Pennsylvania lawyer, Marc Bragg, recently sued San Francisco-based Linden Lab for breach of contract and unfair trade practices after an online property deal went sour. Oddly, the property at the heart of the dispute is entirely virtual and exists only in Second Life. The lawsuit, which sought several thousand in damages, was settled out of court in a confidential agreement.

Bragg’s lawsuit underscores an important question that has recently piqued the interest of politicians and lawyers alike: Do virtual economies, such as those found in various MMORPGs, need to be regulated? And, if so, should the regulations that exist in the physical world apply?

While still uncommon, numerous disputes concerning virtual property have found their way into courtrooms in both the US and abroad. For instance, a recent case found a New York man liable for selling unauthorized copies of numerous Second Life users’ virtual goods. And, in Germany, a 17-year-old was arrested for stealing virtual furniture from within a piece of social networking software.

The idea of litigating such matters was considered laughable not long ago, but the popularity of online games like World of Warcraft and Second Life have created billion-dollar virtual economies where people trade real currency for virtual assets on a daily basis and, thus, lent credibility to such litigation. As these economies continue to grow, there is little doubt that litigation will continue and legislatures will be forced to not only determine what rules should govern these economies, but how these economies can and should be policed.

Yahoo reports that Nintendo of America has recently been ordered to pay $21 million in damages to developer Anascape for patent infringement.

The award is the result of a federal jury verdict in a suit filed by Anascape in 2006. In that suit, Anascape asserted claims against Microsoft and Nintendo for infringement on twelve of the company’s patents, including patents on a “Game controller with analog pressure sensor” and an “Analog Sensor with Snap-Through Tactile Feedback[.]”

Microsoft earlier settled the dispute with Anascape; the details of that settlement remain confidential.

Nintendo spokesman Charlie Scibetta said that the gaming giant will seek an appeal and expects a significant reduction in the award. Fortunately for Nintendo, the ultra-popular Wii controller — both the remote and nunchuck — were not found to infringe upon Anascape’s patents. However, the designs for the Wii Classic, WaveBird, and Gamecube controllers were all found to infringe upon Anascape’s patents.

LOP: Thanks for the tip, Adam!

Ubisoft Entertainment was recently awarded $13.2 million against MGA Entertainment, owner of the Bratz line of dolls, in an arbitration over a breach of contract complaint.

The complaint centers around a 2002 licensing agreement that gave Ubisoft Entertainment the right to publish video games based on MGA’s line of Bratz dolls.  Following a 2003 explosion in popularity of the Bratz brand, MGA allegedly sought to force a renegotiation of the contract by terminating the previous license “without cause and on pretextual grounds.”  When Ubisoft refused to renegotiate, MGA sued.  In response, Ubisoft filed a countersuit alleging that MGA’s termination of the prior licenes was a breach of contract.

The arbitrator eventually ruled in favor of Ubisoft, rejecting all of MGA’s claims.  The Los Angeles Superior Court later confirmed the arbitration award, which covered lost profits, attorney’s fees and interest.

For more, see: Gamesindustry.biz
IGN

Take 2 Interactive recently announced that a settlement has been reached in the Hot Coffee Mod class action. Pending final approval from the US Dictrict Court for the Southern District of New York, members of the class will be entitled to exchange their game disc for a new disc without the offending content or recover $35 if they meet several criteria.¹

According to the press release, Take 2 has agreed to spend at least $1.025 million on settlement benefits, and the settlement generally caps the defendants’ out-of-pocket costs at no more than $2.75 million, in addition to the costs of providing notice to class members and paying a fee to plaintiffs’ counsel.

Take 2 CEO, Ben Feder, also commented on the settlement in the press release:

If the case had continued, we believe the court would have agreed that Take-Two was not liable for consumers acting independently to modify their games with third-party hardware and software to access normally inaccessible content… Nonetheless, we believe it is in the best interest of the Company to avoid protracted and costly litigation to prove our case and to finally put this matter behind us.

For the full press release: Take 2 Games

1. The members of the class must swear that they (1) bought a copy of Grand Theft Auto: San Andreas before July 20, 2005, (2) were offended and upset by the ability of consumers to modify and alter the game’s content using the third-party Hot Coffee modification, (3) would not have bought the game had they known that consumers could modify and alter the game’s content using the third-party Hot Coffee modification, and (4) would have returned the game, upon learning the game could be modified and altered, if they thought this possible.

Finally, finally, finally the original law evading celebrity (“LEC”), O.J. Simpson, is back in the news and, refreshingly, this time it’s not in his favor. Reuters is reporting that the ex-football star will have to turn over any money he has obtained through royalties from Take-Two’s All-Pro Football 2K8 which uses his likeness as one of it’s players in order “to satisfy a $33.5 million judgment won against Simpson.”

Simpson, who has maintained his innocence from the get go, was found not-guilty of the murder of Ron Goldman and his ex-wife, Nicole Brown Simpson in 1995. But, in a civil suit brought forward by the Goldman family two years later, he was found legally responsible for their deaths. Yes, the world of law is a strange place. Simpson has refused to voluntarily pay any of the money the suit says he owes, but that doesn’t mean that the courts can’t drag it out of him. Los Angeles County Superior Court Judge Gerald Rosenberg ordered Simpson to turn over payments that “have been paid, are due or may be due in the future.” Simpson was also ordered to release all contracts and paperwork affiliated with Take-Two to the court.

Reuters, in what appears to be an attempt to extend the length of their story, also drew a connection between the fact that All-Pro Football 2K8 has a team called the Assassins and that said team’s mascot is a hooded man with a stabbing knife. Reuters then decided to watch a video of the game and found Simpson playing as an Assassin:

As previewed on a Web site for video game promotional trailers, the team mascot is a hooded figure who makes stabbing motions with a large knife in the end zone when the Assassins score. Simpson does not have to be assigned to that team, but he was in a clip shown on the Game Trailers Web site.

Way to make video games the bad guy in an article about O.J. Simpson, Reuters. Bravo… bravo. Like Take-Two needed more bad press. Take-Two, which doesn’t seem to care where its money is going as long as their not-so-good name isn’t tarnished further, has responded to the game bashing with a standard PR quote:

[The Assassin mascot is] not specifically associated with O.J. Simpson, and the game does not promote any such connection.

According to the Seattle Post-Intelligencer, Microsoft has recently settled the dispute of Kevin Ray v. Microsoft Corp. The case, originally filed as a proposed class action, was settled as an individual action.

In the case, Ray alleged that the Fall 2006 Xbox 360 Update caused his Xbox 360 to malfunction, rendering it useless. Following Ray’s initial complaint, Microsoft motioned for summary judgment and argued that it has since extended the Xbox 360 warranty and replaced Ray’s Xbox 360 free of charge.

The terms of the settlement were kept private, but I can’t imagine Ray made off with much considering Microsoft’s free console replacement and numerous warranty extensions.

For the full report, and a copy of Microsoft’s summary judgment motion, see: Seattle P-I