SURPRISE! A Loot Box Workshop at the FTC!

On August 7, 2019, the Federal Trade Commission hosted a workshop in Washington, DC on video game loot boxes and related microtransactions. The FTC is a federal organization created by a congressional act that gives the agency two mandates: investigate and dismantle anti-competitive trust behaviors among companies in certain industries (a mandate shared with the department of justice, depending on the industry) and investigate and sanction unfair and deceptive trade practices. Of all of the federal agencies and organizations, the FTC is the most likely to take an interest in the video game industry’s practice of loot boxes and related transactions.

A week after the workshop, the FTC published a 12-page “Staff Perspective” of Key Takeaways from the day of learning about loot boxes (pages 7-12 are footnotes). I will provide a breakdown of that document and include some of my own commentary and perspective.

I) Background and Introduction to Lootboxes and Microtransactions

The workshop began by defining some key terms and concepts. I have to love that a government publication officially defines “skins”, “emotes”, and “pay-to-win.” I can’t wait to see what agencies and courts get to define next.

I am starting to take some umbrage with the use of the term “microstransaction” in a lot of these contexts, for two reasons. First, many of the transactions are not “micro.” It is increasingly common to see in-game stores offering transactions north of $5 or $10, and price points of $20 and $50 are becoming common. Rift offered a $100 loot box. These are not small, minor, or micro transactions. These are just ordinary consumer transactions. My second concern with the term “microtransaction” is that it seems to imply a predatory tactic by the game company: the goal of “microtransactions” is to keep each individual transaction so small and insignificant that consumers don’t give it any consideration and don’t remember it afterward. The goal seems to be to bleed consumers for hundreds or thousands of dollars in increments of 50-90 cents. In the mid-20^th century, the quaint, charming, folksy folk of middle-America called this strategy “nickel-and-diming.” By emphasizing the “micro” of the transaction (accurately or inaccurately), the goal is to hide the impact of the transaction altogether—and by hiding each individual transaction, the aggregate value of all transactions can be hidden. Some companies refer to “recurrent player spending” instead of “microtransactions”, which is more accurate but that term may also fail to spell out some of the concerns.

The FTC also notes what bothers us all: games used to be one-time, static purchases, but now games increasingly function as a service. (This is increasingly true of most software, and will probably get its own post soon.) This change has encouraged loot box mechanics both as a solution (an ongoing service needs an ongoing revenue stream to sustain it), and as a result (updating loot box rewards is only possible if the game has ongoing support).

II) What are the Key Concerns About Loot Boxes?

The FTC paper lists six concerns related to loot boxes, but I disagree with this formatting choice. There is one concern, and the other five concerns are subcategories of that one concern. The concern is that game companies will use loot box mechanics to confuse or manipulate consumers. They may do this by pressuring players to spend, failing to disclose odds, failing to disclose content creator agreements, using in-game currency to obscure actual costs, and generally conditioning children to normalize and accept all of these manipulative tactics.

The crucial note here is that all of the concerns related to loot boxes have to do with some type of dishonest implementation of them. The FTC is not even exploring the possibility that loot boxes are per se illegal or problematic. The current thinking of the FTC seems to accept that an element of an entertainment product may have uncertainty available for infinitely recurring payments. If a company builds an infinite hole into which consumers may pour all money forever, the FTC has no problem with that. The FTC only wants to make sure that the black hole is properly labeled and that consumers adequately understand the nature and function of the hole.

One of the recurring concerns around loot boxes is that the details as to the nature and functionality are opaque. This is the kind of concern ripe for FTC investigation and sanction, as it falls within Section 5 “unfair or deceptive trade practices.”

III) What does Emerging Research Tell us About Loot Boxes?

This section was a little bit light, and I think that’s a major reason that the FTC is not taking any action at this time. This paper presents four works of research, one of which is hypothetical mathematical modeling. One study does establish a correlation between problem gambling and loot box purchasing behavior among subjects, but does not establish causation.

Another researcher presented findings from working with parents and children regarding digital spending. The researcher indicated that communication about this subject is poor. The paper does not go on to explain this in greater detail, but I personally suspect that parents are generally not sufficiently informed about recent trends in gaming and technology to be able to provide guidance to children regarding the subject. As the ESRB noted later in the workshop, “The organization’s research indicated that the in-game purchase disclosure was important to parents, but a significant majority of parents did not know what a loot box was.”

If parents don’t know what a loot box is, how are they supposed to talk to their kids about them?  In years gone by, children might have been teased and bullied for wearing unfashionable clothing brands. Parents had ways to talk to their children about that because they understood what clothing was and what brands were. But now? How does a parent console a sobbing child who is bullied for not having the latest skin or emote unlocked—especially when that parent doesn’t have a clue what Fortnite is?

IV) What Should be Done to Address Concerns About Loot Boxes?

The FTC noted several measures that are already being rolled out as ESRB initiatives. The ESRB has launched educational tools and information to inform consumers about loot boxes and in-game purchase mechanics. The organization is also going to start including loot-box notes as part of its rating system: “in April 2020, the ESRB announced the introduction of a new interactive element, specifying that a game contains In-Game Purchases (Includes Random Items).”

Other self-regulatory measures were also proposed at the workshop, along with mixed views on government regulation. These included: third-party, independent verification of loot box odds displaying a player’s cumulative in-game spending in real world money, making items offered in loot boxes also available via direct purchase,  ; In general, the panel advocated for greater industry transparency and communication surrounding loot boxes mechanics.

 The workshop underscored the need to continue to develop research about the effects and implementation of loot box mechanics. Consumer advocacy and action, particularly in the form of educating consumers and in the form of publicizing predatory, unsavory, deceptive, or unfair practices of game companies and holding those companies accountable. The FTC recorded that “in certain instances, companies have discontinued loot box features based on negative consumer response” with a footnote citing news articles about Star Wars Battlefront II, Rocket League, Call of Duty, and Destiny 2.

V) Conclusion

Jim Sterling has railed against loot boxes for years because of the predatory behavior they exemplify and the harm done to consumers as a result of the obfuscation and appeal to addictive and impulsive behaviors. He once said “They’re coming for you” because every company wants to “turn players into payers.” I think he’s right that most of the biggest developers and publishers will look for more ways to include loot boxes whenever and wherever possible. However, I think there are still companies that make good games that either don’t need loot boxes or don’t need to push the microtransaction business model. Loot boxes may come to earn a place along snake oil salesmen of yesteryear. Unless they become carefully regulated, loot boxes will get put on a list of known red flags that will push customers away from a game that features them.

The community wishlist on GoG has “Don’t Get Bought by EA” has over 22,000 votes. “Remain DRM-free” has exactly 59,000 votes as of Aug 30, 2020. There is a consumer base large enough to support games that don’t use loot boxes.

For the FTC, I think more robust research will guide policy decisions. Extreme anecdotes may also force the FTC’s hand—like stories about consumers who unwittingly spend tens of thousands of dollars in “microtransactions.” The FTC has already enforced rulings at the publisher platform level, against Apple. There’s nothing in the FTC’s history or structure that would prevent it from going after specific developers and publishers. Workshops like this, and guideline publications that grow out of them, are warnings for the industry. The FTC is less forgiving and less lenient when it sanctions companies who should have known better. The FTC is sending a message to the games industry: when we fine you, we will not accept the defense of “we didn’t know any better.”

Is Trademark Law as Broken as Copyright Law?

Why is copyright law so clearly broken and so riddled with well-known problems, but trademark law is just fine?

It’s well-established that there are problems with copyright law. In addition to the term length being perpetually extended, there are significant gaps between people’s expectations of the law and the actual details of the law. In general, copyright law is not at all suited to a world where everyone has a design studio and publication/distribution network in their pockets. It seems like everyone knows it: there are hundreds, if not thousands, of books, articles, YouTube videos, blog posts, think pieces, and academic papers on this issue. Court cases from California to New York have addressed some of the challenges, many of them explicitly noting the impact of technology on copyright law. Congress has been trying to update the law for several years with the CASE Act, which remains controversial after being passed by the House.

Why isn’t trademark law broken? Why is all of this controversy around copyright, and copyright alone?

Trademark law is certain distinct from copyright, but if the reasons for copyright’s problems are broad, sweeping transformations in society, how has trademark law remained untroubled?

I. Trademark’s Supreme Court Updates

Trademark law is just as affected by changes in society, but it’s been easier to adapt. In the last 10 years, trademark law has seen significant changes. The USPTO has a great deal of control over the trademark application process, and how to fit trademark law into modern society. Additionally, the Supreme Court has made multiple rulings that interpret the main statute of trademark law, the Lanham Act. Trademark law now allows for disparaging and obscene marks. The Supreme Court has made fewer significant rulings on copyright in the last 20 years, though <a href="http://&lt;!– wp:paragraph –> <p>Trademark law is just as affected by changes in society, but it’s been easier to adapt. In the last 10 years, trademark law has seen significant changes. The USPTO has a great deal of control over the trademark application process, and how to fit trademark law into modern society. Additionally, the Supreme Court has made multiple rulings that interpret the main statute of trademark law, the Lanham Act. Trademark law now allows for <a href="https://en.wikipedia.org/wiki/Matal_v._Tam">disparaging </a>and <a href="https://en.wikipedia.org/wiki/Iancu_v._Brunetti">obscene </a>marks. The Supreme Court has made fewer significant rulings on copyright in the last 20 years, though <a href="https://en.wikipedia.org/wiki/Star_Athletica,_LLC_v._Varsity_Brands,_Inc.">they haven’t ignored it completely</a>. The Library of Congress also has less authority (and, I’m just going to guess: a lot less budget) when it comes to the details of copyright registration and maintenance. (Although they are in the process of updating their search functionality! I saw a demonstration of that last month, while the Trademark Electronic Search System is… well, it’s been in need of a major design and function overhaul for over 10 years now.)</p> they haven’t ignored it completely. The Library of Congress also has less authority (and, I’m just going to guess: a lot less budget) when it comes to the details of copyright registration and maintenance. (Although they are in the process of updating their search functionality! I saw a demonstration of that last month, while the Trademark Electronic Search System is… well, it’s been in need of a major design and function overhaul for over 10 years now.)

II. Trademark’s Non-Obvious Trouble

The kinds of problems we see in copyright law are harder to recognize in trademark law. The most common problems with copyright law surface when Twitch streamers or YouTube video producers publish content that runs into (or may run into) an infringement claim. The problem is that many people in society feel that these infringement claims conflict with their basic intuitions about the broad concepts copyright should codify. But trademark law has had these problems, too. But trademark law doesn’t force Twitch streamers to sing while playing a video game, and there isn’t a takedown provision for YouTube videos on the basis of trademark infringement. So fewer people are exposed to the trouble caused by trademark law.

III. Technological Advances and Trademarks

I wrote about just such a trademark law case last year: a small coffee shop “Cat and Cloud” wanted to include the word “cat” in their name and sell store merchandise, and the maker of construction and earth-moving machinery, CATTERPILLAR, filed a notice of opposition to the trademark. There are a few causes for this result, but one of the most intuitively distressing things about it is that it goes beyond the function of trademark law. Trademark law is meant to prevent consumer confusion (among a few other things), and it is obvious at a mere glance that no one is going to confuse the “Cat and Cloud” coffee shop with the machinery manufacturer “CATTERPILLAR.” For non-attorneys looking at this case, that seems like that should be the end of it—just like when non-attorneys look at a copyright infringement claim that feels like it should definitely be fair use or something like that, and that just should be the end of it.

One effect of our society’s transformation has on trademark law is the ability of consumers to do research quickly, easily, and effectively. For copyright law, the ubiquity of cell phones has turned everyone* into an entire multi-media production company. For trademark law, the ubiquity of cell phones has given all* consumers the ability to do much more sophisticated research than was previously possible, including the ability to do that research while standing right in front of two product on a store shelf. That access to information significantly changes the way we think about the potential for confusion.

IV. Conclusion: Trademark Law Isn’t Immune to Societal Shifts

Trademark law is definitely affected by the changes in society, and especially by the possibilities opened up by internet technology and mobile devices. It’s harder for most people to see because it doesn’t affect entertainment on the surface the way that copyright concerns change the entertainment experience. Also, the Supreme Court has been more willing to take cases dealing with trademark law and that has helped mitigate some of the gaps between the law and the expectations and intuitions of society.

*there is a point worth mentioning: not everyone in America has a cell phone. They are very affordable for many people, but they are not free, and many Americans cannot afford one. They also don’t always work. Although they are sufficiently distributed to impact society, policies should not be made based on the assumption that literally every single person always has a working cell phone.

Section 230 Is All The Rage Right Now, But Rage Will Make It Irrelevant

We never find out why the video game Rage is called “Rage.” Sure, it’s a violent game, but no more so than most first-person shooter games (and less so than many other games). The sequel, Rage 2, does feature a story that involves revenge to some extent, but the concept of “rage” is not explored or even brought up. Maybe rage is best conveyed when it isn’t explored, and when no effort is made to understand it. Maybe rage differs from anger in its lack of reason or sense. Maybe the explanation is that rage has no explanation—it is just unreasonable anger expressed as violence, and its very nature precludes exploration or understanding.

Unreasonable anger with no explanation or potential for comprehension is an exaggeratedly nihilistic view of the internet, but not an entirely inaccurate one. Rage 2 seems like an obvious choice for the companion game in my presentation of why I think that Section 230 will have diminished importance in shaping the socially interactive portions of the internet. Special thanks to Kate Klonick and Yale ISP for their week-long series on Section 230; I will make several references to that series here.

 

I. What is Section 230 and How Does it Affect the Internet?

Section 230 makes it a less risky decision to develop a platform like Twitter or Facebook, or any kind of interactive social media site, from YouTube to WordPress, InstaGram, or TikTok. Without Section 230, there would be a much more significant concern over lawsuits caused by the speech of users. The easiest way to deal with that would be to deny users the ability to publish speech on the site, which obliterates the entire purpose of a social media platform. Section 230 has other implications and affects the internet in some other ways, but I am focusing on this specific impact of this law.

Those who believe that Section 230 codifies “the 26 words which made the internet” apparently believe that the proliferation of User-Generated Content, Web2.0, and social media came about only because of this law. I do not know why these scholars ignore the entire two-decade history of a robust, emerging internet, which had bulletin boards, instant messaging, gaming, and the general framework and layout of the internet we know today. It may be that Section 230 helped to accelerate the rate of growth of the internet (though I think it’s much more persuasive to claim that decreased costs in devices and connections did a lot more to expand the internet). Maybe Section 230 increased the upper limit on the size of some sites and services, but it is clear that the internet was already on its trajectory. I think the role of Section 230 is massively over-estimated by its proponents and guardians. This leads them to fear that any reformation of Section 230 is an attack on the internet itself.

This is not just a snide, petty aside on my part. My assertion that the role of Section 230 is massively over-estimated is helpful to my prediction that it will become irrelevant. In some ways, I may be claiming that Section 230 was not actually so relevant in the first place. I broadly agree with most Section 230 advocates that reforming that law is unlikely to produce helpful results, usually because the problem at issue is not solved by a change to Section 230. However, I disagree about the importance of that law: if the reason changing Section 230 is that it’s the wrong law to change, it might be that Section 230 doesn’t really have that much of an impact.

 

II. Where is Rage Taking the Internet?

Rage 2 is a science-fiction, first-person shooter game set in a future, post-apocalyptic Earth. Around the year 2029, an asteroid collided with Earth, but humanity preserved itself by burying thousands of people in cryogenic chambers. In the game, you explore a world filled with tiny communities, bandit encampments, strange (and dangerous) creatures, and the miles of desolate Wasteland between everything.

In Rage 2, civilization is spread out into small, independent towns with limited communication between one another. Others gather in even smaller camps in the Wasteland. Some people travel between locations, but many stay put wherever they are. I imagine this is an apt description for the internet I expect to see in coming years.

The internet will become increasingly fragmented: smaller, more insular communities will form as the very large mega-communities crumble. Rage begets rage. We’re already seeing it, and it’s not surprising. The use of blocking and muting features is the precursor to essentially this result. People might say they want challenging, thought-provoking discourse that forces them to re-examine their beliefs, etc. but, based on my observations of behavior on large social media sites, I believe that is bunk.

A significant portion, perhaps the majority, wants to hear things which comfortably reinforce their existing beliefs. People prefer echo chambers. Why wouldn’t they? Echo chambers are comfortable and reassuring, and demand nothing except passive, agreeable silence. (Though there is an important exception, which is that echo chambers cultivate extremism like a petri dish cultivates bacteria, precisely because there is no disagreement.) It’s easy to under-estimate how unhappy people are with their social media experience because they’re addicted to it.

It will be more and more common for communities to have closed-door, invite only policies. Discord is leading the way in this model, and in typical internet progress fashion, is doing so accidentally.* The formation of strictly moderated community was also taking root in other platforms, to the extent that the architecture allows. Megaplatforms will become the broad hosting locations for these smaller communities, which will enforce their own content moderation policies, which will be much narrower and much more intense than the policies of the megacommunities and platforms of the previous internet.

{*It’s always worth remembering how much of the internet is not doing what it was designed to do. Most of the biggest sites and services were not designed or created to be what they have become, or to do what people use them to do.}

The role of content moderators, and the attitudes towards content moderation, will change from our current cultural expectations. There will be no effort towards any kind of neutral enforcement—indeed, people will not want that in their insular bubbles. There will be an expectation that content moderators will specifically forbid certain viewpoints and expressions, and that algorithms will promote other viewpoints disproportionately. Users will openly ask for that. This also solves the currently unsolvable problem of content moderation policies.  In the June 24 panel, David Wilner said all the answers for content moderation are bad. The panel agreed this was an unsolvable problem. But they are wrong (because of the way they define “solve”)—there are several solutions, and this is the one that is most likely to emerge. Much of the current hubbub about Section 230 relates to questions about the fairness of content moderation, particularly regarding whether certain political viewpoints are being suppressed in some way. The fractured internet solves this problem—it is designed to.

 

III. What Does Section 230 Mean to an Internet Fractured by Rage?

In a fragmented internet, Section 230 has a very narrow and specific role. Section 230 does not protect those who express unpopular opinions (other laws do that); it protects companies from lawsuits by those angered by someone expressing an unpopular opinion. The primary function of Section 230 will be to dismiss lawsuits of defamation and liable when one community says hurtful things about members of other communities. This functionality will encourage small communities to emerge and express their views about other people and groups. So, in its own small way, Section 230 will play a part in continuing to shepherd along the growth of the internet, this time in a different direction.

The purpose of Section 230 was to allow platforms to avoid liability for the speech of users of those platforms. But removing Section 230 doesn’t automatically make platforms liable for the speech of users: each claim of liability still needs to be proven. Several panellists noted this, none more so directly than Blake Reid on June 23.  So, even if Section 230 is undermined or destroyed, platforms do not automatically become liable for the speech of their users—the platforms are just at a higher risk for being found liable. The removal of this shield would encourage companies to take more aggressive content moderation policies, and it would also be a lot easier to implement these policies for a smaller community than for a larger one. Removing Section 230 protections might therefore further encourage smaller communities, but it would only accelerate a process that is already underway.

 

IV. Where the Internet is Going, It Will Go Regardless of Section 230.

Section 230 is a US law, and the internet is a world-wide web. OK, that’s a sentence that kicks a lot of dirt in the face of technological technicalities for the sake of punchy rhetoric. And there are some nuances and complexities to the role that a US law can play when an international company is based in the US; the internet has not obliterated national borders the way that some hoped or feared it might back in the mid 1990’s. But the core point here was observed by Rebecca Tushnet on June 23, when she noted that other nations don’t have Section 230 and users in those nations face a very similar internet to the internet that US users see.

On the subject of US law, it’s worth remembering that the First Amendment of the US Constitution is the real source of freedom of speech and expression in the US, not Section 230. One of the further reasons I predict the irrelevance of Section 230 is that the First Amendment is better positioned to protect freedom of speech. Section 230 has a much smaller, more specific role in addressing third party or intermediary liability claims.

The internet is heading towards a different structure of communities and culture. Section 230, or its absence, will neither prevent nor cause this. The internet is just another human tool, a cultural artifact, and it can only be subject to the whims of culture. As people change their expectations and desires for the experience they want from the internet, the internet will transform in response.

People who read this will probably disagree, but they won’t engage in a confrontational discussion about it. Experience on the internet has taught them that such a conversation is unlikely to be productive, interesting, or even respectful. Any interaction with it at all is more likely to be consigned to showing a friend and sharing a laugh about the foolishness and folly of the author. All of this is further evidence to support my prediction that the internet will move towards insular bubbles of communities.

 

In Rage 2, you play a character that travels between the small communities and explores the Wasteland. The game calls you a Ranger, and in typical Hero Trope fashion, one of the many things that sets you apart from those you encounter is this role of travelling between communities. I have to wonder, in an internet of insular bubbles, echo chambers, and closed and locked doors, if there will be Rangers. I wonder what role a person like that might play in a digital wasteland fractured by rage.

A Term We’re Going To Hear: Booking Trademark

The Supreme Court Case of USPTO v. Booking.com is just about everything that is exciting about trademark law. While copyright law has paired with telecommunications and patent law to be at the forefront of the interface of how law evolves to meet society’s needs as technology advances, this case reminds us that trademark law is never too far away from its siblings.

It is almost perfect that this case is the first case that is heard by teleconference. The reason for the change in structure is entirely unrelated to the case, but few cases in the history of the Supreme Court (on the subject of telecommunications or copyright law) could have been more fitting for the occasion. This is a case about interpreting a 19^th century precedent and a 20^th century statute when evaluating domain name of an e-commerce website as a candidate for trademark registration.

BOOKING.COM: PROBABLY A WEBSITE WHERE ONE DOES BOOKING.

The core question of the case is whether “Booking.com” is eligible for trademark registration. The USPTO rejected the application to register the trademark on the grounds that it is generic. In order to be registered as a trademark, the USPTO must conclude that a trademark is more than merely descriptive of a good or service. The USPTO found that “Booking.com” was a generic term for a website that one might go to in order to “book” reservations; the trademark merely described exactly what the service was, and therefore the application was rejected. Booking.com fought this, and the case made its way to the Supreme Court.

Now the trademark world waits to see if there will be a new ruling regarding the use of top-level domain indicators in trademarks.

The USPTO relies on the 1888 case about rubber manufacturer Goodyear, and the effort of that company to prevent other companies from using “Rubber Manufacturer” in their names. Booking.com argues that this case is superceded by a more recent Federal statute, and relies on the interpretation of the Lanham Act test for determining generic marks, the primary significance test, found in section 1064(3), according to Prof. John Duffy.

TRADEMARK TURMOIL

In a year in which most of the world has been turned upside down, the world of US trademark law has also been flipped by a few rulings. The 9^th Circuit has issued a ruling in VIP Products LLC v Jack Daniel’s Properties Inc.  on tarnishment that, some argue, departs from previous understandings about that doctrine. Only a few months later, the same Circuit Court handed down a ruling in San Diego Comic Con v Dan Farr Productions that raised concerns   

The ruling of the Court of Appeals for the Federal Circuit in In re Forney Industries is already seen as a direct rejection of a 1995 Supreme Court ruling (Qualitex Co. v Jacobson Products Co.) on the guidance for registration of color marks. Almost exactly one year ago, in Iancu v Brunetti, the Supreme Court overruled the statutory rule that offensive or immoral marks were not eligible for registration. Only two years before that, in the 2017 case Matal v Tam, the Supreme Court ruled that disparaging marks could be eligible for registration. Now, the Supreme Court has another opportunity to rule on trademark law. It is tempting to look to the previous two decisions to predict the ruling on Booking.com, but those opinions are probably not much help.

The Supreme Court turned to the treasured First Amendment when evaluating the last two trademark law cases. The issues in those cases emerged out of questions about trademark registrations, but the Supreme Court saw them as issues of free speech and constitutional law. This time, the Bill of Rights will provide no guidance on a narrow point of substantive trademark law: is the mark “Booking.com” generic or not? Surely, the Court must answer “Yes” or “No” and clearly establish a rule regarding the status of “.com” and whether two generic components can make a non-generic trademark! Well, the Supreme Court may find a way to avoid addressing the issue quite so directly.

Many attorneys are likely to see this as a case of trademark law. However, the Supreme Court may see it as a question of whether a 19^th century US Supreme Court case ought to hold precedent over a 20^th century Federal statute: Booking.com has argued that the mark should be evaluated according to the Lanham Act, while the USPTO maintains that the 1888 Supreme Court ruling in Goodyear Rubber Co. v. Goodyear’s Rubber Mfg. Co. justifies rejection of the application.

It is important for the Supreme Court to address questions of administrative law and set a clear general course for the interpretation of laws in the United States. However, the Supreme Court has shown that it can address substantive questions of material fact in questions of intellectual property protections issued by the USPTO:  six years ago, in Alice v CLS Bank, the Court explicitly commented on the technology and substantive concepts at issue, and held that merely using a computer as a tool to carry out the concept of escrow could not be protected by patent. It would be consistent with that opinion to attend to the substantive question of whether “Booking.com” is a generic mark, rather than ignoring the issue in favor of broadly interpreting the function of Common Law in the United States.

RULING ON DOTCOM-GENERICISM IN A DOTCOM WORLD

Although it is an accident forced by the conditions of a national emergency and a global pandemic, the fact that the Supreme Court held argument by teleconference is relevant to this case. For me, it is actually dispositive insofar as it demonstrates in the most unignorable fashion that digital technology is ubiquitous and inescapable in US law and commerce. If the true heart of this case is the assertion that the suffix “.com” adds something meaningful and not generic to a mark, that assertion drops dead at the moment a court is held in a digital environment to evaluate that assertion. The term “.com” is perhaps the most general, generic indication of an online presence. It is the digital equivalent of “Street” or “Avenue” and does nothing more than indicate address. If the addition of “.com” is nothing more than generic, and if “Booking” is also generic, the Court could only rule in favor of Booking.com with the claim that two generic components create more than a generic trademark.

IMPLICATIONS FOR A RULING IN FAVOR OF BOOKING.COM

Perhaps more important than whether the Supreme Court upholds or remands is exactly how the opinion is worded. Will the Court explicitly rule on the use of “.com” or other TLD appendages? Will the Court promulgate a broad rule about generic trademarks? I think it will not be enough for the Court to merely declare that the Lanham Act overrules the 1888 Goodyear case; I do not think the “Booking.com” mark is eligible for registration under either the Goodyear case or the Lanham Act. I do not think “Booking.com” can pass the “primary significance test.” Moreover, section 1064(3) is specifically referring to cancellation of marks already registered that become generic after registration. If “Booking.com” is a generic mark, it isn’t because the company has so thoroughly dominated the market that all consumers only identify that service with that name—it’s because consumers have a vague idea of what the word “booking” usually means, and they also have an idea of what “.com” entails.

I am not sure why the mark could not be placed on the supplemental register and then Booking.com can demonstrate acquired distinctiveness; as I understand it, the litigation has been replete with consumer surveys that should be sufficient to demonstrate acquired distinctiveness.

A viewer of a discussion on this subject raised a concern about the possible failure of Booking.com to maintain its domain name. The disconnect between owning the domain and owning the mark presents further complications to the business decision. Even if Booking.com wins, it would be prescient to pause and consider carefully whether a company should register its domain name as a trademark, even if the Supreme Court ruling would appear to allow it.

Slaying Monsters of Copyright Before They Climb The Spire of Creation

Slay the Spire and Monster Slayers are both roguelike deck-building video games in which players attempt to complete a series of dungeons comprised of distinct categories of encounters, including combat, merchants, occult rituals, and campfires. Both games allow the player to equip a few items to give enduring boosts to core stats. Both games allow the player to make constrained choices about which encounter to pursue next. In both games, combat is presented in a 2D, side-view with a hand of playable cards held in the foreground; playing cards prompts simple combat animation movements depending on which kind of card is played.

Slay the Spire released on Early Access in “late 2017,” with a full release in January 2019. Monster Slayers was initially released in March 2017.

I’ve spared a lot of other details of the overlap between these games. Is this copying? Plagiarism? An infringement of intellectual property?

Probably not, no—even though it’s genuinely difficult to describe these games in a way that makes them sound very distinct from one another.

So, how similar can two video games be before there is a problem?

 

I. The Purpose and Limits of Intellectual Property (in a paragraph or two)

 

The concept of genres, generally, presents challenges for intellectual property protection. In both the arts and the sciences, most people understand and accept that there are concepts, toolsets, and constraints that tend to push creative works towards certain points in the same way that the center of a galaxy holds the planets, stars, and cosmic dust in orbit. Debate rages around some points of overlap, some outliers, some fringe data points– but people nevertheless use terms for genres and categories as though these terms have meaning. Pop songs tend to sound similar to one another, but are usually recognized as distinct from jazz, classical, or metal. First-person shooters look and feel similar to one another, but are usually recognized as distinct from real-time strategy, puzzle, or fighting games.

Law is always an effort to balance competing claims. Sometimes those claims are brought by sentient parties. Sometimes those claims are brought by reason itself. Intellectual property law, generally, is an effort to help creators (of various stripes) realize gains from their efforts, but it is quickly obvious that there must be room for many creators. Different categories of intellectual property do this in different ways. Patent law (backed by cases like Mayo and Alice) prohibits ownership on the laws of nature. Trademark law recognizes that merely describing a good or service is a very weak basis for a trademark and therefore merits very weak protective power. Copyright law understands that art draws from a common area of tools, techniques, and cultural concepts that allow art to operate and function as a means of expression and communication. Copyright law uses the term “scenes-a-faire” to describe those elements of artistic expression which are so common or fundamental that to grant copyright protection to it would do meaningful harm to the capacity of future creators.

In considering computer programs, the Supreme Court recognized that the use of a menu in a computer program could not reasonably be subjected to copyright protection; it was just a foundational part of how users used programs. The Court didn’t call computer menus “scenes-a-fair” in this ruling, unfortunately—probably because computers were relatively new devices and also because “scenes-a-fair” is historically tied to ideas in literature. I don’t think anyone else would use “scene-a-fair” to describe ideas in video game development in 2020; I’m just ahead of my time, which is to say, I’m wrong until the rest of the world catches up to me.

Video games have an established history of dealing with similar products in a small market. Games that displayed the player character’s hands and gun in the foreground and focused primarily (or exclusively) on navigating a level and shooting enemies weren’t widely called “first-person shooters” for most of the 1990’s; we called them “Doom clones,” in reference to the singular, incredibly successful game that defined the style of the genre for that decade. There is current debate over whether to make a similar linguistic shift around the use of the adjective “MetroidVania” as a descriptor of… well, it’s a matter of debate just what it describes (but the term is a reference to two popular and successful games, Metroid and Castlevania).

Slay the Spire and Monster Slayers both draw on basic, well-established genres, tropes, themes, and mechanics that are extremely unlikely to be subject to copyright protection. If campfires, dungeons, level-breaks, repeated run-throughs, block cards, or turn-based strategy could be “owned,” it would very seriously hurt the ability of other game developers to make new games.

 

II. If This Doesn’t Cross The Line, Is There a Line to Cross?

 

So, if there is room in the genre of deck-building and rogue-likes for both Slay the Spire and Monster Slayers, is there still such a thing as copyright infringement? If these games aren’t too close, is there such a thing as too close?

The easiest way to identify infringement would be the art-assets themselves. Although the design layout and placement of the art assets is similar, the art style and the actual images are very different between the two games. There are also some meaningful differences between the mechanics of the two games (Monster Slayer allows for the permanent unlocking of benefits for future run-throughs, for example). Generally, the similarities between the two games can be accounted for by noting that both games rely heavily on well-established and understood features of games and the relevant genres. Two games can be very similar without infringing on one another if both games rely heavily on widely- recognized tropes and themes without significant addition, detraction, or transformation.

 

III. Conclusion

Something that copyright and trademark law have in common: your claim to legal protection is generally better when you’re more creative and original.

Animal Crossing: New Horizons Shows Us A New Approach To EULAs and TOS

Within a few minutes of starting Animal Crossing: New Horizons, I thought this month’s blog post would be about Tom Nook’s financial crimes. However, I discovered something even more interesting (and less claimed by internet memes) in the game: the way the designers worked legally significant content about the game into the game.

 

Unlocking the EULA Comprehension Achievement

In the game Animal Crossing: New Horizons, the player guides a character through the process of settling a deserted island and transforming into… well, approximately whatever the player desires, but the game guides it somewhat in the direction of a small tropical real estate development and/or vacation getaway spot. In the process of building, landscaping, exploring, and creating, players can visit the Islands of other players (friends or strangers), either through local or online connections.

In the context of the game, these visits are done by taking a character to an airport on the island and making travel arrangements with the NPC behind the ticket counter. This NPC (a Dodo bird named Orville, employed by the Island’s sole airline, Dodo AirLines) explains the details of the travel arrangements in a carefully and specifically-worded way that analogizes device connectivity to airline travel. For example, Orville presents the option to open or close the island’s airport to incoming flights—a decision that translates to making the player’s device available for connection with other devices.

The result is that the substance of explaining that using the game feature of visiting islands will connect devices and may result in unpredictable game play experiences is actually explained in the game. It is explained one sentence at a time, by a cartoon bird; it is not presented buried somewhere in a massive legal document that is consistently ignored and forgotten. This is a completely new approach to thinking about how to help players understand EULAs and TOS agreements. This is presenting the meaning of a document with every effort bent toward comprehension and understanding.

 

A New Recipe

This multiplayer feature has the potential for good fun, but it also involves some potential risks and concerns, particularly for a game intended to be suitable for players of all ages. Nintendo was clearly aware of the potential for misuse of player interaction, and they wanted all players, even (or especially) younger players, to be meaningfully informed about player interactions.

What deserves the most applause here is that Nintendo wanted actual comprehension on the part of the player. Nintendo diverged from the approach almost every other game has taken for the last 20 or 30 years. Plenty of games include a pop-up of a 5,000 word EULA and TOS agreement somewhere in the installation process, and it is easily ignored and forgotten. Most developers and publishers consider that “good enough”; they either don’t think it’s possible to do better, or they don’t really care that much if something bad happens that was disclaimed somewhere in that wall of dense legal text.

This isn’t easy to do, and I don’t know if every game could do it, but there’s no question that a lot of games could make some effort in this direction. Most modern games could be clearer about the technological and/or legal consequences of using certain features in a game. Perhaps the core of succeeding in this endeavour is to imagine the player as a friend that the developers want to help, and not as an adversary that the developers want to con.

 

Designing for Comprehension

Maybe it’s pure self-interest, or maybe it’s a genuine care about the customer, but Nintendo wanted to explore another method of communicating concerns about device connectivity to the player. Nintendo could have gone with the easier route. They could have put all of the device connection options in a game menu. Instead, Nintendo recognized that they could make both the technical and legal dimensions of this a party of the game itself. They could have a character in the game explain what is happening and what the consequences will be. Perhaps most impressively, they managed to do it without trivializing the player’s decisions or oversimplifying them. By making 3-4 sentences of a legal document a part of the game play experience, Nintendo increased actual comprehension and awareness of the risks at least a hundred-fold.

Maybe all of this started with just one sincere question at a brainstorming session early on in development: “Hey- what if we wanted the player to ACTUALLY UNDERSTAND the technical and legal jargon we usually just throw in the click-wrap pop-ups that everyone ignores?”

Creepy or Creeping Bureaucratic Policy?The Problem With the USPTO E-Mail Requirement That People are Missing

A new USPTO rule combines trademarks, data privacy, and telecommunications policy. There’s a lot of concern about the privacy question, but not a lot of concern about the practicality of the precedent being set.

I. The New Rule: Provide An E-mail Address

Trademarks and data privacy don’t overlap very often. I got interested in law because of consumer protection issues in the telecommunications and consumer electronics industries, and I fell into trademarks because it turned out that copyright law borders both areas. The USPTO recently issued some new rules and guidelines, including some requirements for trademark applications. The most controversial is Requirement III(A), which requires applicants to provide an e-mail address for correspondence regarding the trademark application.

II. The Concern: Publishing an E-mail Address Could Compromise Privacy and Safety

Attorneys at the firm Loeb&Loeb express the worried reaction of many trademark practitioners: “By requiring the owner’s email address, however, the USPTO is making this information available to the public via the USPTO website, which increases the opportunities for spam and scams as well as the risk of this information being compromised.”

I agree that bureaucratic policies should take into consideration the impacts on the safety and well-being (digital and physical) of the people who must abide by the policies. However, I do not agree that this requirement poses a serious, significant, or new threat to data privacy or security. Quite simply: creating a business e-mail address neither difficult nor unusual, and publishing a business e-mail is neither exceptionally risky nor unusual.

III. Glib and Pithy Riposte: Welcome To 2020, E-Mail is Used

It’s not hard to set up a new e-mail address. Most trademark applicants file a trademark related to a business*, and it is and should be a common practice to set up a business e-mail address as part of starting any business. Publishing a business e-mail cannot be seriously interpreted as a breach of data privacy. The e-mail address requirement requires the e-mail to be a dedicated e-mail specifically set up for the purpose of correspondence with the USPTO. This actually reduces the concerns about data privacy, because any e-mail that does not appear to be from the USPTO is obviously illegitimate, therefore making it easier to detect spam and phishing attempts.

IV. Broader, Serious Concern: Collecting E-mail Addresses Can Creep, Even if it’s not Creepy

A greater concern that this policy introduces is one I did not see anyone mention: creep. This happens in video games when a new concept or mechanic is introduced to the game, and it slowly affects the rest of the game in unintended ways. The paradigm example is introducing something that is more powerful than anything already existing in the game, so it becomes the dominant strategy. In order to keep the game interesting and balanced, the game designers are forced to introduce other new elements to the game that can provide competitive alternatives to the preferred option. Soon, the entire game has shifted as a result of introducing just one new element.

Introducing the idea that a government office can require a citizen to have a dedicated e-mail address specifically for that government office could lead to every single government office requiring every citizen to have an e-mail inbox dedicated to correspondence with that office (and from there, maybe every subdivision within each office requires a dedicated inbox, etc.). This could grow out of control very quickly.

Todd Howard has a rule for his team when making open world games: “We can do anything, but we can’t do everything.” The same rule can apply to government bureaucracies. A government office can implement a policy to streamline an administrative process, but an office really shouldn’t try to implement every possible policy that could streamline every administrative process. A policy that seeks to do something new, however simple it may be, should consider the implications of that policy on the world outside that office.

V. Conclusion: Broader Implications for Tech Policy

One of the implications of this entire discussion that should not go unmentioned is that the US government increasingly expects citizens to have reliable internet access. The way that internet-dependent technologies have permeated our lives increasingly cause internet access to feel like a utility—something like water or electricity or heat that we expect any livable home to have, even the most modest one. As more government offices take for granted that citizens have reliable internet access (for example, by creating policies that require e-mail addresses and only accepting online applications), the more pressure there is for the telecommunications industry. Certain regulations and standards regarding internet access are continually debated, and government reliance on the efficacy of this technology puts pretty on the internet service providers (and other companies involved) to deliver a certain minimum quality with minimum consistency and with a certain level of accessibility. I expect government agency rules like this to be cited in future cases in the DC Appeals Court and US Supreme Court rulings regarding the role of the FCC and FTC in regulating telecommunications companies.

 

 

*remember that all trademarks can only be registered if the mark is connected to a good or service in commerce

Show You All the Moves Like… Fatal1ty? Doublelift? Trick2G? Flash? MadLife?

Could you trademark behaviors of a professional esports player?

I came across an interesting question online a while ago (from Ryan Fairchild): “If an esports player did some recognizable set of actions at the beginning of each match, and fans could recognize who the player was just from those actions, could the player eventually claim inherent distinctiveness and claim trademark rights in those actions?”

My opinion is that it would be very difficult to get trademark protection for such “signature moves” in esports—but it would be very interesting to try.

1) What does a trademark need? Can this idea of “signature moves” meet the minimum requirements?

A trademark has to be connected to some good or service in commerce. It would be novel to present streaming and esports as the good or service, but not out of the question. You probably wouldn’t be able to stop other people from doing the same move, but you might be able to sue someone for using the signature moves if it makes people confused about the identity of the player and the impostor profits from it. (That’s not exactly the statutory requirement, but it’s the most favorable set of conditions for someone trying to sue in this case.)

Another important requirement is that the signature moves not have functionality. Optimized pathing, strategically advantageous positioning, etc. are all likely to be out of the question. Trademarks, generally speaking, cannot have a functional purpose. If something functional were protected by trademark, it could prevent people from using or accessing that functionality. Trademarks last indefinitely, provided that they remain in use in commerce and the registration is renewed, so any functionality would be protected indefinitely. Patents are the category of IP that is meant to handle functional subject matter, and patents have the shortest lifespan of the four primary categories of IP (about 21 years, depending on the patent type).

 

2) How does trademark law intersect with identity?

Trademarks are usually about brands, which have usually been associated entire companies. Trying to tie a trademark to an individual is somewhat more tricky, but not unheard of.

After popularizing a pose of kneeling and placing a closed hand against his forehead, athlete Tim Tebow registered his trademark in 2012, (but he apparently decided not to renew it, so it is now cancelled under Section 8—see trademark Reg. No. 4263370). From the perspective of trademark law, there was no confusion about whether someone else doing the Tebow-ing move was, in fact, Tim Tebow . The question was whether merchandise referencing the move was affiliated with or authorized by Tim Tebow. So, a signature move, by itself, really doesn’t qualify for trademark protection – whether it’s on the football field or on a screen depicting a football field. But Tebow’s main concern in getting his trademark had more to do with preserving some measure of authenticity. Because it was a deeply personal matter for him, he was trying to use trademarks to protect something about his identity, reputation, and public persona. It’s not the primary role of trademark law to offer that kind of protection, but there might be a way to make that work.

Fortnite cases drew a line about the copyright protections around dances- particularly length (and, even though the courts and copyright office didn’t say it, let’s say “complexity”). I still hypothesize that trademark protection had more potential, though it would require “building a brand” around the dance. For example, “The Carlton” is a dance actually known by the name of the character who performed it on a long-running tv series, and the performance of it generally evokes that character. In contrast, “flossing” doesn’t really evoke… backpack kid? Or whomstever?

 

3) Is the persona of the player/athlete a character? (Or Does it depend on a philosophical reconciliation of identities?)

There aren’t a lot of federal laws protection one’s right to public persona or right to likeness. But California and New York have a lot of celebrities, who tend to be the most frequently involved in cases about right to likeness.

So, here’s where the thinking gets experimental: What if we think about the persona of the esports player or streamer as both the mechanism by which monetization occurs, and as the likeness subject to protection? There is probably an entire thesis’ worth of content in unpacking the splitting and merging of identities, but I think that there could be cases where the identity of the streamer/player could be sufficiently closely connected with commerce to satisfy the requirements of the USPTO. This might be the best case for the necessary connection between “a good or service in commerce” and the “signature moves” that an esports player might be looking to protect by trademark. I don’t know how the USPTO might react to streaming as a good or service in commerce, but I think there is enough evidence to draw upon to present a sufficiently persuasive case for the point that streaming and esports meet the threshold of interstate commerce.

 

Conclusion

As far as I can tell, the real challenge to getting trademark protection for a signature move in esports is monetizing it in a way that satisfies the requirements for a trademark. I think the association and the distinctiveness are comparatively small challenges. There might be something to the idea of a special emote that only the members of a particular esports organization have—and then any use of it might reasonably be presumed to be an authorized use, which would help make the case for an esports organization preventing the unauthorized use of the emote.

Actual Enforcement of Trademark and Copyright Laws

There are two discussions to have about intellectual property in the ecosystem of the internet: one is about what laws, policies, and procedures are fair, ideal, economically optimal, and so forth; the other is a discussion about what is workable, functional, or feasible.

Actually enforcing trademark, copyright, or telecommunications law has proven to be a significant challenge in the 21^st century. It is worth remembering that the distribution of songs on Napster was a violation of copyright law from the day the site launched. The legal action around Napster was only partly to settle any ambiguity around the question of whether digital copying and distribution of media constituted infringement—the new chapter that opened with Napster was a world in which copyright infringement became almost unenforceable.

AN ENVIRONMENT OF MISINFORMATION

The public perception of how copyright and trademark law work has been significantly shaped by the inability of rights holders to enforce protections over their trademarks and works. In a recent discussion on a potential trademark opposition, the comments on YouTube included numerous references to the abundance of available products that would be potentially infringing the trademark in question. I cannot be sure about why attention was drawn to these examples, but I suspect that many people thought that the availability of [potentially] infringing goods is evidence that a trademark is invalid. I’m pretty confident that the TMEP does not specify that trademarks are invalid if they are infringed.

The internet is awash in examples of copyright and trademark infringement. Most memes involve at least copyright infringement (transformative analysis notwithstanding), if not also trademark infringement. Etsy has published guides for its sellers to specifically point out that the availability of other infringing products does not mean that the product is not subject to trademark or copyright protection.

BUILDING SOLUTIONS WITH AN EXPECTATION OF RESISTANCE

The problem is not just a question of whether a work ought to be subject to protection, or the scope of the protection. The problem is also how to enforce those protections. Adobe, Twitter, and the New York Times Company have been working on a new solution: The Content Authenticity Initiative. The idea, still in its earlier stages, seems to be a kind of metadata tagging system to allow images to be traced back to their sources—thereby giving credit to the original artist or photographer.

There are, I’m sure, concerns that adding such traceability to images compromises security, insofar as it compromises anonymity. It always seems to be the case that those who want to optimize their security and anonymity tend to avoid products and services provided by the market-dominant companies. The question of whether preserving anonymity is in the interest of either the internet or society is a larger discussion for another post (or maybe another blog entirely)—but as far as copyright and trademark are concerned, reducing anonymity is essential in adjudicating infringement claims.

I’m not sure if the idea will ever see implementation. I suspect that if it does, it will be used more as an opt-in tool for communities of artists and rights holders to track their works. This still has very useful implications, but I have little doubt that those who want to find ways around it will be able to do so. It is the nature of the digital era to be continually skirting around efforts to enforce the law, particularly where the capacities of new technology and new media have made [re]production and distribution possible in a new way and to a new extent. It feels like there is a cottage industry build around fighting and breaking any efforts to enforce copyright or trademark protections, and the ongoing escalation between the rights holders and the resistance has lead some industries into places they might not have otherwise gone. I suspect that always-online gaming would not have become as prevalent as it now is if previous, off-line DRM efforts had not been so viciously demolished—and I further imagine that loot boxes and “surprise mechanics” would not have become an industry norm without that push towards always-online game models.

CONCLUSION

I don’t think I can win any prognostication points for predicting that this war will continue through 2020. If this Content Authentication Initiative does see implementation, it will be undermined and circumnavigated.

 

Jeanne Fromer’s “New Copyright Opportunist” and a New Perspective on Copyright Litigants

I really enjoy academic conferences and presentations. A competent, prepared expert can present an interesting set of ideas that will, in some way, enrich the lives of the audience. The loftiest goal for the presenter might be an amazing presentation that revolutionizes the entire field, and that presentation becomes a legend. A more attainable goal is to present something interesting, meaningful, applicable, novel, or at the very least, something clear. Achieving any one of these is laudable. Recently, I was fortunate to see a presentation on copyright that ticked all the boxes.

 

At the Copyright Society’s annual Brace Memorial Lecture this month, Jeanne Fromer gave one of the best academic talks I’ve ever seen. It wasn’t startlingly revolutionary or polemic, but it was clever, careful, and nuanced. This is extremely difficult to achieve, and I have seen some rather sorry presentations that did not qualify for even one of these accomplishments. Even more difficult than having a clever idea or a nuanced distinction is to be clear in explaining the idea and its nuances. Maybe I’ve spent too much time scrolling through sloppy communication on Twitter lately, but I feel strongly that her presentation deserves praise just for how careful and clear it was. But it also deserves praise for its substance, not just the organization and effective communication. Fromer suggested a more careful consideration of some of the current litigation in copyright, and presented a new perspective on a segment of those litigants based on her distinctions. As the title of her talk promised, she gave a view of “the new copyright opportunist.”

 

Fromer set out a distinction between copyright trolls and copyright opportunists by defining each clearly. Copyright trolls make no creative contribution of their own and merely aim to make money solely by settling lawsuits that would be too expensive to litigate. Copyright opportunists seek to increase the value of a work by litigating novel relevant issues.

 

She then gave three examples of these new copyright opportunists:  tattoo artists whose work is represented in video games, paparazzi whose photographs are used by the subjects on their own social media, and songwriters whose less popular songs bear substantial similarity to successful new hits. Each of these examples shows a current contention over the plausible increase in the market potential of these works. One of the most exciting aspects of this presentation was the clear presentation of how technological advancements impact the legal dimensions of artistic and creative works, and subsequently affect the economic dimensions of those works.

 

I particularly like the fact that, after this presentation, I have a new framework and language for considering new copyright litigation I hear about. I expect that this will help me to make more nuanced evaluations of copyright cases and policies in the coming years. It also gave me a new standard for clarity and elegance in communication, particularly where any kind of subtly is involved.