“Aliens: Colonial Marines”: The Current Questions In The “Actual Gameplay”/”Bait-And-Switch” False Advertising Lawsuit.

aliens-marinesThe U.S.  District Court for the Northern District of California will soon consider two primary issues relating to alleged false advertising in the sale of video games:  (1) Whether video games are a “good” as defined by California’s Consumer Legal Remedies Act (“CLRA”), and (2) Whether, and to what extent, a pre-release demonstration of “actual gameplay” constitutes an “express warranty” regarding the quality of the final product.  The Court’s rulings as to both issues—and particularly the second—will no doubt play a significant role in how new games are first introduced to the public.

The Aliens: Colonial Marines Lawsuit.

The video game Aliens: Colonial Marines was released for public purchase in February 2013—and was reportedly received poorly by consumers and industry critics.  On April 29, 2013, one such consumer commenced a lawsuit against game developers Sega of America and Gearbox Software (on behalf of himself and a putative class of disgruntled purchasers), alleging that he decided to preorder the game based on “actual gameplay” demonstrations he viewed at the “E3 2012” video game exposition.  According to Plaintiff, the actual game he received did not comport to the quality of the demonstrations he witnessed, and defendants had thereby “duped” him into preordering the game.

On July 5, 2013, plaintiffs filed an amended complaint characterizing the alleged false advertisement as the product of an elaborate multi-year conspiracy.  According to plaintiffs, the defendants secretly undertook to create two entirely separate versions of the game:  A technologically superior version, which defendants advertised to the public to generate media and consumer hype (but which they never intended to release for public purchase), and the inferior “consumer” version of the game that would actually be delivered, including upon preorders.

The defendant game developers have filed a 12(b)(6) Motion to Dismiss as to two of plaintiffs’ claims, for violation of the CLRA and for breach of express warranty.

Issue 1:  The Consumer Legal Remedies Act—Is Software A “Good Of Service”?

The Consumer Legal Remedies Act prohibits certain unfair or deceptive practices “in a transaction intended to result or which results in the sale or lease of goods or services to any consumer[.]”  (Cal. Civ. Code §1770.)  The prohibitions include representing that the goods or services are of a particular standard, quality or grade, if they are of another; and advertising goods or services with intent not to sell them as advertised.  Cal. Civ. Code §1770(a)(7), (9).

On their Motion to Dismiss, defendants assert that the product at issue (game software) is not a “good” as defined under the CLRA—i.e., a “tangible chattel bought or leased for use primarily for personal, family, or household purposes.”  (Cal. Civ. Code §1761(a).)  Defendants argue on this basis that the CLRA is therefore inapplicable. In opposition, plaintiffs contend that the game qualifies as a “good” because the game software in this instance is embodied in a “tangible chattel”:  Playstation 3 and Xbox 360 game discs.

The Court is therefore presented with a novel question in the video game arena:  whether software (generally an “intangible”) becomes a “good” as defined by the CLRA if it is bought in a tangible medium, rather than downloaded.

Issue 2:  Is “Actual Gameplay” Sufficiently Definite To Be An “Express Warranty?”

 Under California law, the essential elements of a claim for breach of express warranty are (1) the exact terms of the warranty, (2) a plaintiff’s reasonable reliance thereon, and (3) breach of the warranty and resulting damage.  On their Motion to Dismiss, defendants assert that “actual gameplay” demonstrations at videogame conferences, without more, fail to provide any “precise” warranty terms sufficient to state a claim for breach of express warranty.  According to defendants, plaintiffs’ general contention that defendants “warranted” the qualities and specific features depicted in the demonstrations, without more, are too indefinite and therefore insufficient to state a claim.

Plaintiffs respond that an express warranty of quality need not be overly complex, and that defendants’ alleged representations through gameplay demonstrations (denoted “actual gameplay”) were sufficiently definite.  Moreover (and significantly to industry presenters), Plaintiffs further maintain that statements made by the game developers’ representatives at E3 and other game conferences alongside and/or in conjunction with the “actual gameplay” demonstrations likewise provided the terms of the “express warranty” of game quality.  These representations purportedly included (for example) statements by Gearbox CEO Randy Pitchford at E3 2011, that consumers were about to see “what the game actually looks like.”

Hearing on defendants’ Motion is presently scheduled for October 11.  The ruling will no doubt have far-reaching implications to game developers and publishers—particularly those planning to present “teaser” game play demonstrations at upcoming expositions.