X-Play VS Datablitz

Article written by:
Bim
Author: BimWebsite: http://geekout.ph
Bim is a socially adjusted geek with an unhealthy obsession for burgers. Follow him on Twitter (@TheBim) if you like high fives and nonsense.

Details

As most of the gamers in the country already know, and are ticked off about, X-Play has filed a case against Datablitz, which prompted the CIDG to obtain a search warrant and confiscate copies of NBA 2k13 from Datablitz stores.

When I first read it, I was literally taken aback. There was absolutely no way I could believe that a Datablitz store would sell pirated goods. To me and a lot of gamers in the country, Datablitz is the one true legit gaming store in the Philippines. I mean, iTech is around and a couple others, but Datablitz had the biggest footprint, by far.

First off, let's clarify one thing. Although most news bits say Datablitz was selling "pirated" software, that's not entirely accurate and is actually quite damaging to the reputation of DB. By definition, software piracy is the unauthorized reproduction or use of a copyrighted book, recording, television program, patented invention, trademarked product, etc. What Datablitz allegedly did was distribute a game, the exclusive distribution rights of which belonged to X-Play. Yeah, I'm blaming media and lack of fact checking for that one.

I am no law student, but wouldn't a Cease and Desist order be more appropriate for this case? Here's an example I was able to Google. I posted it under a spoiler tag because of the legal mumbo jumbo but it says here:

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Administrative complaint was lodged by TABAC, Inc., a domestic corporation duly organized and existing under Philippine laws against Respondent, doing business under the name and style of ""HURCHILLS CIGAR & WINE MERCHANTS""for Unfair Competition based on the following:

Since August 27, 1998 TABAC, pursuant to an Agreement with THE PACIFIC CIGAR COMPANY LTD. of Hongkong (Exclusively Distributor) of all Cuban Cigar Brands Manufactured by HABANOS S.A. of CUBA for ASIA PACIFIC including the PHILIPPINES) has been the sole and exclusive importer/distributor in the Philippines of all cigar products manufactured and sold by HABANOS S.A. of CUBA. Their product line includes, among others, raw tobacco, cigars, cigarette, cut tobacco, rappee, manufactured tobacco pipe, pipe holders, ashtray, match box, cigar case, humidor and any other smoker's articles goods included in Class No. 34 of the applicable trademark laws observed worldwide.

On June 21, 1999, TABAC wrote Respondent to cease and desist from engaging in the importing, selling and distribution of all CUBAN cigar brands manufactured by HABANOS, S.A., in the Philippines, without the written authority and consent of TABAC, but Respondent persisted in retailing, selling, importing, dealing with or distributing all CUBAN Cigar brands manufactured by HABANOS S.A. in the Philippines.

Hence, an administrative case was filed accordingly.

Prior to the conduct of the formal hearing, the Office of Legal Affairs (OLA) issued in favor of the Complainant a preliminary order (equivalent to a preliminary injunction) directing Respondents to allow Complainant to undertake an inventory of products bearing the infringing marks and have it sealed in the presence of the DTI representatives and the execution of an Undertaking on their/is part parts for submission to OLA.

On November 5, 1999, a COMPROMISE AGREEMENT, was submitted by herein Parties which provided, among others:

  • Respondent recognition and acknowledgment of Complaint exclusive and sole authority to distribute in the Philippines of all CUBAN Cigar brands manufactured and marketed by HABANOS, S.A.;
  • Respondent undertaken to purchase all its supplier of all CUBAN cigars exclusively from the Complainant for resale in all its outlets in the Philippines, under such regular terms and conditions that complaint may provide;
  • Respondent undertaken to comply with all the trade, sales and marketing policies of Complainant in selling the CUBAN cigars.
  • Respondent shall allow the Complainant to display in its entire stores the "TABAC" logo. Such display shall be placed in such conspicuous place without impending or interfering with the identity of the Respondent as an establishment.

Essentially, the complainant issued a C&D order first before the goods were seized in front of a DTI representative. No raid took place.

Some people in some threads I follow are theorizing that the confiscation had to be done quickly because the Christmas season is upon us and consumers wanting to buy NBA 2k13 would have to look elsewhere to get their game.

While exclusive distributorship is anti-consumer, it still is legal. If Datablitz violated that, then yes, although I love Datablitz to bits and will continue to support them fully, they do have to abide by the law. But it should have been done properly, and it should not have tarnished their reputation this badly.

Here is X-Play's official statement, taken from A Bugged Life:

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OFFICIAL STATEMENT OF X-PLAY

It is unfortunate that businesses had to be disrupted by the incident that transpired yesterday. While we sympathize with other individuals dragged on by this issue, we stand by our ground to be vigilant in dealing with illegal activities to protect our rights, our partners and our local gaming community.

This is not a knee-jerk reaction from X-Play. In fact, meetings were held with Datablitz President, Winston Lim and his team to become X-Play’s primary partner for NBA 2K13. Datablitz key executives Sandra Lu and Orpha Oambas even participated in X-Play’s distributor conferences and got all the marketing and distribution plans of the company.

Datablitz’s decision to acquire and distribute NBA 2K13 through unauthorized means despite these efforts, leaves X-Play no other option but to report this to the proper authorities, in which CIDG and the Regional Trail Court took immediate action on.

The action of Datablitz was not only detrimental to X-Play but also affected other smaller retailers, game stores and entrepreneurs.
We hope nothing more but to resolve this predicament but will hold firm in protecting the industry from smugglers and illegal operators.
FACT SHEET

FACTS OF THE CASE
The complaint was for “unfair competition” defined under Section 168 of Republic Act No. 8293 or the Intellectual Property Code of the Philippines.
By selling the NBA2K13 Products without authority from EpicSoft and/or XPlay, the exclusive distributor thereof in the Philippines, Datablitz, Inc. took a “free ride” on the good will and marketing excitement established by XPlay, thereby engaging in “unfair competition” to the prejudice of-Xplay and all of its rightful distributors most of which are small retail outlets.

MEETINGS WITH DATABLITZ
· Meeting between Take 2 Interactive, X-Play, and Datablitz

o Date: September 6, 2012

o Location: New World Hotel

o Discussion Points:

§ X-Play will be Official Distributor for NBA 2K13

§ X-Play wants Datablitz as a primary partner, and requested Datablitz to advise on support requirements it would need for NBA 2K13

· Distributors Conference 1

o Date: September 13, 2012

o Location: Max Restaurant, Gateway Mall, Cubao, Quezon City

o Attendees: Sandra Lu, Datablitz Purchasing Head

Orpha Oambas, Datablitz Marketing and Events Manager

o Discussion Points:

§ Briefing on X-Play Product Portfolio

§ Briefing on Marketing Programs

§ Discussion of Commercial Terms and Trade Concerns

· Distributors Conference 2

o Date: September 27, 2012

o Location: Max Restaurant, Gateway Mall, Cubao, Quezon City

o Attendees: Sandra Lu, Datablitz Purchasing Head

Orpha Oambas, Datablitz Marketing and Events Manager

o Discussion Points:

§ Discussion on NBA 2K13 Trade Programs, inclusive of all commercial terms.

§ Briefing on NBA 2K13 Marketing Program

· Lunch Meeting between Datablitz and X-Play Top Executives

o Date: September 28, 2012

o Discussion Points:

§ In-depth Discussion on partnership Agreement and Concerns

§ Sealed partnership Agreement via a Handshake

· Meeting between X-Play Sales Team and Datablitz Operations and Purchasing Heads

o Date: September 28, 2012

o Discussion Points

§ Discussion on actual orders to be placed by Datablitz

§ Operational discussion involving Purchase Order releasing, delivery timeframe, and collateral distribution.

And here is the official statement of Datablitz:

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To Our Beloved Gaming Community & Friends,

Monday, Nov. 5, 2012, will be remembered as a day of infamy and shame for the gaming industry with XPlay initiating a disgraceful harassment action against DataBlitz for alleged selling of “unauthorized” stocks of NBA 2K13.

Yesterday, XPlay released an official statement listing down various details of meetings between XPlay and DataBlitz in the weeks leading to the launch of NBA 2K13. In spite of all that’s been said in their press release, they’ve conveniently omitted the most pertinent details:

1. All the meetings that took place between Xplay and DataBlitz were initiated at the request of XPlay. DataBlitz has never asked to meet with XPlay and were only asked to participate in meetings and/or to join XPlay’s so-called “marketing programs” (which are really nothing more than just glamorized parlor game events). DataBlitz participated in the meetings and “marketing programs” out of courtesy to XPlay and no such thing as “primary partnership”, whatsoever was ever discussed, offered, nor penned on paper, whatsoever.

2. Apart from just saying that they will be distributing NBA 2K13, XPlay has never indicated in any form of writing or communications whatsoever to DataBlitz that they are the exclusive distributor of the game.

3. Thirdly, and this is the most important and glaring omission in XPlay’s press release: in spite of the above, the fact is that DataBlitz still went ahead and purchased a considerable quantity of NBA 2K13 stocks from XPlay as a gesture of goodwill towards XPlay, even knowing that they are still very new to the industry of console games, without any proven track record whatsoever to speak of along this front.

However, it is the understanding of DataBlitz that XPlay is just another reseller of the game, and as we still live in a free country the last time we checked, DataBlitz reserves its right to buy stocks of the game from other sources, apart from XPlay, so long as these are legitimate, genuine, brand-new, original games, that are and always have been the hallmark of our product offerings to our customers.

DataBlitz has been in the gaming industry for over 17 years now, and our record speaks for itself, we have always maintained a pristine reputation as the one reliable source for original and genuine games at reasonable prices. From the very beginning when piracy dominated the market 17 years ago and up to this day that we have been able to steadily educate our consumers (without harassing anyone) about buying and patronizing original games and software, we have remained steadfast in our core belief of looking after the welfare of the gaming public first and foremost.

If there suddenly are now parties out there who see the vibrancy of the gaming industry as a way to profit immensely by using sham claims of being the only party that possesses “authorized” stocks (whatever that means) in order to shove overpriced games down the throats of the gaming public, this kind of modus is just against the core principles of DataBlitz and something we just cannot and will not go along with.

At the end of the day, we have the welfare of our customers at heart, not the twisted desires of these opportunists. Even if it means this will be a lonely battle, as Monday’s events have shown that we were very obviously the only one unjustly and unreasonably singled out, we shall always remain as the one beacon of light and hope for gamers everywhere and carry on the good fight to stop such forms of profiteering through harassment.

What miffs me here is that X-Play was completely aware that Datablitz purchased copies of NBA 2k13 for resale. Shouldn't that discussion have mentioned "Oy, wag kayo bumili sa iba tapos ibenta ha. Bawal yun."

I think this whole thing could totally have been avoided.

EDIT (Nov. 8, 2012)

Datablitz has released another statement. Find most of it behind the spoiler cut.

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To our friends & family in gaming,

We wish to further dispel the false news reports that have circulated the past few days. The seized NBA 2K13 stocks are not pirated nor smuggled goods. DataBlitz has never sold any pirated games, not then, not now and not ever. The games are genuine, original stocks that came from legitimate suppliers, and had gone through the proper importation channels with taxes & duties properly paid.

The basis and reason for the seizure of the goods was that these were allegedly "unauthorized" stocks, without XPlay stickers, and taken away under the supervision of the lawyers of XPlay, who supervised the whole process up to and including the most unjust detention of our staff who were merely doing their work of manning our stores and trying to make an honest living.

We look forward to contesting the "unauthorized" stocks issue and the truthfulness and validity of the exclusivity claim in the proper fora in due time.

Meanwhile, from the bottom of our hearts, a million billion gazillion thanks for the outpouring of support we've received from our beloved gaming community and from gamers in general everywhere. You are our inspiration and your support is the source of our strength in everything that we do since our inception. There is no DataBlitz today without you and for this, we shall forever be grateful. In this dark hour, you have stood by us and have come to our defense, and the least we can do is to continue to work hard and fight each and everyday for the welfare of gamers everywhere! MARAMING MARAMING SALAMAT PO!!!

They pretty much said that NONE of their stocks are smuggled into the country. They all pass by customs and Datablitz pays taxes. The ludicrous claim of CIDG that the stocks were smuggled are completely unfounded, it seems.

   

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