I was just listening to the CBC in the car, and they were talking about how the makers of Scrabulous — two brothers from India — are being sued by Hasbro for violating the Scrabble trademark. Apparently they will have to remove Scrabulous from Facebook, which is causing kind of an uproar among its 50000 devotees.
The CBC’s guest was this guy, Matt Mason, who talked about how although it is important for companies to defend their intellectual property, current trademark and copyright law is hopelessly out of date with the way we use digital information today. He cited a study in which some guy kept track of all the copyright violations he did in one day — not just illegal downloads, but stuff like quoting someone else’s email in an email you were writing; taking a photo of your friend on the street with a TV screen in the background; embedding a company’s logo in a blog entry. He estimated that the total dollar value of all his violations, if sued for every infraction, would be something like 12.45 million dollars. In one day.
Mr. Mason had some interesting ideas about piracy. In particular he suggested that it was a bad PR move for Hasbro to sue the Scrabulous guys, as it creates a bad impression of Scrabble, the game, among the many many Scrabulous users. He said that since people love Scrabulous, Hasbro should just suck it up and find a way to deal with the the guys — to take advantage of the established user base and brand infiltration to get in on the action themselves, instead of just trying to kill the whole thing. An interesting suggestion. If I had more time on my hands I might check out his book to see what other ideas he has about the internet and pirating…I sure don’t have enough cash to cover that 12.45 million!
TurtleHead 
Presumably Hasbro weighed the cost of allowing Scrabulous to continue against the cost in bad PR that would result from suing and concluded to go ahead with the lawsuit.
That’s how other big companies do it, anyway.
I can definitely see Hasbro’s side of things. With the youthfulness and ever-expanding nature of Facebook’s community, Scrabulous will just grow in popularity, until one day you’re at the cottage with your fourteen-year-old cousin and you suggest playing Scrabble, and he says “You mean Scrabulous?” That’s the sort of thing Hasbro doesn’t want, especially with a game that’s been popular for decades, with a tradition of play which has been passed down from generation to generation.
I don’t think the problem is the laws themselves. For example, there are many exceptions to copyright and trademark law that would cover the examples of piracy that you just quoted.
The real problem, in my opinion, is that the litigation process is so ridiculously expensive that ordinary individuals can’t afford to defend themselves from overblown and stupid lawsuits brought by corporations with overzealous lawyers. So everyone either knuckles under or settles out of court, like all those poor people sued by the RIAA who might have won if they’d gotten up before a judge and jury. Unfortunately, because those cases never do make it to court, the law remains really vague and subjective, which perpetuates the problem.
As for Hasbro buying the two brothers, I would agree with Matt Mason. The cost of coming to some sort of deal with the makers of Srabulous would be far less than the cost of suing them and the resulting PR backlash.
Of course, from Hasbro’s point of view, why the hell should they fork out a briefcase full of money to these two for rights to a game Hasbro already owns?
Maybe this isn’t fair, but maybe that is the price Hasbro should pay for dropping the ball and ignoring the business opportunities. Too many companies are litigating to preserve their outdated business model rather than exploring new ones. The RIAA is a spectacular example — they’re going down flaming, suing their own customers to the bitter end.