Legal Geek No. 68: April Fools' Day and Fraud

Welcome back to Legal Geek. This week, we take a brief look at the history of April Fools' Day and the risks some take when humor crosses the line into fraud.

https://archive.org/details/LegalGeekEp68

This week brings the beginning of April, and the Internet's favorite holiday April Fools' Day. In other words, the one day when nothing online, even reputable news outlets, can always be trusted.

The history and origins of this holiday are old enough to be unclear, but some leading theories have emerged.  One theory is that the change from winterlike weather to summerlike weather and the rapid shifts in weather typical in spring make people act joyful and a little like fools.  Another theory is that when the West adopted the Gregorian calendar in the 1500s, the New Year started on January 1 instead of March 25, which caused some people to look like fools for not adjusting. Regardless of how the holiday ended up being recognized worldwide, it remains a global phenomenon only made more popular thanks to the Internet.

This holiday of pranks and jokes leads to some funny advertisements for fake products, like last year's Siracha injected Jolly Ranchers. However, there's a dark side to this holiday when the pranks and jokes go a bit too far.

Publications of false material can lead to libel or slander claims, as discussed on this segment last week. Fraud is also a serious issue when it comes to securities and investment marketplaces, as one poor Australian teenager found out two years ago. Kudra Falla-Ricketts was 16 years old when she e-mailed out a fake press release purporting to be from the local gas drilling company, with false statements about how the company planned to pull out of the region.

Even though the press release had multiple typos and was sent from her personal school e-mail account, some people did not take this as a joke. That led to an investigation by the Australian analogue to the SEC, as her prank could have potentially been devastating to the stock value of the drilling company. All of a sudden, this teenager was risking prosecution and penalties for making fraudulent statements! Kudra's case turned out OK, but she is not the first person to make this mistake and cause prosecution by the authorities.

The Bottom Line is, the lesson is clear: when making an April Fools' Joke, it's better to have it be obvious or labeled as such to avoid the chance for any legal consequences. If the joke is funny enough, the disclaimer won't matter.  Moreover, this holiday does provide a net benefit if it makes the more gullible among us appreciate the need for a healthy dose of skepticism at all times, especially when reading things online.

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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy

Legal Geek No. 67: Can a Game Developer successfully sue a Reviewer for Libel/Slander?

Welcome back to Legal Geek. This week, we take a look at a lawsuit filed by game developer Digital Homicide against YouTube personality and game reviewer Jim Sterling, and whether such a claim for libel and slander have any chance of success in this context.

https://archive.org/details/LegalGeekEp67


Last week the small digital game developer Digital Homicide sued Jim Sterling in Arizona federal court for libel and slander. Digital claims that Sterling has defamed their company and products with disparaging statements and seeks over $10 Million of damages. Why would a small developer go to litigation to fight with an online personality? The history between these two tells the story.

Sterling makes YouTube videos and often reviews (and pokes fun at) some of the worst games available on Steam and other stores. His first interaction with a Digital product was a 10-minute review of Digital's first-person shooter Slaughtering Grounds in 2014. He dubbed the game a contender for the worst of 2014 because the awfulness just doesn't stop. Digital responded with two videos of their own accusing Sterling of not playing the game and calling him an F-word idiot. Both sides traded some further back and forth, and Sterling has since written a few more articles and reviews critical of the game developer.

The key to a successful libel or slander claim is the making of a false statement that is damaging to a person's or company's reputation. There have to be actual lies to make such a claim work.

That may be the difficult part here, even though Digital has identified what it believes to be nine different damaging false statements or lies allegedly made by Sterling. One example is in a review of another Digital game Galactic Hitman, Sterling stated that the game included artwork that may have been stolen from an artist on the DeviantArt site. Another example is when Sterling questioned whether Digital was misleading consumers by using a different name ECC Games for newer game products, a name which is also used by an unrelated Polish game developer. In this latter count, Digital also takes offense to Sterling's description of this name-changing situation as "being as sly as the Wet Bandits," i.e., the villains of the movie Home Alone.

Although these statements are critical of Digital Homicide and they potentially toe the line of fair criticism, it looks like it may be hard to prove that these statements are false. Even if a couple of the statements are false, proving the actual damages will likely be difficult for a small indie developer, especially one with dirty hands by failing to take any of Sterling's criticism well from Day 1. It looks like an uphill battle for Digital Homicide, but this may be a ploy to just stop what the company feels is harassment by Sterling, if nothing else.

The Bottom Line is, game developers should likely avoid taking criticism so seriously to the point of hostile responses, let alone litigation. However, there are fair rules of reviews and reporting like avoiding lies, so perhaps Sterling and other reviewers will be reminded of these important aspects as this plays out in public and in court. There's some lessons both sides could learn about civility, but they won't likely find truly satisfactory answers in court. 

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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy

Legal Geek No. 66: Hollywood Superhero Movie Tech in Patent Dispute

Welcome back to Legal Geek. This week, we take a look at a new lawsuit seeking to stop distribution of recent Superhero movies using facial animation technology, including the wildly successful Deadpool and last year's Avengers: Age of Ultron.

https://archive.org/details/LegalGeekEp66

Mova is a technology which extends the now well-known concepts of motion capture for actors to more accurately capture the facial expressions and performances of human actors playing CGI characters. The particular way an actor smiles and moves their facial muscles is picked up using phosphorescent makeup dusted on the actor and customized imaging hardware and software. Examples of this are how the CGI characters Ultron and Colossus have more realistic faces that look more like the actors bringing voices to these characters. It has also been used in other movies like Gravity and The Curious Case of Benjamin Button.

This technology was deemed so revolutionary that Mova won a technical Academy Award last year. It certainly is another improvement for making Superhero and Comic Book movies even more realistic and palatable to audiences who are loving these types of movies right now. But the wide praise and commercial success has unfortunately led to a court dispute over who is the rightful owner of this technology.

The history of Mova's development and ownership has become quite a tortured mess. Steve Perlman is a serial entrepreneur in Silicon Valley and he controlled an online game start-up called OnLive which merged with Mova in 2011. The start-up was struggling in 2012, however, so Perlman left the company to produce another opportunity at a new company called Rearden. When OnLive decided to sell Mova's assets later that year, Perlman tasked one of his Rearden employees with acquiring Mova for his new company.

That's where the plot twist occurs. According to Perlman's story, this employee negotiated instead to improperly sell Mova's assets to a different company called Digital Domain and a Chinese sister company Shenzhenshi in 2013. The Chinese company, which is now on the other side of this court dispute, instead claims that the employee properly sold the rights to Mova to them because Perlman had given up on it after failing himself to make a successful business out of Mova, so he encouraged the employee to salvage what he could from the property on his own. So Perlman claims he was defrauded by an employee, while the Chinese company claims this is nothing more than a severe case of seller's remorse.

It honestly sounds like a script from a Hollywood blockbuster instead of real life.

The decision in this case will come down to a very specific set of facts yet to be proven about what Perlman's previous employee was authorized to do. Ironically, or maybe not so much, that employee now works for Digital Domain, the sister to the Chinese company on the other side of this case. But the larger question for movie nerds is whether Perlman has any chance of succeeding in stopping distribution of movies like Deadpool, Terminator Genisys, and Guardians of the Galaxy based on what he calls an improper use of unlicensed patented technology he claims to own.

That type of order implicates First Amendment issues as well as the usual patent issues, so experts who have publicly opined on this case have largely concluded that there's no way Perlman will be able to obtain such an order for movies already in the marketplace. His lawsuit could affect future projects that Digital Domain and the Chinese company are involved in, but even that may not be true if a damages-based remedy appears to serve the needs of all parties and the public better.

The Bottom Line is, cases like this come up when business people play fast and loose with agency of employees and contracts, so make sure you are always abundantly clear when doing deals or making important decisions in business. Getting caught up in a real-life courtroom drama like these parties is usually much worse than making an ill-advised business deal and living with the consequences of such a deal.

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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy