Technology, Media & Telecommunications

Last week, a district court in the Northern District of California ended a suit alleging unlawful and unfair conduct by videogame developer Supercell Oy. Plaintiffs alleged that Supercell’s use of loot boxes in its popular games Clash Royale and Brawl Stars constituted violations of California’s Unfair Competition Law (Business & Professions Code § 17200) and Consumers Legal Remedies Act (Civil Code § 1750). At the crux of Plaintiffs’ complaint were claims that loot boxes are illegal gambling games under California law and that loot boxes are inherently unfair because they exploit the same cognitive traps as gambling.

It is no secret that gaming companies have been increasingly keen to integrate or express enthusiasm for blockchain technology.

Game developers have been increasingly integrating cryptocurrency and Non-Fungible Tokens (NFTs) within their games hoping these digital assets will increase their games’ longevity with an expanded content offering. But, early feedback suggests these features risk fan-blowback so developers are advised to proceed deliberately.

Earlier this month, a district court in the Northern District of California ended a suit against Apple concerning loot boxes. That suit alleged that Apple facilitated in-app purchases of “gems,” a virtual currency used in Supercell’s game Brawl Stars. A decision issued in a similar suit brought against Google ended last week on similar grounds. The case, brought by the same attorneys on the same day as the Apple case, sought to hold Google responsible for games (in this case, Bandai’s Dragon Ball Z Dokkan Battle and Square Enix’s Final Fantasy Brave Exvius) in its Play Store that use loot boxes.

In another blow to plaintiffs suing game developers and publishers over loot boxes, a district court in the Western District of Washington granted summary judgment in favor of Valve Corporation. The case concerns the use of loot boxes in Valve’s Counter-Strike: Global Offensive, Defense of the Ancients 2, and Team Fortress 2 games.

The potential applications of non-fungible tokens (NFTs), like blockchain technology in general, are attracting attention across the economy. Some early projects by mainstream videogame publishers have been met with mixed reviews, but adoption shows no sign of slowing down. But like blockchain technology in general, NFTs, including in videogames, cause environmental concerns because of the energy required to create, transfer, and track them.

A California federal district judge put an end to a suit brought against Apple under California’s Unfair Competition Law (Business & Professions Code § 17200). The suit alleges that loot boxes in games are akin to illegal slot machines, which are prohibited by California law. Rather than suing the game publishers themselves, plaintiffs sued Apple for hosting games with loot boxes in the Apple App Store.

Videogame industry leaders have been optimistic about the endless possibilities of the metaverse, Non-Fungible Tokens (NFTs), and blockchain technology despite relatively recent developments.

As we discussed in our prior post, Blockchain and Cryptocurrency: The Future of Online Gambling?, the blockchain technology offers the online gambling industry security, privacy, efficiency, and cost-effectiveness. While some online casinos have authorized cryptocurrency payments, others have gone further by building platforms entirely on the blockchain.

The metaverse has taken the digital and physical world by storm. Many companies, including Facebook, have developed augmented reality products within the metaverse and many of these products utilize Non-Fungible Tokens (NFTs) to integrate the digital and physical consumer experience.

On October 11, 2021, the Entertainment Software Association (ESA or Association) informed the Office of the United States Trade Representative (USTR) of certain foreign websites and marketplaces that should be labeled “Notorious Markets.”

Decentralized Autonomous Organizations (DAOs) are one of many white-hot blockchain topics promising to bring a blockchain-based method for managing any organization in a decentralized automated way. Adding to the intrigue, DAOs are often associated with the creation of a proprietary blockchain token. This is a first in a series of articles exploring the business and legal ramifications of these intriguing new organizations.

On September 21, 2021, the National Music Publishers’ Association (NMPA)and Twitch announced a partnership to permit music rights holders to opt-in to license their music on the popular gaming platform.

In a class-action suit, customers stated that these digital assets were unregistered securities being sold to defraud customers because GAW did not have the physical equipment they purported to sell. Ultimately, the jury found that the products were not unregistered securities, despite contrary findings by the SEC in a related action.

On November 4, 2021, a California federal jury found that Redbubble did not infringe any of videogame maker Atari’s trademarks or copyrights, in a case that may affect future infringement suits against online retailers that permit users to sell products on their platforms.

Jack Fonss and his consulting company, True Return Systems LLC, are auctioning U.S. Patent No. 10,025,797 (‘797) on the NFT marketplace OpenSea. Bidding for the patent, which is believed to be the first auctioned as a non-fungible token (NFT), starts around USD $7.5 million.

Steam, the world’s largest gaming platform, quietly banned the use of blockchain games and NFTs on its platform on October 15, 2021. Steam’s decision raises new questions about the ramifications of NFTs for videogame companies. 

Increasingly, more and more money is spent on virtual items in the virtual worlds of videogames.

Plaintiffs suing Valve Corporation over the company’s use of loot box in several top videogames have moved for class certification in Seattle federal court.