Baker v. Microsoft Corporation: Game Companies Beware, Ninth Circuit Court of Appeals Decision May Make It More Difficult to Defeat Class Actions

A Quick Overview

The Ninth Circuit Court of Appeals recently reversed a district court’s decision to strike the class action allegations of a putative class action against Microsoft.[1]  The Ninth Circuit’s decision means that the district court must reconsider whether to allow the case to proceed as a class action.  Because the decision as to whether to certify a class generally determines whether a class action will proceed, the Ninth Circuit’s decision is an important one for game companies, which are often confronted with class action lawsuits. Continue Reading

“Unlimited” Time Off Policies – Fad or Fun?

Over the past several years the concept of “unlimited” vacation policies have sprung up around the philosophy that it allows companies to treat its employees with respect and empower them to make their own decisions regarding when to work and when to play.  Being at the center of innovation, many Silicon Valley companies have been early adopters, including Netflix, Evernote and Quirky.  We are now seeing more traditional companies also jump on the bandwagon and follow the lead of Silicon Valley and offer unlimited paid vacation.  While there are many articles arguing the pros and cons of such policies and who they really benefit, what are the legal implications in deciding whether a “flexible” time off policy is the right choice for your company? Continue Reading

Bargaining with Apple: Understanding the iOS Developer Program License Agreement

This article, which focuses on the iOS Developer Program License Agreement, is the second of two articles geared at helping app developers understand the fine print of the agreements they are asked to enter into with the companies that distribute their products. The first article on “Bargaining with the Little Green Robot: Understanding the Google Play Developer Distribution Agreement” can be found here.

When it came to market in July 2008, Apple, Inc.’s (“Apple”) App Store created the first centralized market for applications for mobile devices.  It was an instant hit.  In the App Store’s first year alone, users downloaded over 1.5 billion applications.  And the numbers have only grown from there.  The App Store now currently hosts approximately 1.3 million unique applications that have been downloaded a staggering estimated 85 billion times, resulting in payouts to app developers of more than $13 billion.  With numbers like these, app developers cannot afford to overlook this market.  But what does Apple ask in return for this impressive distribution opportunity?  This article examines some of the major terms of the iOS Developer Program License Agreement (the “License Agreement”).

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California Repeals Prohibition on Use of Alternative Currencies

From pet grooming services paid with currencies backed by aggregated gift cards to coffee shops in Palo Alto and San Francisco that accept digital currencies for a latte, many Californians are completing everyday transactions with digital currencies.  Community currencies (such as currencies “created by members of a community in conjunction with merchants who agree to accept the alternative currency”[1]) are seeing some popularity in Sonoma County, Humboldt County, and other areas of Northern California.  Many video games continue to facilitate in-game and other purchases using alternative currencies.

The payments and video game industries have recognized, however, that quite often law moves more slowly than technology.  In support of continuing the proliferation of alternative currencies,  California Assembly Bill 129 (the “Alternative Currencies Act”) became effective on January 1, 2015.  The Alternative Currencies Act loosens existing prohibitions on use of currencies other than the lawful money of the United States by repealing Section 107 of California Corporations Code.[2]

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Investment Trends in the Gaming Industry

Over the past decade, the gaming industry has evolved into one of the hottest sectors of mobile internet services.  VentureBeat recently reported that in the trailing twelve months of Q3 2014, gaming accounted for $18 billion in trade exits and IPOs.  A prime example of this is Amazon’s acquisition of game-livestreaming startup Twitch for $970 million in August of this year. Gaming is also currently one of the more profitable parts of the mobile internet sector, boasting an average 9.9x return on a three year investment.

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Redbox Collection of ZIP Codes Does Not Violate Song-Beverly Privacy Rights

Redbox Automated Retail, LLC (“Redbox”), provider of the popular self-service kiosks that rent movies and video games in airports and other locations, received confirmation last month from the Ninth Circuit Court of Appeals that it can continue requiring customers to provide their ZIP codes to rent discs without violating California’s Song-Beverly Credit Card Act.  Sinibaldi v. Redbox Automated Retail, LLC, 2014 U.S. App. LEXIS 10556 (9th Cir. June 6, 2014).

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The FTC Continues Its Focus on the Mobile Arena

The Federal Trade Commission has recently focused its consumer protection efforts on the mobile arena, and particularly video game companies operating in that arena.

Early last year, the FTC issued several staff reports related to mobile commerce and gaming.  The reports (1) examined the use of mobile payments (see “Paper, Plastic… or Mobile?  An FTC Workshop on Mobile Payments”), (2) promoted improved privacy disclosures for mobile consumers (see “Mobile Privacy Disclosures, Building Trust through Transparency”) and (3) revised online advertising disclosure guidelines (see “.com Disclosures, How to Make Effective Advertising Disclosures in Digital Advertising”).  As with all FTC guidance, such reports do not represent the law.  However, the reports do create safe harbors for companies that want to avoid FTC scrutiny.

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Georgia’s Limited Tax Credits for Interactive Entertainment Producers

On April 15,[1] Georgia passed a law[2] amending its tax code to provide a limited tax credit to qualified interactive entertainment companies. The law provides incentives for mid-size game developers who demonstrate sufficient ties to Georgia. Qualified interactive entertainment companies are those that:

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Briefing note on the OFT’s Principles for online and app-based games

Recent updates to consumer protection regulations may change the way web and mobile applications are monetized in the United Kingdom.  Developers, particularly those developing promotional or paid-for content directed toward children, may want to know about how UK regulators are ensuring content is transparent, accurate, and fair to consumers.

We are pleased to share an article written by Bird & Bird’s Media team titled “Briefing note on the OFT’s Principles for online and app-based games,” available here.  The article provides a wealth of practical and sophisticated advice for online and app-based game developers and publishers.

IRS Says Bitcoin Isn’t Money

On March 25, 2014 the IRS issued Notice 2014-21, which describes how the IRS will interpret existing general tax principles to apply to transactions using “virtual currencies” such as Bitcoin. This Notice is the most recent in a line of similar regulatory pronouncements issued by several governmental actors such as the Government Accountability Office’s report in May of last year and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) Guidance memorandum issued March 18, 2013.

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