Scrabulous Will Be Hasbro’s Golden Egg If They Can Keep It Out of the Courtoom

Congratulations to Hasbro’s legal team for exhibiting legal restraint and not giving in to corporate greed.  The company has an opportunity to file a legitimate multi-million dollar lawsuit against Facebook for hosting the online game Scrabulous, which is a clear knock-off of Hasbro’s board game Scrabble.  Instead, Hasbro is trying to reach amicable resolution without involving the courts.

 

So there is no misunderstanding, Hasbro sent Facebook a pro forma “cease and desist” letter demanding that Scrabulous be removed from the site, but that is more akin to a barking dog with no bite; it is just a starting point to begin negotiations.  It would be foolhardy for Hasbro to declare war on Facebook because the truth is that Hasbro should be embarrassed that they did not develop an online game for Facebook first.  As result, Hasbro is wise to avoid any public litigation on this controversy.

 

Hasbro should be most embarrassed by who beat them to the Facebook market.  Scrabulous is not the brainchild of any major corporation or even a Silicon Valley start-up, but the creation of two twenty-something brothers, Rajat and Jayant Agarwalla, who live half-way around the world in India.  Presumably without any market research, these brothers designed one of the most popular online games while paying homage to Scrabble in the process.  Scrabulous carries over all of the standard Scrabble rules, but goes on to add an automatic word-verifier, a hyperlinked dictionary, the ability to match up people for pick-up games and many other features too numerous to mention. 

 

Hasbro must also feel silly that a phenomenon like Scrabulous developed right under their corporate noses.  The game has single-handedly brought Scrabble into the 21^st century not through a fancy integrated marketing campaign, but through simple viral email and word-of-mouth marketing.  Further, unlike other online applications which cater to a single age group, Scrabulous attracts players from all age groups.  By way of example, Andrea Schnitzer, a recent college graduate who now works in Washington, DC, persuaded both her mother in Chicago and her aunt in Boston to join Facebook just so they could all play Scrabulous together.

 

As popular as Scrabulous has become, it is still surprising to see how vigilant its fan base is.  Upon hearing that Hasbro asked Facebook to remove Scrabulous, thousands of fans signed online petitions in opposition.  Interesting to note these petitions articulately recognize Hasbro’s right to protect its intellectual property while simultaneously pleading Hasbro not to dismantle the game.  One petition even urges supporters to write Hasbro’s CEO in Providence, Rhode Island, and demand Hasbro to hire the Agarwalla brothers as permanent game designers.  It is commendable that Scrabulous fans are so loyal, but there is no justification for these demands.  The Agarwalla brothers are not Internet Pioneers; they are designers of a simple Internet game “suitable for people of all ages.”

 

With so much public outcry, Hasbro would be crazy to file a lawsuit against Facebook and anger Scrabulous’ very savvy fan base.  Every Scrabulous player is a potential Scrabble customer and Hasbro would be imprudent to do anything that alienates their newfound market base.  More importantly, Facebook has demonstrated that it is an excellent platform for breathing new life into old brands; something Hasbro ought to be negotiating for in their settlement discussions with Facebook. 

 

It remains unclear who at Hasbro is responsible for the company being so out of touch with its audience that the Agarwalla brothers could so easily to show them up.  Shareholders should blame the senior management, but more than likely the buck will be passed down to a marketing executive or even to Hasbro’s advertising agency of record.  As a result, it is highly likely that Hasbro will send out Request for Proposals for a new advertising agency to serve as both a scapegoat and to better help the company interact with online players.

 

In spite of Hasbro’s huge marketing snafu, it is reassuring to see two corporations trying to resolve their differences.  Beyond creating goodwill, it should be noted that there are ulterior motives guiding Hasbro’s legal approach.  If Hasbro brought a costly legal action against Facebook, they would do so with little certainty of the results due to the limited caselaw involving social networking sites like Facebook.  There are a number of cases that deal with “file sharing sites” that facilitate music piracy, but the applicability of that body of law to the Scrabble/Scrabulous issue is questionable.  Due to the costs and uncertainty in bringing a lawsuit, coupled with the public embarrassment Hasbro is already experiencing, an amicable resolution clearly makes the most sense.