Interplay, an Irvine, Calif.-based computer game company partly owned by MCA, last year fell prey to a form of piracy that is new to most of the entertainment industry.
A few weeks before Interplay released the CD-ROM game “Descent,” a New York-area hacker got his hands on an early version of the title. He transferred the software onto the Internet and made it available for anyone to download. Interplay, along with the Software Publishers Assn., a Washington-based trade group, alerted the FBI’s Brooklyn field office but was met with disinterest.
“They asked how much money the company had lost because of this,” recalls Sandra Sellers, director of litigation at the SPA. “We didn’t know, because it was pre-release. The FBI said we needed something more tangible.”
Out of control
Phil Adam, Interplay’s VP of business and chairman of the SPA’s board, draws an analogy to film: “It’s the equivalent of somebody putting out a videotape version of a studio film before it’s released in theaters. It would be devastating,” Adam says. Controlling the situation is made even more difficult because software pirates can hide behind the anonymity of the Internet, says Adam. “We only had an e-mail address, no name or phone number, so we couldn’t do a search and seizure.”
Interplay hasn’t been the only company whose copyrighted material has been stolen and distributed free of charge on the Internet. LucasArts has found its games, including best-seller “Dark Forces,” posted in areas known as File Transfer Protocol (FTP) sites on the Internet.
“They’re usually only up there for brief periods of time, and often the owner of the host computer doesn’t know they’re there,” says Bob Roden, general counsel and director of business affairs for LucasArts, explaining why it’s difficult to prosecute software pirates.
Anonymous hackers who mischievously make software postings on the Net often are creative in their methods, even transmitting software to a distant server, making it even more unlikely that they’ll be caught.
“We might see our games on a server in Hungary, but the server owner there has no idea what’s happening. It only gets identified because of an unusual amount of traffic. And it becomes difficult legally: Whose law applies? Maybe the computer is in Hungary and the person who uploaded it is in Australia,” Roden says.
Legal headaches aside, piracy can result in a significant amount of revenue loss, says Interplay’s Adam: “Take a look at ‘Descent’ or Lucas’ ‘Storm Trooper.’ These products were shipping at least 250,000, and would be in the $10 million-$12 million revenue range. If only half of those units sell (due to Internet piracy), the company potentially loses $5 million or $6 million.”
Help may be on the way for entertainment companies – which are only beginning to grapple with a problem that game makers have faced for several years. The U.S. government recently issued a white paper addressing the issue of software piracy. Among other things, it proposes to eliminate laws requiring that a manufacturer prove how much money has been lost before it can prosecute pirates.
But revenue losses are only one potential problem facing anyone who digitizes content. Bradley Oleshansky of the L.A. law firm Lowy & Zucker, which specializes in software issues, has come across several examples of digitally manipulated images that infringe on studios’ copyrighted material.
In a recent memorandum on the subject of online copyright and trademark issues, Oleshansky wrote about a cartoon he had received via e-mail: “An image of Mickey Mouse, one of the most commercially exploited characters in existence, was scanned into a computer. A picture of O.J. Simpson was also input into the computer. By manipulating the images with common software, the two images were morphed together to form ‘Murder Mouse.’ I highly doubt that Disney licensed the use of Mickey Mouse in this instance.”
Oleshansky’s memo continues: “Standard copyright or trademark infringement remedies would be available to Disney in this case. However, there is a serious policing problem. It is extremely difficult to track down the culprits of such infringing use of protected material. Once an image like this gets on the Net, it is sent via e-mail and multiplies rapidly. The original creator of this unlawful derivative work may never be tracked down.”