Case 2:06-cv-02555-DGC Document 82 Filed 07/14/08 Page 1 of 27
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`WO
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF ARIZONA
`
`No. CV-06-2555-PHX-DGC
`ORDER
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`)))))))))))))
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`))))))))))))))
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`MDY Industries, LLC,
`Plaintiff/Counterdefendant,
`
`vs.
`Blizzard Entertainment, Inc.; and
`Vivendi Games, Inc.,
`Defendants/Counterclaimants.
`
`
`__________________________________
`Blizzard Entertainment, Inc.; and
`Vivendi Games, Inc.,
`
`Third-Party Plaintiffs,
`vs.
`Michael Donnelly,
`Third-Party Defendant.
`
`Blizzard Entertainment, Inc. and Vivendi Games, Inc. (collectively, “Blizzard”) are
`the creators and operators of a multiplayer online role-playing game known as World of
`Warcraft (“WoW”). WoW was released in November of 2004. WoW players control
`characters within a virtual universe, exploring the landscape, fighting monsters, performing
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`Case 2:06-cv-02555-DGC Document 82 Filed 07/14/08 Page 2 of 27
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`quests, building skills, and interacting with other players and computer-generated characters.
`As players succeed, they acquire in-game assets, experience, and power. Players can
`advance from level 1 to level 60 with the basic game, and through level 70 with an expansion
`module.
`Blizzard owns the copyright for WoW software. The software consists of two
`components: the “game client” software and the “game server” software. A user can obtain
`the game client software by purchasing a copy at a retail store or downloading a copy from
`the WoW website. The user plays WoW by loading the game client software on his personal
`computer and accessing the game server software through an online account for which he
`pays a monthly fee.
`Use of WoW is governed by an End User License Agreement (“EULA”) and Terms
`of Use Agreement (“TOU”). These agreements are displayed on a player’s computer screen
`when the game client software is loaded and the player seeks online access to the game
`servers. Players are required to agree to the terms of the EULA and TOU before proceeding
`to play the game.1
`WoW has been enormously successful. Blizzard asserts, and MDY does not dispute,
`that WoW is the largest and most successful multiplayer online game in the world. WoW
`currently has some 10,000,000 active players and generates more than $1.5 billion in revenue
`annually.
`Michael Donnelly is the founder of MDY Industries, LLC (“MDY”). Donnelly
`created, and MDY owns, a software program known as WowGlider (“Glider”). Glider is a
`computer program known as a “bot” – a word derived from “robot.” Glider plays WoW for
`its owner while the owner is away from his or her computer. Glider thereby enables the
`owner to advance more quickly within WoW than would otherwise be possible. MDY began
`selling Glider to WoW users in June of 2005. To date, it has sold some 100,000 copies.
`
`1 The record contains several different versions of the EULA and TOU. The parties
`agreed at oral argument that the most recent versions – the February 2, 2007 EULA and the
`October 16, 2006 TOU – are the operative agreements for purposes of the summary judgment
`motions. See Dkt. #41-8, 42. The Court therefore will not address the earlier versions.
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`Blizzard contends that Glider diminishes the value of WoW and causes Blizzard to
`lose customers and revenue. Blizzard asserts that WoW is a carefully balanced competitive
`environment where players compete against each other and the game to advance through the
`game’s various levels and to acquire game assets. Blizzard claims that Glider upsets this
`balance by enabling some payers to advance more quickly and unfairly, diminishing the
`game experience for other players. Blizzard also contends that Glider enables its users to
`acquire an inordinate number of game assets – sometimes referred to as “mining” or
`“farming” the game – with some users even selling those assets for real money in online
`auction sites, an activity expressly prohibited by the TOU. Dkt. #41. Ex. 8, ¶ 8.
`MDY, by contrast, claims that Glider enhances the game playing experience of its
`users and even enables some disabled users to play WoW. MDY contends that Glider users
`constitute a small fraction of WoW players and that the effect of Glider on WoW is minimal.
`MDY characterizes itself as an innovator and entrepreneur, and claims that Blizzard seeks
`improperly to use the copyright laws to squelch competition and stifle innovation.
`On the morning of October 25, 2006, representatives of Blizzard appeared at
`Donnelly’s home and informed him that the sale and use of Glider violated Blizzard’s rights
`in WoW. The representatives stated that they would file a lawsuit against Donnelly and
`MDY the next day in California federal court if MDY did not agree to stop selling Glider.
`Donnelly declined, and later that day filed this action in Arizona. See Dkt. #1.
`MDY’s amended complaint seeks a declaratory judgment that Glider does not infringe
`rights owned by Blizzard. Dkt. #5. Blizzard filed a counterclaim and third-party complaint
`asserting seven claims: tortious interference with contract, contributory copyright
`infringement, vicarious copyright infringement, violation of the Digital Millennium
`Copyright Act (“DMCA”), trademark infringement, unfair competition, and unjust
`enrichment. Dkt. #10.
`The parties have now filed motions for summary judgment. Blizzard seeks summary
`judgment on the claims for contributory and vicarious copyright infringement, violation of
`the DMCA, and tortious interference with contract (Counts I-IV). Dkt. #39. MDY seeks
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`summary judgment on all claims except trademark infringement (Count V). Dkt. #45. The
`parties have fully briefed the issues (Dkt. ##39, 45, 54, 57, 69-70) and the Court heard oral
`argument on June 26, 2008 (Dkt. #78). For reasons stated below, the Court will grant the
`motions in part and deny them in part.2
`I.
`Summary Judgment Standard.
`Summary judgment may be granted if “there is no genuine issue as to any material
`fact” and “the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
`A party seeking summary judgment “always bears the initial responsibility of informing the
`district court of the basis for its motion, and identifying those portions of [the record] which
`it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v.
`Catrett, 477 U.S. 317, 322 (1986). Only disputes over facts that might affect the outcome
`of the suit will preclude the entry of summary judgment, and the disputed evidence must be
`“such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
`Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
`II.
`Blizzard’s Copyright Infringement Claims (Counts II and III).
`Section 106 of the Copyright Act grants the owner of a copyright the exclusive right
`to “copy” the copyrighted work; that is, to make a copy of the work, to prepare derivative
`works based on the work, or to distribute copies of the work to the public. 17 U.S.C.
`§ 106(1)-(3); see S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085 n.3 (9th Cir. 1989)
`(“copying” is shorthand for the copyright owner’s exclusive rights). Section 501 of the Act
`provides that “[a]nyone who violates any of the exclusive rights of the copyright owner as
`provided by section[] 106 . . . is an infringer of the copyright[.]” 17 U.S.C. § 501(a).
`Copyright plaintiffs must therefore satisfy two requirements to establish direct infringement:
`(1) they must show that they own the allegedly infringed copyright, and (2) they must show
`that the alleged infringer has violated at least one of the exclusive rights granted under
`section 106. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001).
`
`2 The Court will grant summary judgment on Blizzard’s unfair competition claim
`(Count VI). Blizzard does not oppose MDY’s motion on that claim. Dkt. #54 at 2 n.1.
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`A person commits contributory copyright infringement “by intentionally inducing or
`encouraging direct infringement.” MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930
`(2005). A person commits vicarious infringement “by profiting from direct infringement
`while declining to exercise a right to stop or limit it[.]” Id. Blizzard alleges that users of
`WoW are licensees who are permitted to copy the copyrighted game client software only in
`conformance with the EULA and TOU, and that when users launch WoW using Glider, they
`exceed the license in the EULA and TOU and create infringing copies of the game client
`software. Dkt. #10 ¶¶ 80-83, 91-92. MDY is liable for contributory copyright infringement,
`Blizzard claims, because it materially contributes to this direct infringement by Glider users.
`MDY allegedly does so by developing and selling Glider with the knowledge that Glider
`users will create infringing copies. Id. ¶¶ 85-87. MDY is liable for vicarious copyright
`infringement, Blizzard asserts, because it has the ability to stop the Glider-caused infringing
`activity and derives a financial benefit from that activity. Id. ¶¶ 93-95.
`MDY does not dispute that it promotes the use of Glider in connection with WoW,
`that it controls Glider, or that it profits from Glider. MDY instead contends that it is not
`liable for contributory or vicarious copyright infringement because Glider users do not
`infringe Blizzard’s copyright. Dkt. #45 at 7-12. If Glider users violate terms of the EULA
`and TOU, MDY argues, they are merely breaching a contract, not infringing a copyright. Id.
`MDY also asserts a copyright misuse defense and an ownership defense under 17 U.S.C.
`§ 117. Dkt. ##57, 69.3
`
`3 The Court permitted the public interest group Public Knowledge to file an amicus
`brief in this case (Dkt. ##74-75), and required Blizzard to respond to its arguments
`(Dkt. ##76-77). Public Knowledge and the other parties have provided many helpful legal
`arguments. They also make various policy arguments. Although the Court appreciates these
`policy arguments and has benefitted from their excellent presentation, the Court is not a
`policy-making body. The Court’s obligation is to apply the law, particularly the law of the
`Ninth Circuit. As will be seen below, many of the issues in this case are governed by
`established Ninth Circuit law. No matter how persuasive arguments might be for positions
`contrary to Ninth Circuit law, this Court is not free to depart from that law.
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`Do Users of Glider Infringe Blizzard’s Copyright?
`A.
`MDY does not dispute that Blizzard owns a valid copyright in the WoW game client
`and game server software. Nor does MDY dispute that the game client software, which
`typically is located on the hard drive of a player’s personal computer, is copied from the hard
`drive to the computer’s random access memory (“RAM”) when WoW is played.
`Ninth Circuit law holds that the copying of software to RAM constitutes “copying”
`for purposes of section 106 of the Copyright Act. MAI Sys. Corp. v. Peak Computer, Inc.,
`991 F.2d 511, 518-19 (9th Cir. 1993). Thus, if a person is not authorized by the copyright
`holder (through a license) or by law (through section117, which will be discussed below) to
`copy the software to RAM, the person is guilty of copyright infringement because the person
`has exercised a right (copying) that belongs exclusively to the copyright holder.
`MDY contends that users of Glider do not infringe Blizzard’s copyright because they
`are licensed to copy the game client software to RAM. MDY claims that WoW players
`acquire this license when they purchase the game client software and load it on the hard
`drives of their personal computers. MDY claims that contrary provisions of the EULA and
`TOU, such as express prohibitions on the use of bots, are mere terms of contract, not
`limitations on the scope of the license granted by Blizzard. Thus, although Blizzard may
`assert a claim against Glider users for breach of contract, MDY argues, it cannot assert the
`more powerful claim of copyright infringement.4
`“Generally, a copyright owner who grants a nonexclusive license to use his
`copyrighted material waives his right to sue the licensee for copyright infringement and can
`sue only for breach of contract.” Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115,
`1121 (9th Cir. 1999) (“Sun I”) (citations omitted). “If, however, a license is limited in scope
`
`4 Breach of contract damages generally are limited to the value of the actual loss
`caused by the breach. See 24 Richard A. Lord, Williston on Contracts § 65:1 (4th ed. 2007).
`Copyright damages, by contrast, include the copyright owner’s actual damages and any
`additional profits of the infringer, or statutory damages as high as $150,000 per infringed
`work. 17 U.S.C. § 504; see Frank Music Corp. v. MGM, Inc., 772 F.2d 505, 512 n.5 (9th
`Cir. 1985). Courts may also impose injunctive relief, seize infringing articles, and award
`costs and attorneys’ fees. 17 U.S.C. §§ 502, 503, 505.
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`Case 2:06-cv-02555-DGC Document 82 Filed 07/14/08 Page 7 of 27
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`and the licensee acts outside the scope, the licensor can bring an action for copyright
`infringement.” Id. To prevail on a copyright infringement claim, therefore, a plaintiff who
`has granted a license must establish that the license terms are “limitations on the scope of the
`license rather than independent contractual covenants,” and that the defendant’s actions
`exceed the scope of the license. Id. at 1122.
`1.
`Is the EULA Limited in Scope?
`The use of WoW is governed by two agreements – the EULA and the TOU. Players
`must affirmatively consent to these agreements before playing WoW. The first paragraph
`of the EULA states: “IF YOU DO NOT AGREE TO THE TERMS OF THIS
`AGREEMENT, YOU ARE NOT PERMITTED TO INSTALL, COPY, OR USE THE
`GAME.” Dkt. #42 at 2 (capitalization in original). The next paragraph provides that “[a]ny
`and all uses of the [game client software] are governed by the terms” of the EULA, that the
`game client software is “distributed solely for use by authorized end users according to the
`terms” of the EULA, and that “[a]ny use, reproduction, modification or distribution of the
`[game client software] not expressly authorized by the terms of the [EULA] is expressly
`prohibited.” Id.
`
`Section 1 of the EULA specifically addresses the license granted by Blizzard. With
`emphasis on particular provisions, the section reads as follows:
`Grant of Limited Use License. If you agree to this License Agreement,
`computer software (hereafter referred to as the “Game Client”) will be
`installed on your hardware. If your hardware meets the minimum
`requirements, the installation of the Game Client will enable you to play the
`Game by accessing your account with the Service (your “Account”).
`Subject to your agreement to and continuing compliance with this License
`Agreement, Blizzard hereby grants, and you hereby accept, a limited, non-
`exclusive license to (a) install the Game Client on one or more computers
`owned by you or under your legitimate control, and (b) use the Game Client
`in conjunction with the Service for your non-commercial entertainment
`purposes only. All use of the Game Client is subject to this License
`Agreement and to the [TOU], both of which you must accept before you can
`use your Account to play the Game.
`Id. at 3 (emphasis added).
`Several parts of this section are worth noting. The title – “Grant of Limited Use
`License” – makes clear that the license is limited, as does the later reference to a “limited,
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`Case 2:06-cv-02555-DGC Document 82 Filed 07/14/08 Page 8 of 27
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`non-exclusive license.” The grant of the limited license is expressly made “[s]ubject to your
`agreement to and continuing compliance with this License Agreement.” The section further
`provides that “[a]ll use of the Game Client is subject to” the EULA and the TOU. Thus, the
`very portion of the contract that grants a license to use the game client software also makes
`clear that the license is limited.
`2.
`Are Key Provisions of the EULA and TOU Limitations on the
`
`Scope of the License or Separate Contractual Covenants?
`
`Having determined that the Blizzard license is limited, the Court must construe the
`EULA and TOU to determine whether the provisions violated by the use of Glider are
`themselves “limitations on the scope of the license, which would mean that [the users] had
`infringed the copyright by acting outside the scope of the license; or whether the terms [are]
`merely separate contractual covenants, which would make this a contract dispute[.]” Sun I,
`188 F.3d at 1119. Blizzard argues that Glider users violate portions of section 4 of the TOU
`(subsections 4(B)(ii) and 4(B)(iii)) and portions of section 5 (subsections 5(B)(6) and
`5(B)(8)). Dkt. #39 at 6-7. The Court will address these sections.5
`As an initial matter, the Court concludes that limitations on the license granted by
`Blizzard may be found in both the EULA and the TOU. Section 1 of the EULA, which
`grants the limited license, expressly states that users are subject to both the EULA and the
`TOU. Dkt. #42 at 3. These contracts must therefore be read together. As already noted,
`both agreements must be accepted before a user can play WoW.
`The EULA and TOU contain no provision that explicitly lays out the scope of the
`Blizzard limited license. The Court concludes, however, that the limitations on scope are
`
`5 Blizzard also argues, although with less force, that Glider users violate sections
`4(B)(ii) and 4(B)(iv) of the EULA. Section 4(B)(ii) prohibits exploiting the game client
`software for any commercial purpose, and section 4(B)(iv) prohibits unauthorized
`connections to the game. Dkt. #42 at 4. Section 4(A) provides that failure to comply with
`the terms of section 4 results in the immediate and automatic termination of the EULA. Id.
`The Court will not grant summary judgment based on section 4 of the EULA because the
`language of the section is ambiguous and Blizzard has presented no legal authority in support
`of license provisions that “self-destruct” when users commit certain violations.
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`found in section 4 of the TOU. The provisions of section 4 generally are designed to
`preserve and protect Blizzard’s proprietary interests in its software and game, including its
`copyright interests. Dkt. #41 at 4. Subsection A of section 4 prohibits users from
`intercepting, emulating, or redirecting the proprietary components of the game, activities that
`would include the exclusive copying and distribution rights possessed by Blizzard under
`section 106 of the Copyright Act. Subsection B prohibits users from modifying files that are
`part of the game, an activity akin to the creation of derivative works – another right possessed
`exclusively by Blizzard as copyright holder. Subsection C prohibits users from disrupting
`the game or others players’ use of the game. Subsection D reserves Blizzard’s exclusive
`right under section 106 of the Act to create derivative works. Id.
`The provisions of section 4 thus make clear that although users are licensed to play
`WoW and to use the game client software while playing, they are not licensed to exercise
`other rights belonging exclusively to Blizzard as the copyright holder – copying, distributing,
`or modifying the work. The provisions are limits on the scope of the license granted by
`Blizzard.6
`Section 5 of the TOU is different. It is titled “Rules of Conduct.” Id. at 4. The
`subsections of section 5 are titled “Rules Related to Usernames and Guild Designations”
`(§ 5(A)), “Rules Related to ‘Chat’ and Interaction With Other Users” (§ 5(B)), and “Rules
`Related to Game Play” (§ 5(C)). Section 5 thus sets rules for the game, whereas section 4
`establishes limits more clearly designed to preserve Blizzard’s copyright interests. The
`section 5 rules also regulate relatively minor matters such as the use of celebrity names
`(§ 5(A)(4)) or offensive language (§ 5(A)(2)) for WoW characters. Section 5 establishes
`game rules by contract.
`
`6 Section 4 is titled “Limitations on Your Use of the Service.” Id. The title thus
`reflects an intent to create limitations on use. Although the title refers to “the Service,” a
`term that is defined to mean the online portion of the WoW game (Dkt. #41 at 2), the Service
`cannot be accessed or used without the game client software and the EULA expressly makes
`the license of the game client software subject to the terms of the TOU. Dkt. #42 at 2. The
`Court thus views the title of section 4 as consistent with the interpretation of that section as
`a limitation on the license granted by Blizzard.
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`When the EULA and TOU are considered in their entirety, the Court concludes that
`section 4 of the TOU establishes limitations on the scope of the license and section 5 sets
`rules of the game as independent contract terms. A single contract clearly can contain both
`types of provisions. See Netbula, LLC v Storage Tech. Corp., No. C06-07391 MJJ, 2008 WL
`228036, at *5 (N.D. Cal. Jan. 18, 2008) (concluding that one clause of an agreement was a
`contractual covenant while another clause was a limitation on the scope of the license).
`3.
`Do Users of Glider Act Outside the Scope of The License?
`Users of Glider clearly violate the prohibition in section 4(B)(ii) of the TOU against
`the use of “bots” or any “third-party software designed to modify the [WoW] experience[.]”
`Dkt. #41-8 at 4. Players who use Glider to mine WoW for game assets also violate section
`4(B)(iii). When WoW users employ Glider, therefore, they act outside the scope of the
`license delineated in section 4 of the TOU. Copying the game client software to RAM while
`engaged in this unauthorized activity constitutes copyright infringement. See MAI, 991 F.2d
`at 518-19 (copying software to RAM constitutes “copying” for purposes of section 106 of
`the Copyright Act); Ticketmaster LLC v. RMG Techs., Inc., 507 F. Supp. 2d 1096, 1108
`(C.D. Cal. 2007) (use of bot violated TOU and gave rise to copyright infringement).
`MDY relies on the Federal Circuit’s decision in Storage Technology Corp. v. Custom
`
`Hardware Engineering & Consulting, Inc., 421 F.3d 1307 (Fed. Cir. 2005), to argue that
`“uses” which violate a license constitute copyright infringement only when the uses
`themselves infringe one of the exclusive rights granted by the Copyright Act. Dkt. #57 at
`6-7. The Court is not convinced that Storage Technology should be read so narrowly. It is
`obvious that a person cannot be liable for copyright infringement without committing an act
`of infringement. Thus, where a license is at issue, the person must not only act outside the
`scope of the license, but must also engage in an act that infringes upon the exclusive rights
`granted the copyright holder by section 106 of the Act. This much is clear from both Ninth
`Circuit law and Storage Technology. But to the extent MDY suggests that the act that causes
`the person to fall outside the scope of the license and the act that constitutes copyright
`infringement must be one and the same, MDY has cited no Ninth Circuit authority. Nor does
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`this proposition make logical sense. If A grants a software license to B on the express
`condition that the license will remain in effect only so long as B makes monthly payments
`to A, and B then stops making payments to A, any subsequent copying of the software to
`RAM by B would constitute copyright infringement – a conclusion with which MDY’s
`counsel agreed during oral argument. This would be true even though the act that took B
`outside the scope of the license – nonpayment – is different from the act that constitutes
`infringement – subsequent copying of the software. The Court cannot accept MDY’s
`assertion, at least as a matter of Ninth Circuit law, that the act that takes one outside the
`scope of the license and the act that constitutes infringement must be one and the same.
`Even if MDY’s proposition were true, however, it would not change the result in this
`case. The act that violates the EULA and TOU and takes Glider users outside the scope of
`Blizzard’s limited license is the use of Glider to play WoW, and the use of Glider to play
`WoW necessarily includes copying the game client software to RAM. Thus, the act that
`exceeds the scope of the license and the act that violates Blizzard’s copyright are the same.
`4.
`MDY’s Other Arguments.
`MDY does not dispute that the requirements for contributory and vicarious copyright
`infringement are met if the use of Glider constitutes infringement. MDY does contend,
`however, that certain factual disputes preclude summary judgment in favor of Blizzard on
`the contributory and vicarious infringement claims. Dkt. #57 at 11.
`MDY first contends that there is a dispute as to whether Blizzard has ever terminated
`a license pursuant to the terms of the EULA. Id. But MDY has presented no argument or
`legal authority to suggest that Glider users infringe Blizzard’s copyright only if Blizzard
`affirmatively terminates the limited license. Users may infringe if they engage in an act of
`copying that is outside the scope of the limited license granted by Blizzard. Whether
`Blizzard has ever terminated a license is therefore immaterial.
`MDY next contends that there is a factual issue as to whether “the EULA or TOU
`precluded ‘bots.’” Id. There is no such issue. As MDY itself acknowledges, the operative
`version of the TOU expressly prohibits bots. Dkt. #58 ¶ 67; see Dkt. #41-8 at 4 (§ 4(B)(ii)).
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`MDY also asserts a factual dispute as to whether the violations of the TOU were
`“within the reasonable expectations of MDY or its customers as required under Arizona
`law.” Dkt. #57 at 11. This purported dispute is immaterial because both the EULA and TOU
`are governed by Delaware law. See Dkt. #42 at 8-9 (EULA § 14(f)); Dkt. #41-8 at 14 (TOU
`§ 16(F)). Moreover, any person reading the TOU clearly would understand that a licensee
`is not authorized to play WoW using Glider.
`Finally, MDY claims that a dispute exists as to whether the RAM copying Blizzard
`alleges here is the same as the RAM copying in MAI. But whether the loading of software
`into RAM constitutes “copying” for purposes of copyright law is a legal, not a factual,
`question, and has been answered by MAI: “[T]he loading of software into RAM creates a
`copy under the Copyright Act.” 991 F.2d at 519. MDY cites no case to the contrary.
`B.
`Has MDY Established the Copyright “Misuse” Defense?
`The defense of copyright misuse “prevents copyright holders from leveraging their
`limited monopoly to allow them control of areas outside the monopoly.” A&M Records, Inc.
`v. Napster, Inc., 239 F.3d 1004 1026 (9th Cir. 2001) (citing Lasercomb Am., Inc. v. Reynolds,
`911 F.2d 970, 979 (4th Cir. 1990)). MDY contends that Blizzard’s prohibition of bots
`constitutes copyright misuse because Blizzard is controlling its “licensees’ use of
`independently created and noninfringing third party software.” Dkt. #57 at 14. As explained
`above, however, the use of Glider does infringe Blizzard’s copyright. Moreover, while
`Blizzard has limited the license of its WoW software, there is no evidence that Blizzard has
`sought to bar third parties from developing competing games. See A&M, 239 F.3d at 1027
`(rejecting misuse defense where there was no evidence plaintiffs sought to control areas
`outside the grant of copyright); Triad Sys. Corp. v. S.E. Express Co., 64 F.3d 1330, 1337 (9th
`Cir. 1995) (rejecting misuse defense because unlike Lasercomb, “Triad did not attempt to
`prohibit [the defendant] from developing its own service software to compete with Triad”).
`MDY has not established the copyright misuse defense.
`C.
`Does 17 U.S.C. § 117 Require a Finding of Non-infringement?
`Section 117 permits the “owner” of a copy of a computer program to copy the
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`Case 2:06-cv-02555-DGC Document 82 Filed 07/14/08 Page 13 of 27
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`program to RAM if the copy is created as an essential step in using the program. Section 117
`provides, in relevant part:
`Notwithstanding the provisions of section 106, it is not infringement for the
`owner of a copy of a computer program to make or authorize the making of
`another copy or adaption of that computer program provided[] that such a new
`copy or adaption is created as an essential step in the utilization of the
`computer program[.]
`17 U.S.C. § 117(a)(1).
`Public Knowledge’s amicus brief contends that WoW users are “owners” of copies
`of the game client software within the meaning of section 117, that copying the software to
`RAM is an essential step in using the game client software, and that the act of copying to
`RAM is, therefore, not an infringement, even when done in connection with Glider.
`Dkt. #65. MDY adopts this argument in its reply memorandum. Dkt. #69 at 2, 5, & n.7.
`The resolution of this issue is controlled by Ninth Circuit law. At least three cases –
`MAI, Triad, and Wall Data Inc. v. Los Angeles County Sheriff’s Department, 447 F.3d 769
`(9th Cir. 2006) – hold that licensees of a computer program do not “own” their copy of the
`program and therefore are not entitled to a section 117 defense. See MAI, 991 F.2d at 518
`n.5; Triad 64 F.3d at 1333; Wall Data, 447 F.3d at 784-85. Wall Data provides a two-part
`test for determining whether the purchaser of a copy of a software program is a licensee or
`an owner: if the copyright holder (1) makes clear that it is granting a license to the copy of
`the software, and (2) imposes significant restrictions on the use or transfer of the copy, then
`the transaction is a license, not a sale, and the purchaser of the copy is a licensee, not an
`“owner” within the meaning of section 117. Wall Data, 447 F.3d at 785.
`In Wall Data, the Los Angeles County Sheriff’s Department purchased nearly 4,000
`licenses to Wall Data’s computer software, but installed the software on more than 6,000
`computers. Id. at 773. The license granted a right to use the software on a “stand alone
`workstation” or a “networked station which [did] not permit the [s]oftware to be shared with
`other networked stations.” Id. at 775 n.5. The license also limited the transfer of the
`software to “not more than once every 30 days.” Id. The Ninth Circuit concluded that
`“[t]hese restrictions were sufficient to classify the transaction as a grant of a license to Wall
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`Data’s software, and not a sale of Wall Data’s software.” Id. at 785. The court therefore
`concluded that “the Sheriff’s Department [was] not the ‘owner’ of copies of Wall Data’s
`software for purposes of § 117.” Id.
`Under the two-part test for ownership in Wall Data, the transactions between Blizzard
`and persons who acquire copies of its game client software are licenses, not sales.
`First, Blizzard makes clear that it is granting a license. The EULA expressly states
`in section 1 that Blizzard is granting a “limited license.” Dkt. #42 at 2. Section 3 goes
`further and states that “[a]ll title, ownership rights, and intellectual property rights in and to
`the Game and all copies thereof . . . are owned or licensed by Blizzard.” Dkt. #42 at 3
`(emphasis added). The first paragraph of the EULA likewi