Titan Network

A Future without NCSoft?  Legal Considerations and Challenges

Introduction

This thread is designed to deal with potential legal issues that the community needs to consider in its efforts to sustain City of Heroes.

There has been a great deal of discussion in the past several days of how players might sustain the game.  Some have emphasized the possibility of convincing NCSoft to change its mind.  More have focused on options for keeping the game alive in the hands of some other party, whether it be players or another studio.  Much of the discussion has involved transferring "the rights" to the game, though few have discussed what that really means.

In particular, I've seen a lot of discussion of how players might go about recreating CoH systems and about potential player funded efforts.  In my opinion, those discussions, while valuable, put the cart before the horse.  If we are to keep CoH alive, we need to ensure two things.  First, we need to ensure that our actions are not opening anyone up to potential lawsuits.  Second, we need to ensure that the potential new game ownership structure is secure.  This thread contains my observations on what players need to consider in attempting to keep CoH alive in a post-NCSoft world.

Before I go into detail, I have three preliminary caveats.  First, while I'm an attorney, intellectual property ("IP") and transactional matters are not my field.  I am not representing anyone or anything, and my comments are not intended as offers of representation or as legal advice.  Rather, they are meant as starting points for brainstorming and discussion.

Second, these comments may seem mostly negative and defeatist.  Let me assure you that they are not intended that way.  At this point in the process of attempting to save the game, no one is yet ready to provide answers.  My concern is that people are not even asking the necessary questions.  This thread is a series of questions and explanations, not a how-to guide on rescuing a slain MMO.
Imagine the effort to save the game as drawing a route (the plan to save the game) across a landscape (the law and facts we face).  We can't plot out a route until we have at least a vague idea of what the terrain ahead looks like.  There are a lot of misconceptions out there about that terrain, let alone how to plot a route.  Hopefully, this thread will get people thinking about what both routes and terrain mean.

Third, I'm restricting my observations in this thread to the way the law actually exists.  You may not agree with the way intellectual property rights or business associations work under current law.  You are entitled to your opinion.  However, the attempt to revive CoH is not the place to challenge or change existing law.  Changing laws requires litigation or legislative change, both of which are outside the scope of what we all want to accomplish.  We face enough obstacles to our goal without adding sweeping legal change to them.  Committed as you may be to pushing the frontiers of copyright (or whatever), this is not the time and place to do it.  We need to be Crey here, not the Freakshow.

I'll try to keep this thread updated and post further observations as time goes on.  Feel free to ask questions and make other contributions.

What Does "The Rights to CoH" mean?

Before we start talking challenges and options, we need to define our terms.  As I noted above, I've seen a lot of discussion of "the rights to CoH," which NCSoft currently holds.  Technically, NCSoft holds copyrights and trademarks in the material that makes up what we call "CoH."  But what does that mean to hold the intellectual property rights to something?

The classic metaphor for property rights (not just IP rights) is "a bundle of sticks."  Imagine you own a vacant lot.  You have the right to keep other people off your lot if you want.  If they won't leave, you can sue them.  You can sell the plot of land to someone else, free and clear, forever.  That's like selling the entire bundle of sticks.

But you can also sell just one stick.  You can less than the entire plot of land.  You can subdivide your land and sell just a portion of it (one stick).  Or you could sell someone the right to walk across your plot of land without allowing him to do anything else (a different stick).  Or you could rent your land to someone else for a week, a month, a year, etc. (another stick).  Or you could sell someone the right to build a house on your land (yet another stick).  You could even sell someone the right to build a house on your land, but only if the house has six rooms and is painted blue.  The point here is that owning property, real or intellectual, isn't owning one big lump of something; it's owning the rights to do particular things with that something.

NCSoft's IP rights in what we call "City of Heroes" are the same.  NCSoft owns the right to use of the name "City of Heroes," the right to run an MMO with that name, the right to use the game's engine (which it previously bought from Cryptic), the rights to all of the character likenesses in the game (including our player characters), the right to all the game systems, and more.  If it hadn't shut the game down, it could have sold the right to develop a CoH MMO to an independent studio (one stick) while retaining the right to publish that MMO (a different stick).  It can sell someone the right to "walk across" its game by selling him advertising space (another stick), as it tried a few years back.  Most importantly for players, it can rent the right to use its servers to make characters (another stick).  And just as you can tell your potential buyer in the vacant lot example that you'll only sell him the right to build if the house has six rooms and is blue, NCSoft can impose limits on what someone using any of these rights can do.  You've agreed to the blue six room house scenario every time you've logged in, even if you haven't known it.  Our version of "build a house" is "play the game," and our version of "blue with six rooms" is called the EULA.

Why do we care who owns what?  Because, as you can tell other people to stay off your lot without your permission, NCSoft can metaphorically tell people to get off its IP rights.  That means that even if the ongoing player efforts to engineer a non-NCSoft server are successful, NCSoft can still sue players for using its rights to operate a CoH-type server.  This is true even if the game background looks nothing like existing CoH.  Remember, NCSoft owns the game structure as well as the game story.

This is why, as I stated above, recreating the code alone and rebuilding CoH in our collective basement, while valuable, isn't enough.  Doing that just opens us up to a lawsuit from NCSoft, a lawsuit they would win (and rightly so).  Remember our goals from the Introduction.  We need a stable structure to hold the resurrected CoH, and we also need to ensure that the resurrected game can't be shut down by another property holder.
This means that if someone, we the players or another publisher, wants to keep CoH alive in its current form, that someone needs to buy most, maybe all, of the sticks in NCSoft's bundle.  The safest route would be to purchase all of NCSoft's rights.  This means that any future decision to shut down the game would rest solely in the hands of the new rights holder.  However, buying all the sticks in NCSoft's bundle is bound to be more expensive than just buying some of them.

A more realistic option might be to buy or lease the rights to sell and develop a CoH MMO from NCSoft.  This is likely to be cheaper, but it leaves some power in the hands of NCSoft.  NCSoft is unlikely to sell any of its rights unless it has a guarantee that the resurrected CoH does not harm NCSoft financially.  Thus, NCSoft is likely to negotiate for terms along the lines of, "We grant you a nonexclusive license to make, maintain, and operate a CoH MMO, but we may terminate your license at any time if we choose to make a new CoH MMO of our own."  This option may be better than nothing, but it's important to recognize the limitations it entails.

This discussion also bears on the idea of an independently player-developed "spiritual successor" to CoH, what I've seen called "Plan Z."  As others have pointed out, we probably don't run too much legal risk by creating a new superhero MMO.  Concepts like caped crimefighters, Nazi spy rings, alien invaders, supernatural menaces, and the like are all generic enough to be used in a new setting without infringing NCSoft's rights to restrict anyone from using Statesman, the Fifth Column, the Rikti, and the Circle of Thorns.  Where we run into potential problems is in the mechanics of the game.  NCSoft holds rights to them just as firmly as it does to any story element.  If we duplicate the game system "feel" of CoH in a Plan Z scenario without NCSoft's permission, we run the risk of a lawsuit, just as we would if we called the game "City of Heroes Two" and featured all the existing lore.

With all that in mind, the real challenge in acquiring the rights to CoH is convincing NCSoft that selling the largest possible bundle of rights is in its best interest.

What's All This "We" Stuff, Anyway?: Entity Choice

There's been a lot of interesting discussion about potential buyers for the rights discussed above.  The simplest scenario for us as players would be for another publisher to purchase the rights from NCSoft in full.

But what if no other publishers want to take the risk of buying?  This leaves us with two options.  Both have been discussed.  One is a nonstarter.  The other is merely very difficult, but it requires some planning that I haven't seen anyone consider yet.

The nonstarter is "make the code publicly available."  The idea of releasing creative tools like game code into the public domain has been a dream of geekdom since at least the 1980's, with the rise of the cyberpunk literary movement and its freely distributed Turkey City Lexicon of writers' terms.  However, the idea of releasing the game's code publicly for all to use has been categorically rejected (by NCSoft speaking through CoH community manager Andy "Zwillinger" Belford) as recently as today.  Why?

Consider things from NCSoft's point of view.  Right now, you (=NCSoft) own the rights to develop and run a CoH MMO, as well as the right to authorize derivative works like other games and books.  Even though you've decided the game's existing operations aren't worth the money they are costing you to run, the rights to do those things have some value even if you're not exercising them.  What if there's a superhero boom in Korean culture three years from now, and you want to create an MMO to capitalize on it?  Don't give your rights away, or you won't be the only one developing it.  What if a famous author approaches you, wanting to write a CoH book?  If you give your rights away, you funded all those years of development that he's now using for his book for nothing.  If nothing else, sitting on your rights ensures that no one else competes with your other MMO offerings.  (Remember the vacant lot and your right to exclude people from it.)  It's unrealistic to expect NCSoft to give up its rights without getting something in return.

That leaves us with the second option, the one's that's "really, really difficult" rather than "impossible."  That option is for us, the players, to buy the rights to CoH.  I've seen this discussed a lot.  There's even been a lot of talk about how to generate the funding to make it happen.  But if we're doing the buying, what do we mean by "we?"

NCSoft can't negotiate with "the players."  We are an amorphous group.  We have a social identity, created through our shared interest in the game, but we don't have a legal one.  Who speaks for us?  Who holds the money that people have been talking about generating?  What if there's excess money (unlikely, I know)?  Who's responsible if we go ahead with making Plan Z without NCSoft's permission and they successfully sue us?  (You may not be thinking about it right now, but it's better to be safe than sorry.)

Simply put, the amorphous group of players needs to form some kind of business entity to hold the rights we want to purchase.  There are lots of options; I'll just describe a few here in broad strokes.  Note that this isn't intended as a thorough or exclusive list.  Nor are the descriptions intended to be precise or to serve as legal advice.  If a player entity ends up being formed, it will probably require an attorney specialized in this area.  One thing that needs to be done before we get to the point of gathering funds is to determine which of these options to take.  (Or for that matter, whether all the options present so many problems that the better course is to let CoH die quietly.)

All of these options are what lawyers call "business associations" or "business organizations" or "entities."  Like a person, all of them can hold property rights.  All of them also require some legal forms to be fulfilled, things like registering with the state.  That means that if the players end up trying to buy the IP rights, the entity will probably need a lawyer, who will probably need to be paid (though we may be able to get someone to take on the matter pro bono).

First, the players might form a partnership.  Players contribute money to the partnership, which its partners then use to operate it, by doing things like buying the CoH IP, hiring people to run the MMO once it's ready, and the like.  Partnerships have a major drawback.  The partners are individually liable for the entire amount of any judgment against it.  For example, say that Matt, Melissa, and Sean form Hero Partners and each contributes $10,000.  The partnership infringes someone's IP rights, and the rights holder gets a judgment of $50,000 in damages.  The rights holder can try to collect that $50,000 from Matt or Melissa or Sean or any combination of the three, up to the total of $50,000.  Thus, this is a risky proposition for the partners.

Second, the players might form a corporation.  Those of you who only deal with corporations from the outside are probably used to thinking of them as the real world counterparts of Crey, soulless, greedy monsters run by "the suits."  But in legal terms, a corporation is an entity formed by people usually called "stockholders," who contribute money that the entity uses in exchange for a stake in owning it. Like a human, a corporation can hold property rights and take legal actions.  The corporation is like an imaginary person and can do most of the same things a person can do under the law.  Corporations act through their officers, such as CEO's, Treasurers, and the like, and are policed by their boards of directors, who are supposed to ensure that the officers don't misuse the stockholders' money.

The major advantage of a corporation, and the reason it's such a popular form of business organization for large businesses, is that liability in a corporation is limited.  Returning to our example, say that Matt, Melissa, and Sean form Hero Corporation, Inc., to which each contributes $10,000.  Again, a rights holder successfully sues the corporation for $50,000. First, the rights holder will try to collect from the assets of the corporation.  If it isn't paid in full by doing that, it can still try to collect more from any combination of Matt, Melissa, and Sean.  However, each of the three stockholders' liability is limited to the amount they initially contributed.  Thus, it's a "safer" form of entity than a partnership.

There are also other kinds of entities, called things like limited liability companies, limited liability partnerships, and the like, which combine aspects of the two forms of entity I described above.  State law, which governs this kind of thing, varies a fair amount from state to state on what kind of entities people can form, what's required to do so, and how far stakeholders are exposed to liability.  Again, this is something that would have to be examined in much more detail if player efforts to purchase the CoH IP rights end up going forward.

Once someone settles on the type of entity, there are still more legal issues to consider.  For example, while everyone's enthused about the idea of a player-owned game, how is the entity going fund itself in the future?  Will there be a subscription-like arrangement?  Something more like a microtransaction model?  Will the game be entirely free to play?  Something else?  I have no idea how to answer these questions, but they need to be considered.

(As an aside, an idea I find really interesting would be to have the subscribers "buy into" the entity running the game through their subscriptions or other payments.  Rather than renting the use of the entity's rights in the game, as we do with NCSoft, players would actually purchase a small interest in the entity holding those rights, much as some corporations are owned by their employees.  This model presents lots of problems (is the corporation constantly issuing new stock? what, exactly, does a new player own? etc.), but someone with a better grounding in corporate law than me may be able to think of ways around them.  For those who want to "liberate" the game and "give it to the people," this is the kind of arrangement that can do it.  For all my caution, I do believe creativity can do great things.)

Before leaving the subject of fundraising and business structure, I want to make one final point.  I suspect a lot of players are uncomfortable with the idea of treating a player-run, grassroots effort as a business/moneymaking operation.  The bitter truth, though, is that that is what it has to be in order to succeed.  Crowdfunding structures are great, but they aren't charities.  They are means of investment.  Players need to see a potential player-funded operation as an entity holding the contributors' money in trust (in the abstract, not the legal, sense of that term), not as the monetary equivalent of a petition drive.

The main point I want to make in this section on entity choice is that simply raising the money isn't enough.  Before money starts coming in, someone needs to decide what kind of entity is going to hold the money, what that entity's powers are, how it's going to be governed and organized, and the like.  This is not a simple matter, and those running the effort to save CoH need to start at least considering it.

That's all for tonight.  As I said above, I'll try to update the thread as more issues occur to me.

I'd like to be the first to thank you for this valuable insight, Olantern. I won't even make a lawyer joke!

I like the "subscriptions as shares" notion. I know I'm oversimplifying what you said, but you get the idea.  I've been rolling an idea around in my head that I wanted to get more research on before presenting it, but it's not going to hurt to get some community input.  Also, it's still too early to know where the current talks between Paragon and NCSoft have ended up.

What about a PBS-type model, only without the support of the National Endowment for the Arts?  Maybe more along the lines of Wikimedia.  It would be extremely difficult to gain 501(c) status, but none of us are doing this to make money from it.  PBS and NPR have been making a go of it for years, but, again, good luck convincing the good folks at the NEA that something like this is a project "exhibiting artistic excellence." :)

Olantern, if you were here I would kiss ya! This is exactly what has been running through my head, but I lacked the legal terms needed to put them into words. Thing is that if we are going to form a business of any kind, our best option is to lay the ground work for it ASAP. Well before the November deadline. I hear a lot of people telling us that "it may not be needed". You're right, it may not. But I'd rather have a plan and not need it, than need a plan and not have it. Just because we have a formal business plan typed up, does not mean we have to use it right off the bat. Now, excuse me. I need to return to my copy of "small business for complete idiots."

castorcorvus, out.

Wow, really great info. Thanks so much for posting it! I look forward to what else might come to mind. This is all part of being as realistic and prepared as we can be.

And on a side note, that did not seem negative at all. It was very respectful and neutral.

So, assuming there is any latitude at all for NCSoft to sell... we need to form (for example) Titan Group, LLC and use it as the entity all the funds from something like IndieGoGo are pooled into.  Then, each player would be a form of stockholder through their monthly subscription fee.  That entity would purchase CoH's rights... allowing it (and with a lesser amount of liability) those who formed the LLC to operate the game.

Sounds way easier than it is, I assume.  And lots of big ifs in there!

I've been thinking about this in the back of my mind, and since I didn't see it mentioned about, wanted to float the idea of a nonprofit foundation to hold the assets and administer the game in the event that a fan buyout looks possible.

Interesting.  The last I'd heard is that rules to a game system, and the systems themselves are not copyrightable.  Graphic elements of them can be, but the rules themselves, just like recipes, can't be copyrighted.  The US Copyright office seems to agree.  See: http://www.copyright.gov/fls/fl108.html which seems pretty clear about rules for a game.

Patents are a different story.  Has NCsoft got patents on any of the elements of the system used in City of Heroes?

It doesn't mean that a too-close copy wouldn't have NCsoft suing, wether or not they'd win.  Lawsuits are expensive and destroy a group regardless of the outcome of the suit; we really don't want NCsoft to sue.

It's also very likely true that by changing some of the inner workings you can get a system which feels similar enough in play but has a different set of constructs behind it.  They'd be hard pressed to win a suit for a new system developed by the players.  Again, this doesn't they won't sue.

Darn it all people, lets get started. As olantern said, we need a plan, this link ( http://www.sba.gov/ ) tells us what info we need to form that plan. We need to find someone who has already formed a business, get them to help us avoid the pitfalls. I know some people, perhaps they'll give me a few pointers, I suggest you all do the same. We need someone or several somones to step-up and get this underway. Olantern, if you know anyone who can help in corporate law, now would be the time to tell us. We also need accountants, marketing experts, and we either need the Titan Network to step up its game and form a virtual workspace for this company or we need to take it somewhere else. We also need to do some digging and find out for sure just how many of the "sticks" in this bundle that NCsoft owns lock, stock, and barrel. This is happening folks. I'll post again in 24 hours, those onboard had best say so. Keep in mind all, this may be unneeded, or it may be our last chance. But no matter what we need to have the outline done well before November if we are to stand a ghost of a chance if all else falls through.

castorcorvus, out. :D

While we're tossing legal questions about, Cryptic licensed the engine and some other sticks to NCSoft. It's in perpetuity, but is it exclusive?  Does NCSoft have the rights permission to "sublet" their sticks? Do they have the right to just sit on the sticks for the balance of "perpetuity?"

I don't expect anyone to pipe up with answers, but IANAL, as it were.  Just thought they bore adding to the questions being asked.

Best, most valuable thread here so far. Kudos, Olantern!

Part of the problem with "charting a course," however, is the law itself. Walls are up to prevent us seeing the true landscape. Paragon Studios employees are gagged, unable to tell us what it looks like.


Also, I like Codewalker's suggestion of forming a nonprofit trustee of some sort, rather than a corporate commercial entity. That would make the prospect of a collective purchase attempt a little more palatable.

On a side note related to the hopefully never-needed Plan Z, while quite a few people have suggested the name Phoenix City, which not only has nice symbolism, but also keeps the "PC" shortening of the name like Paragon City, I'm now leaning more towards "Titan City" as the name of the project and the setting of the game - not just because any attempt to get it off the ground would very likely be organized here, but because it has a dynamic, powerful ring to it, references the Greek mythology that forms such a big part of the CoH lore, and just generally brings to mind the idea of larger-than-life characters and battles, as in "a titanic struggle", "a clash of the titans", and so on.
So whatever kind of company we set up to take care of funding, we should also register the name of the game as a trademark, and register it as a domain name too - even though it would be a totally fan made and run effort, we'd still need to protect it from outside trouble.
I think we should probably do it soon, too - even thought we're all going to fight NCSoft all the way, we're also going to need to be ready to swing into action with Plan Z as soon as possible, if it's needed, just to give some hope to the wider CoH community and help recruit the help we're going to need to get it off the ground.

Quote from: laufeyjarson on September 06, 2012, 02:49:22 AM
Interesting.  The last I'd heard is that rules to a game system, and the systems themselves are not copyrightable.  Graphic elements of them can be, but the rules themselves, just like recipes, can't be copyrighted.  The US Copyright office seems to agree.  See: http://www.copyright.gov/fls/fl108.html which seems pretty clear about rules for a game.

Patents are a different story.  Has NCsoft got patents on any of the elements of the system used in City of Heroes?

It doesn't mean that a too-close copy wouldn't have NCsoft suing, wether or not they'd win.  Lawsuits are expensive and destroy a group regardless of the outcome of the suit; we really don't want NCsoft to sue.

It's also very likely true that by changing some of the inner workings you can get a system which feels similar enough in play but has a different set of constructs behind it.  They'd be hard pressed to win a suit for a new system developed by the players.  Again, this doesn't they won't sue.

NCSoft hesn't got patents for what they used in CoH, but Worlds, Inc. has tried to sue them in 2008 for patent infringement identical to what they presently sue Blizzard/Activision for, last April (news link (http://www.gamesindustry.biz/articles/2012-04-06-activision-blizzard-sued-for-patent-infringement-of-virtual-worlds-usage))

Though I kinda find it silly to patent "system and method for enabling users to interact in a virtual space" >_>

I whole heartedly agree with the completely new name concept as nomatter what, this will be a rebuilding. Even if we do manage to acquire all of the current assets, it's still going to FEEL like a new city. While I like the concept of the Phoenix, Titan makes more sense (for probably the same reason this site chose said name :-p). Since we already have this Titan group setup, then I'd be willing to bet that it'd be that much easier to step into the light so to speak as an official company. As for the type of company, while LLCs might look interesting, an actual Corp or the Non-Profit entities have me at an empass. Both have merit, but we'd need to take a long hard look into What we want to be. At this stage in the game there is so much going on that I'm willing to bet we also need to save up for a nursemaid for TonyV.  :-p

Quote from: castorcorvus on September 06, 2012, 02:19:39 AMThing is that if we are going to form a business of any kind, our best option is to lay the ground work for it ASAP. Well before the November deadline.

As much as I hate to admit it, you make a very good point. Can we be sure that any efforts to lay groundwork for business and legal proceedings won't detract from other efforts to save the game outright? There's only so much time and energy any one person can give, after all. If we had a team of lawyers and business types whose time would be better used there than in collecting testimonials, that's one thing; if this comes at the expense of pressuring NCsoft, that's another.

Excellent, excellent post, Olantern.  I've been gesturing at the same sorts of concepts, and I feel a bit like a caveman pointing at a car and going, "URGH!  MAKE GO!" in comparison.

Of course, from my primitive point of view, I don't really see the challenges that others do, other than the fundamental and primordial one of, well, convincing NCSoft to sell to us.  We have the basis for our corporation already; as Codewalker said, we will likely want to incorporate as a nonprofit foundation to hold the intellectual properties of CoH.  In exchange for a zero-charge license to use said property, we will require a perpetual license to any and all assets developed for it by whichever for-profit studio(s) maintain and continue it.

This is... subsequent to resolving that primordial issue I mentioned above.  NCSoft might give us something very very limited, like a nonspecific-duration continuation of the game on their terms and restoration of part of Paragon Studios.  I think I would probably try to continue working with interested parties at that point to establish a new CoH-like property, but it would end the current movement.

I'm glad to see people are making use of this thread.

Quote from: castorcorvus on September 06, 2012, 03:01:05 AM
Darn it all people, lets get started. As olantern said, we need a plan, this link ( http://www.sba.gov/ ) tells us what info we need to form that plan. We need to find someone who has already formed a business, get them to help us avoid the pitfalls. I know some people, perhaps they'll give me a few pointers, I suggest you all do the same. We need someone or several somones to step-up and get this underway. Olantern, if you know anyone who can help in corporate law, now would be the time to tell us. We also need accountants, marketing experts, and we either need the Titan Network to step up its game and form a virtual workspace for this company or we need to take it somewhere else. We also need to do some digging and find out for sure just how many of the "sticks" in this bundle that NCsoft owns lock, stock, and barrel. This is happening folks. I'll post again in 24 hours, those onboard had best say so. Keep in mind all, this may be unneeded, or it may be our last chance. But no matter what we need to have the outline done well before November if we are to stand a ghost of a chance if all else falls through.

In a nutshell, this what needs to be done.  Notice all the different steps that ultimately need to be taken.  My concern is that new businesses normally don't start up with less than three months of planning.  We are trying to do something on an expedited timetable here, and I'm not sure how successful we can be at that.  Regardless, we need to start scouting the ground, if not laying groundwork, now.  As Castorcorvus pointed out, ideally, we need someone with business formation and administration experience to pitch in here.  (Don't look at me; I've only ever worked for the government and for academic institutions.)

I strongly recommend that everyone take a look at the SBA website linked in Castorcorvus's post.  One set-up I saw mentioned there that I hadn't even considered is the idea of running something as a cooperative.  I wouldn't normally even think of that kind of organization, which is rarely even mentioned in law school business courses, but it does get around one problem I mentioned in my post on entity choice.  As I noted there, one problem with a "subscribers own the game" structure run as a corporation is that the corporation is constantly having to issue new stock for each new stockholder who joins.  This creates the potential for a lot of organizational problems, since ultimate control of a corporation is apportioned by the amount of stock held.

A co-op removes that issue, since it involves owner-customers by definition.  Most cooperatives out there sell things like food or physical goods (CostCo and Sam's Club being the best-known examples) or services (like credit unions).  I've never heard of anyone even considering running an MMO that way, probably because it would be hard to pay the tremendous start-up costs of an MMO under that system.  There are certainly problems with running a co-op.  Being organized essentially as a democracy of members makes it difficult to make decisions; when have you ever seen even the forums, a tiny subset of the player population, come close to a reasoned consensus on anything controversial?  I shudder to think what would happen if a major balance nerf were required in a game run as a co-op.  But, like other organizational forms, it's worth considering.

With regard to help with starting up, choosing a business form, etc., while it's possible to do these things without having representation, it might be necessary for the planned entity, whatever it is, to have lawyers, especially since we're talking about a business that's expressly set up to buy (or develop a successor to) someone else's IP.  Of course, legal representation is expensive.  However, it might be possible to get around the cost issue, and get some much-needed counseling on entity choice and possibly IP issues, if the planned entity goes to a legal clinic for representation.

Law clinics are a bit like medical clinics.  Normally run through law schools, they involve students, working under the supervision of a professor licensed to practice law, representing actual clients drawn from the public.   I used to be one of those professors, supervising in a clinic handling tax disputes.  (That clinic was ultimately shut down, and now I teach only "regular" law school classes.)  While most clinics are like mine and handle actual disputes, there are also clinics out there that do transactional work, such as starting up small businesses or nonprofits, and the like.  Some even do IP work as well.  The major advantage of these operations is that they're generally free to the client.  While having a student-attorney as your attorney may seem like a bargain-basement option, I can tell you from experience with my own students that they'll usually provide representation at least as good as a regular attorney, partly because they really want the experience (and the grade) and partly because they have more time to work cases than lawyers in practice usually do.  Anyway, that may be an option.  However, it would require the Undetermined Player Entity to have a locality where it wants to be based in mind.  Clinics generally represent "local" groups.  Anyway, it's a possibility.

Before even considering anything like that, though, we need to know what this Undetermined Player Entity will do.  It does need to be something more than "negotiate with NCSoft"; what happens otherwise if those negotiations are unsuccessful, or if NCSoft isn't interested in negotiating?  Developing this kind of plan is a critical, critical thing.  We can't do much with regard to law and form until we know how we want to use them.

In an unrelated matter, I am willing to contribute $10 toward the Nursemaid for TonyV position.  ;D

Quote from: Golden Girl on September 06, 2012, 06:37:35 AM
On a side note related to the hopefully never-needed Plan Z, while quite a few people have suggested the name Phoenix City, which not only has nice symbolism, but also keeps the "PC" shortening of the name like Paragon City, I'm now leaning more towards "Titan City" as the name of the project and the setting of the game - not just because any attempt to get it off the ground would very likely be organized here, but because it has a dynamic, powerful ring to it, references the Greek mythology that forms such a big part of the CoH lore, and just generally brings to mind the idea of larger-than-life characters and battles, as in "a titanic struggle", "a clash of the titans", and so on.
So whatever kind of company we set up to take care of funding, we should also register the name of the game as a trademark, and register it as a domain name too - even though it would be a totally fan made and run effort, we'd still need to protect it from outside trouble.
I think we should probably do it soon, too - even thought we're all going to fight NCSoft all the way, we're also going to need to be ready to swing into action with Plan Z as soon as possible, if it's needed, just to give some hope to the wider CoH community and help recruit the help we're going to need to get it off the ground.

This post got me to thinking of a number of things.

First, while it's awfully early to start thinking about the specifics of a potential new setting, GG is right that it's a good idea to secure things like domain names as soon as possible.  I caution against using either "Phoenix" or "Titan," though.  While both are great names, for all the reasons GG stated, both are also strongly associated with characters of major comics publishers.  I think a cease and desist letter from DC (Titan) or Marvel (Phoenix) is likely as soon as either name goes into use.  It's a bitter pill to swallow, but these are the kinds of pitfalls we need to avoid, especially at very early stages.  I'm pretty confident that the community that came up with eight and a half years of character names is more than up to the challenge of thinking up something both punchy and original.

Second, I'm not sure about registering the trademark.  Trademarks often are not registered until a good or service has been in use for a while because registration is helpful, but not critical, to establishing that a mark is valid in trademark litigation.  There are two reasons I'd suggest holding off, at least for now, on registration.  First, while I don't know what trademark is like, in the world of copyright, registration at an early stage often opens the registrant up to getting bombarded with a bunch of scams.  Second and more importantly, before registering a trademark, there needs to be some kind of entity to hold it.

Finally, and getting off the subject of this thread slightly, if any of the efforts for a post-NCSoft, player-started operation (whether it's a reborn CoH or Plan Z) go ahead, the players doing the starting need to go into doing so with their eyes open.  This is a risky, risky venture, even with the solid base of goodwill from present CoH players.  As those who follow games news know, most new MMO's fail, and as our experience in the past week shows, even successful ones can have trouble staying in operation.  We have to realize that this is just like starting up any other kind of business or nonprofit foundation.  It's likely that nothing will come of any of our efforts.  The first step in ensuring that the squalling infant of the Undetermined Player Entity survives and grows up to thrives is to recognize the dangers it faces from the instant it's born.  Our faith is strong, but we will need wits and luck, too!  :)

For a more thorough assessment of issues related to my last point there, I recommend taking a look at some of the threads on crowdfunding and Superhobo's recent thread about venture capital issues.

Quote from: Olantern on September 06, 2012, 06:01:04 PM
This post got me to thinking of a number of things.

First, while it's awfully early to start thinking about the specifics of a potential new setting, GG is right that it's a good idea to secure things like domain names as soon as possible.  I caution against using either "Phoenix" or "Titan," though.  While both are great names, for all the reasons GG stated, both are also strongly associated with characters of major comics publishers.  I think a cease and desist letter from DC (Titan) or Marvel (Phoenix) is likely as soon as either name goes into use.  It's a bitter pill to swallow, but these are the kinds of pitfalls we need to avoid, especially at very early stages.  I'm pretty confident that the community that came up with eight and a half years of character names is more than up to the challenge of thinking up something both punchy and original.

Wasn't NCSoft sued by Marvel when CoH went live? If I'm not mistaken, part of the settlement was that players weren't allowed to create toons with the names of any Marvel character or the likeness of one and that's why they get deleted so quickly.

Also, one thing to note about types of business structures. Partnerships have no liability limitations. If a partnership were formed and then sued by someone and the other party won, the registered partners would be fully liable for the suit. That means that if the partnership didn't have the funds, liquid assets, or convertible fix assets to cover the suit, the personal property of the partners would be taken, i.e. houses, cars, etc. A corporation is just the opposite in many ways. There is limited liability, but if say one day everyone decided they weren't interested in the company anymore, you can't just walk away and that's that. There are financial liabilities involved. You'll have to register officers, declare ownership and percentages, etc. If one person decides to walk away, the other partners can sue, offer a buyout, and other options. An example of this happening would be what happened at Orange County Choppers and the long lawsuit Paul, Sr. filed to force Paul, Jr. to sell his shares at what was a reduced market value.

I would suggest either an LLC or S-Corp. The liability protection of a corporation, but the ability to scale back and/or shut down if the decision is made that the direction isn't in-line with the vision, etc.

This has been a good read.  I went to school for Business Administration and it has brought back a lot of memories...only I'm a dropout :(  I landed my dream job as a student, which has over the years turned into a nightmare :gonk:

Okay, I can help with something! Yay!  Even if it is miniscule...

when trying to run a business on various platforms, you have to consider tax liability. Below are links to the irs.gov website to explain things better than I can.

Starting a Business: There is a link in here marked "Selecting a Business Structure." Something we may start with. There's even a checklist.
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Starting-a-Business

501(c):
http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exemption-Requirements---Section-501(c)(3)-Organizations

Corporations are more complex. There are different types of Corps and we'd really need someone with the know-how to determine if this is the way we want to go.
http://www.irs.gov/Businesses/Corporations

Partnerships
http://www.irs.gov/Businesses/Partnerships

Small Business
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed

Once we have all the information and have made the decision, I can direct to where to find the right forms we will need. Unfortunately due to my job I would be unable to take on any kind of accounting position as it would be a conflict of interest.

Quote from: Superhobo on September 06, 2012, 06:42:13 PM
Wasn't NCSoft sued by Marvel when CoH went live? If I'm not mistaken, part of the settlement was that players weren't allowed to create toons with the names of any Marvel character or the likeness of one and that's why they get deleted so quickly.

I'm not sure if anything ever got quite to the lawsuit phase but there were a lot of cheap knockoffs of major comic heroes running about early on. Once the threat of things going to lawsuit land got real, they clamped down pretty hard on any appearance of IP infringement regardless of whose it was. I never bothered trying it myself. One big appeal of the game for me was the opportunity to make up my own character and not some cheesy knockoff.

One thought on naming the hypothetical new Paragon would perhaps be to just use and re-imagine a real place. Surely no one can sue over that? PC was supposedly a re-imagined Providence, RI. So we make our own and actually call it that. Or pick a different city if folks like. Then all we need is a snappy name to the game. Or for real ambition, make it a 'World of Heroes'. Today, you're thwarting terrorists in NYC and then it's off across the pond tomorrow to London to keep some evil villain from stealing the crown jewels.

I like the idea of calling it Providence.

It seems fitting somehow.

Quote from: Olantern on September 06, 2012, 06:01:04 PM
This post got me to thinking of a number of things.

First, while it's awfully early to start thinking about the specifics of a potential new setting, GG is right that it's a good idea to secure things like domain names as soon as possible.  I caution against using either "Phoenix" or "Titan," though.  While both are great names, for all the reasons GG stated, both are also strongly associated with characters of major comics publishers.  I think a cease and desist letter from DC (Titan) or Marvel (Phoenix) is likely as soon as either name goes into use.  It's a bitter pill to swallow, but these are the kinds of pitfalls we need to avoid, especially at very early stages.  I'm pretty confident that the community that came up with eight and a half years of character names is more than up to the challenge of thinking up something both punchy and original.

Ok, this makes me think of the beginning of Rendevous with Rama: all the western mythologies were used up, so naming started to pick into the eastern ones.  That would make it a little more difficult to find an audience outside the existing, loyal player base and, say, southern Asia.  "What the heck is Vishnu City?"

Providence does, indeed, have a nice ring to it, but I see a temptation, maybe even an expectation, to start using real-world place names, which could lead to trouble with something like a sports arena that has a trademark name.  I don't know the real Providence to know if there's, say, a Gordon's Fish Sticks Events Center, but you get where I'm coming from?

Providence I find funny as the former mayor is doing time for corruption at the federal penn on Ft. Dix, NJ.

Quote from: Codewalker on September 06, 2012, 07:48:15 PM
I like the idea of calling it Providence.

It seems fitting somehow.

The name "Providence" in the geekosphere has quite strong links to H.P. Lovecraft, which seems to have been one of the big reasons for setting Paragon City in the same area, as a lot of the original devs were big Lovecraft fans.
The fact that it's a reasonably well know real place might also take away a bit from fictioanl city vibe we should be aiming for as the spiritual succesor to Paragon City.

Quote from: Olantern on September 06, 2012, 06:01:04 PM
I caution against using either "Phoenix" or "Titan," though.  While both are great names, for all the reasons GG stated, both are also strongly associated with characters of major comics publishers.  I think a cease and desist letter from DC (Titan) or Marvel (Phoenix) is likely as soon as either name goes into use.  It's a bitter pill to swallow, but these are the kinds of pitfalls we need to avoid, especially at very early stages.

They'd have no case - if we chose to set the game in Phoenix, Arizona, there's nothing they can do about the name.
Also, "the Titan City" was an older nickname for New york, before "the Big Apple" came along - so following the Paragon City/Metropolis idea of the main fictional superhero city playing the same role as New York in the real world, using an actual nickname for New York works well.
If "Titan City" is chosen as the official name of the city, then I think theat "the Phoenix City" should be its nickname, referring to the various disasters it's survived during its history as the hub of the world's superpowered activity, as well as an obivous reference to the origins of Plan Z.
Playing on the NYC theme, as well as the word link of titan = giant, the name of one of the main sport franchises in the city could be the Titan City Giants - The Titan City Phoenixes could be another franchise, which would be using the city's nickname.

The whole project would also need a logo, which, going by those browser games that all have logos that kinda look rather like the WoW logo, would allow us to have something looking similar to the CoH logo.

It NCSoft is still being uneasonable by October, then I think that we should register the name and log, just in case.

It can't hurt to register, say, our top dozen picks, just in case.  I also want to point out that cities are legal entities and they can sue us to stop using their names, if they have cause.

Quote from: jacknomind on September 06, 2012, 09:22:15 PM
It can't hurt to register, say, our top dozen picks, just in case.  I also want to point out that cities are legal entities and they can sue us to stop using their names, if they have cause.

In that case, that's another reason why Titan City works - not that I think Phoenix, Arizona would really object to being linked to a city of superpowered people.

jacknomind, states are legal entities too, but Paragon City is placed in an alternative future for Rhode Island. You are overthinking this.

Too bad the domain name's already taken.  =)

Quote from: laufeyjarson on September 06, 2012, 10:21:56 PM
Too bad the domain name's already taken.  =)

What about www.titancityheroes.com?

Quote from: castorcorvus on September 06, 2012, 09:35:11 PM
jacknomind, states are legal entities too, but Paragon City is placed in an alternative future for Rhode Island.

It would only be a concern if we were to somehow defame the city in question.  Which I don't think is likely, but...

QuoteYou are overthinking this.

Well, yes.  It's a crippling flaw IRL.  That's why the idea of a superhero who fights in a state of no-mind was so appealing to me.  ;)

I propose that if (and/or when) the time comes to need a name for the city, some names are nominated and there's a vote.

I don't believe that the name should be chosen by one or a few people.

If we want buy-in and ownership, let's have the community members help determine the name.

Granted, this isn't the most pressing issue at this time, but since it came up, as a (non-IP) attorney, let me throw in my two cents on the copyright infringement issue regarding NPC names and the like. (Not coding which is a separate issue).

The way copyright law works, if there is any possibility that someone is infringing on your copyright, the law just about requires that you sue the potential infringer. Even if you don't care about it or aren't losing money, the problem is that if you don't sue, then somewhere down the road, when someone else infringes and you do care about it, then that party can claim that you abandoned the copyright. This is probably why Marvel sued Cryptic back in the day, not because they thought they would win, but just to cover themselves. My experience is that Paragon has been far less uptight about this particular CoC violation since the lawsuit was resolved. Since Marvel got what it wanted (a track record on protecting it's copyright), there wasn't really anything to worry about.

In a nutshell, copyright law almost forces companies to file frivilous lawsuits to protect their future interests. So obviously don't name a NPC "The Incredible Hulk" or name a city "Metropolis." But beyond a certain point, there's nothing you can do to absolutely guarantee that someone won't sue.

So what you're saying is that we need you, Olantern, and any other attorneys or paralegals in the community to be very involved in any Plan Z... uh, planning.  ;)

Quote from: Soundtrack on September 06, 2012, 11:01:13 PM
I propose that if (and/or when) the time comes to need a name for the city, some names are nominated and there's a vote.

I don't believe that the name should be chosen by one or a few people.

If we want buy-in and ownership, let's have the community members help determine the name.

Voting will be the major way that we make decisons if Plan Z is needed.
But the problem that we have with naming the project is that we need to seccure the name, domain name, logo copyright and so on well before November 30th, just in case - but we can't afford to distract from the momentum we're generating from the main campaign to save CoH - it'd totally undermine our efforts, and make it look like we were already giving up.
The only reason it's even been mentioned on the official forums is to show the wider community that no matter what happens, we're not just all going to go out separate ways on November 30th.
It's simply not possible to publicize and run the kind of large scale poll we'd need for choosing a name without damaging our focus on saving CoH.
If the absoulte worst thing happens, then we're going to need to be ready to swing into action on November 30th, and hit the community with something hopeful when they're at their lowest - the more organized and prepared we are for Plan Z being our only option left, the easier it'd be to energize the community and recruit the volunteers we'd need to have a chance of getting this off the ground.

Quote from: Golden Girl on September 06, 2012, 11:25:54 PM
Voting will be the major way that we make decisons if Plan Z is needed.
But the problem that we have with naming the project is that we need to seccure the name, domain name, logo copyright and so on well before November 30th, just in case - but we can't afford to distract from the momentum we're generating from the main campaign to save CoH - it'd totally undermine our efforts, and make it look like we were already giving up.
The only reason it's even been mentioned on the official forums is to show the wider community that no matter what happens, we're not just all going to go out separate ways on November 30th.
It's simply not possible to publicize and run the kind of large scale poll we'd need for choosing a name without damaging our focus on saving CoH.
If the absoulte worst thing happens, then we're going to need to be ready to swing into action on November 30th, and hit the community with something hopeful when they're at their lowest - the more organized and prepared we are for Plan Z being our only option left, the easier it'd be to energize the community and recruit the volunteers we'd need to have a chance of getting this off the ground.

I'm in total agreement with you.

It's going to be a balancing act... getting ready in case the worst case scenario happens, while not tapping our energies fighting so that the worst case scenario does NOT happen.

Perhaps we need somebody (or somebodies?) who has their skills and talents in time-scheduling. Even if we have a rough draft timeline for key decision-crunching, or calendar dates ("Okay, by the __th (date) of __________ (month) we need to have ________________ ready. Because just one week later on the ___st of ____________ it will most likely require __________ to occur.")

And of course this would all be considered a "WCS" (worst case scenario) timeline, but as a teacher, I know that if I wait until the last moment to make decisions that do NOT align with my curriculum and timeline, the results can be quite detrimental to the "grand scheme". Of course, that's not just for teachers, but for many professions/projects/etc.

But yes, Golden Girl.... I do see from where you're coming and I do agree.

Just wanted to toss out that the decisions should be as democratic as possible (which may not be easy to do)? I mean even if somebody is familiar with survey monkey or some other polling/survey site... that may be helpful?

Quote from: Soundtrack on September 06, 2012, 11:33:02 PM
I'm in total agreement with you.

It's going to be a balancing act... getting ready in case the worst case scenario happens, while not tapping our energies fighting so that the worst case scenario does NOT happen.

Perhaps we need somebody (or somebodies?) who has their skills and talents in time-scheduling. Even if we have a rough draft timeline for key decision-crunching, or calendar dates ("Okay, by the __th (date) of __________ (month) we need to have ________________ ready. Because just one week later on the ___st of ____________ it will most likely require __________ to occur.")

As an example, if NCSoft are stil not shifting their position by the start of November, then although there'd still be time for a rescue, and we'd still be fighting to bring it about, we should also probably start actively looking at engines.

QuoteBut yes, Golden Girl.... I do see from where you're coming and I do agree.

Just wanted to toss out that the decisions should be as democratic as possible (which may not be easy to do)? I mean even if somebody is familiar with survey monkey or some other polling/survey site... that may be helpful?

The way I look at it, of all the things that would need to be voted on to fully engage the community in the project, the actual name of the project is pretty much last one on the list.
Not having a chosen name would also make us look less organized, and make it harder to attract volunteers, becasue nio matter what we do, we're going to getc a heck of a lot of "don't be stupid", "whatever" and "year, right" comments - presnting a organized and professional pitch to the gommunity would help us a lot, and give the community the biggest boost when it would need it the most.
The worst thing to counter the negativity that would be aimed at the project would be to start off by asking people what they thought we should call it - presenting them with a name, a logo, and a website, even if it's just a single page with the logo on it an d a "welcome to Titan City" message on it would make us look organized, and capable of decisive planning.

Polling would be important once we started the project, a it'd help keep the community interested and engaged while we were carrying out the ginormous amounts of work needed to get the technical side of things going.

Quote from: Golden Girl on September 07, 2012, 12:29:58 AMThe worst thing to counter the negativity that would be aimed at the project would be to start off by asking people what they thought we should call it - presenting them with a name, a logo, and a website, even if it's just a single page with the logo on it an d a "welcome to Titan City" message on it would make us look organized, and capable of decisive planning.

Ok, then who determines what name and logo goes on the page?

That is all I am trying to say. Do I get determine it? Do you? Do seven of us? How about 20 of us?

You continue to call it "Titan City"; what if somebody continued calling it "Phoenix City", or "Redemption City"? "Regal City" or "Town of Majestic".

I'm just saying that one person should not have the power to decide, "Okay... let's call it _________________."

And you started with " the actual name of the project is pretty much last one on the list." Yet you're proposing that we need a name and logo to show others that we're serious. Well, how do we come up with a name to start off with, if that's the last item on which we should vote?

Thus my proposal for a timeline.

We could set up a poll to decide. Pretty basic stuff. We can put in 50 possible names and let everyone choose.

Quote from: Golden Girl on September 06, 2012, 09:25:01 PM
In that case, that's another reason why Titan City works - not that I think Phoenix, Arizona would really object to being linked to a city of superpowered people.

As long as there are no PHXPD officers asking supes for their "papers."

Someplace outside the norm, like Phoenix or Des Moines or Nashville has a certain appeal, mostly because the chosen entity wouldn't mind the potential exposure.

Quote from: castorcorvus on September 07, 2012, 01:39:09 AM
We could set up a poll to decide. Pretty basic stuff. We can put in 50 possible names and let everyone choose.

That's a better topic for the new City Sunset "channel" out on the main board.  The discussion about Successor IPs has already been moved there, and this original discussion topic really can't afford to be moved just because we can't stay on task.

Quote from: dwturducken on September 07, 2012, 01:50:13 AM
That's a better topic for the new City Sunset "channel" out on the main board.  The discussion about Successor IPs has already been moved there, and this original discussion topic really can't afford to be moved just because we can't stay on task.

True, I wasn't suggesting that it be held here though lol. That would be asinine.

Quote from: THWAJO on September 06, 2012, 11:04:56 PM
Granted, this isn't the most pressing issue at this time, but since it came up, as a (non-IP) attorney, let me throw in my two cents on the copyright infringement issue regarding NPC names and the like. (Not coding which is a separate issue).

The way copyright law works, if there is any possibility that someone is infringing on your copyright, the law just about requires that you sue the potential infringer. Even if you don't care about it or aren't losing money, the problem is that if you don't sue, then somewhere down the road, when someone else infringes and you do care about it, then that party can claim that you abandoned the copyright. This is probably why Marvel sued Cryptic back in the day, not because they thought they would win, but just to cover themselves. My experience is that Paragon has been far less uptight about this particular CoC violation since the lawsuit was resolved. Since Marvel got what it wanted (a track record on protecting it's copyright), there wasn't really anything to worry about.

In a nutshell, copyright law almost forces companies to file frivilous lawsuits to protect their future interests. So obviously don't name a NPC "The Incredible Hulk" or name a city "Metropolis." But beyond a certain point, there's nothing you can do to absolutely guarantee that someone won't sue.

Can you cite a reference on that?  Trademarks work that way, but my understanding is that copyright is copyright, and you don't lose yours by infringement or lack of defense on that.  You don't even lose copyright if you haven't registered it.  It's just yours.

Quote from: Golden Girl on September 06, 2012, 10:35:08 PM
What about www.titancityheroes.com?

Currently available.

You can check domain names here: https://www.gandi.net/whois/

Also a lot of other places, but that one won't sell your query results to squatters.

Quote from: Soundtrack on September 07, 2012, 01:11:35 AM
And you started with " the actual name of the project is pretty much last one on the list." Yet you're proposing that we need a name and logo to show others that we're serious. Well, how do we come up with a name to start off with, if that's the last item on which we should vote?

I mean last on the list of priorities that we need the whole community to vote on.

Quote from: laufeyjarson on September 07, 2012, 05:15:24 AM
Can you cite a reference on that?  Trademarks work that way, but my understanding is that copyright is copyright, and you don't lose yours by infringement or lack of defense on that.  You don't even lose copyright if you haven't registered it.  It's just yours.

Like I said, I'm not an IP attorney and you are right about that. But the problem is that there is a grey area between trademark and copyright. If you create a character who is a nerdy scientist who turns into a giant green monster because of being exposed to radiation and call him "Joe Blow" rather than "The Incredible Hulk" that's technically a copyright rather than a trademark issue. Regardless, you will get sued by Marvel in that circumstance. And a clever lawyer can cloud these issues.  You can also get into the differences in copyright law before and after 1976 when the Copyright Act was overhauled. Prior to 1976, complying with formalities was much more important than afterwards. And since just about any Superhero of note was created before then . . . .

Like I said, my main point was that there comes a point where you can't absolutely guarantee that no one will sue you. Where that point is, you need an IP attorney and not me.

I am not a lawyer - but I've been involved in a couple of legal matters that have taught me well on how to research things. As such, there's one thing I outright *KNOW*.

Mythical creatures like the Titans and the Phoenix - ones that have existed in lore many centuries before copyright and trademark laws existed - are considered part of public domain, and as such they can't be trademarked. That wouldn't necessarily stop anyone from attempting to sue, but they'd basically have no case and would falter at the first step if facing a competent defence that knows how to file said defence properly.

Where you might run into issues is if you make characters that are similar to the other companies' equivalents. For instance, let's say you make a character called Phoenix, a human female with red hair who has psychic/mental powers. This is an arguable case for copyright, rather than trademark. In the case of a city name? There's no prior examples of similarly named cities, towns or otherwise from other companies that I know of.

Now onto something I'm not 100% sure of. It's something from how companies work in the UK, and I'm not sure if anything similar applies in the US. With a small company, you typically start out as a Limited company (Ltd) that is owned by a proprietor or partners, and if the company becomes large enough you can later opt to become a Public Limited company (Plc). As long as a company is in the Ltd stage, it maintains *complete* control of its shares - the proprietor or partners don't have to sell any shares if they don't want to, though I believe they're also not measured on the stock market either.

If we have that option available to us, it would be wise - at least to begin with - to avoid any possibility of outside influence. I can see a competitor that's failed to sue our attempts into submission just outright buying the shares and ruining the enterprise that way instead.

Quote from: Golden Girl on September 06, 2012, 09:25:01 PM
In that case, that's another reason why Titan City works - not that I think Phoenix, Arizona would really object to being linked to a city of superpowered people.

Putting here for the legalese folks to see - Everything for Phoenix, Arizona is registered under the "City of Phoenix", not "Phoenix City".

(I live here. There is NOTHING here that says "Phoenix City" at all, anywhere.)

I'm happy to see this thread is still getting traffic.  Three points:

First,

Quote from: Kheprera on September 06, 2012, 07:21:44 PM
Okay, I can help with something! Yay!  Even if it is miniscule...

when trying to run a business on various platforms, you have to consider tax liability. Below are links to the irs.gov website to explain things better than I can.

[links omitted]

Thank you so much, Kheprera!  (I was hoping you would show up in this thread; I used to call your colleagues in SPF with all my complex accounting questions back when I worked for the government.)  I recommend that everyone take a look at the Service's website there for some perspective on the kinds of issues we're dealing with.  Despite the popular attitude that tax law is opaque, the Service actually has a really, really good website (which was just redesigned, too); it's relatively easy to find answers to simple questions on there.

Regarding the specifics, I don't know whether a nonprofit (Section 501) organization is the way to go if we end up with a player-funded entity.  For one thing, I'm not sure if an operation to develop and run an MMO could qualify as a 501(c)(3) organization.  Looking at the Internal Revenue Code (yes, I have my own copy of the tax code at home!), that subsection exempts charitable, religious, and social welfare organizations from tax.  I don't think running an MMO necessarily qualifies, though I'm not aware of any court cases or IRS guidance on the matter.  I wonder if 501(c)(7), which exempts "clubs organized for pleasure, recreation, and other nonprofitable purposes," would fit.  (I have never dealt with 501(c) organizations in any capacity, so I'm writing with the valor of ignorance here.  Once again, this is not intended as legal advice.)

For those of you who didn't understand a word of the past paragraph, even after looking at Kheprera's links, do what my grandmother always suggested when one reads an incomprehensible word: say "corncob" and move on.

This tax stuff may seem impenetrable and boring, but it is really, really important.  Having handled lots of tax disputes on behalf of both the government and taxpayers, I can tell you that complying with tax obligations is possibly the most critical duty a business has.  Bad Things Happen when it doesn't.  (For example, if a corporation doesn't comply with its payroll withholding obligations, for instance, the IRS can and does actually pursue the normally-not-liable officers for the shortfall.)

Second, I don't want the thread to get too bogged down in issues like what to call the setting of Plan Z; that really deserves its own thread, especially since it's as much an artistic choice as a legal one.  I do want to explain why I argued that something like "Titan City" (major props to GG for knowing about its referring to NYC, by the way) might present problems.  Those who have argued that no plaintiff could win a lawsuit arguing that a name like that infringes on, say, a trademark on the Teen Titans, are probably correct.  However, just because the plaintiff is likely to lose at the end doesn't make things easier for a defendant.  If we end up with something like a Plan Z arrangement, make no mistake: we are doing no less than forming our own game design studio.  It will be the smallest startup business in a very tough industry, a business without a lot of cash to run its operations.  Such a business can't afford even to defend a lawsuit, even a lawsuit it would ultimately win.  Lawyers and decent legal advice normally cost money, and those are things that are needed when one receives a cease-and-desist letter.  This is what transactional attorneys are supposed to do: find ways to avoid legal entanglements and costs.  Thus, my abundance of caution.

That reminds me, later today, I'll see if I can find a post of mine from the official CoH fora about IP issues.  That may help clear up some of the confusion here around trademark, copyright, and what they mean.  For the moment, all I can say is that they're all things a business meant to "succeed" someone else's IP needs to consider.

Third, also later today, I want to deal with an issue first raised in this thread by Mantic- what are the legal "walls" preventing us from doing things and getting information, and how (if at all) can we get around them?  (Short answer, "Not easily.")

It has been really inspirational seeing all the efforts made to rescue, rebuild, or resurrect CoH the past week.  Thanks again to everyone who's contributed to this thread.  I'll try to make it back later today, but I need to devote some time to prepping for next week's class (on IRS Examinations  :P).  Keep up the discussion, everyone.

just to throw a name into the pool:

City of Titans

Aim for the top !

World of Heroes ! (before it's taken by a russian game company)

Quote from: NecrotechMaster on September 07, 2012, 04:47:36 PM
just to throw a name into the pool:

City of Titans

Let's move actual discussion of names to the Sunset board? :)

I have to say this is a good read.  If it comes to it this may be needed and I'm willing to throw my hat into the ring.

A few other points to concider-if the players have to enact Plan Z, then we need something very specific...we need the old Devs.  Not forever if they have new awesome jobs with new awesome game companies, but we need them at least to show whoever we get to replace them the ropes.  This would be -invaluable-.

Also I think we need to point out that even if you are a subscriber that doesn't entitle you to make business decisions or game decisions.  Whoever we get to be the actual developers and designers need to be the final authority about systems, content, etc.  Players often have skewed ideas about what should and shouldn't be done based on their personal experience and not hard numbers and important business decisions.  I think this is very, VERY important.  We need to let those designing design.  Can they take suggestions from the player base?  Hell ya, just like our awesome current (former  :-(   ) Devs.  Can players, just because they have a stake in the game, demand certain changes.  Hell no.  That'll be a great way to ruin what we are trying to save.

As I've mentioned in other threads I'm definitely interesting in being an investor (past my subscriptions).  Please keep that in mind for all of you really working on this.  I'd like to be personally contacted if we head out on Plan Z (although I'm definitely hanging around here and the main forums trying to do what I can).  As a side note...I'd be willing to be a junior systems designer (like power designer) if needed and if I could get said training from someone like Synapse (I think it was he who did powers).  This, of course, is if we can't get everyone back for Plan Z (although I'd still love it regardless...).  I'm willing to work -for free- and devoting much time to it-as much as the regular job and any overtime.

Anyway, Doctor Asinine is doing what he can.  Let me know how else I can help.  In anyway I'm able.

-Doctor Asinine

PS  Hey GoldenGirl, I've gained a lot of respect for you through this.  I very much have disagreed with you on in-game stuff...but you have been invaluable to this.  Funny when people get together on an important issue how little things get completely tossed out the window!

GG, everybody.... I have a feeling you have not worked on any game or equivalent standalone game mod before.

Recreating the CoH experience can not happen through scratch development, even if you are able to produce a completed MMO game. Having contributed to a number of game and mod projects I assure you that the concept going in is never what you wind up with. I've worked with very talented people -- it's just the nature of the beast that every programmer solves every little problem differently, and no matter how zealous a fan, every talent who contributes is going to have some idea for 'improvement' that winds up taking things in different directions.

Had Paragon Studios themselves produced a CoH2, it would not have had the same appeal. And they would have had the legal freedom to duplicate the systems available in CoH, as well as knowledge of exactly how those systems were implemented.

I do not see developing a new version of the game as a productive line of thought. Rather, it looks like an attempt to hijack the situation and redirect focus.

Quote from: Olantern on September 07, 2012, 04:41:57 PM

Regarding the specifics, I don't know whether a nonprofit (Section 501) organization is the way to go if we end up with a player-funded entity.  For one thing, I'm not sure if an operation to develop and run an MMO could qualify as a 501(c)(3) organization.  Looking at the Internal Revenue Code (yes, I have my own copy of the tax code at home!), that subsection exempts charitable, religious, and social welfare organizations from tax.  I don't think running an MMO necessarily qualifies, though I'm not aware of any court cases or IRS guidance on the matter.  I wonder if 501(c)(7), which exempts "clubs organized for pleasure, recreation, and other nonprofitable purposes," would fit.  (I have never dealt with 501(c) organizations in any capacity, so I'm writing with the valor of ignorance here.  Once again, this is not intended as legal advice.)

It would be a stretch for an MMO with a paying customer base to be granted a 501(c)(3). The accounting for that might be a nightmare even if it were. That is usually reserved for organizations like churches and The Red Cross, etc. 501(c)(4)s are for organizations like SuperPACs. 501(c)(7)s are for organizations like VFWs, etc. The tough part about trying for a non-profit would be where do the funds go and then who owns what they are spent on. Salaries would be paid, but paying people huge salaries in a 501 has come under fire over the last few years (Red Cross as an example). This is an ongoing debate right now too. If you don't pay senior leadership in a non-profit, wouldn't that talent just go somewhere outside of the 501 world to make the money they can for their abilities? What's left are potentially under qualified/educated/experienced people being put in charge of large budget organizations and not being properly capable to run that organization, so the organization in the end and the people it is trying to help, suffer. The argument is that if it's a non-profit organization, why are donated funds being used to pay seven-figure salaries for a charity? Then they reference the donation-to-distribution ratio chart. That's the total amount disbursed to direct aid divided by the amount donated in aggregate. So if a 501 received $100M in donations in a fiscal year and consumed $62M in direct aid, 62 cents of every dollar received was used for the purpose of the 501, and the other 38 cents on the dollar was used for administrative expenses, salaries, overhead, etc. People like to use that ratio as a basic assumption of efficiency.

Caught in a Web of Obligations: Contract Issues, Ours and Theirs

You've probably noticed over the past week that we haven't heard much from the developers in terms of the future, if any, of CoH.  This post examines why.

To understand what the devs can and, more importantly, can't do to help us, we need to look at some basic issues of employment and contract law.  Contracts are one of the foundational areas of Anglo-American law.  (For those of you old enough to remember The Paper Chase, Prof. Kingsfield taught Contracts.)  For our purposes, the most important thing to know about contracts is that two parties, like a potential employer and a potential employee, can make a contract to do (or not do) almost anything, all on their own initiative.  There are a few restrictions preventing contracts against public policy.  The two parties can't make a contract to commit a crime, for instance.  But for our purposes, the things the parties can do with a contract are practically unlimited.

Turning specifically to employment contracts, where a person makes a contract with an entity or another person to do some kind of work, the basic rule is "at-will employment."  The employee is free to quit at any time, for any reason (or no reason), and the employer is free to fire the employee at any time, for any reason (or no reason), again, so long as it doesn't violate some other law (such as laws against discrimination).
But the parties can tweak this basic rule in various ways, and most employers and employees do.  For example, the employee might seek a provision that if his position is eliminated, the employer will pay him an additional two months' wages.  The employer might seek a provision that allows it to take actions against the employee if the employee steals its property (whether things like desks or things like copyrights).  The parties might even agree to restrictions on these terms.

For an example that hits close to home for us, an employer can demand that an employee not disclose information, usually called "trade secrets," learned while working for the employer.  Someone hired to develop soft drinks for Coca-Cola will have, as a provision in his contract, a requirement that he not reveal the formula used to flavor Coke.  The company can even place a restriction like that that continues after the employee quits his position and no longer works for the employer.  Perhaps most surprising of all, the parties can even agree that the contract's terms themselves are a secret.  The precise contents of any employment agreement will vary based on what the parties negotiate.

If either party doesn't do what it agreed to do, that party has breached the contract.  If the employer doesn't pay the employee the agreed wage, the employer is in breach.  And if the employee discloses the IP that he agreed not to disclose, he's in breach.  A party in breach of a contract can be sued by the other party.
In our case, the developers of CoH signed contracts involving all kinds of restrictions when they agreed to their employment with Paragon Studios, a part of NCSoft.  It's difficult to know what those restrictions are because one of them appears to be a restriction on disclosing the terms of the contracts!  However, we can make educated guesses.  The devs undoubtedly agreed not to disclose any of their works in progress, except as permitted by NCSoft.  They undoubtedly agreed not to disclose what the process of creation entailed.  They undoubtedly agreed not to steal any of NCSoft's IP.  In practical terms that means that they can't go and develop new games using the material they created at Paragon Studios.

Their contracts may have even included something called a covenant not to compete.  This is a special provision in a contract saying, essentially, that the person being hired can't go to work for a competitor (usually only for a limited period of time after leaving the first employer).  I have no idea whether things like this are used in the gaming industry.  Honestly, I don't know much about the gaming industry at all.  (We need someone with industry experience to answer these kinds of questions!)  But if they are, it puts another restriction on the current devs' ability to create any kind of a successor project, whether financed by us or by another publisher.

That brings up another important question.  Say that NCSoft hires David as a concept artist.  If David draws a piece of concept art, why can't he take it home and do what he wants with it?  After all, he drew the picture, so it's his, right?  Wrong!  The picture is a work for hire.  David's job is to produce concept art, so under his employment contract, any such artwork he produces belongs to the party who hired him, NCSoft, not to David.  And keep in mind that "such artwork" doesn't just mean a picture of Statesman drawn on a piece of paper.  It also means the copyright in that drawing of Statesman.  NCSoft holds the sole right to make copies of the art, make derivative works based on the art (like turning it into a loading screen or giving it to Dink to render as an in-game NPC), or to prevent others from doing so.

This concept applies not just to "art," but to other things the devs made during their time at Paragon Studios ... like game code.   As I noted above, rebuilding a post-CoH game with CoH code infringes NCSoft's copyright in the code.  And for a former employee, it's also a contract violation, opening that employee up for lawsuits.  This puts a serious, legal cramp in developing a CoH2 in the absence of NCSoft.

Someone argued earlier that game code is not subject to copyright, since the rules of a game can't be copyrighted (according to the U.S. Copyright Office, anyway.  I'm not sure if a court would agree.).  But computer game code isn't the "rules of a game."  It's a rendering of the rules, and that can be copyrighted.  Let me give an example.  Say that I am the National Football League.  I cannot copyright the rules of football.  But if I write those rules down in a book and call it The Rules of Football, I certainly have a copyright in the book.  The difference is that the rules themselves are just ideas, while the rulebook exists in a fixed form.  Copyright protects the latter, but not the former.  Note that the existence of the rulebook doesn't prevent someone other than the NFL from playing a game of football according to the NFL rules because the rules themselves aren't copyrightable.

Analogizing to our game, one probably cannot copyright the idea of dodging an attack launched by an AI enemy.  But one certainly can enjoy a copyright in the system of Defense as it exists in CoH.  That system is embodied in a fixed form in the game code.  And unlike the football example, one cannot play a game of CoH without using the code.  This remains an insurmountable obstacle to any attempt to replicate the existing game without the IP rights in hand.

We have one final, further contract-related stumbling block: the terms of the EULA.  As I've pointed out many times on the official fora, the EULA is not law.  But it is a contract, and either party can try to enforce it like any other contract.  Most importantly for our purposes here, the EULA provides that NCSoft owns not only everything its employees used to make the game, but also everything we create within the game- characters, text, everything.  (Contrary to popular belief, this isn't because it's greedy to enjoy the fruits of your creativity for free, but because it's afraid of being sued.  It doesn't want someone suing it because a twitchtv transmission broadcast a picture of someone's costume over the internet, for example.  I can go into more detail on my thoughts on the EULA in another post if you all want.)  Additionally, because NCSoft claims a copyright in these things, it holds the right to make derivative works based on them ... such as another game featuring the same material.  (How far it's willing to enforce those rights is another issue.  It probably won't sue if you remake your character with the same name in another game, but it certainly will if you remake the entire game.)

In summary, there's very little we can do to get our hands on any of the existing aspects of CoH.  As discussed above, NCSoft holds the IP rights to everything the devs created.  The devs can't tell us anything about them without breaching their contracts with NCSoft, which would put their severance payments in jeopardy and open them up to lawsuits.  They can't even tell us what they can't tell us.  And even if they could, we couldn't use it, because NCSoft owns their work.  It's a tough situation all around.

There are really only three solutions.  First, we can get someone in the Legal department of NCSoft or Paragon (if that person hasn't been laid off) to disclose the relevant contracts to us.  That's unlikely.  There is, as yet, no "we" to do the negotiating, and even if there were, NCSoft can't disclose something confidential without permission from the devs in question.  Otherwise, NCSoft is in breach, and the whole breach rigmarole starts again.

Second, we can purchase the IP rights to the devs' work from NCSoft.  This is also unlikely.  Currently, for reasons I've already discussed, NCSoft has no incentive to sell.  Even if it did, for other reasons I've discussed, there is no "we" to sell to.

Third, we can work around the lack of IP rights by creating our own game.  This is Plan Z.  Yes, this is a possible option.  However, while I don't want to put a damper on everyone's optimism, it is an enormous undertaking.  Make no mistake; Plan Z is nothing less than creating a new game publisher and game development studio from scratch.  This requires business and technical expertise that may well be beyond our ability (or our ability to purchase; even Paragon Studios at its height couldn't afford the talents of someone like Arcanaville).  Even with that expertise and the best game in the world, there is no guarantee of success or even survival.

Further, we should not be under any illusions that Plan Z would be certain to come out resembling existing CoH in any significant way.  As Mantic noted above, each person to work on a project puts his own spin and glosses on it.  Just consider, as an example, what you, the reader, would have done if you'd been writing the last three years of CoH stories.  Those stories came out as they did partly because John "Protean" Hegner was interested in telling the kinds of stories we saw realized in Praetoria.  Would you have had an identical focus?  Probably not.  People, including developers, vary too much.  Development can take account of player preferences (witness things like the Retro Sci-Fi costume set), but it need not (and, I personally believe, shouldn't always).   Plan Z might be a spiritual successor to CoH, but by that standard, so was Champions Online.  People need to stop thinking of Plan Z as "the same CoH built out of new material" and more as "a totally new MMO created and funded by a bunch of people who liked CoH."

I'll see if I can find that mini-treatise of mine on copyright and trademark now ...

More About IP, Freely: Copyright vs. Trademark vs. the EULA Contract

(The following is a post from the official CoH fora.  A player had had a character named after but otherwise dissimilar to a Marvel character generic'd and was asking why.  While the context of our current problem is different, the legal issues are still important.)

There are really two issues here, the EULA/culture of enforcement and why names of existing characters are generally off-limits. The EULA, as enforced by the GM's, is just an agreement between player and game provider. It could be written to require or prohibit almost anything. But for our purposes here, what's important is that it's written to provide that (1) players can't use the game to infringe other people's intellectual property rights and (2) to make sure they don't, GM's can generic characters that they think might do so, even if a court might make a different conclusion.

It's that second part that brings in the second issue, and it's one about which a lot of misinformation is flung, so let's consider it now.

Do Your Part To Keep Geekdom Popular Culture Accurate and distinguish between copyright and trademark. Most characters that get described as "copyrighted" are covered by both.

A "trademark" is the right to use a word, phrase, or more or less single image in connection with some specific use. For example, Taco Bell has a trademark on the name "Taco Bell" in connection with restaurants. If a bellmaker decides to market his bells as "Taco Bells," Taco-Bell-the-restaurant-company would probably either demand they pay him for the use of the name or sue him to get him to stop, despite the fact that their use is ostensibly limited to restaurants. If the case made it to court, the finder of fact would consider whether there is a "likelihood of confusion" between Taco-Bell-the-restaurant and Taco-Bell-the-bells such that a person might think the two were connected.

A "copyright" is a group of rights that cover a specific work of art, such as a comic book, movie, novel, or video game. The right in question here is probably the right to make derivative works. Say that, in a fit of total insanity, I want to make a movie called Ben-Hur Part II: Ramming Speed! I cannot do this without buying or otherwise getting the right to make a derivative work of whoever holds the right to the original work, Ben-Hur. (This is an especially interesting example because the original movie itself is an adaptation, another derivative work, from a novel.)

Now, finally, we can come around to the discussion of what these fora mean by "copyrighted character." As the discussion above should show, you can't really copyright "a character" in the abstract because copyrights apply only to specific works, not the elements of which they're composed. "But if that's true, Olantern," I hear you cry, "why can't I make Ap0calypse as an in-game character?" There are two reasons.

The first, simpler one is that you're potentially violating Marvel's trademark in a superpowered character named Apocalypse, even if your Ap0calypse has a zero in his name and looks nothing like the Marvel one. Would a reasonable, non-comic-maven person think your character and Marvel's were connected? It seems likely.

The second, subtler reason is that by taking a character who's appeared in a copyrighted story whose rights are owned by Marvel, you're potentially making an unauthorized derivative work of that copyrighted story. Note, too, that the fact that you're presumably not trying to take any of Marvel's business away doesn't enter into either of these considerations.

There are lots of exceptions and permutations to both these bodies of law, but those are the basics. One exception mentioned already in this thread is that works can fall into the public domain over time and thus lose copyright (though not trademark) protection. I'd just like to say here that popular culture tends to misunderstand and often overstate the scope of exceptions to those rules, so don't rely on them without consulting an attorney. (In fact, that last bit of advice goes for everything in this post.)

Now, let's bring this back to Thor, since he comes up so often in these discussions. We're dealing with three things. First, we have the "idea" of Thor, a Norse god of thunder with power over lightning and such. No one holds any enforceable rights in just that idea. (While there is a body of law called the "law of ideas" that theoretically covers this kind of thing, those laws are weak, and Thor the thunder god is presumably public domain or its equivalent for purposes of this discussion.) Second, we have Marvel's trademark on Thor, a blond-haired Asgardian superhuman quasi-deity who fights villains and appears in comic books and derivative media. Third, we have the zillion copyrights on every Thor-the-superhero story ever published in any medium. For instance, Marvel holds a copyright in the story contained in THOR #350, "Ragnarok and Roll!"

With all that in mind, imagine that a player makes a character named "Thor." This Thor has blue skin and is a villain earth/forcefield controller, and his biography states that he's an alien from the planet Zarx using his natural powers to steal all the gold on earth. Very different from any of the Thors mentioned in the last paragraph, right? So why does a GM generic the character when he spots it?

Hopefully, based on the rest of this post, you can see why. First, while the player could argue, perhaps successfully, to a court that no one would confuse villaintroller-Thor-from-Zarx with Marvel Thor, it's just as easy to argue that someone could. (Think about your non-comics friends, the kinds of people who say, "I don't go to those movies because they're so silly.") Second, even if the player wins that argument, villaintroller-Thor-from-Zarx might be derived from one of the copyrighted works about Marvel-Thor that are out there. (The argument might run something like, "Why else would someone call a supervillain 'Thor' except to reference the superhero Thor?" I'd call this a losing argument, but it isn't a frivolous one.) And, most importantly for the player, the mere possibility that those arguments could be raised are sufficient reasons for a GM, who probably doesn't even know this legal abstraction stuff anyway, to generic the character, because the EULA allows for exactly that. A concern is all the GM needs, not an airtight legal argument.

Those are the issues in a nutshell. Sorry for the long post; I didn't mean to write a treatise when I started. I hope people found that interesting, or at least helpful. (Disclaimer: Nothing contained in this post should be taken as legal advice. If you actually need legal advice, consult an attorney. I just read recently that there's one for every 256 people in the U.S., so there are plenty out there.)

(A follow-up post about registering trademarks:)

Trademarks do not need to be registered with the Patent and Trademark Office in order for the trademark to be protected, but registration is common and preferable to non-registration. Even in the present climate of IP nervousness that permeates the content-production world, many character names and similar designations are not registered trademarks. You can tell the difference between a registered trademark and a non-registered, or common law, trademark by the presence or absence of that "R" in a circle; the "R" stands for "registered."

Registration, however, is prima facie evidence of a mark's validity. Referring back to my Taco Bell example from my first post in this thread, imagine Taco Bell the restaurant sues Taco Bell the bellmaker for violating its "Taco Bell" trademark, but the trademark is not registered. In that case, the restaurant would have to present evidence in court that its mark was actually used and recognized to distinguish its restaurants before even reaching the issue of whether the bellmaker's use of the same name resulted in a likelihood of confusion. If the trademark were registered, that first step of presenting that evidence wouldn't be necessary.

Why, then, don't entities register every single potential trademark? First, as this thread has hopefully demonstrated already, a particular trademark is generally limited in scope. This can run into a lot of registrations if, say, Lucasfilm tried to register the name of every single one of its characters in ever possible medium of as a trademark. I should add that most content creators above a certain size tend to stick a "TM" (designating something as a non-registered trademark) after every distinctive name in their IP's. I'm not aware of any cases where someone tried to litigate the validity of such a trademark extensively, so the "TM" may ultimately establish more for the trademark asserter's peace of mind than for his actual, legal rights.

While I'm discussing registration, I should also mention registration of copyrights. When discussing a work, it's something of a misnomer to say it is "copyrightable." While geekdom likes to attack the more recent iterations of copyright protection (the ones with terms of "life plus X years"), one thing that they did for both large and small copyright holders was to make copyright protection inherent. Once a work is set in some fixed form, copyright protection attaches to it automatically, without any registration necessary. For these purposes, even a draft or a work in progress counts as "fixed," by the way; "unfixed" works are essentially just "ideas."

Registering a copyright with the Library of Congress (not the PTO) again provides prima facie evidence of the existence of the copyright. In some industries, such as publishing, it is accepted that works aren't registered upon creation by the author (early in the creative process) but upon publication by the publisher, in the author's name (late in the process); the inherent protection of copyright law is seen as sufficient. In fact, budding authors are often told NOT to register copyrights in their works because disreputable scam artists of various stripes may use the registration information to target them.

Quote from: Dr Asinine on September 07, 2012, 04:55:03 PM
Also I think we need to point out that even if you are a subscriber that doesn't entitle you to make business decisions or game decisions.  Whoever we get to be the actual developers and designers need to be the final authority about systems, content, etc.  Players often have skewed ideas about what should and shouldn't be done based on their personal experience and not hard numbers and important business decisions.  I think this is very, VERY important.  We need to let those designing design.  Can they take suggestions from the player base?  Hell ya, just like our awesome current (former  :-(   ) Devs.  Can players, just because they have a stake in the game, demand certain changes.  Hell no.  That'll be a great way to ruin what we are trying to save.

I strongly agree, and I think this is a critical point to keep in mind, regardless of the entity structure that ends up being used.  Those of you who've followed my career on the official fora (if all two of you are reading this) know that I've often argued that the players' emotional stake in CoH, while important, doesn't and shouldn't give them creative control over the game as a whole.  Players can have good insights.  On the other hand, players are not developers.  "Vision" is not a dirty word.  (The remedy where the vision is cloudy is to take your money elsewhere, not to demand a change.)

Quote from: Dr Asinine on September 07, 2012, 04:55:03 PM
A few other points to concider-if the players have to enact Plan Z, then we need something very specific...we need the old Devs.  Not forever if they have new awesome jobs with new awesome game companies, but we need them at least to show whoever we get to replace them the ropes.  This would be -invaluable-.

It may be hard or impossible to get the original devs, for the reasons I discussed above.  It would sure be great if we could, though.  Heck, I'd just appreciate some industry insider advice at this point.

To that end, it might be helpful to put together a list of some experts or fields of expertise we might need.  I'll start:

-

• Someone with experience in game design and publishing.  This is necessary to find out the customs of the industry, as well as what works and what doesn't (in a business, as well as a game systems, sense).
• Someone with business experience.  This person can provide advice on setting up an entity, entity choice, how things should be structured, capitalization, and the like.
• An accountant, to handle things like tax returns and keeping track of funds.
• An attorney to handle legal issues related to the business in greater detail than we can do in this thread.
• Investors.  Ideally, we find an existing publisher for the existing game, relieving us of the need to found both our own publisher and our own development studio.

.
[/list]

Feel free to add more ...

I am working on contacting people I know in the video game design industry. I do not expect that they will be able to offer a great deal of advice in any public forum on this subject, or are going to want to talk to people that they don't know about it. I also expect that it will be a week or two more before I can chat with them. They are rather busy at the moment. However, I've had a little experience with the world-building and story aspects of game design in general...which is why I'm offering to help with that part. ;)

The few guys I know in the accounting/business area are also going to be a week or so before I can talk to them, and frankly, they're more acquaintances than close friends. Again, I'm not expecting an enormous amount of help from them.

I am an attorney as well, and heard about this effort a few days before I started reading about it.  My mind naturally turned to the legal aspects of such a transaction. Olantern has done a great job identifying the issues, but I did not see mention of what popped into my head as the most challenging issue (other than convincing NCSoft to actually sell off any rights - they've closed other games and I seem to recall similar efforts that failed).

The sticky wicket would be any transfer of account names, passwords, and billing information (both addresses and credit card numbers).  You could live without the billing information, but without account names, you cannot realistically reunite players with their current existing characters.  If you lacked the passwords, you create the additional problem of verifying identities in order to reunite players with their old accounts.  The alternative is a clean restart, but the history is part of the appeal to carrying on, and there will be the issue of name-stealing (or simply practical conflicts in that area - if you don't have the same number of servers that exist currently, you will have similar naming problems).

I feel certain there must be regulations governing the transfer of such information - but I have not researched them.  I'll remind everyone that such a transfer IS possible - Champions Online was bought outright by Atari and the transition was seamless, but I have forgotten the details (I played in beta but never was a subscriber).

Just something to consider for something down the road - someone should consider that potential hurdle.

Olantern and Sith, you should take a look at what is developing in City Sunset for more on Plan Z.  It's still as nebulous as you allude to as far as identifying organization, but a hierarchy is beginning to form.

Quote from: dwturducken on September 08, 2012, 01:14:56 AM
Olantern and Sith, you should take a look at what is developing in City Sunset for more on Plan Z.  It's still as nebulous as you allude to as far as identifying organization, but a hierarchy is beginning to form.

Uh, DW? *grins* You might have noticed my name sprinkled around in there a bit. ;)

Thanks to dwturducken for pointing out the Sunset forum.  It looks like things are further along there than I'd expected, and if I'm reading the posts right, there may be some options for creating game code and systems that wouldn't infringe NCSoft IP.

Quote from: johnnic1235 on September 08, 2012, 12:51:04 AM
I am an attorney as well, and heard about this effort a few days before I started reading about it.  My mind naturally turned to the legal aspects of such a transaction. Olantern has done a great job identifying the issues, but I did not see mention of what popped into my head as the most challenging issue (other than convincing NCSoft to actually sell off any rights - they've closed other games and I seem to recall similar efforts that failed).

The sticky wicket would be any transfer of account names, passwords, and billing information (both addresses and credit card numbers).  You could live without the billing information, but without account names, you cannot realistically reunite players with their current existing characters.  If you lacked the passwords, you create the additional problem of verifying identities in order to reunite players with their old accounts.  The alternative is a clean restart, but the history is part of the appeal to carrying on, and there will be the issue of name-stealing (or simply practical conflicts in that area - if you don't have the same number of servers that exist currently, you will have similar naming problems).

I feel certain there must be regulations governing the transfer of such information - but I have not researched them.  I'll remind everyone that such a transfer IS possible - Champions Online was bought outright by Atari and the transition was seamless, but I have forgotten the details (I played in beta but never was a subscriber).

Just something to consider for something down the road - someone should consider that potential hurdle.

I hadn't considered this at all.  I'd sort of been assuming all along that either the account information would move to whoever purchased the IP rights in a sale situation, as part of the sale, or the players would have to start over from scratch with new accounts in a "spiritual successor" situation.  You're right; it's a significant issue.  It might be worth asking someone on the CO fora (or just someone who knows that game well) for some anecdotal information on what happened there.

olantern your posts have been extremely informative and it does somewhat show the massive undertaking we are doing regardless which option we will go with

such as the option the devs to acquire the rights to the game, they would need investors to back them, they would need lawyers to help formulate and make a deal with ncsoft, then there is all the paperwork of actually transferring the rights to the game over the devs which could potentially be numerous things since the game engine was on a license (although an indefinite license)

im mostly assuming thats why we have heard very little in terms of what the devs are discussing with ncsoft, partially due to the secrecy agreement in their contract and partially due to the slow rate of business dealings/finding investors/actually making the deal

i believe we are still heading in the proper direction though, with the media crusade starting to hit full swing ncsoft is gonna be pressured to either sell or make some form of public statement regarding the publicity, or both

ncsoft is probably taking its time atm, because they know this is publicity thats spreading outside the US as well (as per the foreign language news articles) and depending on what they say they will make everyone happy or create a massive negative public backlash that could hurt them further down the road

The Sentinel+ application may give us to tool to bypass a portion of the problem of account name / character list reconstruction, in case the account data is off limits to us due to a failure to acquire it in an otherwise successful deal with NCSoft, or if PlanZ is activated.  The person possessing a significant number of Sentinel saved character files is almost certainly the account owner, and named accounts with characters could be recreated on that basis alone, with some sort of arbitration if someone tried to cheat to acquire names.

Name conflicts based on server would still need to be resolved in a restarted CoH1, unless our hardware was powerful enough and the game's (apparent) virtualization would permit exact recreation of the exist "servers" as they appear to us.  Under PlanZ's forum section, I haven't seen a discussion of servers and naming.  CoH1 characters may not be cleanly importable to a PlanZ game, though names could be deemed "reserved" by a Sentinel savefile so long as the PlanZ design can build in a means of resolving name conflicts via a (hidden?) unique identifier involving a prefixed [CoHServerId].[CharName] or other scheme.


Side note:
The relevant EULA section pertaining to "who owns our characters" appears to be 6(b), which you can read at your leisure.  I'm a bit of an ethical stickler, so when I agree to something (even as oppressive as a EULA) I'll abide by it unless the other party cheats first.  However, it seems that I'm legally and ethically permitted to recreate my characters in another game.  It's a two-point question:
1) If I had no rights to the character IP, then my agreement to the EULA simply acknowledges that I had no such rights; NCSoft cannot acquire those rights though my signing the EULA.  Therefore NCSoft has no right to stop me...only the IP right holder could do so.
2) If I had rights to the character, the EULA only gives NCSoft a non-exclusive license to use my character.  So I can't stop them from using it, but they also have no right to stop me from using the character elsewhere.
Whew.  8)

Quote from: Golden Girl on September 06, 2012, 08:43:01 PM
The name "Providence" in the geekosphere has quite strong links to H.P. Lovecraft, which seems to have been one of the big reasons for setting Paragon City in the same area, as a lot of the original devs were big Lovecraft fans.
The fact that it's a reasonably well know real place might also take away a bit from fictioanl city vibe we should be aiming for as the spiritual succesor to Paragon City.

Funny. I just thought of Generator Rex.

Quote from: Superhobo on September 07, 2012, 05:37:04 PM
It would be a stretch for an MMO with a paying customer base to be granted a 501(c)(3). The accounting for that might be a nightmare even if it were. That is usually reserved for organizations like churches and The Red Cross, etc. 501(c)(4)s are for organizations like SuperPACs. 501(c)(7)s are for organizations like VFWs, etc. The tough part about trying for a non-profit would be where do the funds go and then who owns what they are spent on. Salaries would be paid, but paying people huge salaries in a 501 has come under fire over the last few years (Red Cross as an example). This is an ongoing debate right now too. If you don't pay senior leadership in a non-profit, wouldn't that talent just go somewhere outside of the 501 world to make the money they can for their abilities? What's left are potentially under qualified/educated/experienced people being put in charge of large budget organizations and not being properly capable to run that organization, so the organization in the end and the people it is trying to help, suffer. The argument is that if it's a non-profit organization, why are donated funds being used to pay seven-figure salaries for a charity? Then they reference the donation-to-distribution ratio chart. That's the total amount disbursed to direct aid divided by the amount donated in aggregate. So if a 501 received $100M in donations in a fiscal year and consumed $62M in direct aid, 62 cents of every dollar received was used for the purpose of the 501, and the other 38 cents on the dollar was used for administrative expenses, salaries, overhead, etc. People like to use that ratio as a basic assumption of efficiency.

I'm executive director of a 501(c)(3) when I'm not running around causing chaos in CoH.  I can confirm what Superhobo says.  Additionally the IRS has also really started to limit granting new nonprofit status because there were many getting the tax exempt status and then benefiting themselves not their communities. 

I am very familiar with (c)(3), and somewhat with (c)4 and (c)(6) organizations.  I don't know the rules of (c)(7) or (c)(8) but those may be more applicable.  However I am willing to offer whatever support and advice I can.  I would also say that despite their reputation,  the IRS has been extremely helpful to me when I have had questions.  They have a Exempt Organization group that are pretty good at getting answers.

Regardless, I think if Paragon Studios is to be saved, or a new entity is set up, a for profit organization is the best fit.  We want them making money and investing it into the game so they can survive.  it's better to do that if they can charge subscriptions (versus dues) and don't have to worry about their programmatic vs administrative ratios.

Quote from: Scott Jackson on September 09, 2012, 01:13:28 AM
Name conflicts based on server would still need to be resolved in a restarted CoH1, unless our hardware was powerful enough and the game's (apparent) virtualization would permit exact recreation of the exist "servers" as they appear to us.  Under PlanZ's forum section, I haven't seen a discussion of servers and naming.  CoH1 characters may not be cleanly importable to a PlanZ game, though names could be deemed "reserved" by a Sentinel savefile so long as the PlanZ design can build in a means of resolving name conflicts via a (hidden?) unique identifier involving a prefixed [CoHServerId].[CharName] or other scheme.

Don't want to get off topic much, but CO has no naming conflicts as all names are actually based on your global. I can't remember exactly how it goes, but something like [globalname] Character Name. So I can be [JustJane] Epic Hero, and you can be [ScottJackson] Epic Hero. IIRC, the global name portion only shows up if you are searching and multiple people have the same toon name. I'm not even entirely sure it shows up in chat. At any rate, it is a work around for that issue.

Quote from: Zapping on September 09, 2012, 04:40:18 AM
Regardless, I think if Paragon Studios is to be saved, or a new entity is set up, a for profit organization is the best fit.  We want them making money and investing it into the game so they can survive.  it's better to do that if they can charge subscriptions (versus dues) and don't have to worry about their programmatic vs administrative ratios.

I agree. I used to work for a very small non-profit, and it is far too easy for small (and large) ones to struggle. We cannot open ourselves up to that.

Quote from: Zapping on September 09, 2012, 04:40:18 AM
Regardless, I think if Paragon Studios is to be saved, or a new entity is set up, a for profit organization is the best fit.  We want them making money and investing it into the game so they can survive.  it's better to do that if they can charge subscriptions (versus dues) and don't have to worry about their programmatic vs administrative ratios.

I tend to agree, too.  Maintaining nonprofit status simply requires too many additional obligations.  As I've said several times, becoming a publisher and/or development studio is an ENORMOUS undertaking.  Keeping the operation alive would be difficult enough without the additional compliance and recordkeeping requirements of a Section 501 organization.

I admit that I do still like the idea of being able to market the game as "the world's first subscriber-owned MMO," but that creates its own set of problems (separate from the Section 501 ones).  Does anyone out there have any experience with membership organizations, like Costco or supermarket co-ops?

I'm also glad to see this discussion.

I work on a daily basis with cooperative business entities - I work with credit unions, which provide financial services and are owned collectively by their members. I can attest that starting up a collective/cooperative is long and involved, although in ths case of a collectively-owned MMO, one of the initial hurdles involved in setting up a credit union (seeking approval of the start-up plan and initial capitalization from federal and state regulators) is eliminated, because I do not think that any governmental entity would need to be involved in a review other than the IRS, who would need to approve the tax status of the organization. I say this as if IRS approval would be an easy thing, which or course, it isn't, but still easier than getting approvals from federal/state financial regulators.

Regarding a timeline, the process of setting up a credit union takes literally years. It is not a quick process, due to requirements for raising capital and getting organizational aprovals. And this applies only to US credit unions, those in Canada, the UK, elsewhere in EU, Australia/NZ, etc., would have their own rules regarding setting up cooperatives. Introducing international organizations would require more people with knowledge of law in a wide variety of jurisdictions.

Perhaps the best alternative would be to keep the cooperative to one owned in a particular jurisdiction (probably the US because it seems that collectively we are a bit better versed in US corporation/tax/IP laws) but certainly could be set up elsewhere if the laws in that jurisdiction make the process easier.

As noted above, there are other forms of tax-exempts other than 501(c)(3)s. It would be highly unlikely that a game cooperative would qualify as educational, etc., under (c)(3) as charitable, but other forms of tax-exempt might be a possiblity. Federal credit unions fall under 501(c)(1) for example. Looking over the lists, nothing leaps out as the right answer, but a tax law expert might find something there that could be arguably correct.

But it may also be possible to organize a cooperative entity as something not exempt from federal tax. Again, we need to find a tax attorney to let us know options. Since tax-exempt organizations have such high IRS-scrutiny, avoiding that status might be easier anyway.

(Disclosure - I have a law degree from a U.S. Law School. While I passed the Bar exam in my state, I do not practice law, ad as others have said, anything I say here or elsewhere on the Titan Network should not be regarded as legal advice. In particular, US Tax Code is very specialized and complex, and I would never, never offer tax planning advice.)

Just a few thoughts out loud to continue the collective thought process.

Thank you, Ad Astra.  That information is extremely illuminating.  As I said earlier, the additional obligations and recordkeeping issues for a tax exempt organization probably make that idea a nonstarter.

I am a tax attorney, but I am not a tax planning person.  Rather, when I was in practice, I handled tax controversies, i.e., disputes between taxpayers and the IRS, usually at the litigation stage.  That said, I am pretty familiar with reading the Internal Revenue Code, and nothing in Section 501 really jumps out at me as fitting running an MMO.  I'll see if I can take some time this week to call some people I know who deal with Section 501 a bit more and can give advice on this kind of thing.

As Ad Astra points out, it would still be possible to run a co-op, or any of the other entities we've already mentioned, as a standard, for-proft business.  This may be the easier route.

Of course, the easiest route of all is to get someone else, either another game publisher or a venture capitalist, to put up the money to buy the necessary IP rights from NCSoft outright.  I advise everyone reading this to take a look at some of Victoria Victrix's recent posts on this subject.  They allude to some of the hard numbers that would be needed in presenting a case for purchase to such a potential buyer.

Here's a repost of something I said in the "Potential Arguments to Investors" thread.  Again, I recommend taking a look at the information Ms. Lackey has passed on to us for how (little) CoH matters in terms of NCSoft/Nexxon's ultimate bottom line.

***

Now that someone has done the hard work of digging up some of the numbers involved, Ms. Lackey is exactly right.  The next step is to get someone interested in purchasing this thing.  There's been interest in the Legal Considerations thread about forming some kind of player entity to do so, but that's also fraught with peril.  I suspect that a crowdfunding effort of some kind can raise one or two million dollars, but not the ten or twelve million that might be needed.  Further, we have neither the necessary expertise in online publishing nor, potentially, the time to gain it.  We are (for the most part) not business people.  I've done a fair amount of bankruptcy work (and taught Bankruptcy), and I've seen a lot of fledgeling businesses perish trying to accomplish something like this.  That's not to say it's impossible, but it is the greatest challenge most of us have likely faced in our financial lives.

The easier route is to interest either an existing games publisher or a venture capitalist in making the purchase.  The return on CoH as an investment, at least as it's currently operating, is excellent.  We need to get the information involved into the hands of people who might be interested in using it.  That means writing to business organizations, writing to game publishers, and using any personal connections any of us have.

It might be worthwhile to start gathering information on such contacts and pooling them in a central location.

Contrary to what one reads in the AE forum, we have plenty of excellent writers in this community.  It's time to put those skills to work.

***

Keep at it, everyone!

Quote from: SithRose on September 08, 2012, 02:55:33 AM
Uh, DW? *grins* You might have noticed my name sprinkled around in there a bit. ;)

To quote some famous last words, "Oops." :)

One thing that has been bothering me as the Sunset discussions have developed is the issue of look and feel.  The drive is to replicate the look and feel as much as possible, should the main efforts fail.  The tickle at the back of my brain has been the recent decision in the Apple v. Samsung case. While it remains to be seen whether it will survive the appeals process, or what the real implications are if it does, the idea that a look and feel, something one would otherwise consider subjective and a bit esoteric, can be intellectual property is more than a little scary. There is a lot of road between hear and there, but it's still there, nagging at me like I'm halfway into a long trip and can't shake the feeling I've forgotten something..

Quote from: dwturducken on September 10, 2012, 01:17:16 AM
The drive is to replicate the look and feel as much as possible...

The drive is to replicate a lot more than that. I don't know how anyone thinks that it would be legal to create such a straightforward knockoff commercially.

Quote from: Mantic on September 10, 2012, 04:46:42 AM
The drive is to replicate a lot more than that. I don't know how anyone thinks that it would be legal to create such a straightforward knockoff commercially.

I don't know about the legality per se, but the industry has always been fraught with unauthorized spiritual successors and blatant knockoffs. I'm not sure CoX has such distinctive styles (which it took from comic books in the first place) that there'd be a case comparable to Apple v. Samsung, which concerns fairly distinctive styles in relatively uncharted territory.

Some modern examples in the industry: From Infiniminer came Minecraft and about six dozen lesser-known clones. The casual/browser scene is highly commercialized and filled with flagrant copies. And I'm not big on FPSs, but it seems to me all the modern (in terms of setting) shooters look and feel identical.

Granted, it doesn't seem like anyone in the video game industry's actually gone to court over this precise issue.

Quote from: Mantic on September 10, 2012, 04:46:42 AM
The drive is to replicate a lot more than that. I don't know how anyone thinks that it would be legal to create such a straightforward knockoff commercially.

I agree with Mantic on this point.  From everything I've seen in the SEGS thread, what the coding folks are trying to do blatantly violates NCSoft's IP rights.

This is different from what might be done in a Plan Z scenario, though.  Most of what I've seen on Plan Z deals with issues of gameplay and story, and I think it's arguable that most of those things are not covered by NCSoft's rights in CoH.  For instance, NCSoft can't realistically claim the sole right to feature superheroes with capes, or alien invasions, or characters who shoot fire out of their hands.  I don't believe they can even assert a right to prevent others from making a game featuring a set of fire-shooting powers player characters can take.  But when someone creates a leveling structure where one can take a power called Flares or Fiery Blast at level 1, up to Inferno at level 32 ... that's treading on NCSoft's toes, no matter what route you take to get there in your programming and code.

<raises hand>
Have ya looked closely at Champions Online?  The tutorial is playing through an abbreviated version of the original (http://www.youtube.com/watch?v=0eHB9zxtet4) CoH trailer. While the point could be argued that both were done by the same people, there still is the distinct ownership of IP. The similarities continue in game: a city overrun by gangs, including a mob-like group; using a transport to get from major area to major area; a pretty similar "social interface."

I could go through the list on tvtropes.org (http://tvtropes.org/pmwiki/pmwiki.php/VideoGame/CityOfHeroes?from=Main.CityOfHeroes) for CoH and find a place where CO hits the exact same mark. As far as Plan Z goes, the IP challenges are legally refutable. The problem that I see with a legal challenge is that, whatever the actual legality of whatever claim NCSoft might make, what is being discussed here is so financially fragile, all NCSoft has to do is pour the money they aren't paying Paragon Studios for a couple of months to shut this down, and there wouldn't be a thing we could do, sustainably, to stop them.

I'm not trying to sound defeatist, but it definitely has to be said.

Quote from: dwturducken on September 10, 2012, 08:58:46 PM
the original (http://www.youtube.com/watch?v=0eHB9zxtet4) CoH trailer

Man, does that ever take me back...

Quote from: dwturducken on September 10, 2012, 08:58:46 PM
<raises hand>
Have ya looked closely at Champions Online?  The tutorial is playing through an abbreviated version of the original (http://www.youtube.com/watch?v=0eHB9zxtet4) CoH trailer. While the point could be argued that both were done by the same people, there still is the distinct ownership of IP. The similarities continue in game: a city overrun by gangs, including a mob-like group; using a transport to get from major area to major area; a pretty similar "social interface."

I could go through the list on tvtropes.org (http://tvtropes.org/pmwiki/pmwiki.php/VideoGame/CityOfHeroes?from=Main.CityOfHeroes) for CoH and find a place where CO hits the exact same mark. As far as Plan Z goes, the IP challenges are legally refutable. The problem that I see with a legal challenge is that, whatever the actual legality of whatever claim NCSoft might make, what is being discussed here is so financially fragile, all NCSoft has to do is pour the money they aren't paying Paragon Studios for a couple of months to shut this down, and there wouldn't be a thing we could do, sustainably, to stop them.

I'm not trying to sound defeatist, but it definitely has to be said.

What I was trying to do in my last post, perhaps unsuccessfully, was to distinguish between the kinds of things you're describing here, the sorts of things that could be identified as tvtropes, and things like leveling systems, attack systems, etc.  I'm not sure where the line is (nor is anyone else, to my knowledge, since this has never been litigated on these facts), but it's definitely there.  (Side note: The reason Plan Z, CO, or anything can reuse the things being discussed is because of geekdom's favorite part of copyright law, the doctrine of fair use.) 

DW's second point here is the more important one.  Just because a legal claim, like, "Plan Z is infringing our IP rights," can be alleged doesn't mean it will succeed.  However, the cost of defending against that claim can be so high that its ultimate merits are only one aspect of the discussion.  This is why I'm so consistently cautious on these types of issues.  The more litigation can be avoided, the better.

(In other news, I'm writing this post on the uber-powerful machine I bought specifically to play CoH ... three days before the fateful announcement.  Sheesh!  :-[)

Quote from: Olantern on September 10, 2012, 09:39:36 PM
DW's second point here is the more important one.  Just because a legal claim, like, "Plan Z is infringing our IP rights," can be alleged doesn't mean it will succeed.  However, the cost of defending against that claim can be so high that its ultimate merits are only one aspect of the discussion.  This is why I'm so consistently cautious on these types of issues.  The more litigation can be avoided, the better.

Yes, but as a flurry of recent info has stated, NCsoft no longer seems interested in COH because it is favored by a Western market. That is to say that unless we have the untimely misfortune of a superhero boom in the Eastern markets shortly after Plan Z is put into effect, then I don't think they will bother with anything short of blatent infringment. That said, I still agree that we should try to avoid provoking them at all costs.

One problem that was raised at the EU player meet is EU data protection law. It would not be legal I believe to transfer any real world player info to a new entity (like an email address) without the explicit consent of the player. How it's been handled in the past where a game transitions from one company to another is that the old owner sends the communication out offering to switch the player over to the new company, so this would require some work by NCSoft.

Quote from: Minotaur on September 10, 2012, 10:52:24 PM
One problem that was raised at the EU player meet is EU data protection law. It would not be legal I believe to transfer any real world player info to a new entity (like an email address) without the explicit consent of the player. How it's been handled in the past where a game transitions from one company to another is that the old owner sends the communication out offering to switch the player over to the new company, so this would require some work by NCSoft.

I'm a little fuzzy, but I believe batch emails from a data base are relatively simple. Usually an organization that handles hundreds of emails in and out every day can do a burst like this without being flagged as a spammer by using a mail/web host that can grant those kinds of permissions. Point being, depending on the method required by EU law, sending that kind of communication is not cast prohibitive; even postage would probably be fractions of a percent of what they were gaining monetarily from the sale.

And, yeah, my first point was more a set up for the second point than anything else, like a nostalgia claymore...  8)

EDIT: After some reflection, here's what I think I was trying to get at.  The people at NCSoft, if they considered us in their decision making, did not figure on us mounting any collective resistance that they would need to worry about.  Now that we're getting attention, people are starting to look here.  We want those people to be media types or more of the glitterati, like the indomitable Miss Lackey, who can catch the ear of the media.  When they look here, they need to see the friendly community that we say we are.  If we're linking to a bunch of news blogs and industry websites, and the bulk of the comments on the pieces at the other end of those links are negative, no amount of denial on our part is going to convince anyone, particularly NCSoft, that it wasn't us, even if it was just people following the links that we gave them and not liking what was at the end of the trail. But, frankly, Hyperstrike (http://www.cohtitan.com/forum/index.php/topic,5072.0.html) said it way more eloquently than I did.

Here's where that relates to this thread. If negativity that kind of negativity, particularly aimed at NCSoft, gets back to them, it undermines the current talks, it undermines any follow up efforts that would originate here, and it would make suing us all back to our Atari 2600s look a whole lot more worth their time, effort, and money, should Plan Z move forward. 

Someone said on one of the other threads that the efforts here seemed fractious.  They really are not.  There is one goal: keep this community together someplace besides what amounts to virtual class reunions, in the sort of interactive environment that has been inspiring us ever since we discovered it.  What looks like divided effort on this board is really just multiple prongs, and each alone is nothing without the others beside it. The ideas being put forth in the myriad threads are all part of the greater whole.  Plan Z, on the Sunset board, is the last ditch contingency, the rainy day plan, the Foundation that will reduce ten thousand years of chaos to a mere thousand.

The media is watching. This was what we wanted. There's a fair chance that it is about to reach mainstream media. As has been said in so many of the other threads: stay on target.

And, can one of the bosses tell me how I'm suddenly a boss? I'm just an ascended lurker.

Hmm, I agree that the threat of a lawsuit could crush Plan Z easily, but then that would also be the case if anyone else should ever perceive Plan Z as a threat, e.g. any of the current superhero-themed MMO publishers. The Marvel lawsuit could even repeat itself, since it was settled. So... I don't know what we could reasonably do to mitigate the risk, short of self-censoring à la shotgun-censorship in AE.

Quote from: dwturducken on September 10, 2012, 11:07:21 PM
And, can one of the bosses tell me how I'm suddenly a boss? I'm just an ascended lurker.

Post count rank, I believe. =^o^=

Yup.  Post count.

On corporate structure:

(All the following assumes initial incorporation within the U.S.  The potential complications of the international reach of the product need to be discussed at some point, as well... I just have little insight to offer in that respect.)

To me, the cooperative concept is the most intriguing.  Very unfamiliar with all of the ins and outs of it, however.

My own familiarity is with the S-corp structure, but I think it has a problem in that it has a limit on the number of shareholders allowed (100, IIRC).  My understanding is that LLCs are more flexible in that regard, with no upper limit.  The pass-through taxation feature of either of these entity types is potentially problematic, although I readily admit worrying about having enough profits to warrant concern about the impact on any shareholder's tax liability seems a bit premature at this stage...

Our Articles of Incorporation are going to be key.  With the number of shareholders we're talking about, spelling out the rights and responsibilities in painstaking detail is the only way anyone is going to remain sane moving forward.  I've been a part of companies with only a half-dozen shareholders that nearly ripped themselves apart over disagreements on direction... 6000 shareholders gives me nightmares just contemplating the potential carnage.

Quote from: eabrace on September 11, 2012, 04:27:25 AM
Yup.  Post count.

Well, THAT's not an accurate metric of authority!  :P

It isn't authority.  It's how much XP you're worth when defeated.

Quote from: DamianoV on September 11, 2012, 10:23:26 AM
On corporate structure:

(All the following assumes initial incorporation within the U.S.  The potential complications of the international reach of the product need to be discussed at some point, as well... I just have little insight to offer in that respect.)

To me, the cooperative concept is the most intriguing.  Very unfamiliar with all of the ins and outs of it, however.

My own familiarity is with the S-corp structure, but I think it has a problem in that it has a limit on the number of shareholders allowed (100, IIRC).  My understanding is that LLCs are more flexible in that regard, with no upper limit.  The pass-through taxation feature of either of these entity types is potentially problematic, although I readily admit worrying about having enough profits to warrant concern about the impact on any shareholder's tax liability seems a bit premature at this stage...

Our Articles of Incorporation are going to be key.  With the number of shareholders we're talking about, spelling out the rights and responsibilities in painstaking detail is the only way anyone is going to remain sane moving forward.  I've been a part of companies with only a half-dozen shareholders that nearly ripped themselves apart over disagreements on direction... 6000 shareholders gives me nightmares just contemplating the potential carnage.

This is the sort of thing we need to consider.

Assuming we don't use a structure where every subscriber is an owner, and we go with something more along the lines of an LLC or an S-corp, how many shareholders should there be?  (Numbers could be reduced through things like indirect contributions through crowdfunding systems, though that's fraught with other perils.)  Note that if they're shareholders rather than part-owners, as in a co-op, at least we don't have to worry about running the business equivalent of the Athenian Assembly, only much larger, where everyone can affect every single decision.

More importantly, what should the powers of individual shareholders be?  My inclination would be to treat it like most (C) corporations, where shareholders act only indirectly, by electing the board of directors.  That just kicks things over to questions like, "How many, and which, people are on the board?" and then, "Who are the officers, and what are their duties?"

It's probably time to cruise through the SBA website again and take a look at these things.

The #1 reason I am not enthused about "Plan Z" is: if you only duplicate what it is legal to duplicate, you will not be any closer to City of Heroes than Champions Online. Probably farther away, because Cryptic had the good will of NCSoft in taking the project with them -- likely negotiating to keep some elements that were initially developed as part of the CoH franchise.

If Titan gets to the point where the only legal option remaining is to develop a new game (and that's where things should be before even considering it), then it seems certain NCSoft will be hostile to the effort and looking for any angle to claim IP infringement. The flexible AT class and power system is easily identifiable as a unique design, and that is the core of City of Heroes gameplay. If you've ever been a pen & paper RPG player this should be obvious -- under all the purty graphics and the very minimal twitch skill involved in the control scheme, that is the game. Just about everything else could be done differently and we might still recognize CoH under there somewhere, but not that.

So it bothers me to see so much energy spent right now on plotting and planning for this, which does not (can not) bring City of Heroes back in any recognizable way. The superhero theme is superficial.

If you ever get to the point that no other option remains, and you still have enough people willing to stay aboard knowing that systems inherent to CoH are off-limits, probably the best way to look at it is as a new game from scratch. It is possible to do better than City of Heroes' costume designer (very much so), it is possible to design less walled-in zones or even tech to stream map data for a contiguous map of an entire city (much larger boroughs, anyway), and it isn't even terribly hard to dream up a world more recognizable as the backdrop to superhero adventures. Maybe that would be enough to make it worth the effort...

Quote from: Mantic on September 11, 2012, 05:23:51 PM
The #1 reason I am not enthused about "Plan Z" is: if you only duplicate what it is legal to duplicate, you will not be any closer to City of Heroes than Champions Online. Probably farther away, because Cryptic had the good will of NCSoft in taking the project with them -- likely negotiating to keep some elements that were initially developed as part of the CoH franchise.

If Titan gets to the point where the only legal option remaining is to develop a new game (and that's where things should be before even considering it), then it seems certain NCSoft will be hostile to the effort and looking for any angle to claim IP infringement. The flexible AT class and power system is easily identifiable as a unique design, and that is the core of City of Heroes gameplay. If you've ever been a pen & paper RPG player this should be obvious -- under all the purty graphics and the very minimal twitch skill involved in the control scheme, that is the game. Just about everything else could be done differently and we might still recognize CoH under there somewhere, but not that.

So it bothers me to see so much energy spent right now on plotting and planning for this, which does not (can not) bring City of Heroes back in any recognizable way. The superhero theme is superficial.

If you ever get to the point that no other option remains, and you still have enough people willing to stay aboard knowing that systems inherent to CoH are off-limits, probably the best way to look at it is as a new game from scratch. It is possible to do better than City of Heroes' costume designer (very much so), it is possible to design less walled-in zones or even tech to stream map data for a contiguous map of an entire city (much larger boroughs, anyway), and it isn't even terribly hard to dream up a world more recognizable as the backdrop to superhero adventures. Maybe that would be enough to make it worth the effort...

Friend, there are 3 good reasons to entertain plan z:

1: By getting a rough draft started, we will be able to get a serious effort underway should the axe finally fall - goodness forbid.
2: By keeping the thought of COH surviving in any form, it keeps hope alive in this forum and in the gaming community.
3: We are already doing all we can short of harrassing potenetial investors, which to me sounds like a good way not to find one, by fooling around with plan Z we can stay connected on the speculative basis that was stripped from us when the game canceled the next issue.

Though I agree that it would be difficult, we can toe the legal line and come up with thousands of ideas for plan z. At any rate, why would NCsoft worry about trying to shakedown a community of gamers, over a franchise they decided to kill? Legal costs go two ways, and there is a good chance that they'de be wasting thier time and money in a fight they would gain next to nothing from.

Quote from: castorcorvus on September 11, 2012, 07:16:35 PM
Though I agree that it would be difficult, we can toe the legal line and...

I don't even think it's worth mentioning how difficult the task is. My point was: you can not toe the legal line and still recreate City of Heroes. Nor would any game developer really want to. Nope, probably not even Matt Miller, who's been there and done that. When you are looking at working for many months or years to realize a game, you want to put your fingerprint on it and do something that hasn't been done. Worse, unless you have a Peter Molyneux, Sid Meier, Will Wright or similar authoritarian design lead, that applies to just about every contributor -- leading to a product that doesn't look much like anything anyone imagined going in (been there).

It's cool if this situation lights your fire and you're inspired to jump into game development as an outlet for the creative energy you were putting into your CoH life. But City of Heroes players should not assume that you can or will recreate this experience, or throw their money at your project based on such an unrealistic expectation.

Quote from: jacknomind on September 11, 2012, 11:19:09 AM
It isn't authority.  It's how much XP you're worth when defeated.

This is the first post on these boards, since "the hammer dropped," that has made me laugh out loud!  Thank you. :)

I would add to castor's points that it gives some of us something to do.  For many of us, sitting and waiting does not come easily.  The letters are written, the media contacts are being explored, and the social media is being stroked.  Aside from the letter, that takes a few minutes. Then what?  We know that there are people who can do things, and they are doing them and keeping us as up to date as they can.  For some of us, it's put focus into something like Plan Z or troll dissenting bloggers and news articles.

The usefulness of Plan Z, whatever the ultimate outcome from negotiations with NCSoft, is still there.  If the game is saved, then there is a wealth of stuff for people to start building in Architect. If the game is saved but not the studio, there's the potential for at least some of the ideas in Plan Z to make it to whatever studio ends up taking over. I had to have this explained to me, too, but it's not a wasted effort, as long as it doesn't detract from the main effort.

Yes, something will be lost if Plan Z has to be fully developed.  It's a spiritual successor, and one of the biggest aspects, for me, of CoH was that is was a game by fans for fans.

That's Plan Z.

I actually think a (C) corp would be cleanest, all around, but...

On the prospect of selling shares: anyone familiar with SEC rules and regs?  Assuming we went the corporate route, how much issue is there with selling shares on a nationwide basis to people who are not licensed investors?  I'm not sure of all the rules and restrictions, but I've watched people get orange jumpsuits for seemingly similar efforts... not an item high up on my to do list. 

My vague recollection is that a private company selling shares is limited to employees and family.  Going public means getting the SEC, FINRA, and so on involved... none of which is free.

And the above is a big part of why a cooperative sounds so intriguing...

OK, one thing that isn't yet clear, and likely won't be until we hear some actually actionable (settle down, lawyers!) news from NC or Paragon or someone else actually at the negotiating table, is what our precise intent is going forward. Right now, we're a mob.  There are some clear leaders and organizers, and more than a few vocally active participants, but it's still not any kind of body that fits any other label.

Let's say, just for the sake of argument, that I had a cousin who was high up in the legal department of a major corporation in Detroit. How would I intelligently phrase a question to this hypothetical relative as to what our best options would be, completely throwing out the option of me saying, "Hey, Cousin, can you read this forum thread and give me your opinion?"

Based on this thread and a couple of posts over in Sunset, I know what it is that we're trying to figure out, but how would I phrase an intelligent question to a lawyer who is, you can well imagine, very busy?

Quote from: dwturducken on September 12, 2012, 03:32:05 AM
Let's say, just for the sake of argument, that I had a cousin who was high up in the legal department of a major corporation in Detroit. How would I intelligently phrase a question to this hypothetical relative as to what our best options would be, completely throwing out the option of me saying, "Hey, Cousin, can you read this forum thread and give me your opinion?"

Based on this thread and a couple of posts over in Sunset, I know what it is that we're trying to figure out, but how would I phrase an intelligent question to a lawyer who is, you can well imagine, very busy?

Good question.  The following points apply to getting legal advice in any situation, really.

First, lawyers like it when clients have recognizable goals.  That doesn't have to be something legalistic, like "form an S-Corp."  Rather, it's a goal in the sense of, "We want to save CoH."  Make that clear right up front.  You also need to explain what you're seeking advice on- forming some kind of business entity to attempt to buy and hold the rights to CoH or develop a spiritual successor to it.

Second, you need to provide some factual background.  This may take a while, particularly for someone who doesn't know much about MMO's!  The attorney needs to know what's happening so far to accomplish your goals in non-law ways (like the letter-writing campaigns to NCSoft, etc.).  All of this is necessary so the lawyer can help you develop a plan of action going forward, whether that means doing what you came in to ask advice about or not.  In particular, you need to educate the lawyer about the business you're thinking of going into (here, MMO publishing and possibly development).  That will help the lawyer with things like figuring out how distributed or concentrated you might want authority to be.

For a tl; dr summary, you have to tell your cousin what the situation is (which may take a while), then say players are considering a player-owned publisher (and developer, should this turn into a Plan Z rather than a save CoH situation), make it clear that it may be difficult or impossible for players to get their hands on the IP rights involved (that step's critical; it isn't like NCSoft is eager to sell to a bunch of people it's never heard of), and then ask what kind of business entity might be best for what the players are trying to do, along with the obligations that entity would have meet to get formed.

The last few posts have included some discussion on that point.  I hadn't even considered things like SEC registration and the like (which is embarrassing, since my best friend from law school is married to an SEC attorney), but yes, all those things would be issues in a C (regular) Corporation.

By the way, while it isn't strictly a legal issue, I recommend checking out Ms. Lackey's most recent post in the "news?" thread, which has a quote from Paragon Studios (ex-)manager Brian Clayton explaining that negotiations are still ongoing.  I point this out because it's important to remember that player ownership and player entities are the backup, not even the second line of defense.  If "get NCSoft to keep the game going" is Plan A, "get NCSoft to sell it to another publisher" is Plan B, and "a new MMO made by ex-CoH players" is Plan Z, a player entity buying the publishing rights to existing CoH is no closer to the beginning than Plan E or so.

Before people go bouncing off and forming a new entity, though, I urge some thought about where the $10-12 million the entity would use to purchase the IP rights involved is going to come from.  I enjoy the Plan Z discussion as much as anyone, but that's something of a separate issue.

In terms of acquiring the IP, its possible that a non-profit organisation may have an advantage, as NCSoft could in theory just donate them and take the fair market price for them as a tax deduction. That may be attractive to them, as it may be worth more than they could actually realisticly sell them for.   Is it possible that a literary organisation dedicated to the preservation and proliferation of the body of work (both initally contained in the IP and in the unique community based colabarative work that is the Mission Architect) could be legally created? Such an organisation could take donations (including subscriptions like other such organisations do) and use them to pay other companies (hosting, development, advertising) to provide services which meet their stated goal?

Quote from: DrDarkspeed on September 13, 2012, 02:42:19 AM
In terms of acquiring the IP, its possible that a non-profit organisation may have an advantage, as NCSoft could in theory just donate them and take the fair market price for them as a tax deduction. That may be attractive to them, as it may be worth more than they could actually realisticly sell them for.   Is it possible that a literary organisation dedicated to the preservation and proliferation of the body of work (both initally contained in the IP and in the unique community based colabarative work that is the Mission Architect) could be legally created? Such an organisation could take donations (including subscriptions like other such organisations do) and use them to pay other companies (hosting, development, advertising) to provide services which meet their stated goal?

Not necessarily.  NCSoft is a foreign-based corporation.  How much anyone can write off as a tax deduction is limited, and for a Korea-based corporation, even less.  I have zero knowledge of Korean tax law and very, very limited knowledge on international tax law, but as far as I know they would not be able to take the full amount of the Fair Market Value as a deduction.

The rules and regulations the IRS has for creating non-profit organizations has been tightened in recent years.  Since in reality any re-iteration of CoX should turn some sort of net gain just to maintain servers (and future upgrades/replacement as needed) and pay whatever staff is on hand (especially if there will be continued development of the game), then I seriously doubt non-profit is the way to go with this venture.

IANAL.  My familiarity with the tax law comes from my personal experience in writing training manuals for IRS employees (which does, strangely, give me a chance to see many aspects of the process). But even common sense should rule that a game company is not a non-profit from a normal perspective.

Olantern, it sounds like the first and second points are more questions to put to Tony and his formal team, and they're doing more immediately productive things, as well as trying to drive a herd of cats (us) through the wilderness.  I'll cull through the various threads to see if I can distill some kind of answer to those, get something coherent written up, and throw it in the inbox of one of the formal team members for approval before I send anything off.  It's purely hypothetical, both in the line of question that I want to ask, and in whether this cousin really does what I hope she does.  I know what company she works for, and that she's not at all low in the food chain, but whether she deals with the kind of stuff that would answer some of the questions we have as far as a potential direction is uncertain.

I also have another cousin just out of GWU who does practice corporate law, but I don't know if he would be any more knowledgeable than any of you other lawyers, because he's still green and just starting out in a firm.  He may do more than get coffee and fetch files...  :)

Point being, no one's shooting off anywhere, but it occurred to me that I might actually have a line on filling in some of the gaps. Like I said somewhere else, some people just need to feel like they're DOING something, even if it means research.

Yeah, it might not be possible. Its just one, crazy, potential way that NCSoft might end up with more money by giving it away than we could possibly raise in a lump sum to buy it. I'd guess we could maybe raise $1-2 million with direct donations/kickstarter. If NCSoft could write off more tax than that by giving it away, then its at least an option.  The nature of NCSoft as an international comapny does indeed complicate things. On the other hand, it also means that there is no particular reason why any such organisation need be US based, so even if the IRS says no, the USA could, potentially at least, be entirely sidestepped.

And the entity that got the rights wouldn't be a game company. They would employ one to develop/maintain a game that helped achieve their goal. Like an educational charity getting a developer to make an educational game. Or a museum using their donations to pay to have exhibits built. No profits, all incoming money is spent on achieving the mission of the organisation.

In reality, it is almost certain that the first money raised by anyone would have to be spent on actual lawyers with expertise in these areas.

Quote from: DrDarkspeed on September 13, 2012, 02:42:19 AM
In terms of acquiring the IP, its possible that a non-profit organisation may have an advantage, as NCSoft could in theory just donate them and take the fair market price for them as a tax deduction. That may be attractive to them, as it may be worth more than they could actually realisticly sell them for.   Is it possible that a literary organisation dedicated to the preservation and proliferation of the body of work (both initally contained in the IP and in the unique community based colabarative work that is the Mission Architect) could be legally created? Such an organisation could take donations (including subscriptions like other such organisations do) and use them to pay other companies (hosting, development, advertising) to provide services which meet their stated goal?

It's something worth researching, especially since the COH community does so much charitable work in general. There would certainly need to be an option to maintain a reserve for server improvements, hiring more staff, and other such expenses, but theoretically it COULD be set up so that any *profits* beyond expenses plus future foreseen expenses are turned towards charitable purposes.

Given that the majority of us are US-based, I think it would be fairly difficult to justify forming an non-US corporation. And I'm rather loathe to do that except in a worst-case scenario. Obviously, if it's the only way to get the rights to COH, then of course we should look into it.

Quote from: dwturducken on September 13, 2012, 03:44:51 AM
Olantern, it sounds like the first and second points are more questions to put to Tony and his formal team, and they're doing more immediately productive things, as well as trying to drive a herd of cats (us) through the wilderness.  I'll cull through the various threads to see if I can distill some kind of answer to those, get something coherent written up, and throw it in the inbox of one of the formal team members for approval before I send anything off.

Please have them contact me as well with whatever they come up with.  I very nearly contacted a colleague who does community development (helping people form entities, both regular and nonprofit) clinical work today.  This is the kind of person who can provide more conclusive advice on things like choice of entity and for-profit vs. non-profit, as well as some general startup issues.  But since I don't know what the plan is, I realized I wouldn't know what to ask him.  I have some contacts, but I'm not sure what the plan is, if there is one.

If there is some kind of Plan B being considered by folks here in Titan-land (aside from those of us just tossing ideas around in this thread) that might require legal advice, I'd like to know so that I can help get that information into the hands of people who can help.  (Especially, as I noted a few pages ago, if they're people who can help for free.)  If any administrators or organizers are reading this, please let me know, either in this thread if you think it appropriate or via PM or e-mail if you'd prefer it that way.

The Nuclear Option- Player Suits Against NCSoft?: Part One: A Very Brief Overview of Fraud

Recently, someone (probably a player with some business expertise) posted a "white paper" on NCSoft's shutdown of CoH to a blog.  It summarizes many of the points that have been made in these fora about how bad a decision this was from a business standpoint.  If you haven't read it, I recommend taking a look at it.  It summarizes a lot of good points in pretty clear language.

But one paragraph got a lot of people excited.  It discussed the possibility of "fraud charges [sic] against NCSoft in the U.S. and U.K. courts."

Several posters here, including one very prominent and respected one, have expressed interest in the writer's suggestion that players could institute a class action against NCSoft for fraud.

Before I go any further, let me state again, emphatically, this is not intended as legal advice.  If you really want to investigate the possibility of a lawsuit against anyone, consult an attorney of your choice, preferably in person.  I cannot stress this enough.  This post, and all my others on this forum, are not intended to tell you how to manage your legal affairs, nor are they intended as offers of representation.  The decision of whether to sue belongs to the client (that's you, in this scenario), after consulting with a competent attorney.

In my view, while players probably could begin such a suit, it would not be a good idea, because it's unlikely to be successful.  This is definitely a case where "could" is not the same as "should."  The risks, costs, and challenges are probably greater than the potential rewards involved.  Most importantly in "bottom line" terms, this is not a route to get NCSoft to reinstate CoH or to obtain the IP rights to the game.

There are two broad areas of problems in any such suit against NCSoft: procedure and substance.  These terms get tossed around a lot in the law.  "Procedure" is the law of "how legal stuff is done."  It deals with things like how and when lawsuits are filed, how motions work, how trials work, and the like.  "Substance" is the particular law at issue in any given case.  For instance, in a criminal case where someone is accused of robbing a bank, the relevant substantive law is the criminal law of bank robbery. 

Here, the procedural law is the law of civil procedure in the federal courts, and the substantive law is the law
of fraud.  This post deals with the substantive issues.

As I understand the problem, the argument is that players were defrauded by NCSoft because it misled them into believing CoH would not be shut down when it was.  So, is there fraud?  I'd say "probably not," based on the evidence available to us at the moment.

Fraud, in most jurisdictions, requires five or six elements to be proved.  Think of the elements like a checklist.  If the plaintiff (the player, here) can't prove them all, he loses.

First, there has to be a false representation.  Second, that representation has to relate to a material fact; it isn't fraud if someone lies about something unimportant.  Third, the defendant has to know the representation is false when he makes it.  Just doing something by mistake doesn't count.  Fourth, the representation has to be made with the intent to deceive.  Again, just a "mistake" isn't enough.  Fifth, the plaintiff has to have taken some action in reliance upon the representation.  Some jurisdictions also require a sixth element, that the plaintiff has suffered some kind of damage (usually, loss of money) due to the fraud.

Notice how several of those elements follow on from the first one.  If the plaintiff can't show the defendant made a false representation, then the whole case suffers cascade failure like a scrapper under attack by Vanguard.

In most jurisdictions, all the elements have to be proved by "clear and convincing" evidence.  That's less than "beyond a reasonable doubt," but it's more than "a preponderance of the evidence" (i.e., a tiny scintilla more than 50%), which is the standard for most civil actions.  Proof by clear and convincing evidence isn't an easy standard to meet.

Here, I think there are problems for the potential player-plaintiff with several of the elements.

First, I think NCSoft can believably argue that it didn't make a false representation.  A false representation doesn't have to be an active lie; it can be an omission, as the plaintiff would argue in this case.  For instance, it can be fraud to sell someone a house with a cemetery in the basement without telling the buyer. 

But I'm not sure NCSoft made that kind of omission here.  It never told anyone "the game will last indefinitely" or even "the game will last three months."  It never even stated that players would be able to spend the Paragon Points they'd bought on anything.  Indeed, it stated in several different places that it reserved the right to discontinue services at any time.  The sole evidence for the alleged misrepresentation is that development and sales were ongoing until the announcement of the shutdown.  Personally, I don't think that's enough to constitute a misrepresentation.

I would argue (and you can bet NCSoft's attorney would argue the same to a jury) that the situation here is more like that of a cleaning service or other subscription-based business that suddenly goes out of business.  If such a business shuts down, its customers are entitled to damages for the unfulfilled portion of their contracts (which NCSoft is paying here, as Aggelakis has pointed out in large letters in the thread that inspired this post).  But the service hasn't defrauded the customers, no matter how suddenly it shuts down.

The first element is a major stumbling block because several of the other elements, like the fifth, rely on its being present.  No false representation, no action taken based on one, no knowing misrepresentation, etc.

But if the first element is satisfied, I think the second element is probably satisfied, too.  The fact at issue (how long the game will operate) is probably material.  However, a judge or jury not experienced with games might not agree with me.

The third element would be very difficult to prove.  There's simply no evidence that NCSoft knew when the players purchased their items that City of Heroes would be shut down.  What does it mean for an entity that isn't a single person to "know" something, anyway?  In my view, and I'm sure NCSoft would argue the same, it didn't "know" what its course of action with regard to CoH would be until it held a bunch of meetings and adopted a formal policy.  Discovery (a phase of litigation where the parties ask each other questions to look for evidence) might reveal otherwise, but to me, the circumstances suggest that it issued its press release almost immediately after it decided on the shutdown.

(Think how much this explains about how sudden the shutdown seemed.  If the shutdown hadn't been that sudden, NCSoft might have been vulnerable to fraud claims for the reasons people have stated in other threads.  More importantly from its point of view, it would have been incurring new contract obligations, and thus new damages to be paid in the event of the breach it was planning, every day.  It also explains why Paragon Studios employees didn't know until the public did.)

As an aside, if someone did start a fraud case, this would be one area where the plaintiff would want to focus his discovery: what did NCSoft know and decide, and when did it know it?  (I'll talk more about discovery in a future post.)

The fourth element, intent to deceive, is nearly always the hardest to prove.  This case is no exception.  Even assuming that NCSoft "told" the players the game would remain in operation by continuing to sell CoH material, there's no evidence that it did so not only intending to shut down the game, but also intending to trick players into buying things.  In actual cases, intent to deceive is usually proved by evidence of things like secrecy or hurriedness of a transfer (in cases about defrauding creditors, which are the kind I know best).  In a "standard" fraud case like this one, discovery would focus on trying to get a hold of internal NCSoft memos and the like, the documents that led up to the decision to shut down.  When was the first discussion of a shutdown?  More importantly, when did NCSoft first start considering what to do about player purchases (subscription, Paragon Market, etc.)?  It's doubtful there's a smoking gun along the lines of a memo saying, "Let's just let them buy stuff, but not give it to them and never refund their money," but you never know.  It's going to be very difficult to find this kind of thing.  These sorts of intangibles rarely get written down.

Also, littering. ;)  (Just kidding.)

I should mention that this lack of evidence isn't just a problem at the trial stage of litigation.  Fraud has to be "pled with particularity."  That means that, when you file your complaint to start off the lawsuit, you can't just say, "I believe NCSoft intended to deceive me."  You have to allege some support for the proposition, along the lines of "I believe NCSoft intended to deceive me because of the following five things I expect to prove at trial."

I think the fifth element is probably satisfied, assuming the first one is.  Players did indeed buy CoH material.  If the player-plaintiff wins on the first element, he probably wins this one, too.  Again, if the first element isn't there, this one isn't, either.

The sixth element, damages, is a major problem.  If players are given refunds, then they haven't suffered monetary damages.  From everything I've read, NCSoft has done a fine job on its CYA work here.

Overall, I just don't see a strong case for fraud.  But for those of you very committed to the idea of suing NCSoft, I urge you to consult a reputable attorney in real life.

Edited to complete a sentence, discuss more about intent to deceive, and include reference to littering.

Quote from: Olantern on September 18, 2012, 03:43:14 PM
The fourth element, intent to deceive, is nearly always the hardest to prove.  This case is no exception.  Even assuming that NCSoft "told" the players the game would remain in operation by continuing to sell CoH material, there's no evidence that it did so not only intending to shut down the game, but also intending to trick players into buying things.  In actual cases, intent to deceive is usually proved by evidence of things like

Things like?

Littering and...

Quote from: Codewalker on September 18, 2012, 05:32:09 PM
Littering and...

Littering and...

Quote from: DrakeGrimm on September 18, 2012, 05:49:25 PM
Littering and...

Oh, things like internal memos. 

Quote from: StarRanger4 on September 18, 2012, 06:43:27 PM
Oh, things like internal memos.

Right.  I edited the original "fraud" post.  This kind of stuff is hard to come by.  People rarely write down things like "I plan to trick someone."  Heck, they rarely write down things about mental states (which is what the intent to deceive element really aims at) at all.

I guess the thing to take away from the discussion on evidence for fraud is that those elements are the law's way of saying, "Are you really, really sure this defendant tricked you?"  Because that's so subjective, courts have developed these elements (over centuries!), and they require a lot of proof from a plaintiff in order to win.

I'll try to make some time to write up something about civil litigation and class action issues this evening.  Got to go teach now.

Well nobody is intentionally getting tricked when a moron climbs over a fence, breaks their neck jumping into a private pool, and then sues the owner for failing to post a "no diving" sign. Both forms of negligence result in a lot of damages, financial or otherwise. And it's not just us, but PS as well.

Something that the legal world still needs to acknowledge though, is that playing an MMO isn't just going to a store and buying something on a shelf. It's a frigging investment. In some cases, as big an investment as a car or an apartment.

Quote from: dwturducken on September 13, 2012, 03:44:51 AM
Olantern, it sounds like the first and second points are more questions to put to Tony and his formal team...

*lost...

What are the first and second points again?  I'll try to address them directly if I can.  There are a lot of posts with a lot of points, and I'm not sure what this is referring to.

Quote from: TimtheEnchanter on September 18, 2012, 07:08:48 PM
Well nobody is intentionally getting tricked when a moron climbs over a fence, breaks their neck jumping into a private pool, and then sues the owner for failing to post a "no diving" sign. Both forms of negligence result in a lot of damages, financial or otherwise. And it's not just us, but PS as well.

Right!  Just because someone didn't intentionally deceive you doesn't mean you didn't suffer harm.  It's just that the fact that no one intended to deceive means you can't get compensated for the harm you suffered by suing for fraud.  Maybe the harm you suffered isn't a kind the law recognizes.  Or maybe (and I think this is the case here), there are other forms of legal relief where you can recover your damages.  Contract law comes to mind.  As I've posted elsewhere, if NCSoft doesn't compensate you for what you've bought from it, such as a prepaid subscription, it's breached its contract with you, and you get damages for that.  (NCSoft knows you'd win a case like this, which is why they're making refunds.)

Quote from: TimtheEnchanter on September 18, 2012, 07:08:48 PM
Something that the legal world still needs to acknowledge though, is that playing an MMO isn't just going to a store and buying something on a shelf. It's a frigging investment. In some cases, as big an investment as a car or an apartment.

This is an interesting point.  I'm more inclined to suggest that being allowed to play an MMO grants you certain kinds of property rights that you don't get from buying a physical good off a shelf.  In some ways, you get less.  Your use of game code is limited by things like EULA's, which normally aren't an issue in buying a lamp off the shelf.  In other ways, you get more.  I think there could be an argument that you get certain IP rights, like the right to create some kinds of derivative works (i.e., your characters), which you don't get by buying an item off a shelf.  To my knowledge, MMO providers haven't even considered this concept.  At least, not in the way I just stated it.

These are complex, abstract concepts that haven't even been thought about by practicing lawyers and judges, to my knowledge.  But they might give hints as to where the law could go over the next twenty years.  (Not that this helps us much with keeping CoH alive.)

I want to find some time this week to contact a colleague, a professor who's written a lot about IP law as it relates to fan fiction and the like, as well as what IP law means in popular discourse.  (I saw her speak a couple years back at a panel on "Comic Art and the Law"; interesting discussion- post here if you want to hear about it in more detail.)  I wouldn't expect some legal revelation or mainstream media coverage out of it.  (Academic legal writing is even more "niche" than gaming journalism, if you can believe it.)  But at least it'd be a chance for Save CoH's efforts to contribute to the evolution of the law in the future.

Quote from: TonyV on September 18, 2012, 07:19:56 PM
*lost...

What are the first and second points again?  I'll try to address them directly if I can.  There are a lot of posts with a lot of points, and I'm not sure what this is referring to.

I think 24 hours or more elapsed between my post and his reply. Yes, the more I look at the depth of field involved in trying to find a cohesive vision here to try to formulate intelligent questions is beyond my ability within the amount of time I am able to devote to it (I have classes, work, and a project that I promised to deliver by end of this month, plus all that annoying parenting :)).

It may be that just briefly lay out Plans to my two cousins (one a high ranking exec in the legal department of a major corp, and the other just out of school and working corporate law at a firm in St Louis) and direct which ever one doesn't ROFL to this thread and Olantern

I just saw this post on the front page and read the two opening ones, and wanted to say: thank you. This is all very well-thought-out.

While I am one of those who is in favor of hastening the "gather some money - or at least pledges thereof" movement, I agree that, if anything resembling a reasonable amount starts to accumulate, we will have to swiftly incorporate - and yes, I do believe a corporation is the right way to go.

I will look forward to reading more of this thread as I have time (I'm at work right now, so can't spend too much even while waiting for a simulation to finish).

But one thing I want to reinforce from your second post: This has to be a business when it's completed. It may not need to be a gigantic money-making operation on the par that NCSoft wanted it to be (and apparently found it wasn't), but it needs to make a profit, if only to pay all its hard-working employees, maintain the servers, develop new content, etc. Money makes the world go 'round.

Given what I understand of the situation, my initial goal in running this thing would be to continue operations more-or-less as-is, just to see what the profit margins are and to see that it CAN maintain itself. The goal is the continuance of this game, at least on the part of the crowd-source donors. It would be grossly unfair to change things out from under them on short notice. That said, efforts to improve its profitability are not to be avoided; it has to make money in order for it to survive.

So: we want to initially keep it going as-is, but acknowledge that some work in pricing structures or marketing schema may need to be done. Stagnation is death; innovation is risky; but risk is life.

Anyway, I think we should seriously consider who wants to be "in" on forming this corporate entity to make this a credible offer. I obviously do; I have not played the game in years, but I sense a genuine opportunity to keep something people love going and perhaps make a small profit. And it IS the ONLY MMO I have played for more than a few levels, ever.

But good intentions pave hell; wisdom and hard work build the towers of heaven (if you'll forgive the florid phraseology). So, thanks again to the OP for his legal insights. We can do this, people. At the very very least, we can get to a point where we will be able to have genuine business discussions with representatives of NCSoft.

Again, I don't want to crush hopes and aspirations here but "Hey look, we can raise $1000 in 45 minutes" does NOT translate into "Hey we can raise TEN MILLION DOLLARS."

That's the kind of ballpark money you are looking at to acquire the IP, Code, Servers and a REDUCED staff of former Paragon employees.

I think just to acquire the IP and Code from them will take AT LEAST a million.  That would require 100,000 of us to put in $1000 each.  We don't have 100,000 of us, right now we have...3,000 and some change.  And a goodly percentage of those 3,000 don't have $1000 to spare.  More like $100 or $10 or $1.

Just laying out some simple numbers for you.  Now if any of you actually know a venture capitalist with $10 million to invest, all bets are off.

Your math is a little off. $1,000,000 (1 million dollars) is one thousand $1,000, not one thousand $100,000.

It would take 1000 people contributing $1000 each. It would take $10,000 contributing $100 each.

That's to raise a million, though. Which is a good starting point.

If you've got figures to back your estimates of $1 million for "just the code" and $10 million for "the whole thing plus a reduced staff," I'd be interested in hearing them. Because they sound suspiciously close to my "bare guess" figures, and I don't trust those. I am looking for more solid figures.

Quote from: Segev on September 18, 2012, 08:19:29 PM
Your math is a little off. $1,000,000 (1 million dollars) is one thousand $1,000, not one thousand $100,000.

It would take 1000 people contributing $1000 each. It would take $10,000 contributing $100 each.

That's to raise a million, though. Which is a good starting point.

If you've got figures to back your estimates of $1 million for "just the code" and $10 million for "the whole thing plus a reduced staff," I'd be interested in hearing them. Because they sound suspiciously close to my "bare guess" figures, and I don't trust those. I am looking for more solid figures.

I'm basing the $10 million figure on the figures the troll posted on how much it takes to run a studio and cut them in half, for a reduced studio, plus the amounts for the servers, which are NOT cheap (assuming the old servers are bought).  No matter what happens, running a studio and support staff costs money, and you need that up front, or you won't be able to hire people.

As for $1 million for the code, if it were purchasable at any cheaper rate, we would already have heard from Brian Clayton by now.  So I am assuming it is somewhere up in the stratosphere.

Quote from: Victoria Victrix on September 18, 2012, 08:31:16 PM
I'm basing the $10 million figure on the figures the troll posted on how much it takes to run a studio and cut them in half, for a reduced studio, plus the amounts for the servers, which are NOT cheap (assuming the old servers are bought).  No matter what happens, running a studio and support staff costs money, and you need that up front, or you won't be able to hire people.

He meant your figure of 100,000 of us putting in $1000 to get $1,000,000. If 100,000 of us put in $1000, that's $100,000,000, since that kind of math is strictly about the total number of zeros being discussed.  Your point was well taken, but we want to be sure the less math-inclined don't get discouraged by a misplaced decimal point.

$100,000,000?  Gee, that's about the price of a Ragnarok proc...

Quote from: dwturducken on September 19, 2012, 04:01:02 AM
He meant your figure of 100,000 of us putting in $1000 to get $1,000,000. If 100,000 of us put in $1000, that's $100,000,000, since that kind of math is strictly about the total number of zeros being discussed.  Your point was well taken, but we want to be sure the less math-inclined don't get discouraged by a misplaced decimal point.

This is why I always use a calculator when I actually have to work with numbers.  Words good, numbers bad.

Quote from: Victoria Victrix on September 19, 2012, 09:01:11 AM
This is why I always use a calculator when I actually have to work with numbers.  Words good, numbers bad.

King Azaz would be proud of you.  The Mathemagician, not so much.

http://www.gamepolitics.com/2010/05/10/real-lawsuit-over-virtual-property
http://articles.latimes.com/2010/apr/30/business/la-fi-lazarus-20100430
http://articles.cnn.com/2010-05-10/tech/virtual.property.second.life_1_linden-lab-virtual-land-second-life?_s=PM:TECH
http://www.law360.com/newyork/articles/5280/can-virtual-property-gain-legal-protection-
http://www.rivkinradler.com/publications.cfm?id=230
http://www.virtualjudgment.com/index.php?option=com_mojo&Itemid=26&cat=24

Quote from: Enson Red Shirt on September 20, 2012, 03:34:05 PM
[links redacted]

Those are all interesting examples of law being applied, or attempts to apply it, to online interactions.  I don't think they're helpful to our current predicament in a legal sense, though.

For those who haven't read the linked materials, the majority of them involve suits against the producers of Second Life by customers who purchased "virtual land" or other in-game materials in the game.  (I followed up some of the cases mentioned in the articles in legal databases to check on precisely what the plaintiffs alleged in each one.)  While the precise facts of the cases varied a little, all of them relied on some variation of a false advertising claim to seek recovery.

"False advertising" is a kind of action created by statutes, notably the Lanham Act (which governs trademarks) and various state laws.  For the purposes of this thread, it's pretty similar to fraud, which I discussed above.  The fundamental concepts are that the plaintiff alleges that the defendant made some material misrepresentation of fact, that it intended to deceive the plaintiff by doing so, and that the plaintiff suffered damages in consequence.

In the cases discussed in the links, Second Life players alleged, based on Terms of Service agreements and public statements by Linden developers, that they'd been told players had property rights in things they created within Second Life.  Later, Linden Labs changed the terms of its contract with players to say that it never intended to sell them such rights.  The plaintiffs alleged that this change constituted false advertising.

In those cases, the plaintiffs are at least arguably correct.  (The courts seem to agree; the plaintiffs in those cases won a number of motions and appear to have successfully settled some of the cases.)  Linden very clearly stated one thing ("you own X"), then changed to another ("not only don't you own X, but you never did").

In our situation, in contrast, NCSoft never stated that we held any property rights at all in anything in-game- not costumes, not text, not AE arcs, not items purchased with Paragon Points, etc.  On the contrary, it's consistently stated from the very beginning of the game that players never owned any of those things.  It's always claimed they were property of NCSoft.  Any belief otherwise comes from players themselves.  Thus, I don't see the potential for recovery on the same theory as those cases used.

Now, this isn't to say that players of an MMO shouldn't have some kind of right in things they create in a game.  An MMO isn't like a book or a movie.  In theory, at least, you can see it as a mutual creation by player and rights-holder.  But notice that I say "in theory."  There's a huge gap between theory and reality in law.  No court has even considered the idea I'm maundering on about, and I don't believe most courts would take it seriously.  I'm not saying that courts are right to think that way.

I'm not saying that people are wrong to feel betrayed by NCSoft, or even to feel that something was taken from us.  I am saying that no one has yet recognized even a hint of the idea that there's any "something" there to be taken.

Olantern is correct here, and the problem is that any legal action would be precedent setting action.  And that sort of lawsuit tends to be...expensive.  And long.  And go through a lot of appeals if the eventual ruling is in favor of the guy with the least money to burn. 

Short form: you could definitely pursue it, but it would be time consuming, very expensive, and drawn out. 

Since NCSoft is handing out refunds instead of time-on-another-game, that pretty much rules out the fraud or bait-and-switch (shorter, simpler, with lots of precedent) actions I had postulated in another thread.

You could also pursue another tactic--proving in court that all the time and effort you have spent in creating and leveling characters and buiding SGs and bases is actually worth something monetarily.  This, again, would be precedent-setting and thus time consuming, very expensive, and drawn out.

Face it, anyone with enough money can sue anyone for anything.  The question becomes how much you want to pour into it and when you start hitting the law of diminishing returns.  IMHO, you hit that pretty quick with either of these scenarios.

I think we need to be more focused on what paths we want to avoid for legal reasons and where we may have a fighting shot of the law acting as our shield.  We know we are going to savve this game.  We would prefer not to have tp sue anyone and don't really want NcSoft sueing us.  We hope to reach  some sort of amicable agreement with them....and if not we may very well end up in barely defined areas of law where they will either look the other way  and avoid potentially groundbreaking legislation...or we may have to defend ourselves.  Shields not swords.  Because swords are expensive and cut both ways...shields that can shelter our path through a world of grey is what I seak.

To put this another way, if it comes to legal action we want to be in a possition where it costs NCsoft less to throw us a bone then pursue litigation

Kudos to Mantic and Olantern, in no particular order.

Call me a pessimist - or a jerk.
The main thing I got out of the multi-page thread, aside from a brief overview of contracts and such, is that it is ...less than wise to think that any collection of personnel assembled - even the latest dev team - would be able to recreate the CoH MMO as a different MMO without stepping on NCSoft's property.

A different mechanic for defense, resistance, Tohit, accuracy, etc ...

(unless allowed for by the purchase or lease of multiple "sticks". )

In the end - the post makes me ask this question - why bother? If it's not going to be "the same" or very close to it - (painfully assuming Paragon Studios is unsuccessful in the negotiations - if they are in fact in negotiations) - then there's really not much point to the rest of it, is there?

It's been stated that it's the community that's so awesome, not necessarily the game - but for me, the two go hand in hand. One does me no good without the other. And, if it's a "new/different" game - why jump through all those hoops when there are other games already available?

I don't ask to be a gloomy gus - but for more insight - did I miss something?
If the end result is likely to be so drastically different from what we're trying to save - why are we trying to save it? (beyond trying for the game in its entirety)

Honestly I think everyone wants the goal to be saving the game in its entirety, which means SOMEONE acquiring IP/Code and rights.

Ukase's question is a worthwhile one.  A lot of the analysis in this thread points to unhappy, or at least unsatisfying, conclusions.

VV is right.  The ideal is to have someone buy the entire IP.  Much of this thread is devoted to explaining what "the IP" is and who the "someone" could be, given the strong player interest in buying the IP for ourselves.  And I think giving people some background on the contractual issues helps explain why things are happening the way they are.

To the extent that that isn't possible, another purpose of this thread is to warn players about the dangers of replicating CoH exactly without those IP rights.  Those dangers being the risk of getting sued successfully.  (Or trying a suit to change or set new precedent.  As VV explained, those cases are long, hard, and expensive, with particularly questionable chances of success.)

And a final purpose is to acknowledge that something like the Plan Z being discussed in City Sunset would indeed be "a new game developed by former CoH players," not "CoH reborn."

To a large extent, this information isn't here to provide answers so much as it is to get people thinking about what questions they need to ask and then answer themselves.

I haven't read the whole tread yet, but I want to add a precedent that I know of. When Activision decided to discontinue the Call to Power series, the allowed the fansite Apolyton to take over the code base and continue to support and patch the game. This happened in 2003 and they have at least maintained the code until 2011.

It's not open source, but it would accomplish exactly what we need if a similar arrangement could be made about CoH. Activision still owns the CtP code, but Allos the fans to maintain it for non commercial use.

See http://apolyton.net/showthread.php/139275-GENERAL-CtP2-Source-Code-Project-FAQ-%28v3%29?postid=4038268#post4038268

http://apolyton.net/showthread.php/139275-GENERAL-CtP2-Source-Code-Project-FAQ-%28v3%29

Quote from: RogerWilco on September 21, 2012, 10:03:24 AM
I haven't read the whole tread yet, but I want to add a precedent that I know of. When Activision decided to discontinue the Call to Power series, the allowed the fansite Apolyton to take over the code base and continue to support and patch the game. This happened in 2003 and they have at least maintained the code until 2011.

It's not open source, but it would accomplish exactly what we need if a similar arrangement could be made about CoH. Activision still owns the CtP code, but Allos the fans to maintain it for non commercial use.

That would certainly be one option.  It does depend on two things, though.

First, NCSoft has to be willing to sell or give away its rights.  That's entirely at NCSoft's option.

Second, that sale or gift of rights needs to include what the recipient wants.  NCSoft not only doesn't have to give its rights away; it doesn't have to give away any more than it wants to.  It can also attach conditions to the sale, like the "only blue houses with six rooms."  Remember the "bundle of sticks" idea from the first page.  In the CtP example, Activision gave away (i.e., sold for $0) the right to maintain the game, but with the limitation that the maintenance be for noncommercial use.  It's impossible for any of us to know whether that could happen here.  It's anyone's guess what, if anything, NCSoft is willing to put on the table.

In the "State of the Titan" thread, someone asked why negotiations for the sale of CoH were taking so long.  I posted this:

The parties' goals are clear.  NCSoft wants to wash its hands of the game entirely and not have the hassle and responsibility of running it any more while getting the highest possible price for the property.  Paragon wants the right to develop the game on its own terms without NCSoft's interference while paying the lowest possible cost.

Those simple goals turn hydralike when you start thinking through things that could happen in the future.  This is what contracts are about- covering contingencies.  If I had to guess, and I do, things the parties need to decide include:

- How much is this thing really worth, anyway?  I don't see Blue Book values for MMO's quoted very often.
- Once the parties agree on a value, is it calculated in dollars or won?  What if the exchange rate fluctuates violently once agreement is reached?
- How long does Paragon have to pay?  If it pays over time, does NCSoft retain a mortgage-like interest in the property?
- If "all rights" to the game are sold, can NCSoft still mention it in non-CoH advertising (e.g., "We sponsored the development of the innovative City of Heroes in 2004" in a Blade & Soul ad)?
- How long does NCSoft have to get rid of all references to and mentions of CoH in its websites and other materials (many are gone, but what about those pictures of Statesman)?
- Since the "new" Paragon hasn't formed yet, what happens if the parties agree to a sale, then it never forms?  Does the IP revert to NCSoft?  To all the potential devs as a collection of individuals?  Somewhere else?
- If someone sues Paragon and/or NCSoft about CoH, who defends the case?  If the plaintiff wins, who pays?  Does the kind of claim matter?  (This is one reason I'm so touchy about people saying they want to sue.  No one wants to buy a lawsuit.)
- What if Paragon wants to develop a new game based on the CoH property, either the game code (e.g., it's a game about zombie hunters, but it uses the CoH character progression system) or the story elements (e.g., a totally new fantasy MMO set in Oranbega at its height)?  Can it do so free and clear?  Or does it have to pay NCSoft a royalty?  Or can it not do that at all?
- How can NCSoft be sure its ex-employees aren't using proprietary information in maintaining an NCSoft-less CoH?  And if it can't, how much more should it charge to release the IP?  (This is the issue Segev raised.)
- If either party breaches the contract, what should the damages be?  In what forum should disputes be resolved (an especially sticky issue in an international negotiation like this)?

... and so on.  Every one of those terms (plus a zillion others, I'm sure) affects the price of the property and one or both parties' willingness to deal.  Of course, on top of all that, there are still the usual hassles of any negotiation, like the cultural issues others have already mentioned, too.  I don't envy the people working on this.  It looks simple to us from the outside, but there are as many potential issues as there are potential problems going forward.  That's why I'm being extremely patient and hoping both parties can get what they want.  That is the way that we will get what we want, too.

All that is out of our hands.  The best thing we can do is to continue to demonstrate that the game has a dedicated fan base that makes it both worth selling and a good buy.  Keep it up, everyone!

I'll just put a link (http://www.cohtitan.com/forum/index.php/topic,5275.msg55761.html#msg55761) to my response to it in that thread here. ^_^

So i quess the PLAY FREE FOREVER is not false advertising?

No, it's not. It's basically puffery (http://en.wikipedia.org/wiki/Puffery).

Quote from: Aggelakis on October 01, 2012, 07:05:50 PMNo, it's not. It's basically puffery (http://en.wikipedia.org/wiki/Puffery).

A little off-topic, I've always wanted to do what Will Ferrel did in Elf when he saw the "Best Cup of Coffee" sign.

CONGRATULATIONS!!! YOU'VE DONE IT!!!

Quote from: Victoria Victrix on September 21, 2012, 01:37:48 AM
Olantern is correct here, and the problem is that any legal action would be precedent setting action.  And that sort of lawsuit tends to be...expensive.  And long.  And go through a lot of appeals if the eventual ruling is in favor of the guy with the least money to burn. 

Short form: you could definitely pursue it, but it would be time consuming, very expensive, and drawn out. 

Since NCSoft is handing out refunds instead of time-on-another-game, that pretty much rules out the fraud or bait-and-switch (shorter, simpler, with lots of precedent) actions I had postulated in another thread.

You could also pursue another tactic--proving in court that all the time and effort you have spent in creating and leveling characters and buiding SGs and bases is actually worth something monetarily.  This, again, would be precedent-setting and thus time consuming, very expensive, and drawn out.

Face it, anyone with enough money can sue anyone for anything.  The question becomes how much you want to pour into it and when you start hitting the law of diminishing returns.  IMHO, you hit that pretty quick with either of these scenarios.

Waaaiit a sec... I thought I remember you saying that the player-created content, that is the players' characters and the AE story arcs that they create, belong to the player and not to NCSoft (although NCSoft has an irrevocable but non-exclusive right to use them). Is this not true?

Just wanted to chime in on the "Phoenix City" thing several pages back and the potential for action from Marvel against the use of that word... how about "Paradigm City?" Still keeps the "PC" initials too.

Quote from: LunaEclypse on October 01, 2012, 07:56:33 PM
Just wanted to chime in on the "Phoenix City" thing several pages back and the potential for action from Marvel against the use of that word... how about "Paradigm City?" Still keeps the "PC" initials too.

I assume (?) someone must still own the rights to Big O, and it's characters/setting, including Paradigm City.

I have been saying non profit would be the way to go and the pr would be great
not too long ago a group of friends and i were sick of donating to seti@home because berkley too 10% right off the top so we stareted donating servers and eventually formed it into a nonprofit within 3 months it was very cheap to doand you do not have to wait for the non profit status to kick in to start doing business people just cant write it off untill the paperwork is pushed thru now people donate to our non profit and we donate it as equipment so seti@home gets 100% instead of 90% you can start an llc for about 199.00 if you do the legwork also once you have the company you can do a merger with a clean shell company on the otcbb markets and use stocks and investors as a way to bring in needed capital all told can be done for under 40k if your smart about it i always keep a couple sole propriatorships sub chapter s and llc's on the burner if i need a new company fast

Nonprofits are not good for running ongoing products. The reason it works for your SETI donations is that you are literally asking for money as donations to support a project that donates server time to SETI. It is, effectively, a charity (albeit one for knowledge and research rather than people in need of life-preserving sustenance and shelter).

Asking for donations to a game won't work so well. Making people pay will, but better if you can monetize it in a "free to play" like fashion, as we've seen that that's a more reliably profitable scheme. The problem with a nonprofit is that it is both deceptive and under tremendous conflicting regulatory requirements. They can't, first and foremost, make a profit. However, they pay all their employees, including their CEO and other executives, and can pay them very well. But they can't pay them bonuses beyond a certain amount. And if they're netting a profit, they can only re-invest so much before it counts as violating their non-profit status.

In effect, non-profits struggle, when they're trading a good or service for money, to make enough not to go out of business but not so much that they are suddenly making a profit.

For-profit dodges the sillier of these "problems" by simply acknowledging that profits mean the product/service is desired and worth continuing to give.

I think the best option here is to make it a profit game, but with a pre-WoW business model for managing it (which in the minds of modern gaming companies, IS a non-profit game).

That means accepting it as a niche game, that will 'probably' never see a soaring population, and keeping costs low enough so that the niche population is all you need. If something amazing happens with the consumer reaction, then the operation can expand, but we can never lose sight of the fact that insane profits are not the primary goal.

I'm not sure what you mean by "pre-WoW business model." Please elaborate?

Quote from: Segev on October 01, 2012, 09:31:48 PM
I'm not sure what you mean by "pre-WoW business model." Please elaborate?

Millions of players meaning multi-millions of dollars to invest back into the game.

Okay, and by contrast, a "post-WoW business model" would be...?

i see no problem running it as a non profit model pay the staff pay the rent donate to charities like i said great pr

Quote from: Aggelakis on October 01, 2012, 09:34:49 PM
Millions of players meaning multi-millions of dollars to invest back into the game.

Yeah, that.  Before WoW, you were doing pretty good if you managed to capture a market that even approached what CoH did.  Post-WoW, anything that can't beat WoW's numbers has been considered unsuccessful.

Let's face fact here:  WoW is an anomaly.  I'd even go so far as to say that WoW is an anomaly within the realm of anomalies.  The minute someone starts comparing your subscriber numbers to WoW, you're toast.

"We're going to dump hundreds of millions of dollars into this new MMORPG we're developing because WoW has shown us that we'll get all of that money back and then some."

Quote from: Segev on October 01, 2012, 09:37:02 PM
Okay, and by contrast, a "post-WoW business model" would be...?

If the game doesn't have 500,000 (in some cases, millions of) players (to support the unbelievable amount of money being dumped into development and marketing), it's an epic fail to be taken out behind the shed and shot.

Just take a look at EQ as an example. In its heyday, EQ was a stunning success. In fact, it was the standard. If an MMO with that amount of success were made today, it would be an industry laughing stock.

Quote from: Segev on October 01, 2012, 09:37:02 PM
Okay, and by contrast, a "post-WoW business model" would be...?

Before WoW, having 100k subscribers was pretty great.

After WoW, having 100k subscribers is a huge disappointment.

dont know how many of you are in the south florida region i wont be there at the time of this meeting but if someone wants straight forward answers to what can be done feel free to take my invitation from one of my stock transfer agents



Dear Brian:

Please join us for dinner on October 3rd in Fort Lauderdale, Florida to discuss the current small cap market environment and challenges facing emerging public companies. We will be joined at dinner by leading attorneys, accountants and other experts who will discuss current issues involving the Depository Trust and Clearing Corporation or DTC. This is an opportunity to meet executives of other emerging public companies and the professionals who serve their needs as well as hear insights regarding many of the significant changes that are taking place in today's markets. We look forward to you joining us for diner and are including the details below: 


Wednesday, October 3, 2012 at 7:00pm
Grille 66 & Bar 2301 Southeast 17th Street at Pier Sixty-Six Marina
Ft. Lauderdale, Florida

For more information or to RSVP, please call us at (702)361-3033 or visit www.pacificstocktransfer.com/invited
I look forward to seeing you there.

Best regards,
Ralleigh Grandberry IV

FOR MORE INFORMATION:
Ralleigh Grandberry IV
(800) 785-PSTC (7782)
www.pacificstocktransfer.com

Quote from: Enson Red Shirt on October 01, 2012, 09:38:06 PM
i see no problem running it as a non profit model pay the staff pay the rent donate to charities like i said great pr

The problem with the part I bolded is that you can't do that beyond a certain point. I worked for a not-for-profit co-op a couple of years ago. A friend of mine still does. They periodically have a major, serious problem in that they cannot find enough legal places to spend the money they take in that is greater than their raw operating costs and are in serious danger of punitive fines that would take them from being "illegally profitable" to "having to lay people off."

Not-for-profit laws have a cap on how much you can pay employees, how much you can spend on "perks," how much you can donate to charities...the laws around them are grotesque because the only actual incentive to being one over being for-profit is tax-avoidance. The one I worked for also had a second imperative: stay not-for-profit so their customers would keep working with them, but that was a very specific market circumstance based on having a very specific customer set.

CoH is best served by a for-profit entity devoted to making the best game it can. If the owners want to donate profits to charity, that, too, is good for tax purposes and comes off as more generous because they had the option of keeping the cash.


As for "comparing to WoW," that's an idiotic thing to do. WoW is the industry LEADER. You might use them as a goal, but never assume you're failing if you aren't beating them. That's like assuming that every swimmer who isn't Micheal Phelps has failed at swimming. >_<

http://www.nonprofitexpert.com/faq/q1.htm

Quote from: Segev on October 01, 2012, 09:48:29 PM
As for "comparing to WoW," that's an idiotic thing to do. WoW is the industry LEADER. You might use them as a goal, but never assume you're failing if you aren't beating them. That's like assuming that every swimmer who isn't Micheal Phelps has failed at swimming. >_<

You'll get no argument from me on that point.

Problem is, investors in MMORPGs over the last 8 years or so haven't been smart enough to figure that out for the most part.  Now that they finally are figuring it out that WoW captured lightning in a bottle, you're seeing far fewer MMORPGs in development because investors who didn't get it and were just looking for "get rich quick" schemes have mostly been weeded out and taken their money on to what they think is the next big thing.

The best thing that this conceptual company could do regarding WoW is: whenever asked any questions about WoW, say, "We don't base our success on the success of WoW or any other game. It isn't a factor."

Though, I think just the idea of a company that is building a game based on the old way of doing MMO's, will at the very least attract the interest of a lot of gamers. There are so many who hate what MMO's have become since everyone became single-minded-ly focused on the illusionary WoW gold rush (it utterly murdered creativity, experimentation, and innovation), that even if the superhero genre isn't their thing, the company will still earn their respect.

Okay, because I'm still puzzled, when people are saying "don't get on the WoW gold rush" or similar, they're basically saying "don't make a WoW-clone?" Or is there something specific to the way WoW makes its money that they're talking about?

Quote from: Segev on October 01, 2012, 10:00:08 PMOkay, because I'm still puzzled, when people are saying "don't get on the WoW gold rush" or similar, they're basically saying "don't make a WoW-clone?" Or is there something specific to the way WoW makes its money that they're talking about?

No, it's not about HOW WoW makes it's money. Just the amount of money. Corporations don't think in the small scale with MMO's anymore. Everything has to be in the millions, if not billions. Ginormous customer base, ginormous funding, ginormous marketing, etc.

As for clones though... even dev teams that aren't intentionally cloning WoW, tend to be very skiddish at straying very far from that template. It's just how investors think. Everyone is afraid of doing something that hasn't already been tried and proven. There are a couple exceptions, but they're a tiny minority.

The WoW gold rush though, is the idea that anyone can make an MMO, get 10 million subs, and make billions from it. This idea has somehow been so ingrained into the business consciousness, that they pump tons of cash into developing a game, assuming they'll earn it all back (I'm looking at you, EA/Bioware). What somehow almost nobody in the biz realizes is, that goal of achieving what WoW did is completely unrealistic. WoW already had an unbelievable fanbase due to the Warcraft games. Blizzard has always been very loyal to their fanbase, and earned the trust of the players before they ever made WoW. And most importantly, WoW attracted people who previously weren't playing an MMO; a LOT of people. Today, more or less everyone who is interested in MMO's is already playing one. There is no untapped resource to draw on like what WoW did. If you want to gain those numbers today, you have to usurp the subs from other games, which isn't as easy, no matter how great your game is.

Quote from: Flying Code Monkey on October 01, 2012, 08:06:10 PM
I assume (?) someone must still own the rights to Big O, and it's characters/setting, including Paradigm City.

Well... shows how much I pay attention. I completely forgot about that show and wouldn't have remembered the name of the city even if I hadn't.

It would be nice to have a similar name to Paragon just out of homage though. Legal action wouldn't amount to much in pursuing a lawsuit against us if its just similar and the city itself looks nothing like what's in CoH.

What about "Pinnacle City?" Is that in something else copyrighted I can't think of at the moment? I'm sure the Pinnacle players would get a kick out of it. The zones within the city could just be named after our server shards as a tribute.

Or "Paradise City?" Or even "Paradice" for the punny misspelling? (We ARE gamers...)



Yeah, foolish to think you can duplicate WoW's base; they have that many players; you're mostly fighting Blizzard for that audience! If you want to tap an "untapped vein," you have to find a genre with a big following who don't play MMOs but who would enjoy one if their genre were represented.

CoH won't tap untapped veins, but it's got its miners in the richest of the superhero fan ore. ...and that metaphor is more than stretched enough, I think. c_c

Quote from: Segev on October 01, 2012, 11:21:26 PM
Or "Paradise City?" Or even "Paradice" for the punny misspelling? (We ARE gamers...)

Paradigm?

QuoteYeah, foolish to think you can duplicate WoW's base; they have that many players; you're mostly fighting Blizzard for that audience! If you want to tap an "untapped vein," you have to find a genre with a big following who don't play MMOs but who would enjoy one if their genre were represented.

CoH won't tap untapped veins, but it's got its miners in the richest of the superhero fan ore. ...and that metaphor is more than stretched enough, I think. c_c

Ore... lore... take your pick. Our miners will dwarf the competition, and the gamers will dig what we do. And the precious gems we find, will be both yours and mine. As for those 'other' superhero games, consider them bound for the Scrapyard.

Having owned a small business, and having dismantled it later...

Based on experience, I would say that a Corporation is the best way to go...I formed an LLC, but then, I was the only investor...so the interests of any other's stake were zero.

Here's why I think this would work best:

As an LLC, or a Corporation, there are limitations to liabilities as previously stated...however, by having the players own stock in the company, we can control who the executive officers are and the company's direction.

Annual stockholder meetings conducted by most publically traded companies also allow all shareholders to convene with the executives that operate the company, and the board of directors.  So you can essentially deal directly with them if you don't like their direction.

This does not have to be set up like a large company, but it could be if so desired.  The number of officers required varies based on the needs of the company.

Furthermore, each stockholder could still contribute to subscriptions and transactions as they would normally...but these shareholders would be entitled to dividends on profits earned quarterly.  This means if the game does extremely well, and continues to earn money, you will get money back in your pocket based on the provided dividends agreement with the company.

This will require an attorney to setup...however, I incorporated my business in an LLC for about $1100.00 in the state of Texas.  That figure may change by going to a corporation, and depending on the complicated nature of what we are wanting this entity to be, it could be as much as $10,000.00 for all I know...I haven't done research into this aspect yet, but it could be done.

Another hurdle to consider as well, is what location we want the corporation to be in, as some states provide tax advantages...(such as TX and NV having no state income tax for citizens or companies).

Company names are generally fairly easily found, and "reserving" one is a little more complicated...you would have to actually incorporate a business under that name to keep it from being taken by another company who is willing to pay the state to start that company.  Note here: Not all company names are taken in all states...for example...Joe Q. Public's Jet Ski Company in Oregon, does not mean that the name Joe Q. Public's Jet Ski Company is a taken name in any other state, unless that company has registered their name in that state officially...(likely under a DBA agreement or some other corporate action in that state...which is another matter entirely)

The next thing to consider...is how many shares are we selling and for what price?  The sales of shares will actually generate the startup capital, and so a kickstarter wouldn't be needed, although...we should be leary of this, as we do not necessarily want a large number of these shares to go to a competitor, or someone who could potentially gain 51% control of our company...so there should be some calculated strategy there to ensure that this does not necessarily happen.

On another note, the set share price is another thing to consider, in the IPA, you'll want to set a share price so that once the given number of shares to be sold have been sold, then you will have the requisite capital secured to continue your investment strategy and conduct your business...

All food for thought...

If all this hypothetical stuff is referring to Plan Z, I think maybe it would be a good idea to ask the talent--ie, the coders and writers--what they want.

Quote from: Victoria Victrix on October 02, 2012, 07:07:53 AM
If all this hypothetical stuff is referring to Plan Z, I think maybe it would be a good idea to ask the talent--ie, the coders and writers--what they want.

So far the general impression I've gotten is that we want to have a pool of potential names (for studio, game title, and city name) vetted by an IP lawyer, then presented to the community for a vote. :) The general consensus seems to be that we want to have Titan in there *somewhere*. There's a Phase 2 Planning thread in the Sunset forum that's addressing these subjects specifically right now.

Here are some posts from a thread where a poster (Sailboat, mentioned below) posted about the possibilities inherent in trusts and Section 501 entities.  This can also serve as my weighing in on the recent spate of "nonprofit or not" posts in this thread.

My First Post (on Section 501/Nonprofits):

Okay, as usual, this is not intended as legal advice.  While Section 501 is not my area of specialty, I do specialize in dealing with the Internal Revenue Code of which it's a part, and I've dealt extensively with trusts (often sham trusts, unfortunately) in a litigation context.

There are two interesting issues raised by this thread.  First, there's the issue of having the IP owned by a nonprofit entity.  While there's been back and forth on this, in my view, many expressing interest in nonprofits are simply acting from a kneejerk hostility to the idea of "profit" and other buzzwords usually associated with corporate culture, which many around here are using to conceptualize an enemy.  (I'm not saying that's what's happening in this thread, mind you.)  But "nonprofit" and "for profit" are really issues of recordkeeping and business (entity) purpose.

In legal terms, a nonprofit is an entity organized under Section 501 of the Internal Revenue Code.  Provided it meets the requirements of that section and the regulations promulgated by the IRS, the entity doesn't have to pay tax on its income.  The statute requires that in order to be exempt from tax, the entity has to fall into one of several categories, listed in 501(c).  These include the well-known 501(c)(3), entities "for ... charitable ... purposes," as well as things like labor unions (501(c)(5)), "clubs organized for recreation ((c)(7)), and over twenty others.  It's very difficult for something like an organization to develop and run an MMO to fit into one of these categories.  Courts and the IRS construe them pretty narrowly.

The regulations require extensive recordkeeping, particularly for 501(c)(3)'s, and the penalty for violating them is revocation of tax-exempt status.  It's very easy to violate them in a variety of ways.  (See the "Legal Considerations" thread for some discussion of this by someone who's worked with exempt organizations.)

Put another way, the only reason to operate as a Section 501 organization is to gain that exemption from income tax.  That's it; that's all.  Notice that there's no requirement that only section 501 organizations can operate for "charitable purposes."  Nor does being a for-profit entity mean the entity is solely concerned with profit at the expense of everything else.

What I think Sailboat's really trying to get at is that having the IP owned by a corporation isn't necessarily the best option if the idea is to keep the game running indefinitely.  This really sounds more like an argument for setting up an MMO as a co-op or some kind of corporate structure (not yet seen in the MMO world, to my knowledge) where players and only players are the shareholders.  See "Legal Considerations" for more on this.  (I should add that another is to have no one own the game at all and simply have everything given away free, which some people over in City Sunset have suggested.  This may or may not be viable, but it isn't the same as "a nonprofit.")

This brings us to the second point.  What is a trust, and what does that mean for an MMO?  I think I'll write that up as a separate post; be back shortly with more on that.

My Second Post (on Trusts):

So, trusts.

Trusts have been around a long time in the law.  The easiest way to think of a trust is to think back to the metaphor of property rights as a bundle of sticks.  In a trust, one person or entity gets the "benefits of the property" sticks, and another gets the "duties of ownership" sticks.  The one getting the benefits is the "beneficiary" of the trust, and the one with the duties is the "trustee."  The person who gives up the property to start up the trust is the "trustor" or "grantor" or the "settlor" (which always sounded like a Masters of the Universe character to me).  People (or entities) create trusts when they want someone to enjoy the benefits of something without enjoying all the rights (like something put in trust for a minor child) to it or all the burdens associated with it (like someone using a trust in estate planning to alter the tax effects of transactions).

Here's a simple example.  Jessica, owner of a stock portfolio that pays a lot of dividends, wants to provide for her minor child, Megan.  She wants Megan to get the dividends but doesn't want Megan to be able to sell the stock until Megan is adult and can make better financial decisions.  So she asks their friend Ray* to serve as trustee.  She signs the stock portfolio over with a "deed of trust," and the stock is held in the name of "Raymond Keyes, in trust for Megan Duncan."  Megan enjoys the benefits of ownership, such as the dividends, while Ray handles things like voting the proxies that stock owners get and the like.  As trustee, he's also responsible for maintaining the property for Megan.  In this case, that means that he can't sell it, and he also has the obligation to forward those dividends on Megan as he receives them.  In real cases, as Sailboat implied, the position of trustee is often (but not always) held by something like a bank or (rarely these days) a law firm.

Apropos of my previous posts, some trusts do qualify as nonprofit entities under Section 501 of the Internal Revenue Code.  However, the IRS keeps a very close eye on this.  (I know because I used to handle cases for the government where taxpayers abused trust structures.)  For instance, say Dean MacArthur, pursued by creditors who want his fabulous collection of ascots and other assets, decides to put his property beyond the reach of his creditors using a trust.  He conveys everything he owns to the Dean-O Trust Organization, Inc., as trustee for the benefit of Dean MacArthur.  Dean himself, of course, is the main officer of Dean-O.  In a case like that, creditors, including the IRS, can bring a lawsuit against Dean to get the property held by Dean-O applied to Dean's debts.  (This kind of situation is called "fraudulent conveyance" because Dean's transfer to the trust was a sham.)  The thing to take away from this is that in a legitimate trust, benefits and ownership (i.e., the trustee) have to be kept separate, or courts can disregard them, and the IRS will disregard them for tax purposes.  That last point means that even if Dean puts in the Dean-O trust documents that Dean-O is organized for charitable purposes and thus exempt from tax, the Service can still go after it as a taxable entity and deny its Section 501 status.

Now, we're finally ready to address Sailboat's thoughts.  If I'm reading the OP correctly, it suggests that NCSoft's primary concern is to avoid competition by CoH with its other games, leading it to avoid selling the IP to prevent a new competitor from arising.  (Personally, I don't believe that was the root problem with the sale to Formerly Paragon, but I'll assume it's correct here.)  Could a trust set-up of some kind solve this?

I don't think it could.  The same results could be achieved more simply with other legal mechanisms.  But I want to make sure I'm thinking through the proposed scenario correctly.  We have NCSoft as the trustor, a (nonprofit? for-profit? doesn't matter for this purpose) entity as the trustee, and, as the beneficiary ... I'm not real clear.  Players?  As I've pointed out elsewhere, "the players" as such don't have any legal existence.  The subscribers?  I've never heard of a trust entity that holds property "in trust for whoever pays X fee," but that doesn't make it illegitimate.  That idea sounds legally workable, at least in theory.

The problem comes with formation of the trust itself.  While the specifics aren't spelled out anywhere, I've got to assume the trust entity would be formed and administered by people with an interest in keeping CoH alive.  In other words, players, probably subscribers.  Again, we run into the Dean and Dean-O situation.  There's no separation between beneficiary and trustee, so the trust is likely to be declared not legitimate, at least for tax purposes.  Note that this isn't much of an issue if the trust organization isn't trying to operate as a Section 501 organization.

It's possible to preserve the spirit of Sailboat's suggestion through simpler devices.  As I've mentioned elsewhere, NCSoft, as the sole holder of IP rights in CoH, can sell or keep whatever rights it wants.  It could choose to sell limited rights in such a way as to prevent competition.  For instance, it could grant whoever's managing the servers (the trustee, some kind of player-created entity) a nonexclusive license to operate an MMO based on the property, nontransferable and revocable at will.  Here, basically, you have the trustee and the trust set-up, but without the beneficiary.  This can be done without the mechanism of trustee and beneficiary or the bookkeeping and other limits of Section 501.  Heck, any profits the licensee makes could be donated to charity, even if it isn't a Section 501 organization.

So, while I think there are some issues with the specifics and the legal issues here, I think the ideas proposed in the OP have some possibilities.

The problem, as always, is getting NCSoft to agree.

* I was going to use Synapse as the trustee, then thought better of it.

A follow-up post by Kheprera:

I cannot say much due to disclosure (*waves at the nice TIGTA** people*) but there are links posted in the Legal Considerations thread.  These links are on the public irs.gov website and contain plenty of information.

To me, and IANAA, running an MMO as a non-profit would be extremely difficult to justify.

**[Treasury Inspector General for Tax Administration, the government unit that monitors the IRS.  An IRS attorney once told me that a TIGTA rep made a special trip to their field office just to go through everyone's reports and books to see if they'd used the forbidden term "tax protestor."- Olantern]

gotta say i love being treated as if i know nothing i have discussed the issues with the game and how it could run things people seem to forget is that this would be a multi national corp or non profit as there are plenty of people in europe who play as for funding and how to get a company on the stock markets i know a thing or two

DoctorEvil@evilincorporated.us
chrischristierson@evilincorporated.eu
chrischristierson@evilincorporated.us
http://www.theofficialboard.com/bio/platmin/chris-von-christierson
http://www.forbes.com/profile/chris-von-christierson/
http://investing.businessweek.com/research/stocks/people/person.asp?personId=1161055&ticker=GFI:SJ&previousCapId=881155&previousTitle=FIRST%20QUANTUM%20MINERALS%20LTD

Hi, all.  I have been busy with real life stuff that past week and a half and haven't been able to keep up with this thread to the extent I'd like, but I have been monitoring the boards.

In the interest of trying to keep this thread a general clearinghouse for law-related information, we've seen a fair amount of discussion of EULA's and the obligations of publishers lately.

In this thread (http://www.cohtitan.com/forum/index.php/topic,5688.0.html (http://www.cohtitan.com/forum/index.php/topic,5688.0.html)), Sekoia noted that the terms of the CoH EULA allow NCSoft to shut down the service for "any reason or no reason at all."  While the thread quickly moves into a discussion of how heavily business should be regulated (really more a political and philosophical discussion than a legal one), several posters also weigh in on what they think a proper player-publisher contract ought to contain.  That thread sparked this one (http://www.cohtitan.com/forum/index.php/topic,5724.0.html (http://www.cohtitan.com/forum/index.php/topic,5724.0.html)), where elvinnsword (sorry if I misspelled your name, elv.) raises the possibility of an "MMO player's bill of rights."  This could mean an actual change in the law or simply a change in how EULA's are written.  Again, much of the discussion is political rather than legal, but the issue is interesting, regardless.

I have some thoughts on EULA's and the obligations of the parties to them myself, which I'll post here when I've had a chance to get my thoughts in order.  For now, I wanted to make sure everyone was aware of the existing posts.

For those specifically interested in Plan Z, the effort to develop an entirely new MMO to succeed CoH, there's also been a fair amount of "law-like stuff" going on in the City Sunset forum, particularly "Legal and Such" (which might more aptly be titled "Business and Legal," but you get the point).

Finally, I'd like to take this opportunity to point out, once again, that none of my posts on the Titan Network are meant to imply an attorney-client relationship with any entity or person.  If you need legal advice, consult an attorney with expertise in the relevant field.

I just posted this in a thread about ownership structures for Plan Z.  The issues it raises have more general relevance for anyone involved in the Titan Forums, though, so I thought it belonged here, too.  (It also touches on the same issues that have come up recently in the Save Paragon forum regarding what, if anything, an MMO player owns with respect to the game.)  You can find the OP in the "Funding, Ownership, and the Future" thread in "Legal and Such" in the City Sunset forum.

***

[Previous posts by others had raised the possibility of issuing new stock to each subscriber to an MMO.]

Stock ownership, the issuance of stock, and related matters are all heavily, heavily regulated, mostly by the Securities and Exchange Commission.  SEC regulations prescribe limits for when stock can be issued, how it can be issued, and how many investors different kinds of corporations can have.  Notably, they also control what rights and classifications can be attached to stock, such as whether corporations of a particular kind can issue both preferred and common stock.  (That last bit is especially important if one doesn't want new investors involved in certain aspects of governance or wants to influence who, if anyone, gets dividends.)  These regulations are also updated fairly frequently.

That paragraph almost exhausts my knowledge of SEC regulation, so I can't offer much more information here.  This (and the whole subject of this thread) is the sort of thing you discuss with a transactional attorney when you're setting up your business.

Aside from the legal problems, there are practical problems with a simple "subscription=ownership" model, at least if the business is a corporation of one kind or another.  (If the business is a cooperative, that's probably exactly the model to use, but cooperatives bring their own problems, such as an essentially democratic control structure.  Do you really want everyone you've seen posting on this board having a potential say in all the business's actions?)  First, as someone already stated, a corporation can't constantly issue new stock for legal reasons; it dilutes existing shareholders' shares.  But it also isn't practical from a "control of the corporation" standpoint.  If Plan Z, inc., starts out as a closely held corporation (in a factual, not the legal, sense) with ten or twenty shareholders, then issues new stock, even single shares, to the thousands of subscribers, there's suddenly an immense block of the corporation, all of which may have rights in the business, which that "close" group no longer controls.  In some cases, you may want that, but in others, it's a serious practical problem.

As a more general point, don't forget that ownership and control also potentially equal "liability."  If the business is a corporation and it's sued, every shareholder is liable up to the value of his or her stock.  If there's  a big judgment against Plan Z, Inc., say, by a Korean outfit who notices that the secret world takeover organization "Elba" is similar enough to "Malta" to justify a copyright suit, that's a lot of people who end up paying into the pot.  (And given what I've seen in other fora around here, those people are likely to be angry about paying for something they don't consider their fault, quite apart from anything law-related.  This is why liability is such a critical concern.)

So much for the "ownership" part; what about "control?"  Being an administrator of the business might subject you to liability if, for whatever reason, the business itself can't pay.  There are several mechanisms in the law that provide for this, essentially to prevent injuries from going uncompensated when a business vanishes, collapses, or otherwise ceases to exist.

For instance, one tax statute allows the IRS to go after "responsible persons" connected to a corporation that has failed to pay withholding taxes.  Whether a person is "responsible" is "a matter of duty, status, and authority," as one court put it.  That "status" can include status as an officer, director, or shareholder.  It's a highly factual inquiry, and the more you control with respect to a business, the more likely liability is to lie, which perhaps should be a concern to those heavily involved with administering Plan Z.  (You can bet some unlucky first-year associate or government trial attorney would be stuck reading through everything ever posted on the Plan Z fora in the event Plan Z, Inc. were sued.)

I say all this not to intimidate people, but to let you know that ownership and control are a big, big deal.  Further, it's a big, big deal full of traps for the unwary.  Or even the wary, sometimes.

***

[I also included this, on a totally different (and more fun) subject.]

In a totally unrelated matter, if you want to learn more about legal issues generally, I suggest picking up the recently released The Law of Superheroes, by James Daily and Ryan Davidson.  (No, I did not write this book, though I sort of wish I had.)  Written for a nonattorney reader, it applies real legal doctrines to various superheroic situations, dealing with issues like "Is the Joker legally insane?" (Answer: Probably not), "Does Superman violate the 4th Amendment when he looks through someone's wall?" (again, probably not), and "Can Spider-Man sue J. Jonah Jameson?" (yes, but not he didn't do it right in the comics).  For purposes of general Save CoH stuff, pay particular attention to the section on contracts, notably whether Johnny Blaze's deal with Mephisto is enforceable.  For Plan Z purposes, pay particular attention to the discussion of business law.

Contracts and IP Redux: EULA's and Their Terms

Introduction

There's been a lot of talk lately about EULA's.  Or, rather, there's been a lot of talk lately about how EULA's are bad.  Most of the talk has focused on provisions like that in the CoH EULA: "the service ... [may be] cancelled for any reason or no reason at all."  If you have an emotional investment in the service continuing to operate, that's a very troubling term to you.  Thus, much of the ensuing talk has dealt with ways to prevent terms like that from being included in EULA's, or at least to prevent those terms from being enforced, either through rewriting them or through development of aspirational documents, like the MMO Gamer's Bill of Rights.  (See the thread of the same name for more on the substance of that.)

I aim to deal with two sets of issues in this group of posts.  First, why does someone include a term like "shut down for no reason at all" in an EULA?  Despite some of the rhetoric I've read here recently, it certainly isn't just for the sake of being immoral or to inflict pain on people.  So why include it?  And what would happen if they couldn't, or had a term like "only shut down if the game's unprofitable" instead?

Second, what effect might a "purely aspirational" document have on someone's liability?  Public concerns, like MMO publishers, love making nebulous public statements about how wonderful they are, regardless of how much substance those statements have.  So why haven't more developers or publishers come up with purely aspirational goals, like the MMO Player's Bill of Rights mentioned above?  Again, rest assured that it isn't just to be nasty.

For you tl;dr folks, I warn you that this is a long series of posts.  (Lawyers are totally incapable of saying anything simply; the term "legal brief" is irony verging on sarcasm.)  Even then, I don't hit all the possible, relevant issues.  The best summary I can give you of the two points above is that publishers are absolutely terrified of being sued, especially for things they can't control, just like everyone else, but the issues are more complicated than that.

I also caution everyone that this isn't a one-sided "players good, publisher bad" situation.  In particular, if you're a Plan Z developer, you're the publisher.  I realize that people are angry, and they are right to be angry, but I also hope they can gain some understanding of what's going on in their adversaries' (not their enemies', take note) minds.

Part One explains what EULA's are in a legal sense.

Part Two imagines how litigation over the shutdown of an MMO might play out under various EULA terms.

Part Three details a fundamental legal (and moral) problem with certain EULA terms.

Part Four assumes an agreement that says something like, "The Publisher must keep this game operating."  If the publisher doesn't, what remedy do the players get?

Part Five deals with aspirational statements like the MMO Players' Bill of Rights that has been suggested.

Now, take a deep breath and dive into a sea of words.

As well, anyone with experience with writing business plans is politely begged to contact me.

Virtually all of the business plans I've written in the past have been done in an academic setting, so although I know how to do it, having people provide feedback on what I'm doing would be greatly appreciated. We can't afford any mistakes on this part.

Contracts and IP Redux

Part One: What's an EULA, Really?

Before we get to any of the important points people have raised recently, we need to define an "EULA."  End User Licensing Agreements are not just long chains of nouns.  In our context, they are a product of the legal system's (and parties') continual struggle to fit electronic material into the boxes of copyright doctrine dating back, originally, to the days before electricity.  It's been settled for centuries that a copyright protects the holder's right in the intellectual property of a work, unless the holder specifically sells one.  However, copyright only protects the holder's right in a particular copy of a work until the holder sells that copy.  Once the copy is out of the holder's hands, the purchaser can do what he likes with it: keep it, sell it again to someone else, destroy it, what have you.  This is called the "first sale doctrine."  (He couldn't use it as the basis of a new work of his own because that infringes the original holder's right to make derivative works, though, because that right wasn't sold with the copy.  See 17 U.S.C. Section 106.)

Now, this is straightforward enough when the copies in question are things like books or records, where the buyer would need a printing press or a record factory to duplicate them.  Even if the buyer wants to infringe the holder's rights, it's going to be hard for him to do it.  But when the copyrighted material is a program that can be downloaded and copied on a home computer, every potential buyer essentially has his own printing press.  Therefore, sellers of software (not always the original rights- holders, take note) developed EULA's to make it clear to buyers that they are selling only particular rights in the material.

I'm convinced that much of the internet community's hostility to property rights in general stems from the way it understands this issue.  (Much of the rest is due to the confusing way rights holders enforce copyrights, but that's a separate post.)  Most people I know through City of Heroes or its related fora (by far the majority of my experience with online communities) believe that electronic material they purchase is more like a physical book.  I.e., they can do whatever they'd normally do with things they own, which includes anything relatively easy to do, such as duplicating it.  Restrictions on use, which are implemented as restrictions on what's sold, are viewed as irrational acts of corporate greed.

Sellers see it very differently.  For the seller, the EULA isn't an act of greed.  If you want to characterize it with a negative emotion, consider it an act of fear.  (It's a rather horrible truth that much of law is a mechanism for frightening people or entities.)  The seller is, in many cases, not the original rights holder.  Sometimes, of course, it is, as with NCSoft, which owns all Paragon's products as works for hire.  Even if it is, it doesn't know what the buyer's going to do with that copy.  What if the buyer goes out and uses it to commit a crime (unlikely with most game software) or, more likely, uses it to inflict some civil injury on someone else?

It's a commonplace of tort law (the law governing civil lawsuits for injuries) that one party can be liable to a victim for injuries caused by a third party if the first person facilitated the situation.  For instance, if I hold a party at my house, someone gets drunk there, then kills someone in an auto accident, the victim's family could sue me as well as the drunk driver.  (This is why dinner parties faded as an American social institution by the end of the '80's, which is when the case that announced this principle finished percolating through the social consciousness.)  Returning to software, it's unlikely that the buyer could use the property to hurt someone physically or to damage property.  But the idea of facilitating an injury applies if the injury is to someone's emotions (say, someone uses the software to cyberbully or stalk someone) or to a nonphysical right, like someone else's IP rights.

Consider a couple examples closer to home.  Imagine there were no EULA for CoH.  What if you create Darth Vader in CoH, violating the IP rights of those who hold the rights to Star Wars and related works?  Bringing things a bit closer to home, what if you create Skandranon Rashkae, the Black Griffon, in CoH, violating the rights of his author and illustrator to create derivative works based on the novels in which he appears?  In the first case, some combination of George Lucas, Lucasfilm, and Paramount could sue you, but they could also sue the seller for making your infringement of their rights possible.  In the second, Ms. Lackey and Mr. Dixon can sue both the infringing player and the seller who made it possible.  (I use this second example advisedly, to show how this can involve a real person.  Copyright isn't just a tool for big, corporate meanies to pick on people.  It protects works in which authors or other creators have made an actual investment of time, effort, and, often, emotion.  To put it another way, the solution to everyone's woes here is not "get rid of IP rights.")

And, in most cases, the player will be relatively poor.  The player may even be "judgment proof," which is lawyerese for "he's not worth suing because he can't afford to pay anyone."  Thus, the real target for recovery ends up being the seller.  Make no mistake, the seller is right to fear this.  This kind of lawsuit happens in the real world fairly regularly.  One well-known case involved a suit by author Harlan Ellison against a fan who posted Ellison's work on a website.  The suit against the fan was settled fairly early on, but the suit against the website, which merely facilitated the fan's infringement of Ellison's right to distribute (or refuse to distribute) his work on the internet, dragged on for some years.  Closer to home, you may remember the Marvel lawsuit against NCSoft and Cryptic from some years back.  Marvel's claims tracked what I just described almost exactly.  (Marvel lost because it failed to establish, or even allege, a critical fact: whether anyone had actually infringed its rights.  No infringement, nothing to facilitate.  Oops.)

To avoid those sorts of situations, sellers developed EULA's.  An EULA, in legal terms, is a contract that makes it really, really clear what property's being sold and what isn't.  For instance, it can establish that the ability to use the copy to infringe someone else's rights isn't being sold.  (Nearly all EULA's do this in one way or another.)  This may not be enough to stop a lawsuit for facilitating infringement dead in its tracks (notice how NCSoft didn't rely solely on the terms of the EULA in its arguments against Marvel), but it's much better than nothing.  It's one line of protection against that potential lawsuit.  In the absence of an EULA that says "no infringing use," the seller risks a lawsuit that costs money to defend even if it's totally frivolous, a lawsuit that would probably mean the loss of someone's job for letting that suit slip through.

(Legally irrelevant aside, feel free to skip:  This isn't likely to be the CEO of the seller, who knows too much about other aspects of the business to fire over this, or the partner at the law firm who billed the time for the contract (ditto).  It's more likely mean the second-year legal associate who actually wrote the EULA (who went thousands of dollars into debt to get her law degree because everyone told her "just college isn't enough any more") and her opposite number at the seller, who said, "I dunno about this law stuff.  Write something that's, you know, safe."  I think it's hard for people who haven't worked with large organizations, like businesses, governments, or universities, to realize how important it is for people to find someone to blame as a coping mechanism or to realize how serious the consequences of being the one who takes the blame can be.  If your answer to "why punish the attorney or the guy who dealt with her" is, "If you join an organization, you deserve whatever you get," then ... we have irreconcilable philosophical differences, I guess.)

So, now, we know EULA's are limits on an exchange of (intellectual) property rights.  That means they are also contracts.  With a few exceptions (transfer on death and squatting, mainly), any time you're transferring rights to property, whether it's rights in land, a physical thing, or IP, you're using a contract to do it.

Notably, EULA's are almost always "adhesion contracts."  This legal term means, essentially, that only one party, the seller, comes up with the terms.  The other party, the player, merely gets the option to take them or leave them.  We care about this because courts construe contracts of adhesion in the terms most favorable to the party who didn't draft them.  This is also important we consider the concept of unconscionability, below.

Contracts and IP Redux

Part Two: What Reason for "No Reason at All?"- The Slough of Litigation

As I mentioned in an earlier post, parties can contract for nearly anything.  And that brings us (FINALLY!) to the first point I wanted to address: why and how would anyone write a contract saying, "We can shut this game down for any reason or no reason at all?"

As I discussed at unbelievable length above, a contract can specify nearly anything.  But why would anyone write the terms that way?  Allowing something to shut down for no reason seems like the height of unfairness.  Why put that in at all?  The terms here are drafted extremely broadly.  While I'm a litigator and contract drafting wasn't taught in law schools when I attended (still isn't, most places), I know enough about contracts to understand why it's drafted this way.  If a contract term is left unspecified and the parties end up in litigation over it, it's up to the court to construe the term based on what is specified in the contract.  Courts don't have unfettered discretion in doing that, but they can certainly act unpredictably and surprisingly.  The whole point of a contract is to resolve disputes ahead of time, to avoid having to bring in a judge at all.  By writing the broadest possible terms ("any reason or no reason at all"), the lawyer makes it absolutely clear that the terms of the contract cover every possible situation.

Notice, too, that the "or no reason at all" might not even be necessary.  It's hard to imagine how a game could be shut down for "no reason."  There's always a reason, even if it's as silly as "we adopted a corporate policy against the color pink and will no longer run any games that feature it."  Still, if the "no reason" clause weren't there, it opens the publisher to potential liability.   Imagine that the servers all burst into flame, the game shuts down, and someone sues, arguing he's entitled to damages because the game shut down for no reason at all.  The publisher counters with the testimony of Joe the Server Guy that "the servers burst into flames and were totally destroyed right in front of my eyes" and pictures of scorch marks on the floor, which would definitely be "a reason" to shut things down.  But in his closing argument, the player's attorney will undoubtedly argue, "Why should you believe Joe the Server Guy?  He's an NCSoft employee anyway, so he's obviously got reason to lie.  And anyone could have put the scorch marks there."

The scary thing is that the lawyer's right!  We, reading this hypothetical, know Joe's telling the truth, but all the jury has to go on is Joe's word, the scorch marks, and its common sense.  I've seen enough juries to know that common sense can work in mysterious ways; the publisher might well lose on those facts.  But if it can shut down the game for "no reason," that whole argument potentially goes away.

The example with Joe gets to another aspect of "why write it that way," and the one that really drove me to want to write this set of posts.  Like the other contract terms, "any reason or no reason at all" is a protection against liability.  I argue below that that's a good thing.  "But, Olantern," I hear someone cry, "how can you argue that this is a good thing?  Doesn't our emotional contribution to the game matter to you?"  Yes, it does.  In fact, it matters a lot.  But it doesn't matter enough to follow this road where it might potentially lead.  (You'll have to wait for Part Three to see where, but the road itself, in the next few paragraphs, is bad enough.)

Again, it's easiest to see why the "any reason or no reason" provision exists if we imagine its absence.  Say the relevant provision instead read, "The service will not be shut down unless it is unprofitable for the publisher to maintain it."  Imagine that the publisher decides that the game is unprofitable and does shut it down.  As in the real world, players miss their game and are angry.  They research the game's and publisher's finances and decide that either (1) the game actually was profitable or (2) the game could have been made profitable had the publisher moved the development offices to Topeka.  The players decide to sue and find someone who will represent them.  They sue the publisher for breach of contract, alleging the publisher breached its contract to keep the game operating, on either of the two theories I just listed.  (Multiple theories of recovery are common in lawsuits.)

The parties go into litigation, costing both sides money for lawyers.  The publisher files a motion to dismiss the case.  After some litigation, the judge says, "Motion denied.  Settle your dang case and keep my docket clear for my backlog of criminal cases, you whiny civil litigation people."  The parties go through a couple of settlement conferences, where each side says "no" until the court realizes they won't give up.  The parties go through discovery, where both sides' lawyers sift through boxes of documents about whether the game really was profitable or not.  Even if they agree on the numbers, they probably can't agree what the numbers mean, so each side also has to hire a forensic accounting firm.  (The accountants are known as "experts" in terms of the law of evidence.)  The experts on each side prepare reports and counter-reports.  The publisher prepares a motion for summary judgment, and the players prepare a cross-motion.  (Essentially, that means the parties are asking the judge to look over all the evidence and give them a decision without having to have a trial.)  The court denies both motions and repeats its demands that the parties settle.  They don't.  They go to trial, where both sets of experts testify.  The parties both put on evidence to educate the jurors about what an MMO is, how development works (from their point of view; think about what Sean McCann says on his blog versus what players on the forums used to say about development for how this'd play out), and the like.  The players put on evidence about the emotional and other damages they've suffered from the shutdown.  Sometime, a clerk actually hands the EULA contract to the judge, who finally reads it.

Assuming this is a jury case, the verdict comes relatively quickly.  If it's a bench trial, which it would have to be if the players wanted an injunction to keep the game running (more on that in a later post), it usually takes three to six months for the court to issue its opinion.  If the publisher wins, the case may be done.  If the players win, the publisher appeals.  An appeal isn't a "redo"; courts of appeals review the decisions of lower courts for legal mistakes.  If a court of appeals finds one, it often sends the case back down for the lower court to fix the legal mistake itself.  In this case, the publisher would argue on appeal that (1) there was some evidentiary problem with the evidence of whether the game was actually profitable, (2) the court below shouldn't've even considered the possibility that the game could have been kept open by moving it to Topeka, and (3) the terms of the contract are unconscionable.

Unfortunately, this parade of horribles is pretty realistic.  It's a side issue here, but I go through it in detail to show what the contract drafter is trying to avoid.  Having seen what happens in civil litigation, I can't really fault the drafter for trying to be thorough, even if that results in a contract that gives me, the player, an unsatisfying result.

Contracts and IP Redux

Part Three: Terms Unfair to ... the Publisher?!

The parade of horribles is only half the story, though.  Let's play appellate court for a minute and look at the heart of the legal issues swirling around here.  It's unclear how the court of appeals would rule on (1).  I include that here mainly to show that evidence that appears conclusive to a party (i.e., is the game profitable or not) may not look the same way to a court.  (2) presents a tougher issue, but fortunately for us as readers of this hypothetical, the court's ruling on (3) would resolve it.  So, what about (3)?  Are these terms unconscionable?

You may be familiar with the idea of an unconscionable contract; the concept has gained a lot of traction in the internet world.  If you are familiar with this idea, you probably think of an unconscionable contract as "a contract that's really unfair," and if you do, you're pretty much right.  An unconscionable contract is "so one-sided that it shocks the conscience" such that only a delusional, dishonest, or unfair person would accept or offer it.  Kojovic v. Goldman, 823 N.Y.S. 35, 39 (App. Div. 2006)(highest court of New York describing New York's version of the law of unconscionability)*.  One-sided-ness is the key here.   If we accept the basic principle that you can contract for anything, we don't want the courts holding people to agreements where one party had no real choice in the matter other than to accept terms that shock the conscience.

You can see why this concept has caught on so intensely in internet communities, which tend to disfavor EULA's.  A player arguably has no choice other than to accept the terms of an EULA if he wants to use a piece of software (aside from rejecting the contract offered entirely, of course).  (This leaves out the party about shocking the conscience, but we'll leave that be.)  Because of this potential concern, EULA's don't always hold up in court.  And if a contract doesn't hold up in court, the court will construe a new contract that's more along the lines the judge believes the parties really meant to agree to (or should've agreed to, in the judge's opinion).

"But wait," I hear someone else cry, "you said the publisher can argue unconscionability!  How can a big, corporate meanie who's dictating terms do that?"  Good question.  Well, first of all, remember that in this hypothetical, the publisher isn't dictating the terms.  The parties agreed to an EULA that specified that the service will not be shut down unless it is unprofitable for the publisher to maintain it.

Second and more importantly, the term requiring the publisher to keep the game running is (at least arguably) unconscionable such that it shocks the conscience.  Why?  Because it compels the publisher to perform an act against its will.

Courts are very, very reluctant to enforce contract terms like this.  They tread far too close to contracts for involuntary servitude.  Such contracts have been viewed with suspicion in Anglo-American law since before the U.S. existed.  This issue was also the subject of a major war in the 1860's, of which you might have heard, and, perhaps most importantly, the subject of the Thirteenth Amendment to the Constitution, which prohibits "involuntary servitude" by its terms.

But if the game is still profitable (and let's assume it is, for purposes of this paragraph), how could that be involuntary servitude (and thus an unconscionable contract term) for the publisher?  An analogy works best here.  Imagine I sign an employment contract with my university to teach Federal Income Tax every semester for a salary of $5000 a semester.  The contract provides that "Olantern shall continue to teach the course so long as the university continues to pay him $5000 a semester."  If I decide that I don't want to teach the course any more, can the university force me to do so, provided it pays me $5000?  Hopefully, most readers said "no."  If I want to stop teaching and the university has already given me the money for that semester, the university gets its money back, but it can't force me to work for it, even with the contract in place.  For a court to force me to teach about taxes four days a week would probably shock most people's consciences.  Thus, the term's unconscionable and unenforceable.

The result in Players v. Publisher would probably be similar.  Even if the parties agreed that publisher would operate the game so long as it was profitable, a court won't compel the publisher to do so.  It certainly won't compel the publisher to move development to Topeka, even if that'd make the game profitable.  At most, it might compel the publisher to refund any money it's taken for future game services.

This frustrating (for the players) result isn't limited to our situation by any means.  Courts only force parties to complete contracts with things other than money in very, very limited circumstances.  Requiring a party to perform the terms of a contract as specified is called, appropriately, "specific performance."  Generally, courts only order it in cases where the contract is for the sale of land, the theory being that land is so unique that the only way to fulfill the contract's terms is to do exactly what the contract said.

That, in a nutshell, is my fundamental problem with requiring a publisher to continue operating a game, even when the circumstances look favorable to the publisher.  First, such terms probably can't be legally enforced. 

Second, even if they could be, enforcing them would be morally wrong.  This is one case where I agree with the rationales courts have given over the years.  I believe it's wrong to compel someone to perform a service against his, her, or its will, even when the someone is a big, corporate meanie.  If I wouldn't want a contract like that enforced against my friends or against me, I can hardly claim in good conscience that I want it enforced against an MMO publisher, no matter how much the publisher has torqued me off.  Frankly, the notion of requiring someone to do this frightens me a little; if we allowed it here, where would it end?

* As the 1989 classic Cvltvre Made Stvpid nicely put it, "This incomprehensible form of citation is used by lawyers to prevent people from going out and looking up the law for themselves."

Contracts and IP Redux

Part Four: What Do We Get?- More Problems with Remedies

Earlier in this thread, I pointed out that players would have a problem with suing NCSoft because it would be difficult for them to show they'd suffered damages as a result of its actions.  If a publisher had included (or been forced to include) a term like "the game will not be shut down unless it becomes unprofitable" in its contract with players, then damages might be easier to show. Assuming the court doesn't care about the issues I mentioned in my last post and the players win the suit, the players might successfully argue that the publisher breached the contract.  If that's so, what might players get?

There are several kinds of contract damages.  The standard kind is called "expectation" or "expectancy" damages.  These are essentially "what the party would have received if the contract had been performed." 

Specific performance, which I mentioned in the last post, is one kind of expectation damage.  If the contract were for the sale of a piece of land, the players would get the land.  But since this is a contract for the sale of services (developing a game and running its servers), the players would get the monetary value of their end of the contract.  That is, the monetary value of game services until the point the game becomes unprofitable.  (The difficulty of calculating such damages might be another reason a court would be reluctant to enforce the contract.)  Alternatively, players might receive "reliance" damages.  Those are expenses the players incurred in reliance on the contract (duh!), or, put another way, the cost of putting things back the way they were before the contract started.  Here, the players would get refunds of the costs of their subscriptions for the period the game was shut down but still demonstrably profitable.

Finally, and particularly common in EULA's, the parties might have agreed to "liquidated" damages.  Liquidated damages are amounts of money set forth in the contract itself that one party agrees to pay the other in case of breach.  (The CoH EULA provides for liquidated damages in case of breach.)  Courts dislike liquidated damages, and they're rarely enforced, especially in adhesion contracts, like most EULA's.

One thing players could not get would be continued operation of the game. .  Aside from the basic involuntary servitude problem with the contract itself, there's a problem with getting this specific remedy.  When a court issues an order requiring a party to do or refrain from doing something, that's called an "injunction."  Here, the players would need to get an injunction to keep the game in operation.  And injunctions are hard to get.  Courts have made it that way over the years, primarily because of concerns like the ones I raised in the last post.  In order for an injunction to issue, the party seeking it has to prove, among other things, that it'd suffer irreparable harm if the injunction isn't issued.  While players might argue that they're suffering irreparable harm because nothing short of a live game can compensate them for their injury, the publisher will argue, and the court will almost certainly agree, that money damages are enough.

So, even if players could convince a publisher to include a term like, "no shutdowns unless the game becomes unprofitable," it's unlikely that such a term would force a publisher to keep a game operating.

Contracts and IP Redux

Part Five: Aspirations and Implications, or, "Why Are These People Suing Me?"

So, explicit contract (EULA) terms that specify what a publisher must do have a lot of problems.  But what about aspirational statements, like a player bill of rights?  Could a publisher "safely" allow those, either by its own public statements or by acceding to players' requests for them?

It's certainly less problematic for a publisher than contracting for particular player rights.  But it still subjects publishers to risks.  Why?  And, for that matter, let's bring back our original question from the first post in this series.  Why have an EULA at all?  Again, the answer comes back to contract law.

Here, the issues revolve around the way the contract is formed rather than its terms.  In order to form a contract, you need three parts.  First, one party has to make an offer, such as Positron placing an ad in the classified ads saying, "One suit of atomic-control armor for sale, $5,000, good condition, slight wear.  Original owner only killed once.  First come, first served."  Second, there has to be an acceptance, such as Fusionette showing up with $5,000 in hand to buy the armor.

Third, there has to be consideration, which means an exchange of value.  Here, it's the $5,000 and the armor.  If Positron just gave the armor to Fusionette, there's no consideration and thus no contract, and a court wouldn't enforce the promise to make the gift.  The "value" doesn't have to be particularly valuable, though.  The parties could renegotiate so that Positron agrees to sell Fusionette the armor in exchange for a rock or an empty can of Red Beast Energy Drink, and that would be enough to furnish consideration, as well as (a new) offer and acceptance.  Consideration can even be something that benefits only one party, as in, "I, Positron, agree to sell you, Fusionette, this armor in exchange for your not running off like a crazed loon and getting yourself captured by every faction under the sun and/or mediported to New Overbrook General constantly."

Up to this post, we've been talking about written contracts, EULA's.  But, as the Fusionette/Positron example shows, a contract may be written or oral or a mixture of the two.  Sometimes, a contract doesn't even require words at all!  How can that be?

Imagine that right after the Rikti War, Paragon is in ruins, there are few heroes left, and there are wounded citizens trapped everywhere.  Paragon City offers a reward to anyone who rescues these citizens.  Hero Corp signs a contract with the city to perform the rescue work, then goes out rescuing.  Assuming Hero Corp's agents don't violate any of the contract's terms, the city must pay Hero Corp for their work.  But imagine that at the same time, Positron (who, if you've read your history plaques, you know doesn't like Hero Corp) goes out and starts rescuing people on his own.  In that case, Positron, too, could go to the city and demand that it pay him.  If it refuses to pay him, Positron could sue the city for breach of contract just as surely as Hero Corp could.  While Hero Corp accepted the offer in writing, Positron accepted it by performance.

You could even imagine a situation where both offer and acceptance are implied by performance.  If I leave a rake lying around my lawn, you rake my leaves on your own initiative, and I pay you $10 after you've done the raking, we've created an implied contract by our conduct.

What does this have to do with an MMO Player's Bill of Rights?  Well, it's possible that a court might read the terms of such a document into a player-publisher contract.  A player could argue that by furnishing a game and agreeing to the terms of the document purely by implication, those terms have become part of the player-publisher contract.  I should note that I consider this pretty far-fetched, but it isn't outside the realm of possibility.  And the mere possibility of something is enough to frighten a publisher's employees when they known their jobs are on the line if they're not careful.

For that reason, I don't think it's wise for publishers to come up with, or even explicitly agree to, things like players' bills of rights.  That's a job for players themselves.  The publisher's fear of expanded liability becomes that much more unrealistic if the publisher isn't the one inventing them or agreeing to them.  The publisher may still get sued, but it's less likely to lose the suit, rendering the whole thing much more economical for it.

By the way, most of the people discussing this issue around here seem to have gotten this point intuitively.  Many people view such a Player's Bill of Rights not as something to be enforced but as a kind of notice to potential publishers that if they don't follow its terms, players aren't likely to contract with it (i.e., buy its products).  (This has the added advantage of putting control of the whole situation in the player's hands.)

So, if there's a bottom line here, it's that I think things like bills of rights are fine, as long as they remain a player-generated endeavor.  (I might take issue with some terms of some that I've seen, but the principle is sound.)

Now, all this discussion is out the window if the "bill of rights" in question becomes a bill in the legal sense of the term.  That is, if someone convinces Congress to pass a law stating that MMO publishers must operate in a certain way, we're dealing with a completely different area of the law.  If something like that were to happen, the terms of the bill of rights couldn't be so easily brushed off by publishers, and players might well have legal claims against publishers who violate them.  Personally, as a player, I consider this a Bad Idea.  Unlike a purely aspirational document, this could subject enough publishers to enough liability that they either stop publishing or write EULA's in such draconian terms that playing games becomes difficult.  (The MMO market might return in another form after a new set of publishers figures out ways to live with or work around the law, but I'm not sure I'd want to wait the time for the former or be a player in the world of the latter.)

As a practical matter, Congress is fairly unlikely to get involved in this kind of thing.  It rarely dirties its hands with the specifics of regulating industries.  Instead, it leaves this sort of thing to administrative agencies, parts of the Executive Branch that do the actual work of applying the laws, often through making regulations.  (The SEC, mentioned a few posts ago, is one example.)  I'm not certain which agency would be the appropriate one to deal with this issue- the FCC?  An agency more concerned with commerce? ... Perhaps you have a theory of your own?

While I understand the need for agencies that are supposed to enforce rules being given the power to create the specific regulations, it has honestly gotten way out of hand just how broad that regulatory power really is. Knowing modern Congresses of the last decade or two, they'd probably pass the "Players' Bill of Rights" with terminology such that a new regulatory commission to "protect the rights of the players to expect return on their investment of time and emotion and money" with the broad statement that the specifics of what those expectations can legally be and what methods of redress are available being "as the Director of [new agency] shall determine." Effectively saying "we like this idea; we empower the Executive branch to make the actual law. And change it at will."

I can't argue with your conclusions Olantern, though the terminology is a little off. I attribute that partly to the fact that the City of Heroes license agreement seriously confused the terms as well.

Most of what you're discussing would be traditionally covered by a Terms of Service agreement (TOS), not a EULA. For some reason I can't fathom, the NCSoft lawyers decided to make a document which consists mostly of their TOS, combine it with a few EULA-like sections covering the client software, package the whole thing up and title it "End User License Agreement".

TOS agreements cover the recurring service provided from one party to another. These have been around for ages and are well accepted. It's no different than the contract on your cell phone, or a lease agreement on an apartment.

Terms of Service includes what are acceptable uses of the service. This is the part that would say, "you cannot use our service for X," and covers the Darth Vader example above. Most TOS agreements include restrictions against using the service for illegal activities, including copyright infringement. Now that may seem a little silly, since those activities are against the law anyway, but it's mostly done for liability reasons -- so they can point to that clause and say, "No sir, we were not facilitating or contributing to this activity. We explicitly prohibit it, see?"

And yes, most TOS agreements do include the "termination of your account for any reason" clause. It's typically done for CYA reasons, and individuals signing them don't really get a choice about it. A large corporate client may have enough pull to negotiate a different arrangement, but big deals typically involve some back and forth on the contract anyway.

EULAs are a different beast entirely. The End User License Agreement is the source of the whole "this software is licensed, not sold" argument. In the case of an online game, it would cover the client software that you either download or buy in the store, but would not cover the service itself or the online aspects. In the absence of a EULA, standard copyright law applies. The only thing copyright law prevents you from doing is making copies. The book analogy is actually rather apt in that case -- you can read it, resell it, burn it, do whatever you want to it except photocopy it (or otherwise duplicate the contents).

So why do EULAs exist and how can they possibly be enforced? The main argument I've seen is that in order to run a computer program, a temporary copy of it must be made in memory (ref: Blizzard v. Glider). As ridiculous as that sounds, it's the primary "in" for abusing copyright law to restrict use rather than just distribution. The argument goes, even though you bought the disc, you can't actually run it without breaking copyright law, that's why you need a license. And as long as they're licensing it, they might as well set some terms in which they're willing to license it to you, preferably favorable ones for them.

The big question is of course what do the courts say about it. There's not just a whole ton of case law on the subject, which is one of the reasons it's a gray area, but there is some. So far it's been hit or miss. Some courts have bought into the "software is licensed" argument. Others have rejected it and said, "No, this is clearly a sale, you can't enforce any restrictions post-sale -- standard copyright law applies." Things like online activation, software updates, and downloadable content further muddy the waters. It really is uncharted territory when it comes to MMOs.

So keep that firmly in mind. The above is one of the main reasons that most open-source licenses don't mention use at all other than the standard liability disclaimers; because duplicating and distributing the program is the only part you actually need a license for. However the content and media industry is pushing hard to change that, as proposed laws like the mostly-shot-down UCITA have shown.

Thanks for the clarification there.  (As I've mentioned before, IP and even contracts are not my area of specialty.)

Sure. I Am Not An IP Lawyer (TM), though I have done a fair bit of research of the subject. So if you see something that looks wrong or needs clarification please do so. :)

The real irony here is that MMOs are one of the few kinds of game where piracy is just not a concern. Not of the standard thing players install on their machines, anyway.

So you got the software for the client for free? Great! You still have to pay to use the server. (In fact, most MMOs give away the client as a free download for that precise reason.)

Not really directly applicable, but I found this in the 2011 NCSoft detailed audit report and thought it was interesting. It's just a list of legal actions that the company was involved with at the time.

QuoteAs December 31, 2011, the Company is a defendant in one pending lawsuit with total claims amounting to ₩64 million in the Republic of Korea. The Company is also a defendant in pending overseas litigation with regards to unfair acts on uncovering fraudulent user accounts and the addictive nature of an online game, Lineage 2, filed by Craig Smallwood, a user of Lineage 2. The Company is also a plaintiff in 11 pending lawsuits to claim the delivery of a building (the Kyungam building) filed to current occupants. As of December 31, 2011, however, no estimate can be made at the time of settlement, or the incremental amount of obligations, which could arise, if any, upon such settlement.

What's especially interesting about the Craig Smallwood case is that the district court ruled (http://ia600507.us.archive.org/15/items/gov.uscourts.hid.87427/gov.uscourts.hid.87427.36.0.pdf) that the EULA clause disclaiming liability was invalid and allowed the case to proceed. (Edit: to clarify, they ruled that liability due to gross negligence cannot be waived, not that the EULA didn't apply)

Quote from: Olantern on September 07, 2012, 11:53:45 PM
I strongly agree, and I think this is a critical point to keep in mind, regardless of the entity structure that ends up being used.  Those of you who've followed my career on the official fora (if all two of you are reading this) know that I've often argued that the players' emotional stake in CoH, while important, doesn't and shouldn't give them creative control over the game as a whole.  Players can have good insights.  On the other hand, players are not developers.  "Vision" is not a dirty word.  (The remedy where the vision is cloudy is to take your money elsewhere, not to demand a change.)

It may be hard or impossible to get the original devs, for the reasons I discussed above.  It would sure be great if we could, though.  Heck, I'd just appreciate some industry insider advice at this point.

To that end, it might be helpful to put together a list of some experts or fields of expertise we might need.  I'll start:

-

• Someone with experience in game design and publishing.  This is necessary to find out the customs of the industry, as well as what works and what doesn't (in a business, as well as a game systems, sense).
• Someone with business experience.  This person can provide advice on setting up an entity, entity choice, how things should be structured, capitalization, and the like.
• An accountant, to handle things like tax returns and keeping track of funds.
• An attorney to handle legal issues related to the business in greater detail than we can do in this thread.
• Investors.  Ideally, we find an existing publisher for the existing game, relieving us of the need to found both our own publisher and our own development studio.

.
[/list]

Feel free to add more ...

Just for the record, if it hasn't been discussed further on, I'm a member of the game development industry even though our company is still only in its startup phase. I have been in the position of recruiting development staff. What I have learned is that such staff often have very unstable employment histories. The companies hire for limited contracts and it is common not to renew. As a consequence such people are often migrating, looking for new contracts. In such an environment, non-compete clauses would tend to be rare, but non-disclosure would be very common. Why? Because to do otherwise would be to destroy available talent but the companies would still need to protect their IP. I've either worked for, freelanced, or been an officer for 3 game companies for the record: Global Games (board games), Kenzer & Company (RPG and other games), and Kingdom Come Games (officer & software lead).

What I think should be reasonable is a "creator's bill of rights."  One that incorporates the same "use it or lose it" language as book contracts.

In a book contract, the publisher is obligated to keep the book in print.  If the publisher does not do so in some form, in X years (varies by publisher, author, and how aggressive the author's agent it), the rights go back to the author to be resold or redistributed as the author sees fit.  The only one of my books to ever go out of print has recently reverted, and the Marion Zimmer Bradley Trust is putting it back in print in e-format.

This would prevent firms like NCSoft from squatting forever on an IP, which I think is only fair.  Given how fast things move in the game industry, I think a 1 or 2 year limit on IP squatting is reasonable.  This would also give firms the incentive to sell while they still can.

Quote from: Victoria Victrix on October 24, 2012, 12:04:06 AM
What I think should be reasonable is a "creator's bill of rights."  One that incorporates the same "use it or lose it" language as book contracts.

In a book contract, the publisher is obligated to keep the book in print.  If the publisher does not do so in some form, in X years (varies by publisher, author, and how aggressive the author's agent it), the rights go back to the author to be resold or redistributed as the author sees fit.  The only one of my books to ever go out of print has recently reverted, and the Marion Zimmer Bradley Trust is putting it back in print in e-format.

This would prevent firms like NCSoft from squatting forever on an IP, which I think is only fair.  Given how fast things move in the game industry, I think a 1 or 2 year limit on IP squatting is reasonable.  This would also give firms the incentive to sell while they still can.

Ooh! I can still amend the license agreement for that! You, of all people, should be familiar with IP issues and publishing. I can add  sections to allow one year, two year, and indefinite transfer. Actually, because of the length production can take in this industry three years should be an option, and the default one at that.

Quote from: avelworldcreator on October 24, 2012, 12:53:47 AM
Ooh! I can still amend the license agreement for that! You, of all people, should be familiar with IP issues and publishing. I can add  sections to allow one year, two year, and indefinite transfer. Actually, because of the length production can take in this industry three years should be an option, and the default one at that.

In book contracts, the "obligated to keep in print" dates from the month of first publication.  Yes, it can take three years from the time a contract is signed to the time the book first is published.  I would amend your license agreement of "use it or lose it" to amend from date of first publication, which should be defined as your choice of Actual or Beta rollout.

Quote from: Victoria Victrix on October 24, 2012, 01:13:57 AM
In book contracts, the "obligated to keep in print" dates from the month of first publication.  Yes, it can take three years from the time a contract is signed to the time the book first is published.  I would amend your license agreement of "use it or lose it" to amend from date of first publication, which should be defined as your choice of Actual or Beta rollout.

Needs a default there. Final Release or Beta? I'm leaning towards beta, but I consider you as having expertise based on real world experience.

Quote from: avelworldcreator on October 24, 2012, 01:28:20 AM
Needs a default there. Final Release or Beta? I'm leaning towards beta, but I consider you as having expertise based on real world experience.

I'd say Final Release (or perhaps Release of last Update).  So long as the game is live, the reversion option won't get triggered, which would save old warhorses like Everquest from the Glue Factory.

In fact, if we are going to go on the book model, we actually should count from Shutdown Date, which corresponds best to "last publication date," which is how book right reversions are counted.  On the other hand, we really don't want to give any encouragement to the vultures who will sit on the corpses of games until there is nothing there but dust and bones.

Quote from: Victoria Victrix on October 24, 2012, 04:38:02 AM
I'd say Final Release (or perhaps Release of last Update).  So long as the game is live, the reversion option won't get triggered, which would save old warhorses like Everquest from the Glue Factory.

In fact, if we are going to go on the book model, we actually should count from Shutdown Date, which corresponds best to "last publication date," which is how book right reversions are counted.  On the other hand, we really don't want to give any encouragement to the vultures who will sit on the corpses of games until there is nothing there but dust and bones.

Thanks. I'll make that modification. I'll go with two years after shutdown and that there must be at least a beta version using the material within 3 years of its contribution (that allows for production delays). That means you can't just sit on contributions indefinitely. I won't add any modifier sections for this part.