STOPPING THE REAL-LIFE BAD GUYS IN THE WORLD OF COMPUTER GAMES – PART III

20.06.2017

STOPPING THE REAL-LIFE BAD GUYS IN THE WORLD OF COMPUTER GAMES

By Lawrence Hoffman

What To Do About Infringement

Introduction:

In Part I of this series, we identified the different aspects of computer games that are potentially protectable under IP law, and the nature of protection that might be available. In this third Part, we want to talk about how courts will go about deciding if your rights have been infringed.

To be sure, this is mainly lawyer stuff, but you will be righteously indignant if you think the poachers are on the loose. A general perspective on what bad behavior you can prevent, and what you cannot prevent will help keep you grounded until you can consult your IP lawyer.

Jurisdiction over Infringers:

Although a unitary patent system is being established in Europe, and might be in operation by the end of 2017, there are presently no international courts having jurisdiction over actions for IP rights infringement. Therefore, as we discussed in Part I, you need to establish your IP rights selectively where your infringers are likely to be operating and/or where courts will exercise jurisdiction over them if you try to bring a law suit. There are two issues here. First, what the infringer has to do for a court to be willing to hear your case, and second, if you get a judgment, for example, in Israel, over a Chinese defendant, will a Chinese court help you enforce your judgment.

Where You Can Bring Suit:  In broad terms, there are two requirement which must be met for a court to take jurisdiction: (a) the case must result from (i) intentional activities within the geographic boundaries of the court’s powers, or (ii) activities specifically directed at persons within such boundaries, or (iii) activities which have effects within those boundaries and importantly, (b) taking jurisdiction is consistent with general principles of “due process” and fairness to an out-of-jurisdiction defendant.

Application of these requirements to traditional ways of doing business has been the subject of extensive litigation and courts usually know how to handle most situations. But the internet changed everything. Today, almost anything – including computer games are for sale over the internet, and, of course, many games are playable interactively on the internet. Courts everywhere are struggling to adapt the traditional rules to this new reality.

Whatever the new normal turns out to be, one thing that won’t change is that, subject to certain limited exceptions, in cases involving IP rights, a U.S. federal court can render judgments that affect infringement throughout the U.S., but not activities that take place outside the U.S. If a knockoff of your game comes, say, from China, to stop the knockoff from being sold in Israel, you will need to bring an action in Israel based on IP rights you have established there, and you will need to meet Israel‘s law concerning jurisdiction over the Chinese infringer. Alternatively, if you have established your IP rights in China, you might be able to sue in China and stop the infringement dead in its tracks.

Enforcing “Foreign Judgment”: If you are able to meet the jurisdictional requirements for example, in Country A, and you get a judgment against a national of Country B, it will generally include money damages for infringement in Country A. But if the infringer has no assets in Country A, if you want to collect the money, you are going to need to enforce your judgment in Country B or someplace else where you can find assets of the infringer.

Whether you will be able to do this will depend on the law of the country where the assets are located. The laws as to this are often quite complicated and well beyond the scope of this article. Nevertheless, you need to be aware of both the jurisdictional and enforcement issues when you have to deal with an infringement of your rights, given the borderless nature of today’s commerce.

Tests for Infringement:

Although there is considerable country-to-country variation in laws governing tests for infringement, the general principles discussed below will be sufficient for our purposes. We will focus, however, on things that will matter to game designers.

Trademarks:   The key element of trademark infringement is confusing similarity. If the goods or services and the names are similar enough, confusion is likely. As a simplistic example, the creators of the Ghostbusters game would likely have a good case for trademark infringement against someone who adopted a name like “ghost patrol” or “ghost exterminators” for a ghost-related game.

Unfair Competition: This is close cousin trademark law, and in the U.S., many types of unfair competition are covered by parts of the Trademark Act. Briefly, the types of conduct addressed involve use of words, symbols, trade dress, packaging etc., and false or misleading representations of various kinds likely to cause confusion, etc., in relation to affiliation, or other connection, or association with the protected party or in regard to the parties’ commercial activities. It also addresses misrepresentations of various kinds in commercial advertising or promotional activities.

Another kind of unfair competition is “dilution”. This is a use other than on a similar product  that that tends to diminish the distinctiveness or reputation of a ‘famous mark’. Use of “McDonalds” or “Mario Brothers” for clothing or sporting goods might give rise to a claim of trademark dilution. Another example would be use of “Coca-Cola” for bathroom tissue or cleaning products.

Copyrights:

We described in Part I the limits on copyright protection. In determining whether your rights have been infringed, a court will need to filter out the unprotectable elements before it can decide if protectable elements have been copied. In general, infringement will be found if an “ordinary observer” (in some cases, a “discerning ordinary observer”) will find the works to be substantially similar. You should be aware that this test is sometimes difficult to apply and courts do so in a wide variety of ways.

For computer programs, the customary process of determining infringement as to non-literal aspects is known as the abstraction-filtration test. According to this, a court identifies the increasing levels of abstraction of the program and at each level, material that is not protectable by copyright is identified and excluded from further examination. The protectable material that remains is then compared to the defendant’s program to determine if it has been copied.

The abstraction step works upward from the individual instructions to the ultimate function of the code. At each level, the elements are discarded that are dictated by efficiency, dictated by external factors, or taken from the public domain. Generally, the court seeks to eliminate features dictated by, or incidental to, the function. This corresponds to the merger and “scenes a’ faire” doctrines discussed in Part I.

Design Patents:   The test for design patent infringement in the U.S. is whether an ordinary observer, familiar with the prior art would be deceived into believing the defendant’s product is the same as the patented product.

Note that the court’s use of the prior art is to guide the ordinary observer in determining if the accused product is like the patented one, and not to determine validity of the patent. To determine validity, the patented design is compared to the prior art. To determine infringement, it is the alleged infringing device that is compared to the prior art. In the context of a game UI, the test would translate to whether the ordinary observer would consider that the accused interface looks like yours, in comparison to other existing UIs.

In other countries, determination of infringement of design patents and registered and unregistered industrial designs is also a visual test.

Judging confusing similarity of trademarks or design patent infringement is highly subjective, but there is no help for that. The differences, particularly in design cases are rarely dramatic. More often the differences are subtle. Stated another way, the judge or jury won’t usually be comparing apples to oranges, or green apples to green apples where the answers pop out at you. Determining infringement is more like comparing two partially ripe apples.

As to damages, the question is up in the air. The U.S. Supreme Court just reversed a 300 million dollar verdict for Apple against Samsung because a jury based damages on the profit on the whole smart phone when Apples’ design patent covered only a feature of the outer cover. The Court said that the proper measure of damage should be based on the contribution to the profit attributable to the infringed design. The case has gone back to the lower court, so some refinement of the law related to damages may be in the offing.

Utility Patents: A patent is infringed if the accused subject matter meets every term of a patent claim, either literally, or in a way that differs only in some immaterial respect. The latter kind of infringement is provided for in the U.S. by the “doctrine of equivalents”. Courts interpret that as a difference that is art-recognized as equivalent. It is sometimes expressed as something that does the same thing in the same way for the same purpose as what is recited in a claim.

Where a single party meets the requirement for literal infringement or under the doctrine of equivalents, it is referred to as direct infringement. A party can also commit indirect infringement by contributing to infringement by another, or by inducing another to complete the infringement. Both of these generally require that there also is a direct infringement. This can be a complex topic and we mention it only as a matter of general interest. Your concern only needs to be triggered if you suspect a direct infringement.

Misappropriation of Trade Secrets: We’ve discussed what constitutes a trade secret and how to protect it in Parts I and II. Here, we just need to discuss the remedies available when a trade secret is used or disclosed without permission.

Remedies for IP Infringement:

Let’s take a brief look at the kinds of remedies you may be able to obtain. In most instances, if a court determines that your rights have been violated, you will get a judgment for damages as noted above, and, often, but not always, an injunction against future infringement. Sometimes, you can also get an order stopping importation of the infringing product. In China, you can even stop exportation of goods that infringe Chinese patents, trademarks and copyrights.

Injunctions: Injunctions are a powerful weapon because violation of an injunction can result in a finding of contempt and imprisonment and/or substantial fines. Injunctions come in three flavors, namely temporary restraining orders (TROs), preliminary injunctions and permanent  injunctions.

A TRO is an emergency measure that a court will grant to maintain a status quo, while it figures out if the plaintiff needs some kind protection, i.e., preliminary injunction, while a matter is before the court. A TRO can often be granted without notice to the other party and without a hearing. It is generally coupled with a request for a preliminary injunction. It is rarely given in cases involving IP rights.

A preliminary injunction can be obtained in IP infringement cases, usually after a preliminary hearing. To obtain a preliminary injunction, a plaintiff must make a reasonably persuasive case that he will prevail on the merits at trial and that without a preliminary injunction, he will suffer irreparable harm. He must also show that there will not be unreasonable prejudice to the defendant and a public interest that will be served if the preliminary injunction is granted. These factors are given weight by the court according to the facts of the case. Preliminary injunctions in IP cases are available in most countries, and the requirements are largely as indicated above.

In Europe, for example, Directive 2004/48/EC on the Enforcement of Intellectual Property Rights requires EU members to provide for preliminary injunctions. It also requires that orders for seizure of infringing goods be available. While the Directive has been implemented, its effect has not been uniform, and is reportedly not always adequate.

China’s patent law expressly permits the granting of preliminary injunctions and they are available in trademark and copyright litigation as well, but, in practice, preliminary injunctions were rarely granted.

In early 2015, however, the Guangzhou IP Court (one of the specialized courts established to hear IP infringement cases) granted its first-ever interim injunction to a company called Blizzard Entertainment, Inc., a world-famous video  game developer. It has been predicted that this will set a strong precedent as it was one of the cases on the list of the top ten IP cases of 2015 released by the Supreme People’s Court. That’s certainly good news for game developers. In fact, since 2015, preliminary injunctions have been granted by courts in the Beijing area in several IP cases.

Turning now to permanent injunctions, after a trial, a successful plaintiff can often obtain an injunction prohibiting future infringement of patents and trademarks. Permanent injunctions are also available  to prevent use of misappropriated trade secrets.

In the U.S., historically, permanent injunctions were routinely granted in patent cases because infringement was presumed to have caused “irreparable injury”. In 2006, however, the U.S. Supreme Court decided the eBay v. mercExchange case, in which it ruled that a generally applicable four-part test for determining whether to grant a permanent injunction must also be used in patent and (by implication), in copyright cases as well. Plaintiffs must therefore prove: (1) an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Courts now give much closer consideration to the facts before permanent injunctions are granted.

The reduced availability of permanent injunctions creates a practical problem for patent owners.  Under U.S. patent law, there is a six-year retrospective limit on damage awards, but no statute of limitations that dictates the period during which an infringement action must be commenced. Courts do not always provide for royalty payments to compensate for future use of the patented subject matter, so unless a permanent injunction can be obtained, suit must be brought every six years during the life of the patent to obtain full compensation.

A similar situation exists in regard to copyrights, where the retrospective period is only three years, and where the term of protection is enormously longer than that of a patent.

In trademark cases, U.S. courts have not followed the eBay test uniformly, and there is presently no controlling Supreme Court decision.

As in the case of preliminary injunctions, permanent injunctions in IP cases are generally available in most countries, subject to requirements similar to those in the U.S. In China, for example, permanent injunctions are often granted.

In Europe, the above-mentioned Directive 2004/48/EC also applies to permanent injunctions.

As noted above, seizure orders are available in principle in Europe. In the U.S., seizure orders can be obtained in IP cases in some instances. They are also available in other countries as well.

Further, in the U.S., the 2016 Defend Trade Secrets Act provides for seizure orders on an ex parte basis. This is potentially a powerful weapon, but only two cases appear to have been reported in which seizure orders were sought. The order was granted in one case and  denied in the other.

Criminal laws may also apply to infringement of IP rights. In the U.S., federal law provides for prosecution in some instances for infringement of all types of IP. Similar laws exist in other countries.

Conclusion:

We have now completed our general survey of what aspects of your game can be protected, how to obtain the protection, what constitutes infringement of your rights, and what you can do about it.

Remember, however, this is just a survey. It is not a course in IP law or a set of instructions for a do-it-yourself project. Leave the details to your lawyers.

About the author: Larry Hoffman has a B.S. in Electrical Engineering and Comp. Sci. from Massachusetts. Institute of Technology and a J.D. from the George Washington University School of Law. He has been a lawyer since 1965 specializing in IP law and product liability defense. He is registered to practice before the U.S. PTO, the U.S. Court of Appeals for the Federal Circuit and the state and federal courts in New York, Maryland, and the District of Columbia. His work has included preparation and prosecution of patents in countries throughout the world, and counseling on IP and product safety matters. He has been involved in the trial of close to 100 lawsuits of various kinds. You can reach him at Lawrence@ipatent.co.il.

 

 

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