In the last two weeks, we looked at the difference between purchases and licenses. This is of vital importance as a major bit of cyberlaw plays out in the Ninth Circuit, namely the next stages of MDY v. Blizzard, Vernor v. Autodesk, and UMG v. Augusto. Today seems like an excellent time to review the case of MDY v. Blizzard, as we've covered the other two a bit. My source for this history will be the excellent collection of files at Justicia.com, which includes all documents filed in the district court of Arizona in this case.
Let's get started!
November 2004 Blizzard released World of Warcraft, our beloved MMORPG. The game is composed of a software client, downloaded from the website or installed from a CD onto the player's personal computer, connected to an online server. Running the program requires making a copy of the game client in the player's RAM.
As part of the installation process, as part of the first use and upon every patch, players are required to scroll through and agree to an End User License Agreement. This document is accessible online, on paper in the retail box edition of the game and also as part of the game installation process. This license includes provisions prohibiting the use of bots and economic exploitation. Players not wishing to be bound by that license can uninstall the software and return it for a full refund.
To ensure compliance with the EULA, World of Warcraft runs a program known as Warden. This program includes a scan.dll that scans for non EULA compliant programs and if any are detected, it prevents the player from logging on. The program further includes a resident program that continually runs scans of the player's computer and can disconnect the player from the game if non EULA compliant programs are detected.
June 14, 2005 Micheal Donnelly, owner of MDY Industries, began offering Glider, a WoW botting program designed to circumvent Warden. This program operates by examining the data states in the game client program, running a shadow driver to remove its process object from the Windows rootkit and hooking kernel functions and other functions. (I'm not a coder, so don't ask me what this actually does!) Running this program is a violation of the WoW EULA, a fact that Donnelly admitted. To allow maximum circumvention of Warden, MDY maintained the ability to update every copy of Glider in response to Blizzard's updates of Warden.
June 2005 - October 2006 The Glider program affected the World of Warcraft. Blizzard received millions of complaints both through the game and on online forums. Blizzard altered Warden to improve detection of Glider bots, but these innovations were circumvented after MDY purchased information about Warden's improvements for $18,000. MDY began allowing a gold-selling website to resell Glider; the website used the program in its gold selling. The program became very popular with gold sellers. Disruptions to the in-game economy resulted.
October 25, 2006 Representatives from Blizzard visited Donnelly at his home, stating that if Donnelly did not stop selling Glider, they would sue him. Donnelly refuses and sues Blizzard, seeking a declaratory judgment that Glider does not infringe rights owned by Blizzard. (This is why the suit is MDY v. Blizzard.) MDY asserted he had no knowledge or belief that he was violating Blizzard's rights
February 16, 2007 Blizzard filed seven counterclaims against MDY:
- Tortious Interference in Contract
- Contributory Copyright Infringement
- Vicarious Copyright Infringement
- Violation of the Digital Millennium Rights Act
- Trademark Infringement
- Unfair Competition
- Unjust Enrichment
Let's look at the first four claims in greater detail.
Tortious Interference in Contract As we covered a while ago, tortious interference with contract requires four things:
- A valid contract -- A EULA exists between Blizzard and a player.
- A third party knows of the contract -- MDY knows players must agree to the EULA to play.
- The third party intentionally and improperly interferes -- MDY knew that using Glider would be a violation of the EULA.
- The non-breaching party suffers damages -- Blizzard lost revenue from trying to block accounts and from the loss of subscriptions due to botting.
- Blizzard owns every copy of World of Warcraft.
- Players acquire valid licenses in World of Warcraft by agreeing to and following the EULA.
- Players make copies of the program into their computer's RAM.
- These copies are permitted under the license.
- The EULA defines a limited scope of rights in a copyright-protected property.
- Violations of the scope of a copyright agreement revoke the license (Sun Microsystems v. Microsoft Corp.).
- Use of Glider is a violation of the scope of the player's EULA.
- Therefore, players who use Glider revoke their license to use WoW.
- Therefore, Glider users' copies constitute copyright infringement.
Vicarious liability has two requirements -- that the party has the right and ability to control the infringing activity and derives a direct financial benefit from the activity. Here, Blizzard alleges that MDY maintained control over every copy of Glider and that it received profits from every sale.
Violation of the DMCA The DMCA forbids a person from offering to the public any product designed for the purpose of circumventing a technological measure that effectively controls access to a work protected by copyright. Blizzard alleged that because Warden controls access to WoW and that Glider circuments Warden, MDY runs afoul of the statute.
March 21, 2008 Blizzard moved for summary judgment. Summary judgment is a pre-trial hearing in front of a judge. All the facts alleged by the non-moving party (here, MDY) are taken as true and the judge decides whether the moving party (here, Blizzard) is entitled to win on its seven claims based on those facts.
MDY moved for summary judgment as well, requesting that the judge take all the facts Blizzard alleges as true and decide whether MDY is entitled to win its request for a declaration that Glider does not infringe any of Blizzard's rights. MDY argued that contract violations can never give rise to copyright infringements (not addressing the various precedents for such an occurrence). Also, it argued that circumventing Warden did not allow access to a work protected by copyright, as it did not protect the game client code or the server code.
June 16, 2008 The summary judgement hearing was held.
July 14, 2008 The judge issued his summary judgment opinion. The score:
- Tortious Inteference -- Blizzard wins, damages to be set later
- Contributory Copyright Infringement -- Blizzard wins, damages to be set later
- Vicarious Copyright Infringement -- Blizzard wins, damages to be set later
- Violation of the DMCA -- MDY wins on 17 USC 1201(a)(2), other DMCA grounds to be decided
- Trademark Infringement -- to be decided later
- Unfair Competition -- MDY wins, claim removed
- Unjust Enrichment -- to be decided later
January 8, 2009 A bench trial to resolve the DMCA, trademark and enrichment claims was held. A bench trial is a trial in which all facts alleged by the parties are taken as true. As such, there is no need for a jury to establish the facts of the case; rather, a judge merely applies the law to the stipulated facts.
January 28, 2009 The judge gives his order from the bench trial. Violation of the DMCA -- Blizzard wins on 17 USC 1201(a)(2) and (b)(1).
While the judge agreed that Warden did not protect the game client or the server code, he did find that Warden protected the dynamic, non-literal combination of elements that are only possible when the game client is connected to the server. (These elements, as you might recall, are protected by copyright thanks to Atari Games Corp v. Oman)
March 3, 2009 The judge amended the damages. MDY must now pay Blizzard $6,500,000 for the Tortious Interference and Copyright claims and may not sell any copies of Glider.
June 7, 2010 The case is heard before the Ninth Circuit Court of Appeals on the same day as the appeals for Vernor v. Autodesk and UMG v. Augusto, two other cases dealing with license v. purchaser issues. (Unfortunately, I haven't been able to locate the briefs online to describe to you.)
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