EA Sued Twice More over Use of DRM Technology

In early September, EA (ERTS) began selling the highly anticipated PC game title, Spore, around the globe. The ambition was huge, the hype enormous. Spore was to be a “sure thing” hit. So far, it’s lived up to that expectation. The game is the top seller in Amazon’s (AMZN) PC and Mac games categories and according to EA, nearly two million copies sold in the first three weeks of sales. Unfortunately, with the sales and high visibility has come another less desirable achievement: Spore has become a lightning rod for complaints over the SecuROM embedded digital rights management system EA is using to thwart piracy. 

In venomous complaint after complaint, buyers have bemoaned EA’s disclosure policy and implementation. This version of SecuROM, they say, puts their computers at risk of damage and cannot be removed. It’s “Draconian.” It’s been called poorly disclosed and poorly thought out. Some are calling it "malware."

EA’s CEO John Riccitiello has downplayed these comments, saying they come from a well orchestrated minority of game players. “We chose a particularly aggressive form of DRM, which 99.8 percent of consumers would never notice, but that two-tenths of one percent got incredibly focused and formed an online PR cabal,” he said, adding, “I personally don’t like DRM. It interrupts the user experience. We would like to get around that. But there is this problem called piracy out there."

Whether those taking their protests to the web are a minority or not, some of the complainers are making themselves heard, and not just in online forums but in the courts too. 

Shortly after the game’s release, a class action lawsuit was filed in September targeting what the plaintiffs called deceptive behavior. The suit accuses EA of unlawfully putting a program on a customer computer (legally, a form of trespassing). The suit also charges EA with misrepresenting its services under California’s Consumers Legal  Remedies Act (Section 1750) and of using fraudulent business tactics.

The issue is not that EA chose to use SecuROM but how EA disclosed (or didn’t disclose) what the security software does.

Some customers say the program damaged their computers and they wouldn’t have bought the games had they known SecuROM couldn’t be removed.

Adding to the original suit, Gamepolitics.com has discovered two more suits were filed in California courts in October.

In the first follow up case, filed on October 14th, Kamber and Edelson, the same law firm representing the plaintiffs in the original suit, takes the claims of trespassing, misrepresentation and fraud and applies them to the free trial version of the Spore Creature Creator. 

The second case, filed October 27th by Missouri resident Dianna Cortez, applies the claims to EA’s use of SecuROM with the Sims 2: Bon Voyage expansion pack.

All three cases are, at this point, in the early stages of litigation. Outcome probabilities lean toward settlement, particularly given Kamber and Edelson’s success with digital trespass cases (they’ve successfully sued Facebook and AT&T (T)), but there’s a long way to go before this comes to a conclusion.

More information on SecuROM, EA and the original suit can be find in this prior article from Metue. 

For those looking to read the case files (in pdf format), the initial filing for the first class action suit is available here. The second and third case documents can be found here and here.

Comments

[Craigd:]

Hi Seth,

not to quibble but the gamepolitics site was not only late in reporting the additional lawsuits...they also missed one. There are actually Four lawsuits aimed at Electronic Arts right now and potentially more to come. Full details of the lawsuits, including links to filings etc, can be found at

www.reclaimyourgame.co...

And last I checked, Spore was at rank 104 on Amazon.com in videogames. Also, you neglected to mention that the vast majority of those 2 million sales were on console versions that do not include the DRM. The DRM affected PC sales figures represent less than a quarter of the total according to NPD sales data. Some estimates showed over 500,000 illegal torrent downloads showing that not only does the DRM negatively impact sales, it also has no impact on curbing piracy at all. In fact, if you were yto visit those torrent sites and read the comments, many of them people illegally downloading Spore actually chose to do so as a direct consequence of wanting to avoid infecting their computers with SecuROM.

Many gamers believe that this DRM software is not designed to do anything about piracy, but is instead aimed squarely at preventing second-hand sales. The legality of this restriction has yet to be determined for Electronic Arts, but it is one of the causes of action in one of the lawsuits because the lawyers believe that EA is infringing the US copyright act by circumventing the doctrine of first sale which guarantees the right of resale for all products. The federal ruling in Autodesk vs Vernor showed that merely claiming that they are selling software 'as a licence' does not obviate the first sale doctrine right for consumers.

Shareholders ought to be alarmed that EA's CEO not only chose to implement a DRM technology that is a lightning-rod for legal action, and for customer revulsion and boycotts, which has no impact on piracy (except perhaps to encourage it), but also decided to respond to customer complaints by calling half of them criminals and the other half ignorant. John Riccitiello has done some good things for EA's product quality, but his publicly stated disdain for EA's customers is killing EA in the market of public opinion. And when a company becomes openly hostile to its customers what does history teach you about the earnings potential of its stocks?

2008 Nov 13 01:09 PM

[Seth:]

Craig, thanks for the added information and links.

Regarding sales rank -- Amazon publishes a number of different sales rankings...The article was referring to rankings in PC and Mac games categories as noted. There the game is #1 in simulation games (sub category), and holds top ten rankings in the PC and Mac categories. You're absolutely correct it's not in the top hundred overall when ranked across all platforms of video games. 109, is the latest I saw there.

Even so, the article should have read "a top seller" not "the top seller". Thank you for raising the point.

2008 Nov 13 06:44 PM