By: Matthew G. Massari

On August 10, 2010, the United States District Court for the Central District of California granted Blizzard Entertainment, Inc., the publisher of the online computer game World of Warcraft, $88.5 million in a copyright-infringement case against a Georgia resident. The game publisher filed suit in federal court in Los Angeles in October 2009 against Alyson Reeves of Savannah, Georgia, and five unidentified defendants.

Blizzard is a premier publisher of online gaming software, including the popular computer games Diablo®, Starcraft® and Warcraft® gaming franchises. Many of Blizzard’s games feature online game play over the Internet via an online gaming service provided by Blizzard. Blizzards’s World of Warcraft (“WoW”) is the company’s most advanced online computer game in a genre referred to in the industry as Massively Multiplayer Online Roleplaying Game (“MMORPG”), a genre of computer games in which large numbers of players interact with each other simultaneously in a virtual online world. WoW allows players from around the globe to assume roles of different characters within the game as they explore, adventure and quest across the Warcraft fantasy universe. As with other MMORPGs, players control a character avatar within a game world in third- or first-person view, exploring the landscape, fighting various monsters, completing quests, and interacting with non-player characters or other players. A central objective for WoW players is to advance their characters through the various levels recognized in the game, thereby enabling them to access new content in the WoW gaming universe as levels increase. 

Also similar to other MMORPGs, World of Warcraft requires the player to pay for a subscription, either by buying prepaid game cards for a selected amount of playing time, or by using a credit or debit card to pay on a regular basis. A subscription permits users to continue accessing Blizzard’s authorized WoW servers and play in the authorized WoW gaming environment. World of Warcraft is currently the world’s most-subscribed MMORPG.

Blizzard claims that the gaming experience of legitimate players of WoW is under near constant attack by “cheaters, scammers, and other wrongdoers seeking to exploit WoW for their own illegitimate ends.” For this reason, Blizzard takes appropriate measures to protect and enforce its valuable intellectual property. For example, prior to installing the game client on a personal computer, Blizzard requires its users to assent to an End User License Agreement, which among other provisions, contains an express limitation on the license providing that a user may not “in whole or in part, copy, photocopy, reproduce, translate, reverse engineer, derive source code from, modify, disassemble, decompile, or create derivative works based on the Game…” Additionally, prior to playing WoW, users must create an account with Blizzard and agree to its Terms of Use which, among other provisions, provides that no one other than Blizzard shall host, provide access to, or emulate the communication protocols used to create the WoW gaming environment, and prohibits any modification of the WoW software, adding components to WoW, or using third-party programs for the purpose of hosting WoW. Blizzard has obtained copyright registrations in both the server and game client software code. 

Blizzard claimed that defendant Alyson Reeves, along with Does 1-5, operated, which serves as a portal to a number of servers operated by scapegaming, designed to emulate the actual WoW game servers operated by Blizzard. Blizzard alleged that the scapegaming servers emulate the WoW servers, and enable large-scale, multi-player online play of Blizzard games. Blizzard alleged that the defendants developed the unauthorized servers to accommodate players that wished to play World of Warcraft without paying the monthly subscription fee. Scapegaming offered five different unauthorized WoW servers to its users, each replicating the WoW online gaming experience provided by Blizzard, but at the same time providing enhanced features that allowed players to advance in WoW and obtain objects more quickly. Blizzard claimed that scapegaming unjustly profited from these unlawful acts by encouraging its user to make “donations” to fund its continued operation, and that it encouraged these “donations” by providing “donors” with additional or enhanced game-play items. These items ranged in cost from $1 to $300.

Blizzard claimed that the unauthorized scapegaming servers and the players’ use of the scapegaming servers exceeded the express limitations set forth in the End User License Agreement and Terms of Use. Blizzard alleged that the defendants were well aware that their activities were unauthorized, even going so far as to place a term in the scapegaming Terms of Use designed to prevent Blizzard from discovering or receiving information about scapegaming’s actions stating that: “No one from Blizzard, assocated with Blizzard or any such affiliated company or anyone directed by Blizzard or its Related companies is permitted to enter these web sites or view any content contained within these sites at any time what so ever due to controversial reasons.”

After failing to respond to the complaint, the Court granted Blizzard’s Motion for Default Judgment and directed it to file additional evidence and legal briefing in order to “prove-up” its damages. The Copyright Act, 17 U.S.C. §504(b) permits the copyright owner to disgorge “any profits of the infringer that are attributable to the infringement.” “The copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” Id. Blizzard submitted satisfactory evidence from third party PayPal Inc. showing that defendants’ PayPal account received $3,052,339 in gross revenues, which the Court awarded under 17 U.S.C. §504(b) in full since defendants failed to respond. Blizzard also requested $20,886,200 in statutory damages under the Digital Millennium Copyright Act (DMCA). Despite the large number, the Court found that they were entitled to much more.

Under the DMCA, “[a] person commiting a violation of section 1201 or 1202 is liable for either (A) the actual damages and any additional profits of the violater…or (B) statutory damages as provided in paragraph (3).” 17 U.S.C. §1201(3). The DMCA states that a party may elect to recover an award of statutory damages for each violation of section 1201 in the sum of not less than $200 or more than $2,500 per act of circumvention, device, product, component, offer, or performance of service…” 17 U.S.C. §1203(c)(3)(A) (italics added). Based on the allegations, the Court inferred that defendant provided each of its users with anti-circumvention products or services on at least one occasion. Blizzard submitted evidence that there were 427,393 members of dendendant’s website’s “community.” The Court concluded that each of the 427,393 community members downloaded, accessed, or otherwise used anti-circumvention software, services or products. Accordingly, the Court concluded that the appropriate measure of statutory damages was 427,393 users multiplied by the statutory minimum of $200 per “act of circumvention” and/or “performance of service” resulting in $85,478,600. After an additional award of $63,600 for attorney’s fees, plus the $3,052,339 in gross revenues, the award totaled $88,594,539.00. 

Now the real-life game begins to ensure that the massive default judgement award is not just a fantasy for Blizzard – collecting the money from the cyber infringers.

Matt Massari is a corporate and intellectual property transactions attorney at Weintraub Genshlea Chediak Tobin & Tobin and member of the firm’s sports, media and entertainment industry practice group.