Despite the lack of a court opinion in this case, the issue of emulators comes up occasionally, so we thought this case was worth a quick note.

Emulators

Video game emulators allow users to play games designed for a specific system on a general-purpose computer. For example, users of the Yuzu emulation software could play games intended for the Nintendo Switch on their PCs. Emulators play digital copies of games called ROMs (short for Read Only Memory).

The Complaint

Nintendo filed five claims against Tropic Haze:

• Counts 1 and 2: Trafficking in Circumvention Technology in Violation of the DMCA

• Count 3: Circumventing Technological Measures in Violation of the DMCA

• Count 4: Copyright Infringement

• Count 5: Contributory Copyright Infringement

Emulator Cases

Over the years, there have been several emulation software cases. Two Sony cases are often referenced to declare that emulators are legal: Sony v. Connectix and Sony v. Bleem. In the Connectix case, Sony accused Connectix of copyright infringement through Connectix’s copying of the Sony BIOS software during Connetix’s reverse engineering process. The Ninth Circuit reversed the district court and held that Connectix’s intermediate copying for interoperability purposes was protected fair use. In the Sony v. Bleem case, the only additional element was whether Bleem’s use of Sony’s images in advertising was copyright infringement. The Ninth Circuit held that the use of Sony’s images in Bleem advertising was fair use as comparative advertising.

Notably, in those cases, Sony did not claim that the emulators violated the DMCA, which was enacted in 1998 just one year before the Sony cases were filed. This is important because Nintendo’s main claims against Tropic Haze revolved around the DMCA’s prohibition on circumventing technological measures that protect copyrighted works. Nintendo alleged that the Yuzu software “unlawfully circumvent[ed] the technological measures on Nintendo Switch games and allow[ed] for the play of encrypted Nintendo Switch games.” And if Nintendo’s factual allegations were true, Tropic Haze would likely have eventually lost the case, which may have led to the quick settlement.

Settlement

Tropic Haze agreed to pay $2.4 million, cease all activities, and give up other elements related to their business (e.g., domain names).

Market Definition

The first step in analyzing anti-competitive behavior is determining the relevant markets. A relevant market, for antitrust purposes, contains both a geographic component and a product or service component. This is a question of fact, which is relevant because the Apple case was a bench trial where the finder of fact was the judge, whereas the Google trial was a jury trial. Juries are often less predictable than a judge.

In both cases, Epic tried to define the relevant market as the respective app distribution and in-app payment systems (iOS in the Apple case and Android in the Google case), as well as the respective in-app billing systems for digital goods.

In the Apple case, the judge (serving as the fact-finder) determined that the market was broader than Epic’s proposal. She found that the relevant product market was the mobile game transactions market as a whole. She also found that the relevant geographic market was global, excluding China. For the relevant product market, the district court pointed to several factors that made her decide on a broader market than Epic argued for:

1. Apple didn’t sell or license iOS;

2. Epic didn’t present evidence that consumers unknowingly locked themselves into the Apple ecosystems when buying iOS devices; and

3. Epic’s market definition expert was “weakly probative” (judge-speak for an untrustworthy hired gun) because their analysis was flawed along several major factors.

In the Google case, Epic was able to learn from the failures in the Apple case. Epic could present evidence of consumer lock-in as well as changing experts and refining the expert analysis. Ultimately, the jury agreed with Epic’s market definition (which Judge Rogers had rejected in the Apple case).

Because the product market definition in Google (Android App and Android payments market) was much narrower than that in Apple (video game mobile transactions market), it was easier to show abuse of that market in Google than in Apple.

Jury Instructions & Findings

The jury in Google found that various Google agreements, like Project Hug, Developer Agreements, and OEM agreements were unreasonable restraints of trade. These included agreements with major developers and publishers. Other than the Developer Agreement, the Apple case did not appear to have similar agreements in evidence. 

In addition, the jury in Google received an instruction from the judge allowing them to make a “permissive inference” because of Google’s bad behavior related to discovery issues. Specifically, the judge instructed: 

You have seen evidence that Google Chat communications were deleted with the intent to prevent their use in litigation.  You may infer that the deleted Chat messages contained evidence that would have been unfavorable to Google in this case.

In other words, the jury was primed to conclude that Google had acted inappropriately, making it more likely that the jury would ultimately side with Epic, at least on evidentiary issues.

Attacking the Verdict

Google has stated that it will seek to overturn the jury’s verdict. It has several options, including attacking the verdict at the trial court level and/or by filing an appeal. It may do both. Unfortunately for Google, the relevant market determination is a question of fact that is reversible only if the evidence compels a conclusion contrary to the factfinder’s verdict. This is also known as a “clear error” standard and is difficult to overcome on appeal. Here, Google would need to convince the Ninth Circuit that the jury clearly erred in their determination that the relevant product market was (1) the Android app distribution market and (2) the in-app billing services for digital goods and services transactions.

Reconciling the Outcomes

One of the hardest things about this verdict is that it seems irreconcilable, conceptually, with the Apple decision. But this is how the law works. Plaintiffs have to prove their cases with evidence. In the Apple case, Epic failed to do that; whereas in front of the jury in the Google case, it learned from its past mistakes, had some extra help from Google’s bad behavior, and ultimately succeeded. 

We predict this case, like Apple’s, will get appealed all the way to the Supreme Court. There is just too much at stake. However, Epic’s appeal in the Apple case is fairly narrowly drawn to a standard used in the anti-competitive analysis and the ruling is unlikely to apply to the Google case. Similarly, the issues at stake in Google are probably not going to be entirely relevant to the Apple case. 

What’s Next?

For many, the big question is: What will the remedy be? This will determine the practical effect for companies other than Epic. Stay tuned -- that will come early next year.

In 2019, Unity, a popular game engine developer, created a PR mess when it changed its Terms of Service to prohibit the use of Improbable OS. After that dustup, Unity announced that retroactive Terms of Service changes should not apply to developers who do not upgrade their projects. To that end, Unity announced that it would host Terms of Service changes on Github to give developers “full transparency about what changes are happening, and when.”

The Recent Changes

On September 12, Unity announced a major fees change. It stated in a blog post that it would start charging a Runtime Fee each time a game is installed. The developer community was quick to criticize the new fee including taking issue with the fact that one user installing a game on multiple devices would incur fees for each install. One of the biggest criticisms was that this fee would be applied to games already released in the market:

Will this fee apply to games using Unity Runtime that are already on the market on January 1, 2024?

Yes, the fee applies to eligible games currently in market that continue to distribute the runtime. We look at a game's lifetime installs to determine eligibility for the runtime fee. Then we bill the runtime fee based on all new installs that occur after January 1, 2024. For more details on when the fee may apply to your game, see When does the Unity Runtime Fee take effect?

(from Unity’s FAQ about the changes, now edited but available from the Internet Archive here). The FAQ additionally stated that while the Fees would start January 1, 2024, the calculations would look back 12 months in time to determine the fees owed.

This stance was … interesting based on previous iterations of the Terms of Service and its own stance on retroactive changes announced in 2019.

Old Terms

For much of Unity’s history, the Terms of Service were governed under the laws of Denmark (see the version updated January 28, 2022, archived here). These terms allowed for any modifications, at any time.

However, the Unity software was also governed by Additional Terms and those terms stated that users could elect to continue using previous versions of the Unity Software and be subject to the terms that were applicable to those previous versions - in line with the philosophy announced in the 2019 blog post:

Unity may update these Unity Software Additional Terms at any time for any reason and without notice (the “Updated Terms”) and those Updated Terms will apply to the most recent current-year version of the Unity Software, provided that, if the Updated Terms adversely impact your rights, you may elect to continue to use any current-year versions of the Unity Software (e.g., 2018.x and 2018.y and any Long Term Supported (LTS)  versions for that current-year release) according to the terms that applied just prior to the Updated Terms (the “Prior Terms”). The Updated Terms will then not apply to your use of those current-year versions unless and until you update to a subsequent year version of the Unity Software (e.g. from 2019.4 to 2020.1). 

We’ll call this the “Modification Clause.” On April 3, 2023, Unity removed the Modification Clause entirely (see this archived version). Additionally, Unity removed the Github repository containing all the previous Terms of Service versions sometime around June or July of 2022. Unity stated they removed the repository because of low views and not in an attempt to obscure previous versions of the Terms of Service (although it just happened to have that effect):

(We’ll get back to this issue later.)

So where does that leave us? Well, it is possible that Unity’s new fees would be allowed under Danish law despite the previous Modification Clause (any Danish legal scholars are welcome to provide insight, we don’t have any familiarity with the laws of Denmark).

However, on or around October 13, 2022, Unity updated its terms to apply the laws of the State of California at least for United States users. The main arguments developers would make against the application of the fees would most likely be that the fee changes are unconscionable and that users of older versions of Unity did not consent to the changes. In California, a contract or provision must be both “procedurally” and “substantively” unconscionable to be unenforceable. The procedural element is often satisfied when the contract is a contract of adhesion. Contracts of adhesion have been described by California courts as:

1) a standardized contract
(2) imposed and drafted by the party of superior bargaining strength
(3) that provides the subscribing party only the opportunity to adhere to the contract or reject it.

On the substantive side, California courts have held that the agreement must be “overly harsh,” “unduly oppressive,” “unreasonably favorable,” or must “shock the conscience.” Here, the application of an entirely new class of fees to older/existing versions of the software could very well be seen as substantively unconscionable, especially when older licenses explicitly allowed for their continued application so long as the developer used those older versions of Unity.

In my opinion, Unity would most likely only be able to apply these fees to new versions of Unity after clear notification and acceptance of these new terms by developers.

The Aftermath

On September 22, Unity issued an apology and revamped its new fee program. Notably, the new fees will only apply to future versions of Unity to be released in 2024. They also stated:

We will make sure that you can stay on the terms applicable for the version of Unity editor you are using – as long as you keep using that version.

Unity also reinstated the Github records of previous versions of the Terms of Service.

The Conclusion

But what does this all mean? Unity has shown on at least two occasions a willingness to introduce massively impactful changes for developers through Terms of Service updates and attempted to apply those changes to all existing Unity users. This most recent incident came just a few years after promising developers flexibility and to not apply new material changes retroactively. Unity has said that they will restore the option for developers to choose which terms apply (though the Terms of Service do not reflect this as of this writing), but can a developer who may be working on a game for years reliably trust that Unity won’t change course again? Time will tell.

Plaintiffs: Sanchez, et al.

Platinffs’ Counsel: Faruqi & Faruqi

Defendant: Nintendo

Defendant’s Counsel: Perkins Coie

The Big Picture

Nintendo defeats plaintiffs’ attempt to sidestep mandatory arbitration clause (and class action waiver).

History

We previously wrote (here and here) about a number of class action lawsuits filed against Nintendo related to issues with the Nintendo Switch Joy Cons (shown below). Courts moved the previous class action suits to arbitration based on the Switch EULA.

Current Case

In a recent case, parents and their children filed another putative class action related to the Joy Con issues. Here, they attempted to avoid the binding arbitration clause found in the EULA by arguing that the children received the Switches as gifts and that the children properly disaffirmed the EULA. (We’ve previously written about attempts to avoid the application of a EULA through a minor’s disaffirmation here). The arbitration panel considered these arguments and found that the parents had agreed to the EULA during Switch setup and that there was no agreement between Nintendo and the children. The plaintiffs then tried to argue the same gifting and disaffirmation points with the district court under a motion to amend their complaint. The district court held that the plaintiffs were collaterally estopped from making those same arguments again and dismissed the case due to the children lacking standing (the parents previously abandoned their claims when it was clear that their claims would have to be heard individually in arbitration).

Conclusion

Plaintiffs continue to try to avoid the applicability of EULAs through minors’ disaffirmation, mostly to avoid the applicability of mandatory arbitration clauses. While it was not successful in this case, there may be an increase in this strategy in the future (for example, this Roblox case where the plaintiff is arguing that in California, a minor is entitled to disaffirm a contract).

Plaintiff: Pavel Gostev

Plaintiff’s Counsel: Blood Hurst & O’Reardon; The Law Offices of Andrew Brown; Ellsworth Law Firm

Defendant: Skillz Platform, Inc.

Defendant’s Counsel: Quinn, Emanuel Urquhart & Sullivan

Big Picture

The California Court of Appeal’s February 28, 2023 decision in this case is important to study for anyone responsible for drafting terms of service agreements that contain agreements to arbitrate. The decision deviates from some recent federal cases (particularly on who decides issues of arbitrability) and it highlights how important it is, in general, to make terms as consumer-friendly and mutual as possible.

The Skillz platform and Terms of service

Skillz provides a mobile platform that hosts games in which players can pay to compete against each other for cash prizes. To participate, players must create an account which entails providing an email address, entering a date of birth, and tapping a button that says “Next.” Below the “Next” button are the words: “I agree to the Terms of Service and the Privacy Policy.” The underlined text is hyperlinked and, if clicked, takes the player to the terms of service.

The plaintiff, a resident of the state of Washington, created his account in July 2019 and sued Skillz in San Francisco County Superior Court in February 2021. He alleged that Skillz’ games constitute gambling games in violation of California and federal law and also brought claims for unfair competition the violations of the CLRA. The plaintiff was aware of the arbitration provision in the Terms of Service when he filed his lawsuit, and addressed it in his complaint. He alleged that the agreement to arbitrate was unenforceable because it prohibited public injunctive relief in violation of McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 216 Cal.Rptr.3d 627, 393 P.3d 85 (McGill), and because it was unconscionable.

The trial Court decision

Skillz petitioned to compel arbitration and the trial court denied the petition. The trial court found that the parties had not delegated the issue of arbitrability to the arbitrator. The court also found that the arbitration agreement was procedurally and substantively unconscionable. At the hearing on the petition, the court observed:

“I've got to say that we’ve look[ed] at a lot of these arbitration cases and ... this is the longest list of unconscionable features that I think I've ever seen.”

In its written decision, the court identified (among other things) as substantively unconscionable provisions:

• that plaintiff’s damages are limited,

• the arbitration must occur in San Francisco,

• plaintiff only has one year to bring his claim,

• the parties must split the arbitration fees and costs, and

• defendant can obtain equitable relief without posting a bond or security.

After the trial court denied its petition to compel arbitration, Skillz appealed.

The Appeal (affirming the trial court’s decision)

Arbitrability

The appellate court first examined whether the parties had agreed that the arbitrator would decide the threshold issue of arbitrability. The court observed that the default rule is that a court — not an arbitrator — will make that decision, unless the parties clearly and unmistakably agree otherwise. The appellate court found that Skillz’ terms of service did not contain an express agreement on this topic and that it wasn’t sufficient to simply reference the AAA Commercial Rules (which provide: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”) Skillz had pointed to federal authority that holds the opposite, including e.g., G.G. v. Valve Corporation (9th Cir. 2020) 799 Fed.Appx. 557, 558 (under Washington state law, “teenagers clearly and unmistakably agreed to arbitrate questions of arbitrability because the arbitration agreement incorporates AAA rules”). The California appellate court, though, which isn’t bound by federal decisions, said it didn’t find such authority persuasive and instead relied on several California state court decisions in reaching a contrary result.

Unconscionability

The appellate court next examined whether the terms of service were unconscionable. Under California law, both procedural and substantive unconscionability must be shown for the defense to be established, though not necessarily to the same degree. For terms of service agreements, like this one, procedural unconscionability is usually easy to show since they are offered on a take-it-or-leave-it basis. In this case, the court also pointed to allegations of inconsistencies in the agreement itself. On substantive unconscionability, the appellate court was, like the district court, persuaded that Skillz had included too many provisions which were non-mutual in nature. In addition to those listed above by the trial court, the appellate court also highlighted:

• the requirement to arbitrate disputes in this case was not mutual (i.e., only Skillz could bring IP claims in court and only Skillz could bring claims in court for billing disputes and alleged unfair methods in participating in the services or using the software)

• the $50 cap on liability;

• a waiver of liability for injury due to hacking; and

• an indemnification clause which was non-mutual and one-sided.

Accordingly, it concluded that the lack of mutuality in the promises to arbitrate in the terms of service were also substantively unconscionable.

Public Injunctive Relief

Public injunctive relief is relief that benefits the general public — not just the individual plaintiff who brings a lawsuit under California’s CLRA and UCL. In this case, the plaintiff alleged that Skillz’ terms of service violated the McGill case (cited above) which held that an arbitration provision was invalid and unenforceable in California insofar as it purported to waive a plaintiff’s statutory right to seek public injunctive relief under the CLRA and UCL.

In this case, the arbitration provision specified that the “arbitrator may award declaratory or injunctive relief only to you individually, and only to the extent required to satisfy your individual claim.” The appellate court found that, “[g]iven the myriad limitations in the Terms of Service favoring Skillz, it seems likely that Skillz intended the language at issue would prevent the award of injunctive relief benefitting anyone other than the individual user, but we need not resolve this question of contract interpretation.” In other words, since so many of the other terms were found to be unconscionable, this was basically a moot point.

Other Issues with the Terms of Service

In addition to the problems discussed above, the appellate court, like the trial court, also took issue with the shortened one-year limitations period on claims, mandating that arbitration be in San Francisco, and the agreement that the parties share equally in the fees and costs of the arbitration. The court also took particular issue with the fact that the arbitration filing fee for the plaintiff’s claim was $6,250, while the Terms of Service purported to limit damages to $50.

As a result, the appellate court affirmed the trial court’s order denying the petition to compel arbitration.

Plaintiff: Peter Mai, et al.

Plaintiff’s Firm: Blood Hurst & O'Reardon, LLP

Defendant: Supercell

Defendant’s Firm: Tyz Law

BIG PICTURE

Supercell earns a decisive win in a loot box class action lawsuit we mentioned previously. The court dismissed the case with prejudice.

The Amended Complaint

Plaintiffs (on their second go-around after their first complaint was dismissed) alleged that Supercell’s Brawl Stars and Clash Royale games contained loot boxes which should be considered illegal gambling games under California law. The plaintiffs alleged to have spent in excess of $150 and $1,100 purchasing loot boxes in Supercell’s games (image from the first amended complaint below).

Plaintiffs’ claims all rely on the underlying assumption that loot boxes are illegal gambling, they were based on:

1. California’s Unfair Competition Law (UCL) (Cal. Bus. & Prof. Code §§ 17200, et seq.);

2. California’s Consumer Legal Remedies Act (CLRA) (Cal. Civ. Code §§ 1750, et seq.); and

3. Unjust Enrichment.

Order Granting Motion to Dismiss

Illegal Gambling

The court analyzed whether Supercell’s loot boxes constituted illegal gambling under the California Penal Code, which requires a game where a “thing of value” may be won or lost based on chance. Plaintiffs alleged that the loot box prizes had subjective non-monetary value to users, including aesthetic and entertainment value. However, the court held that this is not enough stating that under California precedent such subjective value cannot satisfy the “thing of value” requirement for a game to be considered gambling. Plaintiffs also alleged that the prizes have monetary value because external exchanges allowed for the sale of accounts and items. The court found that this too was not enough under California law because Supercell’s terms of service prohibit the sale or purchase of virtual goods.

Other Claims

The court found that plaintiffs lacked standing on the claims related to California’s UCL and CLRA.

The UCL prohibits any “unlawful, unfair or fraudulent business practice.” To have standing under the UCL, plaintiffs had to show that they suffered some form of economic injury. The court found that plaintiffs failed to show economic injury because the plaintiffs had received exactly what they had paid for (i.e., they had received the benefit of the bargain). Plaintiffs argued that the benefit of the bargain analysis did not apply because there are exceptions for material misrepresentations (i.e. Supercell not disclosing that the sale of loot boxes was unlawful gambling transactions) and because purchasing illegal or unapproved products may constitute economic injury. Both of these arguments failed because the court found that the loot boxes were not illegal gambling.

To have standing under the CLRA, plaintiffs had to show that they were exposed to an unlawful practice related to the sale of goods or services and that they suffered some form of damages. As an initial matter, the court found that the sale of virtual currency is not a good or service under the CLRA. The court also found that there were no damages and that the sale of loot boxes is not unlawful.

Finally, because loot boxes are not unlawful gambling, the court also dismissed plaintiffs’ unjust enrichment claim stating “courts may not use the unfair competition law to condemn actions the Legislature permits.”

Conclusion

This is one of several cases (e.g. this case) over the past year where courts have determined that loot boxes are not gambling under California law. As discussed in our last loot box litigation snapshot in March 2021, there had been a flurry of class-action lawsuit activity in the loot box space. Some of these cases are now being resolved. While the Ninth Circuit hasn’t yet weighed in on the issue, it would look like these cases are doomed for failure in California, at least for now.

Plaintiff: Bungie Inc.

Plaintiff’s Firm: Perkins Coie

Defendant: Aimjunkies.com et al

Defendant’s Firm: Mann Law Group

The Big Picture

A cheat maker raises a couple of novel defenses alleging that Bungie violated the cheat maker’s terms of service by decompiling and reverse engineering the cheat software and committed various CFAA and DMCA violations by surveilling a developer without consent.

PROCEDURAL HISTORY

As discussed previously, in June 2021, Bungie sued Aimjunkies (and others), developers of a popular Destiny 2 cheating tool for:

• Copyright Infringement (Count 1);

• Trademark Infringement (Count 2);

• False Designation of Origin (Count 3);

• Circumvention of Technological Measures (Count 4);

• Trafficking in Circumvention Technology (Count 5);

• Breach of Contract (Count 6); and

• Tortious Interference (Count 7).

In January 2022, Aimjunkies filed a motion to dismiss for failure to state a claim on most Counts and to compel arbitration for Counts 3-7.

In April 2022, the court granted Aimjunkies’ motion with respect to Counts 1 and 2, but provided Bungie with the opportunity to file an amended complaint. The court also found that Bungie’s Limited Software License Agreement (“LSLA”) required all but Claims 1, 2, and 3 to be arbitrated (Bungie probably realized they were going to lose on this point and voluntarily submitted a demand for arbitration on those claims in February. Bungie hasn’t updated their LSLA to, for example, exempt DMCA claims (Counts 3 and 4) so we’ll see if they end up changing their arbitration clause in the future.

Bungie filed an amended complaint in May and, on September 16, Aimjunkies filed its Answer and counterclaims.

Answer And Counterclaims

Defendants’ answer includes Counterclaims for Unauthorized Access with Intent to Defraud, Theft of Computer Data, Unauthorized Access, and Circumvention of Technological Measures with respect to Defendant James May and Breach of Contract and Digital Circumvention of Technological Measures with respect to Defendant Phoenix Digital.

Essentially, Defendants have two main counterclaims. First, Defendants argue that Bungie’s anti-cheat software obtained information from Defendant May’s computer about the operation of cheating programs, but Bungie’s LSLA did not provide Bungie with any authority or ability to do so. (Bungie’s current LSLA states that Bungie’s anti-cheat software will process certain information such as running processes, but this wasn’t true for the entire time period at issue.) Defendants also allege that Bungie then used that information to do further surveillance on other parties who also presumably did not consent to such surveillance.

Second, Defendants argue that Bungie agreed to Defendants’ own terms of service to download the cheat and that those terms of service were breached when Bungie decompiled and reverse-engineered the software. It would be interesting to see how the court handles these Counterclaims, but I would assume the case will result in some form of settlement before they are resolved.

This is an interesting order on a motion to dismiss in a loot box class-action case where the court opines on what reasonable people expect about loot box odds even when the publisher doesn’t disclose anything. While the defense would have been even stronger had the game publisher disclosed the drop rates, it’s notable that the publisher still prevailed despite failing to do so, based on notions of common sense.

The Complaint

The class-action complaint alleged deceptive practices in connection with Lilith’s Games’ “Rise of Kingdoms” (RoK) mobile game. The plaintiffs alleged that they were duped into spending thousands of dollars on in-game purchases of gems to play rigged loot box card and wheel games that had unfavorable odds for players. Specifically, plaintiffs alleged that Lilith misrepresented the chances of receiving valuable items for games that required gems to play, secretly sponsored some players and gave them free in-game resources, and failed to enforce the ToS, which allowed some players to share their accounts thereby making the game more difficult and more expensive for players who followed the rules.

The plaintiffs alleged to have spent $8,000 to $15,000 each on purchases of bundles of gems to use in the loot box games within RoK. They allegedly paid to play games called “Card King,” the “Garden of Infinity” and “Wheel of Fortune” 50 or more times at a sitting in hopes of winning prizes. The plaintiffs assumed certain odds based on the use of six-sided dice, 12-spoke wheels and other features, but had no way of knowing the real odds since Lilith did not disclose them. When the plaintiffs didn’t win at what they believed was the statistically expected rate, they concluded the games were rigged and cited to videos on Facebook and YouTube in the complaint to support this claim.

The plaintiffs brought claims based on the:

1. California Consumer Remedies Act (Cal. Civ. Code § 1750, et seq.);

2. Unfair or Unlawful Business Practices (Cal. Bus. & Prof. Code, § 17200, et seq.);

3. Unfair or Unlawful Contest or Sweepstakes (Cal. Bus. & Prof. Code, § 17539.1, et seq.);

4. California’s False Advertising Law (Cal., Bus. & Prof. Code §§ 17500, et seq.); and

5. Breach of the covenant of good faith and fair dealing.

Order granting Motion to Dismiss

Since some of the claims were based on claims of fraud/deception, the court applied a heightened pleading requirement under FRCP Rule 9(b), which requires parties to “state with particularity the circumstances constituting fraud or mistake.” The court concluded that since Lilith did not post odds for the RoK games, it could not have affirmatively misled the plaintiffs. It also found the references to third party videos on YouTube and Facebook “wholly speculative musings” and at several points “largely incomprehensible.” The court chided plaintiffs, saying:

Dropping hyperlinks to what is in effect gossip on the Internet is not the type of plausible allegation of fact that Rules 8 and Rule 12(b)(6) contemplate.

The court also rejected the plaintiffs’ contentions about Lilith misleading players based on how the loot system operated. Plaintiffs had taken the position that because the “Wheel of Fortune” game featured a 12-spoke wheel, this implied players who spun the wheel had a 1 in 12 chance of winning the best prize while spinning the wheel. The court disagreed, finding that “nothing in the presentation of the wheel alone plausibly indicates that players had an equal chance of landing on a given spoke.” Instead, the court found that it “is just as plausible that the odds of hitting a given spoke were not equal,” because “[s]ome of the prizes on the wheel were among the most valuable and rare items available to players, and it is not implausible that it would be more difficult to win them even on what was digitally displayed as an equally divided wheel.” The court observed that “[p]laintiffs’ own characterization of loot boxes as awarding rare and valuable goods on a ‘very low percentage of occasions’ is consistent with the commonplace understanding that rare and valuable items are not equally available as winnings in a game.”

The court next considered the plaintiffs’ allegations about account sponsorship and Lilith’s non-enforcement of the ToS, but found these allegations also lacked sufficient particularity and pointed out other possible explanations for players losing (e.g., to more powerful players).

Observations

At first blush, the court’s reasoning might seem strange. It’s useful, though, to compare RoK’s “wheel” game to the well-known “Wheel of Fortune” game show. If you’ve ever watched “Wheel of Fortune,” you might initially observe that, when a contestant spins the wheel, the chances of the marker landing on a particular wedge (at least those of the same width) are basically the same. For example, if you are trying to calculate the odds of landing on the million dollar prize, you may see that it is initially based on the number of wedges visible — i.e., 1 in 72 chance. However, landing on that wedge only gives you a chance to get the million-dollar prize. You still have to win the game, make it to the bonus round without landing on the bankruptcy wedge (1 in 12 chance each spin), spin for a prize envelope and hope that the prize envelope is the one that has the million dollar prize in it (1 in 24 chance). So, the effective odds of winning the million-dollar prize are far, far worse than initially appears. (Maybe that’s why only three people have ever won it.)

In RoK, the court basically says it’s similar. Reasonable people would understand it’s not really going to be 1 in 12 odds, even if the wedges appear equal to all the others in dimensions. The court refers, conceptually, to a “commonplace understanding” and implies that people intuitively know it’s going to be harder to win rare prizes than common ones.

Another interesting observation is that the court rejected Lilith’s Communications Decency Act (CDA) defense. While this was recently successful for Google in defending against a loot box class-action, the distinction here is that Lilith created the content in question whereas Google, as a platform/host, didn’t.

The court gave the plaintiffs leave to amend for “one last round,” but it seems dubious that this case will survive much longer.

Overview

Zynga quickly settled a class-action lawsuit (discussed previously) alleging that its online games were illegal gambling under Washington law. This was one of many such lawsuits filed post-Kater.

Settlement

This agreement in principle (still requires formal court approval) comes less than three months from the filing of the complaint and establishes a $12 million settlement fund for the class members. As a reminder, Churchill Downs and Aristocrat settled their case for nine figures. We can probably expect to see similar settlements from game companies that operated these virtual casino-type games in Washington.

Two recent cases involved motions to compel arbitration worth noting. In the first case, Blizzard successfully appealed a lower court’s ruling denying Blizzard’s motion to compel arbitration in a class-action loot box case. This is a great result because it reaffirms a common framework for user agreement and dispute resolution acceptance used by game companies. In the second case, Bungie sued some cheat developers and faced both a motion to dismiss for failure to state a claim and a motion to compel arbitration (which it mostly agreed to). The Bungie situation left me a bit puzzled and is worth reviewing since the result leaves some of Bungie’s claims in federal court and some proceeding in an arbitration.

Blizzard’s case in San Diego

A little more than a year ago, I wrote about a San Diego superior court denying Blizzard’s motion to compel arbitration based on its view that Blizzard’s user agreement didn’t fairly put players on notice of the arbitration agreement. The class-action complaint in that case alleged that Blizzard violated California’s Unfair Competition Law (UCL) because it sold loot boxes to Overwatch players, which, in the plaintiff’s view, constituted illegal gambling under three different statutes:

1. California Penal Code §§ 330 et seq.;

2. the Illegal Gambling Business Act (18 U.S.C. § 1955); and

3. the Unlawful Internet Gambling Enforcement Act of 2006 (31 U.S.C. §§ 5361-5367).

The trial court denied Blizzard’s motion to compel arbitration, finding a “reasonably prudent user would not have inquiry notice of the agreement” to arbitrate because “there was no conspicuous notice of an arbitration” provision in any of the license agreements.

Back then, I opined that it was “a no-brainer for Blizzard to appeal this decision” and, of course, Blizzard did appeal.

On March 29, 2022, the court of appeal reversed the decision of the superior court, finding instead that Blizzard’s agreement did provide sufficiently conspicuous notice of the arbitration agreement. The appellate court included a screenshot of Blizzard’s pop-up acceptance box in the opinion:

The court of appeal then stated:

As the screenshot shows, the portion of the license agreement immediately visible in the text box displayed two significant notices. First, that users may not use Blizzard's service if they do not agree to all of the terms in the license agreement. And second, that users should read the section of the license agreement “below” titled “dispute resolution” because it contains an arbitration agreement and class action waiver that affect users' legal rights.

The court explained the different types of online agreements including browsewrap, clickwrap, and scrollwrap, discussed in the recent case of Sellers v. JustAnswer LLC, 73 Cal. App. 5th 444, reh’g denied (Jan. 18, 2022), review denied (Apr. 13, 2022). The court concluded that Blizzard’s user agreement was a valid “sign-in wrap” agreement and similarly had “no trouble concluding” that Blizzard’s pop-up notice “provided sufficiently conspicuous notice that a user who clicked the ‘Continue’ button at the bottom of the pop-up would be bound by the […] Agreement and the Dispute Resolution Policy incorporated into it.”

This is an important win for Blizzard and for all game companies being sued in these increasingly prolific class-action loot box cases.

Bungie’s case in Federal court in Seattle

Last summer, Bungie sued two corporate defendants, Aimjunkies.com and Phoenix Digital, as well as several of their individual proprietors, in the Western District of Washington for creating, advertising and selling online cheat software for Destiny 2 for $34.95 per month. Bungie asserted nine claims against the various defendants, including:

1. copyright infringement under 17 U.S.C. § 501;

2. trademark infringement under 15 U.S.C. § 1114;

3. false designation of origin under 15 U.S.C. § 1125(a);

4. circumvention of technological measures under 17 U.S.C. § 1201(a);

5. trafficking in circumvention technology under 17 U.S.C. §§ 1201(a)–(b);

6. breach of contract;

7. tortious interference;

8. violation of the Washington Consumer Protection Act, specifically RCW 19.86.020; and

9. unjust enrichment.

The defendants moved to dismiss all of Bungie’s claims under 12(b)(6), arguing that Bungie failed to sufficiently plead each of its claims. The defendants also moved to compel arbitration on claims three through nine, and also argued, in the alternative, that personal jurisdiction and venue were improper in the Western District of Washington. The court rejected defendants’ personal jurisdiction and venue arguments, but we will briefly review the first two motions.

The 12(b)(6) Motion to Dismiss for Failure to State a Claim

On the first claim for copyright infringement, the court first dismissed the claim against the individual defendants because Bungie failed to allege how “any of them personally participated in the alleged conduct….” The court then dismissed the claim as to the corporate defendants because it Bungie failed to allege how the cheating software copied constituent original elements from Destiny 2. This isn’t the first time a game company has tried to claim that cheating software infringes the copyright interest in the game, but it’s a dicey proposition because you have to show how the cheating software copied constituent elements of the game itself. Bungie will have leave to amend, but it’s unclear how Bungie will get past this particular hurdle.

On the second and third claims for trademark infringement, the court found that Bungie had adequately alleged its case and denied the defendants’ motion to dismiss these for failure to state a claim.

The Motion to Compel Arbitration

Both parties agreed that Bungie’s user agreement required the parties to arbitrate their dispute, except with respect to copyright and trademark claims. Bungie argued that its third cause of action for false designation of origin should be excepted from the arbitration provision because it’s really a trademark claim and the court agreed, denying the defendants’ motion to compel the third cause of action to arbitration, but granting the motion with respect to the fourth through ninth causes of action.

This creates a weird situation where Bungie can amend its complaint to proceed with a rather dubious copyright claim and two solid trademark claims in federal district court while concurrently proceeding in arbitration on the remaining claims. It’s not at all clear to me why Bungie would want to be in district court for copyright and trademark claims but not its DMCA claims for the defendants’ circumvention of Bungie’s anti-cheat measures, which are probably Bungie’s best legal claims here. In cases like this, the gravamen of the complaint is that the game company’s anti-cheat technology has been wrongfully circumvented. I am puzzled as to why Bungie did not argue that its DMCA claims were also exempt from arbitration because they are clearly “copyright” claims, similar to how it argued that its false designation of origin claim is really a species of “trademark” infringement.

It will be interesting to see if Bungie amends its complaint to try and cure the copyright claim defect and also how the strategy of arbitrating the DMCA claim (and other claims) but not the trademark claims works out.

The Parties

Plaintiff: Tonda Ferrando and Dex Marzano

Plaintiff’s Firm: Edelson PC

Defendant: Zynga, Inc.

The Big Picture

Following the $155 Million Big Fish Casino settlement, a new class-action suit was filed against Zynga for illegal gambling.

The Case

On February 25, 2022 plaintiffs filed suit against Zynga in the Western District of Washington for violations of Washington gambling and consumer protection statutes (Revised Code of Washington 4.24.070 and 19.86.010) based on Zynga’s operation of various slot machine like games. In particular, plaintiffs allege that the games are illegal gambling in part due to the virtual chips that can be purchased or won are things of value because they extend gameplay. As plaintiffs note, the Ninth Circuit in Kater v. Churchill Downs (which the Big Fish Casino settlement resulted from) held that the virtual chips in that case were things of value pursuant to Washington’s gambling definition because they extended gameplay.

We’ll be keeping an eye on this case.

This is our seventh installment in the Epic Games v. Apple dispute.

• Part I: Lawsuit filed

• Part II: TRO filed

• Part III: Opposition

• Part IV: Court splits the TRO baby

• Part V: Preliminary Injunction Order

• Part VI: Rule 52 Order After Trial

In this post, we’ll review: (i) the Ninth Circuit’s partial stay of the district court’s permanent injunction, (ii) the landslide of amicus briefs supporting Epic Games’ position from 35 state AGs, the EFF, Microsoft, and distinguished law professors, and (iii) Microsoft’s newly announced app store principles and how they might fit into a larger plan to unseat Apple as the world’s largest mobile game distributor.

The Parties

Plaintiff: Epic Games, Inc.
Plaintiff’s Firm: Cravath, Swaine & Moore
Defendant: Apple Inc.
Defendant’s Firm: Gibson Dunn & Crutcher

The Ninth Circuit’s Order

On December 8, 2021 the Ninth Circuit granted Apple’s motion to stay, in part, the district court’s September 10, 2021, permanent injunction pending appeal. The Ninth Circuit explained:

Apple has demonstrated, at minimum, that its appeal raises serious questions on the merits of the district court’s determination that Epic Games, Inc. failed to show Apple’s conduct violated any antitrust laws but did show that the same conduct violated California’s Unfair Competition Law. See City of San Jose v. Off. of the Com’r of Baseball, 776 F.3d 686, 691–92 (9th Cir. 2015) (“[U]nder California law ‘[i]f the same conduct is alleged to be both an antitrust violation and an “unfair” business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not “unfair” toward consumers.’” (quoting Chavez v. Whirlpool Corp., 113 Cal. Rptr. 2d 175, 184 (Cal. Ct. App. 2001))). Apple has also made a sufficient showing of irreparable harm, see Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 848, 865–66 (9th Cir. 2017), and that the remaining factors weigh in favor of staying part (i) of the injunction and maintaining the status quo pending appeal, see Nken v. Holder, 556 U.S. 418, 434–35 (2009).

As a result, the Ninth Circuit stayed the portion of the permanent injunction that enjoined Apple from prohibiting developers to include in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to Apple’s in-app purchase system.” However, the Ninth Circuit left intact the second part of the injunction that enjoins Apple from prohibiting developers from “communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.”

The Amici

On January 27, 2022, numerous organizations filed amicus briefs in support of Epic’s position, including a coalition of 35 state attorneys general, Microsoft, the Electronic Frontier Foundation, and two separate groups of law professors. The Department of Justice also filed a brief, but didn’t directly support either Apple or Epic. The Verge helpfully uploaded all of these briefs to Document Cloud:

• The coalition of 35 states led by Utah

• The Electronic Frontier Foundation (EFF)

• Microsoft

• The Consumer Federation of America and the developers Basecamp (the makers of the Hey email app), Match Group, and Knitrino

• Public Citizen

• The Committee to Support the Antitrust Laws

• The American Antitrust Institute

• A group of 14 law, economics, and business professors

• A second group of 38 law, economics, and business professors

The state AGs largely focus on Section 1 of the Sherman Act (which mirrors their position in their complaint against Google).

The most interesting brief, though, is the amicus brief that includes Prof. Herbert Hovernkamp, who the New York Times has dubbed “the Dean of American Antitrust Law” and who literally wrote the book on antitrust law. According to the publisher, his book has been has been “cited more than 50 times by the Supreme Court, more than 50 times by the FTC, and more than 1,050 times by the federal courts.”

In their amicus brief, the law professors argue that the court committed three fundamental errors:

1. It accepted business rationales that do not promote competition or economic efficiency and are, as a matter of law, not cognizable antitrust justifications;

2. It failed in its legal conclusions to credit a less restrictive alternative to Apple’s restraints that it recognized in its factual findings; and

3. In dismissing the case based on its conclusion that the plaintiff failed to show such an alternative, it never engaged in the required analysis of net competitive effects.

On the first point, the professors contend that Apple’s explanations for why it needed app store payment restrictions — chiefly, to ensure privacy and security for iOS apps — aren’t valid antitrust justifications for harming competition. The professors use cars as an analogy:

Imagine if automobile manufacturers claimed that they should be permitted to restrict competition to ensure that they could provide higher-quality cars—perhaps cars with bigger engines, better sound systems, or more reliable and safer brakes. Such contentions—similar to those offered by Apple—would be dismissed. And this would not be a close call. For more than four decades, one of the most uncontroversial principles in antitrust law is that restrictions on competition cannot be justified by arguments that they will improve product quality or even safety.

On the second point, the professors point out that the district court’s own factual findings showed that Apple could easily use a less restrictive alternative. For example, under Apple’s “notarization” model, Apple could continue to review all the apps on the App Store for safety, privacy and security, without limiting distribution. The professors observe that the court’s acknowledgement of this less restrictive alternative that achieved Apple’s objectives “allows us to have our antitrust cake and eat it too, as the defendant can attain its goals while doing so in a way that much less significantly harms competition.”

On the third point, the professors point out that the district court failed to engage in the required balancing when a court finds both harm to competition and benefits that enhance competition that cannot be obtained by less restrictive alternatives.

Microsoft

Microsoft, of course, whose employees testified at trial, also submitted an amicus brief. And, just yesterday, Microsoft took a further shot at Apple’s business model by publishing its own app store principles. In addition to promising quality, safety, security and privacy — all of Apple’s core values — Microsoft directly challenges Apple’s disputed practices by promising (among other things):

• We will not require developers in our app store to use our payment system to process in-app payments.

• We will not require developers in our app store to provide more favorable terms in our app store than in other app stores.

• We will not disadvantage developers if they choose to use a payment processing system other than ours or if they offer different terms and conditions in other app stores.

• We will not prevent developers from communicating directly with their customers through their apps for legitimate business purposes, such as pricing terms and product or service offerings.

Microsoft published these principles, of course, to help reassure the FTC that its acquisition of Activision-Blizzard won’t harm competition and should proceed. But Microsoft is also clearly trying to position itself as a better alternative to Apple as an app distributor that provides all the same benefits, but also plays fairly with developers.

Back in 1996, Microsoft’s Bill Gates published an essay called “Content is King” to emphasize how a website’s content is essential to attracting visitors. Now, it seems that Microsoft has also fully embraced the corollary adage that “distribution is queen.” In trying to turn its Game Pass subscription into the “Netflix of gaming” Microsoft will need to distribute on all platforms and dethrone Apple and Google in their dominance of mobile app distribution. Their support of Epic Games’ appeal and their new app store principles fully support that disruptive ambition.

Last week, the Ninth Circuit Court of Appeals issued two important orders for cases we’ve covered extensively:

(1) in Epic v. Apple, staying the district court’s injunction against Apple pending appeal; and

(2) In Good Job Games v. SayGames, reversing dismissal and remanding to allow for jurisdictional discovery.

Epic v. Apple

On December 8, the Ninth Circuit Court of Appeals granted Apple’s motion to stay, in part, the district court’s September 10, 2021 permanent injunction pending appeal. The Ninth Circuit found that Apple demonstrated “at a minimum, that its appeal raises serious questions on the merits of the district court’s determination that Epic Games, Inc. failed to show Apple’s conduct violated any antitrust laws but did show that the same conduct violated California’s Unfair Competition Law.” In reaching this determination, the Ninth Circuit cited to previous case law that potentially casts doubt on the district court’s judgment:

[U]nder California law [i]f the same conduct is alleged to be both an antitrust violation and an “unfair” business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not “unfair” toward consumers.

As a result, the stay of the injunction will remain in place until the appeal is completed. As a reminder, the order had enjoined Apple from prohibiting developers to include in their:

Apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to Apple’s in-app purchase system.

It also enjoined Apple from prohibiting developers from:

Communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.

Developers who were planning on engaging in these behaviors as a result of the earlier order may now want to think twice before executing on those plans.

Good Job Games v. SayGames LLC

Back in 2020, I remarked that “[t]he most aggravating thing that happened this year was diametrically opposing CivPro results in some very similar clone cases,” in reference to:

·         Good Job Games Bilism Yazilim Ve Pazarlama A.S. v. SayGames LLC, 458 F. Supp. 3d 1202, 1214 (N.D. Cal. 2020);

·         Voodoo SAS v. SayGames LLC, No. 19-CV-07480-BLF, 2020 WL 3791657 (N.D. Cal. July 7, 2020); and

·         Wargaming.net Ltd. v. Blitzteam, LLC, Case No.: CV 20-02763-CJC (MRWx) (C.D. Cal. Oct. 20, 2020).

All of these cases involved personal jurisdiction questions and allegations of conduct directed at California. All three cases ended up getting dismissed for lack of personal jurisdiction, but only one – the Wargaming.net case – allowed for jurisdictional discovery. I lamented that “[h]opefully, the court of appeal can clear up the confusion soon.”

On December 10, the Ninth Circuit provided at least some help in this regard. It reversed a district court dismissal and remanded to allow for jurisdictional discovery in the Good Job Games (GJG) case (that we’ve covered before). GJG, which sued SayGames for its allegedly infringing Cannon Shot! game, had alleged that Cannon Shot! was distributed in the U.S. on the Apple App Store and on Google Play, and U.S. citizens received ads on Facebook. In requesting leave to conduct jurisdictional discovery, GJG had sought specific information from SayGames, including:

·         the downloads of, revenue derived from, and distribution agreements regarding Cannon Shot! in the United States;

·         SayGames’ efforts to advertise, market, license, commercialize, or profit from Cannon Shot! in the United States;

·         and SayGames’ ability to engage in country-specific distribution of Cannon Shot!, including the ability to choose distribution in the United States.

Thankfully, the Ninth Circuit recognized that this kind of discovery might well demonstrate facts sufficient to constitute a basis for jurisdiction. It remains to be seen, on remand, whether a basis for jurisdiction will exist, but I am dubious that SayGames didn’t direct its efforts towards the United States and remain cautiously optimistic that GJG will be able to discover and prove this. Practitioners representing developers should keep a close eye on this case going forward.

This is our sixth installment in the Epic Games v. Apple dispute.

• Part I: Lawsuit filed

• Part II: TRO filed

• Part III: Opposition

• Part IV: Court splits the TRO baby

• Part V: Preliminary Injunction Order

In this post, we’ll review some highlights from the court’s September 10, 2021, “Rule 52 Order After Trial on the Merits” and reflect on the outcome.

The Parties

Plaintiff: Epic Games, Inc.
Plaintiff’s Firm: Cravath, Swaine & Moore
Defendant: Apple Inc.
Defendant’s Firm: Gibson Dunn & Crutcher

The Order

The App Store Business

The court’s 185-page order provides a lot of interesting information about Apple and Epic’s respective business practices and the market for mobile gaming. The court made a number of interesting observations about the App Store business in particular:

• One industry report describes mobile gaming as a “$100 billion industry by itself” that accounts for 59% of global gaming revenue

• Apple enjoys considerable market share of over 55% and extraordinarily high profit margins

• Game transactions overall accounted for 76% of Apple’s App Store revenues in 2017, 62.9% in 2018, and 68% in 2020

• This ~70% of revenue is generated by less than 10% of all App Store consumers

• By contrast, over 80% of all consumer accounts generate virtually no revenue, as 80% of all apps on the App Store are free

• The App Store is primarily a game store and secondarily an “every other” app store

On the “positive” side of Apple’s App Store distribution restrictions, the court found:

• App distribution restrictions increase security in the “broad” sense by allowing Apple to filter fraud, objectionable content, and piracy during app review while imposing heightened requirements for privacy

On the “negative” side of Apple’s App Store distribution restrictions, the court found:

• Apple’s restrictions on iOS game distribution have increased prices for developers

• Some of Apple’s practices unreasonably restrain competition and harm consumers; namely, the lack of information and transparency about policies which effect consumers’ ability to find cheaper prices, increased customer service, and options regarding their purchases. Apple employs these policies so that it can extract supracompetitive commissions from this highly lucrative gaming industry.

Why Did Epic Sue Apple?

Epic sought to disrupt Apple’s business model for two reasons. First, Epic sought “a systematic change which would result in tremendous monetary gain and wealth.” Second, Epic sought “to challenge the policies and practices of Apple and Google which are an impediment to Mr. Sweeney’s vision of the oncoming metaverse” which Epic views as the future of both gaming and entertainment. On that topic, the court recited Tim Sweeney’s metaverse definition: “a realistic 3D world in which participants have both social experiences, like sitting in a bar and talking, and also game experiences . . . .” It also provided an example Sweeney gave at trial involving players in Fortnite watching a Netflix show:

All in the virtual 3D world. You can stand there and watch Netflix with your friends, and it’s different than watching it in front of the TV. You can talk to your friends and you can emote and throw tomatoes at the screen. And so it is a very different experience than either a game or Netflix.

(Sweeney also referenced two outstanding sci-fi novels, Snowcrash and Ready Player One, in his testimony, both of which involve metaverses.)

Epic saw, however, that Apple’s App Store “platform fees” posed “an existential issue” to both Epic’s “business plans and Mr. Sweeney’s personal ambitions for Fortnite, its digital gaming and retail store, and the evolving metaverse.” The court observed that “Epic Games also hoped to revive and reinvigorate Fortnite by pivoting its business whereby player-developers could create new content and plaintiff could ‘shar[e] [a] majority of profit with [those] creators.’”

We’ve previously discussed how Epic went about suing Apple, so we won’t cover that again here.

The court found that Apple Did Not Violate the Antitrust Laws

The court’s antitrust analysis in the order is long and complicated. But the gist of what the court found isn’t. It found that Apple isn’t a monopolist and that, even though Apple exercises considerable market power, it didn’t unreasonably restrict trade with its App Store rules — or, at least not within the meaning of the antitrust laws (more on that, below).

The parties vigorously disputed the relevant product and geographic markets and the court agreed with neither side. Instead, the court found that the relevant market is “digital mobile gaming transactions.” Although the court found that Apple exercises “market power,” in the mobile game market, it also found that its market power wasn’t extreme or substantial to the point where it could be said that Apple has “monopoly power.” Instead, the court viewed Apple and Google as duopolists (which gives us at least some insight into how the Epic v. Google case may fare). The court opined that “Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share” and “is only saved by the fact that its share is not higher, that competitors from related submarkets are making inroads into the mobile gaming submarket, and perhaps, because [Epic] did not focus on this topic.” As a result, the court next looked to whether Apple nevertheless imposed an “unreasonable restraint on competition” with its App Store rules.

Using the “rule of reason” test, the court employed the Supreme Court’s burden shifting framework:

To determine whether a restraint violates the rule of reason, . . . a three-step, burden shifting framework applies. Under this framework, the plaintiff has the initial burden to prove that the challenged restraint has a substantial anticompetitive effect that harms consumers in the relevant market. If the plaintiff carries its burden, then the burden shifts to the defendant to show a procompetitive rationale for the restraint. If the defendant makes this showing, then the burden shifts back to the plaintiff to demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means.

While the court found that Apple’s app distribution restrictions do have “some” anticompetitive effects, it also found some “procompetitive justifications based on security and the corollary interbrand competition, as well as generally with respect to intellectual property rights.” As such, the burden shifted back to Epic and, while Epic proposed some alternatives to Apple’s restrictions, it did not meet its burden to show that those alternatives are “virtually as effective” as Apple’s current distribution model and can be implemented “without significantly increased cost.” The court found that “Apple’s business choice of ensuring security and protecting its intellectual property rights through centralized app distribution is reasonable,” and it declined “to second-guess that judgment on an underdeveloped record.”

What about the anti-steering provisions?

Even though Epic conceded that it breached the DPLA (the standard, non-negotiable developer agreement with Apple) and lost all of its antitrust claims, it still had an Unfair Competition Law (UCL) claim. California’s UCL prohibits business practices that constitute “unfair competition,” which means “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200.

Under the “unfair” prong, as a competitor who claimed to have suffered injury from Apple’s unfair practices, Epic needed to show that Apple’s conduct:

(1) “threatens an incipient violation of an antitrust law,”

(2) “violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law,” or

(3) “otherwise significantly threatens or harms competition.”

In evaluating this claim, the court highlighted that Apple uses “anti-steering provisions” prohibiting apps from including “buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase,” and from “encourag[ing] users to use a purchasing method other than in-app purchase” either “within the app or through communications sent to points of contact obtained from account registrations within the app (like email or text).” Thus, “developers cannot communicate lower prices on other platforms either within iOS or to users obtained from the iOS platform. Apple’s general policy also prevents developers from informing users of its 30% commission.”

Relying on a Supreme Court First Amendment case, Bates v. State Bar of Arizona, 433 U.S. 350, 364 (1977) the court stated that “commercial speech, which includes price advertising, ‘performs an indispensable role in the allocation of resources in a free enterprise system.’” Thus, although Epic Games failed to prove a “present antitrust violation,” the anti-steering provisions “threaten an incipient violation of an antitrust law by preventing informed choice among users of the iOS platform.” The court decided these provisions in the DPLA violated the UCL’s “unfair prong” and should be stricken with an injunction.

The Scoreboard

The court found in favor of Apple on all counts except with respect to violation of California’s unfair competition law and only partially with respect to its claim for declaratory relief. The court also terminated the preliminary injunction.

Epic will get:

…a nationwide injunction…enjoining Apple from prohibiting developers to include in their:

Apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to Apple’s in-app purchase system.

Nor may Apple prohibit developers from:

Communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.

Apple will get:

(1) damages in an amount equal to (i) 30% of the $12,167,719 in revenue Epic Games collected from users in the Fortnite app on iOS through Epic Direct Payment between August and October 2020, plus (ii) 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment; and

(2) a declaration that (i) Apple’s termination of the DPLA and the related agreements between Epic Games and Apple was valid, lawful, and enforceable, and (ii) Apple has the contractual right to terminate its DPLA with any or all of Epic Games’ wholly owned subsidiaries, affiliates, and/or other entities under Epic Games’ control at any time and at Apple’s sole discretion.

Further Thoughts

I had two big questions after reading the opinion:

First, between the termination of the preliminary injunction and the new declaratory relief, Apple now has discretion to terminate the separate DPLA between Apple and Epic International (which it threatened to do before the TRO issued), which would prevent Epic from accessing the tools and SDKs necessary to continue Unreal Engine development for iOS. Will Apple do that? It seems unlikely, but that would be very bad for developers, of course, if it happened.

Second, even though things could have been far worse, how much does this really hurt Apple? In big mobile game markets like Southeast Asia, many games — particularly those made by the biggest and most profitable developers — already send players outside of the app (e.g. to a developer website) to make purchases, thereby avoiding the 30% app store commission. If that practice becomes the new global norm after this ruling, won’t Apple face a material drop in revenue? Apple’s global revenues were $271 billion in 2020. If Apple does, in fact, control 55% of the $100 billion mobile market (i.e. approx $55 billion — or roughly 20% of Apple’s revenue), losing a significant chunk of that seems, at least potentially, pretty unpleasant. Even if Apple only loses half that amount, that’s still a 10% drop in revenue.

Needless to say, we’ll need to see the exact wording of the permanent injunction once it issues — and how game developers respond — but it probably won’t be much different (if at all) from what’s in the Rule 52 Order. For the time being, though, unless Apple decides to act vengefully and terminate access to the tools necessary to continue Unreal Engine development for iOS (again, I think that’s unlikely since that would hurt Apple, too), this order could strike an enormous blow to Apple’s revenue. The real winner here seems to be game developers who have the wherewithal to implement their own payment systems on other platforms, now that they have the freedom to tell their players that those other payment options exist outside the app.

Finally, I think it’s unlikely that Judge Rogers’ ruling will be overturned on appeal. The court’s antitrust analysis is thorough and compelling, and its unfair competition law ruling is solidly grounded in First Amendment principles. Still, there is a very strong chance the fight between Epic and Apple will continue well after trial and, with this much at stake, it’s hard to predict exactly how and when this war will end.

The New Mexico Attorney General claims that Rovio violates COPPA and state privacy laws.

THE SUIT

On August 25, 2021, the New Mexico Attorney General sued Rovio, the Angry Birds developer, for COPPA violations. The suit alleges that Rovio directs Angry Birds towards minors and as such must comply with COPPA and state privacy laws. The suit also alleges that Rovio fails to comply with the relevant laws because it provides third parties with device identifying information constituting minors’ personally identifiable information.

COPPA

COPPA (The Children’s Online Privacy Protection Act) protects the information of children under the age of 13. COPPA applies to website operators and service providers who either direct their services towards children under the age of 13 or who have actual knowledge that they have personal information from children under the age of 13. COPPA requires services providers to obtain parental consent when collecting minors’ personal information as well as providing a privacy notice detailing how personal information will be used among other requirements. The COPPA statute identifies some factors to consider to determine if a website or service is directed towards minors and those include:

its subject matter, visual content, use of animated characters or child-oriented activities and incentives, music or other audio content, age of models, presence of child celebrities or celebrities who appeal to children, language or other characteristics of the Web site or online service, as well as whether advertising promoting or appearing on the Web site or online service is directed to children

DIRECTED TOWARDS MINORS

The suit alleges that Rovio “aggressively directs” Angry Birds to minors through:

• Angry Birds’ E (Everyone) Google Rating - pointing out that Google’s rubric for determining a game’s rating looks at some of the same factors as the COPPA statute;

• Angry Birds’ silly, cartoonish animated characters (image below from Complaint):

• Rovio’s marketing campaign that included toys and merchandise directed to young children (including plush toys, coloring books, and children’s puzzles, baby blankets, children’s Halloween costumes, etc.);

• Market research showing addictive play by children;

• Cartoons and films marketed towards children; and

• Rovio’s own words from its website:

Kids love playing our games! We strive to create fun and engaging games that people of all ages can enjoy, and we’re totally jazzed that so many young kids gravitate towards our titles. Thank you parents for allowing your children to enjoy our games!

(This quote alone may have been enough on this point.) The suit alleges that Rovio attempts to avoid complying with COPPA by crafting a privacy policy that “disavows its actual audience.”

Under our Terms of Service, you represent that you are at least 13 years of age. However, we do not know the specific age of individual users of our Services. If you are under 13 years of age, please do not provide your personal data (including your name, address, telephone number, or email address) to us or use the Services to make your personal data available to others.

PERSONAL INFORMATION

The COPPA statute defines personal information to include “any other identifier that the Commission determines permits the physical or online contacting of a specific individual.” The suit states that the Angry Birds apps collect device identifiers to “track children over time and across apps, devices, and websites” and that this information is shared with advertising companies to create user profiles and serve third-party advertising.

THOUGHTS

Game companies should beware when having games or ancillary content heavily directed towards children. Privacy policies disclaiming information from minors will most likely not cut it with government regulators.

Nintendo wins a motion for summary judgment against a ROM site operator, continuing their fight (as previously discussed) with ROM sites.

The Parties

Plaintiff: Nintendo of America, Inc.

Plaintiff's Firm: Perkins Coie

Defendant: Matthew Storman

Defendant’s Firm: N/A

Background

In 2018, Nintendo began a campaign against ROM sites. Most sites suspended operations, but Matthew Storman, the owner of ROMUniverse.com, was determined to fight back. He continued to operate the site and was publicly defiant. In September 2019, Nintendo sued Matthew Storman for copyright infringement (Nintendo of America Inc. v. Matthew Storman, Case No. 2:19-cv-07818, (C.D. Cal 2019)). Storman attempted to crowdfund a legal defense, stating:

Now I know what you’re thinking, this one person is going to take on one of the largest console/gaming manufacturers in the world?  And the short answer is YES, I believe that I have a solid defense, and considering that other romsites have folded and settled, this has never been done before.

And due to the presumed failure of the crowdfunding campaign, it remained one person taking on Nintendo - he was forced to (or chose to) represent himself throughout the case. On December 29, 2020, Nintendo filed a motion for summary judgment which the judge granted on May 26, 2021.

Motion for Summary Judgment

Nintendo moved for summary judgment on all counts (Direct Copyright Infringement, Secondary Copyright Infringement, and Trademark Infringement) and sought $15,610,000 in statutory damages, attorneys’ fees, and a permanent injunction. Storman attempted to avoid responsibility for copyright infringement by arguing that he never actually verified the contents of the files on his website, including those that he uploaded himself. He attempted to walk this line in his opposition to the MSJ and filed a declaration stating:

Defendant denies and disputes that he uploaded any files to said website and at no time did he verify the content of said ROM file. A file with a title of Mario Brothers does not mean that said file contains Nintendo’s copyrighted video game.

The problem for him is that during his deposition he stated:

Q. Okay. And the -- and the files you uploaded, they -- whether you verified what was actually on them, they did indicate that they were ROMs of Nintendo games; right?

A. That is correct.

This did not sit well with the judge who struck the declaration under the “sham affidavit rule,” stating that Storman couldn’t create an issue of fact with an affidavit contradicting his own prior deposition testimony. Any leeway the judge may have been giving him as a pro se defendant was probably gone at this point. Even without this (and several other missteps including spoliation of evidence) Storman’s case was pretty much doomed from the start and the judge awarded Nintendo $1,715,000 in statutory damages under the Copyright Act and $400,000 in statutory damages under the Lanham Act for a total of $2,115,000 in statutory damages as well as attorneys’ fees and costs to be determined later.

Conclusion

Nintendo continues to have success litigating against ROM sites, but we’ll see if it has any real effect on the availabilty of ROMs or if it just continues to be game of whack-a-mole.

Valve and Sony have separately been sued for alleged anticompetitive practices of the Steam Marketplace and Sony PlayStation stores respectively. This follows the recent trend of suits against Apple and Google’s marketplaces.

THE VALVE SUIT (WOLFIRE GAMES LLC V. VALVE CORPORATION, CASE NO. 21-CV-00563, (W.D. WASH. 2021))

THE PARTIES

Plaintiffs: Wolfire Games, et al.

Plaintiffs’ Firm: Quinn Emanuel Urquhart & Sullivan LLP

Defendant: Valve Corp.

Defendant’s Firm: None entered at this time

THE ALLEGATIONS

Plaintiffs allege that Valve’s Steam Gaming Platform has a monopoly over PC game sales and that Valve abuses its position to extract outside fees from developers, as well as stifling competition.

THE SONY SUITS (CACCURI V. SONY INTERACTIVE ENTERTAINMENT, CASE NO. 21-CV-3361 (N.D. CAL. 2021) (CASE 1) AND CENDEJAS V. SONY INTERACTIVE ENTERTAINMENT, CASE NO. 21-CV-3447 (N.D. CAL. 2021) (CASE 2))

THE PARTIES

Plaintiffs: Cacurri (Case 1) and Cendejas (Case 2)

Plaintiff’s Firm: Westerman Law Corp (Case 1) and Joseph Saveri Law Firm, LLP (Case 2)

Defendant: Sony Interactive Entertainment

Defendant’s Firm: None entered at this time

THE ALLEGATIONS

Both suits (filed within two days of each other) are putative class actions that allege that Sony has a monopoly over the PlayStation games market and that it violated antitrust law when it removed retailers’ ability to sell digital download codes for PlayStation games. Both suits point to the price differential to consumers for purchasing games through retailers vs. through Sony directly (see Table 1 from the Caccurri complaint below):

We’ll be keeping an eye on all of these cases as they develop.

Plaintiff: James “PhantomL0rd” Varga

Plaintiff's Firm: The Quinlan Law Firm

Defendant: Twitch Interactive, Inc.

Defendant’s Firm: Davis Wright Tremaine

THE BIG PICTURE

A popular video game streamer wins a personally pyrrhic victory after Twitch permanently banned him from the platform in 2016.

BACKGROUND

James “PhantomL0rd” Varga was a popular Twitch streamer from 2012 to 2016.  On July 1, 2016, gambling on Counterstrike: Global Operations (“CSGO”) skins became an issue for Valve after a player sued Valve for knowingly allowing an “illegal online gambling market” (this initial suit filed in the S.D. Fla. was withdrawn with plaintiff refiling in W.D. Wash. in August 2016). Valve does not provide the ability to gamble on skins directly but does allow for the transfer of skins, and a small industry of CSGO skin betting sites soon followed and continues to this day. In response to the controversy surrounding the CSGO gambling sites, Valve began issuing cease and desist letters to CSGO gambling sites and presumably reached out to Twitch, where many streamers had been advertising these gambling sites. As a result, Twitch issued a statement on July 13, 2016:

As a reminder, per Twitch’s Terms of Service, broadcasters are not permitted to stream content that breaks the terms of service or user agreements of third-parties. As such, content in which the broadcaster uses or promotes services that violate Valve’s stated restrictions is prohibited on Twitch.

On July 16, 2016, it was reported that Varga owned a CSGO gambling site, CSGO Shuffle (though Varga later denied this).  According to reports at the time, not only did he own the site, but he promoted the site on his stream without disclosing his ownership. On top of that, there were allegations that he rigged bets within the site in his favor so that it would look to viewers like they could win big on the site as well. On July 19, 2016, Twitch placed a permanent ban on Varga’s stream.

THE SUIT

On February 14, 2018, nearly 2 years after his ban, Varga sued Twitch for breach of contract, breach of implied covenant of good faith and fair dealing, intentional misrepresentation, and negligent misrepresentation. (Varga v. Twitch Interactive, Case No. CGC18564337 (S.F. Superior Court 2018)). Varga alleged that the contract, which the parties entered into in 2012, required notice for termination and that Twitch never provided such notice beyond vague gestures towards Twitch’s terms of service and a cure period of 30 days. Varga also alleged that Twitch’s own representative told him he could stream the content, attaching communications where the Twitch representative said: 

don’t do the cs:go gambling as the main focus of the stream. don’t let it go 30 minutes at a time. play some, then do a bit if you want. Just not [t]he focus of your stream

And later:

You have been reported against because of the whole CS:GO gambling for longer than 30 minutes situation. You shouldn’t be doing it for longer than a few minutes to just play it safe, honestly … it’s a cluster***. this entire rule is confusing as hell haha … so time it, do what you think is correct … honestly this whole longer than 30 is just odd to me. why you can do it for 30 but not longer hah is it 30 in 1 sitting, is it 30 cooldown 30 not even i know.

In response, Twitch countersued for:

1. Breach of Contract - alleging that Varga repeatedly violated the agreement and Twitch’s terms of service; and

2. Fraud - alleging that Varga failed to disclose his ownership in the CSGO gambling sites or that he was manipulating gambling outcomes on the site.

THE VERDICT

On April 23, 2021, after a 16-day trial, Varga prevailed. The jury found for Varga on all of his claims except for intentional misrepresentation and essentially found against Twitch on all of Twitch’s counterclaims. For damages, the jury awarded Varga $20,720.34. Even though the jury found for Varga, the awarded damages were fairly minimal and included nothing for Future Lost Earnings, Lost Earning Capacity, or any Tort Damages (even though he was entitled to Tort Damages based on the jury verdict). The award was also far lower than the $35,000,000 Varga requested (full breakdown in images below):

As a side note, the contract between Varga and Twitch contained a $50,000 cap on damages, but this was held unconscionable, so Twitch's damages could have been far higher. While Varga ultimately won the suit, more than three years of litigation and 16 days of trial probably cost him far more than $20,720.34, though there is still time for him to request attorney’s fees. So while he won a moral victory, and has perhaps forced Twitch to be more careful when banning streamers, it probably ended up costing him a great deal of time and money to do so.

Note: In California, if you recover less than the jurisdictional minimum ($25,000 for unlimited civil cases), the court has more discretion in awarding attorney’s fees, and can even deny your entire request for attorney’s fees, even if you otherwise would have been able to recover them. CA Code of Civ. Proc. Section 1033. This could make the victory even more pyrrhic.

TAKEAWAYS

For video game services like Twitch, there are a couple of lessons to be learned here.  First, be very careful about how your representatives communicate with users/players. The Twitch representative’s statements seemingly giving Varga permission to continue streaming his gambling content so long as he stayed below 30 minutes at a time probably influenced the jurors.  Second, if your contracts or terms of service outline a process that will be taken in cases of termination or breach such as adequate notice or cure periods, follow them. For streamers, know your rights, but it could be very, very expensive to enforce them.

THE CASES

First, let’s take a glance at the cases involved:

McFadden et al v. Microsoft Corporation, 2:20-cv-00640 (W.D. Wash.)

• Complaint filed April 28, 2020

• Plaintiff’s Firm: Chimicles Schwartz Kriner & Donaldson-Smith LLP

• Defendant’s Firm: Davis Wright Tremaine

• Claim: Plaintiff alleges that Microsoft breached Washington State’s consumer protection law by selling defective Xbox controllers.

• Motion: On April 2, 2021, a magistrate judge for the U.S. District Court for the Western District of Washington recommended that the court grant Microsoft’s motion to compel arbitration. The court highlights that “[n]otice of the arbitration clause and class action waiver appears in capitalized and sometimes bold text on the first page of the [agreement] and directs the user to the section containing the full text of the agreement.” Plaintiffs made a myriad of arguments trying to invalidate the arbitration provision, including unconscionability. The court rejected all of these arguments and, among other things, cited favorably to the Ninth Circuit’s decision from last year finding that teenagers could enter into binding arbitration agreements in the video game context under Washington law. G.G. v. Valve Corp., 799 F. App’x 557, 558-59 (9th Cir. Apr. 3, 2020).

• Opt-Out language: Microsoft does not have an “opt-out” provision in its dispute resolution section, but it does allow users to reject “future arbitration changes” by sending a notice by mail within 30 days of the change.

Turner v. Sony Corp., 4:21-cv-02454 (N.D. Cal.)

• Complaint filed February 12, 2021

• Plaintiff’s Firm: Chimicles Schwartz Kriner and Donaldson-Smith LP

• Defendant’s Firm: Paul Weiss

• Claim: Plaintiff alleges that Sony breached consumer warranties by selling defective DualSense controllers.

• Motion: None filed as of yet.

• Opt-Out language: Sony does have an express opt-out right in its PlayStation user agreement. Those rights must be exercised within 30 days of accepting the agreement (usually when you first boot up your PlayStation).

Diaz v. Nintendo of America Inc., 2:19-cv-01116 (W.D. Wash.)

• Complaint filed July 19, 2019

• Plaintiff’s Firm:Chimicles Schwartz Kriner & Donaldson-Smith LLP

• Defendant’s Firm: Perkins Coie

• Claim: Plaintiff alleges that Nintendo breached consumer warranties by selling defective Joy-Con controllers for Nintendo Switch.

• Motion: On March 2, 2020, the court granted Nintendo’s motion to compel arbitration. After that, the plaintiffs initiated individual arbitrations.

• Opt-Out language: Nintendo does have an express opt-out right in its Switch user agreement that must be exercised within 30 days of purchasing the console.

OPT-OUT OBSERVATIONS

Both Nintendo and Sony have express opt-out provisions. Microsoft has a “future changes” opt-out provision, which is even less likely to be utilized by consumers and seems to be a compromise between not having anything at all and a more traditional, express opt-out clause that Sony and Nintendo have. The benefit of having an opt-out clause, in the first place, is that it allows a publisher to argue that the dispute resolution section, in general, is more fair to consumers. However, no court has ever held that having an opt-out provision is required. It’s simply a point in favor of being consumer-friendly when courts look at issues like unconscionability.

Here, the plaintiffs’ class-action firm is actively seeking to get people to opt out of their arbitration agreements with PlayStation. It will be interesting to see whether they can get enough consumers to opt-out, such that a useful and sizeable class might exist to proceed with in court. Equally interesting is the fact that the plaintiffs’ firm has continued to pursue individual arbitrations (e.g., in the Diaz matter) despite the low value, individually, of the claims involved. We’ve seen attempts by class-action firms, in other cases, of proceeding with mass filings of individual arbitrations, as a tactic to try and overwhelm the defendant, but query how effective those actually are. Also, query, based on actions like those of the firm in these cases, whether having an opt-out provision is worth it, particularly with more and more court decisions sitting around as precedent without really needing or even mentioning the opt-out provisions. In other words, the question to ask is: Is it still worth it to have an opt-out provision if you’re inviting this kind of conduct from plaintiffs’ class-action firms?

Needless to say, we’ll be watching these cases to find out how this firm’s tactics — and the opt-out provisions — play out in the end.

EA Wins Motion to Compel

First, on March 5, 2021, a Northern District of California court granted EA’s motion to compel arbitration in a class-action case involving EA’s “Ultimate Team Packs” featured in FIFA and Madden NFL games. The court observed that EA presents users with an agreement via a pop-up window that users can scroll through if they wish and must accept the agreement before continuing the game. (Note: the San Diego court seemed to make a fuss about the scrolling part being optional and implied it should be mandatory, whereas this court makes no such statement.) While the rest is mostly standard fare, one thing I found interesting was that the court highlighted that EA included language specifically mentioning the arbitration agreement and class-action waiver not only in the agreement itself, but also directly above the user agreement’s acceptance button. For anyone looking for best practices on drafting a user agreement and a solid UX flow to go with it, with enforceability of the arbitration and class-action waiver provisions in mind, this is an opinion worth reviewing. Ramirez v. Elec. Arts Inc., No. 20-CV-05672-BLF, 2021 WL 843184 (N.D. Cal. Mar. 5, 2021).

Sony Interactive Entertainment Wins Motion to Compel

On March 30, 2021, another judge in the Northern District of California granted Sony’s motion to compel arbitration in a class-action involving minors who spent money on Fortnite via their PlayStations without their parents’ knowledge or consent. The named plaintiff’s sole argument against arbitration was that her minor son could not be bound by a contract under California law. The court said this argument was “beside the point for present purposes…because the complaint alleges a dispute entirely between [the mom] and [Sony].” The court found the mother’s claim to be entirely within the scope of the arbitration provision and granted the motion. Nothing terribly interesting here, other than it follows the normal trend — at least in federal district courts — of respecting game publishers’ user agreements, including standard arbitration and class-action waiver provisions. Crawford v. Sony Int. Ent., No. 20-cv-01732-JD (N.D. Cal. Mar. 30, 2021).