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>Tip: IP Indemnification

>As patent and other intellectual property lawsuits continue to litter the video game landscape, it makes a mind wander to one of everyone’s favorite clauses in developer and publisher agreements: indemnification (which we have discussed before). This is one of those clauses that gets buried at the end of the agreement, often on the hope that it never gets discussed. And, certainly neither party ever hopes to have to invoke the indemnity clause. The problem arises that, while the clause generally does not see the light of day, should the clause ever become necessary — the dollars and stakes are bigger than ever anticipated.A publisher will generally try to seek a broad indemnity from a developer, so that, if a patent owner sues the publisher alleging that the developer’s game infringes the patent (or other intellectual property), the publisher will be protected. The indemnity clause will be used to shield… Continue Reading

>Don’t Ignore Open Source License Terms

>If you embed open source software in a retail game or in gaming hardware, you should be diligent about compliance with the open source license terms. Otherwise, both you and your retailer may be in for an unpleasant surprise. The Software Freedom Conservancy, the non-profit corporate home of the open-source Linux application BusyBox, and Erik Andersen, one of the program’s principal developers, recently filed suit against a number of technology manufacturers and retailers, including Samsung and Best Buy. The suit accuses the defendants of infringing the copyright for Busybox by using the program in consumer products such as DVD players and HDTVs in violation of the terms of its license (the GNU General Public License, version 2). The complaint, filed the U.S. District Court for the Southern District of New York, claims that the defendants were advised that the terms of the GNU General Public License version 2 only allowed… Continue Reading

>Hasbro and Atari Duel over a Licensing Spat

>Hasbro, the owner of the venerable Dungeons & Dragons intellectual property has brought suit against Atari, seeking to terminate Atari’s rights to develop video games based on Dungeons & Dragons. According to Hasbro, the license agreement contained (i) a confidentiality provision that prohibited Atari from disclosing non-public information about Dungeons & Dragons video games to third parties and (ii) provisions outlining minimum customer support requirements.As outlined in Hasbro’s complaint, Atari spun off divisions and went through multiple leadership changes, and then had a subsidiary of Namco Bandai (a key Hasbro competitor) take the reigns of certain Dungeons and Dragons games in certain European countries (thereby disclosing Hasbro confidential information to its competitor). Hasbro also includes in the complaint that it went country-by-country to assess Atari’s customer support of Dungeons & Dragons games and found the support lacking. Hasbro is seeking to terminate the license agreement and also brought claims for… Continue Reading

>Court rules Apple software is only licensed on Apple hardware

>As we have been covering, Apple brought a suit asserting copyright infringement stemming from PsyStar’s sales of non-Apple-Labeled computers with Apple’s operating system. This case presents interesting questions about hardware restrictions placed into EULAs and the viability of a copyright misuse defense based on those restrictions. Last Friday, a Northern District of California court put forth its attempt to answer some of these questions, ruling that Apple could restrict its license of Apple Software through its EULA to only allow installation on Apple-Labeled computers. The court believed the EULA language was a permissible restriction on the use copyrighted software itself, and not an impermissible tying restriction on a good or service outside of the monopoly granted by copyright. The court indicated that Apple could control the use of its copyrighted software through its EULA as long as consumers were not prohibited from using third-party operating systems or buying third-party hardware.In… Continue Reading

>Activision Sued by Rock Band No Doubt Over In-Game Avatars

>Having only recently rid itself of Gibson Guitar Corp.’s Guitar Hero-based patent infringement lawsuit, Activision probably expected to be able to put away the aspirin for a while. Instead, the game development and distribution giant is facing another headache-inducing suit, this one filed by established pop/rock band No Doubt, which was none-too-pleased to discover that their likenesses are available for use as playable character avatars throughout Activision’s new release, Band Hero. The band’s complaint, filed November 4, claims damages for breach of contract, fraudulent inducement and infringement of right of publicity, as well as violations of California’s Business and Professions Code, in connection with No Doubt’s license agreement with Activision. (Case No. BC425268, in the Superior Court of the State of California for the County of Los Angeles.) According to the band, No Doubt entered into a limited license agreement with Activision in May 2009 with the understanding that the… Continue Reading

>Nintendo Settles Wii Remote Claims; "Rock Band" Defendants File to Advance Proceedings

>The end of October brought a flurry of legal activity relevant to two of the more notable segments of the current generation of video game technology: Nintendo has finally settled out of a U.S. International Trade Commission investigation concerning its Wii Remote, and the game developers and retailers that were sued by Gibson Guitar Corporation over the popular Guitar Hero and Rock Band games have made a move to dispose of Gibson’s remaining infringement claims. On October 5, the administrative law judge presiding over the ITC’s investigation of the Wii Remote issued an initial determination (ITC court ruling), later upheld by the Commission, that the settlement reached by Nintendo and Hillcrest Laboratories Inc. satisfactorily disposed of the dispute between the parties. Hillcrest, a developer of home entertainment technologies, claimed that the operation of Nintendo’s Wii Remote in combination with the Wii video game console infringed a collection of Hillcrest patents… Continue Reading

>Bethesda Sues Interplay Over Fallout IP Purchase

>The purchase of intellectual property is always a complicated transaction, which can easily blow up on the participants if not handled carefully. Bethesda Softworks found how easily things can go wrong last month when it sued Interplay over the purchase of the Fallout IP. Bethesda’s suit accuses Interplay of breach of contract and trademark infringement for not abiding by various provisions in the purchase and license agreements detailing Bethesda’s purchase of the Fallout IP from Interplay in April, 2007. Under these purchase and license agreements, Bethesda bought the exclusive rights to the Fallout game and associated trademarks for $5.75 million. Interplay then licensed back several types of limited rights from Bethesda. One provision in the agreements said that Interplay would have the right to develop a Fallout MMORPG if it could raise $30 million in funding by the end of March 2009. Bethesda claims such fund-raising did not occur, but… Continue Reading

>Implied Licenses with Software Developers

>An interesting opinion denying a preliminary injunction in a software development case has just come out of the Eastern District of Washington. The defendant company, bVisual, was sued for copyright infringement by Numbers Licensing, an independent developer hired by bVisual to do software development work. Committing a surprisingly common error, bVisual failed to get a signed, written agreement with Numbers Licensing that placed ownership rights in the source code with bVisual. Therefore, when the two parties later got involved in litigation, the court found that the developer still owned the copyright in the developed source code on bVisual’s computers.However, all was not lost for the defendant, as the court also found that bVisual had an implied license to continue using and modifying the source code. The court found that the relationship between the parties, the defendant’s payment of a substantial amount of money for the software, and the fact the… Continue Reading

>Software licenses, assignability, and mergers

>A new case was handed down out of the Sixth Circuit last week that dealt with software licensing. In this case, a company had licensed some software, and the license agreement contained some of the standard non-assignment language: that the license was non-transferable and that the licensee could not transfer its rights without the approval of the licensor. The licensee underwent some corporate reorganization — it was merged into a new entity. The key thing here is that the merger was *not* with a third party entity or as part of buying assets. This case stemmed simply from a parent company consolidating a set of wholly-owned subsidiaries. However, even though, pre- and post-merger, the software sat on the same computer, doing the same thing, at the same location, the surviving entity was in violation of the software license as a result of the merger.So, two tips for all of the… Continue Reading

>Potential New Implied Software License Warranty

>The American Law Institute has issued a proposed final draft on the “Principles of Law of Software Contracts” (click here to obtain a copy). In this draft, the ALI seeks to provide (suggested) clarifications and requirements in the context of software licenses. While it is not a law or statute, it does serve as a model for States to choose to adopt, and can provide guidance to judges who seek assistance in interpreting software licenses and contracts. One of the areas of concern is that the draft creates an implied warranty of no material hidden defects AND that this warranty is non-disclaimable. The effect, if this were to become law, would be that customers would be able to bring a claim for bugs in the software. Of course, depending on whether you are a software developer or a software buyer will dictate your reaction to this new “requirement.” Looking closer… Continue Reading

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