In August, the (ACCC) started proceedings against software company for its refusal to provide refunds to customers purchasing video games through its Steam online store and distribution platform. The ACCC claims that by refusing to refund in all circumstances and stating that it was excluded from statutory consumer guarantees, Valve is making misleading representations: Australian consumer protection legislationĚýĚýthat cannot be restricted by contract.Ěý Similar immutable implied guarantees can be found in consumer legislation in many Commonwealth jurisdictions, .

This is not the first time that Valve has run afoul of consumer protection groups – German consumer protection group VZBW recently brought Valve to court over users’ right to resell games purchased through Steam. , but the case illustrates the ongoing struggle between consumers and distributors of digital entertainment over rights to online purchase.ĚýMoreover, VZBW was not a government entity, whereas the ACCC is; a regulatory agency taking action against Valve could be indicative of an increased commitment to enforcing compliance with consumer protection law.

If the ACCC prevails in court, the consequences will be felt in Canada, as Canadian courts often find Commonwealth jurisprudence persuasive in forming their opinions. The applicability of any Australian decision is likely to be further enhanced by the close similarity between the relevant Australian and Canadian consumer protection statutes. While wording of the statutory guarantees differs slightly, with the Australia Consumer Law (ACL) section 54 using "acceptable quality" and the British Columbia Sale of Good Act (SOGA) section 18(b) using "merchantable quality", both statutes include guarantees that the goods be fit for disclosed purposes. The ACL's guarantees seem to be slightly broader than those provided in the BC SOGA: under the ACL, in addition to being fit for any purpose disclosed by the purchaser, section 55 states the goods must also be fit for any purpose for which "goods of that kind are commonly supplied". Moreover, in the BC SOGA section 18(b), if the consumer is allowed to examine the goods before purchase, there is no implied condition with regard to defects that the examination would have revealed. Conversely, the ACL's section 54(4)(b)Ěýrequires that any such defects be "drawn to the consumer's attention", placing the burden on the vendor rather than the purchaser.

However, though the ACL was enacted with the intention of protecting purchasers of goods, game buyers may be less than pleased if Valve raises its famously discounted prices or introduces region-specific retail practices as a measure against financial losses incurred through refunding purchases. In the end, even if an ACCC victory in court brings about increased vigilance over online consumer protection, Valve is likely not going to be subjected to a deluge of refund requests under consumer protection legislation. Such laws only guarantee "acceptable quality" or its equivalent, which have not been defined in the context of a computer game, but likely include guarantees that the game runs on the computer systems it is made for and is free of glitches that render it unplayable. Furthermore, the actual logistics of returning a digital copy of a game complicate matters. Steam can run in an "offline mode", allowing games to be played without an internet connection. If a customer were to purchase a game, install it, then return it, he or she could potentially use offline mode or an analogous feature on another platform to continue playing the game despite having received a refund.

In the end, whether Valve wins or loses in court, the ACCC's action is yet another wake-up call to software companies and consumer protection watchdogs. As entertainment media drifts ever further from its roots in physical artifacts like CDs and cassettes, consumer protection regimes ought to evolve as well to ensure that the public is protected regardless of whether the goods they purchase are tangible or not.ĚýThe application of laws governing physical, tangible goods to digital, virtual online products will continue to be a hot topic in courts worldwide, as previously discussed in the ,Ěýand by the ACCCĚýshowcasing the difficulties in applying a legal paradigm of property developed for an offline world to a globally connected Internet.

Adam Chan is an IPilogue Editor and a graduate of the University of British Columbia Faculty of Law.

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The Board's rationale was that because they add value to the final broadcast, incidental acts of reproduction should attract royalties of their own in addition to those payable for the broadcast of the work. It relied onĚýĚýľ±˛ÔĚýsupport of its interpretation of the law. The facts inĚýBishopĚýwere very similar to those in the present case, and raised the same question of whether incidental reproductions made in the course of preparing an audiovisual work for broadcast were subject to tariffs. At issue inĚýBishop was whether pre-recordings of television shows created "to ensure the quality of the broadcasts, and to enable broadcasters to offer the same programming at convenient times across five different time zones" fell within the scope of theĚýĚýs 3.1(f) (broadcasting) or s 3.1(d) (recording). The Court used a narrow, "ordinary words" interpretation of the Act in concluding that the creation of incidental copies to be used in the broadcast process was not a component of the broadcast right itself.

The CBC on the other hand, relied on the technological neutrality principle stated inĚý,Ěýand claimed that the Supreme Court’s decision in that case changed the law as it relates to incidental copies. The principle as articulated by the Court provides that the public should not be subject to additional taxes or tariffs for a copyrighted work depending merely on its method of delivery – more advanced technological methods of delivering a work to a customer should not attract additional levies. The particular version of technological neutrality espoused inĚýESAĚýseems to be that of functional equivalence: if two technologies have the same effect, such as mailing a video game to a customer and downloading the same game via the internet, one method of delivery should not be favoured over the other by copyright law. CBC argued that because the incidental copies were produced "purely to meet the technological requirements of the systems used by producers and broadcasters", an increase in royalties would result in a restriction on technological innovation and efficiency.

The Federal Court of Appeal sided with SODRAC and the Board, reasoning that while the Supreme Court inĚýESAĚýstated three versions of technological neutrality in its majority reasons, it used none of them in its final decision, relying instead on an analysis of the history and jurisprudence separating the performance right from the reproduction right. Because the application of this new principle of copyright law to a changing technological landscape was not the basis of theĚýESAĚýdecision, the Federal Court of Appeal rejected the CBC's technological neutrality argument. Instead, it preferred the reasoning of the Supreme Court inĚýBishop, which did deal with technological change in similar circumstances to the case at hand, and emphasized the distinctness of the reproduction right from the broadcast right.

If SODRAC prevails at the Supreme Court of Canada, consumers will likely be relatively unaffected, at least as concerns the broadcasts at issue in this case. However, the status of ephemeral reproductions under copyright law is of great importance in the transfer of copyright-protected works over the internet. In dealing with the resale of digital works such as MP3s, copyright holders have used the reproduction right to restrict the ability of consumers to resell their "used" audio and video files, despite the fact that they were purchased legally. The lack of a digital right to resale stands in stark contrast to the thriving physical trade in used copies of music and movies. The legal avenue through which copyright holders have been successful in stymieing the development of digital secondary markets is the engagement of the exclusive right of reproduction, a technicality of transferring a file over the internet: in order to transfer a digital file, a reproduction of that file —Ěýan ephemeral copy —Ěýmust be created on the recipient's computer and the original subsequently deleted from the sender's computer. A technological neutrality argument in favour of digital resaleĚý—Ěýthat because resale of copyrighted works is permissible offline, that it ought not to be illegal online merely due to a technicality of online transferĚý— would be significantly harder to make if the Supreme Court decides to hobble the seemingly broad statement of the principle inĚýESA.

Another possibility is that the court will reconcileĚýBishopĚýwithĚýESA in a way that recognizes the importance of technological efficiency and innovation, and allows new business models to thrive while protecting and rewarding the work of artists.

Adam Chan is an IPilogue Editor andĚýgraduate of the University of British Columbia Faculty of Law.

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Facebook's Arguments

One of Facebook’s main objections to the new tariffs was in relation to the definition of a “page impression” for the purposes of assessing the amount of tariffs to be paid. As tariff 22.D.1 stands, an “audiovisual page impression” is made when the user loads a webpage that allows them to view an audiovisual work. Facebook argued that a more accurate method of counting page impressions was by the actual number of times users viewed or listened to an audiovisual work. Moreover, Facebook contended that the existing definition of a page impression was unwieldy when applied to dynamically loading webpages like its News Feed system. The Facebook News Feed periodically refreshes the page being viewed to load new content in real time. Many websites use similar dynamic content loading techniques. Using the current definition of a page impression may result in such websites paying more in tariffs than websites with more standard page loading practices. Facebook’s proposed change to the definition would account for nonstandard content display systems, such as the News Feed, which may not refresh in their entirety, but rather add single new items periodically.

The Board decided that Facebook’s method of counting dynamic page impressions was permissible, but rejected its proposal to assess tariffs by actual views of an audiovisual work rather than potential views. I find the Board’s rejection of Facebook’s alternative view-counting method puzzling, particularly because no justification was given other than that SOCAN’s method was consistent with the definition in the tariff. This definition may have sufficed when the loading of a page that allowed a user to view an audiovisual work was an acceptable proxy for the actual viewing of the work, but today’s web services increasingly make use of real-time content loading similar to that of Facebook’s News Feed (Twitter is another notable example of real-time content loading). Moreover, the technology exists to make more precise view counts – Facebook, YouTube, Twitter, and similar sites almost certainly already keep track of how many times a user views a given piece of media. The Board’s decision to use a less accurate method of counting views over an available, more precise alternative is an odd one.

Netflix's Arguments

Netflix made two main arguments against the tariffs: first, that its practice of offering free trials to potential subscribers was fair dealing for the purpose of research, in a manner analogous to free iTunes previews in ; and second, that the levying of tariffs on free trials was a violation of the principle of technological neutrality set out in . As was the case with Facebook’s submissions, the Board was not convinced, rejecting both arguments.

It concluded that the link between Netflix’s free trials and the short audio samples in Bell was tenuous. The iTunes previews at issue in Bell were only 90 seconds long – to listen to the full song, a purchase was necessary. In contrast, Netflix’s trials allow a user the full benefit of a Netflix subscription, but for a limited time. A closer analogy to a song preview would be allowing a user to access only a small part of Netflix’s library, or allowing them to only watch the first five minutes of a movie or television show. On a more procedural note, the Board declined to probe the fair use issue, pointing to a lack of evidence upon which to make a decision. The Board used some rather narrow reasoning in its rejection of Netflix’s technological neutrality argument, using the example of a digital download of music as an “alternative technology” to a CD being sold in a store. It then stated that the technological neutrality argument failed because no “alternative-technology equivalent” to a Netflix trial existed, despite the fact that the Supreme Court’s reasons in ESA did not mention a requirement that functionally analogous technologies be extant. Without such a requirement, it does not matter whether an alternative technology or business model based on alternative technology exists, only that an analogy may be drawn to a hypothetical alternative technology that would be treated differently than the one in question.

The gauntlet has been thrown down

As stated above, the extremely minimal reasons given by the Board makes in-depth analysis of the legal foundations behind its decision difficult. I look forward to a decision by a court on this matter, as there is much at stake for the businesses that made submissions here. SOCAN’s recent track record at the Supreme Court is not great – both Bell and ESA were decided against it. However, with the passage of the Copyright Modernization Act and the addition of a , SOCAN may think that it can take any comers, and give the ESA decision a rematch to boot. It remains to be seen what the result will be, but with this many industry heavyweights in the ring, it’ll be a fight to watch.

Adam Chan is an IPilogue Editor and graduate of the University of British Columbia Faculty of Law.

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Lohan’s complaint falls under the category of “right to publicity” cases, aĚýclaim that is based on a person’s right to have control of where and who is able to depict them in public. ĚýThe statutory basis for the complaint is , which states that liability may be found when "aĚýperson, firm or corporation that uses for advertising purposes, or for the purposes of trade, the name, portrait or picture of any living person without having first obtained the written consent of such person."ĚýLohan that Lacey "incorporate[s] her image, likeness, clothing, outfits ... identical events to the Plaintiff's life ... making it unequivocal that the Plaintiff was the intended referent."

While many states have to New 91ŃÇɫ’s Civil Rights Code Section 50, right to publicity case law is plentiful in California, where famous faces and movie-star mugs abound. involving video games arose in 2012 between NCAA college athletes and Electronic Arts (EA), the publisher of a game unsurprisingly titled NCAA Football. Although, like Lacey Jonas, the characters in NCAA Football didn’t share the names of the players upon whom they were allegedly based, they did share other vital characteristics, including age, weight, height, position, jersey number, college affiliation, hometown, and other, more subjective statistics including speed and strength. The fact that the real and virtual versions of the athletes in question were identical on many levels besides their names, when taken together with the similar contexts in which the real and virtual athletes existed (the football field), led the appeals courts to rule in the athletes’ favour using a transformative use test.

This test examined whether the use of the plaintiff's likeness was "transformative" in nature: whether it used creative and expressive elements beyond literal recreation of a real person in the game. In both NCAA cases, the courts found that since the virtual football players were almost identical to the plaintiffs except in name and were engaged in the same activity (football) in the same context (college athletics in real-life arenas), EA's use of the athletes' likenesses was not sufficiently transformative to form a defence. However, a previous case, , had the opposite outcome. In that case, Kirby, a professional singer, alleged that Sega had appropriated her likeness in a video gameĚýcharacter named Ulala. However, the Court of Appeal, Second Circuit found that there was sufficient difference between Kirby and Ulala for Ulala to constitute a transformative work. The court found differences in dress (retro 60s vs futuristic) and occupation (professional singer vs space-reporter) persuasive in making its decision.ĚýAlthough the outcome of these cases were quite fact-specific, it is at least possible that a court will look to them for guidance, especially since the complaints in the previous cases and the current Grand Theft Auto V case each arose in a video game context.

On the above factors, it seems that Lacey Jonas falls somewhere between the realistic, near-literal depictions of college athletes in their real-life environment and with obvious attention paid to details such as height and weight, and the space age reporter Ulala, so different from Kirby (if she was even based on Kirby in the first place) as to be nearly unrecognizable. Lohan may have a difficult time showing that Lacey is meant to be an unequivocal reference to her, as the "blonde, vapid celebrity hounded by paparazzi" trope is well-established, and Lohan is not the only real-life example. Furthermore, although the setting of Grand Theft Auto V is clearly a city inspired by Los Angeles, the events that transpire during the game are plainly ludicrous, probably sufficiently so to bring them outside the realm of realistic football stadiums and into that of outer-space news agencies. The player can race a stolen supercar through traffic, fight aliens, orchestrate elaborate explosions, and more that many would consider outside the scope of "realistic" depictions of people and places.

Lindsay Lohan has likely never accepted the help of a stranger to escape the paparazzi by tearing through the streets of Hollywood in a stolen sports car. The question for the courts will be: is the depiction of her doing so transformative enough for Rockstar to avoid liability? Or could Lohan successfully argue it is close enough to her actual likeness to infringe her right to publicity?

Adam Chan is an IPilogue Editor andĚýgraduate of the University of British Columbia Faculty of Law.

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The US doctrine of copyright exhaustion ()Ěýstates that a copyright owner's exclusive right of distribution in a copyright-protected work is exhausted upon first sale of that item (hence the doctrine of exhaustion's other name: the first-sale doctrine).Ěý Although Canada'sĚýCopyright Act among those rights enjoyed by the owner of copyright in a work, Canadian copyright law has functional equivalency by operation of other doctrines. Ěý However, copyright exhaustion is an important consideration elsewhere in the world as the question of whether purely digital goods such as ebooks, MP3s, and audiobooks may be resold on secondary markets is still a contentious question.

On June 15, the German Court of Appeal of Hamm released the first appellate-level decisionĚýon the application of the doctrine of copyright exhaustion to digital goodsĚýsince the Court of Justice of the European Union (CJEU) decidedĚýĚýľ±˛Ô 2012.ĚýUsedSoftĚýwas a case involving the resale of licences to software distributed by Oracle. After passing through Germany's court system, the case reached the CJEU, which ruled that the doctrine of exhaustion applied to Oracle's exclusive right to distribute the software in question. Further, it held that the second owner of the software licences could use those licences to download updated versions of the software from Oracle.Ěý

Last week's decision by the Court of Appeal of HammĚýis currently only , but from what information is , the appeal court upheld the decision of the trial court and concluded that theĚýUsedSoft decision wasĚýlex specialisĚýand only applied to the . The Software Directive, as its name suggests, governs software, while other kinds of digital media such as ebooks and audiobooks instead fall under the purview of the .Ěý

After UsedSoft, there was much speculation about whether the CJEU’s decision regarding copyright exhaustion under the Software Directive would also apply to works falling under the scope of the InfoSoc Directive. With this decision, it appears that computer programs like the one at issue in UsedSoft are subject to different judicial treatment than other commonly-traded digital goods such as ebooks.

The court’s decision here was a victory for copyright owners and distributors of works in digital format, as it provides them more control over the sale and resale of such goods online. However, even if the court had extended the doctrine of exhaustion to the InfoSoc Directive, it is likely that copyright owners could have used other exclusive rights granted by copyright statutes to block the development of secondary markets for digital-format works. The copyright owner’s exclusive right of reproduction is a strong tool against theĚýresale of digital goods as the transfer of a file from one user to another necessarily requires the reproduction of that file. This tactic was used in the United States case in response to efforts by ReDigi to launch a pre-owned marketplace for digital music using the doctrine of exhaustion as a defence. Capitol Records successfully argued that even if its distribution rights in the music files were exhausted, it retained its exclusive right of reproduction. Because of the nature of online file transfer, it contended that every transfer of a copyright-protected file would constitute copyright infringement by way of the reproduction of the file on the recipient’s computer.

While there may be other legal routes to the establishment of secondary markets for digital-format goods, it appears that one of the more promising arguments in favour of digital resale has been dealt yet another blow with the latest decision out of Germany. It remains to be seen whether inventive defences to copyright claims may allow for the creation of such markets, but the legal battles over the growing market for digital goods are only just beginning.

Ěý

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The ValiantChaos MapHack, sold by the defendants in the suit, changes the gameplay of StarCraft II by allowing the player using the hack to see the whole play area. Under usual gameplay conditions, only a small portion of the play area is visible, with the rest of the map obscured by theĚý“fog of war”. The user of the ValiantChaos program thus gains an advantage over his opponent, unless that player is also using the hack. Due to the significantĚýdifference in financial resourcesĚýavailable toĚýthe two parties, it is unlikely that the case will ever see the inside of a courtroom. But what if it did?

Blizzard’s compliant consists of several counts, including direct, contributory, and vicarious copyright infringement, and claims that the distribution of the hack has caused irreparable damage to the game experience. Blizzard is seeking statutory damages, as well as a preliminary injunction against the creators of the hack that would prevent them from distributing it further.

MDY Industries v Blizzard Entertainment

This is not the first time that Blizzard has gone after programmers for modifying the game experience in one of its online multiplayer titles. In , Blizzard sued the developers of a World of Warcraft “botting” program, which allowed a user to automate the actions of her in-game character. She could thus reap the rewards of playing the game, such as in-game items or experience, without actually having to play. Blizzard was successful in obtaining a summary judgment against MDY for tortious interference with contract, contributory and vicarious copyright infringement, and violation of the (DMCA) provision prohibiting circumvention of technological protection measures (TPMs), which the Glider bot program did. On to the Court of Appeals for the Ninth Circuit, the court reversed the district court’s finding of liability for secondary (contributory) copyright infringement and part of its finding of liability under the DMCA. However, it upheld the judgment against MDY for trafficking in technologies that circumvent a TPM that “effectively controls access”Ěýto a copyright-protected work [1].ĚýFinally, the appeals court found that the tortious interference with contract count was inappropriate for summary judgment, and remanded it to the district court for reconsideration.

Will the results of the ValiantChaos MapHack case mirror those of MDY?

In MDY, Blizzard argued that because the users of the Glider program acted contrary to the terms of use and license agreement that they had agreed to upon installing the game, they exceeded the scope of the license they had been granted to reproduce the code of World of Warcraft and therefore infringed Blizzard’s copyright in the code. In its complaint in the current suit, Blizzard chose not to employ the same approach. Instead, it focused on direct infringement, arguing that the creators of the hack created an unauthorized derivative work of StarCraft II in the process of reverse engineering it in order to create a new program. Further, Blizzard contends that the hybrid program created by installing the ValiantChaos hack on top of the original StarCraft II code also creates an unauthorized derivative work.

Focusing solely on the counts of direct, contributory, and vicarious copyright infringement, the key consideration for the court will likely be whether the ValiantChaos hack is a derivative work under the Copyright Act. One of the more relevant cases on video game “mods” is , which involved a hardware modification called the Game Genie that allowed players to modify the gameplay of games played on the Nintendo Entertainment System. The district court in Galoob ruled inĚýtheĚý"mod" developer'sĚýfavour, finding that the Game Genie did not create derivative works of games published by Nintendo. This judgment was by the Ninth Circuit. Crucial to the reasoning of both courts was the fact that the Game Genie “is useless by itself, it can only enhance, and cannot duplicate or recaste, a Nintendo game’s output. It does not contain or produce a Nintendo game’s output in some concrete or permanent form, nor does it supplant demand for Nintendo game cartridges.”

The ValiantChaos hack shares these characteristics: it exists only to be used to supplement the StarCraft II experience and has no independent utility. Furthermore, use of the hack requires a copy of StarCraft II – the creators of the hack do not seek to supplant demand for Blizzard’s game. Indeed, if demand for StarCraft II did diminish, so would demand for their product. Moreover, the effect of the Game Genie is similar to that of the ValiantChaos hack in that it allows a player to make the game easier for herself. The fact that, as Blizzard mentions multiple times in its filing, the ValiantChaos hack is used in a multiplayer context, potentially harming the game experience for another player, is likely to be irrelevant in considering whether it is a derivative work.

However, in the Ninth Circuit qualified the conclusions it reached in Galoob. At issue in this case was whether MAP files – player-made files containing arrangements of pre-existing art and characters for the game Duke Nukem – were unauthorized derivative works. In the end, the Ninth Circuit distinguished the MAP files from the Game Genie by stating that they described the audiovisual displays of the game, and therefore were permanent and fixed, unlike the displays produced by the Game Genie. Because the MAP files used the art assets of the game, the Ninth Circuit held that they were derivative works in the same way sheet music of a copyright-protected melody would be.

There is certainly room for the creators of the ValiantChaos hack to argue that their program is closer in operation to the Game Genie than it is to a MAP file. Its operation is limited to revealing the in-game map for a player, a small change that does not provide a wholly different gameplay experience. Moreover, though the Micro Star court did not say so, the MAP files had the potential to supplant demand for the original game. New player-created MAP files, representing new gameplay experiences, may have decreased demand for a potential official expansion to Duke Nukem. The MAP files differ from the Game Genie in this small, but important, aspect. The ValiantChaos hack has no potential to supplant demand, though it alters the game by making it easier – it is somewhat akin to the ability to skip obstacles granted by the Game Genie.

In the end, the game may be over before it begins

However, this prognosticating over the legal arguments that might be made by either side in a potential court case is likely to be all sound and fury, signifying nothing. The creators of the ValiantChaos hack are just that, hackers. They do not have the resources for a drawn-out court case against one of the largest video game companies in the world. The overwhelming likelihood is that they fold in the face of the legal threat, which is probably just what Blizzard expects them to do.

[1] 17 USC §1201(a)(2).

Adam Chan is an IPilogue Editor and graduate of the University of British Columbia Faculty of Law.

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