Responding to Intellectual Property Theft: How to Protect Your Game Without Damaging Your Company’s Reputation

I explain each of the options a game developer should consider to protect its intellectual property, and I give real-world examples of video game companies doing each and their outcomes.

Stephen McArthur, Blogger

August 5, 2013

17 Min Read

Stephen McArthur is the principal attorney at The McArthur Law Practice where he focuses on intellectual property law, especially for video game companies. www.smcarthurlaw.com

Over one billion people worldwide will spend a total of $65 billion this year playing video games.[1] That makes the video game industry bigger than the Hollywood film industry and twice the size of the music industry. These lucrative numbers are highly attractive to copycatters looking to grab even a tiny slice of that market share. We’ve seen it with mobile apps copying Tetris[2], the countless League of Legends clones that seem to pop up every week, such as 300 Heroes[3], and more worryingly, even the boutique studios often have their work ripped off, such as Spry Fox’s Triple Town[4].

In this article I’ll provide guidance to game developers who need to protect their brands, creative work, and other intellectual property (“IP”). I will explain six options a video game company should consider whenever its IP is at risk: an open letter to the media, a polite cease and desist letter, an aggressive cease and desist letter, a DMCA takedown notice, mediation, and, finally, litigation. For each of those options, I will provide real life examples of how a company handled the exact situation and what the result was.

Game design is an art. Consequently, all games comprise some combination of IP and will be protected by copyrights, trademarks, and perhaps even trade secrets or patented technology. The underlying software code, artwork, music, and script in a game can be protected by copyright. The title, logo, characters, slogans, distinctive sounds or colors, and even unique weapons or items can be protected by trademark. Patents can protect the new and unique gameplay functionality, features rules, or applied algorithms, among other things. Source code, object code, and any other business information or methods that are kept secret from the public and competitors may be additionally protected by trade secret law.

One misconception about IP and brand protection is that it is extraordinarily expensive and time consuming. But that does not always have to be the case. It can often be done in a few proactive steps that do not have to drain your company’s resources.

The best policy is generally to find an equilibrium between shutting down the most egregious game clones and brand infringers, while leaving your fan base and consumers alone to have the freedom to modify your game and promote it through social media without the fear of retribution. Enforcing IP in the social media age of Twitter and Reddit is as much a public relations balancing act as it is a legal decision. Game developers must be sensitive and political with their enforcement: while you must protect your rights, you don’t want to be perceived as a bully or alienate your user base by making the shortsighted decision of harassing smaller companies or shutting down mods, mash-ups, and fan art.

In May 2013, for example, Nintendo alienated part of its YouTube fanbase by being too aggressive with its intellectual property enforcement. Fans frequently make “playthrough” videos of Nintendo’s games and post them to YouTube. The playthrough videos include original user commentary, walkthroughs, tutorials, and reviews. Many of those users create and upload their playthrough videos as full time jobs, receiving revenue generated by advertisements that play before the videos.

Nintendo made mass copyright claims to YouTube to shut down all users’ advertising revenue and instead redirect the money to itself.[5] Any revenue from those playthroughs, which are arguably fair use and created by Nintendo’s biggest supporters and fans, would now belong to Nintendo.

Unsurprisingly, Nintendo was lambasted for this short-sighted move. The gameplay videos are a form of fan-made viral marketing that costs Nintendo nothing. But for a few dollars, Nintendo sacrificed its goodwill with some of its biggest fans. A ham-fisted IP enforcement strategy that doesn’t keep your consumers as its number one priority will inevitably lead to these kind of marketing gaffes.

In 2011, Blizzard used a DMCA takedown notice to force YouTube to remove a video of a fan creation called World of Starcraft. Despite its legitimate interest in protecting its World of Warcraft and Starcraft brands, it was still pilloried in the gaming media for shutting down a fan’s creation. Blizzard reacted to the situation skillfully. It released an open letter explaining the situation, praising the developers, and even inviting them to Blizzard to discuss the game.[6] Today, the fan’s creation has come to fruition and is known as StarCraft Universe.[7]

There is always an important balance that must be observed between allowing fans and third parties to be inspired by your work, and making sure that your brand integrity is protected. You must be very sensitive about not aggressively shutting down creative works generated by fans of your game. Even if you can get away with forcing them to abandon their project, it can be a public relations mess.

1. Open Letter With No Legal Action

In 2011, NimbleBit, a small company of only three people released the mobile game, Tiny Tower. It was an original game, addictive, and very well received. Shortly after it was released, Apple named Tiny Tower the iPhone Game of the Year. Zynga, a company with hundreds of employees, released Dream Heights, a mobile game extremely similar to and clearly inspired by Tiny Tower.

NimbleBit could have sent Zynga a cease and desist letter. But it is unlikely that the much larger company would have backed down. Then, Nimblebit would have been faced with the decision of whether to spend hundreds of thousands of dollars going to war with Zynga in federal court for copyright infringement. Instead, NimbleBit appealed straight to the press and the court of public opinion. It created an illustrated, tongue-in-cheek letter comparing the two games side-by-side, thanking Zynga for being such big fans of Tiny Tower, and inviting them to copy their future games as well.[8]

The letter was a viral hit. It was covered in the press, reposted by legions of game bloggers, and was a blow to Zynga’s reputation and public relations.[9] But it was more than simply a public victory for NimbleBit: Tiny Tower saw a significant spike in sales. NimbleBit, now in the spotlight, continued to get media coverage for its future game releases, such as Nimble Quest, that it probably wouldn’t have otherwise received. NimbleBit may not have won a copyright infringement lawsuit had it brought one against Zynga, but it found a way to win the media and publicity battle regardless.

Another example of the successful appeal to public opinion is Twisted Pixel’s CEO receiving positive press by using Twitter to lambast Capcom for releasing MaXplosion, a game very similar to Twisted Pixel’s ‘Splosion Man. Instead of using an open letter, he engaged in a Twitter attack: “MaXplosion gameplay video makes me sad. If you're going to outright steal a game, you should at least understand what makes it fun.” “We just need to keep our heads down making the next thing so that Capcom has something to steal next year”. Ultimately though, he said that they would not pursue legal action because “we owe them one for inventing Mega Man, so we'll let them slide”.

Like NimbleBit, Twisted Pixel also won the battle of public opinion.[10] The press was so bad for Capcom that it was forced to release a statement that jait hoped to “rebuild the trust of [its] fans and friends in the gaming community.”[11]

Though these social media battles can often work for small startups that may not be able to afford full-fledged litigation, always first clear with an attorney any open letter, tweet, or other public message about another company allegedly copying your game or brand. A letter written in anger and not carefully worded will quickly land you in hot water with anything from a libel to an intentional interference with contractual relations lawsuit. The last thing you want is for the company that copied your game to then win a defamation lawsuit against you, so be very careful with what you write.

2. Polite Cease & Desist Letter

A cease and desist letter is a formal letter requesting that someone stop infringing your intellectual property and that they will face legal action if they do not comply. Cease and desist letters are not private or confidential. You must assume that the letter will get posted to a blog. And, if you’re a large company sending the letter to a tiny company, the recipient will try to make it into a David vs. Goliath story. So, always assume the letter will be read by your fans and could be used to present you in a harsh light.

One of the easiest ways to mitigate that risk is to make the tone of your cease and desist letter as flattering, polite, and nice as possible. The nice approach does often solve things faster and cheaper. Jack Daniel's successfully used that approach when an author published a book with a cover that resembled the famous Jack Daniel's logo:

In their letter, Jack Daniel's explained their need to defend their brand, praised the author who was allegedly infringing their trademark, politely requested that the cover be changed, and did not threaten to sue:

“We are certainly flattered by your affection for the brand, but while we can appreciate the pop culture appeal of Jack Daniel’s, we also have to be diligent to ensure that the Jack Daniel’s trademarks are used correctly. Given the brand’s popularity, it will probably come as no surprise that we come across designs like this on a regular basis. What may not be so apparent, however, is that if we allow uses like this one, we run the very real risk that our trademark will be weakened. As a fan of the brand, I’m sure that is not something you intended or would want to see happen. . . . In order to resolve this matter, because you are both a Louisville ‘neighbor’ and a fan of the brand, we simply request that you change the cover design when the book is re-printed. If you would be willing to change the design sooner than that (including on the digital version), we would be willing to contribute a reasonable amount towards the costs of doing so.”[12]

The Jack Daniel’s letter was well received and won a great deal of positive press for the company. Further, without any bad feelings or contentious litigation, the author changed the book cover to one that was not similar to the Jack Daniel’s logo.[13]

3. The Nastygram.

Playing the nice guy doesn’t always work. Sometimes, yourisk of have to set the tone that you are ready to take the infringer to court if they don’t immediately stop using your game or brand without your permission. This kind of cease and desist letter can often be an effective and relatively inexpensive way to scare an infringer into immediately discontinuing the use of your intellectual property.

These letters on their face may appear to be simple, but there are many common pitfalls game companies make with them. First off, you want to be extremely sensitive to the fact that your cease and desist letter is not confidential, even if you label it as such. Assume anything you write will be posted online to social media sites and read by the press and your fans. Don’t write anything that makes you look like a bully.

Second, don’t send a cease and desist letter with no legal basis. When you send a cease and desist to someone for acts that aren’t illegal or infringing your work, you run the risk that the recipient of the letter may file a complaint seeking “declaratory judgment”, suing you in their own jurisdiction. This means that the person you sent the letter to can drag you into court on the other side of the country in order to get a ruling from the judge that they aren’t actually infringing. So, even though your company is in California, that’s too bad. Now you have to defend an action in Michigan since that’s where the recipient of the letter lived and that is where he filed his declaratory judgment action. You don’t want that expensive headache on your hands.

In 2012, indie gamer developer RC3 released a mobile game called Joustin’ Beaver. The game features a beaver with a purple shirt and mop hair floating down a river on a log. The beaver battles “Phot-Hogs”, signs “Otter-graphs” and encounters the “whirlpool of success”. Justin Beiber’s attorneys sent RC3 a poorly worded and aggressive cease and desist letter. [14]

The letter accused RC3 of “flagrant and conscious infringements of [Justin Beiber’s] rights” and threatened that RC3 would be liable for statutory damages in addition to all of RC3’s profits. The cease and desist then asked for RC3 to settle by paying “compensation for the severe harm that your actions have caused to [Justin Beiber]”, and stated that they would sue them if they didn’t hear back within two business days.

RC3 published the cease and desist in an effort to win over public opinion, then counterattacked with a declaratory judgment, forcing the Canadian Justin Beiber into a court battle in RC3’s home state of Florida where they asserted a “parody” defense. Thus, because of his ill-advised and far too aggressive cease and desist letter, Justin Beiber was forced to defend an expensive lawsuit in Florida. Today, over a year later, Joustin’ Beaver is still available in Apple’s App Store and has even raised its price from $0.99 to $1.99.

4. DMCA Takedown Notice to Service Provider.

The Digital Millennium Copyright Act (“DMCA”) allows a copyright owner to notify a service provider of copyright infringement. The service provider must then, “act expeditiously to remove, or disable access to, the material”. DMCA notifications can be sent to file-sharing sites to force them to remove your video game after a user has uploaded it. This is especially useful to send to companies like Apple to force them to take down an infringing mobile game from their iOS App Store.

DMCA notices are handy because if someone copies your game or your brand and starts selling it on Apple’s App Store, for example, then you can get it removed without taking the offender to court or sending a nasty letter. A DMCA notice must contain certain very specific information, or else the service provider (Apple, Google, etc.) can simply ignore it. Google, for example, receives about 20 million DMCA takedown notices per month, so their takedown process is largely automated.[15] Since the process is automated, as long as you follow the rules, you should successfully get the infringing material removed. Talk to your attorney and have them send the DMCA letter to make sure the rules are correctly followed.

Atari used a DMCA takedown notice to Apple to remove from its App Store a game called Vector Tanks that copied Atari’s earlier game, Battlezone.[16]

Battlezone:

Vector Tanks:

What’s noteworthy about this case is that Atari released Battlezone in 1980, thirty years before Vector Tanks was created and released in the App Store. In response to Atari’s DMCA notice, Apple permanently removed VectorTanks from the App Store.

5. Mediation.

In mediation, a knowledgeable professional with no connection to either party assists them in coming to an agreement and settling their conflict. The mediator is usually someone highly respected by both parties, chosen by them, and paid by them. The mediator is like a therapist; she is not there to come to a binding decision on which side should “win” the conflict. Instead, she neutrally helps each side understand the weaknesses of their case, and tries to find common ground on which the parties can come to a fair settlement.

Solving the conflict in a couple of days of mediation is generally much less costly than litigating the dispute through trial. Mediation is relatively fast, can be scheduled within a few weeks and completed in anywhere from half a day to a few days. Also, unlike lawsuits, mediations are completely confidential, so the result will never be known by the press or your competitors. It also leaves a great deal of power in your hands rather than placing it all in those of a judge or jury. The parties are free to creatively fashion their own solutions to the conflict.

In 1998, Sega applied for U.S. Patent 6,200,138[17], granting it a monopoly over an arrow navigation system for Crazy Taxi, a game where you pick up passengers in a taxi and drive them to their destination as quickly as possible. The patented concept consisted of driving around a city with an arrow that hovers over the automobile guiding it to its ultimate destination. Today, the Crazy Taxi arrow navigation patent is considered one of the most important patents in video game history.[18]

In 2001, Electronic Arts released The Simpsons: Road Rage, generally considered a knock-off of Crazy Taxi, closely paralleling its gameplay elements.

Sega sued for patent and copyright infringement.[19] The litigation was predicted to be a long, expensive battle between two of the largest video game developers in the world. Instead of spending years and millions of dollars battling each other tooth and nail through trial, however, they hired a private mediator to help negotiate a solution. At the mediation, they came to an agreement and dropped the lawsuit in its entirety. We don’t know if the terms of the settlement included the exchange of money between Sega and EA because of the privacy and confidentiality inherent in mediations.

6. Litigation

You’ve tried polite phone calls, angry cease and desist letters, and everything else you can think of. But nothing has worked, and the infringer continues to use your video game or your brand without permission. Sometimes, you have no options left except to take them to court. That’s the position Spry Fox, creator of Triple Town, was in when 6Waves allegedly copied its game with Yeti Town.

About eight months after filing the lawsuit, 6Waves settled and granted all of Yeti Town’s intellectual property to Spry Fox. According to Spry Fox’s CEO David Edery at his 2013 Game Developers’ Conference presentation, simply filing the lawsuit had a surprising number of peripheral positive effects for the company. He was able to send a message to every other video game cloner that Spry Fox fights for its rights and won’t stand idly by while people copy its game. So, litigation, though expensive, can send a strong message and have other positive results beyond a simple victory in the case at hand.

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As a final thought, the purpose of IP is to encourage innovation by rewarding artists and creative people so they will continue to produce great works of creativity. Enforcing it correctly is an incredibly important part of building your company’s brand and assets. But be smart about it and don’t let your company fall into the trap of overzealously acting as a bully and alienating your most important fanbase.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] http://news.xbox.com/2013/05/x360-aaron-greenberg-industry-growth

[2]
[3] http://kotaku.com/chinas-league-of-legends-clone-is-a-bootleg-wonderland-511352428

[4] http://www.escapistmagazine.com/news/view/120080-6waves-Settles-Yeti-Town-Cloning-Lawsuit

[5] http://bit.ly/10JsxI2 (Gamasutra)

[6] http://techland.time.com/2011/01/21/blizzard-responds-to-the-world-of-starcraft-mmo-issue/

[7] http://upheavalarts.com/starcraftuniverse/

[8] http://media1.gameinformer.com/imagefeed/featured/indie/tinytower/tinytower0125-610b.jpg

[9] http://bit.ly/16sroIG (Gamasutra)

[10] http://www.joystiq.com/2011/01/11/capcom-mobile-rips-off-splosion-man-for-maxplosion/

[11] http://arstechnica.com/gaming/2011/01/capcom-saddened-by-its-own-apparent-theft-of-splosion-man/

[12] http://static2.businessinsider.com/image/500d57fd6bb3f7705f000002/jack-daniels-cease-and-desist-order.jpg

[13] http://jimromenesko.com/2012/07/23/publisher-agrees-to-change-book-cover-that-looks-like-a-jack-daniels-bottle/

[14] http://tmz.vo.llnwd.net/o28/newsdesk/tmz_documents/0223_bieber.PDF

[15] http://www.google.com/transparencyreport/removals/copyright/