A United States District Court judge has dismissed a lawsuit brought against Midway Games by a group of shareholders who had alleged that the company artificially inflated its stock by deceiving the public.

Filed by Joseph Zerger, “on behalf of himself and all others similarly situated,” the suit targeted Midway Games’ Steven Allison, James R. Boyle, Miguel Iribarren, Thomas Powell and David Zucker.

In a filing dated October 19, 2009, Northern District Illinois Eastern Division Judge David Coar ruled against the plaintiffs, stating:

Plaintiffs have failed to show that Defendants said or did anything more than publicly adopt a hopeful posture that its strategic plans would pay off. Such preening for the financial press is classic puffery. Even if these statements were not puffery, Plaintiffs cannot establish that they were false when made.

The plaintiffs had alleged that:

While the executives rushed to sell their Midway stock at the trumped-up prices their “scheme” temporarily sustained, the lead plaintiffs and other putative class members purchased it—and lost millions when the market eventually learned the truth.

Midway declared bankruptcy in February of this year.
 

|Image Via icanhascheezburger|

A United States Postal worker has admitted in federal court that he stole 2,200 videogames addressed to Philadelphia-area GameFly customers.

Reginald Johnson, 34, was busted as the result of a surveillance mission that used test mailings after reports of missing GameFly mailings in the area reports Philly.com. When federal agents swooped in on Johnson in September of 2008, they found a total of 160 GameFly mailers in his SUV along with a slew of other game merchandise and GameStop receipts.

Johnson, a mail processing clerk at the USPS processing and distribution center, was apparently trading the stolen games in to GameStop for store credit.

GameFly is currently embroiled in battle with the USPS over what it considers preferential treatment for Netflix and Blockbuster.

Videogame rental company GameFly is still locked in combat with the U.S. Postal Service, this time over information related to the amount of Netflix and Blockbuster specific mail slots in USPS outlets.

GameFly previously filed a complaint against the USPS earlier this year alleging that the USPS grants preferential treatment to the larger rental companies. Last month, GameFly filed a motion in order to compel the USPS to provide figures showing the percentage of USPS retail outlets that have Netflix, Blockbuster or other specific company DVD mail slots.

GameFly said it had asked for such information this past July, but that the USPS insisted it had no data and that that any Netflix-only dedicated mail slots “would be against current Headquarters policy.” GameFly, however, submitted two pictures of Post Offices in Susanville and Alturas (pictured left), California with Netflix Only mail slots, which the USPS has refused to authenticate.

Further charges from GameFly claim that Netflix and Blockbuster DVDs are hand sorted in order to reduce breakage, while GameFly discs are not. The USPS responded to this by saying that “all DVD mailers are not equal” and GameFly could change its packaging in order to gain the handling it seeks.

HackingNetflix via VideoBusiness

The developer of an iPhone game targeted for its use of the term “Edge” by extreme-litigant and Edge Games CEO Tim Langdell believes that Langdell’s lawyers “have fled.”

Mobigame head David Papazian told EuroGamer that Langdell “has absolutely no legal grounds” for his trademark infringement claim and that Langdell never actually sued Mobigames for past sales.

The Mobigame in question, Edge, has been republished on the Apple Store, under a slightly new name—Edge by Mobigame.

Electronic Arts filed suit against Langdell and Edge Games over the latter’s trademarks, an event Papazian termed “amazing.”

In a further twist, Papazian also accuses Langdell of infringing on a Graeme Devine (former id Software developer and ex-chairman of the IGDA, now an Apple employee) copyright, for an Edge Game iPhone title called Firebirds. Firebirds is a copyright owned by Devine claims Papazian, who also charges Langdell with stealing art for the game off of Deviant Art.

The Securities and Exchange Commission (SEC) is going after a Florida-based virtual reality videogame accessory maker with charges of violating federal security laws.

Filed September 29,2009 in the U.S. District Court, Southern District of Florida, the SEC named six plaintiffs from 3001 AD, LLC: Jimmy L. Barker (CEO), Robert J. Ladrach, Mark S. Rifkin, Ronald B. Bowsky, Jack Maddock and Michael Weidgans.

3001 AD ran a series of gaming installations called Beta Zones, which were first launched in theme parks around the country. These installations promised to showcase “the newest and most advanced forms of interactive entertainment” using virtual reality technology. 3001 AD also created the Trimersion First Person Shooter Gaming Accessory (pictured), a virtual reality system for use in the home with either a gaming console or PC.

The complaint alleges that 3001 AD raised around $20.0 million from 500 or more investors over the period of 1998 through April 2008 through the “unregistered and fraudulent offerings of securities.” The company also apparently utilized radio ads and telemarketers to offer and sell 3001 AD securities for $5,000 apiece, even though 3001 AD had never registered with the SEC in “any capacity.”

3001 AD is also charged with misleading investors that an IPO was imminent. Additional accusations stem from misrepresenting to investors the interest of Microsoft, Apple and Michael Eisner in using, licensing or purchasing 3001 AD’s technology.

The full complaint is available on the SEC website.

Following a PlayStation 3 system software update that rendered his console unusable, and a $150 fee from the manufacturer to fix it, a Florida man has filed a class action suit against Sony Computer Entertainment America.

John Kennedy v. SCEA was filed on October 3, 2009 in the San Francisco Division of the Northern District Court of California. The plaintiff alleges that he purchased a PS3 unit on January 8, 2009 before installing the fatal update (Firmware 3.0) in September of 2009.  The suit notes that while “as a general rule, Sony ‘encourages’ PS3 owners to install the latest version of system software, Sony required users to install the Firmware 3.0 update.”

Kennedy added that a Sony forum featured “many” complaints about console failures due to the Firmware, enough that Sony responded with a “Firmware 3.00 Q&A” FAQ.  Also stated is the fact that Sony released a 3.01 version of the update a little over two weeks after the release of 3.0 in order to “improve system stability,” but which, according to the complaint, “not only failed to address problems introduces by Firmware 3.0, it caused new problems,” including the malfunctioning of the PS3’s Blu-Ray drive.

Courthouse News, via Gamasutra, has the full complaint in PDF form.

Videogame legal watchdogs were anxiously refreshing the Supreme Court website this morning for the latest word on the Entertainment Merchants Association (EMA) v. Schwarzenegger appeal.

Unfortunately, however, the case was not listed at all in the 91-page issued Orders (link to PDF). As noted previously, SCOTUS could have denied the appeal without comment last week and then officially noted the result in today’s dispatch., but it appears that the petition for certiorari has neither been granted or denied as of yet.
 

The case of a gamer who sued Sony Computer Entertainment America (SCEA) over being banned from the PlayStation Network has been tossed out of court.

After being banned for “multiple violations” on PSN, the Resistance: Fall of Man player Erik Estavillo had sued SCEA for violating his First Amendment rights (for the PSN ban) and for money he had invested into the PSN Wallet Fund. He sought $55,000 and an injunction that would limit SCEA from banning any players in any form on the network.

Northern District of California District Judge Ronald M Whyte ruled that there was no plausible First Amendment claim for relief stated and dismissed the case.

The Technology & Marketing Law Blog (via Gamasutra) zeroed in on one specific comment of Whyte’s, that “Sony's Network is not similar to a company town.” Blogger Eric Goldman wrote:

…this opinion emphatically rejects a meme that has become pretty popular among virtual world exceptionalists. Some exceptionalists have favored the company town analogy because it enable virtual world customers to reduce an operator's ability to run its business capriciously.

A PDF version of the Order Granting Defendant's Motion To Dismiss is also available on the aforementioned blog.

As noted earlier this week, the Supreme Court was scheduled to look into an appeal of Entertainment Merchants Association v. Schwarzenegger yesterday, September 29.

EMA v. Schwarzenegger was not on the list of Miscellaneous Orders issued this morning by SCOTUS, which could mean that the petition was denied. When considering a petition for certiorari, SCOTUS will deny such appeals without comment, but the official outcome won’t be known for sure until Monday morning, when an Order List is issued from the Court.

Ex-football stars Herb Adderley and Jim Brown seek to formally support Samuel Keller in his lawsuit against NCAA Football game maker Electronic Arts Inc.

Keller, a college quarterback at Arizona State and Nebraska, filed suit against EA earlier this year charging that the game maker and the NCAA unfairly used images of college players in the NCAA Football and NCAA Basketball series of games.

The Associated Press reports that Adderley and Brown wish to file a “friend of the court” brief in support of Keller. Brown, who had filed a similar lawsuit against EA in regards to his depiction in EA’s Madden titles, saw that lawsuit dismissed in Los Angeles last week, as U.S. District Court Judge Florence Marie-Cooper compared videogames to realistic paintings of athletes:

The Madden NFL video games are expressive works, akin to an expressive painting that depicts celebrity athletes of past and present in a realistic sporting environment

Adderley was lead-plaintiff in a class-action suit against the National Football League Players Association (NFLPA) that resulted in a $28.0 million dollar verdict last November.

The United States Supreme Court is scheduled to address an appeal of a Californian videogame law tomorrow, September 29.

Entertainment Merchants Association v. Schwarzenegger (formerly known as The Video Software Dealers Association (VSDA) v. Schwarzenegger), revolves around a Californian law that banned the sale of certain videogames to anyone under 18 years of age. First signed into law by Schwarzenegger in 2005, the law was rejected again in February of 2009 by the 9th Circuit Court of California, which upheld an earlier 2007 ruling that deemed the law unconstitutional.

Schwarzenegger and California Attorney General Jerry Brown appealed to the Supreme Court in May of this year, marking the first time a case involving the restriction of violent game sales to minors has ever been considered by the top court of the United States.

As part of the proceedings, The Supreme Court will also decide whether to accept the amicus brief filed by California State Senator Leland Yee (D) in July of 2009. In the brief, Lee, who authored the original statute at the center of the whole case, argues why the Supreme Court should approve the state of California’s petition for a full hearing. He was supported in the brief by the California Psychiatric and California Psychological Associations.

The Supreme Court’s decision could take a few days or more. A final decision should be made public by next Monday, October 5.

Update: Just to clarify, The Supreme Court did consider a similar topic when ruling on American Amusement Machine Association et al. v Kendrick et al. in 2001, when it denied the City of Indianapolis' petition for certiorari. That case centered on an attempt by the city to limit the display and operation of currency-based machines deemed harmful to minors.

Video game blogs and message boards have been debating the appropriateness of Kurt Cobain’s posthumous inclusion as a playable character in the recently released Guitar Hero 5.  Some think it’s a welcome tribute, others find it a bit creepy if not outright distasteful.

But what does Cobain’s widow Courtney Love think?  Well, one needs look no further than her Twitter account:

For the record this Guitar Hero [expletive] is breach of contract on a Bullys part and there will be a proper addressing of this and retraction. WE are going to sue the [expletive] out of Activision we being the Trust the Estate the LLC the various LLCs Cobain Enterprises.

While Love’s main gripe seems to be the appearance of Cobain’s character model and a feature that allows it to perform other artist’s songs, Activision Vice President Tim Riley told The Guardian that she was very cooperative in the creation of the game:

Courtney supplied us with photos and videos. She picked the wardrobe and hairstyle, which turned out to be the 'Teen Spirit' look, then we went back and forth over changes – some subtle, some not so subtle.

Love, for her part, doesn’t seem to agree:

Activision is fulllo f sh*t... i never intended to APPROVE this sh*t, they are doing a recall you can be sure of that… wait til you see what my lovely lawyer has cooked up, i never ever signed off on this.

Meanwhile, the Associated Press reports that surviving Nirvana members Krist Novoselic and Dave Grohl are also unhappy with the use of Cobain’s likeness:

While we were aware of Kurt's image being used with two Nirvana songs, we didn't know players have the ability to unlock the character.  This feature allows the character to be used with any kind of song the player wants. We urge Activision to do the right thing in 're-locking' Kurt's character so that this won't continue in the future.

Activision defended itself in a statement released Thursday, saying that it “secured the necessary licensing rights from the Cobain estate in a written agreement signed by Courtney Love to use Kurt Cobain’s likeness as a fully playable character in Guitar Hero 5.”

-Reporting from San Diego, GamePolitics Senior Correspondent Andrew Eisen…

Xbox 360 maker Microsoft is playing defense against a lawsuit filed in a Wisconsin court by a disgruntled gamer who claims that his console scratched game discs.

The Madison Record reports that plaintiff Jason Johnson's suit is proceeding after Madison County Circuit Judge Daniel Stack denied Microsoft's motion to dismiss the case. Although Judge Stack threw out two counts, he ruled that two others may proceed. Johnson is seeking $50,000 plus costs. From the newspaper:

Johnson is suing the company for alleged defects in its X-Box 360 video game console. Johnson alleges the company sold the product knowing it scratched video games and made them unplayable...

 

Johnson is seeking damages from the Washington-based company's alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, negligence, breach of implied warranty and strict product liability.

According to the newspaper account, Microsoft's attorney argued that the suit should be dismissed because Johnson didn't personally buy his 360; the system was a gift from his wife. That's a pretty silly argument and Judge Stack apparently thought so too.

Notorious bank robber John Dillinger was gunned down by FBI agents in 1934, but his fame lives on. And that is causing some problems for game publisher Electronic Arts.

EA has filed suit in federal court in San Francisco, requesting that a U.S. District Court judge grant them the okay to use the name "Dillinger" in association with a pair of virtual machine guns depicted in its Godfather games. The "Dillinger Tommy Gun" appears in the original Godfather game, while the "Modern Dillinger" is featured in The Godfather II.

The publisher has taken the unusual step because the owner of Indiana-based Dillinger LLC, reportedly the grandson of the famous gangster's half-sister, lays claim to all things Dillinger, including his name and likeness.

The lawsuit, filed by attorneys for the publisher last week, claims that Dillinger LLC tried to commit a bit of strongarm robbery on EA recently:

On July 22, 2009 Dillinger LLC, through its litigation counsel, contacted EA to accuse it of violating Dillinger's right of publicity and infringing upon its trademarks. Dillinger threatened EA with litigation unless it agreed to pay Dillinger millions of dollars for the game elements...

 

Following Dillinger's recent conduct, EA is faced with the choice of either abandoning its rights to develop, publish and sell the works at issue or risk liability for damages.

The EA case is not the first time Dillinger LLC has gotten legalistic over the use of the Dillinger monicker. The Arizona Star reports that in 2007 Dillinger LLC claimed its permission was needed for local hotel to run a "Dillinger Days" event. As the newspaper explains, an Indiana law has apparently emboldened Dillinger LLC:

The hotel is being sued under an Indiana law that protects a person's personality for 100 years after his or her death. It works like a trademark, because a person who wants to profit from the use of the personality must obtain written permission. Arizona has no such law, and it's not clear whether the Indiana law applies here.

DOCUMENT DUMP: Grab a copy of EA's lawsuit here...

Take-Two Interactive announced yesterday that it has reached a $20 million settlement in a class-action lawsuit filed over the 2005 Hot Coffee scandal.

Although T2's press release is regrettably light on details, securities are mentioned, indicating that  this case is related to loss of equity value caused by Hot Coffee and its fallout.

Venture Beat has dug up a link to the complaint, Feninger vs. Take-Two. Kotaku offers an explanation of the details:

The nut of the allegations contained in the 34-page suit, is that Take-Two was spending more than it was bringing in and couldn't survive until the next Grand Theft Auto. So, the suit alleges, the company pushed Grand Theft Auto: San Andreas out the door knowing that there was pornographic material in the game because delays would have cost the company too much. If the material was known to be in the, the suit continues, major retailers wouldn't have sold it.

The outcome, according to the suit, was inflated stock prices based on bad or uninformed information from the company and a plunge in stock values when the truth came out.

The suit also alleges that Take-Two lied about the included sex scenes, nicknamed Hot Coffee, when they first came to light, with the company the scenes were "the work of a determined group of hackers who have gone to significant trouble to alter scenes.'"

GP: We should point out that, as the record shows, the notion that Take-Two lied about the origin of the Hot Coffee scenes is a fact, not merely an allegation. In one the sleaziest moves ever seen in the game biz, Take-Two tried to pin the rap for the hidden sex scenes on its biggest fans, the GTA mod community. To be fair, there was a different management team in place back then.

Nintendo has settled a patent infringement case that could have blocked sales of the Wii in the United States, reports Bloomberg.

As GamePolitics noted last September, Hillcrest Labs not only sued Nintendo, but filed a complaint with the U.S. International Trade Commission, alleging that the Wii's motion control system infringed upon the Maryland-based company's patents.

Nearly a year (and lots of attorney fees) later, on August 21st, Nintendo and Hillcrest advised the USITC that they had reached an agreement. Financial details were not made public.

Late last year, NFL retirees won a massive $28 million verdict against their former union, the NFLPA, when a federal court jury in San Francisco decided that the old time players' images had been used in EA's popular Madden series without their authorization.

Following an appeal, the retirees accepted a just slightly less massive $26.25 million settlement. Although EA was not a defendant in the case, there has been talk by at least one militant former NFL player that a similar suit against the publisher may be in the offing.

It's very clear that, despite the big settlement dollars, hard feelings linger among the retirees. One of the more outspoken ex-players, former Oakland Raider Dave Pear, bitterly notes that EA has licensed realistic weather for Madden, but won't pay to use former players, who no longer appear in the game. Pear writes:

Retired players are so sick and tired of getting ripped off every time they turn around. We recently came across an article that Electronic Arts was partnering with The Weather Channel to pay them for weather statistics to make Madden Football X more “realistic” – but they DON’T want to pay the retired football players themselves for their stats in order to make the game more “realistic”. I wonder when they’re planning on screwing around with the weather so they won’t have to pay for that either...

The Montreal Gazette reports that a $10,000 lawsuit filed against the game publisher by the bishop of the Raëlian Church has been thrown out.

Raëlism is a UFO-based religion founded in 1974. From the newspaper story:

Daniel Chabot had sued for moral and exemplary damages claiming he was discriminated against based on religion...

 

Chabot had argued before [Judge] Lachapelle that his training program at Ubisoft was cancelled after it was discovered he was a member of the Raëlians.

According to Raëlism's Wikipedia entry, the government of France considers it a cult.

Gamers who purchased a copy of Madden from August, 2005 onward may be eligible to join a class action suit against publisher Electronic Arts.

Pecover vs. EA (all GP coverage here) is currently proceeding in the U.S. District Court for the Northern District of California. The suit alleges that EA's exclusive licensing deal with the NFL and NFL Players Association created a monopoly situation which EA exploited by substantially raising the retail price for a copy of Madden.

In a story broken recently by GamePolitics, an expert witness hired by the plaintiffs theorized that EA's exclusive NFL/NFLPA license may have cost consumers nearly a billion dollars. Lawyers for EA have disputed that claim in court documents.

In a press release issued on Friday, Hagens Berman Sobol Shapiro, the law firm representing consumers in the case, provides a link where Madden buyers can learn more about the suit and potentially join as additional plaintiffs.

Lead attorney Steve Berman, quoted in the press release, pulled no punches in his assessment of EA's position regarding Madden:

There is nothing wrong with good, strong competition in a free market, but we believe EA rigged the game to take advantage of consumers.

EA knows that the demand for these games is based on how realistically the players and teams are portrayed. When EA signed into exclusive agreements it knowingly killed the only competing game of comparable quality, [Take-Two's] NFL 2K5.

Recently, GamePolitics reported on the availability of Barack and Michelle Obama avatars for use in Second Life.

But it seems that those virtual depictions of the President and the First Lady are destined to have short careers.

New World Notes reports that, beginning next month, SL publisher Linden Lab will implement strict new rules on the sale of real-world products and brands - including depictions of actual celebrities. Barack Obama and Angelina Jolie avatars are specifically referenced as examples of prohibited content in the new Linden Lab guidelines.

Readers may recall that stun gun manufacturer TASER, Inc. brought a trademark lawsuit against Linden earlier this year over virtual copies of its weapon which were being sold by third-party content creators for use in Second Life. The suit was later dropped, but the new SL guidelines are almost certainly a response to such legal concerns.

As New World Notes mentions, enforcing the new policy may be problematic for Linden Lab:

While I'm not a lawyer, I would think avatar imitations of celebrities, especially political figures, would fall under the parody safe harbor of fair use. In the real world, you can still buy an unauthorized Barack Obama mask for Halloween. Not so in Second Life very soon...

 

The biggest challenge to this policy, in any case, is likely to be the SL content creation community itself, who often do reference the real world in their works, but are still proprietary about their products.