Mid-Year Updates
One of my Los Angeles Copyright Society colleagues said on a call the other day that time during the pandemic paradoxically feels like it’s going both slow and fast. I agree. And, as the midpoint of 2021 has somehow already come and gone despite 2021’s seemingly lugubrious, plodding pace, it feels like we’re overdue for a larger update.
In this post, we’ll briefly review some of the interesting legal cases going on in the world of video games.
Trials
Gree v. Supercell
While we decided at the start of this year that we (at least mostly) wouldn’t be covering patent cases going forward, we’ll make an exception here to continue a bit of coverage on Gree v. Supercell. Back in September 2020, a Texas jury found that Supercell had willfully infringed a number of Gree’s patents and awarded $8.5 million in damages. (Case 2:19-cv-00070-JRG-RSP). This year, on May 7, 2021, another Texas jury found that Supercell had willfully infringed a number of different Gree patents and awarded $92,176,058 in damages. (Case 2:19-cv-00200-JRG-RSP) While both of these verdicts made the news, they weren’t the whole story.
On November 19, 2020, the Federal Circuit issued an opinion affirming the invalidity of certain claims in Gree’s U.S. Patent No. 9,597,594, including claim 2, which was the only claim of the ‘594 patent asserted at trial (there were other patents asserted, as well). Then, on May 10, 2021, the Federal Circuit affirmed a PTAB decision invalidating claims 1-20 of Gree’s U.S. Patent Number 9,897,799 (not directly at issue in either trial). During the post-trial motion phase, Judge Gilstrap ordered the parties to mediate and the parties settled.
If you want to study the cases at issue, the dockets include:
2:19-cv-00070-JRG-RSP
2:19-cv-00071-JRG-RSP
2:19-cv-00072-JRG-RSP
2:19-cv-00200-JRG-RSP
2:19-cv-00237-JRG-RSP
2:19-cv-00310-JRG-RSP
2:19-cv-00311-JRG-RSP
2:19-cv-00413-JRG-RSP
2:20-cv-00113-JRG-RSP
Overall, these cases continue to remind us of the perils of defending patent cases in Texas (or, at least, in the Eastern and Western districts).
Huffman v. Activision-Blizzard et al.
Activision successfully defeated Booker T. Huffman after a jury trial in Texas over the alleged copying of his “G.I. Bro” wrestling/comic book character persona. Back in July, when covering the denial of Activision’s MSJ, I commented that having a jury trial would be “[a] ridiculous waste of time and resources for what’s clearly an erroneous decision,” so I was pleased to learn that a jury agreed with me on the merits and sided 100% with Activision. Simply put: there was no copying of any original elements from Booker Huffman’s work. The judge has set a schedule for post-trial briefing with opening briefs due on August 16, 2021. Let’s hope Huffman throws in the towel soon.
Valve Loses Patent Trial -- Jury Awards $4,029,533.93
In keeping with our general rule against covering patent cases, we’re just going to leave this citation here for review since the verdict was not insignificant: Ironburg Inventions Ltd. v. Valve Corp., No. C17-1182 TSZ, 2021 WL 2137868 (W.D. Wash. May 26, 2021).
Civil Procedure
Wargaming.net Dismisses Apple Suit
Earlier this year, we discussed three different mobile game clone cases brought by foreign game developers in U.S. district courts in California. All three were eventually dismissed on personal jurisdiction grounds, including Wargaming.net Ltd. v. Blitzteam, LLC, Case No.: CV 20-02763-CJC. After getting dismissed in the initial suit against Blitzteam, Wargaming then filed a suit against Apple for distributing Blitzteam’s allegedly infringing game.
On April 12, however, Wargaming and Apple stipulated to a dismissal of the case without prejudice. (Case 2:21-cv-01066-JVS-JPR). This is the second time in two years we’ve seen Apple get sued for allegedly distributing an infringing clone game followed by a quick voluntary dismissal, indicating some behind-the-scenes negotiation and/or settlement. It will be interesting to see if this becomes a trend.
“Cranking” Dance Step Case Transferred to Northern District of Georgia
Remember the “Cranking” Dance Step Case? We first covered it more than a year ago, where I mused about personal jurisdiction and thought this would be an easy win for Take-Two. A year later, though, while the court decided that the case was justiciable under the Declaratory Judgment Act since Mr. Sims had sent a demand letter to Take-Two claiming he owned the dance step used in Take-Two’s NBA2K game, the court also decided that venue in California was improper since all Sims did to establish contact with California was send Take-Two a letter there. The court acknowledged that “in some instances” sending a cease-and-desist letter may provide a basis for personal jurisdiction, but here, it didn’t find sufficient supporting facts aside from that, so transferred the case to Georgia to die there instead. Take-Two Interactive Software, Inc. v. Sims, 2021 WL 2417002 (N.D. Cal. June 14, 2021).
Antitrust
Pistacchio v. Apple
On October 8, 2020, less than a month after Epic Games sued Apple, this fast-follow, class-action lawsuit was filed against Apple for allegedly monopolizing “the market for iOS subscription-based mobile gaming services.” On March 11, 2021, Judge Rogers granted Apple’s motion to dismiss the complaint with leave to amend. Rogers ruled that “Pistacchio’s antitrust claims must be dismissed because such claims rest on an insufficiently pled narrow product market.” A few weeks later, the plaintiffs’ firm threw in the towel and voluntarily dismissed. Pistacchio v. Apple, (N.D. Cal. Case No. 4:20-cv-07034-YGR). This case is really only interesting insofar as you’re trying to read the tea leaves and predict how Judge Rogers might rule in the Epic Games v. Apple case.
Epic Games v. Apple
The biggest antitrust story of the year has been the Epic Games lawsuit against Apple, which we’ve covered a few times already. While the parties have already tried the case, Judge Rogers has yet to issue a ruling. She is expected to rule within the next few months.
State AGs Sue Google
On July 7, 2021, three dozen state attorneys general joined the big tech piñata party and sued Google for allegedly taking “steps to close the ecosystem from competition and insert itself as the middleman between app developers and consumers.” The complaint makes very similar allegations as Epic’s complaint against Apple and bemoans the up to 30% commission that Google charges app developers on purchases. Google responded, in a blog post, by saying that “[t]his complaint mimics a similarly meritless lawsuit filed by the large app developer Epic Games, which has benefitted from Android’s openness by distributing its Fortnite app outside of Google Play.”
Wolfire Games, LLC v. Valve Corp.
On April 27, 2021, a small indie game studio, Wolfire Games, sued Valve for allegedly monopolizing distribution of PC games via the “Steam Store.” The complaint alleges, similar to the Apple and Google lawsuits, that “Valve is able to extract such high fees because it actively suppresses competition to protect its market dominance.” WOLFIRE GAMES, LLC v. VALVE CORPORATION, 2021 WL 1658403 (W.D.Wash.) Valve has filed a motion to dismiss, currently calendared for hearing on September 17, 2021. Wolfire Games is represented by Quinn Emmanuel. Based on the complaint, and similarly peculiar market definition, I expect this case to meet a similar fate as Pistacchio.
Anti-Cheat
In January 2021, the fine attorneys at Mitchell Silberberg & Knupp represented Riot and Bungie in a garden variety lawsuit against a reseller of cheating software over VALORANT and Destiny 2 cheating tools. After that case settled, Bungie then teamed up with Ubisoft to go after another cheat distributor to “put an immediate stop the the unlawful, for-profit sale and distribution of malicious software products designed to enable members of the public to gain unfair competitive advantages (i.e., to cheat)” in Rainbow Six: Siege and Destiny 2. Bungie v. Thorpe a/k/a Krypto, (N.D. Cal. Case No. 3:21-cv- 5677). Ubisoft and Bungie obtained a default judgment. While these are ordinary cases, they are perhaps somewhat unique in that they involve developers teaming up to fight cheating.
Employment
DFEH v. Activision-Blizzard
The DFEH’s enforcement action, filed on July 20, 2021, seeks to “remedy, prevent, and deter unlawful harassment, retaliation, and discrimination.” Specifically, the DFEH pleads “claims for sex discrimination in terms and condition of employment (including compensation, assignment, promotion, constructive discharge, termination); unlawful sexual harassment; retaliation; failure to prevent discrimination, harassment, and retaliation; and unequal pay.” Department of Fair Employment and Housing v. Activision-Blizzard, 2021 WL 3109804 (Cal.Super.).
Contracts
You Still Gotta Pay the Caterer for Your Esports Event
In March 2020, a catering company called Marbled and a U.K. gaming company, Overlord, entered into a contract in which Marbled agreed to provide catering services to Overlord for the FLASHPOINT CS-GO Global Qualifier, including for competitors and Overlord's staff, tables, chairs, food for lunch and dinner, servers and food warmers, in return for payment of $93,963.15. Because of the pandemic, though, the event couldn’t happen in-person as planned. Instead, Marbled alleges that the parties entered into a new, oral contract, whereby the catering would be delivered to the competitors’ houses in Los Angeles and to Overlord’s staff in its LA office during the 5-week competition. Marbled alleges that it ended up supplying food and services totaling $201,544.01, but that Overlord only paid $130,543.33 leaving an unpaid balance of $71,000.68. Medz Ventures, Inc. v. Overlord Media, Ltd., 2021 WL 3075378 (Cal.Super.).
O'Donnell/Salvatori Inc. v. Microsoft Corp.
A company called ODS sued Microsoft alleging that Microsoft still owes it payments for use of the Halo music or derivative works and for internal uses of the music for promotional and marketing purposes. Microsoft moved for partial judgment on the pleadings. The court granted the motion as to some of the claims, but denied it as to others, including the primary claim for breach of contract and the duty of good faith and fair dealing, so the case goes on. O'Donnell/Salvatori Inc. v. Microsoft Corp., No. C20-882-MLP, 2021 WL 535128 (W.D. Wash. Feb. 12, 2021).
Loot boxes & Monetization
Coffee v. Google
Back in February, we wrote about an order granting Google’s motion to dismiss with leave to amend in the Coffee loot box case. The plaintiff filed a First Amended Complaint. Google filed a new motion to dismiss and the hearing is set for October 21, 2021 at 9:00 am. In the FAC, the plaintiffs allege more of the same, including: (1) that “loot boxes are gambling devices” under California law; and (2) that Google’s conduct “violates established public policies and is immoral, unethical, and unscrupulous” in violation of the Unfair Competition Law. Both of these theories continue to have little chance of succeeding.
Ramirez v. Electronic Arts
Back in February, we also wrote about the Ramirez v. EA case. On March 5, 2021, the court granted EA’s motion to compel arbitration. This is great news for EA; and, also, it provides an argument for keeping arbitration and class-action waivers in terms of service. (Compare this approach with Amazon’s recent decision to ditch arbitration altogether in its user agreement in an attempt to avoid mass arbitration filings.)
Zanca v. Epic Games
The court in Zanca v. Epic Games, Inc., No. 21-CVS-534 (N.C. Sup. Ct.,Wake County) has yet to grant or deny final approval of the proposed settlement. A similar case filed in California, K.W. v. Epic Games, No. 3:21-cv-00976-CRB (N.D. Cal.), is stayed, pending the outcome.
Automatic Renewal Case filed against Zenimax
On July 22, 2021, a class-action complaint was filed against Zenimax for allegedly “engaging in an illegal ‘automatic renewal’ scheme” with respect to its subscription plans for Elder Scrolls Online (ESO) Plus-branded products and services that are available exclusively to consumers who enroll in Zenimax’s auto-renewal membership programs. Armstrong v. Zenimax Media, Inc., 2021 WL 3123974 (Cal.Super.). This complaint follows similarly-themed legislative news: On July 6, 2021, Senators Schatz (D-Hawai’i), Thune (R-S.D.), Warnock (D-Ga) and Kennedy (R-La) introduced new legislation to “stop deceptive subscription business practices.” You can read the text of the bill here.
Roblox Sued for Allegedly Deleting Purchased Content
On May 25, 2021, Roblox got sued in a class-action for allegedly unfairly deleting purchased content without issuing a refund. The complaint alleges:
Defendant’s decision to sell first and “moderate” later has obvious monetary benefit for Roblox. By the time Defendant has deleted items from the Avatar Shop and users' inventories, it has already taken its 30% commission from the sale. Roblox retains all monetary benefit after deleting items from its platform while its players are left with nothing.
Doe v. Roblox Corp., 2021 WL 2143926 (N.D.Cal.). While this seems like a fun final exam hypothetical, it seems unlikely that Roblox actually engages in this behavior. On June 10, 2021, however, Roblox filed a notice that the parties are “evaluating a potential resolution of this action,” so perhaps we’ll never know.
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