Left Empty Handed: Value Shut Down on Written Prior Art, Highlighting Importance of System Art

System art is of increasing importance in patent disputes despite being frequently overlooked or “left for later” in many cases.  A recent decision in the Ironburg Inventions v. Valve Corp. case highlights the importance of system prior art, particularly as IPR success rates have dropped from their high points in 2012-15. Continue Reading

Laundering the Loot: Videogame Developer Valve Ends In-game Key Sales Because of Financial Criminal Activity

Money laundering is no game. Yet, some games have been used for money laundering. That’s what prompted Valve to announce that it would end the online sales of loot box “keys” for its game Counter-Strike Global Offensive (CS-GO).

As of last week, Valve indicated that CS:GO container keys purchased in-game can no longer leave the purchasing account. Thus, they cannot be sold on the Steam Community Market or traded. Pre-existing CS:GO container keys are unaffected–those keys can still be sold and traded.

These CS-GO keys have historically been traded on the Steam Community Market as well as third party websites. The keys could be bought with money from the in-game shop or from Steam. Continue Reading

Gaming Industry Associations Agree on Universal Esports Principles

Earlier this month, a set of gaming industry representatives agreed upon and released a set of unifying esports principles. These representatives include the Entertainment Software Association (ESA), as well as associations from Canada, Australia and New Zealand, the UK, and Europe. These “Principles of Esports Engagement” were developed in a collaborative effort and form a set of values applicable in all aspects of the global esports environment. Continue Reading

“Addressing Video Game Claims Under the Phillips Standard at the PTAB”

Last fall, the PTAB modified its procedures for IPR claim construction, eliminating the use of the broadest reasonable interpretation standard. Since the rule change last year, companies challenging the validity of patents at the PTAB are required to use the Phillips plain and ordinary meaning standard. Continue Reading

Celebrity Entertainer Sues Over Video Game Avatar

As real-world celebrities continue to expand the reach of their persona into the digital realm, the potential benefit for advertisers, game developers and esports event promoters is exceedingly high. But with increased opportunity comes increased risk.

A New York Supreme Court recently addressed this risk when it construed the State’s right of publicity statute[1] in a dispute over an NBA 2K18 video game avatar. In Champion v. Take Two Interactive Software, Inc., celebrity basketball entertainer Phillip “Hot Sauce” Champion sued the video game developer, alleging violation of his right to privacy for Take-Two’s use of his name and likeness. The Court ultimately dismissed the lawsuit, but not before it provided a helpful discussion of New York’s publicity statute and its modern application to the esports industry. Continue Reading

10 Labor and Employment Considerations in Esports*

*This article was originally published in Law360 on June 8, 2019.

Electronic sports, known in the industry as “esports,” has seen remarkable growth in the last decade. The term “esports” refers to the growing world of competitive, organized video gaming, where professional video gamers play on a variety of different video game platforms and video games (“esports titles”) in heavily attended and publicized competitions and tournaments. These competitions are watched by millions of fans across the globe on TV or online, and by others who attend live esports events. Expert projections have shown that this year will be especially significant, with the sport reaching revenues of $1.1 billion in 2019, or year-on-year growth of +26.7%. With a global audience growing to over 453.8 million worldwide in 2019, it is unsurprising that several companies are trying to break into this emerging market. In fact, reports have projected that sponsorship in esports will generate $456.7 million this year alone.

As new companies and individuals attempt to enter this space, it is important to consider several labor and employment consequences. While many of these recurring problems are not exclusive to esports, the unique characteristics of esports highlight the importance of considering these issues before or when employers get into the esports space. Continue Reading

Federal Court “Discards” DOJ Interpretation Of Wire Act

In a closely watched case, a New Hampshire federal court has ruled that the Wire Act is limited to sports betting and set aside the DOJ’s recent opinion to the contrary. However, it limited the scope of its declaratory relief to the parties and deferred a decision on whether to extend the declaratory judgment to non-parties on behalf of the Lottery Commission, but gave the Lottery Commission 14 days to file an appropriate motion and supplement the record with adequate factual and legal support on that point. Continue Reading

Tfue Lawsuit Sparks Scrutiny of Gamer Agreements and Esports Agency Activity

In a lawsuit filed yesterday against esports entertainment organization, FaZe Clan, Turner Tenney (“Tfue”), a twenty-one year old professional gamer and streamer alleges that the exploitation of young, unsophisticated content creators (streamers) has become standard in the esports industry, and that he is a victim.

Tenney claims that the “gamer agreement” he signed with FaZe Clan when he was twenty years old is illegal for multiple reasons – he alleges that it is “grossly oppressive, onerous, and one-sided,” because it entitles FaZe Clan to a finder’s fee of up to eighty percent (80%) of the revenue paid by third-parties for Tenney’s services and that it contains anticompetitive provisions that unlawfully restrain his ability to make deals that are not sourced by FaZe Clan. Tenney also argues that FaZe Clan is acting as his agent and has a fiduciary duty to him, which he alleges FaZe Clan breached when it rejected a sponsorship offer for Tenney because of a conflict of interest. Continue Reading

What Game Companies Need to Know About FinCEN’s Updated Guidance on Virtual Currency

FinCEN has issued updated guidance addressing the use of crypto currency and other convertible virtual currency (CVC). A portion of this guidance addresses the use of CVC in games. The guidance does not establish any new regulatory expectations. Rather, it consolidates current FinCEN regulations, guidance and administrative rulings that relate to money transmission involving virtual currency.

In 2011, FinCEN issued a final rule (“Bank Secrecy Act Regulations – Definitions and Other Regulations Relating to Money Services Businesses,” 76 FR 43585 (July 21, 2011)) defining a money services business (“2011 MSB Final Rule”). The 2011 MSB Final Rule made clear that persons accepting and transmitting value that substitutes for currency, such as virtual currency, can be money transmitters. Continue Reading

Senator Wants to Ban Loot Boxes and Pay-to-Win Aimed at Kids

In the latest salvo in the ongoing debate about whether certain game mechanics are exploiting kids, Senator Josh Hawley (R-MO) announced that he has introduced a bill to ban the alleged exploitation of children through “pay-to-win” and “loot box” monetization. According to Hawley, “The Protecting Children from Abusive Games Act” would apply new consumer “protections” to games played by minors including:

  • Games targeted at those under the age of 18 (this would be determined by subject matter, visual content, and other indicators similar to those used to determine applicability of the Children’s Online Privacy Protection Act (COPPA))
  • Games with wider audiences whose developers knowingly allow minor players to engage in microtransactions

Continue Reading

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