an eight-year-old in night court challenging the fine!? Please Mr. Judge, I thought the video game “Hot Coffee” was a beverage preparation tutorial. How would a child go about paying the fine, with their credit card or check book? Perhaps the police will garnish their allowance for the next 6 months. 😉

GamePolitics Full Coverage Of Minnesota’s Violent Video Game Law

Stream Theory Files Patent Suit Against Competitors

Text of ‘334 Patent
Stream Theory today filed a lawsuit against Softricity, AppStream and Exent claiming the three companies are infringing on its U.S. patent number 6,453,334. The lawsuit, filed in the United States District Court for the Central District of California, seeks damages and an injunction against the three companies for their willful infringement of Stream Theory’s patent. The patent’s abstract reads:

A file system driver program executes on a local computer. One or more agent procedures is configured to execute on the local computer to access file resources on behalf of a target process. A security process regulates the access of file resources by the agent procedures. The regulation of the agent procedure by the security procedure is based on a property that is unique to the target process.

Sources: Gamasutra  |  GameIndustry.biz  |  Market Wire  |  InfoWorld

Movie Industry May Drop HDCP/ICT Until 2010/2012?

In what would certainly be good news for purchasers of the low-end PS3 (which will not have HDMI outputs), the leading German newspaper Der Spiegel claims to have information on an unofficial agreement struck between the movie studios, Sony, Microsoft and others which will see HDCP, and the Image Constraint Token (ICT), being consigned to the scrap heap for at least four years. This move would mean that all movie content produced until 2010 at the earliest, and possibly as far as 2012, will not carry the ICT – a security feature which restricts/down-rez’s high-definition playback only to equipment with HDMI ports and HDCP encryption.
 
Sources: ars technica  |  GameIndustry.biz  |  Daily Tech  |  Next Generation  |  IGN  |  Gamasutra  |  Xbit  |  Joystiq  |  Engadget  |  Der Spiegel (Google’s English Translation)
 
Dale’s Comment: This is a remarkable development if true. I have been participating in online forums for years where this has been a major subject of contention for early HDTV adopters. With the constant delays of HD-DVD and Blu-ray and the many competing HD standards appearing on the horizon, this may spell the demise of HD down-rezzing and the ICT. Recently, Professor Ed Felton suggested that HDCP is Eminently Crackable. All this said, since main-stream press has not yet picked this up, I question its veracity. But, its fun speculation in the meantime.Update: October 15 2006: Save for one or two titles, the first couple hundred Blu-Ray and HD-DVD releases have been released without HDCP/ICT activated.

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Linden Lab Sued for Alleged Breach of Virtual Land Contract

A Pennsylvania lawyer, Marc Bragg, is suing Linden Lab, the publisher of Second Life, alleging the company unfairly confiscated tens of thousands of dollars worth of his virtual land and other property. The suit seeks financial damages in the thousands, in part for a breach of a virtual land auction contract and for violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. Linden Lab froze Bragg’s account after a suspicious online auction in which he acquired significant plots of virtual land for far below market price. Bragg reportedly acknowledges exploiting the auction interface but maintains that the onus is on Linden Lab to run their auctions securely. Sources: Wired | Joystiq | 1Up.com | Kotaku | PR Newswire GamePolitics.com Dale’s Comment: As noted in my earlier comments, following virtual property theft convictions in China, legal rights to virtual property will likely be recognized in the west. It was only a matter of time before this kind of law suit was filed. Dale’s Comment (May 21 Update): In a May 20th e-mail from Mr. Bragg, he indicated that he was in the process of revising the complaint and, once finished, will e-mail me a copy of it for posting here. He also had this to say in his e-mail:

I’m doing this because what the company did was wrong, just plain ethically and I believe legally wrong, and I believe letting other consumers know about it is important. Having nearly $8,000 + / – U.S. dollars in the game and countless hours of adding value to the game by building and enhancing the development of in game concepts, I don’t think it’s right for the company to freeze the assets they claim I rec’d title to when I bought them. Tossing me from the game, I could really care less. But freezing assets when they’re in error, is not right. And not even a phone call.

I also spoke with Paul Coates, another prospective complainant, who explained the situation as follows. From time to time Linden Lab’s puts in-game virtual property up for auction. The auctions are run for real $U.S. dollars on the Second Life/Linden Labs website. Minimum bids are established by Linden Labs for each new virtual property (from as low as $1.00 to as high as $1,250.00). When an auction is complete the winner has 7 days to claim, and pay for, the virtual property. If the virtual property is not claimed, the second-highest auction bidder is sent an e-mail and given the option to purchase the virtual land. However, if neither person claims the land, a glitch in the Linden Labs auction system allowed for the auction to start anew, with NO minimum bids. As I understood it, Mr. Bragg, Mr. Coates, and other players realized that this was happening, waited for this to happen, and when it did, bidded in the no-bid-minimum auctions. Just as with the first auction, winners of the second no-bid auctions, were sent an e-mail from Linden Labs indicating they had won the second auction and were instructed on how to pay for and claim their virtual property. This effectively allowed the purchase of virtual property at prices below that which Linden Labs had set. It is important to understand, from Linden Labs perspective, that it has a financial stake in these new virtual properties, especially the expensive ones, as they must expand their IT infrastructure (adding new servers etc.) to support them. The problem is, according to Mr. Coates, that Linden Lab’s response, when they realized what was happening, was to treat these players with one broad brush – as if they were hackers that had somehow intentionally hacked the system, rather than, admittedly, taking advantage of a flaw in the system that Linden Labs had established. Linden Lab’s response was to ban these players, with no way to appeal. The players are upset because they have spent real-world money to play the game, purchase their virtual property, and then they were abruptly shut out of the game, their virtual assets (paid for with real U.S. dollars) ceased, with no recourse or appeal. If a representative from Linden Labs contacts me with their side of the story I will update this story with their response.

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Ubisoft Wins Non-Compete Order Against Tremblay/Vivendi L.A.

Former Ubisoft COO Martin Tremblay will have to wait until June 7, 2006 before joining Vivendi after a Quebec court extended a temporary injunction. Judge Helene Langlois dismissed Tremblay’s claims that he was constructively dismissed from Ubisoft.

Sources: Gamasutra | GameIndustry.biz | GameDaily.biz | Next Generation | Canada News Wire | Canoe Money(CP)

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Microsoft Countersues Lucent over XBox 360 Patents

Microsoft Corp. has filed a counter suit against Lucent Technologies Inc. in a dispute over Microsoft’s alleged misuse of patented technology in its Xbox 360 games console. Microsoft denies infringing Lucent’s patent and argues that it is invalid, in part, because Lucent failed to disclose “prior art” in its original patent application. Microsoft has also accused Lucent of infringing several Microsoft patents. Earlier, Lucent had filed suit against Microsoft, arguing that technology used in the Xbox 360 for decoding MPEG2 video files infringes on one of its patents.

Sources: GameDaily.biz | GameIndustry.biz | GameSpot | Total Video Games | Reseller News | CIO | Gamasutra | Seattle Times | Next Generation | 1Up.com | PC World (IDG) | IT World Canada (IDG)

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ESRB Re-rates Oblivion to Mature Following 3rd Party Mods

The Entertainment Software Rating Board (ESRB) has changed the rating assigned to the PC version of Bethesda Softwork’s blockbuster video game Elder Scrolls IV: Oblivion from T (Teen 13+) to M (Mature 17+), following the revelation of a topless game skin contained within modded versions of the game. The un-moddable Xbox 360 version of the game has also been re-rated to M ostensibly due to “Blood and Gore, Language, Sexual Themes, Use of Alcohol, Violence”. While critical of the decision, Bethesda has chosen not to challenge the ruling.

Sources: Gamasutra | GameSpot | Next Generation | GameDaily.biz | GameIndustry.biz | 1Up.com | GameSpy | Washington Post | Reuters | San Jose Mercury News | The Inquirer | Joystiq | GamePolitics

Bethesda’s Response: Bethesda Press Release | Gamasutra | GameSpot | Next Generation | Team Xbox | GamePolitics

ESRB’s Response to Industry Criticism:GameDaily.biz

Dale’s Comment: Based on the facts as I understand them, this is regrettable. It is unclear why Bethesda should suffer as a result of third-party mods added into their game without their control. This ruling has the effect of requiring developers to make their games tamper-proof in order to avoid retroactive ratings changes based on the malicious behavior of others. This is very different from last year’s GTA Hot Coffee controversy where, despite early denials, it was later determined that Rockstar had, indeed, embedded unlockable sex scenes within the source code of the game. As far as we understand from Bethesda so far, this is not the case here. But, given the heat the ESRB took last year for its failure to quickly respond, I can somewhat understand this “shoot first, ask questions later” approach, as unfair as it may be to Bethesda.

Another Unpaid Overtime Lawsuit – This Time Against Activision

Following the settlement of two recent class action suits brought against E.A. by its employees, ActiVision’s California-based computer graphics employees are now suing their employer alleging it too has failed to pay overtime compensation as required by California law. The complaint, brought on behalf of , alleges that Activision unlawfully classifies its computer graphics employees as “exempt” from California’s laws requiring overtime pay.

June 2008 Update: This case has subsequently settled.

Sources: Gamasutra | ars technica | Next Generation | 1Up.com | GameDaily.biz | GameIndustry.biz | Yahoo! News | PRNewsWire | Shapiro, Haber & Urmy (counsel for plaintiffs)

Activision (Canulti):

Activision (AE):

EA (Lender Hasty): EA programers

EA (Tam Su):

EA (Kirschenbaum): EA animators, texture artists, and modelers

Sony:

Ubisoft Montreal Enjoins its Former President, Martin Tremblay, from Joining Vivendi L.A.

In seeking to enforce a non-compete clause against its former President and COO, Martin Tremblay, Ubisoft Montreal obtained a provisional injunction from the Quebec Superior Court enjoining Tremblay from becoming President of Vivendi Universal Games’ Worldwide Studios in LA.. The interim interlocutory injunction is valid until 5:00 PM on Tuesday May 9, when Ubisoft will be seeking a safeguard order. The Court has ordered Tremblay to:

“abstain and cease immediately, directly or indirectly, competing with applicant Ubisoft…” and “…cease immediately working, directly or indirectly, within the territories of Canada, the United States and Mexico, for his own behalf or on behalf of any third party, in any business which manufactures or commercializes video products that may compete with products sold, manufactured or developed by applicant Ubisoft”.


Dale’s Comment: It is particularly ironic that Tremblay was the driving force behind Ubisoft’s and EA Canada’s recent non-compete scuffles. For example, in this open letter, EA Canada’s General Manager, Alain Tascan, urges Tremblay to cease requiring that Ubisoft staff sign non-compete agreements as condition of employment. It appears Tremblay is caught by the same type of non-compete agreement that, until recently, he was vigorously enforcing against others.

Sources: Gamasutra | GameDaily.biz | Next Generation | GameSpot

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Entropia Universe to use Real ATM Cards

The Entropia Universe bills itself as “the first virtual universe – with a real cash economy” (the Second Life operators may dispute this claim). It’s operator/developer, Mindark PE plans to introduce a real-world ATM card that will let players withdraw hard cash automatically converted from their virtual game treasury. Entropia runs on its own currency, Project Entropia Dollars (PED), that is explicitly backed by real-world dollars at a conversion rate of one U.S. dollars equals 10 PED.

Sources: BBC | ars technica | CNet – NY Times | ars technica ABC News | market wire | MMORPG blog | WarCry Network | 1UP.com | GameDev.Net

Dale’s Comment: Video game universes are increasingly overlapping with the real world. The Entropia Universe’s use of a convertible currency raises obvious currency exchange, tax law and money laundering issues/concerns. What will happen to users’ accumulated currency when/if the Entropia Universe ceases to exist, or its Swedish operator, MindArk, ceases to exist or goes bankrupt? Will users have claims as creditors against MindArk?

The wildly popular Second Life MMORPG also allows users to use real currency to purchase virtual property. Second Life actually publishes how much real-world money is spent in the game each month. U.S. currency is converted to the in-game $Lindex currency and, through the games ‘Marketplace’ users can convert $Lindex back to real currency. As will be the case in the Entropia Universe, this “virtual” property has real-world value that, if stolen etc., may (should?) give rise to enforceable property rights in the real world.

See a related story posed on April 3, 2006, where a Chinese man was convicted of stealing virtual property and sentenced to a fine of 5,000 yuan (US$617). I suspect it will not be long before this type of case makes its way into Western courts.

EA Settles Leander Hasty Class Action Labor Lawsuit – Tam Su Suit Still Pending

Text of EA’s Leander Hasting Settlement Press Release
Text of Leander Hasty Class Action Complaint
In the case started by an upset spouse’s posting to a blog, EA’s Software engineers have won a $14.9 million settlement from Electronic Arts, in a settlement of the Leander Hasty class-action lawsuit over unpaid overtime. EA also agreed to pay the employer’s share of the payroll taxes. Some entry level programmers (fewer than 200) will be reclassified as hourly workers, making them eligible for overtime pay. They will be allowed a one time grant of restricted company stock, but will no longer receive stock options or bonuses. Major deadlines will be moved to Fridays instead of Mondays in order to encourage a normal five-day working week. The 34 page settlement sets aside a separate $30,000 award for Hasty, who filed the original suit, and $15,000 for John McDonald, who joined the suit later. The settlement must be approved by the Superior Court of San Mateo County, California before it becomes effective. The original Kirschenbaum lawsuit settled on October 5, 2005 when EA made a $15.6 million payout. The Tam Su case is still pending.

Sources: Gamasutra | L.A. Times | San Jose Mercury News | Washington Post (AP) | GameDaily.biz | ars technica | IGN | GameSpy | GameSpot | Next Generation | CNet | Punch Jump | Daily Tech | The Inquirer

Activision (Canulti):

Activision (Erimez):

EA (Lender Hasty): EA programmers

EA (Tam Su):

EA (Kirschenbaum): EA animators, texture artists, and modelers

Sony:

“EA Spouse” Revealed to be Erin Hoffman

The “EA Spouse”, has been revealed to be Erin Hoffman, wife of programmer Leander Hasty. She shook up the video game industry in November, 2004, when she posted this anonymous letter as an “EA Spouse” on the Live Journal Blog. In it she detailed the harsh working conditions of EA Employees. The post led to three class-action lawsuits (two of which have settled) against Electronic Arts and other big video game companies.

Sources: San Jose Mercury News 1 | San Jose Mercury News 2 | 1Up.com

Activision (Canulti):

Activision (Erimez):

EA (Lender Hasty): EA programmers

EA (Tam Su):

EA (Kirschenbaum): EA animators, texture artists, and modelers

Sony:

Malaysia Seizes 1.5m Pirated Game, Film Discs

Authorities in Malaysia have revealed that they have seized 1.5 million pirated game and film DVDs and CDs worth an estimated 51.3 million ringgit ($14m) in raids so far this year. Almost half of these were meant for export, showing that video game piracy of physical discs is still a major issue in many regions.
 
Source: Gamasutra  |  GamePolitics.com

Cheatcc.com and Crave Online Media Settle Cheat Codes Dispute

Davis & Co. report that Cheatcc.com and Crave Online Media have settled their dispute. In a rather novel dispute, Cheatcc had alleged that Crave Online Media had violated its copyright in its user submitted cheat codes. As noted by D&C, this would have been an interesting case to determine whether a court would find that a company has an enforceable compilation copyright or other proprietary claim in information submitted by its users. Details of the dispute have not been released.

Source: Davis & Company LLP

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