A court rules on the owner of the family video game console

Who owns the family video game console? The U.S. District Court for the Northern District of California recently ruled that the parents were doing it, even though they weren’t playing it.

The Nintendo Switch is a video game console equipped with portable controllers, called “Joy-Cons”.1 The named plaintiffs, two parents and their minor children, alleged that their Joy-Cons had lost their center and “drift[ed]», requiring replacements in a few months.2

Nintendo decided to arbitrate, alleging that the parents consented to arbitration twice: 1) in a shrink-wrapped statement printed on the outside of the box that required acceptance of the End User License Agreement (EULA ) from Nintendo and 2) in a “clickwrap” message that Switch owners are required to accept the EULA to use their Switches. The plaintiffs disputed having consented, arguing that only the children activated and used the switches and that the children lacked the capacity to enter into the EULA or de-asserted it. On March 3, 2021, the court ordered that “the question whether or not there is a duly formed arbitration agreement be sent to the arbitrator”.3 District Court Judge William Alsup added that the question was a first impression: “[T]this is not a case on point.4

The arbitration panel later concluded that the parents were bound by the arbitration agreement, but that the children were not:

There is no agreement between Nintendo and Minors. Since minors were never parties to the EULA or bound by its arbitration provision, we need not decide what law would govern minors’ avoidance of contractual obligations under the EULA. We also do not need to determine whether the Minors misrepresented their age, or whether contractual obligations of the Minors were avoided or terminated within a reasonable time.5

The children’s claims returned to federal court, where Nintendo renewed its assertion that the plaintiffs did not allege that the underage children purchased the Switch or suffered bodily harm.

On September 7, 2022, in a class action lawsuit filed by parents and children against Nintendo, the court granted Nintendo’s motion to dismiss.6

The plaintiffs had argued that the parents transferred their ownership interest in the Switches and Joy-Cons to the children, through a donation.seven But the court found that the plaintiffs’ complaint did not properly allege this.8

Under California law, a gift is “a transfer of personal property, made voluntarily and without consideration.”9 The court found that the plaintiffs had failed to plead sufficient facts to show “the voluntary intention of the donor to make a donation” and the “complete disinvestment of all control by the donor”, two elements necessary to constitute a gift in under California law. .ten

The complaint described the parents as purchasing the console for “personal, family and household use”,11 and alleged the parents were defrauded by an advertisement and paid more money for a Switch than they otherwise would have.12 None of the claims characterized the console as a gift or suggested a transfer of ownership to children.13 The mere use of the console by children does not make them owners: “Here, the minors simply used the consoles. They weren’t allowed to sell them. Therefore, miners could not suffer a reduction in resale value. »14

The court expressly stated that it “did not consider that if the complaint were to adequately allege the gift, the minors could rely on Article III or any legal status.”15 Nevertheless, on September 29, 2022, the plaintiffs filed a motion for leave to file a second amended complaint, which, among other things, contains allegations that the minor plaintiffs believe that they “are the true owners of the [Switches and Joy-Cons] as a result of receiving the products as a gift from their parents.16

For more information on contracting with users of your software or hardware product (game or other), please contact a member of the firm’s internet strategy and litigation practice. For more information about electronic games, please contact an attorney in the firm’s electronic games practice.

Waen Vejjajiva and Brian Levy contributed to the preparation of this opinion.

[1] Sanchez vs. Nintendo of Am., Inc.no. 3:20-cv-06929-WHA, 2022 WL 4099154, at *1 (ND Cal. Sept. 7, 2022).

[2] ID. to *1-2.

[3] Transcript at 23:7-11, Sanchez vs. Nintendo of Am., Inc.#3:20-cv-06929-WHA, ECF #46 (ND Cal. Mar. 3, 2021).

[4] Identifier. at 26:2-3.

[5] Sanchez2022 WL 4099154, at *1 (citing arbitration panel).

[6] ID. at 3.

[7] ID. at 2 o’clock.

[8] ID.

[9] ID. (quote omitted).

[10] Cal. Civil. Code § 1146.

[11] Sanchez2022 WL 4099154, at *2.

[12] ID. to *2–3.

[13] ID. at 2 o’clock.

[14] Identifier. at 3.

[15] Identifier.

[16] Word. at 1:7–8, Sanchez vs. Nintendo of Am., Inc.#3:20-cv-06929-WHA, ECF #69 (ND Cal. September 29, 2022).

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