Blizzard Entertainment (Blizzard), the maker of the World of Warcraft (WOW), a popular online game with approximately 10 million players and revenue in excess of $1.5 billion dollars, has successfully prevented the sale and distribution of an add-on software product manufactured by MDY Industries, LLC (MDY). The US District Court for the District of Arizona ruled that MDY had engaged in both contributory and vicarious copyright infringement by distributing an add-on software program that allowed users both to advance through the levels more quickly and to complete the game more rapidly. MDY Industries, LLC v. Blizzard Entertainment, Inc., et al., No. CV-06-2555-PHX-DGC (D. Ariz. July 14, 2008). This distribution allowed  players to infringe Blizzard’s copyright in its WOW game because the use of this add-on software program with the WOW game was outside the scope of the license grant contained in the End User License Agreement (EULA) and Terms of Use (TOU) that each player must agree to prior to installing and playing the game.

In an effort to stop the distribution and sale of MDY’s add-on software, Blizzard alleged that MDY was engaged in contributory copyright infringement because MDY materially contributed to the direct copyright infringement of WOW players. Blizzard also alleged that MDY was engaged in vicarious copyright infringement because MDY had both the ability to stop the direct infringement and that it had derived a financial benefit from the direct copyright infringement. MDY defended these claims by arguing that the WOW players who used the add-on software were not directly infringing because they are entitled to copy the WOW software to the random access memory on their computers, and that the use of the add-on software was merely a violation of the terms of a contract formed when the users agreed to the EULA and TOU and not a violation of the license granted by Blizzard. Since the license had not been violated, MDY argued, no direct infringement had occurred.

To determine whether direct infringement actually occurred, the court first had to determine whether the license from Blizzard to the WOW players was limited in scope.  Generally, a copyright owner who has granted an individual a nonexclusive license to use copyrighted material cannot sue for copyright infringement unless the license is limited in scope. If the license was not limited, Blizzard could only sue for breach of the terms of the EULA and TOU. After reviewing the language of the EULA and TOU, the court reached the conclusion that Blizzard’s license to WOW players was a limited license that allowed players to play the game, but not to copy, distribute, or modify the game. The court further determined that WOW players who used the add-on software acted outside the scope of the license because the TOUs clearly prohibited players from using any third-party software that modified the WOW experience. Thus, the players copying the game to their computer’s random access memory while engaged in this unauthorized activity constituted direct copyright infringement.

MDY attempted to argue that Section 117 of the Copyright Act prevented a finding of direct infringement because the WOW players are “owners” of the copies of the game software and that copying the software to the random access memory was an essential step in using the game software. This argument was unsuccessful since it was clear that Blizzard had only granted WOW players a license to use the game, not a transfer of ownership, and that Blizzard had imposed significant restrictions on the use or transfer of the software. Thus, Section 117’s limitation on liability was inapplicable.

Blizzard also claimed that MDY had violated Sections 1201(a)(2) and (b)(1) of the Digital Millennium Copyright Act (DMCA). Section 1201(a)(2) prohibits the manufacture or other trafficking in technological products, services, or devices designed to circumvent technological protections that are put in place to control access to a copyrighted work.  The court dismissed Blizzard’s allegations that MDY’s software violated Section 1201(a)(2) after finding that Blizzard’s technological measures did not prevent access to the copyrighted material because the WOW players already had full access once the software was installed on their computers. Thus, Section 1201(a)(2) was inapplicable.  Section 1201(b)(1) applies to protective measures that control access to software as long as the protective measure protects a right of the copyright owner. The court declined to dismiss this allegation because of a lack of factual development in the briefing.

This case demonstrates the importance in properly drafting End User License Agreements and Terms of Use for software and other products. Through proper drafting of the nonexclusive license, Blizzard preserved its right to sue for copyright infringement.  Companies that routinely use limited licenses are advised to seek legal counsel to ensure proper drafting of the licensees.

Arent Fox is continuing to monitor this case for further developments. For more information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Sarah L. Bruno
bruno.sarah@arentfox.com
202.775.5760

Matthew R. Mills*
mills.matthew@arentfox.com
202.715.858 

*Matt is admitted only in New York. He is supervised by principals of the firm.