Wednesday, February 19, 2014

Candy crushed, part III

This is part III in a three-part series on trademark law and, the maker of the popular Candy Crush Saga game.  Part I dealt with a specific dispute between King and the maker of a competing game.  Part II dealt with King's broader and questionable efforts to gain additional trademark registrations.

I have been practicing trademark law more or less continuously since the day I was sworn in as an attorney in 2001, and effectively from well before that date under the supervision of other attorneys.  I've handled pretty much every type of procedure found in trademark law, from registration, to opposition and cancellation proceedings, to infringement lawsuits and appeals.  Even though I do practice in other areas, notably patent law, my main expertise is in trademark law.

As trademark attorneys go, my rates are pretty typical for attorneys of my experience level.  Clients who pay the equivalent of what the hotel industry calls "rack rate"--the full, non-discounted rate--pay me $350 an hour for those services.  For the record, most of my clients get a discount, or they pay flat rates, or we have some other arrangement.  I don't make $350 an hour, or anything close to it, for most of the hours I work.  I also don't charge for a lot of the expenses that attorneys usually pass on to their clients.

If I were operating in New York or Los Angeles, you could probably double that rate.

The broader point is that the services of good trademark attorneys are not cheap.  One of the reasons why King can prosecute its interests in the way it is choosing to do so--by using its highly paid trademark attorneys to push registrations that are ultimately of questionable merit through the USPTO--is because King has been made rich through clever marketing of its games, mostly including Candy Crush Saga.

Years ago, the comic strip Doonesbury featured a long-running storyline in which the main character, Mike Doonesbury, had started a dot-com business whose product was to be a "shop-bot," a program that would scour the web for prices on goods in order to help consumers locate deals. The program was nearly complete when--in the strip--Google announced the release of its own shop-bot, thereby severely hampering Doonesbury's prospects for competitive success.

That kind of thing happens all the time.  Small companies with great ideas can be easily overwhelmed by the industry behemoths who aren't risking everything on those ideas.  On a strictly competitive basis, that's not necessarily a horrible thing.  It is, at least, the capitalist way of doing things.  As long as that is how it turns out in a meritocratic fair market, it's hard to oppose it.

But King isn't pursuing that strategy.  Or, at least, the strategy it is obviously pursuing doesn't fit that mold.  It is one thing for King to pour its gains from Candy Crush Saga into development of other products that consumers will want to spend money on.  It's quite another for King to use those gains to stifle competition by making it difficult for smaller players to get traction in the marketplace, based on something other than the relative merits of their products.

It is wishful thinking to expect the public to abandon King.  Candy Crush Saga is an enormously popular game because it appeals broadly to different types of consumers--those who like its sickly-sweet "storyline," those who enjoy the social aspects of the game, and those who appreciate the intellectual challenge of a well executed match-three game.  It is entirely possible to play it without giving King a dime.  But it takes discipline that I expect most people don't have to avoid paying to unlock levels.  To play into that lack of discipline, King has built a game that is not impossible to play, but that is just difficult and frustrating enough that spending 99 cents to get to move on seems like a small act.  If each one of King's downloaders does that just one time per year, that's nearly half a billion dollars in annual revenue, including the revenue share with Google and Apple.

I am relatively confident, however, that the public will move on from Candy Crush Saga as its novelty wears off.  My Facebook news feed was once heavily populated by updates from friends who played Zynga's Mafia Wars and Farmville games.  Those mostly subsided even before Facebook made it easier to block that kind of status update from the news feed.  Even the venerable Words With Friends has lost its steam.  Candy Crush will go away eventually, too.  But I'm not so worried about what happens with that game.  I'm much more worried about what King is planning next, because it very much looks like something we don't want:  a litigious nightmare of a corporation, flush with cash and ready to sue.

As a lawyer, I usually find the complaints about the litigiousness of our society to be a bit naive.  In recent years, for example, it has become fashionable for large companies to complain about "patent trolls," which are individuals or small companies that obtain patents for inventions and seek compensation for the use of those inventions by litigating.  The companies that find themselves to be targets of the patent holders have whined so much about the expense of litigation that they have been able to paint these small entities as misusers of the patent system and to get relief from Congress--even though these targets would not hesitate to sue someone else who was infringing one of their own patents, regardless of the expense it would cause.

That state of affairs has essentially operated to make the legitimacy of a patent depend on whether you have the capital to make a product based on it.  That's not what the framers of the Constitution had in mind when they set up the patent system based upon a fair exchange:  public disclosure of new ideas in exchange for exclusivity for a period of years.  If you can't afford to make a product out of your idea, you can at least use the exclusivity of the patent you get to get others to make it instead and pay you for the privilege.  Restricting non-practicing patent owners from doing so deprives us all of those ideas.

So when we talk about what to do about King, we need to be careful not to rig our actions to cause unexpected harms.  The fact that King is misusing the trademark system doesn't mean that the system is inherently bad. Neither does King's size necessarily make its efforts to obtain trademark registrations illegitimate.  As I discussed in Part II of this series, my issue with King's trademark office activities are entirely based on the merits of their applications, not who is making them. 

What we do need to do is evaluate whether there are unintended loopholes that should be closed, and close them.

The thing that bothers a lot of people about King, however, isn't so much that their trademark-related activities are questionable.  Trademark issues are merely the vector of the community's disappointment.  What bother people are two things that don't have much to do with the law but have everything to do with our society. 

The first is that King doesn't seem to be very conscientious about originality.  Candy Crush Saga is hardly an original game.  It is a fairly close copycat of others' work that has merely caught hold of the viral phenomenon that rewards some and punishes others with apparent randomness.  It's a straight-up lottery that King, and not Runsome (for example), saw success.  As a value judgment, we tend to take the view that originality, not execution, should be rewarded.

The second thing is simply outright envy.  I'm not especially interested in the moral aspects of envy.  But envy as an expression of people's desire for justice--now that's important.  For many people, King's financial success is entirely undeserved.  I'm not sure that I ascribe to that idea, but if there is such a thing as the community of developers, it is fairly obvious that the community wants to knock King down a peg because the rewards King has received are outsize in comparison to what it has contributed.  Even though as human beings we have to understand that life's lottery allocates its winnings in strange ways, I do find envy-driven justice to be a noble goal.

The question is, how do we get there?  To some extent, the peculiarities of our judicial system require that those who are directly affected by King's activities have to take the lead.  For example, opposition to King's proposed trademark registration for CANDY would have to be undertaken, in all likelihood, by someone who has a game that uses CANDY in the title.  The problem, of course, is the expense--it's not cheap to oppose a trademark registration.  But it can be done if the community most affected by it is behind the effort.  I have to believe that the Electronic Frontier Foundation--an organization that I tend to view as radical on intellectual property issues, and not usually in a good way--would be interested in taking up this cause, but there is much power in simply passing the hat for the cause.

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I hope you've enjoyed this series.  Even though a lot of what I do on a day-to-day basis is pretty dry, there are occasionally some aspects of it that can hold your interest.  It's been nice to take a break from the political and cultural commentary that is usually what I cover, so maybe we'll do this more often.  Please feel free to link to and share these posts if you think they would be of interest to others.

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