Is King, the Candy Crush Creator, Taking It a Step Too Far?

POSTED BY Nicole Cocozza

Everyone seems to be addicted to the popular game, Candy Crush Saga (“Candy Crush”). Ltd. (“King”) is the creator of the trendy game that has captured an audience of all ages since the release of the game in April of 2012. The game can be accessed on Facebook or on any smartphone by downloading the app. The goal of the game is to match three candies on a game board filled with different colored candies, which may contain some obstacles, in order to get to the next level. Over the past year, Candy Crush had over 90 million daily players, who spent over $1.5 billion last year. King’s number one selling game has led the company to attempt to protect its intellectual property rights by filing an application to register the terms “candy” and “saga” as a trademark in the United States.

The filing of the application by King to protect the words “candy” and saga” has led to an uproar in the gaming community. King wants the trademark to be approved in a broad range of categories such as: software, entertainment, clothing and accessories. The International Game Developers Association said in a blog that King’s filing was “overreaching” and stood “in the opposition to the values of openness and co-operation we support industry wide.” However, King responds through a letter that there is nothing unusual in seeking to register a commonly used word as a trademark, citing registrations by others for such words as “Time,” “Apple,” “Money,” and “Sun.[1]“ Should Candy Crush be able to receive the same protection over such simplistic words?

The purpose of a trademark is to provide protection to a recognizable sign, design, or expression in order to identify a specific product or service from others. The purpose of a trademark makes the debate over whether King is overreaching its power by filing for trademark protection not a simple problem to solve. Candy Crush has had a significant amount of success over the past two years and is still continuing to prosper. King is aware that it is not attempting to control the word “candy,” but rather is trying to prevent others from taking advantage of the company’s success.

The idea of King applying for an application to protect “candy” and “saga” does not seem unrealistic. Apple was successful when it filed a trademark for the word “Apple.” “Candy”, like “Apple,” is a successful product and is continuing to be successful in the market today. Also, future lawsuits may arise and without trademark protection, King will be at a huge risk. So, why shouldn’t Candy Crush be able to protect words like “candy” and “saga?” Well, registering the term “candy” and “saga” could lead to a monopoly in the gaming world. The purpose of an open market is to allow for businesses to be creative and innovative in developing games, competing for market share with other companies. Competition is protected across most industries and highly valued in order to encourage business growth and reasonable pricing.

Overall, the filing by King to register the term “candy” and “saga” as a U.S. trademark has led to a heated debate in the gaming world. The words “candy” and “saga” are common words used everyday and are similar to words that already have trademarks such as “Times” and “Apple.” The idea of King being successful in registering the two terms invokes fear in gaming competitors. No matter the outcome of King’s trademark attempt, Candy Crush will still remain addictive to its players.

[1] See An Open Letter On Intellectual Property (Jan. 27 2014) archived at (explaining King’s intellectual property debate in applying for an application to protect the words “candy” and “saga”).

YouTube Matures Over Long Seven-Year Litigation Against Viacom

POSTED BY Abner Pinedo

YouTube is an efficient video sharing website owned by Google. It is known as the second largest search engine in the world. It is easy for just about anyone to upload any kind of media online nowadays. People use it for, including but not limited to, streaming music, television shows, tutorials, and news. However, over the past few years YouTube has been struggling in the realm of Copyright law and has fought fiercely.

In the past and currently, YouTube, as an Online Service Provider (OSP), protects itself using the Digital Millennium Copyright Act’s (DMCA) safe harbor provisions found under 17 U.S.C. § 512, which exempts service providers from liability of infringement for a copyrighted work’s transmission. If YouTube is aware of any material on their website that violates a copyright holder’s rights it removes the video. At this point, the subscriber that originally uploaded the “infringing” material has an opportunity to counter YouTube (OSP) and can republish the material, if they so desire. This is were most lawsuits arise in the context of YouTube.

The most recent battle between YouTube and Viacom—owns MTV, Comedy Central, and Nickelodeon—deals with YouTube’s posting of Viacom’s programs on their website without their permission. Google was able to reach licensing agreements with several other entertainment companies, but were unable to reach an agreement with Viacom. Viacom originally sued YouTube back in 2007 for the alleging infringement of 79,000 unauthorized clips. Viacom’s unsuccessfully attempted to narrowly define the Online Service Provider definition in order to oust YouTube from its safe harbor protection. Recently, Viacom and Google have finally reached an undisclosed settlement agreement after a seven-year legal battle.

Over the course of the suit, YouTube has become a well-rounded copyright citizen. Viacom’s aggressive arguments of YouTube knowledgeable awareness of infringement has aided in YouTube’s new stricter take-down policies enabling them to work with more content owners. Through YouTube’s advertisement tactics and monetary opportunities they have created new opportunities for many known and unknown copyright owners. Now that the suit has finished it is only a matter of time before YouTube and Viacom agree to a partnership, increasing YouTube’s popularity and viewership success.

Netflix Refuses ISP Restrictions

POSTED BY Alex Zamenhof

Earlier this month, Netflix and Comcast announced a special arrangement that the two have entered into: namely, that Netflix streaming will be faster for people who have Comcast as their ISP. In a recent article, I found a fantastic description that breaks down exactly how video traffic on the internet works:

“Video traffic on the Internet, like the service that Netflix runs, is very sensitive to delays. As a result the Internet is built in such a way that content is distributed throughout the network in what’s known as content delivery networks, or CDNs. These services strategically place servers throughout the Internet and then they cache certain content, like streaming video, on these servers, so that when customers request a particular video it can easily and quickly be delivered to them. This reduces overall traffic on what’s known as the Internet backbone. And it results in a more efficient use of network resources. It also greatly improves performance and quality of service.”

Netflix has already built its own CDN (Content Delivery Network). The idea behind this is that Netflix would not have to pay a third party to provide its service to an ISP. However, big ISPs believe that Netflix should have to pay for the requisite increase in service necessary to stream effectively. While Netflix is trying to cut out the middle-man, the big ISPs are aiming to charge Netflix just as if it were a CDN itself. How do they achieve this? By dropping not so subtle hints that should Netflix refuse their offers of deals, then Netflix streaming may experience a slower connection on their servers.

This is tantamount to extortion in my book. Netflix is stepping on the toes of big ISPs, and they recognize this. With Comcast’s imminent merger with Time Warner, the ISP provider is slated to become the biggest provider in the US, owning some 30% of the market. Aside from antitrust issues, which are already being lobbed, it creates problems for emerging services like Netflix, Hulu, and Amazon who are all on the verge of premiering their own video streaming services, networks, or other similar things that have historically been the sole ground of the ISPs.

Netflix has made the logical statement that users who stream using Netflix’s own CDN experience significantly better viewing – a fact that is not in dispute by ISPs. This is now the critical juncture, where either Netflix tries to stand up for itself, or gets amalgamated into one or more of the existing ISPs.  Unfortunately, because Netflix is on top of its game in the streaming world, it is true that ISPs must spend more money to upgrade their servers to keep pace with Netflix – therefore, it does make sense that those ISPs want a portion of the pie in exchange for upgrading their servers. I believe that in the near future, we will either see one or two ISPs dominate, or a whole host of choices: perhaps Netflix, Amazon, Hulu, Facebook, etc. will begin to pioneer their own subscription services to compete with the big ISPs. This would put the US more in line with other nations around the world, where there are a multitude of choices, rather than just a few big names.

The Bitcoin: Regulating the Decentralized Digital Currency

POSTED BY Allison Kearns

As investors swoon over the digital currency Bitcoin, regulators deal with questions of whether or how it should be regulated.   The Bitcoin is a decentralized virtual currency that is designed to mimic the mining of a commodity.  Except mining in the online arena consists of clients competing to solve cryptographic puzzles.  Clients that reach certain metrics are awarded Bitcoins, which are added to the network and substantiated by other Bitcoing users.

Currently, Bitcoin operates in person-to-person exchanges without regulatory oversight, and it can be purchased and exchanged for traditional currency, such as Euros or US Dollars.  Advocates for the Bitcoin argue that the virtual currency could spawn economic growth in developing countries where individuals have limited access to financial services.  Transfers of Bitcoins are practically instantaneous; value does not vary among countries; and the Bitcoin offers competitively low exchange fees.

Consumer protection advocates, on the other hand, are grappling with the Internet’s new digital cash with responses ranging from fear to quasi-endorsements.   In 2011, Senator Chuck Schumer called the Bitcoin a form of money laundering.  Ben Bernanke stated that the Federal Reserve has no plans to regulate or supervise “these innovations or the entities that provide them to the market.”  More recently, officials at the Department of Justice and the Treasury Department have recognized the Bitcoin has legitimate and financially viable.

Last August, when someone allegedly used the currency to run a Ponzi scam, the Securities and Exchange Commission (the “SEC”) successfully argued that Bitcoins are money.  This ruling confirms that the Bitcoin may be deemed a viable currency, and thus subject to the regulations it has largely avoided.  The SEC, however, regulates transactions in securities and not currencies.  Therefore, the future of regulatory oversight is likely in the hands of the Commodity Futures Trading Commission (the “CFTC”) — a separate agency that governs futures contracts.

Stale Copyright Claims: Supreme Court To Resolve Whether Doctrine of Laches or Statute of Limitations Controls in Petrella v. Metro-Goldwyn-Mayer

POSTED BY Christopher Barnett

Legendary boxer Giacobbe “Jake” LaMotta has had an incredible career. Nicknamed “The Bronx Bull” and “The Raging Bull”, LaMotta is a former Middleweight Champion of the World. In 1980 his fame propelled him to the big screen, when he was portrayed by Robert De Niro in the Hollywood hit, The Raging Bull. The movie was based on a screenplay authored by Frank P. Petrella in collaboration with LaMotta. Petrella and LaMotta sold their rights to the screenplay to a company in 1976, and in 1980 United Artists began production of the film The Raging Bull. Petrella died shortly after the film debuted.

In 1991 United Artist’s ownership in the copyright expired, and the rights reverted back to Petrella’s estate, specifically Petrella’s daughter, Paula Petrella. Despite this, United Artists and Metro-Goldwyn-Mayer continued, and continue to this day, to promote and profit off of sales of the movie. Petrella repeatedly contacted the movie firms through various attorneys requesting they stop promoting and reaping all the benefits of the movie, however, she did not officially file a lawsuit until 2009.

Under the 1976 Copyright Act, the 2009 suit is well within the statute of limitations given the ongoing infringement. See 17 U.S.C. § 507(b) (2013). The United States Court of Appeals for the Ninth Circuit, however, said that her claim was barred by the doctrine of laches. The doctrine of laches gives the judge presiding over a case carte blanche in determining whether a claim is too stale, or old, to be brought.

The issue of the doctrine of laches being invoked in the face of statutorily prescribed time limitations is one that reveals a deep circuit split among at least six circuits. Some circuits flat out bar it when a claim is brought within the limitations period, and others allow it in a variety of circumstances. Although SCOTUS has the final word, Congress should be the entity that decides the tolling period for bringing infringement claims. The statutory language of The Copyright Act was chosen carefully, and to eschew it for a common law antiquated doctrine undermines the legal system.

The Supreme Court heard arguments in October; the decision is expected in Spring of 2014.

Netflix’s Use of Pirating Websites

POSTED by Stephanie Surette

Does it make sense for media giants to monitor pirating websites for their own profit? In a New York Times article, the author discusses how Netflix has admitted to reviewing piracy websites to gauge consumer interest in shows before committing to purchase them. The company reviews pirating websites to see what programs are being downloaded by consumers and whether or not there is enough interest in the show to warrant them purchasing the license. By monitoring pirating websites, is Netflix undermining laws that were put in place to protect them? These laws are designed to deter consumers from illegally downloading content and instead by using the data provided from these sites, are they legitimating consumers’ use of these sites?

For some consumers, the small monthly charge that Netflix charges is worth the convenience of having an array of TV shows and movies at their fingertips. However, even though Netflix has options to suit any taste, they don’t have everything and they don’t always have the most recently released movies available for streaming. The copyright laws in the United States are strict, and can result in a fine of $250,000 and up to five years in prison for a first offense. While there are steep penalties for offenders, it’s not enough of a deterrent for some. As described in another New York Times article, “[stopping] online piracy is like playing the world’s largest game of Whac-A-Mole.” Almost half of the adults in the United States are estimated to have engaged in some form of piracy (see page 3 of this study).

Where there’s a will, there’s a way – and there’s obviously a will for many people to avoid paying for content when it’s readily available on pirating websites. Even though Netflix is monitoring the pirating websites, they’re not just sitting idly on the sidelines. In 2012, Netflix established FLIXPAC, which is a political action committee (“PAC”) aimed to promote anti-piracy laws and their other interests. While Netflix has an interest in stopping or creating more obstacles for consumers to download content illegally, they might as well monitor it for their own uses while it’s still happening. The piracy battle isn’t close to being over and Netflix may as well get something out it while it’s still going on. If the harsh penalties for piracy haven’t stopped consumers from illegally downloading content, it’s unlikely that Netflix’s use of data from pirating websites will influence their decision regarding whether or not to download content.

Aspiring Media Creators and a Basic Contractual Pitfall

POSTED BY Micah Kesselman

One of the most important steps, and one where the footing is never as solid as would be hoped, a content creator makes along the journey to putting a product to market is signing with a publisher. Be it game development, music, video, or any other sort of media product, it has to be published. What binds the creator and the publisher will of course be the contract the two entities create—be it verbal, written, or some mixture of the two. Unfortunately, this is also where many content creators, especially independent creators, tend to be weakest.

All too often, creators’ instincts are to look at a contract as a framework outlining fairly intuitive common sense scenarios. One side creates content and the other side (for a split of the pie) will bring it to the attention of the relevant consumers; however, the role of contract as risk allocator is, more often than not, overlooked by content creators—which publishers are keen to take advantage of (as you would expect any self-interested actor to do).

Howard Tsao, CEO and Founder of game developer Muse Game, posted an overview of the contracting issues his company faced when originally signing with a publisher. In his conclusion, he writes that one of “the lessons that we learned through it all [is]: Have an acceptable exit strategy if you are unable to do what you promised to do or if you are not getting what you were asking for.” Another way of saying this is, have a way of folding your hand when it becomes necessary. It is easy to become so infatuated with your own ideas and ambitions that the very thought of them not coming to light as planned is painful to even consider. But it does need to be considered. Contracts are more than simply memorializing an agreement—they are mapping out the geography of risk, benefit, and probability that is about to be traversed and demand a practical and impartial eye.

Even big players fall victim to underestimating the importance of every contractual clause. In a recent (as of the time of this writing) unpublished opinion by the 4th Circuit Court of Appeals, the court held in favor of defendants Epic Games in a suit filed by Silicon Knights claiming, among many other things, fraud.[1] A standard and relatively boilerplate warranty disclaimer proved to be fairly robust protection against a claim of fraud. Had Silicon Knights more thoroughly considered the prospect of Epic Games’ product not being capable of Silicon Knights’ ambitions and that Epic Games might not be inherently interested in remedying the issues of a single, possibly one-off, client, closer attention may have been paid to the disclaimers in the contract.[2]

At the end of the day, in an environment where it is becoming increasingly common to quickly glance over a contract before agreeing to it, it behooves small and upcoming content creators to pay particularly close attention to agreements they enter into. Of course, new situations may arise, but more importantly the central role of contracts in allocating risk in clear and favorable ways merits a central focus when artists, developers, or other content creators sit down and take what is hopefully more than a cursory glance at publishing (or any other, for that matter) contracts they are considering entering into.

[1] Silicon Knights, Inc. v. Epic Games, Inc., No. 12-2489 (4th Cir. 2014).

[2] To be fair, fraud was one of a very long list of allegations of the plaintiffs in this case. Furthermore, the case itself was fairly controversial. Epic Games’ infringement counterclaims required considering how much modification of the licensed engine is allowed and how those modified components may be used—a discussion worth its own entry.

Bad Breakups: First Refusal Provisions in Endorsement Contracts

POSTED BY Meghan Bonk

No one can sell a brand quite like a superstar athlete. Most of these athletes aren’t born superstars, however, and many of them partake in some lower-tier endorsement deals before they hit the peak and sign with companies like Nike or Under Armour. Unfortunately, when athletes sign enter into endorsement contracts, the fine print and pesky provisions often get overlooked. One provision that makes its way into most high level endorsement deals is a first refusal provision which gives a brand the upper hand over its athlete when that athlete’s contract expires. The provision essentially allows for the brand whose contract has just expired to match any terms offered by a third party involving the endorsement of products, so long as the products are substantially similar in nature. Issues arise when the athletes supposedly breaches the contract with its original sponsor to sign with a bigger company who offers an endorsement deal that makes the athlete’s eyes turn into dollar signs. The smaller company sues, but it seems unfair to sue when it couldn’t match the new contract in the first place.

Popular athletic brand Oakley launched a lawsuit against golfer, Rory McIlroy as well as his new sponsor, Nike in the spring of 2013. A recent Forbes article reports that although McIlroy’s contract with Oakley expired in December 2012, the company claims to have had a first refusal provision in which “granted Oakley the right, but not the obligation, to match any terms offered to McIlroy by a third party regarding the endorsement of products the same as or substantially similar to the products in his agreement with Oakley.” To sum it up, December 2012 came around the corner, Oakley’s contract expired, and Nike clearly made McIlroy an offer he couldn’t refuse. Nike’s contract with McIlroy is rumored to be worth between $200-250 million, and with McIlroy rising to the top of the world’s golf rankings, most sports fanatics wouldn’t be shocked by that number.

As this case goes to trial, several issues are being brought up, and important facts are coming out of the wood work. It seems that Nike may be banking on e-mail conversations between a marketing manager at Oakley named Pat McIlvian and McIlroy’s agent, Conor Ridge to make its case. Nike will mostly likely argue that although Oakley did, in fact, have a first refusal provision in its contract with McIlroy, Oakley waived its right when Pat McIlvian e-mailed Conor Ridge stating, “Understood. We are out of the mix. No contract for 2013. Pat Mac.” Should Oakley win at trial, it not only seeks an injunction that would prevent McIlroy from keeping his contract with Nike, but it also alleges that it has suffered  irreparable damages which include $300,000 spent on a photo shoot that would have been endorsed by McIlroy in 2013. The question that looms throughout these proceedings is: Could Oakley even match Nike’s $200-250 million contract with McIlroy? If European golf publications are correct, then Oakley was planning on offering McIlroy around $60 million to continue his contract through 2013. There’s a big difference between $250 million and $60 million, and the Oakley contract’s provision required Oakley to match any terms offered by a third party.

Even though Pat McIlvian’s emails to Rory McIlroy’s agent seem to seal the deal in Nike’s case, there’s always the chance that the judge does find that there was a breach of contract and that Oakley is entitled to damages. Specific performance is not an option in this case because forcing McIlroy to participate in a contract with Oakley would look like involuntary servitude, and McIlroy has a thirteenth amendment right which prohibits slavery. Oakley seeks monetary damages; however, the amount has not been released yet. It seems as though Oakley is the quintessential, teenage ex-girlfriend in this case.  It doesn’t want McIlroy (more like it can’t afford McIlroy), but it definitely doesn’t want the more successful, good looking, and popular Nike to have him. If the judge rules in Oakley’s favor in this case and does grant monetary damages, what kind of policy is it enforcing if Oakley couldn’t afford to match Nike’s deal in the first place? It will create a trend of brands that sponsor up-and-coming athletes and continue to make first refusal provisions a primary section of their contracts. Then, when their contracts expire, they’ll sue the larger, more powerful companies like Nike for violating this provision, when in fact, they couldn’t match the new contract’s value in the first place. So, companies like Oakley will continue to play the victim and receive monetary damages when their athletes find a better deal, and companies like Nike will be punished for a breach that didn’t really happen on top of funding a larger-than-life contract with an athlete that better be worth their weight in gold.