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

>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?ÇÖs finding of copyright infringement, but nevertheless held MDY liable for breach of the EULA on a different ground ?Çô 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” ?Çö 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”.

Gavin George is an associate in the Intellectual Property Practice Group of Haynes and Boone. His practice covers all areas of intellectual property law, with an emphasis on technology transactions and data privacy in the information age. His practice includes technology agreement drafting and negotiation, intellectual property analysis and due diligence, and consulting on evolving data protection and social media issues.

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January 2011