These lawyers got game
A year ago, newly minted lawyer Shawn Foust approached a senior partner at his Century City firm with an idea: dedicate an entire practice to the video game industry.
Today, the 26-year-old coordinates a team of 20 lawyers at Sheppard, Mullin, Richter & Hampton that tackles mergers, licensing contracts and other deals that help make the burgeoning game business hum.
“I’m pursuing my lifelong dream of combining the two things I love -- games and law,” Foust said.
Never a group to steer clear of the action, lawyers across California are retooling their entertainment practices to cater to the game industry. Video games are expected to generate nearly $50 billion in global revenue this year, despite a slowdown in consumer spending, and sales have already surpassed old-line businesses including music.
As the game industry grows, so do its legal needs.
“There’s tax work, litigation, risk management, immigration, labor -- the list goes on and on,” said Seth Steinberg, who last year left his position as general counsel of George Lucas’ video game publisher, LucasArts, to start a private practice in San Francisco specializing in the game industry.
Other firms have joined in. Greenberg Glusker Fields Claman & Machtinger, the law firm of record for the likes of Tom Cruise and Warren Beatty, has cultivated a game practice led by Stephen Smith and Suann MacIsaac.
“We looked for areas where our core expertise in entertainment law could be applied,” said Jonathan Fitzgarrald, a spokesman for the Century City firm.
“And we found that video games in many ways represented the future of the entertainment industry.”
For Greenberg Glusker, billings from game-industry clients quickly sprouted from nothing to millions of dollars a year.
The firm’s first big case came in 2004, when one of its clients, Ubisoft Entertainment, was sued by MGA Entertainment Inc., the Van Nuys maker of Bratz dolls and toys. MGA sought to revoke a license it had granted Ubisoft to make games based on the Bratz franchise.
The game publisher countersued and won an arbitration award of more than $13 million in damages, including $2.5 million in attorney fees.
The increasing sophistication of video games and game consoles has generated technical problems, and class-action lawyers have jumped in to pursue claims on behalf of consumers.
Microsoft Corp. has been hit by several suits for flaws in its Xbox 360 game console that cause the device to crash. Activision Inc. was sued because its Guitar Hero III game for the Wii game console allegedly did not feature surround sound as its packaging claimed. Electronic Arts Inc. was targeted for the copy-protection technology on its Spore game.
“For a long time, video games flew under the radar,” Foust said. “That’s no longer the case. The number of consumer class-action lawsuits filed against game companies has gone up pretty dramatically over the last three or four years. The pot [of] money is now big enough for plaintiffs attorneys to become interested.”
In that sense, the game industry now faces the same issues as other complex global businesses. But lawyers who are developing specialties in the field say game industry work has unique aspects, knowledge of which they can promote to prospective clients.
For example, game companies routinely stage critiques at the end of every major game project. These postmortems, meant to improve future games, are brutally frank in pointing out the flaws of even successful titles.
But in contract disputes, the notes from these critiques can be used to assign blame, said MacIsaac of Greenberg Glusker.
“It’s something that’s unique to the game industry,” she said. “Knowledge of how postmortems typically work in the development process can be critical to a case.”
Knowing how to play games -- particularly complex online titles such as World of Warcraft -- can also be an asset. For these games, Foust said, the typical software end-user license agreements that limit a company’s liability and protect its intellectual property don’t work.
“Games aren’t like software,” he said. “People who play them feel a deep intimacy with the game. They feel very attached to the virtual items they acquire in the game through hundreds of hours of playing it. That presents some interesting twists in property law.”
Legal issues arising from virtual worlds -- online environments in which members socialize or play games -- have themselves become the subject of a book titled “The State of Play: Law, Games and Virtual Worlds.”
The book is a collection of articles that grew out of an annual conference organized by New York Law School, Harvard Law School, Yale Law School and other schools that explore cutting-edge topics in the burgeoning game industry.
Foust couldn’t be happier diving into these esoteric legal issues.
“I just love games,” he said, his freckled face stretching into a grin that makes him look more like Dennis the Menace than an envoy from a white-shoe law firm.
“There is no more fascinating area of law than video games, because it has everything.”
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