Is Hasbro Making a Serious Intellectual Property Strategy Mistake by Fighting with Scrabulous?

As an outsider (and who admittedly does not have deep knowledge of the respective strength of the party’s arguments), it appears to me that this is a situation where Hasbro can “catch more flies with honey.” That is, Hasbro might be better off in the long run by trying to realize some revenue from the advertising stream that flows to Scrabulous online. The players of Scrabulous on Facebook are not likely buyers of the board version of Scrabble and, as such, they are not losing any board game revenue from these online players. Any money obtained from the online game is effectively “money for nothing,” which in this down economy Hasbro should be happy to receive.

I understand that Electronic Arts is the licensee of the online version of Scrabble, and Hasbro’s action may be largely directed toward protecting EA’s market for the non-board game versions of Scrabble. This may be true, but the EA version of Scrabble clearly isn’t wowing users like Scrabulous. Like Hasbro, EA should look to obtaining some sort of revenue stream from Scrabulous.

It is worth noting that, from a legal standpoint, Hasbro and Scrabulous must “police” the Scrabble intellectual property rights to ensure that these rights are not lost due to inaction. But there is no requirement that the owners of intellectual property refuse to license their intellectual property rights to others. Licensing is not surrender.

Hopefully, today’s action of shutting down Scrabulous is only the first serious action between Hasbro, EA and the designers of Scrabulous and that the parties are poised to quickly resolve this dispute. In this world of fickle on-line technology users, there may not be much time for the players to work out the legal issues before Scrabulous fans become fans of another online game. In this regard, Hasbro and other game companies need only look at the recent history of the now-moribund traditional music industry, where legal and business decision-makers thought that aggressive intellectual property enforcement would hold off the march of online music delivery technology. If I were an advisor of Hasbro or its licensee EA, I would definitely remind them of the destructive results of this strategy to the music industry as a cautionary tale.

One thought on “Is Hasbro Making a Serious Intellectual Property Strategy Mistake by Fighting with Scrabulous?

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