Lawsuit Against EA Sports?

[PatriotJames]

Quote: Originally Posted by waytofailself

Good start, but I'm not exactly sure that looking at the dictionary definition of monopoly is sufficient to shoot down an antitrust claim against EA. What this case seems to come down to is line drawing: what is the market in question? The claimants say the market is football video games. Others here have said the market is video games as a whole (and to correct your scheme, football games would be the commodity, not the idea of football itself). From what I've read and seen, it's okay to narrow the market to football video games. Outside of their Answer, I have yet to see EA try and fight the definition of market -- but I'm still reading and it could be there somewhere. As you said, other football games can be made. However, that the court certified the class and did not grant EA's motion to dismiss tells me that the court is open to the view that the market will not accept a football game without an NFL/AFL/NCAA license. Instead, EA argues that it is shielded from antitrust liability because it entered a licensing agreement with someone else's intellectual property. The claimants argue, and in my opinion correctly argue, that this is no way to shield oneself from antitrust liability. The case the claimants compare (and EA also cites to) is a famous case where a steam pump manufacturer got severely undercut in the market, and instead of competing back bought many significant patents for producing the pump in order to block others from entering or staying in the market. The court struck this action down and found in favor of the anti-trust claimants. Now before you say "hey, those are patents, this is trademark licensing," just keep in mind that the issue in both cases is a company acquiring IP necessary for others to compete. American antitrust law does not allow IP acquisitions that effectively destroy other competition in the marketplace. Thus, EA's acquisition violates antitrust law (and for those of you keeping score at home, computer programs, except for very specific instances that do not apply here, are not patentable subject matter. video games are protected under copyright law). Don't just get caught up in the definition of “monopoly.” That's not enough. Remember AT&T? IBM? They weren't the only phone and computer companies on the market, but they both violated antitrust law by controlling so much of the market that they could dictate where it went. In my mind, EA is in a similar position with the football video game market through its licensing deals. EA also claims it did not violate antitrust law because it set up short term license agreements. It will be interesting to see what the court/jury says about this if the case ends up making it to trial. However, a number of cases in the recent past have said exclusive software contracts for 2 years were detrimental enough to competition to violate antitrust law. Here, EA's initial contract was for four of five years (depending on who you ask). I have plenty more to say, but after being skeptical at first I'm really starting to buy into the claimants' case against EA. Still reading.

Great job man...

Keep translating to English for some of us dummies! I actually understand now!!!

[waytofailself]

Thanks. A few more points:

0) If you're interested in reading more about this case, try googling 633 F.Supp.2d 976 or 2009-2 Trade Cases P 76, 776.
1) To people who might be wondering about why they haven't been asked to join the class: the district court did dismiss a number of unfair trade practice claims under many different state laws. The only ones that stood are for California and Washington DC (because that's where the two original plaintiffs were from). That could have something to do with it, or just it being difficult to reach every person who purchased the game(s).

2) I find it fascinating that EA is trying to say that California law cannot apply in this case because it violates their due process rights under the US Constitution. Although EA is a Delaware corporation (who isn't?), their principle place of business is in California AND their End User License Agreement (EULA) states that any disputes with the company must be settled in California under California law.

Why would they do this? Because then the Cartwright Act (a California law) applies, and the Cartwright act is terrible news for EA in this case. How so? A Cartwright Act violation is far easier to prove than a Sherman Act violation (federal antitrust law) -- and there's a real chance EA could be found liable under both by restricting/inhibiting competition through their licensing deals. However, even a Cartwright violation would be enough to end EA's exclusive licenses because they restrict competition.

3) EA did dispute defining the market as "football video games." However, at least at the dismissal and certification stages, the district court was willing to allow the definition. I would be surprised if the court ended up not sticking with this definition, although it will be interesting to see what happens in the summary judgment and trial stages (if the case gets that far).

[PatriotJames]

just wondering if you're looking into this with bias towards EA or trying to stay neutral while posting.

either way keep posting this stuff man, it's good reads.

[waytofailself]

Quote: Originally Posted by Kaiser Wilhelm

EA controls 100% of the football gaming market share... Who else makes a football game other than EA? Who else can afford to enter the market without driving themselves bankrupt? Whether or not another company can make a football game in no way defines a monopoly. Rockefeller Oil was a monopoly but it did not have exclusive rights to oil. It used its massive size to undercut competition and drive them out of buisness. The reason nobody will act on this is because it is such a small niche in a larger market. ...It is the size of the market that makes it "legal," whatever that means.

I'll start by saying that 100% is not required to find a violation of antitrust law. In fact, and you imply this and ODogg says it too, requiring 100% means that no one would ever have antitrust claims. It is instead a matter of degree, does EA have enough of a share of the market to control it? Whether or not someone can afford to enter the market or be bankrupt doesn't matter. The problem is that these licensing deals keep anyone else from entering the market, even someone with the necessary financial resources and skill to compete with EA.

Which leads me to the bolded point: don't undersell yourself. The football video game market is a very large market. As far as I know (though I'd love to see some hard numbers but can't afford to pay those fees), football video games make up a huge portion of sales of sports video games in the USA. And then broaden it further, sports video games make up a large chunk of the entire industry of video games. Yes, the court has, at this point, chosen to focus only on the "football video game" market in this dispute, but this is still a big $ wide impact case.

That's why EA jumped on the exclusive licenses in the first place, and what has led to this dispute.

[waytofailself]

Quote: Originally Posted by PatriotJames

just wondering if you're looking into this with bias towards EA or trying to stay neutral while posting. either way keep posting this stuff man, it's good reads.

LOL, asking someone to reveal their bias on the internetz. Do I seem like I have a bias? It's okay though, I'll show my hand.

So far I've mainly been tracking what the side's arguments are and the decisions the court made. So far those decisions have been in favor of the claimants for the most part, although dismissing the state law unfair trade practice claims must be a huge relief for EA. I will say that I am very much against entities making deals that cut the legs out from under their competitors. On the other hand, I'll also be picking up NCAA Football 12 shortly after its release.

I'm just more interested in the case itself than anything, but I am also aware that just because EA has lost so far in early trial proceedings does not mean they can't win later. Furthermore, by the time this whole thing gets resolved (appeals, etc.) it might be moot because EA's exclusivity is over NFL/NCAA/ALF ran out.

[waytofailself]

Quote: Originally Posted by ODogg

And not only does it make no sense in that capacity but it's wrong in another, there are plenty of companies around who could, if they wanted to, get into the football game making business...In fact the first party manufacturers all could make an NFL or NCAA game if they so desired, that's in the contract with the NFL and NCAA but Microsoft and Sony simply choose not to as the profit margin is slim and sports games have been decreasing in popularity for years now.

First, do you have a source for the exclusive license allowing for Sony and Microsoft to make NFL/NCAA games? Not saying you're wrong, I just can't find it anywhere.

Second, even if it is true that the agreement allows a select few parties to make games it would still violate federal and state antitrust law. Other companies do have the skill, know how, and maybe even want to make an NFL/NCAA football game. The licensing agreement restricts them from doing so. Such a restriction not only flies in the face of an American legislative and judicial history of wanting to bolster competition in the free market, but also would violate federal law if obtaining an NFL/AFL/NCAA license is necessary to compete in the marketplace.

Of course, the plaintiffs will have to prove that important point at trial and when facing summary judgment, but the case hasn't gotten that far yet.

[waytofailself]

Quote: Originally Posted by PatriotJames

Hit it on the nose. Anybody remember the Topps owning the rights to all Major League Baseball Cards? Same thing here. I don't see how this is any different and I refuse to budge. Topps didn't own the rights to EVERYTHING baseball, just the MLB. Just like EA doesn't own the rights to EVERYTHING football, just NCAA & NFL.

The Fleer v. Topps case was actually discussed by the court and by both parties. EA said it allowed them to secure licenses, and the court said the facts of the case could be distinguished the facts in the EA dispute for purposes of avoiding dismissal. It will come up again, but it might be useful to read the plaintiff's discussion of the case:

In Fleer, the company had an exclusive right to sell MLB baseball cards "either alone" or in conjunction with "chewing gum, candy, or confection." So what did other companies do? They sold baseball cards with other things: cheap plastic toys, cookies (not sure how that wasn't a confection but okay), etc. So other groups could still sell cards.

In this case, the plaintiffs argue two things. First, that unlike the Fleer case EA went to multiple entities to secure exclusive license, not just to one entity (MLB) for their product. Second, EA has entirely stopped competition because it is impossible to repackage the game into a usable product. Other card companies could find ways to sell MLB trading cards. No other video game company can create a football game using the NFL/NCAA/AFL licenses.

Just thought you'd like to know since you mentioned it, but both sides will be returning to this case for sure.

[xannash]

Quote: Originally Posted by RedRiverchuteout

If Madden is a Monopoly, Then the NFL is a monopoly, Since the case with the $1 judgement is there, it could prove indeed that they are one in the same. This could mean that a lot of people will get law suits nailed to them this summer. With lockouts and all the "fun" that goes along with that, The NFL and EA will be knee deep in trouble. ...

I would like to point out that the players currently have an anti-trust lawsuit against the NFL...

I haven't gotten an email either and I own NCAA 05, 08, 10, Madden 06, 08, 10, and NFL Head Coach (both the original and 09) but I read the article on joystick (I think) yesterday.