Ask a lawyer: Gaming and IP issues

By tgn_admin
In Interviews
Jan 8th, 2010
22 Comments
619 Views

We have received a response to our IP and copyright questions from one of the lawyers and I thought I would post these now and then update the article later with the second set of responses. It has been suggested that I add this qualifier to the article.

Intellectual property law is complicated, and is slightly different in every country on earth. TGN is not an attorney. Nothing on this page should be construed as legal advice. This information should not be relied on without consulting an attorney licensed to practice in your jurisdiction. The attorneys who contributed to this article are experienced intellectual property attorneys, but are only familiar with the laws of the jurisdictions in which they are licensed.

This firs set of responses are from Attorney A. As both of the lawyers involved deal professionally in this issue they have asked to post their responses anonymously.

Attorney A has experience litigating intellectual property cases in the United States District Courts, under the laws of the United States. He has represented large and small corporations and individual clients in cases involving copyright, patent, and trademark infringements, unfair competition, and other intellectual property disputes.

Due to the worldwide nature of the internet, what country/international laws on IP should be taken into consideration in cases where a company serves a Cease and Desist notice to someone in another country? Is this different if a person gets sued?

Attorney A: The short answer to these questions is, “It depends.” The Internet has thrust IP law into the cutting edge on many issues, not the least of which is jurisdictional. A country’s IP laws govern intellectual property within that country. If a person in the United Kingdom sends a letter to a person in the United States demanding that they cease and desist certain infringing behavior, it is probable that the UK-based sender is relying on UK law. However, that UK company may have US affiliates, or even US registered Trademarks. Anyone who receives an actual cease and desist letter should immediately contact an attorney. The letter may be clear about the laws on which its sender is relying, or it may not. As a general rule, you can assume the laws of your own country and those of the sender’s are fair game. In addition, remember that by posting things on the internet, it is reasonable for you to assume that people will view and copy your content in every jurisdiction on earth.

What can be considered derivative of an IP? Are there any guidelines or the matter is subjective?

Attorney A: The answer to this question requires a brief explanation of “IP.” It is clear to me from reading posts on TGN and other forums, that gamers have varying levels of understanding about the various flavors of intellectual property. Under US law, IP takes several forms, including Trade Secrets, Copyright, Trademark/Trade Dress, and Patent. Briefly: Copyright is the right an author has in the expression of original ideas in a tangible medium. Copyright exists with the author the moment he creates. Copyrights may be registered to establish a certain date of creation and to protect certain damages claims, but registration does not create a copyright. Trademark is an indication of origin. Trademark law differs significantly from copyright law, and can be quite technical. Trademarks can be registered with the government to establish certain elements of their strength,including their use in trade, the region in which they are used, and the range of products for which they hold secondary meaning.

Patents are a form of protection obtained from the government. Only certain novel creations may be patented, and only after a complex review process by the US Patent and Trademark Office. Finally, there are trade secrets, which are the secrets held by creators for business purposes, such as the formula for Coca-Cola or the colonel’s secret blend of herbs and spices. Many businesses rely on their own security (including non-disclosure agreements) to maintain their trade secrets, because they can keep them protected longer than the life of a patent.

Now, to answer the question: “Derivative” is part of a legal term of art used in copyright law. See 17 U.S.C sec. 101 (“A “derivative work” is a work based on one or more pre-existing works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, consensation, or any other form in which a work may be recast, transformed, or adapted.) The creator of a derivative work owns the copyright to the derivative work. However, the owner of a copyright in the original work from which the derivative was created still owns that copyright, and has the right to stop infringement of that right, including the creation of derivative works. Examples of gaming-related derivative works include: a fan-created space marine chapter, a Darth Vader character card for Heroscape, or a terrain piece made using bits from Games Workshop model kits.

The question in most lawsuits is not whether a secondary work is a derivative work, but whether it is an infringement not otherwise protected by the doctrine of “fair use,” which is determined by application of a four-factor test set out in 17 U.S.C. sec.107. Under that statute, the court will consider:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

There are scores of court cases examining these factors, and the opinions are as varied as the men and women who wrote them. See, e.g., Gaylord v. U.S., 85 Fed. Cl. 59 (Fed. Cl. 2008) (US Postage stamp depicting plaintiff’s sculpture ruled a fair use). In short, yes, the answer is somewhat subjective, and based on a balancing of these factors.

May I use trademarks (such as “Warhammer” or “Blood Bowl”) in the domain of a fan website as long as I have the appropriate disclaimers? Does the profit or non-profit status of the site change this?

Attorney A: The safest answer to this question is “No.” Using a registered trademark in your internet domain name is a sure-fire way to draw attention from the owner of the mark. The disclaimers are not the issue. Imagine, for example, that you opened a hotel named the “Holiday Inn,” and you printed a disclaimer on the inside of the hotel room doors that read: “This hotel is not affiliated with “Holiday Inns Inc.” Guess what. People would come to your hotel, buy a room, and may never notice the disclaimer. Even if they did, they would have already paid for their room. You would be trading on the goodwill of “Holiday Inns Inc.” to get people into your hotel. That is exactly what trademarks are for. They represent the goodwill of your business.

An internet domain name is very similar. I know to expect a certain level of quality from the “Games Workshop” trademark. If I were searching for GW products online, I would naturally use the Games Workshop name in my searches. If those searches pointed me to a website with that trademark in its name, I’d be likely to think it belonged to, was sanctioned by, or is affiliated with, Games Workshop. Without any effort at building goodwill at all, the owner of the infringing domain name would have instant traffic based solely on the GW name. This is traffic that GW itself would want, and, would likely have a good legal argument that it was entitled to.

I say that “no” is the safe answer because the issue of whether Trademarks can be used in domain names such as “www.<inserttrademarkhere>sucks.com without being infringement is rather hotly debated in US legal circles. For example, use of “sucks” after a trademark (known as ‘cybergriping’), has been permitted by U.S. Courts because there is no likely confusion that the trademark holder is the source of the “____sucks” website. See, e.g., Bally Total Fitness Holding Corp. v. Faber, 29 F.Supp.29 1161, 1165 n.2 (C.D.Ca. 1998); Taubman Co. v. Webfeats, 319 F.3d 770 (6th Cir. 2003). However, in another case, the use of “my” and another person’s trademark (as in mymcdonalds.com or mygamesworkshop.com) was held to be an infringement because of the likelihood of confusion. Coca-Cola Co. v. Purdy, 382 F.3d 774 (8th Cir 2004). Using “talk,” as in”talkbloodbowl.com” seems to me more likely to cause confusion than “sucks” because a reasonable person might conclude the owner of the Blood Bowl trademark is affiliated with the domain.

The fact that a site is not making any profit will not necessarily stop it from being considered an infringement of a legally protected trademark. Injunctive relief (meaning the forced shutdown of the site) can still be granted without any showing of economic harm. However, the fact that the site is making no profit WILL most certainly be relevant to the amount of damages that could be recovered by the trademark holder in any legal action. Regardless of the profits, a clever trademark holder will still argue that traffic and eyeballs are a valuable commodity online, and that the allegedly infringing website is taking eyeballs and traffic away from legitimate owner-controlled sites.

However, regulation of domain names brings US courts dangerously close to the First Amendment of the U.S. Constitution, which protects the freedom of speech. In addition, trademarks CAN lawfully be used in non-commercial speech, accurate comparative advertising in commerce, and new reporting or commentary. The protection of a trademark is not the words themselves, but the attachment of those words as a symbol of the origin of goods or services. See, e.g. Lucasfilm Ltd. v. High Frontier, 622 F. Supp. 931, 933 (D.C. 1985) (use of “Star Wars” to refer to US strategic defense initiative not a trademark infringement).

May I depict photos of miniatures from another manufacturer if I own the copyrights to the paint job and the photo itself? The sculpture is still the copyright of its manufacturer so is it a violation to use such photos?

Attorney A: You are correct that a fan-created photo of a painted miniature is a derivative work. The sculptor owns the copyright in the figure. The painter owns the copyright in the paintjob. The photographer owns the copyright in the photograph. The photo is a derivative work of both the sculpture and the paintjob. It IS a violation of the miniature manufacturer’s copyright in the miniature itself to distribute the photographs. See, e.g., Rogers v. Koons, 960 F.2d 301 (2d Cir 1992) (sculpture based on a photograph held to be violative of photographer’s copyright because the sculpture diluted the photographer’s market in potential derivative works).

The solution to this problem is to seek a license from the miniature manufacturer. It has been said that GW do not like to give such a license to competing rules designers. Future War Commander, for example, uses pictures of figures from several manufacturers, under license. It’s author has noted that GW would not permit him to use pictures of GW figures in his rulebook. He was right not to do so.

Are there any inexpensive (or free) channels that people can take if they do wish to contest some or all of the terms of the Cease & Desist letter?

Attorney A: Yes, but they are not without risk. If you get a cease and desist letter (“C&D”), you should consult an attorney. This stuff is complicated, and, odds are, the attorney who wrote the letter did enough homework to know he or she has a reasonable chance of success if pressed to file suit against you to stop the behavior complained of.

Remember, a C&D is a letter. It’s a scary letter, but, like a letter from your mom, it’s just a letter. It represents the opinion of the person or company who sent it. The lawyers who write them are paid to advocate for their client. The goal of the letter is to stop you from doing what they believe is an infringement. They may be absolutely right. They may be shooting in the dark, hoping you will just stop what you are doing because it’s close to infringement. You won’t know how serious they are unless you test them.

However, most of us reading this site are hobbyists. This is a discussion of our hobby. The people mailing out C&D letters are in business. If you are planning to defend a hobby website against a business, you need to really think about whether it’s worth it. I have had hundreds of clients proclaim they will see a case through to the end because of the “principal of the thing,” only to cringe at the first small legal fee bill. If you won’t put up a few hundred dollars to defend your “principals” then maybe you should just give up before the lawsuits get filed.

At any rate, the first thing you should do if you think you are not infringing, is simply to respond to the letter with a letter that politely and directly explains why you will not stop, and why their letter is wrong. You should also immediately call the author of the letter and offer to discuss it with them in detail, in the hopes of reaching a written resolution of your differences. They don’t want to waste tens of thousands of dollars suing you any more than you want to go broke defending their lawsuit. However, once they have filed suit, settlement discussions will be far less favorable to you, as they will have sunk a good bit of money into their legal fees. Again, I’d get a lawyer to handle this, even if only to proofread or give you a second opinion. You are swimming with sharks if you are acting on your own against experienced corporate IP attorneys. You wouldn’t fight a professional boxer, would you?

Can a company be aware of a fan site for years and later attempt to get them to change their name or domain because of trademark infringement? Does the fact that people at the company other than the legal team are aware of the site change this?

Attorney A: Trademark infringement claims can be barred by what is called the doctrine of laches. If a holder of a mark sleeps on his rights and knowingly permits an infringing use, the court will likely weigh that fact in favor of his opponent. These are, of course, legal arguments to be made after expensive discovery and during trial. The argument is rarely a slam dunk, as it requires the court to consider and weigh a variety of factors after hearing evidence.

The awareness of employees of a corporation can be imputed to the corporation itself, but only under certain circumstances, and only through certain employees. It is a factual determination. As a general rule, the knowledge of a few store employees for a corporation running an international chain of stores is not likely to be imputed to the corporation itself. However, if the officers and directors were aware, then the corporation will likely be held to be aware. Again, this is something that would require extensive discovery and depositions to prove, and “smoking gun” emails are rarer than movies and TV shows might suggest.

Can a company license its trademarks for use in fan sites? Can it do so for free?

Attorney A: Yes. The owner of a trademark can license it’s trademark on whatever terms it wants. It’s just like any other piece of property. I can loan you my car for free, or I can charge you for it. Just don’t steal my car.

What makes one model legally distinct from one GW produces? Can GW attempt to stop the sale of a figure that looks like one of their miniatures?

Attorney A: GW can attempt to stop an infringement of their copyright. The question of whether a new miniature infringes on GW’s copyright by being sufficiently similar to be considered an infringement would require the opinions of experts in miniature sculpting, or sculpture in general. The experts would have to opine about the distinctive and original characteristics of the two miniatures, and conclude whether the later produced one is in fact a copy of the GW miniature, or sufficiently original to constitute its own non-infringing design. There is, for example, a reported decision about the subtle differences in action figure designs which details the competing expert testimony about the figures musculature and posing.

See Mattel, Inc. v. Azrak Hamway Int’l, Inc., 724 F.2d 357 (2nd Cir. 1983) (Mattel sought to hold Azrak liable for trademark infringement because defendant’s figures resembled its Masters of the Universe figures, which, it argued, had a particular posture and musculature that the public immediately associated with the Masters of the Universe. The defendant even used the Masters of the Universe logo in its sales to compare its product to Mattel’s. Mattel lost, and the defendant’s use was permitted. ). A lawsuit between GW and a competing figure manufacturer would have to be resolved through similar testimony.

Does the complainant have the right to demand information such as “what profit have you made” and “who have you been dealing with”?

Attorney A: The author of a letter can demand whatever they want. It never hurts to ask. The recipient does not have to respond. (Again, it’s a letter.)

However, if the author of the letter files a Complaint in court, they can serve written discovery requests on the defendant. Those requests will certainly include these questions, and the Court will almost certainly direct the defendant to answer them unless he can interpose sustainable objections. The answers to those questions go to the issue of damages recoverable in a trademark infringement suit. If the defendant is profiting from his illegal use of the plaintiff’s trademark, the Court can order the Defendant to disgorge all ill-gotten profits and return them to the Plaintiff.

How far would a disclaimer on your website assist you if faced with a C&D notice? If the disclaimer clearly states that you are in no way affiliated with the company, and no infringement on the rights of that company are being made does that help?

Attorney A: A disclaimer is not a silver bullet in almost any context. If it is clearly worded, prominent,and in line with what you are actually doing on your site, it may very well succeed in limiting damages recoverable from you in a successful lawsuit. It will not stop a lawsuit (or a C&D) however.

Can a company legally decide that you are not allowed to do a review of their product?

Attorney A: No. Criticism is a permissible use of copyrightable material under the doctrine of “Fair Use.” Likewise, you may use someone else’s trademark in a purely descriptive context. These two provisions should protect a good faith and honest product review.

Can I make figures for use with GW games legally? Or can GW stop a company from making figures that are “for use with” one of their products?

Attorney A: This question goes to the heart of most hobby-related IP issues. It should be legally possible for someone to manufacture miniatures “for use with” the Games Workshop-brand tabletop miniatures wargame “Warhammer 40,000”. It would have to be done very carefully, however. The Mattel case, cited above, is particularly instructive, as is a case about a board game expansion for use with TrivialPursuit, called Selchow & Righter v. Decipher, Inc., 598 F.Supp. 1489 (E.D. Va. 1984). In each case, the Courts carefully examined a second manufacturer’s marketing and sales of products designed to be comparable to the original (In Mattel), or “for use with” the original (In Selchow & Righter). Both courts explain the factors involved, and note that it is a very thin line between profiting off of the work of another in fair competition and advancement of ideas, artistic expression, etc., and doing so illegally. If you intend to start a line of products in this way, you would be well advised to consult with an attorney before investing a bunch of money that may well be used for legal fees.

To which extent are game rules protected by copyright?

Attorney A: A TGN reader recently posted this link to an article from the US Copyright office: http://www.copyright.gov/fls/fl108.html.

It explains that the mechanics, method, and ideas behind a game are not copyrightable (though they can be the subject of a patent). However, as the article notes, “Copyright protects only the particular manner of an author’s expression in literary, artistic, or musical form. ” So, if a game has a particularly innovative initiative mechanic, and you like that mechanic, it is not a copyright violation use the concept in your own game as long as you don’t literally copy the explanation of the mechanic from the rulebook. It is worth noting that game mechanics can be patented, but it is fairly rare, and typically reserved for novel physical game components, such as Looney Labs’ Icehouse pieces, or the Navia Dratp pieces with the compass that flips over to reveal different abilities. Patents can be easily searched through the US Patent and Trademark Office’s website: www.uspto.gov.

Fair use is a US law term. Is there an international standard for “Fair Use”?

Attorney A: I am familiar with US fair use law, but not with the laws of other nations. I know that the US is a signatory of the Berne Convention (as are dozens of other nations), and understand that some countries, such as France, rely on a system of “Droits Morale” which is different. The Berne Convention requires signatories to offer the same protections to the works of other signatories’ citizens as they would to their own. Again, you need to consult an attorney in your home jurisdiction if you have questions about local laws.