Re: Jacobsen v Katzer, 535 F.3d 1373 overruled by the US Ninth CircuitCourtof Appeals

[Alexander Terekhov]

Hyman Rosen wrote:
[...]
> copyright infringement is a possible result of license violation.
> It is the nature of the license violations that determine this.

Hyman, Blizzard argued exactly that way. And lost.

http://iplaw.hllaw.com/2010/12/articles/copyright/ninth-circuit-concludes-that-violation-of-wow-tou-did-not-give-rise-to-copyright-infringement-claim/

"As to Blizzard's copyright claims, the District Court summed up the
allegations concisely:

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. . . .  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. . . .  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.

In defense, MDY argued that Glider users do not infringe Blizzard's
copyright; rather, MDY argued that if users violate terms of the EULA
and TOU, they are merely breaching a contract, not infringing a
copyright.

The District Court first re-stated established Ninth Circuit law that
copying software to RAM constitutes “copying” under the Copyright Act.
As a result, “if a person is not authorized by the copyright holder
(through a license) or by law (through section 117 [of the Copyright
Act]) 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 argued that Glider users are licensed to copy the WoW game client
software to RAM, which license they acquired by purchasing and loading
the software onto their computers.  But MDY asserted that provisions of
the EULA and TOU that contain prohibitions such as the prohibition
against use of bots are merely contractual terms not limitations on the
scope of the license granted by Blizzard.  As a result, MDY argued that
although Blizzard may have breach of contract claims against Glider
users, it did not have copyright infringement claims.

The District Court disagreed in large part with MDY, concluding that the
EULA granted a limited license to WoW players and that, read together,
the EULA and TOU provided limits on the scope of the license granted by
Blizzard.  Thus WoW players who use Glider acted outside the scope of
the limited license and therefore “[c]opying the game client software to
RAM while engaged in this unauthorized activity constitutes copyright
infringement.”

. . . .

The Ninth Circuit's Decision.

. . . .

As to the copyright infringement claims (alleging contributory and
vicarious infringement), the Ninth Circuit first addressed the
"essential step" defense of 17 U.S.C. 117(a)(1) and the question of
whether WoW players are owners or licensees of the copies of the WoW
software in their possession.  Relying on its decision in Vernor, the
Ninth Circuit concluded that WoW players are merely licensees of their
copies of the WoW software and therefore neither they nor MDY were
entitled to the "essential step" defense.  As a result, "when their
computers copy WoW software into RAM, the players may infringe unless
their usage is within the scope of Blizzard's limited license."

The Ninth Circuit thus turned to an examination of the relevant portions
of Blizzard's license (the TOU), namely, the portion prohibiting bots
and unauthorized third-party software, to determine whether they were
"conditions," the breach of which constitute copyright infringement, or
"covenants," the breach of which give rise to only contract claims.

The Ninth Circuit concluded that the provisions of the license at issue
were covenants, the breach of which did not give rise to copyright
infringement claims.  Essentially, the Ninth Circuit concluded that the
breach of a license agreement must implicate one of the exclusive rights
of copyright to give rise to a copyright infringement claim:  "[W]e have
held that the potential for infringement exists only where the
licensee's action (1) exceeds the license's scope (2) in a manner that
implicates one of the licensor's exclusive statutory rights.""

regards,
alexander.

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