No privacy protection for infringers: Sega v. MAPHIA (1994)

 :: Posted by Randel Reiss on 10-08-2013

4_in_1

Game industry disputes touch nearly every aspect of law.  Sega v. MAPHIA makes a significant contribution to the fast moving, and very current, privacy laws – specifically the Electronics Communications Privacy Act of 1986.  At first glance the case appears to be a straight forward, and typical, dispute between a major content publisher, Sega Enterprises, and a for-profit online pirate distribution service, MAPHIA.  But in the case is a court clarification on legal evidence gathering that will cite Sega v. MAPHIA on privacy dispute court filings, such as DoubleClick, for decades to come.

Takeaways

  • Privacy laws will not protect against evidence gathering of online material accessible by the public.
  • Public use of login, anonymous or pseudonym, is not an exception to the above.

Activity

Sega’s copyrighted video games were available on MAPHIA’s bulletin board by users who uploaded the games. A user of the system was created by a typical forward facing public registration feature.  The user of the service could upload a game, which then became available to an unlimited number of potential subscribers to the site. The defendants charged fees for the service.

Evidence Gathering

An employee of Sega gained access to MAPHIA’s bulletin board service using a pseudonym supplied by an already registered user acting as an informant.  The Sega employee then obtained copyright violation evidence from the bulletin board service.

From the court opionion:

39. Sega undertook to collect evidence of the above activities by having a Sega employee gain access the MAPHIA bulletin board under a pseudonym, as individuals generally do on the bulletin board, using information supplied by an authorized user who was an informant. Yang Decl. PP 11-13.

Privacy Protection Claim

Using the 1986 Electronic Communication Privacy Act, defendant, MAPHIA sought protection.  MAPHIA claimed that the personal and private data of the service and its registered users had been violated in acquiring the evidence.  The defendant claimed hat the login registration process re-enforced that protection.

From the court opinion:

40. Defendants allege that Sega’s access to the MAPHIA bulletin board through use of a pseudonym constituted a violation of the Electronic Communications and Transactional Records Act, and maintains that the Seizure Order was thereby inappropriate. The Electronic Communications and Transactional Records Act makes it illegal to “intentionally access without authorization a facility through which an electronic communication service is provided.” 18 U.S.C. Section 2701(a).

Protection Overruled

The court found Sega did not violate the ECPA because Sega was, either directly or indirectly, an authorized user.  The court then authorized the collection and seizure of the evidence as issued by a preliminary injunction prohibiting the unlawful activities of the online service.

From the court opinion:

41. Because the MAPHIA bulletin board is open to the public, and normally accessed by use of an alias or pseudonym, it would appear that Sega’s employee’s pseudonymous access was authorized. Furthermore, the Act contains an exception for access which is authorized by a user of an electronic service with respect to a communication for that user. 18 U.S.C. 2701(c)(2). The Sega employee’s access appears to have been authorized directly or indirectly by a MAPHIA user whose authorized status is not disputed. Therefore, no violation of 18 U.S.C. Section 2701(a) took place.

42. Moreover, the fact that a plaintiff’s employee, in the course of investigating a copyright or trademark infringement, fails to identify herself as such to the defendant does not provide a defense to the infringement when such identification would have defeated the investigation. Reebok International Ltd. v. Jemmett, 6 USPQ2d 1715, 1988 WL 106933 (S.D.Cal. 1988); Olan Mills, Inc. v. Linn Photo Co., 795 F.Supp. 1423 (N.D.Iowa 1991).

The above clarification, although not unique to this case, is also useful to realize.  If declaring your intentions or your employer during a lawful investigation would risk compromising your access to the evidence – failure to state who you are will not be used to disqualify the evidence.

The entire court opinion on Sega v. MAPHIA in its entirety can be found here:

Sega_Enterprises_v_MAPHIA_1994

A nice detailed analysis of Sega v. MAPHIA is at PatentArcade.com:

http://www.patentarcade.com/2011/07/case-analysis-sega-v-maphia.html

 Sega-16.com also has a nice description of the circumstances of Sega v. MAPHIA:

http://www.sega-16.com/2006/11/genesis-firsts-sega-vs-maphia/

 

 

You’ve Been Served – Patent Troll (2013)

 :: Posted by prairiegames on 06-11-2013

Well we weren’t served, just put on notice, for patent infringement.  Patent 8,180,858 Method and system for presenting data over a network based on network user choices and collecting real-time data related to said choices:Download

And it’s not us, but our sister company Prairie Games and their 3D MMORPG product, Minions of Mirth.

Before I give you the contents of the notification letter, let me give you some takeaways:

  • Don’t ignore infringement notifications, no matter how absurd the infringement appears.
  • Do seek written legal counsel, no matter how absurd the infringement appears.
  • An offer to negotiate a license tends to mean there is no pending, immediate, suit complaint.

This last bullet item is based on a legal concept of the “Declaratory Judgement Act.”  What the act allows is a pre-emptive suite, in the case the potential infringed party were to threaten suit instead of offer to license negotiate.  The pre-emptive suit would in essence be “permitting a person or entity being threatened with lawsuit(s) from another party to force the issue to be decided, rather than having to operate under a cloud of uncertainty and intimidation.”

Below you will find a letter from some fresh attorneys representing the plaintiff from Treehouse Avatar Technologies v. Turbine (2012).  That case never generated any public documents outside the initial complaint: Download


600 SOUTH AVENUE * WESTFIELD, NEW JERSEY 07090
T: 908.654.5000 * F: 908.654.7866 * WWW.LDLKM.COM
CHINA: UNIT 3405A * TEEM TOWER * 208 TIANHE ROAD * TIIANHE DISTRICT
GUANGZHOU, GUANGDONG 510620 * CHINA * T: +86 20 3810-3788 * F: +86 20 3810-3789
INTELLECTUAL PROPERTY LAW
Stephen F. Roth
908.518.6362
SRoth@ldlkm.com

July 5, 2013

Prairie Games, Inc.

151 Old Country Road

Suite B

San Carlos, CA 94070

Re:     TREEH 4.1-001

Treehouse Avatar Technologies, Inc.

Notice Regarding U.S. Patent No. 8,180,858

Dear Sir:

We are intellectual property counsel to Treehouse Avatar Technologies, Inc. (“Treehouse”).  Treehouse is the owner of U.S. Patent No. 8,180,858 (“the ’858 Patent”) entitled “Method and Systems for Presenting Data Over a Network Based on Network User Choices and Collecting Real-time Data Related to Said Choices.”  We have enclosed a copy of the ’858 Patent and a claim chart illustrating the general applicability of the ’858 Patent.

Generally, claims 1, 9, and 15 of the ’858 Patent relate to presenting data over an information network based on choices made by the users of the network and collecting data related to the choices made by the user.  The systems and methods encompassed by the ’858 Patent may be used and performed by operators and developers of video/pc games played using an internet connection, including MMORPGs.  Typically, such games allow users to create characters (avatars) using character attributes (hair color, eye color, skin color, attire, weapons, etc.)  The game operator keeps track of the popularity of each attribute by tallying how many times it is selected.  The same such systems and methods may also apply to games that permit users to create custom sceneries.

We write to bring the ’858 Patent to your attention because it is our understanding that you develop, operate or sell game(s) that may use, or may have an interest in using, the technology covered by one or more claims of the ’858 Patent, including Minions of Mirth.  In order to faciliate your understanding of the technology covered by the ’858 Patent, without limiting our client’s rights, we direct your attention to the enclosed claim chart that shows the applicability of the ’858 Patent to games such as ones your company offers.

As you may know, a United States patent grants its owner the right to exclude others from using products that fall within the scope of the claimed invention and collect damages not less than a reasonable royalty.  However, we are willing to hold amicable discussions and work with you to negotiate a license on favorable terms.  In the matter with your company, we are trying to avoid any unnecessary litigation by providing you with sufficient information to facilitate licensing discussions.

If you have any questions about the ’858 Patent, the technology covered by the ’858 Patent, and terms for resolution, please do not hesitate to contact us.

Very truly yours,

LERNER, DAVID, LITTENBERG,

KRUMHOLZ & MENTLIK, LLP

STEPHEN F. ROTH

SFR/jca

Enclosures(2)

Gamastura.com: 10 Business Law and Tax Law Steps to Improve the Chance of Crowdfunding Success (2013)

 :: Posted by Gamasutra.com on 06-07-2013

Will Lewis, international business, tax, and estate planning advisor, wrote over at Gamastura.com:

When the Kickstarter closes on December 17, you have raised $1 million. After Kickstarter and Amazon take their cut, you’re left with about $920,000 (1M – 1M * .05 [Kickstarter] – 1M * .03 [estimated Amazon Payments rate]. Great news! Right…? Sort of… The worst case scenario, of course, would be that your project doesn’t get funded at all. However, there are serious tax consequences that the imaginary developers in the above situation are going to suffer that could turn this otherwise successful crowdfunding campaign into a nightmare. If 10% of your pledge total is from people in a state where sales of digital goods are taxed, and the average sales tax is 8%, then you might owe about $7,400 in sales tax to your state ($1M * 0.10 – [$1M * 0.10] / 1.08).  If we assume that the developers didn’t spend any more on development in 2012, and if we assume that all of the developers are subject to an income tax rate of 45% (35% federal and 10% state), then you are going to collectively owe $365,670 (0.45 * [$912,600 - $100,000]) to the IRS and state tax authorities on April 15, 2013.  Until an amended return is filed in 2013, this leaves about $450k for the remaining development, and a profit of $50k if development costs were on budget.

Read the entire article over at Gamasutra.com:

10_Business_Law_and_Tax_Law_Steps_to_Improve_the_Chance_of_Crowdfunding_Success

Interesting Gamasutra.com article comment by Scott Burns:

Why would there be sales tax on crowdfunding money? The backers aren’t purchasing any goods or services, they are investing in the production of goods or services and their selected reward (typically a digital download of the game) is their return on that investment.

Magnavox

 :: Posted by Randel Reiss on 06-02-2013

rb_pong_beated

The Magnavox case law is some of the oldest, and some say first, case law of the video game industry.  As such they address a very core game mechanic which today we simplify by calling “hit-detection.”

Takeaways

  • Document everything you do.
  • Prior patent-licensing can strengthen patent holder legal standing.
  • Modernization of means-plus-function does not invalidate patent.

Document Everything

Some quick background from the ever wonderful Smithsonian.ORG site:

By mid-1967, ping pong videogames were played inside Sanders, patent disclosures were applied for, and hardware was designed. Baer and his associates called the devices they were developing “boxes” and numbered the various versions one through seven. In 1971, Magnavox became Sanders Associates’ first videogame licensee. Between 1972 and 1975, Magnavox produced and sold over 700,000 units of Odyssey, a set of games played on its television receivers. Atari became a licensee in 1976 after the first of many lawsuits won by Sanders in pursuit of patent infringements.

Ralph Baer was an extensive documenting engineer – a lesson for all of us.  The complete text of Ralph Baer’s paper, “TV Game Chronology,” can found here: Download

Prior Licensing

During dispute resolution of Magnavox v. Chicago, Atari founder Nolan Bushnell made a separate out-of-court settlement resulting in a license to use the patent.  This clearly added to the momentum of strengthening the patent against attempts by Activision, Nintendo, and others.

Modernizing Means-plus-function

Ralph Baer’s original work was analog based, although he claimed it was digital.  Notice the analog signal marks below for Baer’s Vertical-stripe generator signified by the saw-tooth lines below:

Vertical-stripe generator

Vertical-stripe generator

The “wow” moment of Baer’s work was when the sync signal from the above vertical-strip signal was combined with some logical AND circuitry against the rectangular dot generator circuitry below, a hit detection of the virtual ball to the virtual wall occurred.

Rectangular dot generator

Rectangular dot generator

Later attempts by Activision to claim the means had no applicability in a microprocessor-driven game failed in the courts.