A Few Thoughts on the Future of Law

Had an interesting Twittersation last night with Dr. Sara Kubik, a Ph.D. in Technology (and current third-year law student.) First I Storified it, which I’d never done before, so here’s that:

 

But I thought I’d expand on some of my points a bit.

1) Losing a lawsuit is the only thing worse than winning a lawsuit.

Lawsuits suck. They purely suck. It doesn’t matter how good your case is: every lawsuit I’ve ever brought, I brought because someone had out-and-out stolen from my client. No fair use defense, no inadvertent infringement defense. Likewise (I am really good at picking clients) every time one of my clients has been sued, the claim could at best have been described as “colorable.” That’s a legal term of art which means “I probably can’t report opposing counsel to the disciplinary commission for filing frivolous lawsuits.”

And I’ve won every time.

(Well okay we settled one but it was pretty favorable.)

My clients still had to go through a very distracting, draining legal process which cost them a lot of money up front. While we recovered costs of suit in most cases, sadly I’m not as good at picking lottery tickets so we never got a zillion-dollar payday. Maybe that would make a suit worth it, but frankly given the level of disruption they cause a business that’s what it would take, if I cared about money. I had to file most of those suits because there were intellectual property protection concerns. In that respect, I won – my clients’ IP was protected. But I wish I could have found some other way.

2) Rocket Lawyer/Legal Zoom/Et Al and their impact on the legal profession.

Bad.

Okay, I can unpack that a little. I have seen people get work from “inexpensive legal services providers,” (hereafter, “ILSP”) without naming names (and not necessarily either of the two providers given as examples) which required extensive additional legal work to… well, to fix, to be blunt. I know other lawyers have had similar experiences.

Without knowing how much of what kind of legal work ILSP provide, I can’t give accurate evaluations of whether they are cost-effective in the long run for individual clients and/or society. I admit that freely. But the numbers I used above in the Twittersation seem, if not provable, plausible. It only takes one actual court case or even the preparation for one to wipe out the savings from a very large number of inexpensive legal services.

The people who work for ILSP are, one fervently hopes, licensed and competent attorneys. But given the nature of such operations, they simply can’t become as familiar with a particular client’s needs and issues as a personal counsel can. The numbers don’t work. That extra hour to review, that extra bit of specialized knowledge… they are not worth saving a hundred bucks over. In legal services, as in few other things, you get what you pay for.

3) AI and the future of legal work.

My reference to “Happy Fun Space” is a shout-out to Iain M. Banks’ “Culture” novels, where we are told some AI become so computationally powerful that they spend their time in simulated universes of their own design, which they call”Infinite Fun Space.” The “Singularity” is a hypothetical point in history where human beings or their AI colleagues become so powerful that they can transition mankind to a post-scarcity society. In short, once we get AI powerful enough to do what I do, they’ll be so powerful we won’t have to do anything at all. (This could go really wrong, or really right, depending on whether we get AI of the type Scott Alexander refers to as “Moloch” or “Elua” in his amazing essay Meditations on Moloch.)

</geek>

However, even absent Skynet or Mother, AI will still have a significant impact on the legal profession as technology advances. There are already AI (though they aren’t true AI, they’re agents) which can draft simple contracts or help people protest parking tickets. For parking tickets, this is probably okay. But even for simple contracts, I am not convinced this is a good idea at all. I am fond of saying that an AI could probably safely do a big chunk of my job… but part of the chunk it could not safely do is accurately determining which chunk it could safely do. Any transaction more complicated than buying a pack of gum at the drugstore is inherently individual. AI aren’t there yet. Human programming isn’t there yet. Subjective judgment and experience are holistic and intuitive and that’s just how it is.

For instance, say you’re an attorney for a private, closely-held company which is subject to significant regulatory restrictions. (Yes, this is an example from experience.) You want to redraft the bylaws for your client’s corporate entity. Here are just two things an experienced lawyer will think about which have nothing to do with the actual bylaws.

a) You only have a handful of shareholders. What are their estate arrangements? If one of them passes away or becomes incompetent, will their ownership interest pass to an individual or individuals who will need findings of suitability? Or worse, who can’t get findings of suitability? What will that mean to your client’s regulatory compliance?

b) Maybe you’re lucky and your client’s ownership structure is such that it qualifies for WBE or MBE status. (Don’t know what that is? Does the AI?) First, analogous question to the above. Second, are you sure the bylaws structure control such that in the event of a shareholder conflict, you always have the outcome required to satisfy the WBE/MBE certification agency?

Did whoever programmed your “Makin’ Corporations!” AI/agent think about things like that? Did they KNOW about things like that? Do they keep the program constantly updated with legal, business, and tax strategic background? Can you sue them for malpractice and report them to the bar if they don’t? This is the kind of thing I mean when I say that 999 times in a thousand, the client may save a small amount of money, and the thousandth time, they may end up bankrupt, in jail, or both.

Anyway, those are my thoughts on the matter. Comments invited.

M

Chicago Video Game Law Summit 2016 (CVGLS ’16)

I had the honor of being a speaker on two of the panels at CVGLS 2016, and as always (well, they’re two for two) it was a great time and I met a lot of cool people. First, congrats to Ross (@loadinglaw) and Suzanne (@zedthegamer) for organizing another great summit. Thanks for inviting me and I hope we do it again soon!

To briefly review the panels:

The Changing Scene of eSports

I was on this panel, so it was great. You can find the written materials I referred to several times at this link: MarcWhippleCVGlS2016

Thanks to my fellow speakers Jason Greenglass, Ryan Morrison, and Lydia Picknell. I covered the basics of gambling law in the US and talked about just a few ways you could run afoul of them when developing video games, and why the Daily Fantasy Sports operations like FanDuel and DraftKings were kicking up a lot of dirt that might land on us. Jason and Ryan talked about the legal aspects of eSports, player contracts, et cetera, and Lydia talked about them from the perspective of a player/coach/owner. (Yes, she’s a female eSports team coach and owner. Fear her!) We had a lot of fun and everybody seemed to enjoy it very much.

Recent Developments in Video Game Law

I was on this panel, so it was great. :)

I was on this panel with Greg Boyd (who also moderated, to the extent we let him,) Patrick Sweeney, and Ryan Morrison, again. (Ryan and I were on stage literally all morning and people still stayed!) We covered the basics of intellectual property law, always a hot topic in video game development, as well as advertising and other matters of current interest. We also got into crowdfunding a little bit – just enough to reveal that it is fraught with peril, especially if you want to give backers equity or a right to some of the revenue stream, so you really, really need a lawyer!

Privacy, Harassment, and Free Speech in Video Games

I was not on this panel, but it was still pretty good. :)

While this panel covered a lot of important issues, it focused on the problem of harassment in the video gaming world. Lydia told some powerful stories about the things she’d encountered as an eSports professional. Sadly, a lot of the really excellent questions more or less boiled down to, “How can we use the law to make people nicer?” To which the legal answer is ultimately, “We can’t.”

Video Games and the Right of Publicity

I was not on this panel, but it was still pretty good. :)

This was probably the legal-iest of the panels, with lots of actual case law and real-world examples of using other people’s likenesses (not just their faces – their names, their voices, you name it) and the trouble it can cause. “Don’t, unless you’ve talked to a lawyer,” was probably the takeaway from this panel.

The History of the Video Game Industry in Chicago

I was not on this panel, but it was still interesting. :)

While I won’t try to recount the stories, I will point out something that was said multiple times. One of the developers worked for Bally when they were making arcade games – the typical dev time was a few months! It was very much a pipeline process: electrical engineers and the first game artists would come up with a game, program it, make master copies, and then it went to the assembly line for mass production. What he said was, “If you didn’t finish your game on time, people got laid off.”

That’s still an important concept for developers to keep in mind: the publishers have marketing slots. If you don’t finish your game on time, they lose the slot. Somebody else gets the spot on the shelf or the promoted marketing page on Amazon/Steam/etc. It’s not a question of whether your game is good or it sells: those are equally important but different questions. You have to finish on time or somebody who was going to try to sell your game has no product. That’s never good. If you finish on time and give them the product, you make their lives a lot more pleasant. Even if the game isn’t great (so long as it doesn’t suck) that’s worth a lot for next time. Relationships and reputation are still important, even as assembly lines lose their importance in the world of gaming.

Thanks for reading, and see you next year!

Wow, MAGFEST!

I attended MAGFEST 2016 in National Harbor, MD (just outside Washington, DC) this weekend. MAGFEST is a major computer game conference with an emphasis on music and creativity. And wow was there a lot of creativity on display!

I was there as an invited panelist. My presentation, entitled “Third Party Trademarks vs. Your Game, Your Dreams, and Your Money,” was part of the MAGES Legal sequence, and given in collaboration with three great attorneys from well-known law firm Banner & Witcoff. It was an honor to be up there with them. If you’d like to see the materials from my presentation, I’ll have a link here in a day or so, or follow me on Twitter and wait for me to post the link. :)

First, heartfelt and grateful thanks to:

Sam Castree of Crawford Intellectual Property Law, for the invite, the Legal panels, logistics, and candy from Russia. Sam, you are aces.

Tasker, Jax and their merry band of LARPers, whose games were fantastic and a great way to enjoy the festival if your ears aren’t quite up to some of the… louder stuff. Brilliant, creative, and engaging people. This is the kind of thing I hope to encourage by assisting creators in dealing with business and legal matters.

The doctor of psychology at the Gaming and Immersion panel whose name, shamefully, I forgot to note, for being open minded to my alternate theories on the psychology of game immersion and loss of self.

My fellow presenters Steve Chang, Ross Dannenberg, and Scott Kelly. I really enjoyed collaborating with lawyers of their caliber, and dinner was great fun.

And the MAGFEST staff for their hard work, friendliness, and overall ability to make 20K gamers behave themselves!

Here are my thoughts on the panels I attended:

The other MAGES Legal Panels – They were all great. You should be very confident in hiring any attorney who presented. Special shout-out to Suzanne Jackiw (@zedthegamer) and Ross Hersemann (@loadinglaw) for being young lawyers with mature advice!

What Games Get Right and Wrong About Reality: Expert’s Perspectives – This was really interesting. The experts knew their stuff and were very personable. Lot of good observations and thoughts on how to do better.

Bootlegs, Counterfeits, and Lies: Fakes In the Video Game Market – Went to this on a whim. Though it was a bit chaotic, the panelists knew their stuff and I learned interesting things. They also responded with good humor when they learned that they had two IP lawyers in the audience. :)

The Worst Panel You Will Ever See at MAGFEST – Exactly what it said on the tin. At least for me: it was apparently aimed at long-time MAGFEST insiders/volunteers. Even for them it seemed rather random, chaotic, and obnoxious. I left early.

Video Game Industry Real Talk – I was blown away by how good this panel was. Though young, the panelists were the real deal, knowledgeable and honest about both their successes and their failures. They were having fun, but they were laying it down. If the hopeful indies in the audience were paying attention, they got their money’s worth.

Therapy and Tabletop Role Playing Games – This had a lot of potential, but to be brutally honest the panelists lost control. At one point, an audience member went up on stage and started plugging her book. Now, I’m pretty sure she (and many of the other people who co-opted the talk) had legitimate issues of their own, but it was hard to stay engaged when half the panel was audience members meandering through their ill-defined rambles. The panelists did have some interesting points when they managed to get in a few words.

Therapy and Gaming -Same people put this on as did the prior one. Same objections, plus it seemed a bit redundant. Left a few minutes in.

Brains & Games: Designing Videogames that Incorporate Mental Health and Human Experience – Enjoyed this. This panel had a similar demographic to the prior two, but the panelists maintained control. Good information on using games to implement self-improvement and mental health assistance programs, including a CBT reinforcement game and games to help with grief management.

LARPs by (among others?) Damocles Thread Development – The ones I did were the Fallout “Vault 71” game,  the “Not Shady, Just Fierce” werewolf social game, the Witcher “From Novigrad with Love” game, and the “Gaudete Sunday” Victorian Tea Party game. (Best quote: “I did not anticipate that this game would need combat mechanics.”) They. Were. Amazing. I had so much fun. And extra kudos to the storytellers for dealing with huge turnouts as well as anyone could be asked. Even with the crowds things happened, people participated, and a good time was had by all. If you see DTD putting on LARPs at an event, GO.

The Mind’s Eye: Gaming and the Role of Immersion – The moderator lost control of this one, and didn’t seem willing to stop the endless tide of look-how-smart-I-am questions or just outright I’m-just-going-to-pontificate-for-a-whiles. That being said, it was a fascinating subject and the panelists were extremely knowledgable and insightful. Very glad I attended despite the runaway parts.

That’s it! Thanks for reading, and see you next year!

I’ll be at MAGFest in February!

I’ll be giving a panel talk on “Third-Party Trademarks in Video Games.” In other words, if you want to put a Coca-Cola® sign on the street in your game world, can you? Should you? How should you do it if you want to, can, and should? I’ll be at the conference all weekend and am always glad to talk law, technology, pop culture, or the random topic of your choice.

A Diversion: Fantasy Sports Betting and the Law

(Usual Disclaimer: I am an attorney. Nothing in this post is specific legal advice, and you are not my client. Always consult an attorney licensed in your jurisdiction and familiar with the relevant laws before making legal decisions.)

UPDATE UPDATE: Thank you, Illinois Attorney General Lisa Madigan, for totally agreeing with my analysis and making me look even better. :)

UPDATE: Thank you, Nevada Gaming Commission, for making this post not only brilliant, but prescient!

Nevada Gaming Commission: Daily Fantasy Sports Betting is Gambling

I happened across an interesting Diana Moskovitz piece on fantasy football at Deadspin the other day:

http://deadspin.com/the-daily-fantasy-nightmare-is-here-because-the-nfl-mad-1734882560

(hat tip to https://twitter.com/ChrisWarcraft )

While there’s a lot of info in there about the UIGEA (Unlawful Internet Gambling Enforcement Act) and it’s all on point, I commented, as I have in other venues, on something these stories always seem to miss. The UIGEA is a Federal law. And unlike many Federal laws (e.g., the various patent laws) not only does it not anticipate pre-empting state and local laws about gambling, it specifically says it doesn’t. To wit:

(b) RULE OF CONSTRUCTION.—No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States.

 

— Unlawful Internet Gambling Enforcement Act, 8 U.S.C. § 5361(b) (2006).

 

So while, for most purposes, betting on fantasy sports over the Internet is not a violation of Federal law, the UIGEA is totally silent as to its legality under the law of any state. While I am actually very familiar with the gambling laws of several states – I was the General Counsel of a large gaming company – the law of my own state, Illinois, makes a great example.

 

Let’s leave aside questions of jurisdiction and venue (i.e., whether any particular act takes place in Illinois, and whether the courts of Illinois have the power to reach any particular individual) and assume that John Rogers, a resident of the state of Illinois, logs in from a computer in Illinois, uses money from a bank account in Illinois, etc, etc, and places a bet on a fantasy football event. Assuming the court has power over all this, has John broken the law of Illinois? I think there is a very strong case that he has.

Let’s look at the relevant portions of the Illinois gambling statute. My comments are in BOLD. I refer to Fantasy Betting as FB and sites that offer it as FBS.

CRIMINAL OFFENSES
ARTICLE 28. GAMBLING AND RELATED OFFENSES

720 ILCS 5/28-1) (from Ch. 38, par. 28-1)

Sec. 28-1. Gambling.
(a) A person commits gambling when he or she:
(1) knowingly plays a game of chance or skill for money or other thing of value, unless excepted in subsection (b) of this Section; Illinois is a “skill or chance” state. It doesn’t matter that you’re claiming you’re playing a game of skill. Making a wager on the outcome, unless it falls into one of the exceptions in subsection (b), is unlawful gambling. Period, full stop.

        (2) knowingly makes a wager upon the result of any game, contest, or any political nomination, appointment or election; This is why the claim that FB is a game of skill AND that it is not based on any single sporting event is irrelevant. An FB contest is just that – a contest. Maybe skill is an overwhelming factor (it seems to be, since in actuality almost all the money on FBS is won by a handful of players.) It doesn’t matter. It’s a skill-based contest and therefore falls under this section.

I’ve cut out a bunch of the more obscure things which pertain to private lotteries, numbers rackets, etc. They don’t apply to FB.

        (12) knowingly establishes, maintains, or operates an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet or to make a wager upon the result of any game, contest, political nomination, appointment, or election by means of the Internet. Internet bookmaking is itself gambling even if you’re just making book. This would seem to apply to FBS themselves, not John. However, the FBS servers are all in Costa Rica or someplace and their owners, if they have a lick of sense, will never enter the great state of Illinois. This item (12) does not apply to activities referenced in items (6) and (6.1) of subsection (b) of this Section. Sections 6 and 6.1 make an exception for the Illinois State Lottery and its games. Not applicable to FBS.

    (b) Participants in any of the following activities shall not be convicted of gambling: Here are the exceptions. Most of them, such as legitimate insurance policies, commodity trading, etc, are not applicable and I’ve cut them.

        (2) Offers of prizes, award or compensation to the actual contestants in any bona fide contest for the determination of skill, speed, strength or endurance or to the owners of animals or vehicles entered in such contest. Aha. Here is the lone reed upon which any defense rests. However, it is too thin a reed, and here’s why. To claim this defense, usually known as the “actual participant” defense, you must be able to directly affect the outcome of the contest. FB does not allow this, because John is not playing in the sporting events underlying the FB system. (To claim that this applies to the skill of selecting winners would make it logically impossible to gamble on sporting events at all, which is clearly not the intent of the statute and no court would accept such an argument.) If you want to have a bowling tournament, and let people pay to enter in hopes of placing highly and winning prizes, that’s fine. But no one can wager on the outcome for any other person, not even one of the other players!

        (13) Games of skill or chance where money or other things of value can be won but no payment or purchase is required to participate. – This is the “promotional sweepstakes” exception and it’s why McDonalds can run their Monopoly game every year. No purchase is, technically, necessary to win (there’s an alternate entry means that doesn’t cost anything.) FBS can offer free contests, no problem. But if you have to pay to play, this no longer applies.

Now that we know what the law says, let’s look at what John actually did. He went on an FBS, gave them some money, selected a fantasy roster, and hoped to win money when the players on his roster performed well. Taking it one thing at a time:

  1. He went on an FBS. In and of itself, this is fine. However, FBS clearly meet the definition of something which can facilitate gambling. So while this isn’t sufficient to determine whether he broke the law, neither is it in any way exculpatory. The fact that he’s on a web site and not calling his bookie down the block is unimportant.
  2. He gave them some money. This is the actual wager, or “consideration.” Under the common law, the crime of gambling required three things: Chance, consideration, and prize. If any of them were missing, it wasn’t gambling. The same principle applies here at least this far. If he hadn’t given them money, he’d be in the clear. However, he did. We can proceed with our analysis.
  3. He selected a fantasy roster. This is the contest upon which he wagered.
  4. He hoped to win some money. Now he has made a wager upon the result and/or played a game for money. This is the last requirement of the statute.

So, upon analysis, John appears to have broken the law of the state of Illinois by using an FBS. What punishment does he face? From the same statute:

(c) Sentence. Gambling is a Class A misdemeanor. A second or subsequent conviction under subsections (a)(3) through (a)(12), is a Class 4 felony.

It seems that John will probably only violate (a)(1) and/or (a)(2), no matter how many times he uses FBS. So, technically, he will simply commit Class A misdemeanors over and over again if he keeps using it. What’ll that get him? Well, a Class A is the highest class of misdemeanor under Illinois law: it’s one step below a felony. The potential punishment is up to 1 year in prison, a $2,500 fine, or both. (See: 730 ILCS 5/5-4.5-55) And that is per offense.

Meanwhile, the owners of FBS are violating subsection (a)(12.) Their first offense will be a Class A misdemeanor. Their subsequent offenses will be Class 4 Felonies. A Class 4 Felony is the lowest class of felony in Illinois, and is subject to a sentence of not less than three and not more than six years in prison, plus significantly higher fines and restitution. Like I said, they’d better not ever go where Lisa Madigan can get at them, or they’re in for a hard time.

Now this is an IP blog, so I would be remiss if I didn’t put some IP reference in here. And voila! Here we go.

If you want to see how you can transform a game of chance into a game of skill, a really good example (ahem*) is US Patent 8,523,651. It teaches a method of evaluating skill at poker which makes the chance element (i.e. the actual cards dealt) irrelevant. In my opinion (this is not legal advice, laws vary by jurisdiction) you could use the method in this patent to make a “poker” game which was legal in even a jurisdiction where games of skill or chance were potentially gambling, so long as they had an actual-participant exception. However, this would not work for FB. It only works for “solved games.” Neither football (or any other underlying sporting event) nor FB is a solved game. If the game is not solved, the player is not an actual participant in the outcome. Ooooh, so close!

In conclusion, I’ll say what I always say when this topic comes up:

  1. Fantasy Betting is almost certainly unlawful gambling under the law of many states.
  2. The fact that the Federal UIGEA allows it is completely irrelevant to point #1.
  3. If you participate in FB, you are risking potential criminal liability.
  4. I don’t understand why every prosecutor in the United States who likes easy convictions, big sanctions, and lots of press (i.e., all of them) isn’t all over this.

Thanks for reading!

*I am the patent attorney who drafted this patent.

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