Law of the Game

Best Buy Video Game Ratings Shenanigans

Posted on January 14, 2008 by Mark Methenitis

An interesting anecdote has appeared on the Consumerist blog. To summarize the story, a 21 year old went to a local Best Buy to purchase a copy of Assassin’s Creed (Rated M) and a Xbox Live Gold card. The protagonist of our story had his 15 year old brother in tow, as he was taking him to dinner. Upon getting to the counter, the clerk made a series of loud statements to everyone in line that he was “illegally purchasing a video game for a minor.” After a string of banter, the 15 year old left the store, the patron waited in line again only to have the store refuse him yet again, this time on the half-baked theory that the gift cards were “stolen.” Needless to say, the customer left the store, went to a different Best Buy, and purchased the game without an issue.

I must say this is one of the worst cases of store clerk vigilante-ism I’ve run across, and is disturbing on a number of levels. First and foremost, the rating system is voluntary. No state has yet passed any regulation barring the sale of any game to anyone that has withheld scrutiny in a court of law. To have clerks declaring random acts “illegal” on their own authority is disturbing, and the fact that the manager saw no reason to rectify the situation (or, for that matter, also bought into this arbitrary declaration of legality) speaks very poorly of the management of the store. More importantly, it may suggest that Best Buy’s corporate policy may need to be revisited and revamped to have a clear, uniform policy in stores nationwide. Second, this particular anecdote rises past the level of restriction I’ve seen some store clerks operate under with regard to alcohol and tobacco. Should a law ever be passed, it raises serious concern that minors won’t even be allowed in the store, which would essentially end the sale of M rated games entirely. Third, it’s further discrimination against the medium. Would this clerk have even blinked if it were an R rated movie rather than an M rated game? I somehow doubt it.

While I’m sure this anecdote will make a certain attorney happy, the rest of the gaming community should keep a vigilant eye out to prevent these kinds of problems from being widespread. Moreover, when issues such as these are made public, the corporate offices of the retain store should be made keenly aware that it will cost them sales if they allow their store clerks to harass paying customers.

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The Xbox Live Class Action

Posted on January 7, 2008 by Mark Methenitis

As noted on GameSpot, a number of Texas residents have sued over the Xbox Live holiday outage, for which Microsoft previously apologized and will be offering a free game. The suit apparently asks some $5 million in damages, based on a breach of contract for the service. I have a few thoughts on the matter, which are entirely thoughts and not legal advice (in case anyone is inclined to take them in an improper context).

1. A subscription to Xbox Live, annually, is $50. For 3 months, the going rate is $20, and for a month it’s $8. So, the actual value of a month of Xbox Live is somewhere between $8 and $4.17 or so. The service has been down, or at least been acting in a less than satisfactory manner for approximately one month or less.

2. Microsoft has noted, and will be offering, a free live arcade game of some sort to all paying Live members. Assuming the game isn’t one everyone has already purchased, or there are multiple options or the like, then the approximate value of the replacement game should be about the same as the loss experienced by the Live users.

3. More importantly, as this is supposedly a breach of contract action, upon review of the Xbox Live Terms of Use, the basic contract that governs Xbox Live, there’s not an action to be had on the terms of the agreement if Xbox Live goes down. To quote the agreement:

16. WE MAKE NO WARRANTY
We provide the Service “as-is,” “with all faults” and “as available.” The Microsoft Parties give no express warranties, guarantees or conditions. You may have additional consumer rights under your local laws that this contract cannot change. To the extent permitted by law, we exclude the implied warranties of merchantability, fitness for a particular purpose, workmanlike effort and non-infringement.

17. LIABILITY LIMITATION; YOUR EXCLUSIVE REMEDY
You can recover from the Microsoft Parties only direct damages up to an amount equal to your Service fee for one month. You cannot recover any other damages, including consequential, lost profits, special, indirect or incidental damages.
This limitation applies to:
-any matter related to the Service,
-any matter related to content (including code) on third party Internet sites, third party programs or third party conduct,
-any matter related to viruses or other disabling features that affect your access to or use of the Service,
-any matter related to incompatibility between the Service and other services, software and hardware,
-any matter related to delays or failures you may have in initiating, conducting or completing any transmissions or transactions in connection with the Service in an accurate or timely manner, and
-claims for breach of contract, breach of warranty, guarantee or condition, strict liability, negligence, or other tort to the extent permitted by applicable law.
It also applies even if:
-this remedy does not fully compensate you for any losses, or fails of its essential purpose; or
-Microsoft knew or should have known about the possibility of damages.
Some states do not allow the exclusion or limitation of incidental or consequential damages, so the above limitation or exclusion may not apply to you. They also may not apply to you because your province or country may not allow the exclusion or limitation of incidental, consequential or other damages.

In short, the service is provided “as-is,” and any damages are limited to the value of one month of service. Whether a court will allow payment in the form of, say, additional time on Xbox Live or a free game is yet to be seen, but I would imagine that, given the low per user amount involved, Microsoft’s remedy would likely be adequate, especially since the outage was not 100% over the time claimed and not too terribly extensive in the grand scheme of things.

This is by no means to say the suit is doomed or without merit. There are a number of possible interpretations under which the plaintiffs could succeed, but in general, this seems similar to so many of the other suits levied against the house that Gates built: mostly for profit or for principle.

[Via Joystiq]

Virtual "Seizure" Has Actual Value

Posted on January 2, 2008 by Mark Methenitis

Let’s say you have a Thunderfury, Blessed Blade of the Windseeker. And let’s say you bought this item for $100 US. If Blizzard repossess this item (i.e. takes it from your inventory), does this cause you an actual financial loss? Or, in the alternative, let’s say you manage to somehow get an Ashbringer (despite theoretical impossibility, it happens), do you have a monetary loss if Blizzard takes it, merely because you could have sold it for $1,000 US?

According to a story from Pacific Epoch, it would seem that is the case in China. The jist of the story is that Shanda Interactive has been forced to apologize to a gamer and pay that gamer 5000 Yuan (just under $700 US) because they removed six virtual item from his account in the MMO The World of Legend. The items were removed pursuant to an investigation in stolen good sales in the game, and after police ordered Shanda to return the items post-investigation, Shanda failed to do so.

While I wouldn’t go as far as to say this sets up a virtual “search and seizure” precedent, it does present a greater case for actual value of virtual goods. And while there’s no such thing as “international precedent” that would bind courts in other countries to the decision, it does provide a perspective that US judges could look to when deciding their own virtual asset cases. It also seems to paint a further picture of inevitability to the idea of virtual assets being assigned value in the US officially by either the courts or the IRS, those being the two most likely to make the first statement in the arena.

[Via PlayNoEvil, Thanks Cameron]

Reminder: Vote for Law of the Game!

Posted on December 27, 2007 by Mark Methenitis

There are only a few days left to vote for Law of the Game in the ABA Journal’s Blawg 100. The voting ends January 2, 2008, and I would appreciate any additional votes between now and then.

Click here and vote for Law of the Game.

Have a Happy New Year!

Wisconsin’s Game Tax – Sin vs. Luxury vs. Lunacy

Posted on December 26, 2007 by Mark Methenitis

The proposed “Game Tax” from Wisconsin state senator Jon Erpenbach has gained quite a bit of attention, and accordingly, I thought it was worth addressing a few key points. First, I’m sure many folks are wondering why they should care about a tax in a state in which they don’t live. The simple answer is that tax ideas seem to spread. If Wisconsin adds such a tax, it will only be a matter of time before a dozen other states follow suit. In short, the long term picture is not pretty for gamers if one state begins taxing games.

The second question is what type of tax is this? There are two likely candidates, those being the “Sin Tax” and the “Luxury Tax.” The concept of a sin tax is that because the government wants to discourage a behavior and because that behavior has a proven, clearly demonstrated, and direct negative impact on society, the government taxes the item to both discourage the behavior and offset the negative impact. For example, cigarettes are taxed because they are linked to lung cancer. Alcohol is taxed because drunk drivers kill thousands every year. Video games, however, would be taxed due to an unproven link to a theoretical change in behavior for a small number of users. The link is not nearly as defined as, say, drinking to drunk driving.

The other possibility is considering it a luxury tax. The idea here is that some things are just so extravagant that people should pay extra, or from a different viewpoint, that the people who want to buy certain things are well enough off that they can afford to pay more taxes. A good example of products often hit with a luxury tax are expensive cars. The assertion here would be that video games are a “luxury item,” and therefore are so unnecessary that gamers should have to pay more for them. However, given that books, music, movies, and all other forms of entertainment are not subject to such a tax, it does not follow that any aspect of the “video game” so separates the medium from other forms of entertainment as to draw the line there.

This would appear to be nothing more than another cheap shot at a scapegoated industry for the basic purpose of continuing to fill the already bloated public coffers, which serves to continue to perpetuate the problem of government over-spending. Far be it for me to dictate public policy in Wisconsin, but a video game tax is simply not a logical answer to the issue presented. I’m certain there are many other ways to fund the “keep non-violent juvenile offenders out of adult prisons” program.

[Via GamePolitics]

GamePolitics.com Holiday Podcast

Posted on December 20, 2007 by Mark Methenitis

If you have a few spare minutes for some holiday cheer, please check out the GamePolitics.com Holiday Podcast. It’s full of nothing but personal holiday greetings from many people in the game industry and blog-o-sphere, myself included.

Real Money Transactions Can Lead to Gambling Problems

Posted on December 18, 2007 by Mark Methenitis

Worlds in Motion has an article up detailing a new surge in the efforts to legitimize real money transactions in MMO games. Generally, the idea is a good one, as RMT can provide the players what they want, as demonstrated through the vibrant black market, while the legitimization gives the developers what they want. In fact, RMT based games are widely successful in other parts of the world. However, given the current state of US gambling laws, increased RMT in MMO games where gambling exists could put the MMO providers on thin ice. Second Life has already seen attention for gambling, and other worlds may not be far behind.

The tricky issue to deal with is the conversions between the virtual goods or currency and real currency. This is something I’ve discussed at length in my SSRN Papers. From a broad perspective, if a game either lacks gambling or lacks RMT, then there should be no cause for concern. However, when both elements are present, it becomes more problematic. Second Life (while gabling was still permissible), for example, as a direct currency exchange, could be viewed no differently than online casinos. In fact, even if gambling were using a more barter-like system, where, for example, weapons were wagered in fights, there could be a gambling issue assuming the weapon has a real world value, for example, from the ability to buy or sell it for real currency. The even more complex situation arises where the market price can fluctuate, especially given the prospect of reporting winnings or losses for tax purposes.

Obviously, this issue could take a number of turns depending on what the developers end up implementing in future games. It will be interesting to see if more developers place outright bans on wagering to avoid the issue entirely.

The Involuntary Hiatus is Over; Happy Holidays

Posted on December 17, 2007 by Mark Methenitis

My sincerest apologies, readers, for the hiatus that just ended. It’s rare that I have so many projects operating as such a pace where I simply cannot find any time to blog, but as the year draws to a close, many clients want to wrap up ongoing projects. However, I seem to have things back under control, and so my blogging should be back to normal.

I will also (hopefully) be able to make a pretty big announcement in the very near future.

And please remember to keep voting for Law of the Game until Jan. 2!

Most importantly, please have a happy holiday season.

Happy Holidays from Law of the Game

Latest Microsoft Bandwagon Lawsuit: Halo 3 is Defective

Posted on November 29, 2007 by Mark Methenitis

Information Week is reporting that a San Diego resident is suing Microsoft and Bungie because Halo 3 “consistently causes the Xbox 360 to crash, freeze, or lock up while the game is being played.” I have a number of problems with this allegation and this suit. First and foremost, if Halo 3 were truly “defective” or caused the problems alleged, it seems reasonable to assume that message boards and blogs alike would have been exploding with those types of complaints since October. I dare say it might have broken the internet due to the volume of vocal complaints. However, this is the first time I have seen any such allegation, between the Rooster Teeth forums, Bungie forums, and Xbox.com forums or anywhere on the gaming blog circuit. The suit states: “Although faced with repeated and mounting consumer complaints and inquiries concerning this operational flaw in Halo 3, the defendants have failed to recall Halo 3 or otherwise remedy its failure to function on the Xbox 360.” I would love to see a full version of the complaint and/or the “mounting consumer complaints” that are being referenced therein.

This brings me to the second issue. What the plaintiff is describing sounds far more like the well publicized problem with the Xbox 360 console rather than any problem with the game. And if that is the case, then the plaintiff should be taking advantage of the warranty repair process rather than filing a lawsuit. Which brings me to the third and final point, that given the available evidence, this seems like a rather simplistic attempt to profit from the game that set the new single day sales record. I have no problem with using the legal system to remedy actual problems, but at first glance, this suit seems like it’s either misplaced blame or a shot in the dark. Once the pleadings make their way onto the internet in full, hopefully some more light will be shed on this case.

[Via Joystiq]

ABA Journal Top 100 Blawgs

Posted on November 28, 2007 by Mark Methenitis

Law of the Game has been added to the ABA Journal’s list of “Top 100 Blawgs.” To view the complete list, click here. Selection to the list means that Law of the Game is one of the “top 100 best websites by lawyers, for lawyers.”

From now until January 2, there will be voting to determine the “favorites” among the categories. It is in the “Black Letter Law” category. I’d greatly appreciate if if you would take the time to vote for Law of the Game.

Vote Here

About the ABA Journal:
The ABA Journal is the flagship magazine of the American Bar Association, and it is read by half of the nation’s 1.1 million lawyers every month. It covers the trends, people and finances of the legal profession from Wall Street to Main Street to Pennsylvania Avenue. ABAJournal.com features breaking legal news updated as it happens by staff reporters throughout every business day, a directory of more than 1,500 lawyer blogs, and the full contents of the magazine.

About the ABA:
With more than 413,000 members, the American Bar Association is the largest voluntary professional membership organization in the world. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.