Marginal Utility

by Tom Bozzo

The NYT published an article on the ongoing Scrabulous dispute, reminding us that Hasbro and Mattel "own the rights" to the game and:

denounced Scrabulous as piracy and threatened legal action against its creators, two brothers in Calcutta named Rajat and Jayant Agarwalla who run a software development company. Both Hasbro and Mattel said they were hoping for a solution that would not force them to shut down the game.

There's evidently dissension among the IP holders' ranks, as:

Harold Zeitz, senior vice president for games at RealNetworks, said Friday that he was working closely with the Agarwalla brothers to bring the official Scrabble game to Facebook users.

Hasbro, meanwhile, said in a statement that Electronic Arts was planning to release an online version of Scrabble this spring. And Mattel, which signed a deal with RealNetworks last July, says that settling with the Agarwallas would set a bad precedent.

Nearly the only "expert" opinion offered is this:

After 25 years with the National Scrabble Association, John D. Williams Jr., the executive director, said he had seen numerous copyright infringements of Scrabble, but the Scrabulous program on Facebook was the most “widespread and intense.” [emphasis mine]

Then comes a related entry in the DealBook blog, with some dish on the source of a holdup in the negotiations between the Scrabble rights holders and the Agarwallas:

Still, they are now taking in $300,000 a year and, according to Silcion [sic] Alley’s back-of-the-envelope calculations, with a 10- to 20-times-revenue multiple that would make Scrabulous worth $3 million to $6 million. Allowing for a what the blog calls “a hockey-stick growth curve,” it could be worth more than $10 million, Silicon Alley said.

But according to the publication, again citing an anonymous source, “the brothers want a ‘multiple of several times that’ $10 million, and the four corporations they’re negotiating with think that’s ridiculous.”

Maybe so, but let me tell you what: in copyright disputes, it is highly unusual (to put it mildly) for rights holders to negotiate what they're going to pay the alleged infringers; cf. RIAA versus the world. It would have been informative had the NYT talked to someone who could discuss just what it is Hasbro and Mattel purport to own that puts them in this situation.

Labels: Intellectual Property