Virtual World Law Blog

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Will 2012 be the year of virtual worlds?

What got me thinking about this was a blog post by Maria Korlova over at the HyperGrid Business Blog. In it, she maintains her firm conviction that businesses will soon come around to using these virtual worlds as business tools. Just as the nay-sayers were wrong about the Internet, Software as a Service, and Lady Gaga, we will eventually integrate this technology into how we work.

Courts, Sports And Videogames: What's In A Game?

Although one of the clearest legal thinkers, Louis Brandeis, conceived the modern right of publicity,[1] "unclear" would be an adjective all lawyers would apply to the current state of right of publicity law, regardless of which side of the issue they usually argue. Indeed, although the right of publicity concept was further developed by another very clear legal thinker, William Prosser,[2] he himself alluded to it as the concept "that launched a thousand lawsuits,"[3] few of which can be reconciled with one another.

Insurers Can't Join Coverage Suit Over Athlete Image Use

A Georgia federal judge said Wednesday that four insurers can't intervene in a coverage suit in California over underlying antitrust class actions concerning the use of college athletes' likenesses in video games.

What the Copycat Saw: Creative Theft in Mobile and Social Games

The distinction between theft and inspiration is often unclear in video games. Traditions are formed, broken down, and remade every few years. The most successful ideas are eagerly absorbed by others, from regenerative health in first person shooters to the subdivision of platformer levels into world and stage.

Virtual worlds training for federal cyber pros in the works

After finishing a successful year of training the federal cyber workforce, the government is taking another step toward cultivating better-prepared digital defenders.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

From the Supreme Court to Anonymous, 2011 was a transformational year for games

It's no exaggeration to say that 2011 was a transformational year for the game industry. As the game industry's trade group chief, Michael Gallagher, said, "The word 'historic' is overused, but as we look back on 2011, it is a perfect fit for our industry's year." Here's a recap of 13 events that made this such a big year for games.

Viacom Owes Additional $383 Million in 'Rock Band' Video Game Dispute

After already paying $150 million to former shareholders of Harmonix, arbitrators have determined that Viacom owes an additional $383 million to the video game company that created Rock Band, according to a regulatory filing on Tuesday.

New Wave of Hacker Attacks Coming

Virtual currency, sometimes called cybercurrency, has become a popular way for people to exchange money online. These online "wallets" are not encrypted and the transactions are public, making them an attractive target for cybercriminals. There have already been attacks directed at users of Bitcoin, one of the largest virtual currencies, said Dave Marcus, McAfee's director of advanced research and threat intelligence. "Our concern isn't confined to Bitcoin. Virtual currencies seem almost designed to attract hackers," he told me.

5 social network predictions for 2012

Facebook is the power hitter in social networking today, and is likely to drive the most activity and a fair share of the innovation in social networking in 2012. But it's not the only company driving things forward. Here are five ways social networking is likely to play out in the coming year.

Welcome to the future: We predict big trends in social games for 2012

Now it's that time of year that we, once again, reshuffle our tarot decks and see what the next 12 months will hold for games of a social nature. And, even if the Mayan predictions about the world ending in 2012 prove true, that won't happen until December -- so everyone has plenty of time to get this stuff in under the wire.

Virtual Reality Treadmill

Some of us prefer running outdoors simply because it offers something different for the eyes (and senses), instead of pounding it on a treadmill like a hamster in a gym. Of course, there are others who do it right from the comfort of their home, and there are also some pros to offset the cons - you definitely lower the risk of being robbed, and neither do you need to sacrifice your morning run whenever the skies open and start to pour. With the $2,000 Virtual Reality Treadmill, you will be able to enjoy the best of both worlds.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Scientists Find Safer Ways To Test Medical Procedures

Scientists are developing ever more sophisticated versions of "virtual patients" with the aim of testing medical devices and procedures that can't readily be assessed in real people.

FarmVille Creator Zynga Kicks Off $1B IPO

Zynga Inc., creator of the FarmVille and CityVille phenomena as well as other games that piggyback on Facebook Inc.'s tidal wave of popularity, became a publicly traded company Friday when it made a $1 billion initial public offering of its stock.

What's the right social cocktail for you?

From supply chain management to PR crisis management, the role of public social data in the enterprise is no longer framed around the question of "why does this data matter?"  That said, we are still in the very early stages of corporate adoption and there are plenty of unanswered questions for most companies.   Once enterprises get past asking why this data is important, the next obvious question to address is: which public social data is best for performing business analysis and decision-making?  Facebook?  Twitter?  Google+?, WordPress?

U.S. Senator Mad that Your Tax Dollars Saved Video Games

Video game preservation, educational robot dragons and Department of Homeland Security Sno Cones are just some of the "outlandish" federally funded projects called out in U.S. Senator Tom Coburn's annual big book of wasteful government spending this week.

New Research Shows 72% of Consumers Welcome The Opportunity To Watch Sponsored Videos In Online Games

A new study conducted by SponsorPay, the leading international cross-platform social advertising solution, found that consumers welcome the opportunity to watch sponsored videos in online games and not only recall these brands but also harbor positive sentiment towards them.

New Report Details Demographics of Mobile Gamers Buying Virtual Goods

As gamers age, so does their propensity to buy mobile virtual goods, according to a new study by MocoSpace, the largest mobile gaming community in North America. The results of the new study focusing on virtual goods consumption and engagement by age found younger gamers (25-35) spend the most time playing social games, but gamers over 45 buy exponentially more virtual goods than their younger counterparts.

On December 6, 2011 Zynga settled its copyright suits against Vostu USA Inc. and others.  The first suit, case number 5:11-cv-02959, filed in the U.S. District Court for the Northern District of California back in June, alleged that several of Vostu's games infringed Zynga's copyrights.  Specifically, Zynga had alleged, that Vostu's MegaCity, Cafe Mania, Pet Mania, Vostu Poker and MiniRazenda games are merely clones of Zynga's popular titles.  Zynga followed this suit with another one in Brazil claiming copyright infringement and unfair competition.  Vostu initially responded to the suits asserting that its games were non-infringing but has ultimately agreed to settle the US and Brazilian matters by compensating Zynga and altering some of its games.

The parties have issued a joint statement that "Zynga and Vostu have settled the copyright lawsuits and counterclaims against each other in the United States and Brazil".  Additionally, "[a]s part of the settlement, Vostu made a monetary payment to Zynga and made some changes to four of its games" but the parties did not elaborate on the amount of the payment or the nature of the changes.

This settlement followed (and may have been prompted by) some early success in the cases by Zynga.  Zynga was able to obtain a preliminary injunction from the Brazilian court ordering Vostu to cease making the challenged games available.  In response Vostu initially convinced a U.S. District Judge to grant a temporary restraining order prohibiting Zynga from enforcing the Brazilian court's order; however this TRO was quickly dissolved.  The Brazilian order was stayed by the appeals court pending Vostu's appeal.

This settlement is a good example of how IP rights can be used to protect a video game from being cloned.  There is a history of successful games being the subject of imitation which goes back to the earliest days of the industry.  Many companies have come to believe that cloning is just part of business and there is nothing that can be done to stop it.  However, this is not entirety true.  Copyright, trademark, trade secrets and patent rights can all provide differing levels of protection for games.  Copyright can protect a game from literal duplication or use of its protected images, code, literary elements, music, etc.  Trademark can protect the actual name, logo or certain other identifying elements from a competitor's potentially confusing use in a game (or elsewhere).  Additionally, trade secrets can be used to protect a company or game's "secret sauce" from being co-opted.  Finally, patents may be used to protect features and functions of a game, including game mechanics, business methods and other functionality and processes. 

Game companies should consult with IP attorneys who understand the IP strategies and patentable aspects for games. For an overview of some of the IP protection available for games, see here.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Bambuser Powers World's First 24-Hour Virtual Tour of New York City

Starting and finishing in Times Square on Tuesday, 1^st November at 9am EDT, Hans Eriksson - executive chairman of the live mobile streaming application Bambuser will spend 24 hours exploring New York, broadcasting all he encounters live onto the web from his iPhone - with his itinerary selected by his online audience.

Square Enix, DeNA Team Up For Japanese Final Fantasy Social Game

Square Enix and Japanese mobile social gaming company DeNA are teaming up to create the first social game based on the popular Final Fantasy series. Few details have been announced regarding the Mobage title, which is based around the theme of "fighting for teammates," but DeNA said it will be developing the game in-house using familair characters from Square Enix's Final Fantasy series.

Bunchball Wants to be the 'Motivation Engine for the Internet'

Who would have thought that a company located just above an Irish pub in San Jose would grow to be so successful? According to Bunchball's Founder and Chief Product Officer, Rajat Paharia, Bunchball originally had roots in "social gaming", a concept that he admits was a bit too early to market and proved very difficult as a pitching point.

Nirav Tolia launches Nextdoor, private social network for neighbors

"Even though social networks are completely ubiquitous, I didn't see a social network for one of the most important communities in our lives: the neighborhood," Tolia said in an interview this week. Tolia says neighbors have lost touch with each other. He points to a 2010 study from the Pew Research Center that found that 60% of Americans didn't know the people who lived near them.

Video games for sweepstakes argued before NC court

The state is seeking to preserve a law that attempts to rid North Carolina of sweepstakes that use video-style games to reveal winnings but that companies say infringes on free speech rights and should be thrown out.

The Top 10 Most Influential People in Facebook and Social Games

In an attempt at fairness, we took to AppData's developer leaderboard, but also peppered the list with industry transplants of note. We're certain we've glossed over some video game veterans, but did you really want a list of 30 people? So, feel free to give us your two cents in the comments. (We've put on our flame-retardant suits already.) Here are the top 10 most influential people in Facebook and social games...

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

PBS KIDS Sets New Bar in Educational Gaming Space

PBS KIDS today launched over 40 new cross-platform games designed to help children ages 2-8 build critical math skills. They include PBS KIDS' largest offering of interactive math content for preschoolers to date. The games comprise several suites, each of which is centered around a PBS KIDS media property - from CURIOUS GEORGE to THE CAT IN THE HAT KNOWS A LOT ABOUT THAT!. Available for free on the new PBS KIDS Lab website (PBSKIDS.org/lab), each suite links a set of games across platforms - accessible through computers, mobile devices and interactive whiteboards - so that kids engage with the same characters as they move from device to device. The content is also linked by a curricular framework, leveraging games on a variety of platforms to support key math skills.

Zynga announces 'CastleVille,' 9 other titles

From its sparkling new headquarters here, the company announced a major new gaming platform, code-named Project Z, that will let its millions of customers seamlessly play games on Facebook and Zynga.com; a lineup of 10 new titles, including Zynga Bingo, Hidden Chronicles and the mobile-only Dream Zoo; and, perhaps, its most ambitious game yet, CastleVille.

Hollywood Taps Videogames as Source of Inspiration

Despite the tarnished history of videogame adaptations, studios are moving forward with more than dozen big-screen gaming movies. What's amazing, though, is it's possible -- just possible -- that some of these films might not stink.

What drives Adidas' virtual wall

So popular was Inside Retail's story about the Adidas in-store 'virtual wall' which took an innovation honour at the recent World Retail Awards, we're revisiting the concept with an interview with designer David Judge from Stuart MacGill.

Oracle To Launch Enterprise Social Network

Oracle Social Network enables users to communicate and collaborate with other people inside or outside of their organization using a variety of tools, such as personal profiles, groups, activity feeds, status updates, discussion forums, document sharing, co-browsing and editing, instant messaging, e-mail, and Web conferencing. Oracle Social Network also provides native applications for iPhones, iPads, and Android devices, along with Web browser support, so mobile users can work and interact from anywhere.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Social network ad revenue to hit $10B

Non-U.S. markets would account for slightly more than half, or 51.9 percent, of the US$10 billion global ad revenue in 2013, the research firm said in report Wednesday. While revenue growth would be in the double digits in the United States, higher growth elsewhere meant that spending in non-U.S. markets would account for a slighter greater share each subsequent year, it explained.

Steve Jobs: Accidental video games visionary

Sure, Jobs had some history in the space. He took a job at Atari as a technician in the mid-'70s, but this was because he was looking for money to fund a spiritual retreat to India. Later, with the release of the Apple II in 1977 he helped usher in a golden age of video games by providing a platform for the explosion of creativity that came in the early '80s: Bubble Bobble, Beach Head, Boulder Dash, Choplifter, F-15 Strike Eagle, Hacker, Hardball!, Karateka, King's Quest, Leather Goddesses of Phobos, Leisure Suit Larry, Lode Runner, Might & Magic, The Oregon Trail, Raid Over Moscow, Skyfox, Ultima, Wizardry, Zork. So many games that so many of us remember fondly, and all of them made possible because of the Apple II and Jobs.

Supreme Court Dodges Video Game Fee Request

In a surprisingly precarious move, the U.S. Supreme Court took no action Monday on a request from the video game industry for 1.4 million dollars in attorneys' fees and expenses incurred fighting the unconstitutional violent video game ban law, originally passed in California. 

How will Facebook's newest changes affect gamification?

If you're at all interested in the world of social and casual games, and the gamification of social media, the stream of major and minor changes from Facebook over the past week or so has got to be top of mind. Besides the major F8 developer conference, which introduced Timeline and an updated version of Open Graph, we've also seen the introduction of Facebook subscriptions and an updated news feed in the past few weeks.

What the iPhone 4S Means for Mobile Gaming

Some of the best news is that the iPhone 4S is getting a power upgrade. The 4S is getting a dual-core 1GHz A5 processor with dual-core graphics. That means the 4S have comparable graphics to the iPad 2. Games are almost guaranteed to run smoother and faster on the new 4S, since it will be about 7 times faster than the old iPhone 4. However, gamers might not be able to enjoy the increased details due to the tiny screen size which stayed at 3.5".

Augmented Reality Meets Location-based Social Networking

A new app in this field is TagWhat. Part augmented reality-app and part social networking service, it lets people check and view locations along with additional random info like the place's history, the famous people who lived in it, anecdotes about the neighboring establishments, or any other information that can either be trivial, interesting, or extremely useful.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

U.S. virtual goods revenue on Facebook to grow 32 percent to $1.65B in 2012

That growth rate is lower than the 40 percent growth for 2011, as the market analyst firm predicts that revenue this year is growing from $800 million in to 2010 to $1.25 billion by the end of 2011. While that is rapid growth, it shows that the fast-growing virtual goods and social gaming industries that use it are maturing and slowing down.

SecretBuilders Passes 5 million Member Mark, Makes Parents Magazine's Top 10

SecretBuilders, a game world for children with an emphasis on creativity and historical adventure, was selected by Parents Magazine, the leading parenting magazine in the world, as one of the Top 10 kids' websites for 2011, alongside PBS Kids, National Geographic's Animal Jam, Nickleodeon's Monkeyquest, and Pearson's Poptropica.

Online gamers crack AIDS enzyme puzzle

Online gamers have achieved a feat beyond the realm of Second Life or Dungeons and Dragons: they have deciphered the structure of an enzyme of an AIDS-like virus that had thwarted scientists for a decade.

Facebook Changes The Social Networking Game... Again

Today at their annual F8 conference Facebook announced some dramatic changes to its platform. But this time it's different. Why? Because the big social networks (i.e. Facebook, Twitter, MySpace, and now Google) have traditionally battled over the social graph - your relationships in the digital world and how to help build and connect them, but now Facebook is laying claim to your life.

Dangerous Intersection Of Mobility And Credit

There's a 2011 version of the birthday cakes, mugs of beer, and other gifts Facebook used to let us "buy" for our friends. Since July 1, Facebook has required all game developers that receive payments through the site to use Facebook Credits for the transactions. When developers go to convert Credits into cash, Facebook gets a cool 20% cut.

Clarins Gets into Social Gaming on Facebook

In a seemingly unusual move for a cosmetics company -- not to mention a French one -- Clarins launched a casual game on Facebook earlier this week called Spa Life.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Video Game Targets 'Tea Party Zombies,' Fox News Personalities

A New York-based video game developer has set his virtual crosshairs on Republican and conservative political figures in a game called "Tea Party Zombies Must Die," which allows players to indiscriminately slaughter politicians like Michele Bachmann, Mike Huckabee and Sarah Palin.

Red Robot Launches Life is Crime Game With Location-Based Play

There's got to be more to location-based mobile games than checking in. That was the thinking behind the game startup Red Robot Labs and its first game, Life of Crime. Life of Crime uses what Red Robot believes is going to be its critical asset: the R2 Gaming Network platform for making location games.

Can Gamification Help Solve the Online Anonymity Problem?

There's been a lot written recently about the issue of online anonymity, and in particular how Google believes that a "real names" policy is necessary so that the Google+ network maintains a certain tone and level of trust.

Amazon Gets Serious About Social Games, Calls Out for Developers

The Facebook gaming arena is about to welcome a new gladiator: Amazon. The household name of online retailers (and e-readers) is officially pulling out all the stops for its inevitable entrance into the space, openly and internally calling out for a team of designers and developers.

Most Bosses Monitor or Block Social-Network Use At Work

Viruses, loss of confidential data and fear of employees tooling around doing sweet FA on Twitter are the top reasons that employers give for putting the brakes on social media in the workplace. And it's stopping them benefiting from new collaborative technologies, says ClearSwift Research.

Social Gaming Startup Guerillapps Launches First Green-Theme Upcycling Game on Facebook

Guerillapps, a Manhattan-based social gaming startup, today announces the launch of Trash Tycoon, its first green-theme social game for Facebook. The game is now available for play and takes a unique approach to social gaming by incorporating awareness for environmental issues and sustainability. The first game to ever highlight the concept of upcycling, Trash Tycoon is an immersive, fun game that presents opportunities for real-world impact.

Your Virtual Cow Could Be Worth $0

Fans of SuperPoke! Pets were crushed recently when Google announced it was pulling the plug on the game. Google killed off all but one project from social app maker Slide, which it bought last year for around $200 million.

On September 15 & 16, join industry titans such as Sony, SalesForce, Zappos, and Adobe at the GSummit in New York City. GSummit NYC will show attendees how to use the power of games to create breakthrough engagement with their customers and employees. Companies like Gilt Groupe, Google, NBC/Universal, MTV, Recyclebank and Aetna have leveraged gamification to transform their businesses, and will share startling insights, statistics and hands-on workshops at GSummit NYC. Check out some of the amazing content and speakers. Register now before GSummit sells out.

Jim Gatto, Leader of Pillsbury's Virtual Worlds & Video Game team and Social Media, Entertainment & Technology team will be speaking from 1:30 - 2:15 PM on September 15 about gamification law and a formula for success.

Earlier this year, Jim spoke at the Gamification Summit held in San Francisco. His presentation on managing legal risk in gamification can be viewed below:

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Judge Says Warrant Required for Cell Phone Location Data

In recent years, the courts have struggled to decide whether the government needs a warrant to access historical records about a cell phone user's location. Some courts have found that when users turn on their cell phones, they "voluntarily" transmit their location to their cell phone providers and thereby waive any expectation of privacy.

Social Media Could Render Covert Policing 'Impossible'

Facebook has proven to be one of the biggest dangers in keeping undercover police officers safe due to applications such as facial recognition and photo tagging, according to a adjunct professor at ANU and Charles Sturt University.

Building With Someone Else's Blocks: Going Open Source With Games

Giving players access to source code has been a part of gaming's history for years, from the earliest MUDs to Tim Sweeney's ZZT. As console gaming's proprietary hardware and its closely guarded development tools slowly squeezed PC play from its central place in the industry the idea of open source play declined.

Wirklich? Germany Declares Facebook 'Like' Button Illegal

The German government on Friday declared the Facebook "Like" button, which appears on countless websites accessible all over the world, in violation of the country's strict privacy rights -- and thus illegal.

U.K. Pulls Back From Threat to Control Social Networks

The British government stepped back from threats to shut down social networks during future disturbances and instead is seeking to work with the networks on how best to use them to help. A high-profile political meeting today between the government, police and the networks was described as "honest and refreshing" after police admitted they struggled to understand social media.

Al Qaeda In Azeroth? Terrorism Recruiting and Training in Virtual Worlds

In their pursuit of terrorists, government intelligence agencies leave no digital rock unturned: telephone calls, emails, text messages, blogs, news sites - they monitor them all. Sometimes, as with social networks like Facebook, the companies behind these services gladly hand over data to governments to assist in this hunt. Yet there is still one place where terrorists can go, one place where they can talk to each other openly without fear of being detected: online video games.

Given the great interest in "the cloud" from a business perspective, as well as Microsoft's popularization of the concept with its "To the Cloud!" advertising campaign, it's no wonder that many game providers are looking to the cloud as the next viable and profitable gaming platform. The cloud movement not only provides economic incentives through various subscription and pay-to-play models, but also helps defeat piracy by locking down game code and other intellectual property from potential thieves.

Cloud game providers have a lot to gain from virtualization, but moving to a cloud-based framework raises potential legal issues that should be considered.

Latency

The first big issue for gaming providers considering moving to the cloud is both a practical one and a legal one - latency. Unlike digital downloads, streaming games require both down and upstream communications. Further, gaming often demands instant, real-time action, so any material latency will be noticed, especially for multi-player, FPS-type or other real-time games. Currently, some game providers have tried to satisfy gamers' demand for real-time, low-latency play by operating in data centers that are physically close to the gamer. From a technical perspective, cloud gaming may present an issue because it could involve moving the game servers much farther away from the gamer, thus having the potential to lead to increased, or even significant latency. Another technical fix may be to use "tricks" similar to those used in non-cloud gaming to compensate for latency issues.

From a legal perspective, however, the move to the cloud could bring such "tricks" into the realm of patents held by the gaming company OnLive--patents which cover "twitch gameplay" over a cloud-based system. When porting a game from client-server or mobile-based platforms to a cloud-based platform, game providers should be sure to investigate whether the conversion will expose them to potential infringement liability, including the OnLive patent portfolio. This is especially important because most game providers are not the actual game developer, so game providers should also review their agreements with the game developer to understand whether indemnification or re-development are options. Further, if the agreement is with a small game developer, the developer may not have the financial resources to indemnify the game provider, and thus the game provider should be aware of the potential risks before embarking on a cloud-based venture.

To read this publication in its entirety, click here.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

LinkedIn's 2Q Earnings Soar as Growth Accelerates

The results announced Thursday provided the first update on LinkedIn's progress since the company's headline-grabbing initial public offering in May. LinkedIn's shares have more than doubled from their IPO price of $45, stirring a debate about whether investors are overvaluing Internet companies. LinkedIn earned $4.5 million, or 4 cents per share, in the April-June period. That contrasted with earnings of $938,000, or 2 cents per share, at the same time last year.

Controversy Erupts Over SpotON3D's Patent Claims

Competing OpenSim hosting companies are concerned that SpotON3D's viewer plugin patent isn't original, will hinder innovation, and that the company isn't playing fair with the broader open source community. Other developers, however, say that SpotON3D's innovation can help energize OpenSim adoption -- and the patent, if it is granted, may not be that burdensome to the community.

Diablo III Will Have Real Money Auction House

For as amazing as Diablo II was, the economy was rather quickly ruined by the sale of virtual items. Most of the better loot required a significant time investment - or luck - so many players naturally flocked to the more convenient option. Blizzard, being the savvy developers that they are, has come up with a work-around for that: A flood of reports are coming in that Diablo III will feature an in-game auction house that will allow you to sell and buy virtual items (including virtual currency) for real cash.

EA Chief Vows to Keep Up With Big Changes In the Video Game Industry

Electronic Arts chief executive John Riccitiello said in a conference call today that the video game industry has fundamentally changed as gamers embrace new digital alternatives to console games - from mobile games to social games. And, he said, EA's strategy is changing with it.

SAP Launches The Ultimate Travel Challenge Dashboard

I find the concept of gamification fascinating so when I heard that a fellow team at SAP was launching a game to showcase one of the company's solutions it peaked my interest.  The game was built on SAP Crystal Solutions and showcases how the product can help your business by simulating the pressure of making informed decisions in a face-paced environment.

Augmented Reality Kills the QR Code Star

Augmented reality leader Layar just took its system to a whole new level by installing a real-world object recognition protocol that's a little like Google's Goggles. In one swoop it may have turned AR apps from intriguing, inspiring, and occasionally useful toys into serious tools for information discovery and, of course, advertising. Let's call it hacking the real world.

PayPal: 12M Monthly Users Are Paying For Virtual Goods

PayPal, which collects a lot of data on online payments, says the monetization of digital content has come a long way since the company was launched in 1998 and sold to eBay in 2002. Now it generates more than $1 billion in quarterly revenue and has more than 100 million active users.

Socialnomics on where social media is and where its going.

A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

EBay Rings Up Mobile Payment Outfit For $240M

EBay Inc. unit PayPal will beef up its position in the online payment market with the $240 million purchase of mobile phone payment specialist Zong, as big online merchants continue to snap up upstarts in the world of virtual commerce.

The Metrics Are the Message: How Analytics is Shaping Social Games

The freemium gaming business is expanding rapidly. We all know about the Facebook behemoth Zynga, which now claims over 250 million monthly players, and is valued at anywhere between $5-10bn. But online, there are dozens of global companies hawking a range of in-depth gaming experiences.

Online Consumers Willing to Pay Premium for Net Privacy

Online consumers thought to be motivated primarily by savings are, in fact, often willing to pay a premium for purchases from online vendors with clear, protective privacy policies, according to a new study in the current issue of a journal of the Institute for Operations Research and the Management Sciences.

Could Google+ Be the Best Social Network for Your Career?

Barely two weeks old, Google's new social network, Google+, is already scrambling the social media hierarchy. One of its key features -- that your professional and personal lives can go their separate ways -- helps solve a key Facebook drawback.

BizRocket.com, Inc., projects $50 Million Revenue

According to eMarketer worldwide social network spending is expected to reach $6 billion this year. The social networking market for kids age 13 and under is estimated at over one billion ($1,000,000,000) dollars per year and rapidly growing. BizRocket.com, Inc., is committed to earn a significant share of that revenue stream for shareholders and provide a safe Internet experience for pre-teens. BizRocket.com, Inc., projects annual revenues to exceed $50 million by third year of full operations.

Electronic Arts To Pay $750M for PopCap Games

Electronic Arts Inc. said Tuesday that it will buy PopCap Games for at least $750 million in a bid to snag a larger piece of the rapidly growing market for games on cell phones and social networks.

Badgeville Raises $12M to Lead the Way in Gamification

Gamification startup Badgeville has raised $12 million in a second round of funding to add game-like features to non-game applications.

The Supreme Court of the United States issued a long-awaited decision in Brown v. EMA. The decision authored by Justice Scalia (in which Justices Kennedy, Ginsburg, Sotomayor and Kagen joined and Alito and Roberts concurred) opined on the validity of California Assembly Bill 1179 (2005), Cal. Civ. Code Ann. §§1746-1746.5 ("Act"). The Act prohibited the sale or rental of violent video games to minors and required packaging to be labeled '"18" if the game included options for "killing, maiming, dismembering, or sexually assaulting an image of a human being" in ways that reasonably could be considered as appealing to "a deviant or morbid interest of minors" or is "patently offensive to prevailing standards in the community".

The Supreme Court strongly held that video games qualify for First Amendment protection and that the "basic principals of freedom of speech . . . do not vary" with the creation of a new and different communication medium.  Specifically, the Court stated that "[l]ike the protected books, plays, and movies that preceded them, video games communicate ideas -- and even social messages -- through many familiar literary devices (such as characters, dialogue, plot and music) and through features distinctive to the medium (such as the player's interaction with the virtual world).  That suffices to confer First Amendment Protection."  The decision stated that the First Amendment protection is subject to only a few limited exceptions for historically unprotected speech, such as obscenity, incitement and fighting words and a legislature may not create new categories simply by deciding that such categories of speech do not have sufficient societal value.  Moreover, the Court's decision stuck down the proffered argument that violence is a form of obscenity by holding that "[v]iolence is not part of obscenity that the Constitution permits to be regulated".

The court did not remove the possibility of any sort of video game regulation and clearly understood California's desire to protect its minor citizens.  "No doubt a State possesses legitimate power to protect children from harm . . . but that does not include a free-floating power to restrict the ideas to which children may be exposed."  The Court found that if California could actually demonstrate that its Act passes the strict scrutiny test (i.e. justified by a compelling governmental interest and is narrowly tailored to serve said interest) it may be able to restrict the protected speech inherent in video games.  However, the Court opined that California could not meet this standard as its evidential psychological studies were flawed and its Act is "widely underinclusive" raising concerns that it is merely disfavoring a certain viewpoint rather than protecting a valid state interest.

"Here, California has singled out the purveyors of video games for disfavored treatment -- at least when compared to booksellers, cartoonists, and movie producers -- and has given no persuasive reason why."  Therefore, the Court felt that by limiting its purported regulation to the video game industry while ignoring other industries that make violent content available to minors, California demonstrated a unconstitutional bias.  Moreover, the court stated that the video game industry's ESRB voluntary rating system already accomplishes one of the Act's goals, that of assisting parents in restricting their children's access to violent video games eliminating the compelling need for California's Act.

While the Court's decision did not put a final nail in the coffin of any future laws seeking to regulate video game content, it did make it significantly more difficult to do so without meeting the strict scrutiny standard.

On April 12, 2011, the Massachusetts Department of Revenue issued Letter Ruling 11-4 holding that a product providing a customer access to information from a Taxpayer's database is not subject to sales or use tax where the services provided do not involve transfers of prewritten software or a license to use software on a server hosted by the Taxpayer or a third party.

The Massachusetts Department of Revenue ("DOR") issued Letter Ruling 11-4 addressing the issue of whether Massachusetts customers of a Taxpayer's product, which provides employment application collection and selection services through proprietary software, are subject to Massachusetts sales and use tax.  The DOR held that sales of the taxpayer's products to Massachusetts customers are not subject to the Massachusetts sales and use tax.  Massachusetts imposes a 6.25% sales tax on sales of tangible personal property and telecommunication services within the state including sales of prewritten (canned) software regardless of the method of delivery.  Also, the sale of a license or right to use software on a server hosted by a taxpayer or third party is taxable.  However, where there is no charge for the use of the software and the object of the transaction is acquiring the good or service other than the use of the software, sales or use tax on software does not apply.  See 830 CMR 64H.1.3(14)(a); LR 10-1.  In the instant matter, the provision of information services to customers based on data gathered from prospective employees and provided in a report by a taxpayer to its customers is not subject to tax.  The object of the customer's purchase of the product is to obtain database access including reports prepared by the taxpayer, rather than use of the software itself.  The taxpayer customers do not have the ability to operate, direct, or control the software.  The DOR concluded that the services provided by the taxpayer do not involve transfers of prewritten software or a license to use software on a server hosted by taxpayer or a third party and therefore are not subject to sales and use tax.

The taxation of on-line services is evolving in many jurisdictions.  Jurisdictions without specific statutory or regulatory authority addressing such services look to existing provisions for information, telecommunication, data processing or software services in attempts to include some on-line services within their scope.  As the above ruling indicates, under existing sales and use tax principles such as true object of the transaction or primary purpose tests such efforts may not succeed.  However, every jurisdiction has is own statutory provisions and tests so one needs to review them in the context of the specific facts relating to the online game or other social media services.

Copying within the games industry is prevalent. Some people attribute this to the fact that this is just the way it is and has always been within the industry. This is often premised on the notion that the "idea" for a game is not protectable. But as the game market grows, so to do the losses from copying suffered by the game innovators.

One of the biggest factors contributing to this is that many game developers do not develop comprehensive strategies for protecting the valuable intellectual property that they create. This is generally due to several reasons. One is that historically, intellectual property has just not been a big focus for many in the industry. The other is that many people are not aware of the range of options available for protecting IP in the game space and what aspects of games are protectable. This is often due to some common misunderstandings about intellectual property, particularly with respect to the patentability of game features.

While it is true that one can not protect the "idea" for a game, this does not end the inquiry. Many aspects of games are protectable by patents, copyright and trademarks. Of these, patents are probably the most overlooked and least understood. While this applies to all types of games, there are particularly compelling opportunities to patent many of the innovative aspects of social and online games. This is due in part to the many recent developments in the relevant technology and business models for these games. Prudent developers and publishers will seize these opportunities to develop a comprehensive IP protection strategy.

Check out our recently released "Intellectual Property for Games" brochure that summarizes some common patent misconceptions and the importance of a strong IP Protection Strategy.

On of the announcements coming out of E3 is that GameStop and Virgin Gaming have formed  a partnership to power online video gaming tournaments. According to the announcement, Virgin Gaming will be:

The preferred online tournament provider for featured console game releases sold in U.S. GameStop locations and through GameStop.com. GameStop will offer publisher partners unique, large-scale online tournaments to help market, sell and create deep player engagement for their games. GameStop customers will have the opportunity to win cash and incredible prize packages through the GameStop/Virgin Gaming tournaments, in addition to Virgin Gaming credits redeemable for games and other merchandise.

As online gaming continues to grow, companies are seeking various ways to create ancillary revenue and drive user engagement. Tournaments can be one way of doing that. Tournaments, if done right, can be legal. However, there are a number of legal considerations of which companies must be aware to avoid running afoul of various laws.

While the National Endowment for the Arts ("NEA") is traditionally known for providing grants for various "traditional" artistic endeavors, a recent change in its eligibility requirements expands its coverage to certain categories of digital media as well. Specifically, the NEA has modified its mandate to include providing grants for innovative work in the video game design field.  Grants will be made available for the development, production, and national distribution of innovative video games about the arts and video game projects that can be considered works of art on their own.

The eligibility changes are due in part to the NEA's understanding that people can experience art in a number of ways outside traditional arts venues, including through video games. However, video games will need to comply with the same standard of artistic excellence and merit as works in any other medium.  While those are somewhat subjective standards, the NEA has asserted that its panels will have knowledge and experience in the relevant field to judge any applicants.

Grants may range from $10,000 to $200,000 (or more in some extraordinary instances), based on the platform, complexity and scope of the project.  However, applicants must be a 501(c)(3) nonprofit arts organization, or affiliated with one, to qualify for a grant of any size.  The application deadline date is September 1, 2011, for projects that start on or after May 1, 2012.  For more information visit the NEA's website at link.