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

Converting an IPR Loss into a District Court Win

It is very common to defend against a claim of patent infringement by litigating in the district court and the PTAB in parallel. The most straightforward-way for the defendant to win is to persuade the PTAB that the asserted patent is invalid. But, that is becoming more difficult as Director Iancu pushes the PTAB to apply greater scrutiny to petitions in order to address patent owner criticism that the PTAB proceedings are unfair. However, a recent decision disposing of a non-practicing entity’s long-running litigation against Ubisoft highlights how a defendant that ultimately lost on an issue before the PTAB can use the loss to their advantage in district court. Continue Reading

DOJ Asserts Wire Act Opinion Doesn’t Cover Lotteries

In an effort to side-step the lawsuit filed against it by the New Hampshire Lottery (and others), the Department of Justice (DOJ) asserts that its recent reinterpretation of the Wire Act doesn’t apply to lotteries. As we previously reported, the New Hampshire Lottery has sued the DOJ to prevent enforcement of the DOJ’s opinion (issued in January 2019) reinterpreting the Wire Act. As we also reported, the January 2019 DOJ opinion reversed the position it took in 2011 that the entirety of the Wire Act is limited to sports betting. The new opinion concluded that only one of four parts of the Wire Act apply to sports betting, while the other three apply to any online betting. Continue Reading

Caution to Game Companies: PTAB Continues to Preclude PTAB Challenges That It Views As Untimely

In a proceeding that included Patent Office Director Andrei Iancu on the panel, the PTAB issued an order this past week denying institution of 3 IPRs filed by Valve. The decision demonstrates that the PTAB continues to tighten its standards for institution of post-grant challenges, including based upon considerations related to what it perceives as fairness to patent owners. Continue Reading

FTC Loot Box Workshop Announced

The Federal Trade Commission FTC has announced that it will hold a public workshop on August 7, 2019 to examine consumer protection issues related to video game “loot boxes.” As we have previously reported, loot boxes have been under scrutiny by regulators around the world. In the U.S., these issues were recently raised in a November 27, 2018, Congressional oversight committee hearing. During this hearing, Senator Maggie Hassan (D-N.H.) described loot boxes as “endemic in the video game industry,” adding that “children may be particularly susceptible to engaging with these in-game purchases, which are often considered integral components of video games.” In response, FTC Chairman Joe Simons assured Sen. Hassan that the FTC would “investigate these mechanisms to ensure that children are being adequately protected and…[would] educate parents about potential addiction.” Continue Reading

Unpacking Recent Loot Box Updates

As we have previously reported, as loot boxes have become increasingly popular in high-profile video games, they have come under greater legal scrutiny. Several jurisdictions have indicated they are not illegal gambling, but other jurisdictions have found some implementations to be illegal gambling. Even in the jurisdictions where loot boxes are not deemed gambling, regulators have raised concerns about whether loot boxes raise other issues. One alleged concern is the potential impact on children and the potentially addictive nature of loot boxes, though little, if any, hard evidence to date supports this. Continue Reading

DOJ Sued Over its Reinterpretation of the Wire Act

It didn’t take long. The New Hampshire Lottery has sued the Department of Justice (DOJ) to prevent enforcement of the DOJ’s opinion (issued last month) reinterpreting the Wire Act. As we reported last month, the DOJ reversed the position it took in 2011 that the entirety of the Wire Act is limited to sports betting. It newly concludes that only one of four parts of the Wire Act apply to sports betting, while the other three apply to any online betting. Continue Reading

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