My Borderlands 3 DLC Idea: Claptrap Files for a 1201 Triennial Review Exception Hearing

I. Story Of a Lonely Robot

In the Borderlands series, a megacorporation (“Hyperion”) made a product-line of 3-ft tall, one-wheeled robots: the CL4P-TP Steward Bot. In the very first moments of the first game, the player is introduced to one such unit, who introduces himself as “Claptrap.” This robot became the face of the game (the way Teemo became the face of League of Legends, despite over 100 other characters to choose from), and “Clappy” has been a major feature of Borderlands 2 and 3 (often as comic relief). In one DLC add-on for Borderlands 1, Hyperion reprogrammed Clappy to lead a revolution (“The Robolution”) to kill enemies of Hyperion, but the effort backfired and Clappy also fought against Hyperion. The incident led Hyperion to discontinue the product line and destroy all existing models—however, Clappy survived the extinction event. A decade later, as the sole survivor of his species, Clappy undertakes the task of building a companion; he asks the player to find and salvage parts from CL4P-TP units found in the course of the game’s adventures. There’s just one obvious, glaring question:

Is Clappy violating section 1201 of the DMCA with this quest?

17 USC 1201 generally prohibits getting around the technological measures on a device to use it in some way outside of the intended user experience. It’s actually a lot more intricate than that; there are a lot of exceptions to the prohibition, and there is a cycle of reviews (to be held every three years, the fancy word for which is “triennial”) built into the statute.

 

II. Analysis of 1201 (a)(1)(A) Violation

Is Clappy “circumventing a technological measure”? It is reasonable to presume so, given the context of the story. We know that Clappy was built as a Hyperion robot, and accordingly has information and ability to bypass Hyperion technological measures. In a DLC episode for Borderlands 1, Clappy wages an open, violent revolution against the Hyperion corporation, which could be reasonably interpreted to indicate that Clappy is no longer an employee of Hyperion. Furthermore, in Borderlands 2, a software upgrade for Clappy is illegally obtained and installed in Clappy. Clappy’s situation is therefore like that of a former employee who has the knowledge to circumvent technological measures but no longer has the authority to do so.

Is Clappy accessing a work that would be protected by copyright law? Computer software is generally subject to copyright (though some exceptions apply).  If Hyperion were able to get a copyright registration on the CL4P-TP software, they would likely have a strong case against Clappy for violating section 1201 of the DMCA.  Clappy’s best defense would likely be to argue that the software at issue is not subject to copyright, because that would stop the case before it even got started. However, that argument seems unlikely to work because the software is almost certainly subject to copyright.

Nothing else in the statute is relevant to Claptrap’s case. His project is not subject to (g) encryption research exception or (d) library/non-profit/education research. Clappy is arguably a government entity (if the Crimson Raiders are a government entity), but he is not acting pursuant to an investigation, so (e) is not relevant. A CL4P-TP is not an analog device, so that also makes paragraph (k) irrelevant. Paragraph (i) is not relevant because (i)(B) requires the absence of a conspicuous disclosure of the gathering of personal information—it is reasonable to assume that Hyperion has made very conspicuous disclosure about the wanton invasion of privacy that the CL4P-TP unit perpetrates. Paragraph (j) exception for security testing does not apply. There might be a dedicated robot to prevent minors from accessing material on the internet (the Borderlands 2 Captain Scarlett DLC did feature a robot obsessed with censorship and copyright enforcement, but that robot was distinctly not of the CL4P-TP product line). The only other paragraph that might be relevant is (f), which allows for reverse engineering to allow for interoperability. The game does not provide enough details to be certain as to the nature and extent of Clappy’s circumventing of the CL4P-TP parts the player brings back to him, but I think it’s safe to presume it goes beyond the exemptions allowed in part (f) of the statute.

 

 

III. Hyperion Abandonment: Claptrap’s Issue

Another argument for Clappy’s defense is that Hyperion abandoned their claim to any rights in the CL4P-TP unit after the ill-fated Robolution and subsequent discontinuation of the product. This would be an interesting case for a few reasons. First, copyright abandonment is a largely untested area of law. Whispers of abandonment (or “orphan works“) almost always involve a defunct company or a confusing acquisition of a company in which it is unclear who holds the claim to the copyrighted material.

The abandonment argument highlights some of the meaningful differences between copyright and trademark protections. There was a trademark case in which a broadcast network had stopped the production of an entertainment program, but continued to claim rights in that trademark. Crucially, trademark does not have a fixed time limit (copyright does) and trademark is explicitly connected to an actual use in commerce (copyright does not require a use in commerce). This is why abandonment in copyright is a very different situation from abandonment of a trademark. The fact that Hyperion stopped making or selling CL4P-TP units would likely affect the trademark, but not the copyright related to the product.

Perhaps the ultimate test for copyright abandonment is whether a company takes action against an alleged infringer. In some non-legal sense, the copyright is “abandoned” when no one fights against the infringement of the work. But in more accurate legal terms, a copyright is abandoned when no one is in a position to fight against the infringement of the work. Discontinuing the CL4P-TP Steward Bot product, scrapping existing stock, and ceasing service on existing products might be taken as strong evidence of trademark abandonment—but not of copyright abandonment.

Because robots of this sort are still new, it’s not entirely clear how patent law might apply. Indeed, it’s currently unclear just how patent law is meant to fit with software, so the layers of technology involved in a CL4P-TP unit are something well beyond the contemplation of the current configurations of US intellectual property law.

Fun fact I learned while doing research for this post: Robot Patent does not have to do with what we currently think of as either patents or robots.

 

IV. Clappy, the Exceptional CL4P-TP?

Could Clappy seek an exception during a triennial review, as provided in (a)(1)(c)?

Given the five factors listed in (a)(1)(C), (i)-(v), Clappy has a reasonable chance of having his case approved as an exception. It’s unclear how he would fare as to (i), but he wins on (ii) as a matter of preservation; (iii) doesn’t particularly apply unless someone wants to do research on CL4P-TP units; (iv) is an interesting point that ties back to the abandonment question, but to the extent the Hyperion is not interested in making more CL4P-TP units, there is no market impact (and only making 1 copy for non-commercial use is a negligible market impact anyway). Finally, the discretionary factor, (v), is up to the Librarian of Congress to determine whether Clappy’s project is an appropriate exception to this section of the DMCA. The circumstance of being the sole survivor of a species seeking companionship is a likely cause for such an exception.

 

V. Final Thought: Is the Player Violating 1201 by Helping Clappy?

The player doesn’t provide specific means of violating 1201 (a)(1). The primary concern for the player is that 1201 (a)(2) and 1201 (b)(1) both prohibit devices whose purpose in the circumvention of technological measures which protect copyrighted material. But the player doesn’t provide such a device; the player just gets the CL4P-TP parts themselves. This is effectively like dumpster diving for old cell phones or laptops. That, by itself, isn’t a violation of 1201— which makes sense because there are uses for those objects that don’t involve the data stored on those objects. That said, there might be a contributory infringement claim under a different statute, as (c)(2) explicitly clarifies that 1201 leaves infringement claims open to the possibility of contributory infringement.

 

 

Tyreen’s Mean Streams in Borderlands 3

People are going to make a lot of interpretations and analyses about the story of this game: A violent psychopath unites disparate pockets of violent psychopaths and becomes their entertainer and their leader.

Tyreen Calypso and her brother Troy are the biggest social media stars in a lawless and murder-filled galaxy, far, far away. In the setting of Borderlands, there are no laws and no authorities or institutions to enforce them.

Third party hosts and platforms have endured criticism over the last decade, either for their failures to stop odious behavior (especially when it yields revenue) or for their treatment of less profitable users. Does Borderlands 3 paint a grim picture of the downsides of a social media ecosystem without independent platforms? In doing so, does it clarify the role and responsibility of these platforms?

 

Stream Queen Tyreen

Before the player joins the story, Tyreen builds up a following of murderous bandits through her social media presence. By providing entertaining live streams and a sense of community, she creates a cult (“Children of the Vault,” or COV). The player is tasked with opposing Tyreen and stopping her quest for opening a mystical vault that will grant her the power to destroy all life in the galaxy. As her social media follower count grows, her resources to thwart the player and to achieve her goal also grow.

As a fictional character in a fictional setting, Tyreen’s social media ecosystem is very different from ours. One factor is obviously absent from Tyreen’s social media: a third-party hosting platform. Tyreen doesn’t stream on some fictional version of Twitch or Mixer, and she doesn’t upload videos to YouTube or Vine or Twitter. She apparently owns all of the hardware and does her own broadcasting.

 

Murder in the Safe Harbor

As the behavior of various influencers, personalities, content creators, streamers, and others who make use of recent accessible broadcast technology comes under scrutiny, the hosts and platforms for this technology also comes under scrutiny. Even though there has been substantial criticism of some of the most popular social media stars, there has also been a fraction of that criticism directed towards the platforms that allow the behavior to continue (and profit as it does).

In our current social media ecosystem, the platforms we know and use and sometimes love have their own concerns. Among other things, they have to worry about whether they can be in trouble for the things that people do while using their platform.

There is a law to help platforms. Title II of the DMCA, the Online Copyright Infringement Liability Limitation Act, found at 17 USC 512, allows platforms, hosts, or service providers to avoid getting in trouble (“safe harbor” protections) if they meet some requirements (such as taking down material that infringes copyright, not profiting from it, and banning repeat infringers).

Despite the criticism of these third party hosts, I still expect that any platform would be very quick to ban the account of Tyreen, who regularly broadcasts videos of murders and explicitly offers rewards to her followers for killing her enemy (the player). In addition to the very obvious criminal laws around murder, uploading content depicting illegal and/or obscene acts would certainly be against any Terms of Service agreement. According to law professor Daphne Keller, there isn’t currently a law that governs the obligations of a platform when a user uploads content depicting a crime. There was an effort in 1996 to better govern this kind of thing, but almost the entire title of an act was struck down by the Supreme Court on the assessment that it violated the 1st amendment.

In the US, social media professionals like Tyreen are often at a crossroads of several areas of law: copyright, trademark, consumer protection/ advertising, and telecommunications. These people need to build and maintain a fan base while abiding by FTC disclosure guidelines, working within the constraints of the structure established by the FCC, and avoiding infringing the copyrights and trademarks of other businesses and artists.

Tyreen doesn’t have to worry about any of that, of course…

 

Mad Moxxi is a Guerrilla Genius

Moxxi is a successful entrepreneur and business owner in her own right, and she recognizes that Tyreen cannot be stopped by the kinds of methods that we might use in the US. There is no third-party host that might be liable for Tyreen’s behavior, so there is no authority that can ban her or even respond to a notice-and-takedown request. Even if there was a Borderlands Trademark Office, Tyreen wouldn’t seek to protect her trademarks because that doesn’t align with her business strategy (she’s hoping to destroy the galaxy in the time it would take to get a trademark registered). And in a setting where guns and grenades are purchased from vending machines, there isn’t any kind of recognition of consumer protection law.

However, the telecommunications infrastructure is unregulated (like everything else), and Moxxi sees that as an opportunity. Maybe Moxxi read Lessig and applied her understanding of architecture as law. Moxxi assigns the player the task of finding and sabotaging the broadcasting devices throughout the galaxy. As the player goes to the terminals of these broadcast antennae and changes the channels, Tyreen is unable to reach her audience, leaving her effectively de-platformed (or “cancelled”).

I appreciate the (perhaps accidental) fact that accessing these transmitters requires repeated use of the platforming mechanic: It’s platforming to de-platform. **

Moxxi’s de-platforming strategy is effective, and it underscores the limited options available in the social media ecosystem of the story. It also shows what is possible in the extremes of lawlessness: the worst and most dangerous people are more difficult to stop, and the methods of stopping them are available to anyone, to be used against anyone. It’s a kind of Hobbsiean state-of-nature, but it turns out that both the lives and the livestreams are nasty, brutish, and short.

 

Conclusion

The absence of a third party hosting platform facilitates Tyreen’s ability to achieve her nefarious goals. She can broadcast what she wants and gets 100% of her revenue—that’s definitely an appealing concept to anyone looking to upload, post, or stream. But she’s also a threat to the existence of the galaxy, tries to kill you, personally, and the only way to de-platform her is literal warfare. The only way that a platform can provide a better world than this is if the platform takes effective measures to avoid such extreme scenarios. I don’t think we’ve seen any content creators aim for galactic destruction yet, but the rising generation is nothing if not ambitious. As social media becomes increasingly lucrative and legally complex, the next year might be a good time for platforms to carefully and seriously evaluate their business strategies, visions, goals, and values.

 

 

Next time, maybe I’ll evaluate whether Claptrap violated 17 USC 1201 by salvaging dead robots to build a new friend.

 

 

 

**Platforming

De-platforming is a term that means “to remove someone from a position of broadcasting, or to remove or severely diminish the ability of a person to broadcast.” It often implies denying a person access to an established host or platform, and most often for reasons related to behavior or the content of a message.

Incidentally, Borderlands 3 introduces a new playable mechanic to the game: the ability to climb designated ledges. As in the Assassin’s Creed series and the Mirror’s Edge series, this mechanic can go by a few names: parkour, free-running, free-climbing, mantling (the term I heard most at Gearbox press conferences for this game), or platforming (a more archaic and less accurate term, but the one which suits my purposes here).

Trying Their Luck With Loot Boxes, Betting on Microtransactions

Almost exactly three years ago, I explored the question of whether loot boxes might be considered gambling (under a specific federal statute). Despite my analysis, the controversy has not abated. Either my earlier writing was insufficient, or I am not the final authority on all US law. Or both. In any case, I am revisiting this topic.

We have a long history of kids buying an unknown, unidentified, or concealed thing and not calling it gambling: baseball cards, gashapon machines, Kinder Eggs, mystery figurines etc. We also have an established tradition of letting children play games of chance for the opportunity to gain rewards at carnivals and arcades. But stories of kids bankrupting their parents to buy baseball cards are… rare. People have ruined their lives in pursuit of many things (one psychologist admitted to having an addiction to collecting classical music). However, there seems to be an ample stock of stories of people meeting financial hardship after engaging in microtransactions of video games.

Societies make laws and institutions to mitigate the extent to which people can harm themselves and each other. Do the practices of the video game industry cause the kinds of harms that run afoul of these laws and institutions when they make it easy for a customer to bring about self-ruin (and extend that ruin to others)?

 

I. Definitions

I will define the following terms based on my understanding and experience:

Loot Box:  In-game items, conditions, or abilities available to a player, initially concealed from players when obtained. These can be given to players by the game (often for completing particular objectives) or they may be purchased, either with in-game currency or legal tender (“real world money”).

Microtransaction: The option to translate legal tender (“real world money”) for objects or conditions in the game. Although these are often near a $5 price point, it is not uncommon to see options for $30 for a single item, and many games provide bundled options for over $50 or $100. The implied predatory tactic at work in this mechanic is “nickel-and-diming” the customer: the company wants the player to perform repeated small transactions so that the player does not recognize the aggregate amount spent, and therefore spend more than the player would if the player were presented with that aggregate amount.

Pay-To-Win: The design of a game to be unreasonably difficult without the use of microtransactions. This is often combined with games with very low or no cost to play the game, then a significant escalation in game difficulty. Notably, the game does not cease to function, nor become unplayable from a programming perspective.

Cosmetic: An item, feature, ability, or condition in a game which does not affect the mechanics of the game, or the mathematics that calculates the success of the player in the game (or the ability of the player to progress in the game). Some microtransactions are argued to be less predatory because the possible outcomes are cosmetic, and the lack of an impact on game mechanics precludes an assertion of pay-to-win design.

Shareware: The business decision for a company to provide a substantial portion of a game free of charge, often to generate awareness and word-of-mouth advertising. The company expects that the success and appeal of the free portion of the game will lead customers to purchase the full game.

Demo: A small portion of a game available for customers to sample the general style, art, user interface, and gameplay experience, typically for free. In the last 10 years, it has been more common for demos to be available only by watching others (often employees of the company) play the game. Some recent demos have been criticized for misrepresenting the game they purport to demonstrate.

 

II. The Controversy

The largest looming question is whether loot boxes constitute gambling. This question has the biggest legal ramifications, particularly because many of these games and transactions are available to (if not also marketed towards) minors, for whom gambling is illegal.

The second biggest legal question is whether the practices surrounding these microtransactions (advertising, communications, implementation, functionality, etc.) comport with relevant laws and regulations, particularly those set forth and enforced by the Federal Trade Commission (FTC).

Another important question is whether these practices are ethical, dangerous, predatory, fair, or are otherwise positive for the entertainment software industry, developers, publishes, and customers.

 

III. The Analysis

Issue One: Is it gambling?

I still find my previous analysis on the gambling question relevant. However, I don’t know how it would be received by a court or administrative agency. Under my analysis, the issue turns on whether the contents of the loot box are determined before or after the transaction is made. I think the strength of this analysis is that it help to delineate between the purchasing of unknown items available to minors (e.g., baseball cards, Kinder Eggs, etc.) and conventionally understood gambling (sporting events, slot machines, blackjack, etc.) I think the weakness of my analysis is twofold: 1) it may be too technical for some adjudicating bodies to appreciate, and 2) it fails to address the unsavory impacts of loot boxes and microtransactions.

It has become popular to declare loot boxes to be a form of gambling (and some games aren’t exactly shying away from that accusation or the image).  However, I am still unconvinced that any purchase of an unknown item falls under the legal definition of gambling. It may be true that it can be called “gambling” in a cultural sense, but this uses the term to mean “any taking of risk or a confronting of uncertainty.” This use of the term is unsatisfying because it also describes going to a new restaurant (and hoping the food is good) or ordering a shirt online (and hoping it fits well).

I have not yet heard a persuasive explanation that distinguishes buying a pack of Magic: The Gathering cards at my local game store from buying a pack of Hearthstone cards in Blizzard’s digital store. There might be an important distinction. There might not be one. Maybe the purchase of sealed packs of trading cards (Pokemon, YuGiOh, MTG, etc.) needs to be restricted. Maybe Disney needs to put the “mystery figurine” boxes in the “Adults Only” section of stores at Disneyland. However, if the sales of concealed items to minors are permissible, it isn’t clear why purchasing concealed outcome in a game’s loot box is necessarily legally different, in and of itself.

 

 

Issue Two: Is it unfair or deceptive?

The FTC has sometimes found a great deal of latitude in its statutory jurisdiction over “unfair and deceptive trade practices.” The task before the FTC is to determine whether the entirety of the game and microtransactions are designed in a way that is unfair or deceptive to the customer. There is a snag, however: the terms “unfair” and “deceptive” are not clearly defined. Even a sciolistic understanding of advertising in the US shows that there is a lot of distance between an advertisement and the reality of a good or service. The FTC has the responsibility to determine when advertising and marketing tactics (which are frequently adversarial, treating the customer either as a target or an enemy) become unacceptable in the eyes of the law.

Any evidence of companies’ deliberate efforts to obfuscate the amounts spent is likely to earn umbrage from the FTC. I’m fairly confident that the FTC will be displeased with implementation of microtransactions by many companies, and not just because they have addressed a similar issue already.

I’m less certain as to how the FTC would react to the concept of loot boxes. The FTC would examine the implementation of the loot boxes—not just the mere concept of them. The recent decision by several game platforms to require disclosures regarding the probabilities of outcomes for loot boxes will probably please the FTC, because the FTC likes it when useful, relevant, complete information is put in the hands of the consumer. However, some companies are not even putting truthful information in the hands of the consumers. Additionally, the FTC would still take seriously the claims that companies rely on the same tactics as those used by casinos, and the same psychology behind gambling addiction to advance their products. The many stories about the disastrous effects of these strategies on people’s lives would also hold significant weight in the judgment of the FTC.

I think it is likely that the FTC would find some practices by some companies to be unfair or deceptive. Crucially, this would almost certainly lead to a new promulgation of guidelines (and maybe codified regulations) that detail specific requirements for game developers who wish to implement microtransactions, loot boxes, or similar structures.

 

 

Issue Three: Is it good for the industry?

Ostensibly, these strategies have been good for the bottom line of some major companies. But let’s reflect on a very different business strategy. In 1993, Doom was the most popular game of its era and genre, and the developers gave away 1/3 of it for free, as shareware. That is an astonishing truth. It was free and the developers encouraged the unregulated sharing and spreading of it. This is a complete reversal of the current marketing strategies in the video game industry. In every way, this is the opposite of a loot box. And the bottom line did just fine: the developers still made enough money to buy ostentatious sports cars and the company survives to this day. I think there is a lesson for developers from the successful marketing of Doom: Make a game so good that people are happy to play it.

Sure, shareware didn’t always work. Apogee could have been the poster child for shareware. Now Apogee games are the poster child for orphan works. But in fairness: not every loot box game turns a profit, either.

It really goes without saying that loot boxes and microtransactions are designed to make more money for the companies that make and publish the games. I suspect they have been profitable strategies up to this point. However, if you have to spend one hundred million to defend your company’s strategy for making seventy million, that strategy isn’t so good for the bottom line—and that’s not to mention the impact of the negative public image of being perceived as predatory or dishonest.

 

 

IV. CONCLUSION: Maybe Legal, Likely Unethical, Definitely Unnecessary

Loot boxes and microtransactions may very well be legal—but that doesn’t mean that they’re “good” in any sense of the word. There are urban legends of drugs that are so addictive that dealers give away the first dose for free, because they know that the user will immediately become addicted and begin paying. They lower the barrier so that more people will ultimately become customers.

There are two options for developers who crave financial eminence: make a game so good that people want to play it, or make a game so addictive that people struggle to stop playing it. The two games may look similar, but the core functions are opposites. One is a positive experience that works to enhance the player’s life. The other is an effort to remove autonomy and destroy the player’s life. One is giving. The other is taking.

Making Offensive Trademarks Legal, If Not Fashionable (Incau v. Brunetti)

Some of the most challenging cases in law (and in political philosophy) are questions about the limits of freedom. It is generally accepted by all but the most extreme anarchists that some level or order and constraint on behavior must be maintained in a society. Opinions differ greatly as to methods, reasons, and applications more specific than this.

For Americans, finding the limits on the freedom of speech found in the first amendment is a perennial challenge.

 

I) The Case

Brunetti makes a clothing line called “Fuct.” Like many people who make something, he wanted to register a trademark for his brand. However, the 1946 law that governs trademarks in the US (the Lanham Act) prohibits “immoral… or scandalous” trademarks. The US Patent and Trademark Office rejected Brunetti’s application for a trademark because they found that the mark “Fuct” is “scandalous or immoral.” Brutnetti brought the USPTO to court (the court case is named for the director of the USPTO, Andrei Incau). The Supreme Court found that Brunetti cannot be denied his trademark registration on the grounds given by the USPTO, and declared that the section of the Lanham Act that prohibits immoral or scandalous trademarks is unconstitutional as a violation of the first amendment.

This case follows a previous ruling on disparaging trademarks. In 2017, the Supreme Court decided that an Asian-American music group called “The Slants” could not be denied their trademark on the grounds of the offensive nature of the name. This ruling found that another part of the Lanham Act was unconstitutional: the prohibition of trademarks which are disparaging.

Unsurprisingly, it has been difficult to apply a law that relies on such an amorphous and malleable concept as “offensive.” Since the Lanham Act was passed over 60 years ago, the USPTO has accepted and rejected trademarks that could be considered immoral or scandalous.

 

II) Potential Problems and A Public Safety Possibility

With disparaging and offensive trademarks no longer prohibited by the Lanham Act, what constraints remain?

One of the few things that consistently beats out freedom of speech in American law is public safety. The iconic example from a case in 1919 is that the act of shouting “fire!” in a crowded theater (where there is no actual fire) and causing a panic in which people could be injured or die is not an act protected by the first amendment.

One of the foreseeable problems with opening up trademarks to offensive and scandalous terms is the potential for trademarks which seek to harm people (for example, promote violence). There are already restrictions on trademarks that prevent some confusion with official government symbols. I think there is a line of reasoning that such existing restrictions serve the purpose of promoting public safety, and therefore rejecting trademarks that threaten public safety may be permitted.

Trademarks which are grossly offensive but do not threaten public safety may be more difficult to oppose or cancel. The 2017 Matal v Tam case ended the litigation around the cancellation of the trademark for the Washington, D.C. football team. Such is the difficult and challenging nature of creating and applying law: it is always a balancing act of various competing interests, and it is very difficult to create winners without creating losers.

 

III) You Can’t Be Refused Your Trademark, But I Can Refuse To Say It

I think there’s an Easter egg in this case: a hidden, subtle lesson that I’m not sure I fully grasp. As far as I can tell, for the entire proceeding of this case, none of the justices actually used the word that “Fuct” imitates. They did not say it during oral arguments and it does not appear anywhere in 44 pages comprising five different opinions.

That word, and the use of it, is fundamental to this case. The Court handed down an opinion that required the government to not prohibit the use of a word that the Court thoroughly (almost pointedly) declined to use. This suggests interesting things about language, culture, and law. Maybe this lack of usage underscores a point about the chasm between what is legal and what choices people can make. Maybe it illustrates a kind of objection-by-performance, demonstrating that people can act and speak in ways that differ from mere legal requirement.

Although this case changes the law to permit offensive language in trademarks, the cultural sensibilities and sentiments that once prohibited such speech remain. Tension between culture and law is rarely sustainable.

 

 

The Very Hungry Caterpillar: Is Caterpillar Going Too Far To Protect Its Trademarks?

A thousand years from now, the legends will say that cats invented the internet as part of their plan. Of course, sophisticated scholars will snort, scoff and explain, “Actually, cats only invented the meme.”

If that is funny, it’s mostly because of the ubiquity of cats in 21st century culture. Domesticated felines have been a dominant, widely-recognized force on the internet. My evaluation of the Caterpillar v Cat & Cloud trademark dispute is that it shows how the internet affects trademark strategies (a break from the persistent and well-established analysis of how the internet has affected copyright strategies). I think it also raises an interesting, esoteric question about truncated marks and interpretation of meaning.

I think Caterpillar has two problems: 1) Cat is a really terrible mark in a cat-crazed culture, 2) The truncated mark foists cat troubles on them

Caterpillar’s Trademarks

It’s important to protect trademarks. Trademarks, arguably more so than other IP, have a way of slipping away if you leave them unattended. Copyrights and patents eventually expire, but trademarks last as long as they are used, maintained, and defended. A trademark can become generic, or it can be slowly encroached on in ways that make it harder to defend later. Caterpillar understands the importance of trademark vigilance, and has initiated at least two major trademark proceedings in the last few years, following a significant number of new trademark registrations in 2015. (See CAT Registrations: 4804263-275. All filed in 2014 and issued in 2015.)

PetraCat, An Energy Services Company

In April 2015, Caterpillar and PetraCat argued before the Trademark Trial and Appeals Board (TTAB) on the question of whether PetraCat’s trademark was too close to Caterpillar’s trademark. Caterpillar opposed the registration of PetraCat’s mark out of concern that consumers would be confused by the similarity of the marks. It was an interesting question with reasonable arguments from both sides, but the TTAB ultimately concluded that there was enough similarity to be concerned about consumer confusion.

 

Cat & Cloud, a Coffee Shoppe

In August 2018, Caterpillar filed a cancellation proceeding against Cat & Cloud, a coffee shop based in Santa Cruz, CA. The easy criticism to make is that there is no likelihood of confusion between the goods or services of these companies, but that criticism would be misguided. Trademarks are registered with the USPTO according to categories (called “classes”). Caterpillar is not concerned about the use of trademarks with respect to providing beverages; Caterpillar is concerned about the class of goods that the two companies share: shoes, hats, t-shirts, and other merchandise. This at least establishes some overlap about which there is even fathomable confusion or contention—but is Caterpillar reasonable for pursuing a cancellation proceeding?

 

When discussing any trademark dispute, two subjects are virtually unavoidable: the strength of the marks and the likelihood of confusion.

 

Trademark Strength: Ranking Your Advertising Department’s Imagination

Trademark strength (or distinctiveness) can be thought of as existing along a spectrum that runs from “weak” on one end and “strong” on the other.

Fanciful – When you make up a word that has no other meaning in the language (Xerox, Frisbee)

Arbitrary – When you pick a word that already exists and has a meaning, but has nothing to do with your goods or services (Apple, for a computer company)

Suggestive – When you use words that are related to your goods or services, but don’t quite describe them.

Descriptive – When your trademark more or less describes your goods or services.

————————————————–

Generic (no protection) – When your trademark is the word everyone uses for your product, and then you lose trademark protection because the language has claimed your trademark as its own. This happens most tragically when a fanciful mark dominates the market too well. Aspirin is the seminal example of a trademark lost to genericism. Xerox corporation fights this risk, as does Google. Marks frequently at risk for this include Band-Aid, Frisbee, Velcro, and anything that everyone you know calls by its trademark name even when referring to the general good or service.

So, how do we rate these marks?

I would argue that Caterpillar’s full mark is descriptive, as it describes a style of tread-and-wheel movement for heavy machinery. (I could also see the argument that Caterpillar is a suggestive mark, because it could be said to suggest to the mind the slow and steady motion of a grub… but I’m not entirely convinced.) On the other hand, the mark “CAT” is… well, truncated. It wouldn’t even be part of Caterpillar’s trademark portfolio if it weren’t for the fact that it’s just the first three letters of the word “caterpillar.”  But “cats,” conceptually, have nothing to do with Caterpillar’s business.

And this is where Caterpillar’s problems start.

Caterpillar is not interested in aligning their branding with felines- Caterpillar is interested in the first three letters of their company name. As a mark, it’s arbitrary (insofar as cats have no conceptual relationship with bulldozers or cranes—though maybe there’s a long-shot argument that cats sometimes dig, and some of Caterpillar’s machines dig). But it’s only an arbitrary mark if Caterpillar can claim the feline meaning of “cat.” The recurring question that determines a lot about Caterpillar’s mark is what the mark actually means.

Here’s the most interesting question in this dispute that I’d like to see the USPTO answer: when a truncated mark happens to spell a new word that has no common meaning with the original mark, does the truncated mark adopt the meaning(s) connected with the truncated mark as though that mark was not a truncated mark? To put that in context: does Caterpillar’s “CAT” mark mean “a feline” or does it mean “short for caterpillar”? If Caterpillar can claim the new meaning, this could elevate their mark strength from “Suggestive/Descriptive” to “Arbitrary.”

On the other hand, “Cat & Cloud” is either arbitrary (because neither cats nor clouds have anything to do with coffee) or suggestive (because cuddly cats and cloudy, overcast whether evoke an image that seems more complete with a warm cup of tea or coffee). If it is suggestive, it is one of the most abstractly suggestive marks I’ve seen. If it is arbitrary, it is one of the more thematically-attuned marks I’ve seen.

 

Likelihood of Confusion: The Quintessence of Trademark Disputes

Almost every trademark dispute comes down to an examination of the likelihood of consumer confusion.

The Likelihood of Confusion Factors Are:

Relatedness of Goods or Services

Similarity of Marks

Similarity In Appearance

Similarity In Sound

Similarity In Meaning

Design Marks

Likely to Deceive

The actual goods and services of these two companies are far apart. However, the subject matter at issue is the merchandise that is ancillary to both businesses. As far as the trademark analysis is concerned, a shoe is a shoe, and a t-shirt is a t-shirt, so the goods are considered related for the purposes of this analysis. I think there is still some argument to be made for Cat & Cloud that the shoes themselves might be very distinguishable (as I understand it, Caterpillar shoes tend to be steel-toed boots designed for rough construction work, while Cat & Cloud makes lighter-wear, everyday walking shoes). A significant distinction between shoes might be enough to argue that there is less likelihood of confusion.

The marks display a weak similarity. Both marks contain the word “cat,” though the shortness and commonplace nature of the word make this barely noteworthy. The inclusion of a substantive element with “Cat” is sufficient to establish the marks as dissimilar. This also addresses questions regarding similarity in sound and in meaning.

Similarity in appearance only seems plausible if the words “& cloud” are significantly smaller than the word “Cat” in the mark of the defendant. Furthermore, to address the design elements, Caterpillar has carefully cultivated a stylized typeface and design that is distinct and recognizable and, to my understanding, this has not been remotely imitated by Cat & Cloud.

To the factor of similarity in meaning: this is sufficiently addressed in my analysis regarding mark similarity, but I think there is an additional point to be made. Given the context of the trademark “CAT” for the company Caterpillar, it is not clear on its face that the plaintiff’s truncated mark is actually intended to mean or signify a member of the taxonomic family felidae. I don’t think this matters much because of the dissimilarity of the marks, but I am not convinced that there is actually any similarity in meaning. I bring this up because I think it points to the central, recurring problem for Caterpillar’s trademark.

Finally, it seems profoundly unlikely that either mark will serve to deceive consumers. It is truly difficult to imagine a serious scenario in which a consumer seeks out a hat or t-shirt sporting the trademark of one company and mistakenly purchases a product from the other company.

 

Bonus Find: Google Hints at a Huge Branding Problem for Caterpillar

While researching for this blog post, Google offered me additional helpful information regarding other inquiries about Caterpillar, Inc. Google indicates that the number one question that average users have about Caterpillar is whether it is also Cat:

 

Caterpillar problem

 

That is a huge problem. That is a failure of branding. That is the “Where’s the Beef?” advertisement all over again. (An enormously popular advertisement, yet consumers failed to correctly identify the advertisement with the correct brand, product, or company.) Maybe Caterpillar is scrambling to bat down other trademarks in the hopes that consumers will know who they are if they are the only company left with a cat-related trademark.

This is a bitterly ironic discovery. This lack of brand understanding isn’t Cat & Cloud’s fault. It isn’t anyone fault besides Caterpillar’s. If consumers don’t connect a trademark to a company, it doesn’t matter how thoroughly that company defends the trademark. Caterpillar doesn’t have a likelihood of confusion problem with competitors or other companies outside of their industry. Caterpillar has a likelihood of confusion problem with itself. Maybe marketing should work on reconciling the “CAT” and the “Caterpillar” before the company invests in aggressive trademark protection.

Perhaps this confusion is the effect of Caterpillar’s own identity crisis: Is this a Caterpillar company or is this a Cat company? Caterpillar might resolve a lot of its problems if it picked one animal and stuck to it. Perhaps Caterpillar set itself up for an IP portfolio headache by stretching its trademarks as far as its goods when it decided to become a clothing and heavy machinery company that is known as two completely different kinds of animals.

 

The Charitable Interpretation

Despite the bad press Caterpillar is getting, I think there is an empathetic viewpoint: Caterpillar is actually in a very weak position, and they are compensating with an aggressive strategy. “CAT” is actually a sub-optimal trademark, and Caterpillar feels stuck with it.

Caterpillar has two facts against them:

1) Their truncated mark spells “cat”

2) Cats are exceptional popular, wide-spread, well-liked, and generally excellent subjects for brands

I don’t think Caterpillar ever wanted to be a cat company; they didn’t name their company after anything remotely feline. The irony is that Caterpillar probably doesn’t want to be defending “cat” as a trademark — after all, the company never really picked it. Caterpillar is unlucky to have a truncated mark that happens to spell “CAT,” and the company is concerned about how difficult that mark is to protect. After careful consideration, the company has decided that their best chance at protecting their truncated mark is to aggressively seek out trademarks that involve the word “CAT” and pursue actions against those trademark holders.

Caterpillar seems to be leaning into the hand they’ve been dealt: the company applied for two more trademark registrations last August that incorporate some honeycomb design into the mark (Serial numbers 88080972 and 88080934). I think we’ll know that Caterpillar has gone too far if the company pursues actions against other companies that make any use of honeycomb lattice designs in their logos, marks, such as Post Foods (for their Honeycomb cereal) or the American Beekeeping Federation.

 

Conclusion: Can’t Own Every “Cat”

The troubling fact for Caterpillar’s IP management is that their truncated mark happens to be an entirely different English word—an extremely common, extremely brand-able (because of the American fondness for cats) English word.

This accidentally expands the range of what Caterpillar has to consider when thinking about IP protection. It turns out that Americans like cats, and associating with something positive is a classic brand-building technique. So a lot of companies are prone to incorporating felines into their branding. This shouldn’t have anything to do with a company named after a butterfly larva, but trademarks are more about language than they are about zoology.

There are 2459 results for live marks in the USPTO Trademark Database with the word “CAT.” Caterpillar can’t deny IP ownership of every “cat.” But Caterpillar can’t idly sit by and let their trademark fade into oblivion because cats got a popularity boost from social media.

The central battle in IP is defining the boundaries of ownership (this is what it has in common with other types of property law). Caterpillar surely understands that no single company can own every instance or usage of the word “CAT.” But Caterpillar just as surely understands its risks: that a mark like “CAT” is extremely difficult to protect, and is likely to become a weak mark without constant vigilance.

There are strategic reasons for defending IP aggressively. But somewhere, there is a line between an aggressive defense and an offensive offense. Although Caterpillar’s strategy is understandable, there has to be a limit to a trademark portfolio. If Caterpillar hasn’t crossed that line with its cancellation action against Cat & Cloud, it surely must be getting very close.

 

***

I have to include the caveat that there may be more to this particular case than is apparent. Research on open litigation is challenging. Seemingly insignificant or unimportant details can completely alter the course of a legal analysis. As always, nothing in this post constitutes legal advice and is for educational purposes only.

***

Fun Fact: Caterpillar owns the second oldest “Cat” mark in the TESS database.

Second oldest CAT mark: 0564272, issued Sept 1952

Oldest Mark: TOMCAT:  0552420, issued Dec 1951.

***

Bonus Background Trademark Knowledge: Two Types of Proceedings

What is an Opposition?

An opposition proceeding is when one party applies for a trademark, the USPTO says, “If anyone doesn’t think we should approve this trademark, speak now or … well, file a cancellation proceeding later.” An opposition is another party speaking up just before a trademark is granted.

Trademark owners sometimes file oppositions that sound egregious. But filing an opposition is sometimes just a way of announcing that you care about your trademark; in some of the more outlandish cases, the opposing party doesn’t really expect the USPTO to deny the application—the opposing party is just establishing a record. Other times, the opposing party really does think that there is a legitimate concern with the applicant’s trademark. The proceeding between Caterpillar, Inc. and PetraCat was an opposition proceeding (and as a result, PetaCat was not granted a registration for their trademark).

 

What is a Cancellation?

After the USPTO has approved an application and given a certificate of registration to a trademark holder, sometimes another party realizes that there is some reason that the trademark registration should be cancelled. A cancellation is different from an opposition in the fact that the defendant has already received a trademark registration. This gives a little bit more of a presumption of legitimacy to the defendant than the applicant has in an opposition proceeding. The proceeding between Caterpillar and Cat & Cloud is a cancellation proceeding.

 

What Slay the Spire can Teach About Digital Media Access Decisions

When I heard that iTunes was scheduled for destruction, I was baffled and alarmed. I have since learned that the service is being split and re-branded, in a sort of platform-mitosis. But I had several conversations in which my interlocutors were not persuaded of the merits of media ownership over streaming media. Having collected my thoughts, and faced with Google’s Stadia announcement as well as even the phantasmal threat of an iTunes closure, I hope to make a case here that media ownership reduces wildly unpredictable and uncontrollable elements of media consumption.

Slaying The Spire, With Just a Little Luck (Or a Lot of It)

Slay the Spire is a rare case in which combining a lot of ideas into a game doesn’t make the game feel chaotic and confusing. The game consists of progressing through the levels of an eponymous spire, each level consists of some encounter or event—very, very often, a combat event. Combat in this game is a resource-management card game: using a limited pool of “energy,” cards are played that either deal damage or prevent damage from being taken. Each card costs a different amount of energy, so strategic choices have to be made to optimize offense and defense. At the end of a combat, the player is presented with three choices for a new card to add to the deck. The same deck is carried through the spire, so each completed combat presents an opportunity for new cards for future encounters.

Slay the Spire gets its replay value from the unpredictable factors that permeate the game. There is randomness within the combat encounter, as a player’s options are defined by the cards that are drawn from the deck on any given turn. Then there is further randomization in the events themselves (what enemies you fight, if any, on any particular level of the Spire). Slay the Spire adds randomness in the building of the player’s deck: there are no guarantees that you will even have the option to add a certain card to your deck in a particular run of 50 levels in a Spire. (I once spent an entire run through a Spire trying to assemble a deck centered around one specific card that would greatly amplify my defensive capabilities—I never even saw that card, and inexplicably still got to the final level.) And I haven’t even discussed the role of Relics in the game, which can provide small bonuses or fundamentally alter game mechanics. All of these unpredictable, randomly-generated chances and choices give the game replay value and make it interesting, fun, and challenging. Putting choices out of a player’s control can be an element of a great game, but it’s not a part of a great day.

 

Unpredictable Elements

There are a lot of components involved in the everyday digital tasks that fill (and sometimes sustain) our lives. The device has to work properly, it has to connect to a network, the network has to function, and we also rely on the server that hosts the data we want. Anything from dropping a cell phone to a power outage to an unplugged cable somewhere in a distant city can cause the entire process to fail. It is really amazing and awe-inspiring that the entire system works as well as it does. Of course, sometimes, something goes wrong.

For purposes of today’s discussion, I think it’s helpful to divide the possible problems into two categories: those in the user’s control, and those outside of the user’s control. So, whether I charge my cell phone, whether I spill water on my computer, whether I use a program correctly—those are, practically speaking, in the domain of the user. However, the city’s electrical power grid is not something a user can single-handedly maintain or repair. Similarly, the user cannot control conditions at a distant server farm, or control the telecommunications network that links the user to those servers.

This, it seems, is where I diverge from so much of my demographic cohort. I don’t want my access to media to rely on these two additional components (telecommunications and data-holding servers). Maybe I would feel differently if I had better experiences, but I have repeatedly been unable to play games or watch movies because at least one of these components has failed. I have encountered this setback for over a decade- in some cases, I have experienced it daily, over the course of months. In contrast, when I think back to those halcyon days in which I owned my media, the only obstacle was a scratched DVD or a VHS tape that was just too-well-loved (we all have a childhood story of the tape that we watched so many times that the playback became warped and distorted).

Conclusion

The unpredictable nature of the available choices in Slay the Spire keeps an otherwise repetitive game novel and engaging. By forcing the player to consider various probabilities and possibilities, the game creates challenge and the kind of frustration that invites a player to learn, try again, and do better next time. I cannot understand the kind of person who willingly invites this kind of challenge and frustration into the process of trying to listen to music or watch a movie. Conversely, if a player had control over any of these random elements in Slay the Spire, the game would be easier. For both Slay the Spire and media access, generally, the same rule applies: the more control one has over the variables, the less challenging the experience.

There are other issues implicated in this debate that I didn’t touch on: the data privacy questions that come with streaming and DRM protections, the reasonable efforts of artists and publishers to protect their copyrights and profit from their works, the legal status of digital goods, etc. Those issues deserve consideration (which is why I have written about them before and will do so again), but I wanted to keep my focus narrow for the sake of clarity. My perspective on this question can be distilled to one personal point: I do not feel that there is evidence to support the claim that US telecommunications networks are more reliable than I am. I simply trust myself more than I trust those corporations, their services, and their infrastructure. Likewise, I trust myself more than I trust the media companies that provide the platforms and media. This is true on a day-to-day basis (for telecom), and it is true for long-term planning (media providers make no promises that they will last longer than my interest in the media they provide).

I can trust electricity providers—they have proven themselves. Power outages certainly do occur, but their frequency, cause, and duration are within acceptable parameters.* Maybe it comes down to what inconveniences, unknowns, and probabilities we are willing to accept. I can live in a world where my electricity is out for maybe 30 minutes per year. I’m not excited to choose a world in which I can access my own leisure at the leisure of so many other people.

 

 

 

 

*The fact that power failures necessarily cause network failures would be a meaningful riposte if my point were strictly confined to unadjusted uptime comparisons.

How Pirates Change Games (It’s Usually Not An Improvement)

Sea Of Thieves: It’s Not Called “Sea of Cool Guys” – Mike Krahulik

Sea Of Thieves is a game where people who want to be pirates can be pirates. Some players really, really  get into the role. Every online game community has experienced some trolling and griefing; there are always players who invent their own game, though it’s always the same game, in which the objective is to make other players unhappy. The developers of Sea of Thieves specifically designed space for that kind of player—unlike other games which seek to curtail negative behavior and ban players who ruin a good time for others. In a game about pirates, wanton aggression has a place.

 

When You’re a Professional Pirate…

It took me a while to understand how copyright infringement (and counterfeiting) came to be called by the same term that was previously reserved for attacking a ship, killing the crew, and stealing their stuff. The two crimes don’t really look similar: copying a digital file rarely involves a cutlass or a flintlock pistol, taking barrels of rum or chests of gold, and typically doesn’t involve boats at all (except when moving a lot of counterfeit goods internationally, I guess).

I think the term makes more sense from the perspective of the owners of the rights. Pirates of the 15th-19th centuries were hard to find, hard to predict, and hard to pursue. Sometimes their attacks wouldn’t be noticed for months, as it was hard to get good cell phone reception in the mid-Atlantic in the 1600’s. So, when music, movies, books, and games started getting copied and distributed, and rights owners struggled to identify who was doing it, where they were, or what they might do next, as they completely disrupted the industry’s ability to sell and distribute their wares, I imagine pirates came to mind.

 

Countermeasures

Media industries reacted to piracy differently, as best fit the particular medium. The music industry moved away from physical goods and into the digital marketplace. The iTunes Music Store was, in many ways, like the P2P networks that had threatened the industry, except that Apple was the only one seeding and they charged for each song.

The video game industry took a different approach. After a short-lived effort to encrypt physical copies, the industry moved to a digital distribution system. This was easy enough, and platforms like Steam and the Play Station Store were already moving the industry in this direction. The next move, however, was for the internet to start shaping the way games were played: online gaming became increasingly popular, and developers and publishers realized that it was easier to keep track digital copies if devices had to connect to the company’s servers. It was a natural fit: the games already involved internet connection, so it wasn’t much more work to have the serves check to see if players had authentic copies of the games. Because the game required player to be always online, this method became known as Always-On DRM. When it worked well, it was something that honest players would never notice or think about. But it didn’t always work so well.

Rebellion

The new system worked well for some games. Other games… well, suffered. Sometimes, the online connection requirement was obviously completely artificial and frustrated players because the setup made no sense. This exacerbated problems in cases of poor execution: when a server couldn’t connect, it was even more frustrating when the server wasn’t necessary for the game experience. Even today, not everyone has a consistent, stable, high-speed internet connection (especially in the US). Many players just wanted a simple, single-player experience, and Always-On DRM interfered with that. The method created an environment that only allowed players to play when the company was able to facilitate it; if the server was down, or the connection was slow, the game was unplayable. This upset people who paid for a leisure product and then found out they could not use it at their leisure. By increasing friction and fuelling resentment against the game industry, some game companies suffered as they tried to implement Always-On DRM. The artificial inclusion of Always-On DRM to the reboot of the incredibly popular and successful video game SimCity is credited with its failure (notably, the execution of the Always-On DRM was sub-par, as the server was frequently down or buggy).

 

Pirate By Design

Sea of Thieves found success as a game by embracing a certain attitude that the rest of the industry had been fighting for decades. The developers made a space for people who want to undermine the work of others. So far, it’s been an interesting experiment that I can only predict will culminate in the coagulation of that particular kind of trolling, griefing player. I see it as a kind of prison in which the inmates believe they are at a theme park. Maybe the game will eventually give us some kind of data about trolls who revel in ruining the joy of others. Maybe it will teach us something about pirates.

There is already a lesson about piracy for video games. In the early 90s, piracy was built into the business model of some companies. They called it “shareware,” and the idea was that people would copy and distribute a portion of a game. The developer hoped that this would serve as a sort of advertising, and people who enjoyed the shareware portion of the game would then purchase the full game. In 1993-4, idSoftware proved that this model was feasible with one of the most popular games of the 90s: Doom was distributed widely as a shareware product and the company made enough profit for the head programmer and the lead level designer to each purchase a high-end sports car. This year, idSoftware released Rage 2; unsurprisingly, the new parent company, ZeniMax, did not opt for a shareware distribution model. The video game industry has changed over the last 30 years. It takes a special combination of product, customer, and ecosystem for it to be a smart choice to give away a third of your product for free—but it’s not an impossible dream.

Today, piracy remains a problem for the video game industry, but new legal challenges (some with more legitimate basis than others) have proven more urgent: legislation of loot boxes, esports contracts, prosumer sponsorship deals and disclosures, copyright infringement within the game, and copyright infringement for streaming and video uploads.

Maybe that’s the best reason to keep the term “piracy” for copyright infringement that involves copying the entire work and distributing for consumption as a counterfeit or inauthentic product: there are so many ways copyright can be involved in a video game in the current digital ecosystem, have different terms for the different infringements is nice.