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Copyright Protection for User Generated Content in Virtual World Confirmed

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While a legal battle will continue between a Second Life content "consultant" and a school teacher using the online virtual-world creating program as an educational tool, the Southern District of New York made one thing clear last week - user-generated Second Life content is copyrightable.

In FireSabre Consulting LLC v. Sheehy, the Defendant, a teacher in the Rampao Central School District in rural New York, created "Rampao Islands," a school project in the virtual world Second Life in 2006.  That year, she attended a Second Life convention in San Francisco to solicit help for the project.  She met Frederick Fuchs, owner of Plaintiff FireSabre, an education-focused virtual-world content creation company.  Fuchs agreed to help with the project in 2006 and designed "terraforming" content, in which he created a portion of the geography of the "First Three Islands" (islands are pieces of land that one can purchase in Second Life) that made up the class project.  He provided further terraforming services in 2007 for the "Second Three Islands," for which he was paid $5000.  The parties dispute the purpose of the payment - the Plaintiff claims it was a limited license to use the content for that school year and Defendants claim it was either a purchase of the content or a perpetual license to use the content.  Defendants have also raised the work for hire doctrine as an affirmative defense, but did not move for summary judgment on that issue.  

In any event, the relationship between the parties broke down.  In summer 2008, Fuchs deposited 40 screenshots of his work with the US Copyright Office and obtained a Certificate of Registration.  He then informed Defendants that continued use of his content was a copyright violation.  When they refused to remove the content from the in-game Rampao Islands, Fuchs engaged in "self-help" and removed some content himself.  He also sent takedown notices under the DMCA to Linden Lab, the Second Life creator, and succeeded in having additional content removed.

Nonetheless, FireSabre sued Ms. Sheehy and other school district executives, claiming copyright infringement and breach of contract.  Both sides moved for summary judgment - motions that the court rejected.

Plaintiff argued that the terraforming was not copyrightable.  The court disagreed, finding it was "fixed in a tangible medium" because it existed on Linden's servers and was visible in the game for some period of time.  The court also found that it was not transitory, despite the fact that students could alter the content.  "In this regard I see no distinction between the terraforming designs and a drawing created on a chalkboard or a sculpture created out of moldable clay. That someone else could come along and, with or without permission, alter the original piece of art does not mean the art was too transitory to be copyrighted in the first place."

Nonetheless, the court denied Plaintiff's motion for summary judgment because there were questions of fact regarding what, if anything, was copied and whether the copying exceeded the scope of any license.  The court also rejected Defendants' fair use argument, despite the fact that the works were used as part of an educational project.  "Nevertheless, this case does not resemble that of a teacher using an excerpt of a copyrighted work as part of a limited instructional exercise. Rather, as to the Second Three Islands, the allegations more closely resemble misappropriation or conversion."  In fact, the court found that none of the fair use factors favored Defendants.

Thus, the case will continue.  And larger issues can be foreseen.  Content can be sold in-game and, as this case demonstrates, can be transferred outside of the game.  If an outside sale is governed by the agreement between the parties, what is the scope of rights granted for an in-game sale?  Does the first sale doctrine apply?  What can a content generator prevent others from doing?  Can a user alter the creation of another in a way that is sufficiently transformative to allow for unfettered use?  How can one enforce their rights in a game world encompassing millions of users and countless creations?

It's a whole new (virtual) world for copyright law.

Around the Virtual World - July 2-6, 2012

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

 

Twitter Drops LinkedIn Partnership

LinkedIn announced via a blog post on Friday that Twitter would no longer be partnering with the business-networking site to sync updates from one site to the other. This ends a partnership that began in 2009. LinkedIn users can still create updates on the site and click a button to share to Twitter as well, but the reverse is no longer possible.

Two Major Gaming Deals Just Went Down 

Two pretty major announcements hit the gaming press Friday. And they have the potential to pretty much completely change the gaming industry. First off, Vivendi is selling off its majority stake in Activision Blizzard. It's unlikely they're going to find anybody to just buy the whole thing: AB is valued at $13 billion, and there's a very, very short list of companies who could afford it and who would be interested.

What Sony's $380M purchase of Gaikai means for future gaming hardware

Sony Computer Entertainment has been known for its iconic PlayStation hardware, including the PS3 console the PlayStation Portable, now called Vita. But does its future lie in proprietary hardware, or in a delivery platform that brings PlayStation games to any connected device? That's one possible implication of a $380 million acquisition of Gaikai, a Silicon Valley provider of gaming delivered through the cloud.

Health-care apps for smartphones pit FDA against tech industry

Three tries. More than two years. And roughly $150,000. That's what it took for MIM Software to get the Food and Drug Administration's clearance for a smartphone application that physicians can use to view MRIs and other medical images. 

Xbox Class Sues Microsoft For Blocking Online Access

A California Xbox video game system owner filed a class action in Washington federal court on Friday accusingMicrosoft Corp. of breaching contracts with consumers by blocking access to its Xbox Live online service without issuing refunds for their subscriptions, purchases and credits.

Usher Wants a Virtual You to Dance at His Concert

Pop star Usher is looking for new backup dancers -- virtual ones -- for his upcoming London concert, which will be live-streamed June 11 from Hammersmith Apollo. Starting Friday, fans can create digital avatars of themselves to win the chance of becoming a choreographed dance square during Usher's performance of "Scream." American Express teases the interactive element in the above video, shared first with Mashable.

Around the Virtual World - June 4-8, 2012

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.


 

 

Social network LinkedIn reports stolen passwords

Business social network LinkedIn said Wednesday that some of its users' passwords have been stolen and leaked onto the Internet. LinkedIn Corp. did not say how many of the more than six million passwords that were distributed online corresponded to LinkedIn accounts. In a blog post Wednesday, the company said it was continuing to investigate.

Ubisoft Wants 'Assassin's Creed' Copyright Claims Offed

Ubisoft Entertainment SA asked a California federal court on Wednesday to kill an author's allegations that the video game maker's popular "Assassin's Creed" infringes a copyrighted novel, saying the writer's claims cover generic aspects of the stories that can't be protected.

Android Ruling A Sweeping Win For Open Source Software

A California judge's ruling Thursday that certain Oracle Corp. Java software cannot be copyrighted is an important vindication for accused infringer Google Inc. and open source software in general, but whether the decision will have broad ramifications for software copyrights remains to be seen, attorneys say.

City introduces private social network for neighborhoods

San Mateo is making Nextdoor, www.nextdoor.com, available to all San Mateo neighborhoods.  Nextdoor, the first private social network for neighborhoods, is designed to foster neighbor-to-neighbor and citywide communication. Starting now, San Mateo residents can use Nextdoor to create private websites for their neighborhoods where they can get to know their neighbors, ask questions and exchange local advice and recommendations. Topics of discussion on Nextdoor are as varied as local events, school activities, plumber and babysitter recommendations, disaster preparedness, recent crime activity, upcoming garage sales or even lost pets.

Smartphones, tablets threatening handheld video games

Smartphones and tablet computers are expanding the market for handheld video games and challenging traditional devices, forcing game developers to adapt to a rapidly changing landscape. Executives at the Electronic Entertainment Expo (E3) held this week in Los Angeles said the industry -- long focused on generating blockbuster titles for PlayStation, Wii or Xbox 360 -- are taking a new look at portable platforms.

World's Largest Multi-Stakeholder Virtual Care Community Launched by the Premier Healthcare Alliance

The Premier healthcare alliance's PremierConnect(TM) technology platform will be at the fingertips of more than 100,000 clinicians, supply chain leaders, hospital executives and other healthcare providers nationwide, allowing them to interact as one in communities of common interest.

Mary Meeker's Latest Stunning Presentation About the State of the Web

No one in the entire world is as good at summarizing the state of the technology business through slideshow presentations as Kleiner Perkins partner Mary Meeker. She's about to do it again at the All Things D conference.
 

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Magid National Study Finds Social Networking Gaming Growth is Slowing

The research, conducted as part of the Magid Media Futures 2012 study, found social network gaming user growth has slowed in the United States. About two in five (38%) social network users, up slightly from 36% in '11, say they regularly play games on social networks. Social network gaming has decreased among its primary demographic, females age 12-44, with less than 43% of users age 12-17 (down from 54% in 2011) and about 36% of users 25-44 (down from 40% in 2011) reporting playing on a weekly basis.

Internet Gaming On The Horizon For NJ, Lawmaker Says

Internet gaming could be a reality in New Jersey before the end of the year, eventually providing Atlantic City's casinos with a much-needed influx of revenue, a state senator sponsoring such legislation told a roomful of attorneys Wednesday.

Overexposed? Thanks to SceneTap, San Francisco bars are now profiling you

SceneTap is a maker of cameras that pick up on facial characteristics to determine a person's approximate age and gender. The company works with venues to install these cameras and track customers. It also makes web and mobile applications that allow random observers to find out, in real-time, the male-to-female ratio, crowd size, and average age of a bar's patrons. And no one goes unnoticed. "We represent EVERYONE in the venue," SceneTap proudly proclaims on its website.

Judge: An IP-Address Doesn't Identify a Person (or BitTorrent Pirate)

A landmark ruling in one of the many mass-BitTorrent lawsuits in the US has delivered a severe blow to a thus far lucrative business. Among other things, New York Judge Gary Brown explains in great detail why an IP-address is not sufficient evidence to identify copyright infringers. According to the Judge this lack of specific evidence means that many alleged BitTorrent pirates have been wrongfully accused by copyright holders.

For Start-Up, Virtual Casinos

Andrew Pascal was one of Steve Wynn's trusted lieutenants when the Las Vegas magnate was rebuilding his gambling empire a decade ago. Now the former president of the Wynn Las Vegas and Encore casinos is the chief executive of a Silicon Valley gaming start-up aimed at running virtual casinos.


Around the Virtual World

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

The Virtual Military

While much of the international system remains mired in the economic doldrums, many global military powers continue to increase defense budgets focused upon the research and development of simulation technologies. As part of our week-long focus on the importance of games to international relations and security, today we consider how Russia, China and the United States are using virtual simulators to train its armed forces.

Social game Idle Worship takes Facebook gaming to new level

Idle Games is launching a next-generation social game today dubbed Idle Worship. The title opens up a new genre on Facebook -- the once popular "god game" -- and it has an interesting and witty approach to social gameplay. Founded by former ad executive Jeffrey Hyman, San Francisco-based Idle Games is in a "holy war against games that suck or aren't actually social."

TrialPay and TubeMogul Introduce Real-Time Bidding for Virtual Currency and Social Video

TrialPay, a leader in transactional advertising, and TubeMogul, a media buying platform for brand advertising, announced a partnership that brings real-time media buying to social video advertising for the first time today.

Illinois legislation to ban employers from asking for social network passwords hits snag

Legislation that would prohibit employers from seeking job applicants' social network passwords is on hold in the Illinois House. Democratic Rep. La Shawn Ford's measure would allow job-seekers to file lawsuits if asked for access to sites like Facebook. Bosses could still ask for usernames that would allow them to view public information on the sites.

 Smithsonian Art Of Video Games Exhibit Opens With Gaming Festival

The exhibit is curated by Chris Melissinos of Past Pixels, a group charged with the preservation of video game history. Over the past year, Melissinos -- aided by a board of advisors that includes Double Fine's Tim Schafer, text adventure veteran Steve Meretzky, and Penny Arcade team Jerry Holkins and Mike Krahulik -- designed an exhibit that encourages visitors to make what Melissinos calls "a deeply personal decision" of whether video games are art. The exhibit offers five eras of video games with both playable demos and self-playing videos, showcasing everything from the Atari 2600 to the PlayStation 3, from the traditional platforming of Super Mario Bros. to the more experimental play of Flower.

Navy Pursues a Better Attack Submarine Virtually

Technical advances in the field of virtual reality, also known as virtual worlds (VWs), are making it possible for the U.S Navy to tap into the collective expertise of its best submariners to design and build the next generation of attack submarines. At the Naval Undersea Warfare Center (NUWC) in Newport, Rhode Island, designers are able to create collaborative environments for submarine development using a fully immersive virtual reality application similar to the popular Second Life environment, which enables them to interact with one another both audibly and visually. Numerous participants at remote sites worldwide are linked to one another through the Defense Department's secure computer network.


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Will 2012 be the year of virtual worlds?

What got me thinking about this was a blog post by Maria Korlova over at the HyperGrid Business Blog. In it, she maintains her firm conviction that businesses will soon come around to using these virtual worlds as business tools. Just as the nay-sayers were wrong about the Internet, Software as a Service, and Lady Gaga, we will eventually integrate this technology into how we work.

Courts, Sports And Videogames: What's In A Game?

Although one of the clearest legal thinkers, Louis Brandeis, conceived the modern right of publicity,[1] "unclear" would be an adjective all lawyers would apply to the current state of right of publicity law, regardless of which side of the issue they usually argue. Indeed, although the right of publicity concept was further developed by another very clear legal thinker, William Prosser,[2] he himself alluded to it as the concept "that launched a thousand lawsuits,"[3] few of which can be reconciled with one another.

Insurers Can't Join Coverage Suit Over Athlete Image Use

A Georgia federal judge said Wednesday that four insurers can't intervene in a coverage suit in California over underlying antitrust class actions concerning the use of college athletes' likenesses in video games.

What the Copycat Saw: Creative Theft in Mobile and Social Games

The distinction between theft and inspiration is often unclear in video games. Traditions are formed, broken down, and remade every few years. The most successful ideas are eagerly absorbed by others, from regenerative health in first person shooters to the subdivision of platformer levels into world and stage.

Virtual worlds training for federal cyber pros in the works

After finishing a successful year of training the federal cyber workforce, the government is taking another step toward cultivating better-prepared digital defenders.

Around the Virtual World

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Virtual Fairs Offer Real Jobs

As companies find themselves swarmed with applicants, struggling to match workers with the right skills to job openings, many are turning to virtual career fairs. Employers say these online forums--accessed by companies and job seekers from anywhere in the world--can save them time and money, as well as broaden the candidate pool.

Deal United's Facebook "Credits Rewards" Lets Clients Incentivize Signups and Purchases With Virtual Currency

German offer provider Deal United today announced it is entering the virtual currency incentives industry with the launch of "Credits Rewards". The new service allows brands to reward to users with Facebook Credits when they make purchases, registrations, signup for newsletters, enter contests, fill out surveys and more. Because virtual currency is so cheap to distribute and Facebook users may value Credits higher than their actual cost in dollars, they can be a cost effective way for businesses to reward users for following their call actions.

Children's book publisher heads into virtual world

Given that virtual worlds are driven by strong narratives, it comes as little surprise that more book publishers are eyeing opportunities in the space. The latest example comes from Finnish publisher DramaForum, which is transitioning its Petra's Planet book series into a virtual world through UK development studio Dubit.

Three ways virtual environments are changing how companies conduct business

One of the more popular attractions at major theme parks is the "motion ride." Through the use of visual, audio and other sensory cues (along with some pretty slick technology), visitors are given the opportunity to go places and do things they never could in the real world. Whether it's flying through the jaws of a dinosaur in Doc Brown's Delorean, visiting a galaxy far, far away, or taking a tour through the inner workings of the human body, these virtual environments engage visitors with a sensory experience that moves them in a way ordinary roller coasters can't.

Samsung Launches the Industry's First Gamified Corporate Website

Samsung Electronics America today announced the launch of Samsung Nation, its first social loyalty program. Available on the Samsung U.S. website, the program rewards consumers by enhancing their online experience with Samsung.

The Not-At-All-Distant Future of Green Gamification

Games are like ketchup: widely loved and diversely applied, with an appeal rooted in childhood. In fact, a new report reveals that over 90 percent of U.S. kids aged 2-17 are gaming today. Yet the gaming generation has been on the rise for three decades, leading to not only an army of young gamers, but also an influential adult segment. It is small wonder, then, that "gamification" is the most disruptive force to impact marketing since the arrival of social media.

Macy's Introduces Augmented Reality Experience in Stores across Country as Part of Its 2011 "Believe" Campaign

For the first time, customers mailing their letters at Believe Stations in Macy's stores will have an opportunity to take a photo with the campaign's animated stars Virginia and Ollie from the animated holiday special "Yes, Virginia." Using new augmented reality technology, customers with IOS and select Android smartphones can download the "Macy's Believe-o-Magic" application that allows them to unlock the magic to see and interact with Virginia, Ollie and their friends.

Around the Virtual World

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Bambuser Powers World's First 24-Hour Virtual Tour of New York City

Starting and finishing in Times Square on Tuesday, 1st November at 9am EDT, Hans Eriksson - executive chairman of the live mobile streaming application Bambuser will spend 24 hours exploring New York, broadcasting all he encounters live onto the web from his iPhone - with his itinerary selected by his online audience.

Square Enix, DeNA Team Up For Japanese Final Fantasy Social Game

Square Enix and Japanese mobile social gaming company DeNA are teaming up to create the first social game based on the popular Final Fantasy series. Few details have been announced regarding the Mobage title, which is based around the theme of "fighting for teammates," but DeNA said it will be developing the game in-house using familair characters from Square Enix's Final Fantasy series.

Bunchball Wants to be the 'Motivation Engine for the Internet'

Who would have thought that a company located just above an Irish pub in San Jose would grow to be so successful? According to Bunchball's Founder and Chief Product Officer, Rajat Paharia, Bunchball originally had roots in "social gaming", a concept that he admits was a bit too early to market and proved very difficult as a pitching point.

Nirav Tolia launches Nextdoor, private social network for neighbors

"Even though social networks are completely ubiquitous, I didn't see a social network for one of the most important communities in our lives: the neighborhood," Tolia said in an interview this week. Tolia says neighbors have lost touch with each other. He points to a 2010 study from the Pew Research Center that found that 60% of Americans didn't know the people who lived near them.

Video games for sweepstakes argued before NC court

The state is seeking to preserve a law that attempts to rid North Carolina of sweepstakes that use video-style games to reveal winnings but that companies say infringes on free speech rights and should be thrown out.

The Top 10 Most Influential People in Facebook and Social Games

In an attempt at fairness, we took to AppData's developer leaderboard, but also peppered the list with industry transplants of note. We're certain we've glossed over some video game veterans, but did you really want a list of 30 people? So, feel free to give us your two cents in the comments. (We've put on our flame-retardant suits already.) Here are the top 10 most influential people in Facebook and social games...


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Judge Says Warrant Required for Cell Phone Location Data

In recent years, the courts have struggled to decide whether the government needs a warrant to access historical records about a cell phone user's location. Some courts have found that when users turn on their cell phones, they "voluntarily" transmit their location to their cell phone providers and thereby waive any expectation of privacy.

Social Media Could Render Covert Policing 'Impossible'

Facebook has proven to be one of the biggest dangers in keeping undercover police officers safe due to applications such as facial recognition and photo tagging, according to a adjunct professor at ANU and Charles Sturt University.

Building With Someone Else's Blocks: Going Open Source With Games

Giving players access to source code has been a part of gaming's history for years, from the earliest MUDs to Tim Sweeney's ZZT. As console gaming's proprietary hardware and its closely guarded development tools slowly squeezed PC play from its central place in the industry the idea of open source play declined.

Wirklich? Germany Declares Facebook 'Like' Button Illegal

The German government on Friday declared the Facebook "Like" button, which appears on countless websites accessible all over the world, in violation of the country's strict privacy rights -- and thus illegal.

U.K. Pulls Back From Threat to Control Social Networks

The British government stepped back from threats to shut down social networks during future disturbances and instead is seeking to work with the networks on how best to use them to help. A high-profile political meeting today between the government, police and the networks was described as "honest and refreshing" after police admitted they struggled to understand social media.

Al Qaeda In Azeroth? Terrorism Recruiting and Training in Virtual Worlds

In their pursuit of terrorists, government intelligence agencies leave no digital rock unturned: telephone calls, emails, text messages, blogs, news sites - they monitor them all. Sometimes, as with social networks like Facebook, the companies behind these services gladly hand over data to governments to assist in this hunt. Yet there is still one place where terrorists can go, one place where they can talk to each other openly without fear of being detected: online video games.

Around the Virtual World

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Groupon Files for $750 Million IPO

Groupon has filed with the Securities and Exchange Commission to go public in a $750 million IPO underwritten by Morgan Stanley, Credit Suisse and Goldman Sachs.

Pandora Raises IPO Size as High as $141.6 Million

According to Thursday's amendment, Pandora is now looking to sell 15,736,600 shares at a maximum offering price of between $7 and $9 per share. That means its IPO could be as big as $141.6 million.

Why YouTube Adopting Creative Commons Is a Big Deal

Making legal YouTube mashups just got a whole lot easier. The site's video editor is now allowing its users to remix existing YouTube videos without violating anyone's copyright. This is made possible by YouTube adopting Creative Commons licenses, offering users the chance to publish any video under the liberal CC-BY license.

Tenn. Passes Web Entertainment Theft Bill

State lawmakers in country music's capital have passed a groundbreaking measure that would make it a crime to use a friend's login -- even with permission -- to listen to songs or watch movies from services such as Netflix or Rhapsody.

Virtual Worlds: Immersive Training, Collaboration and Meetings

Are virtual worlds really viable environments for work? According to a survey by Unisfair, a global provider of virtual events and business environments, usage of virtual environments is growing for marketing, training and collaboration. Surveying 550 marketers nationwide, the study revealed that 60 percent of respondents plan to increase spending on virtual events and environments this year.

Army Names Top Builders of Virtual Worlds

The U.S. Army is looking for a few good worlds -- virtual worlds, that is. The Army Research Laboratory Simulation & Training Technology Center announced winners for its annual Federal Virtual Worlds Challenge in which contestants from around the globe compete to produce the best virtual solutions for training and other applications.

Mobile Phones Transform Consumer Payments and Retailing Both On and Offline

The mobile phone is catalyzing virtual currency and payment development across the globe, says Geraldine Mitchely, business development manager for mimoney, virtual currency powered by Standard Bank, which resides on the mobile phone.


Around the Virtual World

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

Is Online Poker Over?

This week, the FBI landed a crushing blow on all of the online poker sites that are advertised nightly in the United States. Individuals involved with internet gambling companies PokerStars, Full Tilt Poker and Absolute Poker were indicted for bank fraud, money laundering, and illegal gambling and sued in a companion civil suit that seeks at least $3 billion in forfeitures and penalties.

HP Rolls Out Virtual Banking With Avaya's Web.alive

Building on HP's Unified Communications and Collaboration Services portfolio for the enterprise, HP and Avaya today announced a strategic offering that provides banks with a customer-centric, humanizing element for assisted self-service.

What Effect Has the Internet Had On Religion?

The concept of religious ritual is so deeply embedded in our social fabric that it is natural for it to have made the leap to virtuality. And it hasn't just reared its head in worlds such as Second Life. Social networks, including Facebook, have active and close-knit communities of religious followers of all creeds, gathering in what science writer Margaret Wertheim described in her 1999 book, The Pearly Gates of Cyberspace, as "a new kind of realm for the mind".

Hackers Go After Points, Credits, and Virtual Currency

Virtual thieves can sell stolen points in online forums or on eBay, or they can try to exchange points for rewards. However, most online retailers, social media, and gaming websites recognize the thieves' behavior patterns when cashing in stolen points. By analyzing the history of the device being used to access a website, the website's operator can prevent fraudulent transactions.


Social Gaming on Track to Become $5 Billion Industry by 2015

Parks Associates, an internationally recognized market research and consulting company specializing in emerging consumer technology products and services, forecasts revenues in the social gaming market will increase by five times from 2010 to 2015, due in large part to advertising revenues and sales of virtual items. These factors already pushed revenues over $1 billion in 2010.

FNB's eBucks Buy 19 Million KMs of Fuel

In December 2009, members of eBucks, First National Bank's rewards programme, were given the ability to pay for fuel with eBucks, FNB's virtual currency, at participating Engen service stations around South Africa. Since then, FNB has enabled eBucks' members to fill up on fuel to the value of over R13m at participating Engen service stations - which is enough fuel to drive almost 20 million kilometres or - more accurately - to make 25 trips to the moon driving an average family sedan.

IU Shares $297,929 NSF Grant to Study Use of 3D Virtual Worlds

The National Science Foundation has awarded $297,929 to a multi-disciplinary team from Indiana University and Arizona State University. The award supports on-going research concerned with the use of computer-generated 3D virtual environments by business and educational enterprises.

Virtual Currency Drawing in More Viewers

Virtual currency isn't just for gamers any longer. New data from Jun Group indicates that video viewers are also interested in virtual currency. According to their report on incentivized social video, virtual currency is pushing consumers to watch more video content in the social space.


PokerGate - 400 Billion chips Stolen from Zynga

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A UK court entered  a guilty plea against Ashley Mitchell, an IT guy who hacked into Zynga's servers last year and stole 400 billion virtual poker chips. His efforts to resell them, which is against Zynga's terms of service, netted him $86,000 and a yet to be determined jail sentence.

To avoid issues with the gambling laws, Zynga sells poker chips to users for real money (and in some cases to reward user actions), but prohibits any cash out or resale of the chips.

Zynga's Terms of Service states:

"Zynga owns, has licensed, or otherwise has rights to use all of the content that appears in the Service or the Zynga games. Notwithstanding any provision to the contrary herein, you agree that you have no right or title in or to any content that appears in the Service, including without limitation the virtual goods or currency appearing or originating in any Zynga game, whether earned in a game or purchased from Zynga, or any other attributes associated with an Account or stored on the Service.

Zynga prohibits and does not recognize any purported transfers of virtual property effectuated outside of the Service, or the purported sale, gift or trade in the "real world" of anything that appears or originates in the Service, unless otherwise expressly authorized by Zynga in writing. Accordingly, you may not trade, sell or attempt to sell in-game items or currency for "real" money, or exchange those items or currency for value of any kind outside of a game, without Zynga's written permission. Any such transfer or attempted transfer is prohibited and void, and will subject your Account to termination."

With respect to chip "purchases", Zynga states:

"The purchase of Zynga Poker chips from a third party seller is a violation of Zynga's Terms of Service. We are  not responsible for any losses incurred and will not restore chips.

The only safe method of purchasing our chips is directly through the application, via the Buy Chips tab."

As virtual currencies proliferate, it is important for companies to ensure that they think through their business models, develop and enforce effective terms of service and consider up front how they can use technological measures to deal with people who inevitably will try to beat the system. This requires a careful integration of business, legal and technical strategy.

For more information on legal issues with virtual currency, see Pillsbury's Virtual Currencies Overview.

What Happens When Social Media Environments Die?

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Despite supposedly having millions of users (to Facebook's 3/4 of a billion), social networking pioneer MySpace appears to be headed out to pasture. Last week, the company laid off 47 percent of its workforce, lopping off 500 employees from its nearly 1,100-person payroll. Rumors that MySpace's parent company News Corp. wants to sell are all over the tech and mainstream media. (see Link) This is despite a widely publicized "redesign" intended to focus the site on "social entertainment." (Link)

Assuming the redesign doesn't provide the boost News Corp. (or a potential buyer) would be looking for, what will happen to all of the material on users' MySpace pages if the service shuts down? A similar question faced users of Second Life's Teen Grid when Linden Labs announced that portion of the virtual world would be shut down. (See Link).

But closing down Teen Grid doesn't come close to the scale of shutting down MySpace. If done right (i.e., with plenty of notice and providing members a user-friendly option to export content), the passing of this early social media icon could be the model of the right way to wind things down.

The idea that a social media platform with millions of members (and millions more still joining), could "go gently into that good night" should serve as a warning to those investing time, energy and money into virtual assets - if you're on someone else's platform, and you're not big enough to get anything other than their standard user agreement, you need to plan for the day when your platform could turn off.

Value of a Strong IP Portfolio

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In October, tech media sources, such as CNET, were reporting that Facebook had acquired part of Zenbe's intellectual property portfolio, in addition to hiring some of Zenbe's key engineers. While Zenbe will stay intact, Zenbe Mail has been shut down, and the associated intellectual property, has been acquired by Facebook.  

Zenbe is just one in a long list of recent acquisitions by the social networking giant that have focused primarily on the value of intellectual property assets. Some of those acquisitions include: Divvyshot, Hot Potato, NextStop, Drop.io and FriendFeed. This underscores to critical importance of a sound intellectual property strategy that helps protect your product development and is aligned with your overall business goals.

Is Zynga Patenting Virtual Currency?

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There has been much buzz about Zynga's attempt to patent virtual currency. As is often the case with patents, there is much hype, many misconceptions and little focus on the actual facts. Here are the facts.

1. Zynga does not have a patent on virtual currency. It has applied for a patent, the application has been published but has not yet been examined. It will be some time, if ever, before a patent will issue. The published application is 2010-0227675. Here is a copy of the Zynga Application.

2. Zynga is seeking protection for various aspects of virtual currency, particularly in the context of "gambling" games. The following is an example of one of the claims:

A method, comprising:receiving, at a server, a purchase order for virtual currency from a player, wherein the purchase order was made with legal currency, and wherein the virtual currency is usable within the context of a computer-implemented game;crediting an account of the player with virtual currency, wherein the virtual currency is not redeemable for legal currency;receiving a second purchase order for a virtual object within the context of the computer-implemented game from the player, wherein the second purchase order was made with virtual currency; and debiting the account of the player based on the second purchase order.
3. This claim appears to be seeking protection using real money to buy virtual currency, precluding redemption of the virtual currency for real money but enabling it to be used to buy virtual objects in the game.

4. The patent application was filed 03-03-2010 and claims priority to a provisional application 61/158,246 filed March 6, 2009.

5. We will monitor the status of this application as it is examined and any rejections are made.

While many believe that this patent application will be rejected due to prior art, the most important take aways are these:
  • MANY ASPECTS OF SOCIAL GAMES ARE POTENTIALLY PATENTABLE
  • ZYNGA (AND OTHERS) ARE PURSUING MORE PATENTS IN THIS SPACE
  • IT IS WELL KNOWN THAT THERE IS A LOT OF "BORROWING" OF IDEAS FROM COMPETITORS IN THE SOCIAL GAME SPACE
  • THIS HAS BEEN FACILITATED BY LACK OF ATTENTION TO IP PROTECTION
  • IT IS CRITICAL FOR ANYONE OPERATING IN THE SOCIAL GAMING SPACE TO DEVELOP A COMPREHENSIVE IP PROTECTION STRATEGY,  INCLUDING PATENTS, COPYRIGHTS AND TRADEMARKS
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