Legal Geek No. 139: Sales Tax Everywhere and Westworld Game Ripoffs

Hi, and welcome back to Legal Geek. This week, we cover the interesting Supreme Court sales tax decision from this week and then dive into a new lawsuit alleging that the Westworld phone game app is simply a ripoff and infringement of Fallout Shelter.

https://archive.org/details/LegalGeekEp139

The Supreme Court ruled in a case entitled South Dakota v. Wayfair that internet retailers such as Overstock, Wayfair, and Amazon can be required by states to collect sales tax on product sales to consumers regardless of whether they have a significant physical presence in the state.  This 5-4 decision overturns a 1992 case called Quill in which it was decided that the Constitution bars states from collecting sales taxes unless a seller has a so-called substantial connection to the state.  That opened the loophole for online retailers to avoid paying sales taxes in some or many states, which was a competitive advantage over local brick-and-mortar stores.

The decision is a victory for local businesses and for the states themselves, which have missed out on a lot of sales tax revenue over the past 25 years.  The biggest negative impact will be felt by small online sellers who now have to figure out how to comply with up to 50 different state laws and tax codes.  The dissent in this decision raised that very concern, but with the named defendant being one of the major online retailers who can handle such logistics, that argument did not win the day.  So expect to pay more sales tax online if you prefer the convenience of online retail.

Turning to our second topic of the week, Bethesda Softworks sued the Canadian game developer Behavior Interactive and Warner Brothers for allegedly ripping off Bethesda's popular Fallout Shelter game when making the recently-released Westworld game app.  Behavior was contracted by Bethesda to help make Fallout Shelter, and they were contractually obligated to confidentiality as well as turning over all intellectual property in this work to Bethesda.

However, it appears from the similar core mechanics of Westworld and Fallout Shelter that some of the game design and/or source code may have been re-used when Behavior worked on the Westworld game for Warner Brothers.  That's precisely what Bethesda is claiming, leading to charges of copyright infringement, breach of contract, and misappropriation of trade secrets.  

The rapid development of the Westworld app by the same team that had previously done Fallout Shelter does raise some red flags, particularly in view of the significant similarities and overlap between the games outside the themes.  While companies have a right to compete in the marketplace following work on a business deal, they must do so while avoiding any intellectual property and contractual issues.  It is typical for companies like Bethesda to protect their investment in the work they pay companies like Behavior to do, both by contract and by work made for hire copyright assignments, and this is done to prevent easy shortcuts to competition, as may have happened here.

If the court finds a contract breach or IP infringement, Behavior and WB may be estopped from continuing the Westworld game or could have to turn over all profits to Bethesda.  In the meantime, if you enjoy Fallout Shelter, you'll probably also enjoy the Westworld game.  We'll keep an eye on this case to see what develops between these parties. 

The Bottom Line is, when there's profit to be made, and with over 120 million players, Fallout Shelter has proven there's profit in this game design, companies will use whatever legal protections they have to keep that profit as long as possible.  While the larger entities here in Bethesda and WB will probably be inclined to settle this dispute at some point, the lesson for the small company Behavior will be to avoid making such mistakes in future contracts or game design work.

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Legal Geek No. 138: Gerrymandering Update and a Triple Crown TM Fight

Hi, and welcome back to Legal Geek. This week, we update you on the Supreme Court gerrymandering case we discussed in a segment last September, and then cover a recent dispute over Triple Crown trademarks that is timely considering we had a second Triple Crown winner in the last 4 years happen when Justify achieved the feat a couple weeks ago.

https://archive.org/details/LegalGeekEp138 

Back in September, we did a deep dive into a Wisconsin dispute over partisan gerrymandering at the Supreme Court.  The Wisconsin plaintiffs sought to have the courts step in and stop the drawing of voting district lines in such a manner that was heavily biased towards one political party, AKA, whoever controls the state legislature when the lines are drawn.  That case, Gill v. Whitford, was disposed of this week with a remand to the lower courts based on procedural issues.  The Supreme Court declined to decide this on the merits because the individual plaintiffs did not have standing to challenge the entire state map, just their own district.  

So unfortunately, we will not find out if the so called "efficiency gap" or other statistical measures presented in this case would be enough to convince the swing vote Justice Kennedy that the courts could have an objective standard to step in for such circumstances.  The fight in election law over gerrymandering will continue in a different venue for now.  

We will update on further major Supreme Court decisions as they wrap up the term in the next couple weeks.

Turning to the other story for today, the horse Justify became just the 13th Triple Crown winner when he won the Belmont Stakes a couple weeks ago.  Ironically, this occurs as two horse-related retailers are duking it out on court over the rights to a Triple Crown trademark.

Triple Crown Nutrition is a Minnesota company that sells feed for horses, and they filed an opposition to an application for trademark on the name "Triple Crown Custom" for saddles and other equestrian equipment by Ireland-based Horseware Products.  Triple Crown Nutrition has had their name registered at the Trademark Office for a number of years, which is the grounds for bringing this challenge to the new application.  

Now here's the interesting bit of the conflict: trademarks are registered to cover certain types of goods and services offered under the mark.  The goods don't really overlap here, as the Minnesota company sells feed and pharmaceutical preparations, while the Ireland company seeks to sell saddles and collars.  But Triple Crown Nutrition argues that because these different goods are marketed to the same consumers, a likelihood of confusion would occur for consumers and that should be enough to cancel the latter trademark application for Triple Crown Custom.

However, we also know from marks like Delta that different companies selling different products and services can co-exist.  But the overlap is not as close as in this case, and trademark conflicts often occur when product lines change and merge over time to overlap with other companies.  

The Bottom Line is, the risk of such eventual overlap seems high in this case, which would favor the Minnesota company.  But there's no current overlap, and that could undermine this challenge as these two horse sellers race to the finish line.  It will be an interesting close call to watch in trademark law, as we get over our frustrations at the Supreme Court punting on a fascinating gerrymandering case based on mere procedural issues.

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Legal Geek No. 137: Supreme Court allows Voter Roll Purging in Landmark Decision

Hi, and welcome back to Legal Geek. This week, we cover the landmark election law decision from the Supreme Court this week on the practice of purging inactive voters from the voter rolls and registries.

https://archive.org/details/LegalGeekEp137 

The Supreme Court decided Husted v. A. Philip Randolph Institute this week, which was a case regarding a massive purge of Ohio voters from the state's voter registry.  The purge was enacted a few years ago in Ohio by using a voter's failure to vote in elections as evidence that the voter has moved, and therefore should not be on the rolls anymore.  Of course, if the voter then returns to try and vote without having re-registered to do so, which needs to happen 30 days in advance of the election, they cannot vote or their vote is made on a provisional ballot which undergoes heavier scrutiny before being included in the counts.

The law on point from the challengers of this practice is the National Voter Registration Act of 1993, commonly called the Motor Voter Act.  This law requires states to provide a number of different types of voter registration, including whenever a driver's license is renewed or obtained, and it also requires states to maintain voter registration lists accurate and current.  The goal is to make it easier and more understandable for people to get to the polls and vote.  In the latter requirement about keeping registrations lists current, voters being removed for moving away or for non-voting can only be done so after meeting certain requirements, AKA, safeguards against improper removal of voters.

So you may ask, what safeguards did Ohio use to avoid removing voters improperly?  Here's how the purge works.  Ohio sends notices to registrants who have not engaged in any voting activity for a period of two consecutive years.  These voters are removed from the rolls if they do not respond to these notices, and then continue to be inactive for another four years.  Thus, it takes 6 years to remove a voter from the registration lists, and Justice Alito, writing for the Court's majority, found this to be acceptable as a purge mechanism under the law.

In short, Alito argues that it is not the lack of voting that causes the purge, but instead, this is just a piece of evidence indicating someone has moved which then eventually can lead to a purge.  Justice Breyer writes a dissent that argues that a system which assumes you have moved based on a lack of voting and does not kick into action otherwise puts the impetus on the non-voting, which by itself cannot be a factor used to remove voters from the rolls under the law.  Both sides make what I consider to be plausible interpretations of the law to reach their respective conclusions, although both are very complicated and above the depth of our normal coverage here.  The law is ambiguous enough to allow for this, and so we end up with a 5-4 split decision at the highest court accordingly.

The Ohio practice is therefore deemed legal for purging voters from the registration rolls, and the practice can continue there as well as perhaps be more widely adopted in other states.  That's also what happened following up on the Supreme Court's similar decision in a 2008 case called Crawford in which an Indiana voter ID requirement was upheld as constitutional, leading to voter ID laws in a majority of states in the past decade.

These safeguards and measures are made in the name of preventing voter fraud, but studies have shown voter ID laws and even this Ohio purging the rolls practice ends up suppressing the votes of legitimate voters who want to participate.  Indeed, these studies show a disproportionate effect of many of these measures on the impoverished and minorities.  That begs the question of whether these practices are enacted to serve those who don't want such types to vote, or if they really are for prevention of fraud.  The debate is a core background to these election law cases.

The Bottom Line is, the openness of the polls in Ohio to all potential voters arguably closed a bit this week thanks to this voter purge practice being upheld, but it will be a few years before we see if this has the same impact as voter ID laws have had nationwide.  One can hope that we stop politicizing ballot access because we as citizens should all have a fair voice in this thing we call government, for better or for worse.

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Legal Geek No. 136: Cocky-gate rocks the Romance Novel World

Hi, and welcome back to Legal Geek. This week, we cover a story brought to our attention a few weeks ago by author and friend of the network J.F. Dubeau, a controversy now known in publishing circles and the romance novel world as Cocky-gate.

LINK 

Faleena Hopkins is a self-published online romance novel author who writes stories about the fictional Cocker brothers.  All her books are entitled Cocky something, such as cocky marine and cocky senator, for example.  So Hopkins sought a trademark registration for covering the word Cocky in the field of a series of downloadable e-books or regular books in the field of romance.  That trademark was registered by the U.S. Trademark Office earlier this year.

Hopkins then began sending a bunch of cease and desist letters to other romance novel authors who happened to use Cocky in their book titles.  She also had Amazon take a bunch of titles off the Kindle store based on her trademark.  This led to a firestorm within the romance novel and broader publishing community, as enforcement of such a trademark effectively takes one of the most popular words in romance novels off the table as an option for an author.

Our friend JF asked a few weeks ago whether this trademark was legal and what the likely outcome would be.  Well, with a couple more weeks of progress behind us, the answer appears to be developing. 

First, a retired lawyer decided to file a petition to cancel the trademark at the Trademark Office, which is a procedure by which third parties can challenge the validity of registered trademarks.  An IP law firm out of New York and a trade association called the Romance Writers of America have taken over this petition to try and remove this trademark from the register.  

Turning to the merits of this cancellation petition, there does appear to be earlier use by other authors, and the opponents argue that the term is generic or descriptive in this field.  In other words, Hopkins was not the first to commercialize the term, nor should she be able to lock up a term that other novelists in the field often need to describe the plots of their books and the characters within.  While the original Examining Attorney for the trademark came to an opposite conclusion, it seems that this cancellation petition has a good chance of success.

Earlier this week, another development occurred against Ms. Hopkins' position.  She had been sued by the aforementioned Romance Writers of America and The Authors Guild in federal court in New York to stop her from enforcing the trademark.  The district court judge ruled this week that summary judgment should be granted to The Authors Guild because Hopkins was not likely to succeed on the merits of her claims.  The Guild argued that "cockiness" is prevalent in romance novels and thus consumers in the field do not rely on such terms to distinguish the source or author of the book, but instead, the author's name instead.  The court appears to have agreed that a term like "cocky" cannot function as the signifier of a single author or source in this genre.

As silly as this case is, the broader implications were what troubled the publishing field.  Another author was already trying to trademark "forever," and you can imagine how awkward it would be if other generic-type terms like "space" for sci fi novels was locked up by a single party.  Thus, Cocky-gate appears to have led to an affirmance that common words in a field cannot be trademarked at all unless they develop a strong association in the minds of the public with a particular author or source.  That's not the case for Hopkins in the crowded romance novel field, so her claim appears destined to fail.

The Bottom Line is, sometimes the cutting edge of legal fields comes from those you least expect it from.  While Hopkins was within her rights to pursue and then enforce her trademark, it seems to better follow our rules and norms if that type of registration is cancelled or not allowed to register in the first place.  The Trademark Office is not perfect, and that's why we have cancellation proceedings and the courts to rely on, as in this case.

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