GC2 Inc. v. Int'l Game Tech., IGT
391 F.Supp.3d 828 (2019)
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Rule of Law:
Under the Digital Millennium Copyright Act (DMCA), a party 'removes' copyright management information (CMI) when it creates and distributes copies of a copyrighted work without the CMI it was contractually obligated to affix, even if the CMI was not on the original files provided by the copyright holder. Each separate act of distribution, such as uploading files to a server, can constitute a new and distinct violation for the purpose of calculating statutory damages.
Facts:
- GC2 Inc. developed artwork and thematic elements for physical slot machine games.
- Beginning in 2003, GC2 licensed its artwork to IGT NV for use in the development of specific land-based physical slot machine games.
- A 2007 agreement between the parties granted IGT NV a perpetual license to use the GC2 artwork for the physical land-based machines but expressly reserved GC2's rights for use in internet gaming programs.
- GC2 provided its artwork to IGT NV on a CD that also included GC2's logo, which qualified as copyright management information (CMI).
- The parties' licensing agreement contractually obliged IGT NV to affix the GC2 logo to the artwork before it could be used on the physical games.
- IGT Holding and its subsidiaries, IGT NV and Doubledown, later developed, distributed, and licensed online digital versions of the games containing GC2's artwork.
- These digital versions of the games used GC2's artwork but did not include GC2's logo or any other attribution.
- The defendants repeatedly updated their online game library, and each update or new game launch involved re-uploading the entire library, including the infringing games, to a server accessible to players.
Procedural Posture:
- GC2 Inc. filed suit against International Game Technology (IGT) and its affiliates in the U.S. District Court for the Northern District of Illinois, alleging copyright infringement and DMCA violations.
- The court denied the defendants' initial motion to dismiss for failure to state a claim.
- The court granted a motion to dismiss one defendant, IGT PLC, for lack of personal jurisdiction.
- The remaining defendants filed a motion for partial summary judgment.
- The court granted summary judgment for defendants on two games not at issue in the trial and a state law claim but denied summary judgment on GC2's DMCA claim.
- The case proceeded to trial, where a jury found unanimously for GC2, awarding over $16 million in copyright damages and finding 696 separate DMCA violations.
- The court awarded statutory damages of $1,740,000 for the DMCA violations.
- The defendants then filed post-trial motions for judgment as a matter of law, a new trial, remittitur, and/or to alter the judgment, which are the subject of this opinion.
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Issue:
Under the Digital Millennium Copyright Act (DMCA), does a defendant 'remove' copyright management information when it creates and distributes copies of a copyrighted work without the CMI that it was contractually required to affix, even if the CMI was not physically present on the original files provided by the copyright holder?
Opinions:
Majority - Judge Matthew F. Kennelly
Yes. A defendant can be liable for 'removing' copyright management information (CMI) under the DMCA even if it did not literally strip pre-existing CMI from the plaintiff's original work. The court rejected the defendants' 'unreasonably crabbed reading' of the statute, holding that making copies of materials without including the contractually required CMI constitutes 'removal' under § 1202(b). The court reasoned that a contrary reading would lead to absurd results, such as immunizing a party who contracts to affix CMI but then distributes copies without it. Furthermore, the court found there was sufficient circumstantial evidence—including the licensing agreement reserving internet rights, the defendants' sophistication in intellectual property matters, and evidence of bad-faith negotiations—for a reasonable jury to find the defendants possessed the requisite 'double scienter' for the DMCA violations. The court also affirmed that each of the 696 re-uploads of the infringing games to a public-facing server constituted a separate act of distribution and thus a distinct DMCA violation, as the statute forbids all distributions, not merely the first one.
Analysis:
This case significantly clarifies the scope of the DMCA's anti-removal provision (§ 1202(b)), establishing that liability is not confined to the literal act of stripping embedded CMI from a file. The decision confirms that failing to add contractually obligated CMI when creating new derivative or digital copies is actionable as 'removal,' thus strengthening protections for licensors in the digital age. It also sets a potent precedent for calculating damages by affirming that each re-upload or new distribution of infringing material can be counted as a separate violation, potentially leading to massive statutory damage awards. This holding serves as a strong deterrent against ignoring attribution requirements in licensing agreements and underscores the importance of thorough compliance in digital distribution.
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