• by Wendy Davis  @wendyndavis, November 10, 2008

The makers of "Grand Theft Auto" did not violate the rights of an East Los Angeles strip club by depicting the club in the game, a federal appeals court has ruled.

In a decision issued last week, the Ninth Circuit found that the manufacturers have a free speech right to show the characteristics of the cities in which their games are set.

ESS Entertainment 2000, owner of the Play Pen's Gentlemen's Club, sued "Grand Theft Auto" maker Rockstar Videos in federal district court in 2005, arguing that the "San Andreas" version of the game, which includes the virtual city "Los Santos" --meant to resemble Los Angeles--infringed Play Pen's trademark. The main complaint was that the virtual reality game included a logo similar to Play Pen's--the company's name, the words "Totally Nude," and a silhouette of a dancer inside the stem of the "P."

But the appellate court found there was no likelihood that "Grand Theft Auto" players would be confused about whether Play Pen was affiliated with the game.

"Both San Andreas and the Play Pen offer a form of low-brow entertainment; besides this similarity, they have nothing in common," the court wrote.

"Nothing indicates that the buying public would reasonably have believed that ESS produced the video game or, for that matter, that Rock Star operated a strip club," the judges added. "It also seems far-fetched that someone playing San Andreas would think ESS had provided whatever expertise, support, or unique strip-club knowledge it possesses to the production of the game."

Internet lawyer Eric Goldman, who first reported the ruling on his blog, characterized the case as a "waste of time and money."

"The risk that consumers will be confused about the source of goods in the marketplace is ZERO," he wrote. "What a complete waste of time and money to push such a meritless 'problem' to the Ninth Circuit."

The Ninth Circuit did not address the fact that marketers sometimes pay for product placement in games--which could potentially lead consumers to assume that any company that appears in a virtual reality game has somehow endorsed it.