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New Book: Business & Legal Primer for Game Development

A new book entitled “Business & Legal Primer for Game Development” (Amazon.com) has been published. It is written by Gregory Boyd and Brian Green. The CoursePTR website describes the book as follows:

Business is an important part of making games and the legal aspects have also become significant. Business and Legal Primer for Games explores the major legal and business issues involved in game development with a particular focus on starting a business. The book contains practical introductory sections on business and legal problems that members of the development community are often confronted with. These problems include business structure, contracts, employment law, taxation, and IP. Those seeking to start their own game development company will receive invaluable information regarding getting started, basic business operations, marketing, licensing intellectual property, and exit strategies. Business and Legal Primer for Games is the ideal starting point with any who has ever wanted to start a game business and an excellent reference of information for those who already are involved in game development.

Sources: CoursePTR | Amazon.com | Gamasutra

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Pointeless Waste of Time: Games Manifesto

This is a terrific article that I had to pass on. It outlines many of the pet-peeves that us gamers have with game developers – the many cheats used by developers to save time, artificially expand game play etc. Gamers hate these things. Game developers should take a serious look at this list.

I most relate to:

  • Item 6 – Save Points: Since all consoles in this generation have hard drives, there is no excuse not to have user-selectable save points. I am an adult. If I found it fun and challenging to play an entire levels without saving, I could choose to do that. But I submit that the increasingly aging gamer demographic does not find it fun to play the same thing over and over due to deficient save point planning by game developers. The lack of decent autosave points or user selectable save-points is the primary reason I abandon otherwise good games.
  • Item 12, para 7 – Unnecessarily Difficult End Levels: I thoroughly enjoyed Gears of War and had EVERY intention of playing the entire game again on the harder level until I had to fight RAAM (the final boss) over and over and over. It took me hours to figure out what was necessary to kill this guy. The arbitrariness of this fight is silly in the extreme. The game gives you no indication as to what is required to kill him and how much effort, of which type, it will take to kill him. This final boss fight was so off-putting that I no longer intend to play the game through on the harder level because the last thing I want is to finish the game and find I can’t kill the final boss on the harder level. Cliffy! Watch the end of Halo 1 for an example of a perfect ending level! Back to EB goes Gears for trade-in!

I would also add:

  • Escort Missions Should be Outlawed: If the character being escorted would actually accept orders from the player to hide somewhere, stay behind until beckoned, shoot at the enemy etc. it wouldn’t be so bad. But too many games require the gamer to escort a hapless character that will not take direction and repeatedly gets himself/herself killed for no fault of the gamer.

I can’t complain about the “Short-sighted Business Bull***” mentioned in item 15. If this were solved there would be almost no raison d’etre for this blog. 🙂 And, as for me, wooden crates really don’t bother me all that much!

Warning!: The author uses both humorous and explicit language in this manifesto.

Source: PointlessWasteofTime

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Grandma Files FTC Complaint over Wii Bundling

Shelly Peruso reserved two Wii Consoles at a local Pennsylvania Saturday Matinee store on October 13th. She put $100 down on deposit. When she went to pick them up last week the clerk said she must also purchase two games per console. She says she was never told this when she reserved the system.

Dale’s Comment: While I don’t believe she’ll have much success if she were to argue console/game bundling is problematic, she’ll probably have an actionable claim (if it goes that far) on both a basic contract formation and consumer protection basis. If the receipt she received isn’t explicit on the point, the verbal contract should govern.

Sources: GamePolitics.com | WJACTV

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Federal District Court Judge Makes Louisiana’s Violent Game Bill Injunction Permanent

Text of Short Summary Judgment Ruling (November 29, 2006)
 Text of Preliminary Injunction (August 25, 2006)
Text of Temporary Restraining Order
Text of ESA Complaint
Text of Violent Game Bill (HB 1381)

Hot on the heals of the 7th Circuit’s upholding the permanent injunction against Illinois’ Safe Games Illinois Act’, Federal District Court Judge James Brady issued a bench ruling permanently (followed by this short summary judgment ruling) enjoining the application of Louisiana’s, Jack Thompson-drafted, Violent Game Bill.

ESA’s response to the ruling:

“What makes Judge Brady’s action unusual and remarkable is that he issued his ruling from the bench rather than through a written decision, a strong signal that he felt the State’s arguments were so without merit that they didn’t even require a detailed opinion beyond the Judge’s August decision imposing the preliminary injunction. In his August ruling, the Judge emphasized the State’s failure to take into consideration when passing this law the long line of previous cases holding that video games are protected speech. The ESA will immediately file to recover its legal fees from the State as it has successfully done elsewhere.”

“In nine out of nine cases, federal courts have struck down these grandstanding efforts by politicians to ban video game sales to minors. It doesn’t get clearer than that. One hopes that enough is enough. Video games are like rock and roll: they’re here to stay, and it’s about time for elected officials to focus their energies, and taxpayer dollars, on truly productive and useful programs to educate parents to use the tools industry has made available — from ESRB ratings to parental control technologies.”

Sources: GamePolitics.com | Gamespot |ars technica | GameDaily.biz | Gamasutra

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Librarian of Congress Exempts ‘Abandonware’ DRM Circumvention for ‘Preservation” from DMCA Liability

In its recent triennial rule-making with respect to exemptions from the prohibition against circumvention of technological measures that control access to copyrighted works, the Librarian of Congress, James H. Billington, has ruled, again, that persons making non infringing uses of older abandonware video games, as described below, will not be subject to the prohibition against circumventing access controls (17 U.S.C. § 1201(a)(1)) during the next three years. Specifically exempt from the prohibition are:

…video games distributed in formats that have become obsolete and that require the original media or hardware as a condition of access, when circumvention is accomplished for the purpose of preservation or archival reproduction of published digital works by a library or archive. A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace.

Dale's Comment: Firstly, despite many reports to the contrary, this is not a wholly new ruling. The 2003 triennial rule-making contained the following very similar exemption:

… video games distributed in formats that have become obsolete and which require the original media or hardware as a condition of access.

Indeed, this rulemaking is more restrictive than the previous rulemaking because it now specifically limits such circumvention for preservation purposes as I discuss below.

Secondly, I have read many blog 'interpretations' of this exemption over the last few days (not linked to here for obvious reasons) and most bloggers don't seem to understand this exemption. Most are interpretting this exemption as a free-for-all right to decrypt, copy, distribute and use any abandonware on any system.  My reading of this exemption is much more limited. 

Clearly the circumvention exemption for "archival reproduction of published digital works by a library or archive" doesn't apply to the average gamer.  However, the first portion of the exemption "for the purpose of preservation" would apply to the average gamer.

It appears the average gamer has the right to circumvent technological measures used to protect video games in obsolete formats that are already owned by the user for the purpose of preservation when the gaming console, for instance, is no longer manufactured or reasonably available in the commercial marketplace. 

This DMCA exemption does not exempt other provisions of Title 17 (the U.S. Copyright law) that otherwise generally prohibit copying, distributing and otherwise infringing copyrighted works.

So, what exactly does this exemption allow you, the owner of a video game in an obsolete format, to do. It allows you to circumvent the copy-protection scheme used to protect obsolete format video games for the purpose of preserving them (backing them up and, presumably, using the backup if the original copy becomes defective).  That's pretty much it. Indeed in the Librarian of Congress' commentary on the exemption he flatly says: 

"…the sole basis for this exemption is preservation and archival use…"

An important point here is that Billington did NOT exempt non-obsolete formated video games from the DMCA. So, it is still illegal under the DMCA's (17 U.S.C. § 1201(a)(1)(A)) to circumvent DRM on modern video games for the purpose of backing them up – let alone for any other purpose.

This exemption expires after three years unless the rule proponent (in this chase the Internet Archive) proves their case again. Namely, that without the exemption:

current technologies that control access to copyrighted works are diminishing the ability of individuals to use works in lawful, noninfringing ways.

Sources: Library of Congress Rulemaking | Detailed Background and Librarian of Congress Discussion | GameSpot | GWN | Joystiq

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Microsoft (Accidentally) Giveth, Microsoft (Intentionally) Taketh Region Code Work-a-Round Away

If a recent post I mentioned that some clever users found a way around Microsoft’s XBox 360 region-specific Market Place movie and video demo download restrictions. The trick was to take advantage of Microsoft’s free XBox Live Accounts. A user in one jurisdiction could create multiple silver-level (a.k.a. free) accounts by simply stating in the online sign up process that they live in a another download-frinedly jurisdiction. Paid movie downloads, trailers, game demos etc. would then be available available through the alternative silver-level account in jurisdictions that Microsoft did not intend.

After only weeks of being out in the wild, Microsoft has patched this work-around. Now only users that have credit cards with billing addresses that match the purported region can download content for that region. Happily Microsoft is not banning these extra accounts, they are simply restricting their access to region-coded content.

As a lawyer, this is understandable. As a user, this is sad. Having previously lived in the U.S.and having access to virtually anything the Internet can deliver, it is a very rude awaking to move back to a 2nd tier jurisdiction like Canada where so many Internet-based services are either not available, delayed, provided at higher price points or provided with less functionality. Microsoft’s new movie download service is a perfect example of this regrettable phenomena.

Presumably a Canadian with an American credit card and billing address could still circumvent the system for instance. Humm… as a holder of several U.S.-based credit cards, I wonder which of my U.S. buddies would allow me to use their address for credit card statement receipts? 🙂

Sources: TeamXbox | Major Nelson | Xbox 360 Fanboy | Hexus | Pro-G | EuroGamer | PlanetXbox | Gamasutra | Joystiq

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Seventh Circuit Court of Appeals Upholds Permanent Injunction Against ‘Safe Games Illinois Act’

– 7th Circuit Court of Appeal Ruling ESA v. Illinois Decision (November 27, 2006)
– Lower Court Ruling in ESA v. Illinois Decision (December 2, 2005)
– Text of Rejected Act

The U.S. Court of Appeals for the Seventh Circuit has upheld the prior Illinois District Court permanent injunction against the implementation of Illinois’ “Safe Game Illinois Act” that provided for two new criminal laws, the Violent Video Games Law and the Sexually Explicit Video Games Law. Illinois had not appealed the Violent Video Games Law portion of the earlier decision. The Court of Appeal held that the Sexually Explicit Video Games Portion of the Law swept too broadly:

The game God of War… is illustrative of this point. Because the (Illinois law) potentially criminalizes the sale of any game that features exposed breasts, without concern for the game considered in its entirety or for the game’s social value for minors, distribution of God of War is potentially illegal, in spite of the fact that the game tracks the Homeric epics in content and theme. As we have suggested in the past, there is serious reason to believe that a statute sweeps too broadly when it prohibits a game that is essentially an interactive, digital version of the Odyssey.

Similarly, it seems unlikely that a statute is narrowly tailored to achieving the stated compelling interest when it potentially criminalizes distribution of works featuring only brief flashes of nudity.

The Court of Appeal also held that the portion of the law requiring a 4″ warning sticker in addition to the ESRB warning was not sufficiently narrowly tailored.

According to Next Generation (and other sources), the state has not yet paid the $150,000+ legal costs that the court awarded to ESA on August 12, 2006.

Sources: Gamasutra | GameSpot | GameDaily.biz | GamePolitics.com | ars technica | CNet| Chicago Tribune | First Amendment Center | Media Law Prof

GamePolitics Full Coverage of Illinois Game Law

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Success with Video Streaming to my Xbox 360

For years I have been looking for a convenient way to stream my videos (movies, video clips, video game trailers etc.) from PCs on my home network to my HDTV in the living room. Today I have had my first success using the new video streaming functionality built into the most recent XBox 360 Dashboard software update.

This Arne360 blog entry describes the basics of setting up the new Windows Media Player 11, sharing media directories with the 360 and setting up the 360 so it can access content from a home network. That was all well and good, but a continuing basic problem was that the Microsoft video streaming solution only supports their proprietary (but still very good) .wmv codec. Most of my video content is not in the .wmv format – or at least it wasn’t.

Today I stumbled across this Joystiq post about the freeware transcoding program called VLC (download here) (official website). This program is butt-simple to use. Drag any video in any format (or at least any format I use) onto the batch file, and it automatically transcodes the video into .wmv format. When done, the file will be accessible and playable through the Xbox 360 with no further effort. It’s THAT simple.

All is not peaches and cream though. There’s good news and bad news.

First the good news:

  • Once set up, it works like a charm.
  • Transcoding with VLC is easy-peasy.
  • The picture quality is as good as the source – in this case, most of my videos/movies look fantastic when played back through the Xbox 360.
  • All my .wmv videos are easily and instantly available for playback through the 360 – no more DVD flipping.

Now the bad news:

  • All the videos (even when sorted in different directories on my PC) end up being tossed into ONE long directory when listed on the Xbox 360. In my case there’s some 140 .wmv videos, video snippets, tutorials, video poscasts, demos, movies, trailers etc. on my computer. When I access them through the 360, they all show up in one long alphabetical list.
  • There is no way, that I can find so far, to separate them into sub-folders on the 360. This is notable because when I view my pictures or access my music through the 360, they are sorted into directories as they are on my PC. This anomaly is quite odd.
  • The fast forward and rewind seems to be busted. When I try to fast forward and rewind the .wmv files when watching them on the 360, they just stutters as if I was playing the videos back in frame-by-frame mode – there certainly is no “fast” movement forward or back.
  • I can only play and pause – though pressing the chapter forward and back buttons does seem to move me forward and back in indeterminant and varying time increments backwards and forwards through some, but not all, videos.
  • The Xbox 360 does not remember where you I left off when returning to a video that was previously viewed (as TiVo does).

Upcoming Streaming Through my TiVo Series 3

  • TiVo recently announced a new service about to be launched that does effectively the same thing – and more.
  • The new TiVo service will allow users to stream Quick Time, .wmv format and Mpeg 4 movies/podcasts/video content stored on the PC to the TiVo.
  • Since TiVo will also play videos coded in the .wmv codec, the transcoded video files I’m creating now for playback on the 360 will be equally accessible through my TiVo Series 3 – once TiVo rolls out that software upgrade that is.

While I don’t like the fact that all the videos are tossed into one directory on the 360, and while the fast forward and rewind functionality seems to be broken, it is still terrific to finally have all the videos I care about, permanently saved on my computer and playable at will on my Plasma TV through my Xbox 360 – no more DVD flipping! Yeah!

Note: I’m not talking about Microsoft’s new Xbox 360-based movie/tv download service that launched in the U.S. yesterday. That’s a whole different kettle of fish. For licensing reasons (Listen to Major Nelson’s Podcast #201 on this topic for more info.), Microsoft has not yet launched this outside the U.S. No doubt the U.S. Thanksgiving holiday and the PS3 launch made this a high priority for U.S. roll-out before the rest of the world. I expect Microsoft to extend this to Canada, Europe and the world as their team has time to negotiate the various country by country rights. I certainly am looking forward to it.

Sources: Joystiq | Arne360

See Also:

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EU Investigating Whether French Video Game Developer Tax Incentives are Legal

The EU is investigating whether France’s proposed tax breaks for French video games industry (a tax credit worth 20 percent of the cost of the game) are designed to support “genuine cultural projects” and therefore legal under EU rules, or harm comptetition and trade between member states, and therefore offside EU rules.

Sources: Gamasutra | Middle East Times (AFP) | International Herold Tribune | Forbes (AFX) | San Jose Mercury News | Business Week | European Union Press Release

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ESRB Recants Over T-Shirt Parody Trademark Cease & Desist Threat

I reported on November 10 that the ESRB had sent cease and desist letters to Kotaku, The BBPS and others concerning their reporting on a T-Shirt that parodies the ESRB logo (see the offending logo on the t-shirt depicted to the left). Despite being notified by Kotaku that the post is editorial content and not an advertisement for the sale of a T-shirt, the ESRB continued to demand the removal of the post.

The ESRB has since recanted and sent a letter to BBP&S (no workd on Kotaku yet) containing the following:

The ESRB Rating Icons are valuable trademarks of ESA, and we must be vigilant in protecting them against unauthorized commercial uses, lest our trademark rights become diluted. At the same time, we also understand and respect the First Amendment rights of those who, like bitsbytespixelssprites disseminate news and information.

That said, we have taken a second look at this issue and concluded that bitsbytespixelssprites was reporting on a product in the marketplace, and is not involved in distributing or marketing this product, and thus did not engage in any conduct sufficient to trigger the issuance of the cease and desist letter we sent. Please accept our apologies. I am happy to discuss this with you further if you so desire.

Sources: GamePolitics.com | Joystiq

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Newsweek Alleges Kutaragi Dropped the Ball on PS3 3rd Party Exclusives

In this third part of a very interesting 3-part “inside baseball” article, Newsweek alleges that Kutaragi dragged his feet on signing third party exclusives for the PS3 while Microsoft was aggressively pursuing exclusives from third parties such as EA (FIFA), Konami (Winning Eleven) Take-Two (Bioshock) and Ubisoft (the next Splinter Cell). Famously, Sony lost its Grand Theft Auto exclusive with Take-Two and Rockstar Games. And Assassin’s Creed, long assumed to be a PS3 exclusive, has now been confirmed to be under development for the XBox 360.

Sources: Newsweek

Discussed: 1Up.com

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Oops! – Please Update Your Link to my Video Game Law Blog Feed

My apologies. I'm still working out the kinks with my new blogging tool – WordPress.

I noticed that RSS feed subscriptions to my iMedia Law Blog were off the charts but nobody was subscribing to my Video Game Law Blog RSS feed. It turns out that a faulty cut-and-paste on my part redirected everyone attempting to subscribe to the Video Game Law RSS feed to my iMedia Law Blog feed by mistake. Oops! For those wanting to subscribe to my video game law blog RSS feed, the proper link is below:

Proper Link: RSS Feed to Video Game Law Blog

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FBI Shuts Down L2Extreme.com’s Unauthorized Lineage II Servers

The FBI has shut down an illegal game operation that allegedly provided subscribers with fraudulent service to, and code for, Lineage II. Apparently L2Extreme.com (now seized by the FYI) had some 50,000 active users. NCSoft says it lost millions in revenue from this. The operators of L2Extreme.com face a fine of $250,000 and up to five years in jail. NCSoft has said it has no plans to pursue the users.

This case is different from the Blizzard v. BNetD case because in the BNetD circumstance, they had reverse engineered the Blizzard server software and, presumably, wrote emulating software in a “clean room” without access to the original Blizzard server software – thus no direct copyright infringement. In the L2Extreme case, it is alleged that the L2Extreme.com server software was pirated (ie: copied) NCSoft server software.

Sources: NextGen.biz | Daily Tech | Gamasutra | ars technica | GameSpot | P2PNet | GameSpy | GameDaily.biz| NCSoft Press Release | GameIndustry.biz

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Canada to Provide Seed Money to Winner of Video Game Developer Competition

Competition Rules

Today, the Canadian federal agency, Telefilm, invited new Canadian video game developers to compete for Cdn $2M (U.S. $1.8M) in financing. The ten projects voted most likely to succeed in the “Great Canadian Video Game” competition will receive $50,000 each to further explore their proposed game, seek venture capital etc.. Two months later the field will be winnowed to 4. Each of those will receive a further $250,000 to develop a prototype. At next year’s Vancouver VidFest, a finalist will be given a further $500,000 to launch their game.

Click here to apply! Applications are due by December 15, 2006.

Dale’s Comment: I am of mixed-emotions about this. I have no problem in principle with tax incentives to favor emerging industry. But I have always argued against Canada’s ubiquitous Canadian content rules and preferential treatment for Canadian-owned businesses over foreign-owned businesses. I’m also not so sure Canada actually needs these incentives because it is disproportionately represented on the global stage by its extremely successful video game development community – Montreal’s Ubisoft, Edmonton’s BioWare, Vancouver’s EA and Radical, London’s Digital Extremes, to name just a few.

All that said, if one of these new developers requires a place to spend this money on first rate legal services – look no further! Laughing

Sources: Reuters/Hollywood Reporter | City News | ZDNet | Washington Post

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Mark Bragg File’s Virtual Property Complaint Against Linden Labs

Text of Bragg v. Linden Labs Complaint (Oct 4, 2006)[.zip format]
Jurisdiction and other Interim Court Filings
While I was converting this blog to WordPress over the last 8 weeks, Mark Bragg sent me his updated complaint against Linden Research Inc. ("Linden") that was filed on October 4 in the Chester County (Pennsylvania) Court of Common Pleas.  Mr. Bragg is seeking a jury trial. On November 7, Linden petitioned the US District Court for the Eastern District of Pennsylvania to take jurisdiction of the case. 

I'm just now getting the time to review the claim and post this blog entry about it. 

The complaint contains a terrific history (frankly, the best I've read) of Linden, its MMORPG Second Life and describes how Linden differentiated Second Life from its competitors by granting "ownership rights" to in-game property (most MMORPG publishers claim/retain ownership in all related virtual property). It also contains a history/description of virtual property generally in the context of the growing MMORPG phenomena.

The 239 paragraph complaint alleges violation of Californian and Pennsylvanian unfair practices and consumer protection laws, fraud, violation of California's Civil Code concerning auctions, conversion (theft), interference with contractual relations, breach of contract, unjust enrichment and tortuous breach of the covenant of good faith and fair dealing. He discounts many of the provisions of the Linden Labs Terms of Service ("TOS") as being unenforceable due to unconscionably. Suffice it to say, when this case is over, I suspect Linden will be updating its TOS! Laughing

This Law.com article provides a good summary of the facts. The complaint, itself, is worth reading if only for its best-in-class description of the MMORPG industry and related virtual property issues. Excellent job Mark!

Dale's Comment: Given that many courts in many countries have upheld the validity of extremely one-sided Internet-service click-wrap/shrink-wrap agreements, I think Mark will have a tough time overcoming the clear provisions contained in the TOS. But he makes many compelling arguments pertaining to the contradicting public statements of Linden representatives, rights in and to virtual property purchased from other Second Life users, and the right to recoup the real $U.S. dollars he paid into the Second Life economy and not returned when Linden booted him from the game.

Bragg is claiming ownership to his in-game property. I am quite sympathetic to his arguments and have advocated, here, for the the recognition, at law, of rights in and to virtual property. But, if analogies to real-world and intangible property are taken to their logical extreme, Second Life players could argue that Linden would never have the right to shutdown their MMORPG and deny virtual property owners of their "right" to access, use, sell and other wise deal with their virtual property when, as will inevitably be the case one day, Second Life ceases to be a profitable game for Linden. 

This could be a very important, precedent setting case if it goes to trial. It could set the ground rules for the application of laws to virtual property going forward. Needless to say, I'll be following this one closely.

[Dec 13, 2006 Update: Mark has sent me this link where the most recent court filings in the case can be found. At the moment the parties are fighting over the most appropriate jurisdiction for further proceedings.] 

Sources: *Law.com | Blogger News Network | MMORPG BLog | Pilly.com

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GameDaily.biz Feature: Do Mandatory Console Game Bundles Violate Anti-trust Laws?

A phenomena of the recent three console launches (Xbox 360, PSP, DS, PS3 and Wii) is the mandatory bundling foisted on gamers by retailers looking to cash in on the extremely high demand for these consoles on launch.

GameDaily.biz has a feature article “Predatory Packaging: Are You Being Illegally Forced into Buying a Mega Console Bundle?“ on this topic is worth a read.

According to Bob Freitas, a technology and antitrust litigator and partner in Orrick’s Silicon Valley office, it’s possible that these bundles could violate certain anti-trust laws, but it’s not highly likely he explained.

Source: GameDaily.biz

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Users Find Work-a-Round to Defeat 360 Marketplace Region Coding

If you follow Major Nelson’s (Larry Herb’s) day-to-day missives about what is available for download through the Xbox 360 Marketplace, you’ll note that many arcade games, game demos, trailers and other downloadable content is only available in certain regions of the world. This has lead to much consternation among Microsoft’s international customers. But the issue was brought to a head recently when, for the first time, North American XBox Owners were initially restricted from downloading a Rainbow Six: Las Vegas demo that was available for download by European users. This doesn’t happen very often to U.S. customers.

As a result, some clever users found a way around Microsoft’s XBox 360 region-specific MarketPlace download restrictions. You can read about them in the linked articles below.

Dale’s Comment: Just as Sony had legitimate legal reasons for opposing Lik-Sang’s import of PSP systems into the UK, no doubt Microsoft has legitimate legal reasons for restricting access to content on a country by country basis. For example, game publishers/developers that provide downloadable content to Microsoft probably have granted exclusive distribution/marketing and other rights to that content in the prohibited regions to others. My hope/expectation is that over time licensing and distribution deals will be structured to recognize the increasingly globalized nature of the market so as to anticipate and, indeed, facilitate global distribution/downloads without this kind of constraint.

Sources: Gizmodo | SAGN

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ESRB Sues Kotaku over Link to ESRB Parody T-Shirt

The ESRB is apparently demanding that Kotaku remove a post on their website describing and depicting a T-Shirt that parodies the ESRB logo (see the offending logo on the t-shirt depicted to the left). Despite being notified by Kotaku that the post is editorial content and not an advertisement for the sale of a T-shirt, the ESRB continues to demand the removal of the post. The ESRB demand letter states, in part:

We believe that this t-shirt ad will result in consumer confusion, and a substantial likelihood that the ESRB certification marks will face tarnishment and dilution.

Dale’s Comment: I personally don’t get the parody joke. Unfortunately the current state of trademark law is such that the trademark owner must fiercely protect its mark or face loosing it. This is an area of IP law that I believe is ripe for reform. The recent spat of “pod” related lawsuits brought by Apple against any company or service including ‘pod’ in their corporate, product or service name is another example of this silliness. Chris Bennet at the law firm of Davis & Company wrote this interesting blog entry on the topic. While the ESRB may have a case against the t-shirt manufacturer (and even that, I believe, is a tenuous case), they would have a much tougher time in any legal action brought against Kotaku based on this editorial post because Kotaku is not using the parodied logo in commerce. It merely comments on the existence of the shirt in a blog post. Trademark law is designed to keep others from using the trademark holder’s marks in commerce – not to keep editorialists from commenting on the existence of items that possibly infringe another’s trademarks.

[Update:] TheBBPS, a one man blog, apparently also received a cease and desist order from the ESRB for a similar blog post and took down the post. Destructoid, still another gaming blog, has seemingly decided to keep its post on the t-shirt up despite also receiving an ESRB cease and desist letter.

Sources: Kotaku | GamePolitics.com | Davis & Company | MMORPG Blog

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XNA Game Studio Express Beta 2 – You Too Can be a Game Developer!

Microsoft’s XNA Game Studio Express Beta 2 aims to provide anyone who’s ever thought they’d like to take a stab at developing a video game with a platform and system to do so. The beta version can be downloaded for free until December 11.

Dale’s Comment: From everything I’ve heard about the XNA Game Studio, this bodes very well for both the future of video gaming and the prospects for new developers to get into the business. With this development environment, anyone can attempt to develop video games. Video games created with XNA can be uploaded to the Internet and downloaded by members of the XNA Creators Club ($99 a year – or $44 for a 4 month trial) who wish to give your game a go – including through Xbox 360 Live Marketplace downloads. This is a tremendous opportunity for new developers to start off small and get their creations seen by publishers. If successful, such small games might, one day, become saleable PC game titles or XBox 360 Arcade titles – or both. Heck, maybe I’ll give it a try! 🙂

Sources: Gamasutra | IGN.com | Kotaku | EuroGamer | Next Generation | GameIndustry.biz | GameDaily.biz | TeamXbox

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Australian Tax Office Will Tax Income from Virtual Transactions

A spokesperson for he Australian Tax Office, in what is probably a world first, has said that if a virtual transaction has real world implications – if it can be attributed a monetary value – it attracts the attention of the Tax Office. In her words:

“The real world value of a transaction may form part of your taxable income, even if it is in Linden dollars,”

Australia seems to be heading in a different direction on this issue as the U.S. is based on Representative Jim Saxton has recently said.

Dale’s Comment: Frankly this makes complete sense to me. I see no reason to make a distinction between real-world revenue generated from virtual activities and any other income.

Sources: TheAge.com | Kotaku | nzherald.co.nz | TaxNews.com

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XFire Sues GameSpy Over Battlefield 2142’s Buddy Sync Feature

Viacom-owned XFire has sued News Corp subsidiary IGN alleging the GameSpy Comrade "Buddy Sync" feature included with the hot title Battlefield 2142, infringes its copyrights. Comrade Buddy Sync accesses a user's friends lists from third party instant messaging programs (including XFire and AOL Instant Messenger) thereby allowing the gamer to see which friends are online and facilitating friend invites into games – a feature that is directly competitive with XFire's core functionality. District Court Judge Susan Illston denied Xfire's request for a preliminary injunction.

Dale's Comment: I haven't found the pleadings online. As I understand it the case alleges copyright infringement and misappropriation of trade secrets. Proving copyright infringement is difficult because a successful case requires a finding of significant copying of underlying source code – something that is highly unlikely to have occurred. Noting about how XFire works seems to be a trade secret. How XFire works is common knowledge in the industry. If it was a trade secret then how did GameSpy find out about it? Barring some kind of fiduciary or contractual duty to keep XFire's trade secrets secret, I don't know how XFire can make out a case on this basis. 

Sources: GameSpot | GameIndustry.biz

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