Via Penny Arcade, I see that Vivendi Universal has allowed a fan group to make a new King's Quest game, King's Quest IX. My reaction is one of restrained jubilation. Generally speaking, the corporate attitude with respect to video game rights has been to protect them like misers. This includes, but is not limited to, refusing to allow fans to remake old games that the company owns the rights to, refusing to allow fan sequels to series that the company considers dead, and refusing to allow free distribution of games that the company has no intention of ever releasing again.
Now, I'm not a civil disobedience all-intellectual-property-is-theft damn-the-man pirate-software-for-the-sake-of-the-revolution type. If a company doesn't want to make its software free to the public, if it doesn't want to allow fan development of its intellectual property, which it either worked hard to produce itself or paid good money to legally acquire, that's its right, and I will respect its wishes. But that doesn't mean I won't criticize the decision. These are often games that companies have decided will never see the light of day again, or that they don't even know they own and have completely forgotten about, even if fans haven't. Now I don't mind them jealously guarding the rights to their games if they have vague plans to release the games in a compilation in the future, or if they think they may build on the brand again at some later point, but a lot of times companies sit on a golden horde of intellectual property that they care nothing about and plan to do nothing with, but that fans would love to get their hands on.
So this is quite the positive thing. Vivendi Universal, which now owns the King's Quest franchise, will allow a fan group to continue producing a King's Quest game. Hopefully, this will open the door to VU granting permission to fans to work with other of their software products. It might even convince other companies to (judiciously) release some of their own IP to fan groups. There are dozens of computer game series, and thousands of individual games, that are fruitful grounds for a fan sequel. Or a fan re-make. Or even, ala The Ur-Quan Masters, fan updates that allow old DOS games to run in a modern environment without the tweaking and twiddling generally necessary to get such games to run on a DOS emulator (That's a 100% legal free version of Star Control II that will run with all features in a modern Windows environment, by the way. For those that don't know, Star Control II was a sort of hybrid of Starflight/Elite/Privateer and Computer Space, and was probably one of the best computer games ever made). So this is pretty exciting.
At the same time, it would be foolish to get hopes up too far. Note the careful wording of the linked letter: "has been given approval to continue development." Last I heard, that's not a legal contract. That's "We have talked to our lawyers and decided to sit back and not sue you. Yet." That's not a promise to abstain from future lawsuits. And you can bet that if this game is at all popular things are going to get pretty ugly pretty fast, because the fan group will be distributing a video game based on an intellectual property they have no rights to. At best, after a cease-and-desist letter and expensive negotiations, VU and the group will reach a settlement that permits the group to distribute the game in exchange for a royalty. At worst, distribution will be shut off and the fans will have to pay incredibly massive out-of-pocket expensive for trademark infringement.1 The company still has all the power here. This letter is in no way a legal shield for the fan groups.
Still, though, I'm cautiously optimistic. I'm hopeful, given that VU is playing ball so far, that they'll adopt a flexible and reasonable approach if the game is successful. Perhaps, if the game succeeds, they'll reach an amicable agreement with the fan group to allow them to distribute the game for a small fee. This could, in theory, open the gates to VU and other companies deputizing fan groups as development contractors, who will work with the various companies' old and unused IP to create products that appeal to a small niche market on the cheap. Nonetheless, this is the best-of-all-possible worlds scenario, and I think it's far more likely that there's going to be a lot of acrimony between VU and the King's Quest IX group in the future.
1Trademark infringement damages are some of the biggest damages you can get. To start, the burden of proof is different; for most damages the plaintiff has to affirmatively prove what their damages were, and the defendant can refute them. For trademark infringement damages, the plaintiff just has to state what their damages were, without proof, and the burden is on the defendant to prove the plaintiff wrong. To do that defendant would generally need unfettered access to plaintiff's sales data, along with the ability to understand plaintiff's filing and organization system to actually find what's needed and figure out what it means. Generally speaking trademark infringement damages are a lot closer to what the plaintiff claims than to what defendant claims. Further, trademark infringement damages are defined as 1. Any loss to the company's direct profits from confusion (people think they're buying the legitimate product when in fact they're getting the knock-off) PLUS 2. any loss to the company's good name and public good will caused by consumers associating the low quality knock-off with the real product, and assuming this means the real product is of low quality PLUS 3. any and all gross profits acquired from the sale of infringing goods PLUS 4. the judge, at her discretion, may automatically triple the damages PLUS 5. within her discretion, the judge may also tack on punitive damages without limit. This country REALLY doesn't want you infringing on trademarks.
That list of trademark infringement damages has interesting implications. As you mentioned, it's when the infringing product gets popular and/or profitable that the trademark holder will get involved. But if you don't want to get socked with #2, loss to the company's good name, you'd better not make a crappy product.
So if you're making a product which is infringing upon someone's trademark, such as a fanmade sequel to a computer game, you'd better make it good enough that the company can't claim it's hurting their image, but not so good (or so well advertised) that you actually make any money off of it.
In other words, you need to be fantastic and underappreciated.
The idea of trademark damages for fan-made productions is interesting. Most of the fan-made derivative software I've seen (Mods for existing programs, on-the-sly fan-made sequels and re-makes, etc.) have been distributed as freeware. So there's not really a concern about #3. #1 seems like it'd be off the table entirely if, as is often the case here, the company isn't bothering to sell the game in any form.
But #2 is the tricky one; to what degree are you damaging the company's good name if you create a crappy product with the name of a license the company doesn't use anymore? King's Quest raises some interesting questions on its own. When most people think of the company responsible for King's Quest, they think Sierra On-Line, a company that was bought by Vivendi Universal. At first Sierra was a development group within VU. Then they killed off that group and just used Sierra as a brand name that they published under. But they haven't published a game with the Sierra name on it in years. So not only is King's Quest a dead line, it's a dead line associated with a dead company. It's pretty unlikely, as a practical manner, that anyone confused by King's Quest IX such that they think that it's a legitimate release will attribute its terribleness to Vivendi Universal.
This, I think, is where the different rules for burden of proof make a big difference. Normally, it would be up to the plaintiff to prove and put a monetary value on their loss of good will. But in this case, all the plaintiff has to do is state a number that's not so implausibly high that it gets laughed out of court, and suddenly it's the fan group's job to prove people weren't confused and don't think less of VU because of their game. That's a pretty tough standard to meet.
The other interesting aspect to all of this is the original creators. What does Roberta Williams, creative mind behind King's Quest I-VIII think of this? Has she had any say at all in the development of IX? Has she given it her blessing? Obviously she has no legal right to it any longer, because those rights were sold off with Sierra On-Line to Vivendi Universal. But King's Quest was largely the product of her creativity, and now it's being co-opted by people she has no connection with. I can see getting pretty annoyed by that. Moreover, a lot of games from the 80s to mid-90s were largely the product of one or two creative minds who no longer have control of the intellectual property. What do they think of fans taking their creation and doing their own thing with them? This isn't so much a legal as a moral question. Probably, if they can get the owning company's consent, fan groups can make their own sequels to old games. The question, though, is should they do it without consulting the original creator?