Coors sued for $12.5 million over iPhone app

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The Silver Lion-winning iPint application for Carling from London agency Beattie McGuinness Bungay has come under scrutiny, the target of a $12.5 million dollar suit against corporate client Coors by Hottrix, the small, Nevada-based developer of the $2.99 iBeer application. It's unclear where the buck stops, should Coors and BMB be found liable, making it possible the developer of the application, Sweden's Illusion Labs, has some measure of legal responsibility for the infringement.

Wired's Gadget Lab blog broke the story, and included a PDF of the lawsuit, filed Friday afternoon in Los Angeles County.

According to the lawsuit, Beattie McGuinness Bungay contacted Hottrix to license the developer's $2.99 iBeer application, which uses the accelerometer inside the iPhone to simulate drinking a beer, but was rebuffed by Hottrix, whose application was one of the most downloaded in the iPhone App Store. BMB then went around Hottrix, creating a near copy with iPint and releasing it for free, causing iBeer sales to suffer.

"On or about November 5, 2007, BMBL contacted (Hottrix founder) Sheraton via the Internet after having seen iBeer 1.0 requesting (1) a license to use iBeer 1.0 for marketing purposes for its client(s), and/or (2) a license to create a derivative work of iBeer 1.0 to create a functional iBeer application that can be used for marketing purposes for its client(s) on "jailbroken" iPhones ("BMBL contact"). Throughout the BMBL Contact, none of the Defendants were granted a license or any rights to copy or create derivative works of iBeer 1.0."

According to Hottrix's attorneys, after the developer sought to come to an agreement with Coors after iPint's release and was unsuccessful, it contacted Apple, which removed iPint from the U.S. App Store. The application is still available abroad. The suit asserts there have been over 6,000,000 downloads of iPint.
"If, in fact, Illusion Labs has an agreement with Beattie McGuinness Bungay in which they warrant that their work will not infringe upon the rights of a third party, they could potentially be on the hook for the lawsuit filed by the iBeer people."

According to a statement from Jason H. Fisher, an attorney representing Hottrix, "Hottrix is a small mom-and-pop company that takes the protection of its intellectual property very seriously. Hottrix has been developing its digital 'tricks' since it debuted the 'e-Spresso' for the Palm Pilot in 1999."

Clearly iPint's popularity is due to its sharing a central feature with iBeer -- the visual device that appears to fill users' iPhones with beer, which they can then drain by tipping the phone -- yet costing only exposure to the Carling brand as opposed to $2.99. Some of the legal argument may hinge around the mini game created for the Carling app, Barslide. In it, players use the accelerometer to help a sliding pint avoid obstacles on the bar--the reward is the frosty virtual beverage. However, you don't need to play the game to use the iPint tippy beer feature.

The lawsuit stresses the game is only there to mask the theft of iBeer. "On information and belief, the Mini-Game was added to create a false distinction between the Infringing App and the iBeer Content," it says.

However, in the event that Coors pays off Hottrix, it's unclear who's liable. The language in the lawsuit claims Coors is "vicariously liable" for the actions of BMB. The lawsuit also names "Does 1-10," unnamed entities the plaintiff will be allowed to amend once it identifies the parties responsible. According to the suit, Does 1-10 "may be liable under one or more of the claims in the matter complained of herein." Inquiries to Coors, BMB and Illusion Labs went unanswered.

iPint was produced by Illusion Labs in Malmö, and widely hailed by industry pundits and awards show jurors, which awarded it a Silver Cyber Lion at Cannes this year.

According to Kevin Arthur, executive vice president at digital production shop Firstborn, his company has seen contracts that would hold it responsible for copyright infringement, should a suit like the iBeer-iPint one arise. "While I'm not an attorney (much to my mother's dismay) the issue of third party infringement is one we've come across from time to time in our contracts with our clients," Arthur says. "If, in fact, Illusion Labs has an agreement with Beattie McGuinness Bungay in which they warrant that their work will not infringe upon the rights of a third party, they could potentially be on the hook for the lawsuit filed by the iBeer people.

"In instances in which an agency comes to us with an assignment to execute and extend upon an idea they already have in place, we've pushed back with the legal terms if they ask us to take on an unfair amount of risk. We certainly warrant that our part of the work is original but as far as any third party claims, there's a danger as exemplified by the iBeer case."

Until recently, agency network TBWA had been in talks to acquire BMB, which was founded by former TBWA London creative head Trevor Beattie in 2005. Talks between TBWA and the BMB came to a sudden end on Friday, the day the lawsuit was filed.

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