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Law of the Game on Joystiq: Shareholder Deriva-what?
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: What the hell is a shareholder derivative suit? Ever since the Take-Two shareholder derivative lawsuit was announced, I've been deluged by various forms of that question. So this week I've decided to outline some of the basics of the law of corporations and explain the 'shareholder derivative suit' a little better.So, really, what is a corporation? Put simply, it is an entity (i.e., an 'artificial person') that is created pursuant to the laws of a state. It is a separate legal entity from the people who make up the officers and directors of that corporation. Of course, the corporation is not the only business entity, but for this discussion, I'll limit the discussion to a standard corporation, or a 'c-corp' to those of you familiar with the terminology. While the specifics of corporations vary from state to state, there are a number of commonalities among all US corporations. (Corporations in other countries may vary more substantially from this description.) Those common features are:
Law of the Game on Joystiq: Royalties 101
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: With all the recent bru-ha-ha about Microsoft restructuring the XBLA royalty scheme, it seemed like an opportune time to discuss royalties as a whole. Royalties are a legal construct based around intellectual property, and are the basic way the business of intellectual property can function. In fact, I spend a good portion of my time writing up royalty agreements for all sorts of products, and while this may sound like a personal hell to many of you, I do actually enjoy it. And honestly, whether your dream is to create video games or make music or write books or something else along these lines, an understanding of royalties may help you out in your career. Given that Microsoft won't share its royalty specifics, I'm going to stick to the general concept.So, what is a royalty, anyway? In a broad sense, it's a payment received for use of an intellectual property right. To be more specific, it's a payment for some right to a copyright, trademark, patent, or even a trade secret. (As a side note, certain kinds of payments for mineral rights are also termed 'royalties.') Here are some of the most common examples of a royalty in action:
Law of the Game on Joystiq: The 'Zombie Suit'
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: We're here today to discuss the greatest threat to the world as we know it: Zombies. Or, rather, how that particular threat has become the topic of a lawsuit over who controls said brain-eating, reanimated corpses. Before I start commenting on the suit, I have to put forth this bit of a disclaimer: I'm not privy to the court documents, and my commentary is purely speculative. That being said, there are a lot of problems with this suit from a theoretical standpoint.The suit cites, specifically, both trademark and copyright claims. I have my doubts about either claim being successful, but I'll begin with the trademark issue. For those not familiar, intellectual property law has three major areas that involve Federal registration in the US: patent, trademark, and copyright. In short, patents protect ideas, trademarks protects brands, and copyrights protect expressions. The trademark claim, then, likely involved some issue of dilution or confusion between George A. Romero's 'Dead' movie series (specifically Dawn of the Dead) marks and the 'Dead Rising' mark. Without some pretty substantial evidence, I don't think MKR group has much of a case based on this claim.
Law of the Game on Joystiq: MMORPGambler
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: Well, it's GDC week, which likely means no one will be reading 'Law of the Game on Joystiq.' I can't say I blame you ... However, I just got back from the Gaming Law Minefield conference, and I feel like writing about MMORPG gambling. So, if you can pry yourself away from the real-time GDC updates for a few minutes, it's time for this week's Law of the Game on Joystiq. But first, a little shameless self promotion in the way of background: I've been writing about the MMORPG gambling idea since December 2005, which, best as I can tell, makes me one of the earliest legal commentators on the matter, and my commentary spans my SSRN account and Law of the Game. If you want a pretty complete background on MMORPG gambling legal issues, feel free to read up. If, on the other hand, you'd rather get a summary and get back to your GDC coverage, read the next couple paragraphs.MMO gambling, when linked to currency with a real world value, is essentially the same as any other online gambling. The first major issue in the early years of MMO gambling was what constituted a tie to "real world value," as games with eBay economies were a gray area. Games such as SecondLife were much more clearly linked to real currency. Given that MMO games have the freedom to incorporate practically anything imaginable, they can have any of the types of online gambling integrated into the game, or to a lesser extent, acted out by players (i.e., player sponsored tournaments with a gold buy in and prize) without integration. So, like any other online gambling system, there were the perpetual issues of access by minors, taxation, and, of course, the endlessly murky waters of differing gambling regulations worldwide. Things took a rather abrupt turn with the passage of the Unlawful Internet Gambling Enforcement Act in the United States at the end of 2006.
Law of the Game on Joystiq: Bar Hero
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: It's starting to seem like all I ever post about is Guitar Hero, but the game keeps presenting new and interesting issues to examine. I received an email from a reader who goes by 'mmmbeer' about a local bar that's doing 'Guitar Hero' nights. According to mmmbeer, they are "a lot like karaoke nights but with drunk people getting on stage trying to push 3-5 colored buttons on little plastic guitars." On the increasingly rare occasion that I make it out of the office to a bar, I've actually noticed these types of events in my area as well, and not just for Guitar Hero. One local bar actually has a weekly Wii tournament. In any event, mmmbeer was wondering what sort of legal ramifications might be associated with these types of events. And really, that's a two part question: what legal ramifications are there for in-bar tournaments; and are there special considerations for music games with real music tracks, such as Guitar Hero and Rock Band?Simple as the questions may be, the answers are far more complex. The answers, though, all stem from the concept of licensing under copyright law. (Of course, I'm purposely excluding the issue of whether bar advertisements may be violating trademark law, in the event they are using unlicensed trademarks, just to simplify the discussion). I suppose the first question to ask is 'What is a copyright?' My answer, as usual, is a bit of a historical footnote. The term 'copyright' actually comes from England, in the period just after the printing press was invented. The Statute of Anne was the first real copyright statute, which gave publishers an exclusive right to print for a set period of time. That is, they had the exclusive right to make copies of the text, or a copyright. That has evolved into the modern concept, where a group of rights accompanies authorship, what is collectively referred to as 'copyright.' (Tip: Those of you who tune out for my historical footnotes can start reading again.)
Law of the Game on Joystiq: Call the cops, he stole my Cloudsong!
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: Everyone remembers the now classic "You Stole My Cloudsong!" recording (warning: NSFW). What's less funny, if you're a MMORPG player, is that theft is a real occurrence in MMO worlds. So what happens if someone steals your hard earned gold or items? Do you have any recourse? According to the cops in Minnesota, the answer is no. However, a more progressive look at the issue would suggest that protection for your virtual assets is certainly coming, if it doesn't exist already. In fact, in China, a recent case declared that seizure of virtual assets had actual value with actual recourse. It's an issue that is often discussed at sites like VirtuallyBlind, TerraNova, and (shameless plug in 3-2-1) Law of the Game, among others. Of course, simply lumping in digital theft with ordinary theft is far more complex than one might think.The baseline question that needs to be answered is: What is theft? According to Black's Law Dictionary (7th Ed.), theft is "the felonious taking and removing of another's personal property with the intent of depriving the true owner of it; larceny." Simple enough, but going back into the common law, many jurisdictions traditionally limited larceny (the root of theft) to tangible personal property. It's only more modern interpretations, especially in the US, that include intangible property in the grander concept of "theft." However, even assuming you can include intangibles in "theft," there are much bigger problems with trying to apply this concept to in-game theft.
Law of the Game on Joystiq: Grumpy Thompson Again
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: Like a bear awakening from winter hibernation, you can be assured that after a Grand Theft Auto game is slated for release, a certain attorney in Miami will come stumbling out of his cave, grumbling and growling. Sure enough, Jack Thompson released a statement just after GTA IV's April 29 release date was announced – I won't go as far as to call this statement a "threat," as it seems to lack any credible consequences for gamers or the industry. Jack has made many, similar vague statements in the past, forecasting everything from the destruction of Take-Two to the apocalypse in the wake of game releases, but what can Jack really do? The answer to that question is 'not much,' from a legal perspective. Of course, there was that oddly short settlement agreement between Jack and Take-Two last year, whose status has been questioned previously, which should theoretically restrict Jack's ability to sue or threaten to sue to block the sale or publication of any Take-Two title. And if you look closely at the latest Thompson statement, it seems he's following those guidelines so far. To quote from his statement, "... contacting state and federal officials to stop the improper sales of Grand Theft Auto IV ..." Specifically, Jack is not suing, per the letter of the settlement, but encouraging government officials to act.
Law of the Game on Joystiq: Gambling Hero
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: It's that time of year again. Yes, it's the Las Vegas convention season, and between CES and D.I.C.E., many of the gaming faithful will have been in casino central before the end of February, including my own trip to the Gaming Law Minefield conference. This means bloggers are more drunk and broke than usual. It also means it's time to talk about gambling and how it may soon have a greater impact on video gaming. In fact, video game gambling has been a hot topic as of late, between MMO gambling and Kwari, among other stories. As an idea, video game gambling is relatively new.Gambling, and gambling laws, on the other hand, have been around for quite some time. Games themselves fall into a range between two extremes: Games of Pure Chance and Games of Pure Skill. Chance games are ones where the player has literally no impact on the outcome of the game. The classic example is a lottery, where no matter what you do, you can't change the odds of your numbers being drawn on any given entry. Skill games, on the other hand, have no elements of chance whatsoever. The classic example of a pure skill game is chess, given that there are no random elements in the game; the outcome is determined solely by the skill of the two players. Most games, from blackjack to backgammon to baccarat to Bubble Bobble, falls somewhere between chance and skill.
Law of the Game on Joystiq: Crossover Contracts
Each week Mark Methenitis contributes Law of the Game on Joystiq, a column on legal issues as they relate to video games: The various entertainment industries, from games to movies to books, are replete with crossovers from the other entertainment mediums. Some of these end products have turned out far better than others. Legally, however, they all stem from the same basic legal document: a license agreement. While this may be painfully obvious to many people, the aspect that few outside the legal or business end of the deal have considered are the terms of these agreements. The contract is one of the cornerstones of modern society. The idea of freedom of contract stems from the writings of John Locke, and is an idea that has been generally upheld in the United States. In fact, until 1937, the concept of a "minimum wage" was even seen as contrary to the ideal of freedom of contract. While the "socialism lite" attitude of the New Deal quashed much of the pure laissez-faire freedom of contract in the US, there is still a fairly general freedom in contracts in the marketplace today.
