insurance-coverage-letter-pinnacle.docx

1033-00004 · Redstone Gaming Corp · Correspondence

insurance-coverage-letter-pinnacle.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-8200 Facsimile: (213) 555-8201 www.calderwoodharkness.com

April 8, 2024

VIA CERTIFIED MAIL AND EMAIL

Franklin Teague, Claims Adjuster Pinnacle Mutual Insurance Co. 200 Commerce Drive Hartford, CT 06103

Re: Notice of Claim and Tender of Defense — Luminos Interactive LLC v. Redstone Gaming Corp., Case No. 2:24-cv-00587-RWL, United States District Court for the District of Nevada

Policy No.: PML-IP-2023-08841

Claim No.: PML-CLM-2024-3392

Our Matter No.: 1033-00004

Dear Mr. Teague:

I. Introduction and Purpose

Calderwood & Harkness LLP writes on behalf of its client, Redstone Gaming Corp. ("Redstone" or "RGC"), a Delaware corporation publicly traded on the Nasdaq Stock Market under ticker symbol RDST, with principal offices located at 4100 Obsidian Tower Boulevard, Suite 2200, Las Vegas, Nevada 89109. We have been retained by Redstone as its primary defense counsel in connection with the matter referenced above.

The purpose of this letter is to provide Pinnacle Mutual Insurance Co. ("Pinnacle Mutual") with formal notice of a copyright infringement action filed against Redstone and to tender the defense of such action under Redstone's media and entertainment liability insurance policy issued by Pinnacle Mutual, Policy No. PML-IP-2023-08841 (the "Policy"). We understand that Pinnacle Mutual has designated this matter as Claim No. PML-CLM-2024-3392, and we will use that designation in all future correspondence regarding this claim.

On behalf of Redstone, we respectfully request that Pinnacle Mutual provide written confirmation, at its earliest convenience, of coverage for defense costs incurred in connection with this action under the intellectual property litigation sub-limit of the Policy. As set forth in greater detail below, the claims asserted against Redstone in the underlying action fall squarely within the scope of the Policy's covered intellectual property claims, and Redstone is entitled to indemnification for its defense costs, subject to the applicable deductible and sub-limit, as a matter of right under the express terms of the Policy.

II. Identification of the Underlying Action

The underlying action giving rise to this claim is identified as follows:

Case Caption: Luminos Interactive LLC v. Redstone Gaming Corp.

Case Number: 2:24-cv-00587-RWL

Court: United States District Court for the District of Nevada

Presiding Judge: The Honorable Rebecca W. Langford

Date Filed: March 18, 2024

Plaintiff: Luminos Interactive LLC, a Texas limited liability company with its principal office located at 802 Brazos Creek Lane, Suite 5, Austin, Texas 78701. Luminos Interactive LLC was founded by Tobias Crane, who serves as Managing Member, and Elara Whitfield, who serves as Art Director and Co-Founder. Luminos Interactive LLC is represented in this action by the law firm of Hargrove, Tanaka & Whitmore LLP, with lead attorney Daniel Hargrove, located at 1400 Congress Avenue, Suite 900, Austin, Texas 78701.

Defendant: Redstone Gaming Corp.

Redstone was served with the complaint and summons in this action on March 25, 2024, at its principal offices in Las Vegas, Nevada. Pursuant to Federal Rule of Civil Procedure 12(a)(1)(A)(i), Redstone's responsive pleading is due on or before April 15, 2024. Redstone intends to file a timely response, and we are currently evaluating whether to file a motion to dismiss under Rule 12(b)(6) or an answer with affirmative defenses. We will advise Pinnacle Mutual of the responsive pleading strategy once that determination has been made.

III. Summary of the Complaint's Allegations

The complaint, a complete copy of which is enclosed with this letter as Enclosure A, sets forth the following principal allegations against Redstone:

Luminos Interactive LLC ("Luminos") alleges that Redstone's flagship multiplayer online video game title, Ironclad Dominion, which was commercially released on November 14, 2022, incorporates character designs, environmental textures, and user interface ("UI") elements that are substantially similar to corresponding visual assets from Luminos's earlier independent video game title, Shardfall Chronicles. Shardfall Chronicles was commercially released on March 22, 2021, and Luminos obtained a copyright registration for the work from the United States Copyright Office, Registration No. VA 2-254-781, with an effective date of registration of June 8, 2021.

Specifically, Luminos challenges a total of thirty-seven (37) discrete visual assets incorporated in Ironclad Dominion, organized in the complaint as follows:

(a) Twelve (12) character armor designs, which Luminos contends are substantially similar in overall shape, ornamentation detail, and color palette to corresponding armor designs featured in Shardfall Chronicles;

(b) Nine (9) environmental crystal textures used in the in-game world environments of Ironclad Dominion, which Luminos contends replicate the crystalline fracture patterns, light-refraction overlays, and gradient color schemes that Luminos developed for Shardfall Chronicles;

(c) Eight (8) UI icon sets governing in-game inventory management, ability selection, and status indicators, which Luminos contends adopt a nearly identical layout, silhouette design language, and stylistic convention to corresponding icons in Shardfall Chronicles; and

(d) Eight (8) background matte paintings used as environmental backdrops and loading screens in Ironclad Dominion, which Luminos contends reproduce compositional arrangements, atmospheric lighting techniques, and architectural motifs from matte paintings featured in Shardfall Chronicles.

Based on these allegations, Luminos seeks the following relief:

(a) Injunctive relief requiring the removal of all allegedly infringing visual assets from Ironclad Dominion and all associated marketing materials, and enjoining Redstone from further distribution, reproduction, or display of such assets;

(b) Actual damages in the amount of $28,500,000.00, calculated on an apportioned-profits theory. Luminos asserts that the thirty-seven challenged visual assets collectively account for approximately 9.13% of the commercial value and player engagement of Ironclad Dominion, and that Ironclad Dominion generated approximately $312,000,000.00 in first-year revenue following its launch ($312,000,000.00 × 9.13% ≈ $28,500,000.00);

(c) Statutory damages pursuant to 17 U.S.C. § 504(c), in the alternative to actual damages, at such amount as the Court deems just; and

(d) Attorney's fees and costs pursuant to 17 U.S.C. § 505.

Redstone vigorously disputes each of Luminos's allegations and intends to mount an aggressive defense, as described in Section VI below. Redstone denies that it copied any visual assets from Shardfall Chronicles and further denies that any of the challenged elements of Ironclad Dominion are substantially similar to protectable expression in Shardfall Chronicles.

IV. Identification of the Policy and Applicable Coverage

The insurance policy under which Redstone tenders this claim is identified as follows:

Policy: Media/Entertainment Liability Policy

Policy Number: PML-IP-2023-08841

Issuing Insurer: Pinnacle Mutual Insurance Co.

Named Insured: Redstone Gaming Corp.

Relevant Coverage Section: intellectual Property Litigation Sub-Limit

IP Litigation Sub-Limit: $15,000,000.00 per occurrence

Deductible: $5,000.00 per claim

The claims asserted by Luminos in the underlying action — copyright infringement relating to visual game assets, including character designs, environmental textures, UI elements, and matte paintings — constitute intellectual property claims within the meaning of the Policy. The Policy provides coverage for defense costs, including attorney's fees, expert witness fees, and related litigation expenses, incurred by the Named Insured in defending against intellectual property claims brought by third parties, subject to the applicable deductible and per-occurrence sub-limit.

There is no exclusion in the Policy that would operate to bar coverage for the claims at issue. The claims arise from Redstone's ordinary course of business as a video game developer and publisher, an activity squarely within the scope of the covered media and entertainment operations described in the Policy's declarations page. The underlying action was filed after the effective date of the Policy, and the alleged infringement falls within the Policy period. Accordingly, coverage for defense costs is triggered.

Redstone hereby formally tenders this claim to Pinnacle Mutual and requests that Pinnacle Mutual acknowledge coverage and authorize payment of defense costs incurred in connection with the defense of the underlying action, in excess of the $5,000.00 per-claim deductible and up to the $15,000,000.00 per-occurrence intellectual property litigation sub-limit. Redstone has already satisfied the $5,000.00 deductible through initial costs incurred in connection with the engagement of counsel and preliminary case analysis.

V. Engagement of Defense Counsel

Redstone has retained Calderwood & Harkness LLP as its primary defense counsel in this matter. The engagement was formally opened on April 3, 2024, under Calderwood & Harkness Matter No. 1033-00004. The engagement team assigned to this matter consists of the following attorneys and support professionals:

Catherine Bloom, Responsible Partner, intellectual Property Litigation Practice Group, billing rate of $1,150.00 per hour. Ms. Bloom will serve as the overall matter supervisor and primary point of contact for Pinnacle Mutual on coverage and defense strategy matters.

Alan Ngo, Billing Partner, intellectual Property Litigation Practice Group, billing rate of $1,100.00 per hour. Mr. Ngo will serve as co-lead trial counsel and will oversee the development of the substantive copyright defense, including the independent creation and merger/scènes à faire defenses.

Omar Siddiqui, Lead Associate, intellectual Property Litigation Practice Group, billing rate of $725.00 per hour. Mr. Siddiqui will manage day-to-day case activities, including discovery, motion practice, and coordination with expert witnesses and local counsel.

Christy Bauer, Working Associate, intellectual Property Litigation Practice Group, billing rate of $575.00 per hour. Ms. Bauer will support discovery review, legal research, and briefing.

Paralegal and e-discovery support, billed at a blended rate of $295.00 per hour. This team will handle document collection, review platform management, privilege logging, and litigation support services.

In addition to Calderwood & Harkness LLP, Redstone has retained Thorngate & Associates, PC, as local counsel in the District of Nevada. Thorngate & Associates is located at 300 South Fourth Street, Suite 1100, Las Vegas, Nevada 89101, and the engagement is led by Patricia Thorngate, the firm's principal. Ms. Thorngate will coordinate all filings with the Clerk of Court, manage local procedural requirements, and attend court appearances in Las Vegas as needed. Ms. Thorngate's billing rates will be provided to Pinnacle Mutual separately upon request.

We are prepared to provide Pinnacle Mutual with copies of the applicable engagement letters and fee agreements for both firms, should Pinnacle Mutual require them for its coverage file.

VI. Anticipated Defense Strategy and Cost Categories

While Redstone's defense strategy remains under development and will be refined as discovery progresses, we can identify the following principal lines of defense that we anticipate pursuing on Redstone's behalf:

(a) Independent Creation. Redstone maintains that all of the visual assets challenged by Luminos were independently created by Redstone's in-house art team and contracted concept artists. Critically, the development of Ironclad Dominion commenced in the first quarter of 2020, with the first commit to Redstone's internal Git version-control repository — designated "ironclad-main" — dated February 12, 2020. This date precedes the commercial release of Shardfall Chronicles by more than thirteen (13) months. Redstone possesses extensive contemporaneous documentation of its independent creative process, including timestamped repository commits, Jira sprint records, internal art review meeting minutes, and concept art files with embedded creation metadata. This evidence is expected to demonstrate that the challenged assets were conceived, designed, and finalized well before Shardfall Chronicles entered the public domain, thereby negating any inference of copying.

(b) Scènes à Faire and the Merger Doctrine. Many of the visual elements that Luminos challenges — including crystalline environmental textures, medieval-fantasy armor designs, and standard inventory/ability UI conventions — are stock elements and generic tropes that are commonplace throughout the fantasy role-playing game ("RPG") genre. Under the scènes à faire doctrine, such standard elements are not protectable by copyright because they flow naturally from the genre and game type. Similarly, to the extent that there are only a limited number of ways to express certain functional UI concepts (e.g., health bars, inventory grids, ability cooldown indicators), the merger doctrine bars copyright protection because the idea and expression have merged. Redstone will present a comprehensive survey of prior art across the fantasy-RPG genre to demonstrate the ubiquity of the challenged visual conventions.

(c) Fair Use Under 17 U.S.C. § 107. To the extent that any arguable similarity exists between discrete elements of Ironclad Dominion and Shardfall Chronicles, Redstone will assert that any such use is protected under the fair use doctrine, as analyzed under the four-factor test set forth in Section 107 of the Copyright Act. Redstone anticipates arguing, among other things, that Ironclad Dominion is a transformative work that uses the challenged elements in a fundamentally different creative context, that the elements at issue constitute a de minimis portion of both works, and that Ironclad Dominion does not serve as a market substitute for Shardfall Chronicles, which targets a different player demographic and platform ecosystem.

In connection with these defenses, Redstone anticipates incurring defense costs in the following categories, for which coverage is requested under the Policy:

1. Attorney's fees for Calderwood & Harkness LLP (primary defense counsel) and Thorngate & Associates, PC (local counsel), including fees for all phases of the litigation from initial pleadings through trial and any post-trial proceedings.

2. Expert witness fees. Redstone anticipates retaining at least two expert witnesses: (i) a visual-asset comparison expert with expertise in game design and digital art to opine on the lack of substantial similarity between the challenged assets and to analyze the prevalence of comparable elements across the fantasy-RPG genre; and (ii) a damages and valuation rebuttal expert to challenge Luminos's $28.5 million apportioned-profits calculation and to demonstrate that the challenged assets do not account for the revenue share that Luminos attributes to them.

3. Digital forensics consulting. Redstone anticipates retaining a digital forensics firm to authenticate and present the metadata from Redstone's art production pipeline, including Git repository commit histories, file system timestamps, Adobe Creative Suite project files, and Unreal Engine asset import logs, to substantiate the independent creation defense.

4. Court filing fees, deposition costs, and other litigation expenses. These include costs for court reporter services, deposition transcripts, videography, travel expenses for depositions and court appearances, demonstrative exhibit preparation, and any other costs and disbursements reasonably incurred in the defense of this action.

We respectfully request that Pinnacle Mutual confirm that each of the foregoing cost categories falls within the definition of covered defense costs under the Policy, and that Pinnacle Mutual will authorize reimbursement for such costs as they are incurred, subject to the applicable deductible and sub-limit.

VII. Request for Coverage Confirmation and Ongoing Communication

On behalf of Redstone, we respectfully request that you, or your designated representative, provide written confirmation of Pinnacle Mutual's acceptance of Redstone's tender of defense and Pinnacle Mutual's agreement to cover defense costs incurred in connection with the underlying action, above the $5,000.00 per-claim deductible and up to the $15,000,000.00 per-occurrence intellectual property litigation sub-limit. We request that such confirmation be provided in writing, directed to the undersigned at the address set forth below, no later than April 22, 2024, given the impending responsive pleading deadline and the ongoing accrual of defense costs.

In addition, we request that Pinnacle Mutual identify its preferred billing and reporting protocols applicable to this claim, including without limitation:

(a) The required invoice submission format (e.g., LEDES, standard narrative), the level of task-code and activity-code detail required, and the frequency of invoice submissions (e.g., monthly, bi-monthly);

(b) Any interim reporting requirements, including the frequency, format, and substance of status reports or litigation budgets that Pinnacle Mutual expects from defense counsel;

(c) Any litigation management guidelines, billing guidelines, or outside counsel guidelines that Pinnacle Mutual requires defense counsel to follow in connection with this claim; and

(d) The identity and contact information of any coverage counsel, claims supervisor, or litigation management professional at Pinnacle Mutual to whom ongoing communications should be directed.

Calderwood & Harkness LLP commits to keeping Pinnacle Mutual informed of all material developments in the underlying litigation on a regular and timely basis. Such developments will include, without limitation, the filing and disposition of responsive pleadings and dispositive motions, significant discovery milestones (including the commencement and conclusion of fact and expert discovery), any scheduling orders or case management deadlines set by the Court, any settlement demands or settlement communications initiated by Luminos, and any court rulings or orders that materially affect the scope or trajectory of the case.

The primary contact at Calderwood & Harkness LLP for all communications regarding this matter is the undersigned, Catherine Bloom, who may be reached as follows:

Catherine Bloom, Partner Calderwood & Harkness LLP 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-8214

Email: cbloom@calderwoodharkness.com

VIII. Reservation of Rights

Nothing in this letter, nor in any prior or subsequent communication between or among Redstone, Calderwood & Harkness LLP, and Pinnacle Mutual, is intended to, nor shall it be construed to, waive, limit, release, or otherwise prejudice any right, remedy, or defense available to Redstone under the Policy, under any other insurance policy, at law, or in equity. Redstone expressly reserves all of its rights under the Policy, including but not limited to the right to seek coverage for indemnity obligations, the right to challenge any coverage determination or reservation of rights issued by Pinnacle Mutual, and the right to pursue any claim for breach of the duty to defend or the duty to indemnify should such a claim become necessary. This reservation of rights shall apply with full force and effect regardless of any action or inaction by Pinnacle Mutual in response to this letter.

IX. Enclosures

Enclosed with this letter, please find the following document:

Enclosure A: Copy of the Complaint, Luminos Interactive LLC v. Redstone Gaming Corp., Case No. 2:24-cv-00587-RWL, United States District Court for the District of Nevada (filed March 18, 2024), including all exhibits attached thereto.

We appreciate Pinnacle Mutual's prompt attention to this matter and look forward to receiving written confirmation of coverage at the earliest opportunity. Please do not hesitate to contact me directly at the telephone number or email address set forth above should you require any additional information or documentation in connection with your review of this claim.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Catherine Bloom Partner, intellectual Property Litigation Calderwood & Harkness LLP 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-8214

Email: cbloom@calderwoodharkness.com

Enclosures (1)

cc:

Priya Venkatesh, General Counsel, Redstone Gaming Corp. Alan Ngo, Partner, Calderwood & Harkness LLP Patricia Thorngate, Thorngate & Associates, PC

CALDERWOOD & HARKNESS LLP Attorneys at Law 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-8200 Facsimile: (213) 555-8201 www.calderwoodharkness.com
April 8, 2024
VIA CERTIFIED MAIL AND EMAIL
Franklin Teague, Claims Adjuster Pinnacle Mutual Insurance Co. 200 Commerce Drive Hartford, CT 06103
Re: Notice of Claim and Tender of Defense — Luminos Interactive LLC v. Redstone Gaming Corp., Case No. 2:24-cv-00587-RWL, United States District Court for the District of Nevada
Policy No.: PML-IP-2023-08841
Claim No.: PML-CLM-2024-3392
Our Matter No.: 1033-00004
Dear Mr. Teague:
I. Introduction and Purpose
Calderwood & Harkness LLP writes on behalf of its client, Redstone Gaming Corp. ("Redstone" or "RGC"), a Delaware corporation publicly traded on the Nasdaq Stock Market under ticker symbol RDST, with principal offices located at 4100 Obsidian Tower Boulevard, Suite 2200, Las Vegas, Nevada 89109. We have been retained by Redstone as its primary defense counsel in connection with the matter referenced above.
The purpose of this letter is to provide Pinnacle Mutual Insurance Co. ("Pinnacle Mutual") with formal notice of a copyright infringement action filed against Redstone and to tender the defense of such action under Redstone's media and entertainment liability insurance policy issued by Pinnacle Mutual, Policy No. PML-IP-2023-08841 (the "Policy"). We understand that Pinnacle Mutual has designated this matter as Claim No. PML-CLM-2024-3392, and we will use that designation in all future correspondence regarding this claim.
On behalf of Redstone, we respectfully request that Pinnacle Mutual provide written confirmation, at its earliest convenience, of coverage for defense costs incurred in connection with this action under the intellectual property litigation sub-limit of the Policy. As set forth in greater detail below, the claims asserted against Redstone in the underlying action fall squarely within the scope of the Policy's covered intellectual property claims, and Redstone is entitled to indemnification for its defense costs, subject to the applicable deductible and sub-limit, as a matter of right under the express terms of the Policy.
II. Identification of the Underlying Action
The underlying action giving rise to this claim is identified as follows:
Case Caption: Luminos Interactive LLC v. Redstone Gaming Corp.
Case Number: 2:24-cv-00587-RWL
Court: United States District Court for the District of Nevada
Presiding Judge: The Honorable Rebecca W. Langford
Date Filed: March 18, 2024
Plaintiff: Luminos Interactive LLC, a Texas limited liability company with its principal office located at 802 Brazos Creek Lane, Suite 5, Austin, Texas 78701. Luminos Interactive LLC was founded by Tobias Crane, who serves as Managing Member, and Elara Whitfield, who serves as Art Director and Co-Founder. Luminos Interactive LLC is represented in this action by the law firm of Hargrove, Tanaka & Whitmore LLP, with lead attorney Daniel Hargrove, located at 1400 Congress Avenue, Suite 900, Austin, Texas 78701.
Defendant: Redstone Gaming Corp.
Redstone was served with the complaint and summons in this action on March 25, 2024, at its principal offices in Las Vegas, Nevada. Pursuant to Federal Rule of Civil Procedure 12(a)(1)(A)(i), Redstone's responsive pleading is due on or before April 15, 2024. Redstone intends to file a timely response, and we are currently evaluating whether to file a motion to dismiss under Rule 12(b)(6) or an answer with affirmative defenses. We will advise Pinnacle Mutual of the responsive pleading strategy once that determination has been made.
III. Summary of the Complaint's Allegations
The complaint, a complete copy of which is enclosed with this letter as Enclosure A, sets forth the following principal allegations against Redstone:
Luminos Interactive LLC ("Luminos") alleges that Redstone's flagship multiplayer online video game title, Ironclad Dominion, which was commercially released on November 14, 2022, incorporates character designs, environmental textures, and user interface ("UI") elements that are substantially similar to corresponding visual assets from Luminos's earlier independent video game title, Shardfall Chronicles. Shardfall Chronicles was commercially released on March 22, 2021, and Luminos obtained a copyright registration for the work from the United States Copyright Office, Registration No. VA 2-254-781, with an effective date of registration of June 8, 2021.
Specifically, Luminos challenges a total of thirty-seven (37) discrete visual assets incorporated in Ironclad Dominion, organized in the complaint as follows:
(a) Twelve (12) character armor designs, which Luminos contends are substantially similar in overall shape, ornamentation detail, and color palette to corresponding armor designs featured in Shardfall Chronicles;
(b) Nine (9) environmental crystal textures used in the in-game world environments of Ironclad Dominion, which Luminos contends replicate the crystalline fracture patterns, light-refraction overlays, and gradient color schemes that Luminos developed for Shardfall Chronicles;
(c) Eight (8) UI icon sets governing in-game inventory management, ability selection, and status indicators, which Luminos contends adopt a nearly identical layout, silhouette design language, and stylistic convention to corresponding icons in Shardfall Chronicles; and
(d) Eight (8) background matte paintings used as environmental backdrops and loading screens in Ironclad Dominion, which Luminos contends reproduce compositional arrangements, atmospheric lighting techniques, and architectural motifs from matte paintings featured in Shardfall Chronicles.
Based on these allegations, Luminos seeks the following relief:
(a) Injunctive relief requiring the removal of all allegedly infringing visual assets from Ironclad Dominion and all associated marketing materials, and enjoining Redstone from further distribution, reproduction, or display of such assets;
(b) Actual damages in the amount of $28,500,000.00, calculated on an apportioned-profits theory. Luminos asserts that the thirty-seven challenged visual assets collectively account for approximately 9.13% of the commercial value and player engagement of Ironclad Dominion, and that Ironclad Dominion generated approximately $312,000,000.00 in first-year revenue following its launch ($312,000,000.00 × 9.13% ≈ $28,500,000.00);
(c) Statutory damages pursuant to 17 U.S.C. § 504(c), in the alternative to actual damages, at such amount as the Court deems just; and
(d) Attorney's fees and costs pursuant to 17 U.S.C. § 505.
Redstone vigorously disputes each of Luminos's allegations and intends to mount an aggressive defense, as described in Section VI below. Redstone denies that it copied any visual assets from Shardfall Chronicles and further denies that any of the challenged elements of Ironclad Dominion are substantially similar to protectable expression in Shardfall Chronicles.
IV. Identification of the Policy and Applicable Coverage
The insurance policy under which Redstone tenders this claim is identified as follows:
Policy: Media/Entertainment Liability Policy
Policy Number: PML-IP-2023-08841
Issuing Insurer: Pinnacle Mutual Insurance Co.
Named Insured: Redstone Gaming Corp.
Relevant Coverage Section: intellectual Property Litigation Sub-Limit
IP Litigation Sub-Limit: $15,000,000.00 per occurrence
Deductible: $5,000.00 per claim
The claims asserted by Luminos in the underlying action — copyright infringement relating to visual game assets, including character designs, environmental textures, UI elements, and matte paintings — constitute intellectual property claims within the meaning of the Policy. The Policy provides coverage for defense costs, including attorney's fees, expert witness fees, and related litigation expenses, incurred by the Named Insured in defending against intellectual property claims brought by third parties, subject to the applicable deductible and per-occurrence sub-limit.
There is no exclusion in the Policy that would operate to bar coverage for the claims at issue. The claims arise from Redstone's ordinary course of business as a video game developer and publisher, an activity squarely within the scope of the covered media and entertainment operations described in the Policy's declarations page. The underlying action was filed after the effective date of the Policy, and the alleged infringement falls within the Policy period. Accordingly, coverage for defense costs is triggered.
Redstone hereby formally tenders this claim to Pinnacle Mutual and requests that Pinnacle Mutual acknowledge coverage and authorize payment of defense costs incurred in connection with the defense of the underlying action, in excess of the $5,000.00 per-claim deductible and up to the $15,000,000.00 per-occurrence intellectual property litigation sub-limit. Redstone has already satisfied the $5,000.00 deductible through initial costs incurred in connection with the engagement of counsel and preliminary case analysis.
V. Engagement of Defense Counsel
Redstone has retained Calderwood & Harkness LLP as its primary defense counsel in this matter. The engagement was formally opened on April 3, 2024, under Calderwood & Harkness Matter No. 1033-00004. The engagement team assigned to this matter consists of the following attorneys and support professionals:
Catherine Bloom, Responsible Partner, intellectual Property Litigation Practice Group, billing rate of $1,150.00 per hour. Ms. Bloom will serve as the overall matter supervisor and primary point of contact for Pinnacle Mutual on coverage and defense strategy matters.
Alan Ngo, Billing Partner, intellectual Property Litigation Practice Group, billing rate of $1,100.00 per hour. Mr. Ngo will serve as co-lead trial counsel and will oversee the development of the substantive copyright defense, including the independent creation and merger/scènes à faire defenses.
Omar Siddiqui, Lead Associate, intellectual Property Litigation Practice Group, billing rate of $725.00 per hour. Mr. Siddiqui will manage day-to-day case activities, including discovery, motion practice, and coordination with expert witnesses and local counsel.
Christy Bauer, Working Associate, intellectual Property Litigation Practice Group, billing rate of $575.00 per hour. Ms. Bauer will support discovery review, legal research, and briefing.
Paralegal and e-discovery support, billed at a blended rate of $295.00 per hour. This team will handle document collection, review platform management, privilege logging, and litigation support services.
In addition to Calderwood & Harkness LLP, Redstone has retained Thorngate & Associates, PC, as local counsel in the District of Nevada. Thorngate & Associates is located at 300 South Fourth Street, Suite 1100, Las Vegas, Nevada 89101, and the engagement is led by Patricia Thorngate, the firm's principal. Ms. Thorngate will coordinate all filings with the Clerk of Court, manage local procedural requirements, and attend court appearances in Las Vegas as needed. Ms. Thorngate's billing rates will be provided to Pinnacle Mutual separately upon request.
We are prepared to provide Pinnacle Mutual with copies of the applicable engagement letters and fee agreements for both firms, should Pinnacle Mutual require them for its coverage file.
VI. Anticipated Defense Strategy and Cost Categories
While Redstone's defense strategy remains under development and will be refined as discovery progresses, we can identify the following principal lines of defense that we anticipate pursuing on Redstone's behalf:
(a) Independent Creation. Redstone maintains that all of the visual assets challenged by Luminos were independently created by Redstone's in-house art team and contracted concept artists. Critically, the development of Ironclad Dominion commenced in the first quarter of 2020, with the first commit to Redstone's internal Git version-control repository — designated "ironclad-main" — dated February 12, 2020. This date precedes the commercial release of Shardfall Chronicles by more than thirteen (13) months. Redstone possesses extensive contemporaneous documentation of its independent creative process, including timestamped repository commits, Jira sprint records, internal art review meeting minutes, and concept art files with embedded creation metadata. This evidence is expected to demonstrate that the challenged assets were conceived, designed, and finalized well before Shardfall Chronicles entered the public domain, thereby negating any inference of copying.
(b) Scènes à Faire and the Merger Doctrine. Many of the visual elements that Luminos challenges — including crystalline environmental textures, medieval-fantasy armor designs, and standard inventory/ability UI conventions — are stock elements and generic tropes that are commonplace throughout the fantasy role-playing game ("RPG") genre. Under the scènes à faire doctrine, such standard elements are not protectable by copyright because they flow naturally from the genre and game type. Similarly, to the extent that there are only a limited number of ways to express certain functional UI concepts (e.g., health bars, inventory grids, ability cooldown indicators), the merger doctrine bars copyright protection because the idea and expression have merged. Redstone will present a comprehensive survey of prior art across the fantasy-RPG genre to demonstrate the ubiquity of the challenged visual conventions.
(c) Fair Use Under 17 U.S.C. § 107. To the extent that any arguable similarity exists between discrete elements of Ironclad Dominion and Shardfall Chronicles, Redstone will assert that any such use is protected under the fair use doctrine, as analyzed under the four-factor test set forth in Section 107 of the Copyright Act. Redstone anticipates arguing, among other things, that Ironclad Dominion is a transformative work that uses the challenged elements in a fundamentally different creative context, that the elements at issue constitute a de minimis portion of both works, and that Ironclad Dominion does not serve as a market substitute for Shardfall Chronicles, which targets a different player demographic and platform ecosystem.
In connection with these defenses, Redstone anticipates incurring defense costs in the following categories, for which coverage is requested under the Policy:
1. Attorney's fees for Calderwood & Harkness LLP (primary defense counsel) and Thorngate & Associates, PC (local counsel), including fees for all phases of the litigation from initial pleadings through trial and any post-trial proceedings.
2. Expert witness fees. Redstone anticipates retaining at least two expert witnesses: (i) a visual-asset comparison expert with expertise in game design and digital art to opine on the lack of substantial similarity between the challenged assets and to analyze the prevalence of comparable elements across the fantasy-RPG genre; and (ii) a damages and valuation rebuttal expert to challenge Luminos's $28.5 million apportioned-profits calculation and to demonstrate that the challenged assets do not account for the revenue share that Luminos attributes to them.
3. Digital forensics consulting. Redstone anticipates retaining a digital forensics firm to authenticate and present the metadata from Redstone's art production pipeline, including Git repository commit histories, file system timestamps, Adobe Creative Suite project files, and Unreal Engine asset import logs, to substantiate the independent creation defense.
4. Court filing fees, deposition costs, and other litigation expenses. These include costs for court reporter services, deposition transcripts, videography, travel expenses for depositions and court appearances, demonstrative exhibit preparation, and any other costs and disbursements reasonably incurred in the defense of this action.
We respectfully request that Pinnacle Mutual confirm that each of the foregoing cost categories falls within the definition of covered defense costs under the Policy, and that Pinnacle Mutual will authorize reimbursement for such costs as they are incurred, subject to the applicable deductible and sub-limit.
VII. Request for Coverage Confirmation and Ongoing Communication
On behalf of Redstone, we respectfully request that you, or your designated representative, provide written confirmation of Pinnacle Mutual's acceptance of Redstone's tender of defense and Pinnacle Mutual's agreement to cover defense costs incurred in connection with the underlying action, above the $5,000.00 per-claim deductible and up to the $15,000,000.00 per-occurrence intellectual property litigation sub-limit. We request that such confirmation be provided in writing, directed to the undersigned at the address set forth below, no later than April 22, 2024, given the impending responsive pleading deadline and the ongoing accrual of defense costs.
In addition, we request that Pinnacle Mutual identify its preferred billing and reporting protocols applicable to this claim, including without limitation:
(a) The required invoice submission format (e.g., LEDES, standard narrative), the level of task-code and activity-code detail required, and the frequency of invoice submissions (e.g., monthly, bi-monthly);
(b) Any interim reporting requirements, including the frequency, format, and substance of status reports or litigation budgets that Pinnacle Mutual expects from defense counsel;
(c) Any litigation management guidelines, billing guidelines, or outside counsel guidelines that Pinnacle Mutual requires defense counsel to follow in connection with this claim; and
(d) The identity and contact information of any coverage counsel, claims supervisor, or litigation management professional at Pinnacle Mutual to whom ongoing communications should be directed.
Calderwood & Harkness LLP commits to keeping Pinnacle Mutual informed of all material developments in the underlying litigation on a regular and timely basis. Such developments will include, without limitation, the filing and disposition of responsive pleadings and dispositive motions, significant discovery milestones (including the commencement and conclusion of fact and expert discovery), any scheduling orders or case management deadlines set by the Court, any settlement demands or settlement communications initiated by Luminos, and any court rulings or orders that materially affect the scope or trajectory of the case.
The primary contact at Calderwood & Harkness LLP for all communications regarding this matter is the undersigned, Catherine Bloom, who may be reached as follows:
Catherine Bloom, Partner Calderwood & Harkness LLP 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-8214
Email: cbloom@calderwoodharkness.com
VIII. Reservation of Rights
Nothing in this letter, nor in any prior or subsequent communication between or among Redstone, Calderwood & Harkness LLP, and Pinnacle Mutual, is intended to, nor shall it be construed to, waive, limit, release, or otherwise prejudice any right, remedy, or defense available to Redstone under the Policy, under any other insurance policy, at law, or in equity. Redstone expressly reserves all of its rights under the Policy, including but not limited to the right to seek coverage for indemnity obligations, the right to challenge any coverage determination or reservation of rights issued by Pinnacle Mutual, and the right to pursue any claim for breach of the duty to defend or the duty to indemnify should such a claim become necessary. This reservation of rights shall apply with full force and effect regardless of any action or inaction by Pinnacle Mutual in response to this letter.
IX. Enclosures
Enclosed with this letter, please find the following document:
Enclosure A: Copy of the Complaint, Luminos Interactive LLC v. Redstone Gaming Corp., Case No. 2:24-cv-00587-RWL, United States District Court for the District of Nevada (filed March 18, 2024), including all exhibits attached thereto.
We appreciate Pinnacle Mutual's prompt attention to this matter and look forward to receiving written confirmation of coverage at the earliest opportunity. Please do not hesitate to contact me directly at the telephone number or email address set forth above should you require any additional information or documentation in connection with your review of this claim.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Catherine Bloom Partner, intellectual Property Litigation Calderwood & Harkness LLP 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-8214
Email: cbloom@calderwoodharkness.com
Enclosures (1)
cc:
Priya Venkatesh, General Counsel, Redstone Gaming Corp. Alan Ngo, Partner, Calderwood & Harkness LLP Patricia Thorngate, Thorngate & Associates, PC

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