Who owns the family video game console? The U.S. District Court for the Northern District of California recently held that the parents do, even if they don’t play it.
The Nintendo Switch is a video game console equipped with hand-held controllers, known as “Joy-Cons.”1 The named plaintiffs, two parents and their minor children, alleged that their Joy-Cons lost their center and “drift[ed],” requiring replacements within a few months.2
Nintendo moved to arbitrate, alleging the parents had twice consented to arbitrate: 1) in a shrinkwrap statement printed on the outside of the box that required acceptance of Nintendo’s End User License Agreement (EULA) and 2) in a “clickwrap” message that Switch owners are required to accept the EULA to use their Switches. The plaintiffs disputed that they had consented, arguing that only the children had activated and used the Switches and that the children either lacked the capacity to enter into the EULA or had disaffirmed it. On March 3, 2021, the court ordered “the issue of whether or not there is a properly formed arbitration agreement to be sent to the arbitrator.”3 District Court Judge William Alsup added that the issue was one of first impression: “[T]here’s not a case on point.”4
The arbitration panel subsequently concluded that the parents were bound by the arbitration agreement, but that the children were not:
There is no agreement between Nintendo and the Minors. Because the Minors were never parties to the EULA or bound by its arbitration provision, we need not decide what law would govern the Minors' avoidance of contractual obligations under the EULA. Nor do we need to determine whether the Minors misrepresented their ages, or whether any contractual obligations of the Minors were avoided or disaffirmed within a reasonable time.5
The children’s claims returned to federal court, where Nintendo renewed its contention that the plaintiffs had not alleged that the minor children purchased the Switch or suffered any personal injury.
On September 7, 2022, in a class action lawsuit by parents and children against Nintendo, the court granted Nintendo’s motion to dismiss.6
The plaintiffs had argued that the parents had transferred their property interest in the Switches and Joy-Cons to the children, through a gift.7 But the court found that the plaintiffs’ complaint did not properly allege this.8
Under California law, a gift constitutes “a transfer of personal property, made voluntarily and without consideration.”9 The court held that the plaintiffs failed to plead sufficient facts to show “voluntary intent on the part of the donor to make a gift” and the “complete divestment of all control by the donor,” two elements necessary to constitute a gift under California law.10
The complaint portrayed the parents as purchasing the console for “personal, family, and household use,”11 and alleged that the parents had been 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 any transfer in ownership to the children.13 The children’s usage of the console alone did not make them owners: “Here, the minors simply used the consoles. They had no right to sell them. Therefore, the minors could not suffer reduced resale value.”14
The court expressly stated that it did “not hold that if the complaint were to adequately allege the gift, the minors could boast Article III or statutory standing.”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 they “are the true owners of the [Switches and Joy-Cons] as a result of receiving the products as gifts from their parents.”16
For more information about contracting with users of your software or hardware product (gaming or otherwise), please contact a member of the firm's internet strategy and litigation practice. For more information about electronic gaming, please contact any attorney in the firm’s electronic gaming practice.
Waen Vejjajiva and Brian Levy contributed to the preparation of this advisory.
[1] Sanchez v. Nintendo of Am., Inc., No. 3:20-cv-06929-WHA, 2022 WL 4099154, at *1 (N.D. Cal. Sept. 7, 2022).
[2] Id. at *1-2.
[3] Transcript at 23:7-11, Sanchez v. Nintendo of Am., Inc., No. 3:20-cv-06929-WHA, ECF No. 46 (N.D. Cal. Mar. 3, 2021).
[4] Id. at 26:2-3.
[5] Sanchez, 2022 WL 4099154, at *1 (quoting arbitration panel).
[6] Id. at *3.
[7] Id. at *2.
[8] Id.
[9] Id. (citation omitted).
[10] Cal. Civ. Code § 1146.
[11] Sanchez, 2022 WL 4099154, at *2.
[12] Id. at *2–3.
[13] Id. at *2.
[14] Id. at *3.
[15] Id.
[16] Mot. at 1:7–8, Sanchez v. Nintendo of Am., Inc., No. 3:20-cv-06929-WHA, ECF No. 69 (N.D. Cal. Sept. 29, 2022).