MDY INDUSTRIES, LLC v. Blizzard Entertainment
629 F.3d 928 (2011)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A licensee's violation of a software license agreement constitutes copyright infringement only if the violated term has a nexus to the copyright holder's exclusive rights. The DMCA's prohibition on trafficking in technology that circumvents an 'access control' measure (§ 1201(a)) is a distinct cause of action that does not require a link to copyright infringement, unlike the prohibition on circumventing a 'rights protection' measure (§ 1201(b)).
Facts:
- Blizzard Entertainment, Inc. created the massively multiplayer online role-playing game World of Warcraft (WoW).
- To play WoW, users must accept a Terms of Use (ToU) agreement, which prohibits the use of third-party software like 'bots' to automate gameplay.
- Michael Donnelly, through his company MDY Industries, LLC, developed and sold 'Glider,' a software bot that automates playing the early levels of WoW.
- Glider does not alter or copy WoW's game client software but allows a user to advance in the game without being at the computer.
- Blizzard implemented a technology called 'Warden' to detect players using bots and prevent them from connecting to WoW's servers.
- In response, MDY modified Glider with anti-detection features specifically designed to circumvent Warden, and marketed these features to its customers.
- MDY's website and Donnelly's communications acknowledged that using Glider violated Blizzard's ToU.
- MDY earned approximately $3.5 million from selling 120,000 Glider licenses.
Procedural Posture:
- MDY Industries, LLC sued Blizzard Entertainment, Inc. in the U.S. District Court for the District of Arizona, seeking a declaratory judgment that its Glider software was non-infringing.
- Blizzard filed counterclaims against MDY and a third-party claim against its owner, Michael Donnelly, for contributory and vicarious copyright infringement, DMCA violations, and tortious interference with contract.
- The district court granted partial summary judgment to Blizzard, finding MDY and Donnelly liable for secondary copyright infringement and tortious interference with contract.
- Following a bench trial, the district court also found MDY liable for violating DMCA §§ 1201(a)(2) and (b)(1).
- The district court entered a permanent injunction against MDY and Donnelly and awarded Blizzard a stipulated judgment of $6.5 million.
- MDY and Donnelly, as appellants, appealed the judgment to the U.S. Court of Appeals for the Ninth Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the sale of a software 'bot' that automates gameplay in violation of a game's terms of use constitute secondary copyright infringement, and does the bot's ability to bypass the game's anti-bot detection system violate the Digital Millennium Copyright Act's anti-circumvention provisions?
Opinions:
Majority - Judge Callahan
No as to secondary copyright infringement; Yes as to the DMCA § 1201(a)(2) violation. A software user playing with a bot in violation of the Terms of Use (ToU) breaches a contractual covenant but does not commit copyright infringement. The court reasoned that for a license violation to be copyright infringement, it must have a 'nexus' to one of the copyright holder's exclusive rights under the Copyright Act, such as reproduction or creation of derivative works. Merely using a bot while the licensed software makes temporary copies in RAM does not create such a nexus. Therefore, MDY is not liable for secondary copyright infringement because there was no direct infringement by its users. However, MDY is liable for violating DMCA § 1201(a)(2) because its Glider software trafficked in a technology that circumvented Blizzard's 'Warden' system. The court held that Warden is a 'technological measure that effectively controls access' to the dynamic, real-time elements of the copyrighted WoW game. A claim under § 1201(a) for circumventing access controls is a distinct cause of action and does not require a connection to an underlying act of copyright infringement, creating a circuit split with the Federal Circuit. Conversely, MDY was not liable under § 1201(b)(1) because Warden does not protect an exclusive right of a copyright owner, such as the right to reproduce or distribute the work.
Analysis:
This decision significantly clarifies the boundary between breach of contract and copyright infringement in software licensing, preventing copyright holders from elevating any terms-of-service violation into a federal copyright claim unless it implicates an exclusive right. By requiring a 'nexus' to a right like reproduction or distribution, the court limited the scope of copyright protection in the context of user agreements. More importantly, the ruling established the Ninth Circuit's interpretation of the DMCA's anti-circumvention provisions, creating a split with the Federal Circuit by holding that a violation of § 1201(a) (access controls) requires no proof of copyright infringement. This strengthens the DMCA as a standalone tool for online service providers and game developers to combat unauthorized tools, like bots or cheats, that bypass their technological protection systems, regardless of whether those tools facilitate traditional infringement.
