Social Media Entertainment
[Reprinted with permission from the October 22, 2012 edition of The Recorder © 2012 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.]
The social and mobile game industry is experiencing rapid growth as thousands of gaming companies and developers make their games available on iTunes, Facebook and other platforms in the hope of launching the next "FarmVille" or "Angry Birds." Even as the luster fades from Zynga Inc.'s IPO, the popularity of social and mobile games remains strong and is expected to expand as sales of tablet computers and smartphones rise. In this competitive landscape, it is not uncommon to find new games that are similar to established popular games, even bearing similar names and features. Success breeds imitation, or depending on your perspective, inspiration and emulation.
Gaming companies have to walk a fine line between developing a game that has game play and features that are familiar and popular, versus becoming the target of an intellectual property infringement suit. Zynga, for example, finds itself on both sides of the line, filing dozens of lawsuits against others for infringement, while being the target of infringement claims itself such as Electronic Arts Inc.'s recent suit claiming that Zynga's "The Ville" game infringes copyrighted content in EA's "The Sims Social." But where is that "line"? When does emulation become infringement? When does taking inspiration from an established game constitute violating another's IP rights? Like many things in the law, it depends.
Game Cloning and Copyright Infringement
Game cloning is the practice — prevalent in the social and mobile gaming space — of creating a game that is similar in game play, functions and features to another game. Generally, the idea of a game is not protectable under copyright law, but how the idea is expressed could be protectable. The idea of a game where characters simply go about leading their lives, as in "The Sims," is not protected by copyright, but how this concept is expressed is protected by copyright. For example, one of the many claims made in the EA suit against Zynga is that in both companies' games, when a player wants to use the restroom, the game characters in each game make a "similar uncomfortable pigeon-toed stances, with thought bubbles indicating the need to use the toilet." The idea of a game character feeling the need to use the restroom is probably not protected, but how it is expressed may be.
While the EA v. Zynga case was only recently filed, a recent court decision from the federal district court in New Jersey, Tetris Holding v. XIO Interactive, indicates that courts may be more willing to find copyright infringement in cases of game cloning where the game play of a game is defined at a very basic level, and the other elements of the game are thereafter deemed expressive. In Tetris, the owner of the IP rights in the popular game "Tetris" sued defendant Xio for making a similar game, "Mino." Xio founder admitted that it had intentionally set out to create a "Tetris"-like game for the iTunes App Store. Xio even analyzed the law in order to try to avoid copying the protectable elements of the game, and tried to limit its copying to unprotectable elements (rules, functions, game mechanics).
Xio argued that certain game features were not protected by copyright because they related to the function of the games (such features could be protected by patent, but only if a patent registration had been obtained). The court said this went too far, stating: "Xio is correct that one cannot protect some functional aspect of a work by copyright as one would patent. But this principle does not mean, and cannot mean, that any and all expression related to a game rule or game function is unprotectable." Consequently, the court found that Xio had infringed the copyright in "Tetris" by copying the design, style, shape and even the movement of "Tetris" game pieces, even if these may be related to functional aspects of the game. The court also noted that "the style of the [game] pieces is nearly indistinguishable, both in their look and in the manner they move, rotate, fall and behave." The Tetris decision, though it may be appealed, indicates that there are limits on "game cloning" even as to a relatively basic game like Tetris.
Social and mobile games often have relatively short and descriptive names that may be driven by the desire of companies to have their games appear in search results when a gamer searches for a game about farms or birds, for example, or in some cases by the popularity of another title.
After "FarmVille" became a hit followed by other Zynga "Ville" games such as "CityVille," dozens of companies began using "Ville" in their marks. Zynga filed more than 40 opposition proceedings with the Trademark Trial and Appeal Board against such marks, asserting infringement and dilution. One company, Blingville LLC, struck back by filing a declaratory judgment action for noninfringement last year in federal court, which attracted much publicity in the gaming media. While some had hoped that the case would provide guidance on the enforceability of "Ville" marks, it appears the matter has concluded quietly and without much guidance. In May, a consent judgment was entered against Blingville and the Blingville trademark application was withdrawn.
The use of a term in a trademark that refers to or describes the subject matter of the game can also potentially weaken the mark's strength and validity. In general, marks or terms in trademarks that are descriptive of a product's characteristics or features are considered merely descriptive and unenforceable against others, unless one can show that the descriptive mark or term has acquired "secondary meaning" (i.e., has become so widely known that consumers recognize the term as a brand of a particular company). In the past couple of years, the U.S. Patent and Trademark Office has increasingly requested that gaming companies disclaim rights in terms in trademarks that refer to the subject matter or content of a game, such as "Farm" or "Aquarium." But in the social and mobile gaming world, the use of a descriptive term can help a game appear higher in search queries and can also help to quickly convey the nature of the game to gamers. This can be important when space is limited on a mobile phone screen and mobile device users quickly scan through search results to pick a game. Gaming companies must balance the desire to use a descriptive term in a mark versus weakening the mark's enforceability.
Other IP Issues
There are, of course, numerous other IP legal issues that social and mobile game developers face, such as securing ownership rights in code, preventing former employees from using proprietary information, dealing with patent infringement claims (e.g., in March, GameTek LLC sued 21 gaming companies for infringing a patent regarding the use of virtual currency to buy items), and finding a way through a maze of federal and state privacy laws.
In the game development field, creation of code is frequently done by independent contractors or by persons at a startup who have not yet signed any agreement assigning rights to a company – if a company even exists. Under federal law, however, any assignment of copyright rights or a work-for-hire arrangement with independent contractors must be in writing and signed. Such agreements should also make clear the U.S. laws apply, as some foreign nations do not recognize the "work for hire" doctrine as applied to independent contractors.
Similarly, if an agreement does not expressly transfer "ideas" from an employee to the company, then the company may not have rights in an employee's work-related idea which has not been reduced to a tangible item. Mattel Inc., the maker of Barbie dolls, faced this when the U.S. Court of Appeals for the Ninth Circuit vacated a district court decision awarding Mattel millions of dollars against MGA Entertainment Inc., the maker of Bratz dolls, in Mattel v. MGA Entertainment, 616 F.3d 904 (2010). The Ninth Circuit held that because Mattel's inventions agreement with a former employee (who had left Mattel and helped launch the Bratz doll line at MGA) did not expressly cover "ideas," but only "inventions," that the judgment for Mattel must be vacated. On retrial last year, Mattel lost and was ordered to pay more than $300 million to MGA in damages and fees, amounts which Mattel is appealing.
As social and mobile gaming industry continues to grow, gaming companies will have to be as nimble and flexible as their gaming characters to navigate through the maze of IP laws that affect their field.