1. False designation of origin regarding the mark ZYNGA (15 U.S.C. § 1125(a)):
   Here Zynga alleges that the defendants have used the mark to falsely represent that the defendants are affiliated with Zynga in a way that’s likely to cause confusion as to Zynga’s true association with the defendants and/or their products.
   
   


2. Federal cybersquatting regarding the mark ZYNGA (15 U.S.C. § 1125(d)):
   Under this claim, Zynga alleges the defendants are liable because the ZYNGA mark is distinctive, zyngachips.com is confusingly similar to that mark, and the defendants had a bad faith intent to profit from using the mark.
   
   


3. California statutory unfair competition:
   Zynga claims that the defendants have acquired an unfair competitive advantage through the unauthorized commercial use of the mark in a willful attempt to trade on Zynga’s goodwill gained from the mark.
   
   


4. California common law trademark infringement:
   Zynga claims that the defendants’ unauthorized use of the mark is trademark infringement likely to cause confusion, deception and mistake as to the source of, and authorization for the products and/or services sold by the defendants.




5. California common law passing off and unfair competition:
   Lastly, Zynga alleges that the defendants’ actions constitute intentional attempts to pass off its products and/or services in such a way as to deceive the public into thinking they’re being offered by, or are affiliated with, Zynga in order to obtain an unfair advantage over Zynga.
   
   

Zynga is seeking equitable relief (including an injunction to prohibit defendants from using the ZYNGA mark in a way that may cause confusion as well as transfer of the zyngachips.com domain name to Zynga) and monetary damages.

This appears to be a fairly straightforward trademark/domain name dispute, but we’ll keep you updated as the case progresses in case anything interesting happens.

Read the full complaint here.

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word "patent" or any word or number importing the same is patented, for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public - Shall be fined not more than $500 for every such offense.

• Activision's Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 5,739,457 ("'457 Patent").




• Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,018,121 ("'121 Patent").




• Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,252,153 ("'153 Patent").




• Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,268,557 ("'557 Patent").




• Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,369,313 ("'313 Patent").




• Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,379,244 ("'244 Patent").




• Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,429,863 ("'863 Patent").




• Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,758,753 ("'753 Patent").




• Guitar Hero 5, Band Hero and Guitar Hero Smash Hits video games are falsely marked with U.S. Patent No. 6,769,689 ("'689 Patent").




• Guitar Hero 5 and Guitar Hero Smash Hits video games are falsely marked with U.S. Design Patent No. D441,403 ("'403 Patent").




• Guitar Hero 5, DJ Hero, Band Hero and Guitar Hero Smash Hits video games are falsely marked as "patent pending" or "patent applied for."

Essentially, PCG is claiming that the scopes of the patents with which Activision's video game products are marked do not cover the methods or systems of the actual products. In addition, where Activision has marked products with "patent pending" or "patent applied for," PCG's position is that none of Activision's patent application has a potential scope of protection which would cover any aspect of the specified video game products.

Success in a qui tam action of this nature will depend heavily on whether PCG is able to show that the scope(s) of one or more of the specified patents do not cover the specified products as well as whether Activision had an intent to deceive the public with those markings. Generally, a simple denial of intent to deceive is insufficient to escape liability under section 292. However, Activision may avoid liability if it is able to sufficiently prove that it had a reasonable belief that the articles were within the scope of the patents with which the product were marked.

If PCG prevails on one or more of its false marking claims, the assessed damages may be astronomical given the number of copies of Activision's video game products that have been sold. Although in some cases, courts have attempted to reign in the potential for substantial sums of damages, the Federal Circuit recently held that damages for false markings are to be calculated on a per article basis. See Forest Group, Inc. v. Bon Tool Co., 2009 WL 5064353 at *4-5 (Fed. Cir., Dec. 28, 2009). However, a court may set the damages assessed to each article well below the $500 maximum in order to avoid what they might feel is an excessive penalty.

We will keep you posted.

This case is Patent Compliance Group, Inc. v. Activision Publishing, Inc., Case 3:10-cv-00288-B (N.D. Tex.).

This case was moved from court to private mediation on October 7, 2010 and plaintiffs filed for voluntary dismissal of the charges on March 15, 2011 under FRCP 41(a). Rule 41(a)(1) allows for the plaintiff to dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment. In this case it appears that a satisfactory solution was reached in ADR leading the plaintiffs to end their civil court case. The court dismissed the case on March 16, 2011.

Case Update:

As many of you know, and as was discussed in our previous post, Linden Labs runs and operates the internet-based interactive computer simulation Second Life which allows participants to see, hear, use, and modify the simulated objects in the computer-generated environment. Second Life is famous for its free-market economy. Players of Second Life, called “Residents,” can buy and sell goods with Second Life currency (“L$”). L$ can be exchanged for real currency.

Eros, LLC (“Eros”) and Shannon Grei (“Grei”) have filed an Amended Complaint against Linden Research Inc. and Linden Research Int’l., Inc. (“Linden”) alleging violation of real-world intellectual property rights and infringement of the trademarks and copyrights owned by the Plaintiffs. Eros markets a line of erotic items within Second Life under the mark SexGen® (See U.S. Reg. No.3483253, registered on August 12, 2008). According to Eros, over 100,000 active Second Life Residents are customers. In the Amended Complaint, Eros alleges that its SexGen® products have been “counterfeited, cloned, and ripped off countless times by a multitude of Second Life Residents.” Similarly, Shannon Grei markets clothing and other coverings, including “skins” for Residents to wear within Second Life. The Amended Complaint indicates that since 2004, Grei has sold hundreds of thousands of her products within Second Life, making her one of the most popular and successful sellers in the game. Ms. Grei has allegedly suffered financial loss at the hand of pirates who have made and sold copies of her “skins” for real-world profit, and infringement of her rights in the copyright to “Nomine Araignee Set,” which was registered on September 24, 2007 as VAu000958340. Similarly to Eros, Ms. Grei alleges that the Defendant, Linden, has profited off of these pirates with each transaction.

The Amended Complaint reiterates many aspects of the original Complaint. It alleges that Linden “knowingly and willingly profits" from infringing activities through several mechanisms. As asserted by Eros and Grei "pirates must rent (for real-world currency) virtual world ‘locations.’ …Second, pirates must then ‘upload’ their infringing work, products or services into the Second Life virtual world, for which Defendants impose a fee. Third, all inworld transactions on Second Life are made through the exchange of Linden Dollars. …Not surprisingly, Linden Lab also operates the most widely used currency exchange platform in the Second Life community, LindeX, for use at which it imposes an exchange fee of 3.5%. Fourth, Linden Lab operates the website XStreetSL.com, which is an online marketplace for goods and services to be used in Second Life. Fifth, Linden Lab also operates an in-world classified ads system. Pirated works are available both on XStreetSL.com and the in-world classifieds system.”

Eros and Grei acknowledge that “[t]he Second Life Grid utilizes what is effectively a Digital Rights Management (‘DRM’) scheme," but allege that "the nature of the system allows third-party programs to bypass the DRM.” The Amended Complaint further alleges that “Linden Lab conducts little supervision or enforcement to insure that such content copying is eliminated, minimized, or detected. Moreover, whatever DRM-type protection Linden Lab offers against such piracy-enabling programs is easily circumvented and hopelessly ineffective.” The Plaintiffs acknowledge that use of such programs is against Linden’s Terms of Service and that may result in the Resident being banded, but according to the Complaint, Linden “will not ban a user for simply uploading or even selling copied content [and t]hese actions evidence that Linden Lab limits its enforcement of intellectual property law to that required by the ‘safe harbor’ provisions of the Digital Millennium Copyright Act, therefore filing a real-world lawsuit is necessary to protect ones interests.”

The Plaintiffs have alleged twelve (12) causes of action:

1. Trademark Infringement, 15 U.S.C. § 1114(1) (on behalf of Eros)





2. False Designation of Trademark Origin, 15 U.S.C. §1125 (on behalf of Eros)





3. Contributory Trademark Infringement, 15 U.S.C. §114 (on behalf of Eros)





4. Vicarious Trademark Infringement, 15 U.S.C. §1114 (on behalf of Eros)





5. Direct Copyright Infringement—Public Display, 17 U.S.C. §501 (on behalf of Grei)





6. Direct Copyright Infringement—Reproduction, 17 U.S.C. §501 (on behalf of Grei)





7. Contributory Copyright Infringement, 17 U.S.C. §501 (on behalf of Grei)





8. Vicarious Copyright Infringement, 17 U.S.C. §501 (on behalf of Grei)





9. Violation of Cal. Bus. Prof. Code §17200 (on behalf of all Plaintiffs)





10. Violation of Cal. Bus. Prof. Code §17500 (on behalf of all Plaintiffs)





11. Intentional Interference with Economic Relations (on behalf of all Plaintiffs)
    
    



12. Negligent Interferences with Economic Relations (on behalf of all Plaintiffs)
    

The Plaintiffs also allege that Linden’s acts of infringement have been willful, intentional, and purposeful, and that the Defendants have caused injury to both Plaintiffs in the form of lost sales and revenue, lost business reputation, and consumer confusion.

We will continue to monitor this case.

Case Update:

This case was dismissed on February, 18, 2011. Given the large number of defendants, the case was resolved in different ways. Zynga voluntarily dismissed the case against several defendants early on. Judgments were entered against several defendants and were satisfied. In these the court found that Zynga indisputably owned the trademark rights to its name, and the defendants knowingly infringed Zynga’s rights. They were ordered to pay monetary compensation, and to cease any use of the mark. Consent judgments were entered against several other defendants who admitted infringing use of the mark, and agreed to stop use and pay monetary damages. Lastly, some defendants never showed up and default judgments were entered against them.

Original Post:

Zynga, the popular online social gaming company, has filed yet another lawsuit. Much like its suit against John Does 1-5, Zynga is again going after website operators infringing on its ZYNGA trademark. This time, however, Zynga has a problem with more than just the domain names.

One of the games Zynga operates is Texas Hold ‘Em Poker which uses virtual “chips.” Players get a set amount of chips when they first sign up and then may win more through game play or purchase more from Zynga. Zynga alleges that the defendants operate sites that sell virtual chips that can be used in the game for real world money, an act that Zynga’s Terms of Service expressly forbid.

The defendants are unnamed “John Does” for the time being because they “registered their domain names using the Domain by Proxy privacy protection service, preventing Zynga from accessing the name and contact information Defendants used to register the domain names.”

Examples of the domain names, some of which include Zynga’s mark, are: 123chips.net, facebookchips.com, and zyngachips.org.

Zynga alleges 7 causes of action for which it’s seeking an injunction and damages:

1. Trademark Infringement – False Designation of Origin Regarding the Mark ZYNGA: The complaint alleges that consumers may be confused or misled into thinking a connection exists between Zynga and the defendants by the defendants’ use of the ZYNGA mark.



2. Trademark Infringement – Federal Cybersquatting Regarding the Mark ZYNGA: The complaint alleges that the defendants registered domain names with the bad faith intent to profit from use of the ZYNGA mark.



3. California Statutory Unfair Competition: The complaint alleges that by using the ZYNGA mark and selling the virtual chips required for the game the defendants are attempting to trade on Zynga’s goodwill and have gained an unfair advantage.



4. Common Law Trademark Infringement of the Mark ZYNGA: The complaint alleges that the defendants’ use of the ZYNGA mark causes confusion or deception as to the source of, and authorization for, the defendants’ products in violation of California common law.
   


5. California Common Law Passing Off and Unfair Competition: Zynga is seeking punitive damages for the defendants’ allegedly intentional and malicious actions which Zynga says resulted in an unfair advantage.



6. Breach of Contract: Zynga claims the defendants agreed to be bound by the game’s Terms of Service by participating in the poker game. “By selling ‘chips’ for use in the Game through the Infringing Websites, and by using the Game itself to transfer the ‘chips’ they sell, Defendants have breached the Terms of Service, which specifically prohibit Game users from exchanging ‘chips’ “for ‘real-world’ money or otherwise exchange items for value outside of the Game.”



7. Intentional Interference with Contractual Relations: Zynga alleges that the defendants intentionally acted to induce consumers to breach their contracts with Zynga by selling chips without authorization at a lower price than Zynga offered and by distributing the chips in a manner prohibited by the Terms of Service.

Read the full complaint here.

Case Update:

This case ended on August 20, 2009, following a final judgment on consent. The judge ordered a permanent injunction, and a dismissal of the action with prejudice. Nintendo was also awarded damages in the amount of $1,100,000.

According to the complaint Daniel Man Tik Chan is the owner, President or CEO of the other defendant Inspire Electronics and does business as Inspire Technologies and Inspiretech Electronics as well as on the websites http://www.dselite.com/, http://www.thedsdeals.com/, and http://www.blogger.com/www.inspiretech.com.

NOA alleges that the defendant sells devices “designed to circumvent the technological security measures built into” Nintendo’s DS handheld video game systems. The accused devices, referred to in the complaint as “Game Copiers” are “commonly used to play illegally downloaded pirated copies of Nintendo DS video games on the Nintendo DS.” The Nintendo DS is Nintendo's popular dual-screen handheld portable video game system featuring a clamshell design with two LCD screens inside, the bottom one a touchscreen.

The complaint states that Nintendo is the target of a lot of intellectual property piracy because of the immense popularity of its games and systems. In addition to registering its intellectual property rights, the company builds protections into its systems and software. The Nintendo DS contains design-based protection in that the system will only play game cartridges that fit, with a certain size and matching electrical components. Nintendo also has a technological security measure where commands are exchanged between the system and game card inserted into the system. Copyrighted programs are repeatedly accessed and copied during the use of the system. So even if the game card fits, passing the design-based measure, if the game card doesn’t have the software necessary to pass (or circumvent) the technological security measure, the game can’t be played.

The defendants’ accused devices consist of two parts: 1) the game card itself (referred to as the “Game Copier Card”), which substantially matches the DS cartridges so it passes the design-based measure, and 2) a portable memory device (or instructions to purchase one) that can hold hundreds of illegally pirated DS games that can be inserted into the Game Copier Card for unauthorized play that passes the second measure. When the Game Copier Card is used as instructed by the defendants, Nintendo’s trademark appears on the screen. NOA alleges this may confuse users into thinking they are using an authorized copy of the game.

On June 1, 2009, NOA alerted defendants that they were infringing on NOA’s IP rights and ordered them to cease their infringing operations, but the defendants failed to respond.

NOA brings four causes of action in this suit:

1. Violation of the Digital Millenium Copyright Act:
   
   NOA alleges that the defendants’ willfully violated the DMCA because their actions fell into at least one of the categories listed in 17 U.S.C. § 1201 (a), Violations Regarding Circumvention of Technological Measures:
   
   (1) (A) No person shall circumvent a technological measure that effectively controls access to a work protected under this title.
   
   (2) No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that:
   (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;
   (B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or
   (C) is marketed by that person or another, acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.








2. Copyright Infringement
   
   NOA alleges that the defendants’ actions “constitute the vicarious or contributory reproduction, preparation of derivative works, distribution, and inducement of the same, in violation of Nintendo’s exclusive rights in its copyrighted works under 17 U.S.C. § 106.”








3. Trademark Infringement
   
   NOA alleges that the defendants violated the Lanham Act, 15 U.S.C. §§ 1114, 1125 (a) because they cause the Nintendo trademark to appear on the DS without Nintendo’s authorization. The complaint says the defendants violate § 1114 because they used a “reproduction, counterfeit, copy, or colorable imitation” of NOA’s registered trademark in commerce which is likely to cause confusion or to deceive. The defendants allegedly violate § 1125 (a) because use of the trademark is a false or misleading representation, likely to cause confusion or deceive the user as to the origin or approval of the goods provided.








4. Unfair Competition
   
   Nintendo also alleges that the defendants have willfully and persistently violated the California Business and Professions Code section 17200 et seq.

Read the full complaint here.