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Congress, in enacting the Digital Millennium Copyright Act, gave digital content owners a new legal protection against technologies that circumvent access controls protecting their digital property, the U.S. Court of Appeals for the Ninth Circuit held Dec. 14 (MDY Industries LLC v. Blizzard Entertainment Inc., 9th Cir., No. 09-15932, 12/14/10).
Ruling that a game software maker had alleged a viable DMCA circumvention of access controls claim against a man who marketed a software program that enabled game users to surreptitiously play the game in an automated fashion, the court said that both the text of the DMCA and its legislative history supported the conclusion that 17 U.S.C. 1201(a) “creates a new anticircumvention right distinct from copyright infringement.” The court further ruled that fair use or other defenses to copyright infringement claims are not available to a defendant accused of circumventing access controls under Section 1201(a).
The ruling sets up a circuit split with the U.S. Court of Appeals for the Federal Circuit, which held in Chamberlain Group Inc. v. Skylink Technologies Inc., 381 F.3d 1178, 1203 (Fed. Cir. 2004) (68 PTCJ 531, 9/17/04), that a claim under Section 1201(a) is subject to a fair use defense.
In 2005, Michael Donnelly, a WoW player and software programmer, developed and sold Glider, a software bot that automates play of WoW's early levels. Glider does not alter or copy WoW's game cilent software and has no commercial use independent of WoW, but it lets players advance quickly through the game amassing additional game assets.
Donnelly sold Glider to WoW players through his company, MDY Industries LLC, for $15-$25. Blizzard eventually banned players using Glider, and MDY responded by modifying Glider to avoid detection.
In 2006, MDY filed a complaint seeking a declaration that Glider did not infringe Blizzard's copyright or other rights. Blizzard, in turn, filed counterclaims and third-party claims against MDY and Donnelly for contributory and vicarious copyright infringement, violation of DMCA Sections 1201(a)(2) and (b)(1), and tortious interference with contract.
In 2008, Judge David G. Campbell of the U.S. District Court for the District of Arizona granted Blizzard partial summary judgment, finding that Glider sales contributorily and vicariously infringed Blizzard's copyrights and tortiously interfered with Blizzard's contracts. No. CV-06-255-PHX-DG CL 89 USPQ2d 1015 (D. Ariz. July 14, 2008) (76 PTCJ 412, 7/25/08). Later, the district court held MDY liable under Sections 1201(a)(2) and (b)(1) of the DMCA and Donnelly personally liable for MDY's copyright infringement, DMCA violations, and tortious interference.
In 2009, Campbell entered judgment against MDY and Donnelly for $6.5 million and permanently enjoined MDY from distributing Glider.
MDY appealed, and Blizzard cross-appealed the district court's holding that MDY did not violate Sections 1201(a)(2) and (b)(1) of the DMCA as to the game software's source code.
The parties agreed that when playing WoW, a player's computer creates a copy of the game's software in the computer's random access memory. This copy potentially infringes unless the player owns the copy of the software and makes a copy solely as “an essential step in the utilization of the computer program,” the court said, citing 17 U.S.C. §117(a)(1).
MDY contended that WoW players own their copies of WoW software, and thus Glider users do not infringe by reproducing WoW software in RAM while playing, and thus MDY is not secondarily liable for copyright infringement. The court did not agree, concluding that WoW players are licensees of the game client software rather than owners, and thus the essential step defense was unavailable.
Judge Consuelo M. Callahan cited the holding in Vernor v. Autodesk Inc., 621 F.3d 1102, 96 USPQ2d 1201 (9th Cir. 2010) (80 PTCJ 631, 9/17/10), that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions. Here, according to the court, Blizzard imposes transfer restrictions if a player seeks to transfer the license and a variety of use restrictions.
Thus, since WoW players do not own their copies of the software, Glider users may not claim the essential step defense, the court said. Thus, the players may infringe unless their usage is within the scope of Blizzard's limited license.
Turning to the licensing issue, the court said that, to prove infringement, Blizzard needed to demonstrate that the violated term of the licensing agreement was a condition rather than a covenant.
A covenant is a contractual promise, i.e., a manifestation of intention to act or refrain from acting in a particular way, such that the promisee is justified in understanding that the promisor has made a commitment, the court noted. A condition precedent is an act or event that must occur before a duty to perform a promise arises.
“Were we to hold otherwise, Blizzard--or any software copyright holder--could designate any disfavored conduct during software use as copyright infringement, by purporting to condition the license on the player's abstention from the disfavored conduct,” the court said. “The rationale would be that because the conduct occurs while the player's computer is copying the software code into RAM in order for it to run, the violation is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally conferred on copyright owners.”
For a licensee's violation of a contract to constitute copyright infringement, there must be a nexus between the condition and the licensor's exclusive rights of copyright, the court said. WoW players do not commit copyright infringement by using Glider in violation of the terms of agreement and, therefore, MDY was not liable for secondary copyright infringement, the court concluded.
Thus, the court reversed the district court's grant of summary judgment to Blizzard on its secondary copyright infringement claims and vacated the portion of the district court's permanent injunction that barred MDY and Donnelly from infringing, or contributing to the infringement of, Blizzard's copyrights in WoW software.
The court next turned to whether certain provisions of Section 1201 prohibit circumvention of access controls when access does not constitute copyright infringement.
Section 1201(a)(1)(A) prohibits circumventing a technological measure that effectively controls access to a work protected under the statute Sections 1201(a)(2) and (b)(1) provide that no person shall manufacture, import, offer to the public, provide or otherwise traffic in any technology, product, service, device, component, or part thereof that is designed to circumvent technology.
The court said that Section 1201 creates two distinct types of claims: those that prohibit circumvention of any technological measure that effectively controls access to a protected work and grants copyright owners the right enforce that prohibition, and those that prohibit trafficking in technologies that do such circumvention. It added that Section 1201(b)(1)'s prohibition was aimed at circumventions of measures that protect the copyright itself: it entitles copyright owners to protect their existing exclusive rights under the Copyright Act.
The court declined to adopt the Federal Circuit's approach to the DMCA expressed in Chamberlain Group, requiring Section 1201(a)(2) plaintiffs to demonstrate that the circumventing technology infringes or facilitates infringement of the plaintiff's copyright. The court faulted the holding in that case that a DMCA action was foreclosed to the extent that the defendant trafficked in a device that did not facilitate copyright infringement. Instead, according to the court, “a fair reading of the statute (supported by legislative history) indicates that Congress created a distinct anti-circumvention right under § 1201(a) without an infringement nexus requirement.”
Even accepting the validity of the concerns expressed in Chamberlain, the court said, “those concerns do not authorize us to override congressional intent and add a non-textual element to the statute.” The court accordingly rejected the imposition of an infringement nexus requirement.
Applying that analysis, the court ruled that MDY's Glider did not violate Section 1201(a)(2) of the DMCA with respect to WoW's literal elements and individual non-literal elements, because the program Blizzard implemented to halt Glider did not effectively control access to WoW's literal elements since those elements--the game client's software code--are available on a player's hard drive once the game client software is installed.
However, the court said that MDY did violate Section 1201(a)(2) with respect to WoW's dynamic non-literal elements because MDY was trafficking in a technology that is primarily designed for circumventing a technological measure that effectively controls access to a copyrighted work.
Judges William C. Canby Jr. and Sandra S. Ikuta joined the opinion.
MDY was represented by Lance C. Venable of Venable, Campillo, Logan & Meaney, Phoenix. Blizzard was represented by Christian S. Genetski, then of Sonnenschein Nath & Rosenthal, Washington, D.C.
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