From pet grooming services paid with currencies backed by aggregated gift cards to coffee shops in Palo Alto and San Francisco that accept digital currencies for a latte, many Californians are completing everyday transactions with digital currencies.  Community currencies (such as currencies “created by members of a community in conjunction with merchants who agree to accept the alternative currency”[1]) are seeing some popularity in Sonoma County, Humboldt County, and other areas of Northern California.  Many video games continue to facilitate in-game and other purchases using alternative currencies.

The payments and video game industries have recognized, however, that quite often law moves more slowly than technology.  In support of continuing the proliferation of alternative currencies,  California Assembly Bill 129 (the “Alternative Currencies Act”) became effective on January 1, 2015.  The Alternative Currencies Act loosens existing prohibitions on use of currencies other than the lawful money of the United States by repealing Section 107 of California Corporations Code.[2]Continue Reading California Repeals Prohibition on Use of Alternative Currencies

On March 25, 2014 the IRS issued Notice 2014-21, which describes how the IRS will interpret existing general tax principles to apply to transactions using “virtual currencies” such as Bitcoin. This Notice is the most recent in a line of similar regulatory pronouncements issued by several governmental actors such as the Government Accountability Office’s report in May of last year and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) Guidance memorandum issued March 18, 2013.
Continue Reading IRS Says Bitcoin Isn’t Money

Last week’s arrests[1] of Robert Faiella, an alleged seller on online marketplace Silk Road, and Charlie Shrem, the CEO of the startup BitInstant, marked a recent round in a series of law enforcement actions against what the government characterizes as a “rise in criminal activity”[2] by people using the cryptographically-controlled digital currency, Bitcoin.[3]  The arrests of Shrem and Faiella occurred nearly contemporaneously with hearings by the New York Department of Financial Services to determine how to regulate Bitcoin in the State of New York.  More than one source has suggested the timing of the arrests may have cast at least some cloud on the New York hearings on regulation of Bitcoin.
Continue Reading Bitcoins and Liability in the Wake of Recent Silk Road Arrests

As companies are presented with the ever-challenging goal of achieving and maintaining brand recognition, many fashion companies are now attempting to engage consumers in both the real and virtual worlds. Gaming represents one non-traditional avenue that has undergone recent growth, as brands find value in connecting with existing and potential consumers through interactive online means.Continue Reading Game On!

In Thorner v. Sony Computer Entertainment America, LLC (Case No. 2011-1114, Feb. 1, 2012) (Moore*, Rader & Aiken (D. Or. sitting by designation)), the Federal Circuit reiterated the prohibition against importing limitations from the specification and reversed a district court construction depending from consistent uses of the disputed phrase in the specification.
Continue Reading Federal Circuit Narrows Claim Construction Options in Game Controller Suit

Financial institutions and currency transactions are highly regulated in the United States. That much is common knowledge. However, game developers may not realize that by creating a system of virtual currency within a game that can be purchased with or redeemed for real currency, they could be opening themselves up to legal issues arising from this morass of federal and state laws, regulations, and rules.Continue Reading Making Sense of Virtual Dollars

Justice Antonin Scalia and his teammates mowed down California’s ban on violent video games with fully loaded First Amendment precedents and barbed retorts to opposing arguments. In doing so, the Supreme Court reinforced a fundamental point: that First Amendment protections do not depend on the medium of communication. Thus, video games are protected speech, and restrictions based on their content will be subject to strict scrutiny.Continue Reading First Amendment Fire Power: United States Supreme Court Applies Strict Scrutiny, Rejects Ban on Violent Video Games

Nintendo of America, Inc. ("Nintendo") faces a new patent infringement lawsuit in the Western District of Washington, regarding the camera lenses included in its Nintendo DSi handheld gaming systems. The lawsuit, filed on May 24, 2011, accuses Nintendo of infringing United States Patent No. 6,888,686, owned by Plaintiffs Milestone Co., Ltd. and Satoshi Do.Continue Reading Patent Holder Takes a Shot at Nintendo over DSi Cameras