By: Tavis McClain

Introduction

On September 18, 2024, Nintendo and the Pokémon Company filed a lawsuit against Pocketpair, the developer of Palworld. For those unfamiliar with either of the games, Pokémon is an iconic franchise that has been around since 1996. The Pokémon video games are a staple of the franchise that allow players to catch, trade, and battle with the over 1,000 different Pokémon the franchise has created. Unlike Pokémon, Palworld is a new video game developed by Pocketpair that was released on January 19, 2024. Similar to Pokémon, Palworld allows players to catch and battle with creatures referred to as “pals” but also contains many other features such as the ability to use weapons and build bases. Soon after Palworld released, the Pokémon company released a statement leading many to believe a lawsuit was imminent. However, contrary to the speculation of most people, the lawsuit filed by Nintendo is for patent infringement rather than copyright infringement Further, Nintendo has filed the lawsuit in Japan rather than the United States.

 What’s a Patent and How Do They Work in Video Games?

Patents are a form of intellectual property that is meant to protect the inventions, processes, designs, and more from the general public. The federal rules that govern patents are codified in U.S.C. Title 35. Patents give inventors an incentive to invest in research that either solves issues or improves upon existing solutions. Patents accomplish this by providing exclusive rights to inventors to use their inventions. In the gaming world, developers are constantly searching for new technology, features, and designs that will make their game stand out from the rest. 

People are familiar with copyrights in video games. This can range from the code a video game is made with to the game’s presentation or character designs. On the other hand, patents in video games protect new features or designs such as mini games on loading screens or the directional pad on the Nintendo controller. Lawyers in this field are given the difficult task of filing or litigating patents that are broad enough to meaningfully protect the property of the client while also keeping the language narrow enough to prevent the patent from being denied based on prior art. In other words, patents cannot protect inventions that are already in use, they must be original.

What Claims Are Being Asserted by Pokémon?

As previously mentioned, Pokémon has sued Pocketpair in Japan which has different laws for patents than the United States. The primary differences relate to procedure. For example, the time restrictions of filing divisional claims are much more strict in Japan than the United States. A divisional claim builds off a pre-existing claim to protect ideas that strongly relate to the pre-existing claim. While there are different procedural rules for obtaining patents in each country, the idea is the same in that both countries use patents to encourage innovation. At the moment, it is unclear which specific patents Pokémon is claiming that Pocketpair has violated. Based on Japanese patents that Nintendo already has, it is reasonable to believe that their claims are related to different aspects of catching and/or riding Pokémon using player characters. Each of these patents were filed as divisional claims from pre-existent families after the release of Palworld.

What is the Likely Outcome of the Lawsuit

In all likelihood this dispute will end with a settlement between the parties. Pokémon wants Palword to be removed from the market while Pocketpair wants to keep Palworld on the market. To reconcile these differences, the companies will likely arrive at a compromise where Palworld makes some changes in their games that address the patent infringement claims that Pokémon has asserted. Pocketpair, while a large game development company in Japan, does not have the influence and resources of a company like Nintendo. As a result, Nintendo will likely have more leverage in the negotiation and is better equipped to endure a trial than Pocketpair. 

Pros and Cons 

Assuming a settlement is reached that compels Pocketpair to make changes to Palword or Nintendo wins at trial, this would allow Nintendo to protect their intellectual property that they heavily invested resources into creating. If Nintendo and other companies had no recourse to prevent their competitors from copying and profiting from their ideas, these companies would be disincentivized from researching new technology. Alternatively , the impacts of this lawsuit could have negative impacts on consumers. Many long-time Pokémon fans have complained about the franchise’s neglect to incorporate features in their game that appeal to a more mature audience. Palworld was able to capture many of these features fans had asked for such as the ability to play alongside multiple friends, build bases, and use weapons. If Palworld is removed from the market because of the lawsuit, consumers may interpret the ruling as deterring competition. 

Conclusion

The lawsuit may take years to play out, but game development companies will closely monitor the situation. The decision could reshape the landscape of game development, innovation, and the complex world of intellectual property in gaming. Stay tuned as this legal saga continues to develop!

#patents #videogames #IP #entertainment

By: Evan Stewart

It is never a good sign when a judge describes your $4.1 billion lawsuit as “25 hours of depositions and gobbledygook.” But this was how a U.S. District Judge described the plaintiff’s expert witness testimony during the In re: National Football League’s Sunday Ticket Antitrust Litigation trial, leading to a rare procedural decision that altered the trajectory of the litigation.

Background of NFL Sunday Ticket Antitrust Litigation

In 2015, Mucky Duck, a San Francisco sports bar, filed a class action lawsuit against the NFL and DirecTV, alleging that the NFL and DirecTV violated antitrust laws by conspiring with network partners to eliminate broadcasting competition and inflate the price of NFL Sunday Ticket. Mucky Duck, acting on behalf of a class of residential and commercial Sunday Ticket customers, brought two claims against the NFL. First, Lucky Duck claimed that the NFL entered into agreements with CBS and Fox to create single telecasts that limited free televised games regionally. Second, Lucky Duck alleged that the NFL and DirecTV agreed to allow the licensing of all CBS and Fox telecasts to DirectTV so they could bundle them into one all-or-nothing package, thereby eliminating the consumer’s ability to watch out-of-market games through other means.

Understanding NFL Broadcasting Rules

NFL broadcasting rules are complicated. There are NFL games broadcasted nationally, or streaming online on Thursday nights (Amazon Prime), Sunday nights (NBC/Peacock), and Monday nights (ESPN/ESPN+), which are available regardless of location. However, on Sunday afternoons, CBS and Fox split the broadcasts for the remaining games (usually between 8-13 games per Sunday) by region. For example, Seahawks games on Sunday afternoons are broadcast in the Pacific Northwest, but rarely in other U.S. regions with NFL teams.

What is NFL Sunday Ticket and Why Is It Controversial?

 Sunday Ticket is a yearly subscription that allows NFL fans to bypass regional restrictions and watch any CBS or Fox broadcast. Currently, YouTube TV is the official provider of Sunday Ticket. But from 1994 to 2002, DirecTV was the sole provider, thus implicating them in the litigation. 

NFL Sunday Ticket has been controversial among football fans for many years because it only offers one broadcast package. Sunday Ticket consumers are limited to buying a bundle of every regional broadcast, whether they want them or not. This differs significantly from the streaming services for the other major American professional sports leagues. For example, MLB.TV and NBA League Pass offer single-team and league-wide packages. There is also a significant price disparity between Sunday Ticket ($670.96), MLB.TV ($129.99/149.99), and NBA League Pass ($109.99/$159.99).

Verdict and Subsequent Appeal

On June 27, 2024, a jury ruled that the NFL and DirectTV had violated antitrust laws by restricting the availability of NFL broadcasts and allowing DirecTV to inflate the cost of Sunday Ticket. The plaintiffs were awarded $4.7 billion, but because federal antitrust rules allow for trebled damages, the damages exceeded $14.1 billion. The two key pieces of evidence that led to this decision were memos showing that CBS and Fox swayed the NFL not to charge lower prices for Sunday Ticket or to sell a team-by-team package to ESPN. 

In response to the jury’s verdict, the NFL filed a motion for judgment as a matter of law, petitioning the judge to reverse the verdict and enter a judgment in their favor. The NFL argued that the damages were nonsensical, specifically taking exception FL specifically with the damage experts presented by the plaintiffs as the basis for their argument. 

The two experts called into question by the NFL were Dr. Daniel Rascher and Dr. John Zona. Dr. Rascher’s damage model followed college football’s broadcasting model, where conferences and teams made their own broadcasting contracts. Such situations lead to increasing numbers of telecasts and decreasing costs to watch the broadcasts. Dr. Zona attempted to calculate damages using a multiple distributor model that predicted what consumers would have paid if another service other than DirecTV offered Sunday Ticket. 

The NFL argued that these two experts used flawed methodologies to calculate the damages and thus should have been barred from testifying. The NFL added that the jurors did their own unfounded math to award damages by unfairly using the list price for Sunday Ticket and using subscriber discounts as overcharges to arbitrarily come up with the $4.7 billion verdict.

The NFL’s Successful Challenge

U.S. District Court Judge Phillip Gutierrez agreed with the NFL and vacated the $4.7 billion verdict.

In his opinion, Judge Gutierrez focused his rationale for overturning the verdict on the plaintiff’s experts. He wrote that their damage models were “not the product of sound economic methodology,” and used incorrect distribution methodologies. Judge Gutierrez disagreed with Dr. Rascher because his model did not explain how out-of-market telecasts would have been available on cable through different channels without additional subscriptions, like in the college football model. Judge Gutierrez also disagreed with Dr. Zona because he made an unsupported assumption that another distributor could provide a service like Sunday Ticket and predicted consumers would pay more for that other service. 

Judge Gutierrez also wrote about his remorse for not barring the plaintiff’s witnesses earlier in the trial for not meeting the Daubert Standard. The Daubert Standard provides a systematic framework for assessing the reliability and relevance of expert witnesses. There are five factors for determining whether an expert’s methodology is valid.

1. Whether the technique or theory in question can be, and has been tested; 
2. Whether it has been subjected to publication and peer review; 
3. Its known or potential error rate; 
4. The existence and maintenance of standards controlling its operation; and 
5. Whether it has attracted widespread acceptance within a relevant scientific community.

Typically, judges assess expert witnesses before the testimony is presented to the jury, but General Electric Co. v. Joiner clarified that an appellate court may still review if a trial court abused its discretion to admit or exclude expert testimony. This was the mechanism that Judge Gutierrez used to overturn the jury verdict.

Although Judge Gutierrez did not dispute the plaintiff’s antitrust claims, he explained that the experts did not produce coherent, testable models, thereby barring them from testifying. He then finished his opinion by writing “Without the testimonies of [the two experts], no reasonable jury could have found class-wide injury or damages”, essentially retroactively barring the previously admitted expert testimony, and directing a verdict for the NFL.

The Future of In re Sunday Ticket Antitrust Litigation and Daubert Challenges

The plaintiffs immediately appealed this decision, so the future of this case will be interesting to follow. Judge Guiterrez’s opinion seemed to confirm the antitrust violations, but providing scientifically-supported damage calculations will be challenging. It will also be worth monitoring whether this case sets a precedent for more Dauert challenges being raised post-verdict, which could have serious ramifications for judicial efficiency and trial procedures. 

#WJLTA #Antitrust #NFL #SportsLaw

By: Jee Soo Han

Have you ever gone to a McDonald’s for their signature McFlurry, only to be denied because the ice cream machine was broken, yet again? Having one’s McFlurry cravings thwarted is a comical universal experience that even spurred the creation of a website that gives live updates on the working status of every McDonald’s ice cream machine in the United States. Fortunately, those who seek the delightful snack in the future may not be so disappointed, thanks to the recent exemption granted by the U.S. Copyright Office that will allow ice cream machines to be fixed in a timelier manner.

Why are the ice cream machines always broken?

In 1998, Congress enacted the Digital Millenium Copyright Act (“DMCA”) to foster the growth of digital works by providing copyright owners with legal protections against unauthorized access to their works. Section 1201 of the DMCA prohibits circumventing any access controls, such as digital locks, on any copyrighted works. This prohibition includes accessing proprietary software encoded in retail machinery. That’s right: Section 1201 prohibits bypassing the digital lock to access the software operating the ice cream machines, despite being essential to the repair process.

The ice cream machines in most McDonald’s franchises are made by Taylor Company, a commercial food service equipment manufacturer that has been supplying McDonald’s with ice cream machines since 1956. Under Section 1201, only Taylor Company and associated contractors could repair broken McDonald’s ice cream machines, as they are the copyright owners of the underlying software and, therefore, the only party legally allowed to bypass the lock on the machines. Additionally, bypassing the lock itself is an ordeal that can only be done by “authorized technicians” or those with access to a “Taylor-approved diagnostic tool, or via an extended, undocumented combination of key presses,” according to the long comment submitted by the petitioners. This means that the information needed to bypass the machines’ digital locks is neither widely distributed nor available, and repairs can only be done by those with said information. McDonald’s has 13,449 locations in the United States, and Taylor is just one company. Doing the math, it’s easy to see how there could be significant delays in fixing the ice cream machines. 

There was a brief interlude in 2019 and 2020 when a startup called Kytch created a device that would unlock the Taylor ice cream machines to find and fix software issues. Kytch devices were a hit with franchisers looking to repair ice cream machines in a more efficient manner until November 2020, when McDonald’s sent an email warning franchise owners of a “human injury” hazard when using a Kytch device. After McDonald’s urged franchise owners to stop partnering with Kytch, the startup’s business dried up almost immediately, and consumers were left with ice cream machines that were still often inoperable. 

Enter: Section 1201 exemptions

Within Section 1201, a rulemaking process grants temporary exemptions to the prohibition against circumventing access controls. This process involves: (1) a petition arguing that the proposed exemption satisfies the necessary requirements; (2) a public comments and hearings period; (3) the Copyright Office’s review and recommendation of the exemption; and (4) a final rule issued by the Librarian of Congress in the Federal Register. 

To qualify for a temporary exemption, the petitioner must show that (1) the proposed exemption relates to a work protected by copyright law; (2) use of the work does not infringe copyright; (3) users must currently be or soon to be adversely affected in their ability to make such use; and (4) the protection measure indicated in Section 1201 must be the cause of such adverse effects. The Copyright Office reviews exemption requests and issues recommendations every three years. 

Public Knowledge, a public advocacy group, and iFixit, an e-commerce repair website, petitioned the U.S. Copyright Office for a temporary exemption to Section 1201, allowing circumvention of digital locks on commercial and industrial equipment to repair their software. The petitioners detailed how many commercial and industrial equipment, such as McDonald’s ice cream machines, have complex, frequently changing access codes that only allow specific users to get past them to repair the equipment. Despite the software fix being relatively simple after getting past the digital locks, Section 1201 prevents business and franchise owners from repairing their machinery in a timely and economical manner, which costs them much-needed business. The Federal Trade Commission (FTC) and Department of Justice also filed comments supporting this petition. 

After review, on October 25, 2024, the Copyright Office granted an exemption allowing users to circumvent digital locks to repair “retail-level food preparation equipment,” and the Library of Congress issued a corresponding rule soon thereafter.

What does this mean?

This new exemption means that third parties that are not Taylor Company can bypass digital locks to access the software in McDonald’s ice cream machines to repair them. In the era of sweet treats, this is not only a win for consumers, but also for businesses who can better serve customers with working machines. More retailers seeking independent repair services can stimulate third-party repair activities, and you might be able to finally treat yourself to that Oreo McFlurry the next time you crave one.

#copyright #DMCA #McDonalds

By: Cynthia Huynh

The release of posthumous albums is nothing new; Tupac, The Notorious B.I.G., and many more had music released after their deaths. But some artists believe that their unreleased work should be kept private after their deaths. For example, Anderson .Paak expressed this position when he showed off his tattoo which says “[w]hen I’m gone, please don’t release any posthumous albums or songs with my name attached. Those were just demos and never intended to be heard by the public.” Anderson .Paak is not the only artist who shares this position, showing that an artist’s unfinished music may reflect something that they do not intend to release to the public.

Modern Posthumous Music

In recent years, many famous rappers have unexpectedly passed away at a young age due to drug use and violence, including Juice WRLD (age 21), XXXTentacion (age 20), Pop Smoke (age 20), Lil Peep (age 21), and Mac Miller (age 26). Each left behind incomplete or unreleased songs, some of which were released as enormously popular posthumous albums. Historically, posthumous music has raked in the big bucks for artists’ estates and record labels. When an artist dies, there is often a significant increase in demand for the artists’ released and yet to be released music. For example, after Pop Smoke’s death, his label released two albums and a mixtape. Both albums were number one on the Billboard 200 and the mixtape peaked at number seven. Notably, “Pop Smoke’s only non-posthumous release to reach the charts was a mixtape that peaked at 105 on Billboard, which only occurred after the artist passed away, seven months after its release.”

Gustav Ahr, known as Lil Peep, died of a fentanyl overdose in 2017, just two years after the SoundCloud rapper released his debut hit “Star Shopping.” Before his death, Lil Peep and rapper iLoveMakonnen were in the midst of recording an album together. The album was never completed but included an unfinished version of a song called “Sunlight on Your Skin.” Clips of the song were posted on YouTube, where it gained attraction from fans and other artists. After Lil Peep’s death, another rapper, XXXTentacion (X), expressed his love for the song and his desire to be included as a feature. X recorded his feature on the song, but also passed away before production was finalized. The song was then released after the death of both Lil Peep and X under the name “Falling Down.”

For some, “Falling Down” pays tribute to Lil Peep and X. But the two artists never collaborated during their lives and many Lil Peep fans condemn the song for being a product that Lil Peep never would have approved. While Lil Peep was alive, he “explicitly rejected X for his abuse of women. He spent time and money getting X’s songs removed from his Spotify playlist and wouldn’t have co-signed that song,” explained one of Lil Peep’s collaborators, Fish Narc. Even Lil Peep’s mother attempted to prevent the release of “Falling Down,” saying that Lil Peep had “sworn off any association with XXXTentacion” and had expressed how proud he was of the original song. With this, one might wonder if there are any laws that protect an artist’s work from being altered after their death. One treaty, The Berne Convention, attempts to provide such protections.

The Berne Convention

The issue of moral rights in art was addressed in 1886 through an international agreement called the Berne Convention for the Protection of Literary and Artistic Works (“Berne Convention”). The Berne Convention includes the protection of works by musicians and gives them the right to control how their works are used, by whom, and on what terms. Article 6bis(1) of the Berne Convention grants artists moral rights such as the right of integrity and allows artists “to object to any distortion or modification of a work, or other derogatory action in relation to a work, which would be prejudicial to his honor or reputation.” For example, imagine a photographer carries a religious faith that prohibits the use of tobacco. The photographer sells one of their images and its related copyright to an advertising agency which uses the image in a campaign for a cigarette company. In a country where copyright protects moral rights, the photographer may be able to protect their work from such distortion if the change offends their honor or reputation.

The United States became a party to the Berne Convention in 1989, but has not ratified the treaty, so it is non-binding until Congress statutorily enacts legislation that makes the non-self-executing Berne Convention enforceable. This could be accomplished by amending current federal statutes to expand the kinds of art that are protected like the Visual Artists Rights Act (VARA) that provides protections for visual, but not auditory, art.

The Visual Artists Rights Act

In the United States, the Visual Artists Rights Act (17 U.S.C. § 106A), protects moral rights, but only for works of visual art. Because music is audible art rather than visual art, musicians who have passed away are not afforded moral rights such as the right of integrity for their unreleased music. Should Congress wish to strengthen the moral rights framework, possible legislative changes include amendments to VARA and the Lanham Act to better protect artists’ interests and expand recourse for removal or alteration of copyright management information in section 1202 of title 17 which prevents false information about the name of an author, the name of the work, and more. But the U.S. Copyright Office stated in a report that it believes expanding VARA to encompass musical works and sound recordings contradicts the purpose of VARA as explained in the legislative history. First, musical works and sound recordings are made available to the public in mass-produced editions, not the single or limited editions that make certain works of visual art so suitable for moral rights protection. Second, . . . musical works created to accompany audio-visual works tend to be made-for-hire. Works-made-for-hire are explicitly excluded from VARA even if they are original visual art works. Third, musical works and sound recordings can benefit from contractual protections for attribution and integrity interests not available to visual artists, who typically work without such contracts.

Conclusion

It is crucial that lawmakers carefully consider and balance the tradeoffs between protecting the rights of musical artists to not have their work distorted versus overregulating an issue that is not as vulnerable to distortion as singular creations of visual art. The struggle for control over an artist’s unreleased music after their death has led to many lawsuits, which puts pressure on Congress to consider expanding copyright law to include moral rights in the United States.

#WJLTA #copyrightlaw. #moralrightsinmusic. #legalethics.