9th Circuit: Contract Battles Copyright in World of Warcraft's Killer 'Bots

World of Warcraft:  Contract Battles Copyright Over Killer 'Bots

In copyright cases it is often difficult to tell where copyright law ends and where contract law begins. This has a significant effect on how a case will be litigated and pleaded, it will also have an effect on how copyrighted works may and may not be used. Using contracts to extend the control of a copyright owner over the creativity and commercial freedom of users of the copyrightable works raises First Amendment and antitrust concerns, on the one hand. On the other, following the US Supreme Court’s decision in Feist which rejected the “sweat of the brow” doctrine and which deprived (in that case owners of telephone directories) databases lacking in originality of copyright protection if the databases lacked originality in selection and arrangements. By shrinking the traditional contours of copyright law, the Supreme Court left a greater task to contract law in protecting the rights of database owners or software owners.

Thus, copyright law can tell us that material is in the public domain and that we are free to use it. However, if you enter a contract permitting you access to a private database comprised of public domain materials, how many restrictions can be placed on a user? End User License Agreements (EULAs) or Terms of Use (TOU) are the agreements that most of us enter into daily by clicking “I accept”. Although almost no one reads or understands these agreements, courts engage in the legal fiction that we have all entered into contracts that are governed by these agreements. There was a rumor that an early Microsoft WORD EULA asserted Microsoft’s copyright in any document created on Microsoft WORD.

In these swampy precincts where copyright and contract intersect MDY Industries LLC v. Blizzard Entertainment Inc., 629 F.3d 928 (9th Cir. Dec. 14, 2010) emerges. This action was commenced by the plaintiff seeking a declaratory judgment that its software did not infringe Blizzard’s copyright. Blizzard creates and operates a popular multiplayer online game called “World of Warcraft”. This is a world where chubby geeks the world over assume avatars and go on sex, drug and violence-lace rampages from the safety of a home computer. The game has 70 levels and stores where you can buy goods to use in the online world and where you can sell goods that you’ve made online. The game consists of 70 levels.

One entrepreneur decided to make a software or “bot” that plays the first levels of the game, basically letting the player advance levels without having to spend the time, energy or skill to do so. Blizzard initially did not have any rules against this, but then amended the EULA and also started implementing technological anti circumvention measures to detect and eject bots. MDY responded by changing its software to avoid detection by the bots. In a year, MDY was making $3.5 million from the bot software.

The questions are: did MDY breach the contract? Did MDY violate the Copyright Act in some way?

The court found no copyright infringement. The reason is that when someone enters into a licence agreement exceeds the bounds of the agreed use, the court will look to whether the unauthorized use is a breach of a “covenant” of the contract or a “condition” of the contract. If it is a breach of a condition, a copyright infringement claim may be pursued. If the unauthorized use is a breach of a covenant, the copyright owner (licensor) is limited to a breach of contract claim. In this instance, MDY breached a covenant of the license, not a condition.

I cover the case law discussing the distinction between covenants and conditions in Copyright Litigation Handbook (West 5th Ed. 2010).

Additionally, the Copyright Act did not preempt Blizzard’s claims based on the EULA under contract law. Further, although the court did not grant summary on tortious interference with contract, holding that MDY’s improper motive had to be established at trial, that claim was permitted to proceed.

The Court did find a violation of the trafficking in anti-circumvention technology provisions of the Copyright Act. 17 U.S.C. Section 1201. Significantly, the Ninth Circuit declined to adopt the Federal Circuit’s “infringement nexus” test for finding a violation of Section 1201. Compare Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178 (Fed. Cir. 2004).

This opinion is big, dense, and will give you a headache but is required reading for DMCA mavens.


 Purchase Copyright Litigation Handbook 2010 by Raymond J. Dowd from West here  

Google TV: A few of the future of content consumption on your television

1st Cir: Implied Non-Exclusive License Survives Death of Architect

The First Circuit dealt with the question of whether an architect had granted an implied non-exclusive license, and if so, whether such non-exclusive implied license survived his death.

The architect had been a partner in a group that developed a property the development of which was planned according to his original plans.  Then he died.

Could the partners use the plan?  Yes, the circumstances implied a non-exclusive license.  Do such licenses survive death?  Yes.

1st Cir: Implied Non-Exclusive License In Architect's Plans After His Death

The Law of Avatars: Copyright Act Doesn't Preempt State Law Governing Gwen Stefani's Avatar

No Doubt Group Photo - from Nodoubt.com

Band Hero - Courtesy Wikipedia

The law governing the use of a person's image for purposes of trade or advertising is called a "right of publicity" or "right of privacy".   It is a body of law governed by state, not federal law.   Celebrity-obssessed states like California and New York have statutes governing this right.  Other states recognize the right under common law.

No Doubt claimed that the video game Band Hero exceeded the scope of a license agreement and permitted players without authorization to show band members playing individually (rather than as a group) and to create in-game avatars by manipulating and distorting the images of the band members.   So the question is: does the Copyright Act preempt state laws of publicity (use of name and likeness), breach of contract, and unfair competition?  "Preemption" in this context means completely overriding the state law.  Copyright is one of the rare areas of law in which the "complete preemption" doctrine applies.

Backgrouns: Actors in a film lose the publicity right

When an actor appears in a film, he or she loses the right of publicity, which is said to be "preempted" by the Copyright Act.   So if an actor is stiffed on a fee for appearing in a film, there is no action for copyright infringement or any alternative theories such as "misappropriation" of the actor's image.  The actor must rely on state contract law and must pursue the person who broke the contract.  The logic is that the actor's performance is a "copyrightable work" that was captured by a film-maker "author".

No Doubt v. Activision Publishing, Inc., 2010 WL 1387988 (C.D. Cal. Jan. 14, 2010) discusses the situation of actors:

Notably, the actors' “performances in the film were recorded with their active participation and consent.” Id. at 1920 n. 5, 58 Cal.Rptr.2d 645. But after a pay dispute, the actors filed a claim for misappropriation of likeness and violation of their rights of publicity. Id. at 1915, 58 Cal.Rptr.2d 645.

The court held that the actors' claim fell within copyright subject matter. Id. at 1920, 58 Cal.Rptr.2d 645. The court reasoned that once the performances were put on film with the actors' consent, they were “fixed in a tangible medium of expression” that fulfilled the requirements of section 102 of the Copyright Act. Id. at 1919, 58 Cal.Rptr.2d 645. The actors' performances were part of the copyrighted material, and the actors' likenesses could not be detached from the copyrighted performances that were contained in the film. The court concluded that the actors' case “crumbles in the face of one obvious fact: their individual performances in the film ... were copyrightable .” Id. at 1919, 58 Cal.Rptr.2d 645. As a result, the court held that their claims were preempted: “A claim asserted to prevent nothing more than the reproduction, performance, distribution, or display of a dramatic performance captured on film is subsumed by copyright law and preempted.” Id. at 1924, 58 Cal.Rptr.2d 645.
No Doubt v. Activision Publishing, Inc., 2010 WL 1387988 (C.D. Cal. Jan. 14, 2010) on the other hand, dealt with the issue of whether the rock band No Doubt could sue under California law for right of publicity and unfair competition for unauthorized manipulation and distortion of their names and likenesses.

A bit of procedural history is in order.  In my Copyright Litigation Handbook (West 4th Ed. 2009), Chapter 10 is titled "Removal from State Court and Preemption.   Grossly simplified: if a complaint does not state a "federal question" on its face, it belongs in state court.  If a "federal question" appears on the face of a complaint, it can be automatically bounced to federal court by filing a notice of removal.  28 USC 1441  If the person whose case is removed to federal court is unhappy and has grounds to do so, he or she must then make a motion to remand.  I quote:

“[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States.” 28 U.S.C. § 1441(a). If the federal courts lack subject matter over the action, the case must be remanded to the state court from which it was removed. 28 U.S.C. § 1447(c).

The Ninth Circuit has expressed a “strong presumption against removal.” Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir.1992). The removing party bears the burden of establishing that removal was appropriate, and “the removal statute is strictly construed against removal jurisdiction.” Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709, 712 (9th Cir.1990). Federal courts must remand the case “if there is any doubt as to the right of removal.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.1979)).

No Doubt v. Activision Publishing, Inc., 2010 WL 1387988, 2 (C.D.Cal. 2010)

Very few people on the face of the earth are fascinated by this pingpong between federal and state courts because the decisions rarely make it to the appellate level where law professors and law reviews concentrate their energies.   But as a working litigator, I find an understanding of this game of pingpong to be crucial for strategic reasons at the beginning of a litigation.

No Doubt v. Activision Publishing, Inc., was filed in state court and removed to federal court.  So the question before the No Doubt court was whether or not to bounce the case back to state court ("remand").

The court decided that the contract, right of publicity and unfair competition were not preempted, and remanded the case back to a California state court.

The court's reasoning below:

We must first determine whether the “subject matter” of the state law claim falls within the subject matter of copyright as described in 17 U.S.C. §§ 102 and 103. Second, assuming that it does, we must determine whether the rights asserted under state law are equivalent to the rights contained in 17 U.S.C. § 106, which articulates the exclusive rights of copyright holders.Laws, 448 F.3d at 1137-38.

First, Plaintiffs' rights do not fall within the subject matter of copyright. In this case, in contrast to Laws and Fleet, the object that is “fixed in a tangible medium of expression” is the physical likeness and persona of the Plaintiffs. Name, likeness, and persona are not copyrightable subject matter, both under the Copyright Act and the Copyright Clause of the Constitution, because a name, likeness, or persona is not a work of “authorship” entitled to copyright protection. See Downing, 265 F.3d at 1003-05; see also Toney v. L'Oreal USA, Inc., 406 F.3d 905 (7th Cir.2005) (holding no preemption where photo model asserted right of publicity claim against photo copyright holder).


It is true that Defendant's videogame is a work of authorship entitled to copyright protection, see Midway Mfg. Co. v. Arctic Intern., Inc., 704 F.2d 1009, 1012 (7th Cir.1983), and that the musicians' songs incorporated into Defendant's videogame are copyrightable. See 17 U.S.C. §§ 102(a)(2), (7) (listing “musical works” and “sound recordings” as copyrightable works of authorship). Further, live musical recordings that are captured on videotape are also copyrightable. See, e.g., Armstrong v. Eagle Rock Ent., Inc., 655 F.Supp.2d 779, 2009 WL 2923173, at *7-8 (E.D.Mich.2009) (musician's publicity and appropriation claims against music video distributor preempted by Copyright Act where case involved live musical performance recorded on videotape); see also 17 U.S.C. § 102(a)(6) (listing “motion pictures and other audiovisual works” as copyrightable works of authorship). Thus, if Plaintiff were suing on the basis of Defendant's misuse of Plaintiff's songs or videotaped musical performance, its claims would be preempted by the Copyright Act. See, e.g., Laws, 448 F.3d at 1138-43. The same result would occur if Plaintiff were claiming a right in the entire videogame as infringing a similar work of Plaintiff's own authorship. See, e.g., M. Kramer Mfg. Co., Inc. v. Andrews, 783 F.2d 421, 445-46 (4th Cir.1986).


However, Plaintiff does not allege that Defendant misused Plaintiff's copyrighted songs or copyrightable musical performances. Plaintiff alleges that the contents of Defendant's videogame infringes Plaintiff's rights under the parties' contract and under state publicity laws. Specifically, Plaintiff asserts that Defendant's videogame contains cartoon likenesses that resemble Plaintiff. See Kirby v. Sega of America, Inc., 144 Cal.App.4th 47, 55-57, 50 Cal.Rptr.3d 607 (2006) (video game character that resembled plaintiff potentially infringed plaintiff's likeness and identity); see also Wendt v. Host Intern., Inc., 125 F.3d 806, 810-12 (9th Cir.1997) (robot look-alike misappropriated plaintiff's identity); White v. Samsung Electronics America, Inc., 971 F.2d 1395, 1397-99 (9th Cir .1992) (same); Newcombe v. Adolf Coors Co., 157 F.3d 686, 692-94 (9th Cir.1998) (cartoon likeness of baseball player potentially infringed rights of publicity); Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959, 967-68 (10th Cir.1996) (same).


Even more specifically, Plaintiff asserts that Plaintiff consented to Defendant's use of Plaintiff's name, image, and likeness in the videogame, but only within the well-defined parameters laid out in the parties' contract. Defendant's videogame then included Plaintiff's name, image, and likeness in a manner that was outside the scope of Plaintiff's contractual consent.

This case is exactly what the Laws court had in mind when it suggested that Debra Laws might have a valid cause of action against Elektra Records (with whom she had entered into a recording contract), but not against Sony Records (which had obtained from Elektra licenses to use Laws's songs). The court clearly counseled that artists and entertainers should proceed exactly as Plaintiff has proceeded in this case:

If Laws wished to retain control of her performance, she should (and may) have either retained the copyright or contracted with the copyright holder, Elektra, to give her control over its licensing. Laws, 448 F.3d at 1145. The court added: But if Elektra licensed “Very Special” to Sony in violation of its contract with Laws, her remedy sounds in contract against Elektra, not in tort against Sony. Id. at 1144. Laws's right-of-publicity claims against the copyright licensee were preempted by the Copyright Act; but Laws's claims against the party with whom she contracted would not be preempted.

Here, Plaintiff contracted with the videogame's copyright holder (that is, Defendant) so that the copyright holder would only engage in certain activities. Plaintiff carefully controlled the rights it was allowing Defendant to incorporate into the videogame. Subsequently, Defendant engaged in certain other activities that were not contractually permissible. Thus Plaintiff has a valid breach of contract cause of action. Further, Defendant's alleged breach of contract involved Defendant's impermissible use of Plaintiff name, image, and likeness. Thus Plaintiff also has a valid tort cause of action for violation of Plaintiff's right of publicity. Accord Facenda v. N.F.L. Films, Inc., 542 F.3d 1007, 1031-32 (3d Cir.2008) (sportscaster's breach of contract and right of publicity claims not preempted by copyright where sportcaster's contract allowed defendant to use sportscaster's voice recordings in context of sports broadcasts, not in context of television advertisements for videogame).

In short, the rights asserted by Plaintiff are not copyrightable, see Downing, 265 F.3d 1003-04, and Plaintiff did not agree to Defendant's incorporation of Plaintiff's name, likeness, or image into Defendant's copyrighted work in the manner that Defendant did so, cf. Fleet, 50 Cal.App.4th at 1919, 58 Cal.Rptr.2d 645. Accordingly, Plaintiff's tort and contract claims are not preempted by the Copyright Act.

Beware of Default Judgments: Captcha Gotcha Spammers Under Digital Millenium Copyright Act

Craigslist is a wildly popular service for posting free classified advertisements.  Over the years I have hired a number of employees through Craigslist - responding quickly to an ad shows tech savvy, computer literacy and some level of good judgment.

Over the years we have all entered fuzzy, annoying-looking numbers and words into Captcha fields probably without thinking too much about it.   Captcha is a free spam-proofing device used by many websites to ensure that a human being is entering a website and using it for legitimate purposes.  There are numerous providers of Captchas, check out here and here.

From Wikipedia:

A CAPTCHA or Captcha (pronounced /ˈkæptʃə/) is a type of challenge-response test used in computing to ensure that the response is not generated by a computer. The process usually involves one computer (a server) asking a user to complete a simple test which the computer is able to generate and grade. Because other computers are unable to solve the CAPTCHA, any user entering a correct solution is presumed to be human. Thus, it is sometimes described as a reverse Turing test, because it is administered by a machine and targeted to a human, in contrast to the standard Turing test that is typically administered by a human and targeted to a machine. A common type of CAPTCHA requires that the user type letters or digits from a distorted image that appears on the screen.

I found one 2007 case finding CAPTCHA to be a technological measure to protect copyrighted materials, the circumvention of which would be a violation of the Digital Millenium Copyright Act. Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F. Supp. 2d 1096 (C.D. Cal. 2007)

In Craigslist, Inc. v. Naturemarket, Inc., C 08-5065 PJH, 2010 WL 807446 (N.D. Cal. Mar. 5, 2010) Craigslist sued a spammer who offered software that did auto posting on Craigslist and sold telephone-verified Craigslist accounts to other spammers or marketers.  To develop the software, the spammer had to access Craigslist, obtain data, code and images, steal telephone-verified accounts, and distribute that information.

When we go on a website, we usually click "I accept" the terms of use ("TOU").  This creates a contract or license agreement (a k a "end user license agreement" or EULA) governing use of the information obtained through the website or database accessed.

In Craigslist, Inc. v. Naturemarket, Inc., Craigslist sought to pursue the spammer through the Digital Millenium Copyright Act and through the terms of the TOU (essentially contract claims).

Craiglist was told by the spammer that he'd sold about $40,000 worth of the autoposter software.  Craigslist pursued both  Digital Millennium Copyright Act, 17 U.S.C. §§ 1201 ("DMCA") and the TOU (Contract) claims.

The spammer did not hire a lawyer to defend the lawsuit and failed to respond to pleadings and court notices.

Craiglist obtained default judgments pursuant to Rule 55 of the Federal Rules of Civil Procedure under both the DMCA for statutory damages of $470,000 and under the TOU (Contract) for $840,000. The court found the liquidated damages clause of $200 per unauthorized post to be enforceable.   The court accepted Craigslist's lowest estimate of unauthorized posts.  The spammer, Igor Gasov was held personally liable.

 Craigslist alleged that Defendants violated § 1201(a)(2) and (b)(1) of the DMCA. “A plaintiff alleging a violation of § 1201(a)(2) must prove: (1) ownership of a valid copyright on a work, (2) effectively controlled by a technological measure, which has been circumvented, (3) that third parties can now access (4) without authorization, in a manner that (5) infringes or facilitates infringing a right protected by the Copyright Act, because of a product that (6) the defendant either (I) designed or produced primarily for circumvention; (ii) made available despite only limited commercial significance other than circumvention; or (iii) marketed for use in circumvention of the controlling technological measure.” Ticketmaster L.L. C., 507 F.Supp.2d at 1111 (quoting Chamberlain Group, Inc. v. Skylink Tech., Inc., 381 F.3d 1178, 1203 (Fed.Cir.2004)).

The court found defendant's "auto poster" software to be a product violating the DMCA because it permitted posters to circumvent Craigslist's Captcha and telephone verification controls.

Looking at Google, we can see that the spammers did not get the message that auto poster software and selling verified Craigslist accounts can lead to significant personal liability.  It appears that the market for spamming Craiglist is quite large.  It is very dangerous not to defend these cases.   Craigslist's lawyers were awarded $65,038.20 in legal fees and $1,712.07 in costs.