Haynes and Boone Blogs » 9th Circuit

>MDY v. Blizzard – The Court of Appeals Weighs-in

Gavin George — Fri, 07 Jan 2011 23:51:00 +0000

>As you may recall (and as we’ve been covering), last January, an Arizona District Court found that using MDY’s Glider bot program in conjunction with Blizzard’s World of Warcraft game software fell outside the scope of the game’s End User License Agreement (EULA). The District Court then held that MDY is responsible for players running Glider outside the scope of the EULA, and awarded Blizzard a $6.5 million judgment against MDY for copyright infringement.

MDY appealed the case to the Ninth Circuit Court of Appeals, which recently issued its own decision. The Ninth Circuit overturned the District Court’s finding of copyright infringement, but nevertheless held MDY liable for breach of the EULA on a different ground – violation of the Digital Millennium Copyright Act (DMCA).

The Ninth Circuit held that using Glider while playing World of Warcraft in violation of the EULA did not amount to copyright infringement. The Ninth Circuit categorized the EULA term that forbade the use of bots as a “covenant” (i.e. a promise not to do something), rather than a “condition” (i.e. a limit on the scope of the copyright license). And, while a violation of a covenant might be a breach of the EULA, such a breach does not trigger copyright infringement.

In upholding the DMCA verdict against MDY, the Ninth Circuit held that Section 1201(a)(1) & (2) of the DMCA created a right of “anti-circumvention” — the right to prevent circumvention of measures designed to control access to a copyrighted work. The most significant aspect of this holding is that no actual infringement of the copyrighted work needs to actually occur. The Ninth Circuit acknowledged that this new right created a split with the Court of Appeals for the Federal Circuit, which requires actual infringement before holding a defendant liable for a DMCA violation. It’s possible that this split may trigger a Supreme Court review of the issue.

The Ninth Circuit’s ruling appears to make it easier for copyright owners to attack products and software designed to circumvent access controls, encryption, or other digital rights management in video games and other digital works. Without the need to prove infringement of the work itself, courts (at least within the Ninth Circuit) will likely find it easier to remove or impound devices, software, or access keys designed to facilitate cheating, hacking, decryption, or pirating of video games or consoles. It is unclear whether or not a defendant would have any fair use defenses to a claim based on this new right of “anti-circumvention”.

>The End of Used Video Games?

Gavin George — Fri, 24 Sep 2010 22:20:00 +0000

>Are you one of the 75 million used video game purchasers in the U.S? Or, are you one of the 26 million used video game sellers looking to subsidize your next game purchase with a trade-in? If so, you might not want to delay too long before making your next trip to GameStop.

The Ninth Circuit Court of Appeals recently ruled that Timothy Vernor, an eBay seller of used commercial versions of Autodesk’s AutoCAD, is not permitted to sell used AutoCAD discs under copyright law. The court held that the “first sale” doctrine that traditionally protects used book sellers from charges of copyright infringement does not apply to used software sellers. The court based this distinction on the finding that the company that originally sold its old copy of AutoCad to Vernor was not an owner of software, but merely a licensee.

The court held that a software user is a licensee when the publisher or copyright owner (1) specifies that the user is a licensee, (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable restrictions on the use of the software.

In Vernor’s case, the court found that Autodesk had done each of (1), (2), and (3). As a result, the company that sold the used AutoCAD software to Vernor was a mere licensee, and could not transfer title to the software to Vernor, so neither that company nor Vernor were entitled to any protection under the first sale doctrine. As a result, Vernor’s eBay sale of AutoCAD was an infringement of Autodesk’s copyright.

So, why does a case about used commercial PC software matter to video games? Well, the Ninth Circuit appears to have opened the door for game publishers to adopt the software industries’ licensing model. Don’t be surprised if the terms and conditions included with your next Xbox game purchase look more like the terms and conditions included with your copy of Windows Vista. Should game publishers adopt this model, legal sales of used games may become a thing of the past.

>NFL Retirees Suing EA Over Madden

Andy Ehmke — Wed, 04 Aug 2010 23:47:00 +0000

>Electronic Arts, Inc. is again feeling the pressure regarding its sports-based video games, this time thanks to a class action centered around its “Madden NFL” video game franchise.

The complaint was filed in the District Court for the Northern District of California on Thursday, July 29, 2010, by former Cincinnati Bengal and Tampa Bay Buccaneer Michael “Tony” Davis, on behalf of himself and about 6,000 former NFL players. It claims that EA is intentionally pilfering the players’ publicity rights under California law, through the unauthorized use of the players’ likenesses to recreate over 140 NFL teams of the past.

Specifically, the complaint states that older versions of Madden NFL included player profiles for each “player” on a “vintage” team featured in the game, such profiles including descriptions of the players’ positions, number of years of NFL experience, physical characteristics, and relative skill level in different facets of the game. These descriptions were so close to the true characteristics of real former NFL players that consumers of the game could easily discern what player was being represented.

This inclusion of “vintage” NFL teams allowed game consumers to pit classic teams of the past, such as the ’84 San Francisco 49ers or the ’72 Miami Dolphins, against each other or against current teams. Sales of the 2009 edition of Madden NFL generated approximately $400 million in revenue, according to the complaint. EA discontinued the vintage team feature in the 2010 edition of Madden NFL.

The complaint further notes that EA paid the NFL Players Union about $35 million to license the use of current players’ likenesses in Madden NFL, but attempted to get around paying licensing fees for former players’ likenesses by making small changes to player information that consumers could easily see through. For example, the game featured a halfback for the ‘79 Tampa Bay Buccaneers who was 26 years old, measured 5’11”, weighed 215 pounds, had four years of pro football experience, and wore number 37. In reality, Plaintiff Tony Davis was a 26-year-old, 5’11”, 215 pound halfback for the ’79 Bucs in his fourth year in the NFL, but wore number 27.

Plaintiffs are seeking compensatory, statutory, and punitive damages, in addition to disgorgement of profits attributable to the use of the players’ likenesses in all versions of Madden NFL sold from July 29, 2008 through the date of filing of the complaint.

This is not the first time EA has had with the issue of athletes’ publicity rights. EA is already facing a similar action over its NCAA Football and NCAA Basketball games, brought on behalf of former NCAA football and basketball players who allege EA misappropriated their likenesses as well. NFL Hall-of-Famers Jim Brown and Herb Adderley filed amicus briefs in that action. The court denied EA’s motion to dismiss that complaint in February, and EA is appealing the decision.

Additionally, Jim Brown was a plaintiff in an action against EA filed in 2009 in federal court; the sole federal claim in that action was dismissed on First Amendment grounds in September, and the court declined to exercise jurisdiction over the remaining state law claims. That case is currently on appeal to the 9th Circuit Court of Appeals.

>Blizzard v. MDY Update: $6.5 Million Judgment Stands, Appeal is Imminent

Gavin George — Mon, 06 Apr 2009 13:31:00 +0000

>If botting on World of Warcraft can get you a 48 hour ban, what does coding a bot and selling it to thousands of other players get you? The answer (for now) appears to be a $6.5 million dollar penalty. We’ve referenced the Blizzard v. MDY case in a few previous entries here at LiaGW. The latest ruling has come down from the Arizona District Court.

As you may recall, the case went to a bench trial on the issue of damages, and the Court awarded $6.5 million to Blizzard back in January, along with a permanent injunction on the sale of Glider. After trial, Blizzard argued that under the DMCA, it was entitled to between $200 and $2,500 for each violation, so MDY should be liable for at least $24 million. MDY countered that the $6.5 million judgment should be decreased based on the “innocent violators” provision under the DMCA.

Well, last Wednesday, the District Court rejected both contentions, and upheld the initial $6.5 million in damages. We’re getting closer to seeing this matter come to a close, but we’ll keep everyone posted in the event that an appeal is filed.

For a recap of the case, please follow the jump.

The company MDY (which appears to be just one person, Michael Donnelly) makes a program called “Glider” for World of Warcraft players. Rather than spend hundreds of hours of playtime to level-up an avatar, some World of Warcraft players instead pay twenty-five dollars for Glider, which essentially plays the game on autopilot.

Blizzard Entertainment was apparently not happy with players running Glider, resulting in a suit in the Arizona District Court. Blizzard contended that the use of Glider alienates legitimate players who think Glider players are cheaters and also reduces Blizzard’s revenue by allowing Glider players to more quickly level-up their avatars and acquire rare assets. MDY responded that the Glider software actually enhances the player’s experience by removing the tedium, and encourages more casual gamers to purchase World of Warcraft without fear they would never be able to complete with more dedicated players.

The license language in the World of Warcraft End User License Agreement (“EULA”) prohibits the use of bot software running simultaneously with Blizzard’s software. Blizzard made a direct copyright infringement claim that relied heavily on an earlier Ninth Circuit holding that copyright infringement may be proved in software cases by showing an unauthorized reproduction of a copyrighted software program in a player’s RAM. Blizzard claimed that this license to copy its software into RAM is expressly conditioned on compliance with the contractual restriction prohibiting bot software. Blizzard argued that, because the EULA did not permit a RAM copy of the World of Warcraft software when Glider was also running on the same computer, Glider players were infringing Blizzard’s copyright in the World of Warcraft software by copying it without a license. Blizzard then could sue MDY on a theory of secondary liability for Glider players’ direct copyright infringement, since MDY induced those players to create the unlicensed RAM copies of the World of Warcraft software.

After considering the arguments, the Arizona District Court agreed with Blizzard. The Court found that because use of the World of Warcraft software in conjunction with Glider falls outside the scope of EULA, Glider players therefore infringe Blizzard’s copyright. The Court accordingly granted summary judgment in favor of Blizzard with respect to liability on its secondary infringement claims against the MDY. Following a bench trial on the issue of damages, the Court awarded a $6.5 million judgment to Blizzard back in January, along with a permanent injunction on the sale of Glider.

>Ninth Circuit Declines to "Boldly Go Where No Court Has Gone Before"

Haynes and Boone Administrator — Wed, 25 Feb 2009 23:47:00 +0000

>Proponents of free speech through the arts earned a victory on February 20, 2009, when the United States Court of Appeals for the Ninth Circuit confirmed a California district judge’s 2007 ruling that a California law that restricts sales of “violent video games” to minors is unconstitutional.

Chapter 638 of the Statutes of 2005, otherwise known as “AB 1179,” was passed by the California state legislature in October 2005. AB 1179 imposes restrictions on the sale and rental of violent video games to anyone under the age of 18. The act defines a “violent video game” as, among other things, making available the option of “killing, maiming dismembering or sexually assaulting” a human or substantially human game character if doing so appeals to a “deviant or morbid interest of minors” or is done in an “especially heinous, cruel, or depraved” manner. Such games must also be labeled with two-inch by two-inch stickers bearing a large “18″ prior to sale to signify the restricted nature of the game.

Less than two weeks after the act was passed, the Entertainment Merchants Association (then known as the Video Software Dealers Association, working in tandem with the Entertainment Software Association) filed a lawsuit against the governor and attorney general of California, as well as three cities and counties (the “State”), alleging violations of the First Amendment right of free speech. Shortly thereafter, the district court issued a prelminary injunction that prevented AB 1179 from being enforced until the lawsuit could be resolved. In August 2007, the district court ruled AB 1179 unconstitutional and the State promptly filed an appeal.

Where government action in pursuit of an alleged government interest conflicts with and is weighed against a fundamental right, such as freedom of speech, the government’s action is normally analyzed by the courts under the highest level of scrutiny (strict scrutiny). The State attempted to obtain a less stringent level of scrutiny by arguing that the “First Amendment rights of minors are not coextensive wth those of adults,” particularly where, as with AB 1179, the governments interest lies in “preventing violent, aggressive and antisocial behavior” and “preventing psychological or neurological harm to minors that play video games.” The EMA responded that the subject matter of many so-called “violent video games” possesses redeeming social value as it can be tied to contemporary arts such as film (e.g., “Resident Evil”) or books (e.g., Tom Clancy’s “Rainbow Six”) or even classical literature (e.g., “God of War,” which EMA cites as paralleling many Homeric concepts.

The Ninth Circuit ultimately rejected the State’s bid for a more lenient review of AB 1179, suggesting potential parallels between the legislation and an illegitimate interest in “controlling minors’ thoughts.” Upon considering the State’s invitation to include consider “violence” as falling under “obscenity” and, therefore, meriting a lesser degree of scrutiny under U.S. Supreme Court precedent (Ginsberg v. New York, 390U.S. 629 (1958)), the court pointedly declined to “boldly go where no court has gone before” and determined that AB 1179 is subject to strict scrutiny review.

The court’s subsequent review of AB 1179 highlighted several deficiencies of the act, most significantly that the evidence presented by the State in support of the act does not actually address the “compelling interests” asserted by the State. The court pointed out that the majority of the evidence was directed toward the impact of video games on the aggressive and violent tendencies of gamers with respect to interactions with other people. The evidence therefore contradicted the State’s overarching theme of protecting the minors, themselves, and did not allow AB 1179 to survive strict scrutiny as a justifiable restriction on free speech. As a result of the court’s ruling that the act is unconstitutional, the labelling requirement was considered to be moot.

An added bonus was the Ninth Circuit’s emphasis, near the end of its opinion, on a statement made by one of the doctors upon whose work the State’s evidence was based: “‘Are young adolescents more hostile and aggressive because they expose themselves to media violence, or do previously hostile adolescent prefer violent media?’” This classic chicken-or-the-egg question has been posed repeatedly by parties on both sides of the debate over video game content, and it appears to have played at least a small role in determining the Ninth Circuit’s disposition of the case.

In light of the predisposition of the Ninth Circuit, as well as every other circuit that has addressed this issue, to disallow restrictions on the sale of violent video games to minors, the question now becomes: What tactics will opponents of “violent video games” adopt now? According to the Ninth Circuit, AB 1179 also failed, in part, because the State could have utilized less-restrictive means to accomplish its goal of protecting minors from video game violence. That being the case, will anti-violence parties throw their support behind enhanced education campaigns featuring the Entertainment Software Ratings Board’s (ESRB) video game rating system? Or will they take the lessons learned from the Ninth Circuit’s decision here and head back to the drawing board within state legislatures?