Legal Geek No. 17: Supreme Court Deals Death Blow to Cordcutting Option Aereo

Welcome back to Legal Geek. This week, we review the impact of this week's Supreme Court decision that killed one cord cutting option called Aereo.

https://archive.org/details/LegalGeekEp17

The Supreme Court always releases a high number of decisions in June at the end of their annual term, and the complex intellectual property cases always seem to be left to this time period. One of the most notable decisions came down this week, as the Aereo service was confirmed to be copyright infringement by the Supreme Court.

For those unfamiliar with Aereo, this was a subscription service that allowed users to watch over-the-air television broadcasts by intercepting the signals with miniature antennae. Basically, a user decided what program he wanted to watch and Aereo opened access to the channel by sending the intercepted antennae signal to the user's device. Effectively, this was a cord-cutting system because it allowed for live and cable programming to be viewed without a cable or satellite TV subscription.

The 6-3 majority opinion held that the transmission of these intercepted programs to user devices was enough to qualify as a public performance of those programs, which is one of the rights that copyright protection includes. Just because the programs were individually transmitted in a passive manner on an individual by individual basis, this was deemed by the court to be analogous to a performance of the program through an individual conduit to many users (which would more clearly be improper under copyright precedents). On this point, I think that common sense won the day.

Thus, Aereo will be shut down, which all 9 justices agreed should happen, even though the dissent disagreed on the grounds for shutting this down. The Court explicitly stated that this case does not decide whether copyright infringement occurs with cloud computing or remote storage DVR's, so this really just shuts down the most illegitimate of the cordcutting services. And of course, this decision has no effect on the more popular services like Netflix and Amazon Prime, which pay royalties to stream the programs delivered to subscribers. Indeed, Aereo could make the same negotiations and stay in business, should it choose to continue on the right side of the law.

Bottom Line: Cordcutting and cloud computing live on, while Aereo will not in its current form. Much like the aftermath of the Napster decisions in the music industry, we still appear to be headed toward a great place for consumers of live and recorded television and films.

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

Legal Geek No. 16: Evaluating the Copyright and Trade Dress Claims in Hex vs. Magic Litigation Battle

Welcome back to Legal Geek. This week, we finish our review of the legal battle brewing between Wizards of the Coast and Cryptozoic by looking at the merits of Wizards' copyright and trade dress claims.

https://archive.org/details/LegalGeekEp16

The trade dress claimed by Wizards is the overall product appearance of Magic and its computer counterparts, alleged to include the packaging and 15-card contents of booster packs, the overall visual aspects of the cards, and the like. However, Wizards likely shot this claim in the foot by admitting all of this alleged trade dress has some functionality.

Functional elements are not protectable trade dress under the Lanham Act, so this trade dress claim is likely dead on arrival. I expect the trade dress claim to be decided in favor of Hex on initial summary judgment.

Turning to copyright, Wizards has set forth a compelling story of all the elements of Magic that Hex has allegedly copied. These copied aspects include the major types of cards, ability names on creatures, the same five colors of cards, a list of functionally identical cards, the background game appearance on a computer display, the same general rules of deck construction and combat during play, and the use of tapping cards to show use.

The vast majority of these appear to be the underlying facts or ideas that are not protectable creative expressions under copyright law. Many knockoff video games were able to escape copyright infringement over the last two decades on similar grounds, but some courts (including one involving a Tetris clone in 2012) have recently taken to applying copyright infringement where the amount of total elements copied is significant and overwhelming. Based on Wizards' complaint, that could very well be the case here.

So the copyright claim may come down to whether the judge or jury is sympathetic to the idea that knocking off most of the major aspects of a computer game is wrong. That's incredibly hard to predict, so the copyright claim will be the most interesting going forward.

Bottom Line: Wizards will likely prevail on the patent claim but will lose on the trade dress claim, which means the unpredictable copyright claim will determine whether Hex will be allowed to continue in this market for the long term. It will be certainly fun to see how this plays out in court between two game company titans.

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

Legal Geek No. 15: Evaluating the Patent Claims in Hex vs. Magic Litigation Battle

Welcome back to Legal Geek. This week, we continue our review of the legal battle brewing between Wizards of the Coast and Cryptozoic by looking at the merits of the patent claims against the game Hex.

https://archive.org/details/LegalGeekEp15

Let's begin with the basics: patents that are issued by the USPTO are effectively 20 year monopolies rewarded for innovation in the arts and sciences, but the monopoly is limited to just the specific numbered claims at the end of a patent. The difference between what is described in a patent and what is actually claimed can be very dramatic, as the claims are typically narrowed significantly during prosecution.

The urban legend is also true that Richard Garfield, the designer of Magic, did procure a patent in 1994 for various basic things like deckbuilding and tapping cards that are now a commonplace thing in trading card game designs. That patent of legend is what Wizards is claiming is infringed by Hex.

There are 57 claims in the Magic patent, but four of them stand to me as real problems for Hex. The first two recite a card game and a computer card game requiring only obtaining a hand of cards from a supply, playing a card, and designating a card by rotating it to a different orientation, AKA tapping. That's all, and Hex certainly seems to do those few steps.

Another of the broad claims recites obtaining a hand of energy/mana components and effect components, then using the energy components or mana to play the cards. Again, very basic TCG rule sets. The last of the broadest claims describes selecting a library of cards and displaying it on a computer screen to one user, then executing turns of a game and showing the cards played on multiple computer screens.

Claim construction is a process for deciding how to interpret these legalese claims, and that process plus discovery of documents and information from each party can be very complex and somewhat unpredictable. However, it seems likely that the close clone of rules and operations that Hex is compared to Magic will infringe at least those broad claims, if not more.

So Hex will likely need to fall back on the other defense to patent infringement, that being arguing that Wizard's claims are too broad or vague and therefore invalid. Of course, that will require finding prior art from before 1993 on these points, and the TCG market was not really in existence before Magic, so that could be difficult.

Although this patent will expire later this month, Wizards is still entitled to damages if this claim is successful for the large kickstarter profits and recent profits made by Hex. Plus, fighting over patents in court is ridiculously expensive, even by litigation standards. Unless Cryptozoic finds some invalidating prior art nobody else has located over the last 20 years, this infringement claim likely will go in favor of Wizards.

Bottom Line: At least on this claim, the makers of Hex should likely settle as soon as possible. The expected loss on the patent claim could be devastating, if not fatal to this game.

Next week, we will finish this subject for now by looking at the copyright and trade dress claims, which thankfully are a bit more straightforward.

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

Legal Geek No. 14: Diving Into the Hex vs. Magic Litigation Battle

Welcome back to Legal Geek. This week, the subject is litigation strategy and why Wizards of the Coast is suing Cryptozoic on a number of different intellectual property grounds.

https://archive.org/details/LegalGeekEp14

As discussed by Scott and Tom during last week's Current Geek, it was publicly announced last week that Wizards was suing Cryptozoic for infringement of IP relative to the iconic trading card game Magic the Gathering. In short, Wizards believes that Cryptozoic's new video game TCG called Hex is an illegitimate copy of Magic that should be stopped.

This interesting case between two gaming industry titans could be ground-breaking in a field close to our nerdy hearts.  As a result, this segment will look at some important aspects we can learn from this litigation over the next couple weeks.

This week, let's focus on the threshold question many are asking: why is Wizards is suing Cryptozoic on so many different grounds?

http://www.scribd.com/doc/224144304/Wizards-of-the-Coast-v-Cryptozoic-Entertainment-et-al
Comparison Photos from Complaint in W.D. Washington District Court filed by WOTC.

Wizards has three distinctive claims in the Complaint against Crptozoic, specifically patent, copyright, and trade dress infringement. Each of these three types of intellectual property provides a different scope of protection and each has a different test or burden of proof that Wizards must meet to prove that Hex is infringing. To put it most simply, Wizards is taking every bite at the apple it can because winning on any of these grounds will likely be fatal to Cryptozoic's game.

In addition, IP rights do not last forever. For example, the patent that Wizards is suing over is set to expire in June 2014. At long last, TCG designers will have "tapping" a card in the public domain for use in future designs. Thus, while the patent may have the best chance at obtaining profits and damages from Cryptozoic, the rights of Wizards to stop Hex from future sales based on patent rights will be moot in just over a month.

The copyright and trade dress actions are not based on soon-to-expire IP, so these items could lead to a long-term shutdown or redesign of the Hex game. Also, the likelihood of confusion test used to determine trade dress infringement is drastically different than construing and applying patent claims or determining the protectable authorial expressions covered by copyright. By making Cryptozoic prove a lack of infringement under each of these various standards, Wizards is banking on Cryptozoic not being able to rebut all of the different tests and arguments.

Bottom Line: The scorched earth approach of litigators is nothing new, and Wizards is making Cryptozoic jump through the most hoops possible to avoid infringement.  Even if some of the claims are more shaky than others, it is worthwhile for Wizards to fire every bullet it has in the litigation gun.

Next week, we will look at the merits of some of these claims and predict how this case might come out.
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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below

Legal Geek No. 13: Do Blackberry Phones Finally Have a True Successor?

This week, the subject is whether a new phone to be released in June will finally be a true successor to Blackberry phones in the business world.

https://archive.org/details/LegalGeekEp13

The smartphone industry, like many technological fields, generally hits booms and busts based on widespread acceptance by the corporate world and by government. When employees in the business world could remain connected to the job everywhere on a secure connection with a keyboard and e-mail capabilities, the Blackberry became the crown jewel of the smartphone market.

Indeed, at its height, Blackberry held more than 20% worldwide market share. But that crashed quickly to less than 3% in five year thanks to the iPhone and other competitors blazing new trails while Blackberry was left behind.  Perhaps the only reason Blackberry remains in business is the corporate world, which is slow to adapt to new technologies thanks to data security and privacy concerns, among other items.

But have we now finally found the true successor to Blackberry phones?


The Blackphone was announced early this year and is designed by Phil Zimmerman, who is known as the inventor of PGP.  It is touted as the Spy-Proof phone, which is precisely the type of marketing scheme that works wonders in the corporate world. Although some would argue only idiots leave phone communications unencrypted or unprotected these days, it's hard to stop the onslaught of data collection in nearly every phone application and there will always be plenty of non-saavy tech idiots in the business world.

Thus, reports are flooding in this week that corporate giants such as those in the Fortune 50 are pre-ordering the Blackphone in high amounts. Considering the phone has comparable specs as android phones slightly above entry level, this could be a cost-effective option for finally replacing the Blackberry in many business settings.

Businesses want to keep all proprietary data such as trade secrets and future patent subject matter such as R&D away from prying eyes that will sell out or possible include foreign and domestic competitors, and this phone is promising the world on that front. Especially if the general public buys in for the purpose of privacy from big brother interests like the NSA, this phone could be the next sensation.

It's unclear if any of this technology is patent pending, although that might not matter if the marketing clicks. Make no mistake: Blackphone is intended to be a play on Blackberry, which again might bring up some interesting trademark questions that likely won't matter to the commercial success of the device.

Bottom Line: In this era of increased focus on privacy, the Blackphone is well positioned even without IP protection to be a huge player. Look for this star to continue to rise.

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

Legal Geek No. 12: Students Lose as College Textbook Market Gets Desperate

This week, the subject is whether textbook publishers will succeed in destroying unfavorable parts of copyright law, or the consumers supporting the business of college textbooks itself.

https://archive.org/details/LegalGeekEp12

College textbook publishers have long wielded every protection possible under copyright law to try and discourage the resale market as well as counterfeits, citing second hand stores as serious threats to the industry. However, one limit in copyright law is the First Sale Doctrine, which serves to exhaust the publisher's right to control resale of the physical goods after selling them to the first purchaser. This has long been the worst enemy of this very lucrative entire industry.

But will recent actions by publishing companies overcome this First Sale Doctrine problem?

Rather than embracing more digital distribution models such as the music industry and the videogame industry to combat resale, textbook publishers have chosen to double down on high prices and force student consumers into impossible choices.  Aspen has begun e-mailing law school professors to inform them that the next editions of their popular textbooks will come with a so-called lifetime access to a digital copy of the text, but the physical book must be returned to the publisher at the end of the class.  In other words, students pay an exorbitant $200 or so for a book that they will not really own, and is not really sellable or useable by second hand shops and libraries.

If there's anything the tech world has learned over time, it is not to trust so-called lifetime digital access from providers such as this. Plus, the publishers are touting these added digital benefits come without increasing the cost of the book, but the price should actually be dramatically dropping if all the consumer gets is a temporary license to the physical copy and a questionable digital copy.

You can bet if this flies in the high-cost law school setting, all publishers will force this change down students' throats in all academic fields, and maybe even primary, secondary, and homeschool settings as well. Consumers will then really be paying money for nothing, and the publishers will rake in the profits while doing an end-run around the First Sale Doctrine established as early as 1904 and reconfirmed by the Supreme Court as recently as last year's term.

Bottom Line: Sometimes consumers need to step up and fight via petitions or supporting organizations like the Electronic Frontier Foundation, and this appears to be one of those times.  Otherwise, college and other schooling could become out-of-reach for the worst reasons possible: corporate greed and profit margins.

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

Legal Geek No. 11: Patent Trolls Lose Another Battle at Supreme Court

This week, the subject is whether the tide is turning against patent trolls in the Federal court system.

https://archive.org/details/LegalGeekEp11

The Supreme Court issued two related opinions this week that related to patent law, and specifically how to apply the fee shifting provisions applied for so-called "exceptional circumstances."  This is one of the ways that frivolous litigating parties like patent trolls can be held in check, as paying the legal fees of the other party can be a deterrent when risking litigation against big pockets who have expensive legal counsel.

But how important will these decisions be in solving the patent troll problem?


The Supreme Court is giving far more discretion to the District Courts to determine what are exceptional circumstances meriting a loser pays all legal fees situation. This is not quite so far as some Congressional proposals have been, up to and including fee shifting to the loser in all patent cases, but it does make it more risky to force alleged infringers into court, especially when the case for infringement is shaky.

Another interesting part of the ruling is that the Supreme Court explicitly said an unreasonable manner in which a case is litigated can lead to fee shifting, which means patent trolls must play a little nicer or else run the risk of incurring the wrath of the court. Furthermore, the Supreme Court increased the standard fro review at the appeals court level is to look for abuse of discretion in shifting fees to a losing party, which is very different than the de novo standard that the Federal Circuit has been using (which allows for a fresh look and determination rather than giving deference to the District Court).

At the District Court, the proof now needed to show that the exceptional nature of the case is a preponderance of the evidence, not clear and convincing evidence. In other words, it is much easier for the District Court to shift fees to a losing patent litigation party and much harder for the court of appeals to overturn such fee shifting.

Although not explicitly targeted at patent trolls, these two decisions will likely affect some of the more egregious litigating parties that threaten lawsuits just to try and collect settlement paydays. Furthermore, this keeps legitimate inventors who cannot practice an invention but want to stop infringement or protect their own licensing rights from being harmed by overly harsh fee shifting rules. If you are litigating or threatening litigation and acting with poor tactics to disadvantage the opponent, that will eventually bite you when a court applies the fees from a winning party.

Bottom Line: The patent troll problem of companies buying up patents just to monetize them by threatening litigation is not going away with any one change, but making the courts more of a risky proposition for these entities should help in the long run. The patent troll may be slayed sometime soon!

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