The Lawbringer: MDY v. Blizzard Q & A

Welcome to The Lawbringer, WoW.com's weekly look at the intersection of law and the World of Warcraft. I'm a new law school grad, acting as your tour guide after escaping the rapping, taco-eating armadillos of my bar prep class.

Last week's timeline of the MDY v. Blizzard case seemed to prompt more questions than it answered. Therefore, I want to take this week to go through the many questions and comments that were left on the site or emailed to me.

Sean asked:

"Can you explain the unfair competition claim? As the only one that MDY won (far as I can tell), it's interesting in its own right."

Blizzard alleged that MDY's business practices of selling a product that encouraged people to violate their EULA & TOU was a willful and knowing violation of Arizona's Unfair Competition Law. MDY moved for summary judgment and Blizzard didn't oppose the motion. MDY "won" by default.

The Money

A number of you were interested in the $6.5 million judgment against MDY.

How did the judge assign this number?

Both parties agreed that Glider produced approximately $3.5 million in revenue for MDY and that Blizzard had spent approximately $1 million ($942,614.57) per year combating Glider. The judge did not explain how he arrived at $6.5 million.

It is worth noting that under copyright law, the judge could theoretically have ordered MDY pay statutory damages of $2,500 for each copy of Glider sold. It would have required a finding that MDY "willfully and wantonly" infringed, a question which the judge did not decide. Also, Blizzard claimed that the loss of value to its good name (there were over 465,000 complaints of bots while Glider was sold) could potentially be worth $20 million. Note again that the judge did not assign such enormous damages.

Who is responsible for paying this?

MDY was assigned to pay the damages. Under normal rules, a corporation like MDY would have to pay. However, there is a doctrine known as "piercing the corporate veil," in which a director or owner of a corporation may be personally liable for the debts of the corporation. In Arizona, this can happen when directors or officers of a company participate, have knowledge amounting to acquiescence or are guilty of negligence in the management of the corporate affairs causing or contributing to the injury. In this case, Micheal Donnelly was the president of the company. He was certainly aware that use of Glider after November 2005 was a violation of the WoW TOU and of the facts that the court used to decide that MDY was tortiously interfering in Blizzard's contracts. As a result, the court ruled that Donnelly was personally liable for the $6.5 million.

How does Blizzard collect the money?

After all the appeals are heard and assuming MDY and Donnelly are required to pay something, Blizzard will receive what is known as a judgment lien. This is a piece of paper that says Blizzard has a right to receive $6.5 million (or whatever other value may be assigned) and is nothing more, as my Secured Transaction professor likes to put it, than "ink stains on paper." Let's assume MDY does not try to settle or make arrangements to pay. To collect on this debt, Blizzard would then file appropriate paperwork (a writ of replevin) with the sheriff of the jurisdiction that describes what belongs to Blizzard and where it can be found. The sheriff will then go out to the corporation and seize (levy on) as much corporate property as possible, from the furniture to the cash box to any accounts, etc. If this doesn't add up to enough money, Blizzard can then file another writ of replevin (or use the same one) and seize as many of Donnelly's assets as possible. If MDY/Donnelly declare bankruptcy before the property is levied on (which they would almost certainly do), the bankruptcy judge might "cram-down" or reduce the debt, require MDY/Donnelly to come up with a repayment plan or other options, depending on the type of bankruptcy declared.

Some misconceptions

A number of folks questioned where some of my sources of information came from. Everything is from the collection of documents in the docket at Justicia.com. As a reminder, information submitted to the court, whether depositions, statements of fact or other evidence, are submitted under oath that this information is true to the best of the submitter's knowledge. Knowingly giving false information is perjury and can result in jail time.

Technical details

From Blizzard's Statement of Fact Supporting its Motion for Summary Judgment:

"Glider wasn't designed to circumvent Warden."

"Glider couldn't have been designed to circumvent Warden because Warden didn't exist yet."

Warden was in use for Diablo II in patch 1.11 (8/8/05) and was publicized as part of WoW by Oct 20, 2005. Furthermore, the June 2, 2005 EULA expressly notes: (caps original)

While this isn't primary proof that Warden existed, it seems strange that Blizzard would require players to agree to Warden-like monitoring if Warden didn't exist. It should be noted that this EULA was in force before MDY started selling Glider (6/14/2005).

The EULA/TOU didn't forbid botting or use of Glider, so MDY couldn't have tortiously interfered/ contributorily infringed copyright.

I hope this has answered some of the questions raised last week. Next week, I'll be taking you through the arguments, both written and oral, made by MDY and Blizzard.

This column is for entertainment only. If you have a real legal question, consult a real lawyer. For questions about law, law school or the joys of bar prep, you can email me at amy@wow.com, tweet me @wowlawbringer, or /whisper Patent <It Came From the Blog> on Zangarmarsh on Thursday nights.