Wizards: Peter on the Cusp, Part Twelve

Steffan O'Sullivan, who saw trouble brewing

In June 1992, after Wizards had released The Primal Order and The Talislanta Guidebook, with more products underway and things looking hopeful, a long-brewing crisis came to a boil.

It was set in motion on 17 November 1991, when Peter posted on the Usenet group rec.games.frp at 4:18 a.m. looking for RPG systems experts. Four hours later, Steffan O'Sullivan warned him in his reply:

If this project involves publishing, you'd better get publishers' permissions, first . . .

A day later, Peter responded:

I will be following the procedures outlined for me by my intellectual properties attorney.

Experts from all over the Internet contacted Wizards and contributed their conversion notes to The Primal Order to create the first Capsystem product. TPO hit the stores five months later in April 1992, and two months later in June Kevin Siembieda launched the lawsuit that nearly destroyed the fledgling company. The long, difficult road to their very first product release led Wizards of the Coast directly into legal trouble.

The Wizards staff had wanted to create a stronger RPG community by developing ways for people using different RPG rule systems to play together. The Capsystem line of products was created with that in mind, as was the Envoy system (though that was never published nor even written down beyond the notes stage). The marriage of the d20 system and the Open Gaming License many years later was a return to that goal.

The lawsuit's claims to the contrary, what got Wizards into trouble was not actually the system-integration notes themselves. Under U.S. copyright law, only the text - not the ideas - are copyrightable, so expressing those ideas in your own words does not count as a violation of copyright. Had Mr. Siembieda patented Palladium's rules, then Wizards would have been in the wrong, but he did not. Wizards's intellectual-properties attorney was correct, and Wizards correctly followed the procedures he outlines.

The actual problem came in two parts, which the many very smart and creative but idealistic people out there should pay attention to if they want to learn from history.

Kevin Siembieda, Palladium founder

The first part is that under trademark law, a company that does not vigorously defend its trademark can be accused of abandoning it, at which point they lose their trademark and it's up for grabs. That is, the law itself drives companies into aggressive attacks upon anyone who infringes upon their trademarks. If you have heard the saying about the Disney company Don't mess with the mouse, this is why; if Disney did not defend their trademarks, they would be considered abandoned. Even if a company will lose a court case, it also benefits by demonstrating that it cares about its trademarks.

Now simply naming a company or referring to its trademarks is not a violation of trademark law - on the contrary, the whole point of trademarks is the hope that the public will refer to them frequently. Trademark violations occur when you misrepresent your own work as falling under that trademark, or vice versa if you use the trademark in such a way that it seems to belong to you rather than its proper owners. These kinds of dilutions of the brand are the kinds of damage trademark cases are built around. Since Wizards in no way tried to represent its work as part of Palladium, nor presented Palladium Books's trademarks as though they belonged to Wizards, it did not even come close to violating trademark.

Nevertheless, for the reasons described above (as well as other less noble motives that do not apply in this case), companies are often ready to launch trademark-violation lawsuits even when they are clearly in the wrong. We live in a severely suspicious and litigious culture, in which people try to resolve with court cases what past cultures resolved through etiquette. Because of trademark law, this unpleasant quality is multiplied in the case of companies who want to survive for long.

The lesson of the first part is this: just because you're in the right legally does not mean you will not be dragged into court. As children we sometimes learn to become so focused on what's "fair" or "right" that later as adults we can lose track of what's prudent. Just because you can do something does not mean you should, or that you will not be attacked for it.

The second part is that the guarantee of swift justice - that is, of efficient determination of whether someone is guilty or innocent - has long ago devolved into a labyrinthine system of laws and procedures so Byzantine that more than a few defendants have died before being exonerated in court. The American legal system has become so complex that it has itself become the punishment.

The punishment now precedes the determination of any crime. Merely to be dragged into an extended legal process is often all it takes to punish someone financially with large debts for the rest of their life or even bankruptcy. The threat of court is often enough to make innocent people subject themselves to punitive settlements in an effort to avoid it.

Those with the money to spend on lawsuits know how to use the court system to get what they want out of the innocent. Although this was not Mr. Siembieda's motivation (Palladium Books had more money than Wizards, but not enough to squander on harassment lawsuits), the consequences were the same - both Palladium and Wizards suffered.

Publisher of numerous RPGs, including Rifts

The lesson of the second part is this: you are one lawsuit away from having your life turned upside down. Do not be in a hurry to prove your innocence in a court of law. Unless you have good legal counsel and a wise judge and are lucky, you're gambling with your future. You will certainly pay a much higher price than you expect to in time, money, and stress just to return to the status quo - if you can; today's overburdened courts are fallible. You may be held guilty of something of which you are innocent. DNA evidence in recent years had turned up plenty of convicted "murderers" who we now know cannot possibly have commited the crimes for which they have been punished. Avoid the court system if you possibly can.

Wizards couldn't. They had relied upon doing the right thing, upon following the law and trusting that it would back what they did. This approach was central to the strategy of the Capsystem product line, which in turn was central to their strategy of carving out their niche in the RPG world by doing things differently than anyone else had done them, by finding ways to grow the pie rather than fighting over it. Concerned about his trademark and copyright, Kevin Simebieda could settle for nothing less than an admission of guilt, but an admission of guilt would set a precedent and open Wizards up to lawsuits from all the other companies they integrated with in TPO.

They couldn't back down, and as things stood they couldn't settle either, so during the second half of 1992 their pride and hope in their growing line of RPG products was increasingly undercut by mounting legal costs and dread about the future. Just as they seemed poised to become financially sustainable, they became financially pressured again. The train had left the tracks and seemed headed unstoppably toward a court battle that would economically destroy them.

Peter's 1993 narrative about this time:

But just after the Guidebook came out, on June 17th, 1992, we were dealt a devastating blow (although it took several months before the full impact really started to hit). We were jointly sued by Palladium Books and Kevin Siembieda for copyright and trademark infringement due to the TPO integration notes. The further and further we got into 1992 the more time and resources this started to consume, and a cloud started settling over our office that sapped our energy and caused us to start doubting the future of the company. This last November and December were low points, culminating with the fact that the case wasn't thrown out of court on the 14th of December as we'd hoped it would be at the summary judgement hearing we had that day. We had started a stock solicitation in November, but it was proceeding slowly, and on December 28th, during our Christmas holiday, I told our staff that the payroll checks I was writing would be their last, probably for several months.