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1015
License to Kill
MDY V. BLIZZARD AND THE BATTLE OVER
COPYRIGHT IN WORLD OF WARCRAFT
I. INTRODUCTION
Copyright law grants a limited bundle of exclusive
rights to copyright owners.
1
These rights include the exclusive
right to reproduce and distribute the work.
2
However, these
rights are limited as the law distinguishes between protecting
one’s intellectual property in a product and protecting a right
to the product in and of itself.
3
In MDY Industries, LLC v. Blizzard Entertainment, Inc.
4
the District Court of Arizona upheld Ninth Circuit precedent
that gutted this distinction, finding that the purchaser and
user of the video game, World of Warcraft (“WoW”), is a
licensee of that game, not an “owner.”
5
By finding that a WoW
user was a mere licensee and not an “owner” of the software,
the MDY court concluded that the user was not protected by
1
See 17 U.S.C. § 106 (2006). “The purpose of copyright is to grant authors a
limited property right in the form of expression of their ideas.” N
AT’L COMM’N OF NEW
TECHNOLOGICAL USES OF COPYRIGHTED WORKS, FINAL REPORT 16 (Library of Congress
1979), available at http://digital-law-online.info/CONTU/contu1.html [hereinafter
CONTU R
EPORT].
2
Brief for Public Knowledge as Amici Curiae Supporting Neither Party at 5,
MDY Indus., LLC v. Blizzard Entm’t, Inc., 2008 WL 2757357 (D. Ariz. 2008) (No.
CV06-0255-PHX-DGC) available at http://www.publicknowledge.org/pdf/pk-amicus-
20080502.pdf. [hereinafter Public Knowledge]; see also 17 U.S.C. § 106.
3
Indeed, Congress specifically recognized this distinction when codifying the
Copyright Act.
Ownership of a copyright, or of any of the exclusive rights under a copyright,
is distinct from ownership of any material object in which the work is
embodied. Transfer of ownership of any material object, including the copy or
phonorecord in which the work is first fixed, does not of itself convey any
rights in the copyrighted work embodied in the object; nor, in the absence of
an agreement, does transfer of ownership of a copyright or of any exclusive
rights under a copyright convey property rights in any material object.
17 U.S.C. § 202 (2006).
4
No. CV-06-02555-PHX-DGC, 2008 WL 2757357 (D. Ariz. July 14, 2008).
5
Id. at *8-10. The Copyright Act encompasses video games and other similar
computer programs. See 17 U.S.C. § 102.
1016 BROOKLYN LAW REVIEW [Vol. 75:3
the Copyright Act’s Section 117(a)(1) safe harbor provision,
which allows “owners” to copy software to a computer’s
Random Access Memory (“RAM”) as an “essential step” in
using the program.
6
Thus, the MDY court held that when a
user played WoW using a popular third-party application
known as WoWGlider (“Glider”), the user exceeded his license
in the End User License Agreement (“EULA”) and Terms of
Use (“TOU”), and created infringing copies of the game in the
computer’s RAM.
7
Because of these infringing copies, the court
held MDY Industries, the owner of Glider, liable for
contributory and vicarious copyright infringement
8
resulting in
$6,000,000 in damages.
9
In addition to snuffing out Glider use, the MDY decision
disrupted the delicate balance between a copyright holder’s
ability to protect its intellectual property and a consumer’s
right to use his particular copy without being held liable for
copyright infringement. Indeed, the MDY decision facilitated a
“chilling extension of control” by copyright holders over their
software.
10
While the MDY court followed a line of Ninth Circuit
precedent under Wall Data Inc. v. Los Angeles County Sheriff’s
Department
11
and MAI Systems Corp. v. Peak Computer Inc.,
12
which gave conclusive weight to the software provider’s EULA
when determining whether a purchaser owned a piece of
6
Id. at *8, *10.
6
Id. at *1, *10; RAM is a form of computer data storage in which
information can be temporarily recorded. L
EE HOLLAAR, LEGAL PROTECTION OF DIGITAL
INFORMATION, ch.2, sec. II.C.1 (2002), http://digital-law-online.info/lpdi1.0/treatise20
.html. Whenever software is loaded into RAM, a copy is created. Id.; see also MAI Sys.
Corp. v. Peak Computer Inc., 991 F.2d 511, 517-18 (9th Cir. 1993). When the computer
is turned off, the data is lost. H
OLLAAR, supra, at ch.2, sec. II.C.1.
8
MDY Indus., LLC, 2008 WL 2757357 at *10.
9
MDY paid Blizzard a stipulated judgment pending appeal. Benjamin
Druanske, MDY Agrees to Pay Blizzard $6m in Damages of Warcraft Bot Lawsuit,
Pending Appeal, V
IRTUALLY BLIND, Sept. 29, 2008, http://virtuallyblind.com/2008/09/
29/mdy-blizzard-damages/. Outside the scope of this note, but of significant interest, is
the court’s ruling on the remaining issues left unresolved by summary judgment. The
court found that MDY violated Sections 1201(a)(2) and 1201(b)(1) of the Digital
Millennium Copyright Act (“DMCA”), that MDY’s owner was personally liable for
MDY’s DMCA and copyright violations, and that Blizzard was entitled to a permanent
injunction against Glider sales. MDY Indus., LLC v. Blizzard Entm’t, Inc., 616 F. Supp.
2d 958, 962-68 (D. Ariz 2009).
10
The Patry Copyright Blog, http://williampatry.blogspot.com/2008/07/
strange-copyright-world-of-warcraft.html (July 15, 2008, 08:48 EDT).
11
447 F.3d 769 (9th Cir. 2006).
12
991 F.2d 511 (9th Cir. 1993).
2010] LICENSE TO KILL 1017
software,
13
this Note argues the court’s holding was ultimately
incorrect for three reasons. First, the MDY court should have
followed an alternative line of Ninth Circuit precedent under
United States v. Wise
14
and Vernor v. Autodesk, Inc.,
15
which
more equitably allocates rights between software providers and
software purchasers. Specifically, Wise and Vernor utilized the
First Sale Doctrine, which focuses on the economic realities of
the underlying transaction surrounding the software purchase
to determine whether a purchaser is an “owner” or licensee of
the software instead of granting the software provider’s EULA
conclusive weight.
16
Under this precedent, the MDY court
should have found for the third-party application maker and
held that WoW users are software “owners,” not licensees.
Second, courts should be informed by John Locke’s theory of
labor desert when analyzing whether a WoW user is a licensee
or an “owner.”
17
Lockean labor desert theory argues that
ownership rights are created by the investment of time and
labor in creating a good such as a WoW user’s self-created
character, or avatar. Third, the Copyright Act’s underlying
policies favoring progress and innovation counsel in favor of
more substantial protections for WoW users’ rights.
Part II of this Note discusses the background of WoW
and Glider. Part III then discusses the MDY case and the
precedent developed under Wall Data and MAI that led to the
court’s decision. Part IV argues that MDY was wrongly
decided. It first examines the contrary Ninth Circuit precedent
under Wise and Vernor. Second, it discusses why courts should
afford software purchasers and their time investments greater,
though not absolute, protection under Lockean labor desert
theory. Third, it argues the policies of copyright law require
greater protection of WoW users’ rights. This Note concludes by
summarizing why the MDY decision was incorrect and how the
case should have been decided.
13
See MDY Indus. LLC, 2008 WL 2757357, at *8.
14
550 F.2d 1180 (9th
Cir. 1977).
15
555 F. Supp. 2d 1164 (W.D. WA 2008).
16
See United States v. Wise, 550 F.2d 1180, 1188-90 (9th Cir. 1977); Vernor
v. Autodesk, 555 F. Supp. 2d 1164, 1169-70 (W.D. Wash. 2008).
17
JOHN LOCKE, TWO TREATISES OF GOVERNMENT 306 (Peter Laslett ed.,
Cambridge Univ. Press 1988) (1690).
1018 BROOKLYN LAW REVIEW [Vol. 75:3
II. B
ACKGROUND
A. World of Warcraft
1. World of Warcraft and MMORPGs Generally
WoW is a massive multiplayer online role-playing game
(“MMORPG”) released in 2004 by Blizzard Entertainment, Inc.
(“Blizzard”), based upon the Warcraft universe,
18
a Tolkien-
esque fantasy world explicated in a series of video games that
Blizzard created.
19
WoW is the most successful MMORPG
ever
20
—it has over eleven million players
21
and generates over
$1.5 billion in annual revenue for Blizzard.
22
WoW generates its
revenue mainly through a monthly fee.
23
Of course, Blizzard
profits from the player’s initial purchase of WoW’s physical
software package as well.
24
Blizzard has also released two
sizable expansion packs
25
for WoW, which have further
contributed to WoW’s success.
26
In an MMORPG, hundreds or thousands of players exist
in the same virtual world
27
at the same time, which creates an
18
WorldofWarcraft, Game Guide, What is WoW,
www.worldofwarcraft.com/info/basics/guide.html (last visited Jan. 2, 2010). For a
discussion of the “Warcraft universe” as well as WoW’s background history, see World
of Warcraft Europe, Warcraft History Library, http://www.wow-europe.com/en/
info/story/index.html#history (last visited Jan. 2, 2010).
19
MDY Indus., LLC, 2008 WL 2757357 at *1.
20
Id.
21
Press Release, Blizzard, World of Warcraft® Subscriber Base Reaches 11.5
Million Worldwide (Nov. 21, 2008) (http://www.blizzard.com/us/press/081121.html).
22
MDY Indus., LLC, 2008 WL 2757357 at *1.
23
World of Warcraft, Game Guide, General F.A.Q.,
www.worldofwarcraft.com/info/faq/general.html (last visited Jan 20, 2009). The
monthly fee is required to support customer service and WoW content updates. Id.
24
See Blizzard, Blizzard Store, http://www.blizzard.com/store/browse.xml?f=
p:110000034,p:110000018,p:110000044 (last visited Jan. 20, 2009).
25
See World of Warcraft, Cataclysm F.A.Q., http://www.worldofwarcraft.com/
cataclysm/faq/ (last visited Mar. 12, 2010).
26
In 2007, Blizzard released its first expansion pack, “The Burning Crusade,”
WorldofWarcraft, Game Guide, Intro to WoW, www.worldofwarcraft.com/info/
beginners/index.html (last visited Jan. 29, 2009), and in 2008 Blizzard released the
second, “Wrath of the Lich King.” Id. Blizzard currently plans to release a third WoW
expansion pack (“Cataclysm”), Press Release, Blizzard World of Warcraft: Cataclysm
Unveiled (Aug. 21 2009) (http://us.blizzard.com/en-us/company/press/pressreleases.
html?090821), sometime in 2010. Posting of Adam Holisky to WOW.com,
http://www.wow.com/2009/08/23/world-of-warcraft-cataclysm-targeted-for-a-2010-release-
date/ (Aug. 23, 2009, 1:03PM).
27
“Virtual worlds are persistent, dynamic computer-based environments in
which interconnected users interact with each other and the virtual environment
around them.” Steven Horowitz, Competing Lockean Claims to Virtual Property, 20
HARV. J.L. & TECH 443, 443-44 (2007).
2010] LICENSE TO KILL 1019
engaging, interactive atmosphere that more closely
approximates human reality than a closed game in which only
one or a small number of players are controlled by actual
humans and a computer controls the rest of the environment.
28
To illustrate the distinction, imagine if humans controlled the
ghosts chasing Ms. Pac-Man in the popular arcade game, thus
eliminating any advantage gained by memorizing the computer
program’s built-in instructions for controlling the ghosts’
movement.
Events that change the virtual world and affect other
players constantly occur, even when those other players are not
playing the game.
29
An MMORPG’s immersive, interactive
atmosphere adds to the intricacies of the game. These
intricacies are far more complicated than other game genres
such as “first-person shooter” games in which the objective is to
kill computer-generated monsters or other virtual people.
30
Instead, MMORPGs envelop a player in an entire virtual world
where users do more than kill. For example, players can role-
play with different identities and connect to other users in a
virtual community.
31
The absence of a set chain of events and
an open-ended storyline creates a history for the player, giving
new and significant meaning to every adventure the user
undertakes.
32
MMORPGs further attract players by allowing for
thousands of hours of game play and providing an “infinite
variety” of tasks, goals, and achievements for them to
experience throughout the virtual world.
33
Indeed, because the
game never ends for the player, it is impossible to “win” at an
MMORPG. Most MMORPGs, including WoW, provide regular
monthly content updates that add new creatures to kill, items
to acquire, and dungeons to explore.
34
28
World of Warcraft, Game Guide, General F.A.Q., supra note 23.
29
Id.
30
Jack Balkin, Virtual Liberty: Freedom to Design and Freedom to Play in
Virtual Worlds, 90
VA. L. REV. 2043, 2043 (2004).
31
See id.
32
Id. at 2057 (“[An MMORPG] player is in a very different situation than
someone who operates a pinball machine. . . [they] can take on multiple personas. . .
they can create their own stories. . . and they can build things and form
communities.”).
33
World of Warcraft, Game Guide, General F.A.Q., supra note 23.,
www.worldofwarcraft.com/info/faq/general.html (last visited Mar. 3, 2010).
34
See id.
1020 BROOKLYN LAW REVIEW [Vol. 75:3
2. Avatar Creation and Improvement
Upon first logging into WoW, a player creates an
avatar
35
and chooses from two rival factions: Horde or Alliance.
36
A player’s faction choice is significant because a player can only
speak to members of his own faction, and other facets of the
game, such as the “level”
37
of skill a player may attain, the
quests a player is eligible to attempt, and dungeons a player
may enter, are organized by faction.
38
Once a player chooses a
faction, the player must then choose a “class.”
39
Players may
further customize their avatar’s appearance by choosing the
avatar’s race, gender, skin color, facial structure, and hair
color/style.
40
WoW also enables players to make their avatars
unique by adding facial markings, piercings, facial hair, or
tusks.
41
Players improve their avatars by killing monsters and
completing quests.
42
Once a player kills enough monsters or
finishes enough quests, the avatar will gain a level or “level
up.”
43
“Leveling” a character requires a great deal of time.
44
35
An avatar represents a player’s physical representation in a virtual world.
M
ICHAEL LUMMIS & ED KERN, WORLD OF WARCRAFT MASTER GUIDE SECOND EDITION
STRATEGY GUIDE 4 (Brady Games 2006).
Avatars are “onscreen characters controlled (and often designed) by the
players.” Theodore Westbrook, Note, Owned: Finding a Place for Virtual World
Property Rights, 2006 M
ICH. ST. L. REV. 779, 780 (2006).
36
Both horde and alliance players have five customizable race choices each
with different strengths and weaknesses. World of Warcraft, Races,
http://www.worldofwarcraft.com/info/races/index.html (last visited Jan. 2, 2010).
37
In WoW, players are assigned a level that reflects how powerful an avatar
is. See
LUMMIS & KERN, supra note 35, at 5. Avatars begin at level one and the
maximum level is level 80. World of Warcraft, Game Guide, Characters F.A.Q,
http://www.worldofwarcraft.com/info/faq/characters.html (last visited Jan. 2, 2010). As
one kills monsters and gains experience points, the player will reach the next level, or
“level up,” thus increasing the avatar’s stats, abilities, and enabling the avatar to
accomplish challenges it was not able to accomplish before. See
LUMMIS & KERN, supra
note 35, at 4-5.
38
See World of Warcraft, Game Guide What is WoW, supra note 18.
39
World of Warcraft, Game Guide, Classes F.A.Q., www.worldofwarcraft
.com/info/faq/classes.html (last visited Jan. 20, 2009). When beginning the game,
players choose between warrior, mage, rogue, druid, hunter, warlock, priest, paladin,
rogue, and shaman classes. See id. Within each class, one is able to specialize in
different talent trees. See id. This provides for greater diversity of skills among classes
and allows a player to experience WoW game play from different perspectives See id.
40
WorldofWarcraft.com, Game Guide Characters F.A.Q., http://www.world
ofwarcraft.com/info/faq/characters.html (last visited Apr. 7, 2010).
41
Id.
42
See LUMMIS & KERN, supra note 35, at 5.
43
See id.
44
See Extreme Leveling, http://www.extremeleveling.com/ (last visited Jan,
20, 2009) (Illustrating that creating a level 60 character often requires 19 days, or 456
2010] LICENSE TO KILL 1021
Players may complete quests to earn experience points, or
repeatedly kill a certain type of monster to “level” faster, which
most gamers find rather dull compared to high-level game
content. Avatars may also improve by acquiring high-level
items
45
through professional skills such as crafting,
46
killing
enemy bosses,
47
earning reputation awards,
48
engaging in player
versus player combat, and purchasing items through an
auction house.
49
Because items such as weapons and armor are needed
to level an avatar and accomplish other in-game quests, these
items are of great importance. They are so important that
players often choose to purchase items in “real world” dollars
instead of earning them within the game because many months
of game play may be required to attain them.
50
In other
MMORPG games, players resort to “camping”
51
and “kill
stealing”
52
to obtain these items. However, in developing WoW,
Blizzard took elaborate steps to prevent these cheating
hours of in-game time). However, Blizzard has recently reduced that time. See World of
Warcraft, Game Guide, The Gods of Zul’Aman Patch 2.3, http://www.worldofwarcraft.
com/info/underdev/implemented/2p3.html (last visited Jan. 20, 2009); Because players
often find the required time commitment to level a maximum level character to be
enormous, more experienced WoW players began offering guides, for a fee, to greatly
reduce this time. See Extreme Leveling, supra.
45
High-level items are separated into four separate classifications. In order
of increasing rarity and power, they are uncommon items, rare items, epic items, and
the coveted legendary items. See
LUMMIS & KERN, supra note 35, at 14.
46
Players can create powerful weapons and armor through professions such
as blacksmithing, engineering, leatherworking, and tailoring. See id.
at 246 (Brady
Games 2006).
47
World of Warcraft, Game Guide. Items F.A.Q., http://www.worldofwarcraft.
com/info/items/basics.html (last visited Jan. 20, 2009).
48
By increasing one’s reputation with a faction within the WoW virtual
world, players gain access to reputation rewards that enable one to acquire high-level
items. WorldofWarcraft, Game Guide, Reputations, http://www.worldofwarcraft.
com/info/basics/reputation.html (last visited Jan. 2, 2010).
49
An auction house serves as a clearing house for items that players acquire
who would rather sell the items than use the items. World of Warcraft.com, Game
Guide, Auction Houses, http://www.worldofwarcraft.com/info/basics/auctionhouses.html
(last visited Jan. 2, 2010). Players may bid on or buy-out weapons, armor, or other in-
game goods. Id.
50
Leandra Lederman, “Stranger than Fiction”: Taxing Virtual Worlds, 82
N.Y.U.
L. REV. 1620, 1628 (2007).
51
Camping is when a player monopolizes a group of monsters, killing them
over and over again, in order to level-up or acquire loot. See
LUMMIS & KERN, supra
note 35, at 4.
52
World of Warcraft, Game Guide, Gameplay F.A.Q.,
www.worldofwarcraft.com/info/faq/gameplay.html (last visited Mar. 4. 2010). Kill
stealing is rushing to kill a monster another player was attempting to kill in order to
gain the experience or loot from that monster before the other player. See
LUMMIS &
KERN, supra note 35, at 5.
1022 BROOKLYN LAW REVIEW [Vol. 75:3
mechanisms by creating a pseudo first-in-time property right,
where the first player or group to damage the virtual monster
will receive both the experience and the loot.
53
Blizzard has also
dispersed the dropping of high-level items across many
monsters in the world, resulting in relatively little advantage
in camping or racing to kill a specific monster type.
54
3. World of Warcraft as a Social Network
WoW is not only a complex video game, it is also a social
network.
55
One of Blizzard’s main goals in creating WoW was to
encourage in-game socializing.
56
Players can join a guild
57
to
socialize with other players, as well as to make group hunting
easier.
58
“Guilds are an integral part of the game, allowing like-
minded players to join together to achieve goals, not to mention
getting to wear a really cool tabard.”
59
In regular WoW play,
players may group with up to five other players to complete
quests.
60
One feature of the game, called an “instance,”
61
allows
for the creation of a sub-world within the larger WoW world. In
53
WorldofWarcraft.com, Game Guide, Gameplay F.A.Q., supra note 52.
54
See id. However, WoW has rare or “elite monsters” which appear from time
to time in the game which are more difficult to kill, but almost always drop a high-level
item. See
LUMMIS & KERN, supra note 35, at 14. Once they are spotted, players will
likely rush to kill the monster to retrieve its high value items.
55
See David Sheldon, Comment, Claiming Ownership, but Getting Owned:
Contractual Limitations on Asserting Property Interests in Virtual Goods, 54
UCLA L.
REV. 751, 757 & n.27 (2007) (“[P]layers of the game enjoy a form of comity rarely seen in
the real world; higher-level players go out of their way to tutor newbies and accompany
them on quests. Deep friendships are forged. Relationships begin that flower into
marriage, with Tauren brides and Undead grooms tying the knot in some virtual
tavern in Thunder Bluff.” (quoting Steven Levy, Is World of Warcraft a Game?,
N
EWSWEEK, Sept. 18, 2006, at 48) (alteration in original)); see also Balkin, supra note
30, at 2078 ( “Some players already invest enormous amounts of time in these worlds;
they make friends there and form attachments.”).
56
See World of Warcraft, Game Guide, What is WoW, supra note 18.
57
A guild is an in-game association of players. See LUMMIS & KERN, supra
note 35, at 121. Guilds may provide lower level players with a network to complete
quests, receive discounted or free items from other players in the guild, and provide
higher level players with a network to complete more difficult game content. See id. at
122-23.
58
See id.
59
Id. at 121. A “tabard is a wearable item that proudly displays your guild’s
chosen symbol and colors.” World of Warcraft, Guilds, http://www.worldofwarcraft.com/
info/basics/guilds.html (last visited Mar. 12 2010).
60
World of Warcraft, Game Guide, What is WoW, supra note 18.
61
“An instance is a personal copy of the dungeon for you and your party. The
only players in [the] instance will be yourself and the members of your party—no one
else can enter your dungeon instance.” World of Warcraft, Game Guide, Instancing,
http://www.worldofwarcraft.com/info/basics/instancing.html (last visited Jan. 20, 2009).
2010] LICENSE TO KILL 1023
an “instance,” players may band together in groups of up to
forty players to kill monsters and complete quests that would
otherwise be impossible to complete alone.
62
4. World of Warcraft’s Terms of Use and End User
License Agreement
Because WoW has millions of players with deep social
connections, a complicated reward structure, and a user-
created in-game economy, the game requires rules to protect
other players’ in-game rights. Thus, Blizzard provides a EULA
63
and TOU
64
to regulate player conduct. Under Section 2(A) of the
TOU, Blizzard banned the use of “cheats, automation software
(bots), hacks, mods or any other unauthorized third-party
software designed to modify the World of Warcraft
experience.”
65
Most significantly, under Section 4(a) of the
EULA, Blizzard provided 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.”
66
Further,
Section 4 of the TOU provides, “[a]ll rights and title in and to
the Service. . . are owned by Blizzard or its licensors.”
67
Indeed,
Section 11 of the TOU specifies:
[y]ou may not purchase, sell, gift or trade any Account, or offer to
purchase, sell, gift or trade any Account, and any such attempt shall
be null and void. Blizzard owns, has licensed, or otherwise has rights
to all of the content that appears in the Game. You agree that you
have no right or title in or to any such content, including without
limitation the virtual goods or currency appearing or originating in
the game . . . you may not sell in-game items or currency for “real”
money, or exchange those items or currency for value outside of the
game.
68
Last, Section 7 of the TOU provides that “you acknowledge and
agree that you shall have no ownership or other property
interest in the Account, and you further acknowledge and agree
that all rights in and to the Account are and shall forever be
62
See id.
63
World of Warcraft, World of Warcraft End User License Agreement,
http://www.worldofwarcraft.com/legal/eula.html(last visited July 29, 2008).
64
World of Warcraft, World of Warcraft Terms of Use,
www.worldofwarcraft.com/legal/termsofuse.html (last visited July 29, 2008).
65
Id.
66
World of Warcraft, World of Warcraft End User License Agreement, supra
note 63.
67
World of Warcraft, World of Warcraft Terms of Use, supra note 64.
68
Id.
1024 BROOKLYN LAW REVIEW [Vol. 75:3
owned by and inure to the benefit of Blizzard.”
69
These EULA
and TOU provisions grant the copyright holder, Blizzard, title
to anything the user procures within the game, thus arming
Blizzard with a powerful weapon against any claim the user
may have to his virtual commodities.
70
The more restrictive
Blizzard makes its EULA, and the more rights Blizzard
attempts to withhold from its customers, the more difficult it
becomes for WoW users to claim any property rights over their
in-game commodities.
Blizzard inhibits virtual property rights and bans
account sales in order to protect itself from black market
transactions.
71
According to Blizzard, there are two problems
with black market transactions. First, if players were allowed
to buy a high-level avatar, the player would spend less money
on the subscription fees required to level that avatar through
game play.
72
Second, with more users playing high-level
characters, Blizzard would need to create more high-level
content to keep those players satisfied.
73
For Blizzard to be
profitable, it must retain a high-level of monthly subscribers
who spend a great deal of time experiencing the virtual world.
If black market transactions were allowed, Blizzard would
receive less money from monthly subscription fees and would
have to expend greater resources on content updates, because
it would have to update WoW’s content and storyline more
frequently to keep it new and challenging.
74
Blizzard’s costs
would increase while its revenues would decrease.
Thus, to give force to these EULA and TOU provisions,
Blizzard penalizes violating players who lessen the gaming
experience for other users.
75
Penalties include a warning for a
minor account violation, a brief suspension for moderately
severe violations, and account closure for the most severe
69
Id.
70
See Joshua A. T. Fairfield, Virtual Property, 85 B.U. L. REV. 1047, 1082
(2005).
71
Jaime J. Kayser, Note, The New New-World: Virtual Property and the End
User License Agreement, 27
LOY. L.A. ENT. L. REV. 59, 73-74 (2007).
72
Id. at 73.
73
Id.
74
See id.
75
Blizzard, Account Penalties, http://us.blizzard.com/support/article.xml?
locale=en_US&articleId=20221&rhtml=y (Blizzard takes “disciplinary action . . .
against disruptive players who are causing damage to other’s play experiences or the
service itself.”) (last visited Jan. 20, 2009).
2010] LICENSE TO KILL 1025
violations.
76
Blizzard has a reputation for aggressively
responding to EULA and TOU violations.
77
In November 2006,
Blizzard banned 105,000 accounts for selling virtual items for
“real world” currency.
78
More strikingly, Blizzard considered
canceling accounts of guild leaders trying to recruit for a guild
catering to “gay, lesbian, bisexual, and transgendered
individuals,” out of a concern that other game players might
respond inappropriately.
79
Blizzard ultimately allowed the guild
to continue recruiting;
80
however, Blizzard clearly takes a
proactive approach to ensure that players’ “real world” rights
do not transfer to their “virtual world” pursuits. A prime
example of Blizzard’s aggressive defense of itself through its
EULA and TOU is the penalties it meted out to players
running Glider.
B. MDY Industries and WoWGlider
MDY Industries is the creator and owner of Glider,
81
a
third-party program
82
that plays WoW while the user is away
from his computer.
83
Glider’s sophistication allows it to
undertake several surprisingly complex tasks. “It grinds, it
loots, it skins, it heals, it even farms soul shards . . . without
you.”
84
Since MDY began selling Glider in June 2005, “it has
sold some 100,000 copies.”
85
MDY advertises and tailors Glider
not to new players, but to experienced ones who want to level-
up a new avatar quickly.
76
See id. Blizzard will close accounts when “a player has excessively and/or
grossly violated [its] policies” and when a player “insists on negatively affecting other
players’ enjoyment of the game or harming the service itself.” Id. Blizzard rarely closes
accounts. Id.
77
See Sheldon, supra note 55, at 769.
78
Id.
79
Id. at 769-70.
80
Id. at 770.
81
MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-02555-PHX-DGC,
2008 WL 2757357 (D. Ariz. July 14, 2008) at *1.
82
A third-party program is any program developed by someone other than
the original software developer, which modifies the original program. Blizzard, Hacks
and Third-party Programs, http://us.blizzard.com/support/article.xml?locale=en_US
&articleId=21133 (last visited Jan. 2, 2010).
83
Glider, www.mmoglider.com/default.aspx?LS=54694 (last visited Jan. 20,
2009).
84
Id.
85
MDY Indus., LLC, 2008 WL 2757357, at *1; Glider can be purchased for
$25.00. Glider, Frequently Asked Questions,www.mmoglider.com/FAQ.aspx (last
visited Jan. 20, 2009).
1026 BROOKLYN LAW REVIEW [Vol. 75:3
Best priest just quit your guild, but got no good recruits? Want to
find out if you should have picked a mage instead of a warlock, but
don’t want to spend all that hard . . . game time again? Want to get
some rogue-riffic revenge on those guys sneaking up on you in
Battlegrounds? Those are the problems that the Glider solves.
86
WoW players can tailor Glider to their own preferences,
instructing it to accomplish specific tasks, such as killing a
particular monster.
87
Once the player instructs Glider, the
program works automatically, allowing the player to return to
his computer later and resume playing with the added
experience and valuable items Glider earned in the meantime.
88
All a player has to do after launching Glider is to locate an area
of monsters to kill, indicate to Glider the radial area the player
wants his avatar to patrol, and specify the monsters the player
wants to kill.
89
Players who really want to take full advantage of Glider
can “dual box,”
90
which allows a player to have one Glider
account active on more than one computer at the same time.
Before Blizzard took an active interest in Glider use, Glider
had become so widely utilized within avid gaming circles that
software developers created third-party add-ons for Glider
itself.
91
Thus, there was a third-party program for the third-
party program.
MDY recognizes that Glider, its program, is against
Blizzard’s TOU,
92
and tells its customers as much: “If you are
detected using Glider, your account will be suspended for 72
hours and very likely banned completely.”
93
MDY further warns
its customers that they use Glider at their own risk.
94
MDY also
has a community forum that, in part, is used to advise its users
of account closings that may be due to Glider use.
95
These bans
often occur in waves when Blizzard changes its monitoring
86
Glider, Frequently Asked Questions, supra note 85.
87
See id.
88
See id.
89
See id.
90
Dual boxing, or multiboxing describes one player using multiple computers
at one time to be active on more than one account at one time. WoWWiki, Multiboxing,
http://www.wowwiki.com/Multiboxing (last visited Jan. 20, 2009).
91
Glider, Forums, Best Addons for use with Glider,
http://vforums.mmoglider.com/showthread.php?t=80 (last visited Jan. 6, 2010).
92
Glider, Frequently Asked Questions, supra note 85.
93
Id.
94
Id.
95
Glider, Forums, Ban Wave in Progress, May 20, 2008,
vforums.mmoglider.com/showthread.php?t=148301 (last visited Jan. 6, 2010).
2010] LICENSE TO KILL 1027
“Warden”
96
program or updates the game client and scans a
user’s computer
97
before Glider changes its detection evasion
coding.
98
In order to facilitate a player’s Glider use, Glider has
defense mechanisms to lower Blizzard’s detection rate of the
program.
99
Glider is able to evade detection when Blizzard
searches a user’s computer for illegal third-party programs.
100
This feature is what makes Glider such a difficult problem for
Blizzard to solve, thus causing Blizzard to divert resources
from improving the game to combat Glider.
101
The legal implications of the Glider program under the
Copyright Act arose in MDY Industries, LLC v. Blizzard
Entertainment, Inc.,
102
the subject of Part III.
96
Warden is a program used by Blizzard to detect when a player is using an
unauthorized third-party program. MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-
06-02555-PHX-DGC, 2008 WL 2757357, at *11 (D. Ariz. July 14, 2008). Warden detects
Glider in two ways. Id. First, it will scan the player’s computer to locate the Glider
program. Id. If Warden does detect Glider, Blizzard will deny the player access to the
game server. Id. Second, Warden scans the user’s computer while playing WoW as well.
Id. Again, if Warden detects Glider, “Blizzard revokes access to the game.” Id.
97
Players consent to these computer scans under Section 17(A) of the TOU.
World of Warcraft, World of Warcraft Terms of Use, supra note 64. Players who do not
consent are unable to launch the game. The enforceability of these online click-wrap
agreements is outside the scope of this note. See generally Kaustuv M. Das, Forum
Selection Clauses in Consumer Clickwrap and Browsewrap Agreements and the
“Reasonably Communicated” Test, 77 W
ASH L. REV. 481 (2002). In Blizzard’s TOU,
Blizzard capitalized the entire provision. However, that may not matter. For example,
to prove a point, PC Pitstop, an internet site offering antivirus and internet speed
scans, provided in one of its EULAs that if anyone emailed a certain email address
listed in its EULA, the sender would receive $1000. Larry Magid, It Pays to Read
License Agreements, PC
PITSTOP NEWSL., Feb. 16, 2005, http://www.pcpitstop.com/
spycheck/eula.asp. After four months and three thousand downloads, someone finally
wrote in to receive the money. Id. Further illustration of the absurdity of click-wrap
contracts can be found in Google’s Terms of Service that includes a clause barring any
person not of legal age from using “any of Google’s Web properties.” Chris Soghoian,
Google: No Kids Allowed, CNET
NEWS, Mar. 27, 2008, http://news.cnet.com/8301-
13739_3-9902548-46.html. Recently, Apple also mistakenly included a clause in its
EULA for the Windows version of Safari (an internet browser), providing that the
browser was not to be installed on a PC. Jeff Hinman, I’m a EULA. I’m a Contract.
Apple Fumbles, Exposes EULA Dangers, L
EGALITY, Apr. 30, 2008, available at
http://www.thelegality.com/2008/04/30/i%E2%80%99m-a-eula-i%E2%80%99m-a-
contract-apple-fumbles-exposes-eula-dangers/ (last visited Jan. 6, 2010).
98
See On Warden, http://onwarden.blogspot.com/2008/05/may-20th-ban-
wave-wow-242.html (May 20, 2008, 6:14PM).
99
See Glider, Frequently Asked Questions, supra note 85.
100
See id.
101
MDY Indus., LLC, at *15.
102
No. CV-06-02555-PHX-DGC, 2008 WL 2757357 (D. Ariz. July 14, 2008).
1028 BROOKLYN LAW REVIEW [Vol. 75:3
III. MDY
INDUSTRIES, LLC V. BLIZZARD ENTERTAINMENT,
INC.
The main copyright issue that arose in MDY Industries
was whether a user infringed Blizzard’s copyright in WoW on
the ground that whenever a user launched Glider in
conjunction with WoW, the user created unauthorized “copies”
of those programs in the computer’s RAM because Glider use
violated WoW’s EULA and TOU.
A. Facts/Claims
On October 25, 2006, Blizzard representatives traveled
to the home of MDY Industries’s founder Michael Donnelly and
advised him that MDY’s Glider sales violated Blizzard’s
copyright in WoW.
103
Blizzard told Donnelly that if he did not
agree to stop selling Glider, they would immediately file a
lawsuit against him and MDY.
104
Donnelly refused to stop
selling the program, and Blizzard filed suit in Arizona federal
district court.
105
Blizzard claimed that Glider diminished WoW’s value,
influenced players to deactivate their WoW accounts, and
decreased Blizzard’s revenue.
106
Due to WoW’s meticulously
orchestrated competitive balance, Blizzard asserted that
players who used Glider were able to unfairly complete tasks
103
Id. at *2.
104
Id.
105
Id.
106
Id. at *1. Players have terminated their accounts due to other players’
Glider use. See E
DWARD CASTRONOVA, EFFECTS OF BOTTING ON WORLD OF WARCRAFT®
5 (Nov. 13, 2007), http://virtuallyblind.com/files/mdy/blizzard_msj_exhibit_7.pdf. First,
players that do not use Glider feel that it is unfair for Glider users who are violating
the EULA and TOU to advance through the game more quickly than the users who do
not use Glider. See id. Second, Glider users, by playing more than humanly possible,
negate Blizzard’s intent for certain items to cost a certain amount by flooding the in-
game WoW economy. See id. at 6-8. Thus, a player who does not use Glider will only
realize a marginal market return on any in-game goods the user decides to sell. See id.
at 9. Third, an additional market distortion comes in the form of gold farming, where
Glider users sell their in-game currency for “real world” money. See id at 7. Because
the average player realizes less of a return from his farming due to Glider users, a user
may be forced to buy gold from Glider users to purchase in-game goods, thus
decreasing the amount of real-world dollars available for WoW subscription fees, which
may force account cancellations. Id. at 11. Fourth, Glider use also increases Blizzard’s
costs of providing WoW by requiring greater customer service costs arising from Glider
use complaints, and increasing the cost to technologically eliminate Glider. Id. at 14-
16. Last, Blizzard markets WoW as an immersive, role-playing, social, in-game
experience. Id. at 16-17. Glider use is detrimental to this vision in that it incentivizes
players to use the game while not at their computers. Id. at 18.
2010] LICENSE TO KILL 1029
throughout the game more quickly than Blizzard intended, and
that Glider users lessened the gaming experience for players
who did not use Glider.
107
Blizzard further alleged that Glider
facilitated “gold farming,”
108
and the selling of in-game gold to
other users.
109
Gold farming, like the use of third-party
programs, is also expressly prohibited by the TOU.
110
Specifically, the copyright issue that arose in MDY was
that whenever a user launched Glider in conjunction with
WoW, the user created unauthorized “copies” of those programs
in the computer’s RAM because Glider was against WoW’s
EULA and TOU.
111
The Ninth Circuit determined in MAI that a
work copied from software to RAM was sufficiently “fixed in a
tangible medium of expression” so that it could be considered a
“copy” for purposes of the Copyright Act, because it was present
for a period longer than a “transitory duration.”
112
Nevertheless, software “owners” are permitted to copy
software to RAM. Section 117 of the Copyright Act permits the
“owner” of a computer program to “copy” software to RAM if
the copy was created as an “essential step” in using the
program.
113
However, the users in the MAI case were not
entitled to such a defense because the users were not software
107
MDY Indus., 2008 WL 2757357 at *1.
108
Gold farming is “an Internet-age phenomenon in which players in less
developed countries collect and sell virtual gold . . . to wealthier gamers in the
developed world. This enables gamers who have the means to buy virtual gold to get
ahead in the games without actually having to accomplish the grunt work.” Dave
Rosenberg, China Bans Online ‘Gold Farming’,
CNET NEWS, June 29, 2009,
http://news.cnet.com/8301-13846_3-10275180-62.html. Gold farming will often result in
bans from the game. Id. Gold farming is a one billion dollar industry. Posting of
Michael Sacco to WoW.com, http://www.wow.com/2009/06/29/china-bans-gold-farming
(June 29, 2009 7:40 PM). “Some half a million people in developing nations are working
at least part time [farming gold.]” Posting of Mark Hefflinger, to digitalmediawire.com
(Aug. 25, 2008, 11:59AM). While gold farming has been big business, China recently
banned online gold farming. See Rosenberg, supra. Approximately four of every five
gold farmers live in China. See Sacco, supra.
109
MDY Indus., LLC, 2008 WL 2757357, at *1.
110
Id. at *1; see also World of Warcraft, World of Warcraft Terms of Use,
supra note 64 (Section 9(B)(vii)).
111
World of Warcraft, World of Warcraft Terms of Use, supra note 64 (Section
17(A)).
112
MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 518-19 (9th Cir.
1993) (holding that a computer maintenance company running MAI’s program on its
client’s computers as part of a repair job had created an unauthorized “copy” of the
software in the RAM of the client’s computer).
113
MDY Indus., 2008 WL 2757357 at *6. “It is not an infringement for the
owner of a copy of a computer program to make or authorize the making of another
copy or adaptation of that computer program provided . . . that such a new copy or
adaptation is created as an essential step in the utilization of the computer
program. . . .” 17 U.S.C. § 117 (2006).
1030 BROOKLYN LAW REVIEW [Vol. 75:3
“owners.”
114
Thus, the MAI court ruled that users created
unauthorized “copies” by merely using software that was then
copied into the computer’s RAM.
115
Therefore, the unauthorized
copying in MAI constituted copyright infringement by a non-
owner, as non-owners are not entitled to a Section 117
defense.
116
Congress intended to render “owners” free from
copyright liability for the lawful purchase and use of software,
when the software’s use in its intended manner involves the
copying of software to RAM.
117
If an “owner” exceeded his
license and unlawfully copied software to RAM, the software
provider may have a remedy in contract, but not in copyright.
118
In MDY, Blizzard argued that the court should find
MDY liable for contributory
119
and vicarious copyright
infringement
120
because the individuals who purchased WoW
were not “owners” of the game, but instead were licensees, who
may not take advantage of the Section 117 safe harbor.
121
Under
114
MAI Systems Corp., 991 F.2d at 518 n.5.
115
Id. at 518-19.
116
Id. at 518 n.5 & 518-19.
117
“Because the placement of a work into a computer is the preparation of a
copy, the law should provide that persons in rightful possession of copies of programs
be able to use them freely without fear of exposure to copyright liability.” CONTU
R
EPORT, supra note 1, at 13. Indeed, the situation in MDY is exactly the situation that
CONTU commission intended to protect in its recommendations to Congress
concerning the Copyright Act. Id. The commission stated,
Obviously creators, lessors, licensors, and vendors of copies of programs
intend that they be used by their customers, so that rightful users would but
rarely need a legal shield against potential copyright problems. It is easy to
imagine, however, a situation in which the copyright owner might desire, for
good reason or none at all, to force a lawful owner or possessor of a copy [of a
program] to stop using a particular program. One who rightfully possesses a
copy of a program, therefore, should be provided with a legal right to copy it
to that extent which will permit its use by that possessor.
CONTU R
EPORT supra note 1, at 13.
118
CONTU REPORT, supra note 1, at 13-14 (“Should proprietors feel strongly
that they do not want rightful possessors of copies of their programs to prepare such
adaptations, they could . . . make such desires a contractual matter.”).
119
“A person commits contributory copyright infringement by ‘intentionally
inducing or encouraging direct infringement.’” MDY Indus., LLC, 2008 WL 2757357 at
*3 (quoting MGM Studios Inc. v. Grokster, 545 U.S. 913, 930 (2005)).
120
“A person commits vicarious infringement ‘by profiting from direct
infringement while declining to exercise a right to stop or limit it.’” Id. at *3 (quoting
MGM Studios Inc. v. Grokster, 545 U.S. at 930). The court also ruled on summary
judgment for MDY’s alleged infringement of Sections 1201(a)(2) and 1201(b)(1) of the
Digital Millenium Copyright Act, see id. at *10-14, tortuous interference with contract,
see id. at *14-16, and unjust enrichment, see id. at *17. These rulings are outside the
scope of this Note.
121
MDY Indus., LLC., 2008 WL 2757357 at *3.
2010] LICENSE TO KILL 1031
Blizzard’s argument, if the purchasers were licensees, they
would not be entitled to a Section 117 defense, and thus MDY
may be liable for the underlying direct copyright violations.
Blizzard framed its argument in the context of the
Ninth Circuit’s decisions in MAI and Wall Data, which held
that when software providers utilize a EULA to restrict a
purchaser’s property interest in software to that of a licensee,
the computer program purchasers are not “owners” of the
software and are precluded from utilizing Section 117’s
shield.
122
Specifically, the Wall Data court held that if the
copyright holder clearly stated that it only granted the
purchaser a license to the software copy, and imposed
significant restrictions on that purchaser’s ownership interests
in terms of redistribution or copying, the purchaser was only
licensed to use the software and could not be considered an
“owner” under Section 117.
123
In Wall Data, the Los Angeles
County Sheriff’s Department contracted with Wall Data, a
developer and seller of computer programs, to purchase eight
CD-ROMs that contained Wall Data’s terminal emulation
program,
124
“RUMBA.”
125
Each CD-ROM contained two hundred
fifty licenses, for a total of two thousand licenses.
126
However,
the parties disagreed as to the relationship between the copies
of the software and the license. The Sheriff’s Department
claimed that it purchased 2,000 copies of RUMBA, while Wall
Data contended that the Sheriff’s Department only bought
2,000 licenses of RUMBA.
127
Subsequently, the Sheriff’s
Department purchased additional RUMBA licenses, which
brought it to a total of 3,663 licenses.
128
In order to facilitate the
opening of its new detention facility, the Sheriff’s Department
decided to simultaneously install the RUMBA software onto all
122
See id.
123
Wall Data Inc. v. Los Angeles Cty. Sheriff’s Dep’t., 447 F.3d 769, 785 (9th
Cir. 2006).
124
A terminal emulator is a program that makes a computer “appear to look
like another, usually older type of terminal so that a user can access programs
originally written to communicate with the other terminal type.”
SearchNetworking.com, What is Terminal Emulation?, http://searchnetworking.
techtarget.com/sDefinition/0,,sid7_gci213121,00.html (last visited Jan. 20, 2009).
125
Wall Data, 447 F.3d at 774.
126
Id.
127
Id. at 774 n.2.
128
Id. at 774.
1032 BROOKLYN LAW REVIEW [Vol. 75:3
of its 6,007 computers in the new facility, exceeding the 3,663
purchased licenses.
129
Wall Data learned of the Sheriff’s Department’s actions
and sued for copyright infringement.
130
Wall Data claimed that
because the Sheriff’s Department over-installed the RUMBA
software onto its computers, it violated the terms contained in
Wall Data’s shrink-wrap,
131
click-wrap,
132
and volume license
agreement.
133
Therefore, because Wall Data clearly stated that
it only granted the purchaser a license to the software copy,
and imposed significant restrictions on that purchaser’s
ownership interests in terms of redistribution or copying, the
court considered the purchaser an unprotected licensee rather
than an “owner” who could avail itself of a Section 117 safe
harbor defense.
134
Under the MAI and Wall Data precedent, the MDY
court awarded Blizzard summary judgment
135
on its claims for
contributory and vicarious copyright infringement. Section 106
of the Copyright Act grants the “owner” of a copyright the
exclusive right to “reproduce” the copyrighted work or to
prepare derivative works
136
based upon the work, or to
distribute copies of work to the public.
137
Further, under Section
129
Id. at 774-75.
130
Id.
131
A “shrink-wrap license” is a “form on the packing or on the outside of the
CD-ROM containing the software which states that by opening the packaging or CD-
ROM wrapper, the user agrees to the terms of the license.” Id. at 774 n.4.
132
A “click-through license” is a “form embedded in computer software which
requires the person initially installing the software onto a computer to affirmatively
click a box or an ‘accept’ button indicating that the user accepts the terms of the license
in order to complete the software installation and to use the software after it is
installed.” Id. at 775 n.5.
133
Id. at 775.
134
Id. at 785.
135
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.” F
ED.
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, 323 (1986)
(citations omitted).
136
A “derivative work” is a “work based upon one or more preexisting works,
such as a translation, musical arrangement, dramatization, fictionalization, motion
picture version, sound recording, art reproduction, abridgment, condensation, or any
other form in which a work may be recast, transformed, or adapted. A work consisting
of editorial revisions, annotations, elaborations, or other modifications which, as a
whole, represent an original work of authorship, is a ‘derivative work.’” 17 U.S.C. § 101
(2006).
137
Id. § 106; see also MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-
02555-PHX-DGC, 2008 WL 2757357, at *2 (D. Ariz. July 14, 2008).
2010] LICENSE TO KILL 1033
501 of the Copyright Act, anyone who violates one of the
exclusive rights granted to the copyright holder in Section 106
is an infringer of the copyright.
138
Applying the Wall Data reasoning to MDY and looking
to the restrictions on ownership Blizzard dictated in its EULA
and TOU, the MDY court determined that first, Blizzard’s
EULA stated that it granted a limited license,
139
and second,
Blizzard imposed significant restrictions on the transfer and
use of the game client software.
140
In further support of
Blizzard’s argument in favor of classifying a WoW purchaser as
a licensee instead of an “owner,” Blizzard pointed out the
notices on WoW’s box, the paper copy of the EULA in WoW’s
box, and the online notices that appeared when the user
installed the WoW game client, which all notified the
purchaser of his limited rights in the game as licensees.
141
Therefore, when users launched WoW using Glider, they
exceeded Blizzard’s license and created infringing copies of the
game.
142
Just as in Wall Data, the Court refused to afford MDY
a Section 117 defense because of Blizzard’s restrictive EULA
language.
143
Although Wall Data’s result may arguably be sound
under its facts, MDY’s facts make clear Wall Data’s faulty
underlying reasoning. Ultimately, allowing a copyright holder
to restrict a consumer’s legal rights under the Copyright Act by
merely including restrictive language in a click-wrap or shrink-
wrap contract is inequitable. As seen in today’s marketplace,
because a shrink-wrap EULA may be the beginning and end of
the inquiry in determining ownership, video game
manufacturers, music companies, and other software providers
only need to include restrictive boilerplate language in their
EULAs and TOUs to hold purchasers who exceed these license
terms liable for copyright infringement.
144
Illustrating the
unfairness of this result, as one commentator suggested,
“[n]either the traditional norms of contract law nor the policies
behind the protection of intellectual property support
138
17 U.S.C. § 501; see also MDY, 2008 WL 2757357, at *2.
139
MDY, 2008 WL 2757357, at *8.
140
Id. at *9.
141
Id.
142
Id. at *3.
143
Id. at *8-9.
144
Sherwin Siy, MDY v. Blizzard: Cheating at WoW May Be Bad, but It’s Not
Copyright Infringement, May 5, 2008, http://www.publicknowledge.org/node/1546 (last
visited Mar. 1, 2010).
1034 BROOKLYN LAW REVIEW [Vol. 75:3
enforcement of agreements that exist primarily to frustrate
public legislation.”
145
Here, Congress intended Section 117 of
the Copyright Act to protect software purchasers from
copyright liability for making incidental copies of software to
RAM.
146
A software provider should not be allowed to thwart
that legislative purpose by providing in its EULAs that they
sell nothing, and license everything.
Further illustrating MAI’s and Wall Data’s problematic
owner-licensee distinction is the experience of an ordinary
purchaser from that purchaser’s perspective. One who
purchases a copy of WoW from her local electronics retailer and
leaves the store with the software, never obligated to return
the software to the store as if she had temporarily leased the
software, would never think she only purchased a software
license. On the contrary, the customer would think she
purchased a copy of software.
147
The person could dispose of the
software copy as she chooses by throwing it in the trash, giving
it to a friend, or installing it on her computer.
148
All of these
activities are consistent with ownership powers.
149
Admittedly, allowing software providers to limit a
purchaser’s rights has several benefits. For example, it is a
simple rule to administer. If the software provider implements
restrictive language in its EULA, the court need not look
elsewhere to discern the purchaser’s rights. Further, if the
software provider only wants to sell licenses to its software and
courts begin holding that the providers are actually selling
ownership rights to the particular copy, software providers may
stop selling certain software altogether or may adjust prices or
other terms.
Nevertheless, the court’s method of looking only to the
software provider’s restrictive EULA language as the
dispositive issue in classifying a purchaser as an “owner” or a
licensee of the software is ultimately inequitable.
145
Elizabeth I. Winston, Why Sell What You Can License? Contracting Around
Statutory Protection of Intellectual Property, 14 G
EO. MASON L. REV. 93, 94 (2006).
146
CONTU REPORT, supra note 1, at 13-14.
147
MDY, 2008 WL 2757357, at *9.
148
Id.
149
Id.
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IV. MDY WAS INCORRECT
The MDY court’s ruling was incorrect for three reasons.
First, the First Sale Doctrine under Wise more equitably
allocates the rights between software purchasers and software
providers by focusing on the economic realities of the
underlying transaction to discern whether a software
purchaser is an “owner” or licensee of the software. Second,
Lockean labor desert theory counsels in favor of more
substantial, though not absolute, protection of the users’ rights
when considering how purchasers utilize their software after
the transaction. Third, copyright law’s underlying policies
suggest greater protection for purchasers because the illusory
rights the Ninth Circuit afforded to software users stymie
creative development far out of proportion to what Congress
intended under the Copyright Act. In MDY, the court afforded
no rights to software users, but instead merely deferred to
what Blizzard provided to the purchasers in its EULA.
150
This is
exactly the situation that Congress feared and enacted Section
117 to prevent.
151
A. First Sale Doctrine
1. Precedent
MDY argued that notwithstanding the Wall Data
decision, WoW purchasers were software “owners” rather than
licensees under the First Sale Doctrine as articulated in Wise,
152
and the copying of software to RAM was an “essential step” in
using the game client software.
153
According to MDY, under
Section 117 of the Copyright Act, the software purchasers were
authorized to copy the game client software to RAM through
the license they acquired when they bought the game.
154
Thus,
by creating the RAM copies, Glider users did not infringe upon
Blizzard’s copyright; they only breached a contract.
155
Therefore,
150
Id. at *8-9.
151
See supra note 118 and accompanying text.
152
MDY, 2008 WL 2757357 at *3.
153
Id. at *8.
154
Id. at *3.
155
Id. This distinction is significant because breach of contract damages are
generally limited to the value of the actual loss caused by the breach. 24 RICHARD A.
LORD, WILLISTON ON CONTRACTS § 65:1, at 213 (4th ed. 2002). In contrast, copyright
damages include the copyright owner’s actual damages and any additional profits of
the infringer or statutory damages. See 17 U.S.C. § 504 (2006).
1036 BROOKLYN LAW REVIEW [Vol. 75:3
Glider users did not infringe Blizzard’s copyright even when
using Glider in violation of Blizzard’s EULA and TOU.
156
Wise and Vernor defended against the frustration of
legislative intent through restrictive private contractual
language as seen in MDY. In Wise, Woodrow Wise, Jr. operated
a business that distributed lists of copyrighted movies that he
sold to film enthusiasts for home use.
157
Each list included a
provision stating, “used film for sale. Sold from one private
movie collector to another for home showing only. No rights
given or implied.”
158
Witnesses who testified against Wise stated
that the movie studios that held the copyright to these films
did not sell the films to the purchasers, but only licensed their
use for specific purposes for a limited time.
159
The studio
licenses provided that the studio retained all rights in and title
to the movies, and the license further restricted the licensees to
only use the movies for their personal use.
160
Further, the
copyright holders distributed the films pursuant to a theatrical
license agreement, which stated “[t]he distributor grants the
Exhibitor and the Exhibitor accepts a limited license under the
respective copyrights of the motion picture . . . to exhibit said
motion picture.”
161
The United States criminally prosecuted
Wise for copyright infringement due to Wise’s unauthorized
film sales in violation of these restrictive licensing terms.
162
Just
as in MDY, Wise argued in his defense that he was an “owner”
and not a licensee of the films.
163
In contrast to the Ninth Circuit’s restrictive decisions in
MAI and Wall Data, the Wise Court invoked the First Sale
Doctrine.
164
The First Sale Doctrine provides that the Copyright
156
MDY, 2008 WL 2757357, at *8.
157
United States v. Wise, 550 F.2d 1180, 1183-84 (9th
Cir. 1977).
158
Id. at 1184.
159
Id.
160
Id.
161
Id. at 1190.
162
Id. at 1185.
163
Id.
164
“The first sale doctrine is a narrow limitation on a copyright holder’s
rights.” Vernor v. Autodesk, 555 F. Supp. 2d 1164, 1168 (W.D. Wash. 2008). Under the
Copyright Act, a copyright holder has the exclusive right to copy his work, 17 U.S.C.
§ 106(1) (2006); to prepare derivative works, id. § 106(2); and to distribute copies of his
work, id. § 106(3). The first sale doctrine was first articulated in Bobbs-Merrill Co. v.
Strauss, where a book publisher attempted to restrict resale of a book through a license
agreement prohibiting resale for less than one dollar. Bobbs-Merrill Co. v. Straus, 210
U.S. 339, 341 (1908). Defendants sold the book for 89 cents. Id. at 342. The court
concluded, “[i]n our view the copyright statutes . . . do not create the right to impose, by
2010] LICENSE TO KILL 1037
Act shall not “forbid, prevent or restrict the transfer of any
copy of a copyrighted work the possession of which has been
lawfully obtained.”
165
Thus, when a copyright owner first sells a
copy of its copyrighted work, the owner is thereafter precluded
from using his exclusive right of distribution to prevent the
resale of that same copy.
166
The copyright holder still holds the
exclusive right to reprint and copy its work, but the purchaser
earns the right to sell the transferred copy. Indeed, “the
copyright is distinct from the property which is copyrighted,
and the sale of one does not constitute a transfer of the other.”
167
Therefore, under the First Sale Doctrine, if the purchaser
breaches a contract by selling a copy of a copyrighted work he
may be held liable for breach of contract, but not for copyright
infringement.
168
Further, in contrast to the Wall Data and MDY
decisions, which merely considered the software providers’
restrictive EULA language in determining ownership, the Wise
court looked outside the “four corners” of the contract to discern
the rights for which the parties actually bargained.
169
The Wise
court found that most of Wise’s purchases were licenses
because the transfer contracts between Wise and the film
studios transferred only the rights to show or distribute the
films for a limited period of time, and Wise was to return the
films at the end of the license.
170
Even though some of the
licenses did not expressly specify the copyright holder reserved
title, the court concluded that such a clause was not necessary
“where the general tenor of the entire agreement [was]
inconsistent with such a conclusion.”
171
Based on this reasoning,
the Wise court found sales in two instances
172
regardless of other
limitations on use.
173
notice . . . a limitation at which the book shall be sold at retail by future purchasers,
with whom there is no privity of contract.” Id. at 350.
165
Wise, 550 F.2d at 1187; see also 17 U.S.C. § 109.
166
Id. at 1187.
167
Id. at 1187 n.9. “[O]wnership of a thing is always separate from ownership
of the intellectual property embedded in a thing. Ownership of a book is not ownership
of the intellectual property of the novel that the author wrote. The book purchaser
owns the physical book, nothing more.” Fairfield, supra note 70, at
1096.
168
Wise, 550 F.2d at 1187 n.10.
169
Id. at 1190.
170
Id.
171
Id. at 1191.
172
Id. at 1191-92.
173
The limitations on use in these contracts were quite severe. Id. at 1192. In
one agreement, Warner Brothers sold a print of “Camelot” to Vanessa Redgrave
1038 BROOKLYN LAW REVIEW [Vol. 75:3
The First Sale Doctrine as applied in Wise related to
movie sales, but it has been recently applied by a Ninth Circuit
district court to sales of computer software packages like the
transactions in MDY.
174
In Vernor, Plaintiff Timothy Vernor, an
eBay entrepreneur, lawfully purchased a used Autodesk
software package at a garage sale, and auctioned it on eBay.
175
Included in the package was Autodesk’s license agreement.
176
Autodesk sent notice to eBay and claimed that Vernor’s sales
violated Autodesk’s copyright in its software;
177
eBay cancelled
the auction.
178
Vernor sent eBay a counter-notice
179
asserting
that the software package sale was lawful.
180
After no response
from Autodesk, eBay resumed the auction.
181
whereby Ms. Redgrave was to pay $401.59 for the print. Id. According to the contract
terms, Ms. Redgrave was required to have the print in her possession “at all times”;
she was not allowed to sell, lease, license or loan the print; and was restricted from
exhibiting it for profit. Id. The Wise court nevertheless determined this purchase to be
a sale instead of a license. Id.
174
See Vernor v. Autodesk, 555 F. Supp. 2d 1164 (W.D. Wash. 2008).
Following Wise, the first sale doctrine has also recently been applied to protect a seller
of promotional music CDs against a copyright infringement action. See UMG
Recordings, Inc. v. Augusto, 558 F. Supp. 2d 1055, 1058 (C.D. Cal. 2008). In UMG, a
promotional CD contained a license restricting its transfer, but did not contemplate the
return of the CDs. Id. The court held that licensing language is not dispositive in
creating a license; instead, “courts must analyze the ‘economic realities’ of the
transaction.” Id. at 1060 (citing to Microsoft Corp. v. DAK Indus., 66 F.3d 1091, 1095
(9th Cir. 1995)). The court emphasized that “perpetual possession” without the
copyright holder intending the item to be returned is a hallmark of ownership and a
sale. Id. Thus, UMG still had the exclusive right to distribute and make copies of the
copyrighted music, but the copy that the consumer purchased could be resold. See
Matthew Schroettnig, “Damn The Man!” The Ability To Sell Second-Hand CDs, T
HE
LEGALITY, Oct. 16, 2008, http://www.thelegality.com/2008/10/16/%E2%80%9Cdamn-
the-man%E2%80%9D-the-ability-to-sell-second-hand-cds/ (last visited Mar. 3, 2010).
175
Vernor, 555 F. Supp. 2d at 1165.
176
Id. at 1165 n.1. “The License Agreement grants a nonexclusive,
nontransferable license to use the enclosed program . . . according to the terms and
conditions herein.” The license imposed several restrictions on software purchasers
such as limiting the number of computers on which the software may be installed,
limiting the number of users, “software copying and copying of documentation” and
prohibiting “rent, lease, or transfer [of[ all or part of the Software, Documentation, or
any rights granted hereunder to any other person without Autodesk’s prior consent.”
Id. at 1166 (citation omitted) (internal quotation marks omitted).
177
Id. at 1165.
178
Id.
179
Internet content providers such as eBay enjoy protection from secondary
liability for copyright infringement through a take-down notice regime. 17 U.S.C.
§ 512(c) (2006). Generally, once a content owner sends notice to the content provider of
the allegedly infringing content, the content provider will be immune from liability so
long as the provider promptly disables access to the material, notifies the user that
posted the allegedly infringing material, and did not have actual or constructive
knowledge of the allegedly infringing material. Id.
180
Vernor, 555 F. Supp. 2d at 1165.
181
Id.
2010] LICENSE TO KILL 1039
Several years later, Vernor purchased three more
Autodesk software packages at an office sale from CTA, an
architecture firm.
182
Again, the same process occurred: Vernor
auctioned one of the software packages, Autodesk sent notice to
eBay to cancel the auction, to which Vernor would respond
with his own counter-notice, and the auction was reinstated.
183
However, when Autodesk objected to Vernor’s fourth eBay
software package auction, eBay suspended Vernor’s eBay
account for repeatedly infringing its policies by selling the
copyrighted software.
184
Vernor filed a declaratory judgment
action to establish the legality of the sales.
185
As in Wise, the Vernor court held that Vernor’s sales
were immunized under the First Sale Doctrine.
186
According to
the court, “[t]he First Sale Doctrine permits a person who owns
a lawfully-made copy of a copyrighted work to sell or otherwise
dispose of the copy.”
187
Thus, because Vernor lawfully owned the
software packages when he purchased them from CTA, he
could sell or dispose of them as he wished.
188
The Vernor court
recognized that the first sale extinguished the copyright
holder’s ability to further control that copy’s distribution.
189
The critical question for the Vernor court, as in MDY,
was whether Autodesk sold the software packages to CTA or
merely authorized a license.
190
Without a sale, Vernor would not
have acquired ownership of the copy within the meaning of
Section 109(a) of the Copyright Act, and therefore could not
rely on the First Sale Doctrine.
191
But if the transactions were
sales instead of licenses, breaching the terms of the license
would “give rise, at most, to a breach of contract claim.”
192
182
Id.
183
Id. at 1165-66.
184
Id. at 1166.
185
Id.
186
Id. at 1168.
187
Id. “Notwithstanding the provisions of section 106(3) [17 USCS § 106(3)],
the owner of a particular copy or phonorecord lawfully made under this title, or any
person authorized by such owner, is entitled, without the authority of the copyright
owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” Id.
(quoting 17 U.S.C. § 109(a)).
188
Id. “For example, the first sale doctrine permits a consumer who buys a
lawfully made DVD copy of ‘Gone With the Wind’ to resell the copy, but not to duplicate
the copy.” Id.
189
Id. (citing United States v. Wise, 550 F.2d 1180, 1187 (9th
Cir. 1977)).
190
Id. at 1169.
191
Id. at 1168 (citing Quality King Distribs., Inc. v. L’anza Research Int’l, Inc.,
523 U.S. 135, 146-47 (1998)); see also Wise, 550 F.2d at 1188-89.
192
Vernor, 555 F. Supp. 2d at 1169 (citations omitted)
1040 BROOKLYN LAW REVIEW [Vol. 75:3
In contrast to Wall Data, where the court only looked to
the EULA language to determine whether the purchaser owned
or was licensed to use the software,
193
the Vernor court,
following Wise’s reasoning, stated that there was no “bright
line rule” to easily determine a purchaser’s classification as an
“owner” or a licensee.
194
Further, the Vernor court explicitly
refused to grant conclusive weight to the restrictive language
used by the providers in the transaction.
195
Instead, the Vernor
court analyzed the entirety of both the agreement and the
transaction to determine whether the purchase should be
considered a sale.
196
Thus, in contrast with MDY, the Vernor
court gave proper deference to Congress’ intent of protecting
software users from copyright liability under Sections 109 and
117 of the Copyright Act by looking to what the parties actually
transacted for, and not solely what the software provider
claimed it was selling.
197
The Vernor court concluded that the critical factor in
determining whether a purchase was a license or a sale was
whether the purchaser was required to return the purchased
copy to the copyright holder.
198
Therefore, even though CTA’s
purchases of Autodesk’s software contained limitations on its
use, because CTA purchased the copies for a one-time payment
at the time of sale and the contract allowed CTA to retain
possession of the program, the purchases constituted a sale.
199
The Vernor court explicitly noted the conflicting Ninth
Circuit decisions in MAI and Wise,
200
and its language suggests
that it believes MAI was incorrectly decided.
201
Indeed, the
Vernor court pointed out that the MAI court neither cited Wise,
the previously binding Ninth Circuit precedent, nor supplied
193
Wall Data Inc. v. L.A. County Sheriff’s Dept., 447 F.3d 769, 785 (9th Cir.
2006).
194
Vernor, 555 F. Supp. 2d at 1169 (“[t]he label placed on the transaction is
not determinative.”).
195
Id.
196
See id.
197
See id. at 1169-70.
198
Id. at 1170. Indeed, “[e]ven a complete prohibition on the further transfer
of the print (as in the Redgrave Contract), or a requirement that the print be salvaged
or destroyed, was insufficient to negate a sale where the transferee was not required to
return the print.” Id.
199
Id.
200
Id. at 1171-74.
201
Id. at 1171-72 (“In a single footnote, without analysis or explanation, the
[MAI] court declared that ‘since MAI licensed its software, its customers do not qualify
as ‘owners’ of the software and are not eligible for protection under § 117.’ The court
did not cite Wise.”). Id. at 1171.
2010] LICENSE TO KILL 1041
any reasoning to support its determination that the purchaser
was only a licensee of the software.
202
In contrast with Wise’s
reasoning, the MAI court looked only at the limiting terms of
the license to see whether the purchase was a sale or a license,
and failed to assess the “general tenor” of the agreement in
making its determination.
203
Due to the restrictions on the
license, if the Vernor court followed MAI and its progeny, CTA
would have merely received a license for the software
packages.
204
Nonetheless, the Vernor court followed Wise’s
reasoning, and held that because Autodesk sold the software
packages to CTA and Mr. Vernor lawfully purchased the
software from CTA, Mr. Vernor was an “owner” of the copy and
was entitled to a Section 117 defense.
205
2. MDY and the First Sale Doctrine
The MDY court, without elaboration, acknowledged the
MAI and Wall Data decisions as binding precedent and refused
to follow Wise, thus undermining Congress’s intent in
protecting software purchasers from extensive copyright
liability under Section 117 of the Copyright Act.
206
The district court, while noting Wise, doubted the
outcome of MDY’s facts under Wise.
207
The court stated that
under Wise, a transaction is a license when the purchaser
never receives title in the transaction.
208
Blizzard, in its EULA,
provides “that Blizzard explicitly retains title to ‘all copies’ of
the game client software.”
209
However, this reasoning is flawed
in that it focuses solely on the copyright holder’s restrictive
EULA terms and fails to consider the economic realities of the
transaction, as Wise requires.
210
Applying the reasoning of Wise to MDY’s facts, when a
user purchases a copy of WoW, the user obtains one copy of the
202
Id.
203
MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 517-18 (9th Cir.
1993).
204
Vernor, 555 F. Supp. 2d at 1172.
205
Id. at 1174-75.
206
See supra note 117 and accompanying text.
207
MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-02555-PHX-DGC,
2008 WL 2757357, at *10 n. 7 (D. Ariz. July 14, 2008).
208
Id.
209
Id.
210
United States v. Wise, 550 F.2d 1180, 1191 (9th
Cir. 1977).
1042 BROOKLYN LAW REVIEW [Vol. 75:3
software for a one-time payment
211
from either a retail store or a
website.
212
The user is not required to return the purchased
copy, is not required to pay Blizzard to retain possession of the
copy, and may destroy the copy if the purchaser wishes.
213
These
are not characteristics of mere licenses, but are consistent with
ownership powers. The Wise inquiry is concerned with the
economic and social realities of the transaction, not just the
restrictive language that copyright holders provide in their
contract terms to limit users’ rights.
214
Under Wise, a WoW
purchaser would likely be classified as a software “owner” and,
therefore, would be entitled to a Section 117 defense against
copyright infringement. Thus, the District Court of Arizona
erred in ignoring Wise and its progeny.
B. Lockean Labor Desert Theory
In this section, I argue that Lockean labor desert theory
should at least influence courts towards classifying a WoW
user as a software “owner” instead of a licensee for the purpose
of a Section 117 defense, given an MMORPG player’s time and
labor investment into the virtual world. Because MMORPG
users invest substantial amounts of time and money into their
avatars’ development, they should be afforded more substantial
rights in their ability to use the game as they wish, free from
fear of liability for copyright infringement.
“Video games are big business.”
215
“Millions of people
play these games,” and their subscription fees make the
operators very profitable.
216
In addition to the subscription fees
the operators receive, many other MMORPGs, though not
WoW, receive advertising dollars from major corporations such
as Intel and McDonald’s that cater to the gaming community.
217
While the Copyright Act protects the profits of owners, the
game players whose time and effort enable those profits
211
See Public Knowledge, supra note 2, at 15.
212
See id. at 17.
213
See id. at 18.
214
Wise, 550 F.2d at 1191.
215
Kenneth Hwang, Blizzard Versus BNETD: A Looming Ice Age for Free
Software Development?, 92
CORNELL L. REV. 1043, 1046 (2006); “Virtual worlds are
becoming more important in the lives of average citizens. These virtual worlds produce
real effect in the real world.” Kayser, supra note 71, at
85.
216
Kayser, supra note 71, at 62.
217
Gregory Lastowka & Dan Hunter, The Laws of Virtual Worlds, 92 CAL. L.
REV 1, 8 (2004).
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deserve consideration as well.
218
Because MMORPGs are
qualitatively different from most property purchases in how
the players interact with their purchase by “living” in the
virtual world and investing an extraordinary amount of time
and effort into the world, an operator should not be able to
merely utilize a EULA to impose unilateral restrictions upon
its virtual world inhabitants.
An MMORPG player’s immense time investment into
the virtual world is unlikely to be substantial enough to
acquire rights the software provider withheld from the user
under the EULA or TOU. The EULA and TOU are binding
contracts, and the user activity does not occur at the time of the
transaction, but instead occurs ex post. However, the user’s
labor investment into the virtual world after the transaction
should at least influence courts towards classifying a user as
an “owner” instead of a licensee for the purpose of a Section 117
defense.
219
In other words, a WoW user’s substantial in-game
time investment should not insulate the user from breaching
Blizzard’s EULA or TOU contracts, but the user’s ex post
treatment of the software should be a considerable factor in the
court’s inquiry as to whether a user is an “owner” or a licensee
of that particular software.
Commentators recognize the internet as a space
separate and apart from the “real world,” and view internet
commodities as a type of quasi-property.
220
But as illustrated in
MDY, virtual world disputes have “real world” consequences.
221
218
MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-02555-PHX-DGC,
2008 WL 2757357, at *9 (D. Ariz. July 14, 2008). For an interesting article concerning
players’ rights, see Raph Koster, Declaring the Rights of Players, Aug. 27, 2000,
www.raphkoster.com/gaming/playerrights.shtml (advocating that players and avatars
receive certain inalienable rights).
219
“Indeed, if a user’s claim to a virtual product were strong enough, courts
might be justified in ignoring the terms of a EULA that limited virtual property
rights.” Horowitz, supra note 27, at 444.
“Through time, effort, and often monetary
expenditures, players’ avatars build status in their perspective communities, amass
virtual property (usually taking the form of weapons or armor), and gain
characteristics advantageous to game play.” Westbrook, supra note 35, at
780. Indeed,
“many [players] spend[] hundreds of hours per year logged in.” Id.
220
See Jessica Vascellaro, Yahoo Posts Loss as New Chief Plots Strategy,
W
ALL ST. J., Jan 29, 2009 at B1 (stating that Yahoo is “a fantastic Internet
property. . . . It really doesn’t deserve everybody trying to pick it and pull it apart.”).
221
Horowitz, supra note 27, at 443 (describing far more interesting scenarios
such as a Chinese gamer killing someone for stealing an online item, and Anshe
Chung, who became the first person to become a millionaire through acquiring virtual
property); see also Ross Miller, WoW Character Sells for Nearly $10,000, Joystiq, Sept.
17, 2007 available at www.joystiq.com/2007/09/17/wow-character-sells-for-nearly-10-
000/ (describing a WoW character with “arguably the best gear in the game” that sold
for $9,700).
1044 BROOKLYN LAW REVIEW [Vol. 75:3
Nevertheless, as of now, America does not honor virtual
property rights,
222
due in part to the lack of any virtual property
litigation or legislation.
223
All of the cases where it appeared the
court would have to consider virtual property rights have
settled.
224
Many articles discuss the possibility of virtual
property rights, and one of the arguments most frequently
advocated in favor of recognizing these rights is one based on
John Locke’s theory of labor desert.
Lockean labor desert theory allocates property rights to
those who invest their time and effort in distinguishing an
object from a commons.
225
When a person mixes her labor with
an object from a commons, the person makes that object her
property
226
so long as her labor contributed the greatest part of
222
“A virtual property right is a property right in a virtual product.” Horowitz,
supra note 27, at
444; see also Westbrook, supra note 35, at 782. “[C]omputer code
enables [virtual items] to resemble real chattels in their ‘rivalrousness, persistence,
and interconnectivity.’ That is, ‘[i]f I hold a pen, I have it and you don’t . . . If I put the
pen down and leave the room, it is still there . . . And finally, you can all interact with
the pen.” Lederman, supra
note 50, at 1631.
223
Kayser, supra note 71, at 65.
224
Westbrook, supra note 35, at 805. However, a Chinese court acknowledged
that virtual property is entitled to some protection, ordering an online gaming company
to return the user’s virtual items after a hacker stole the items when he hacked the
game company’s servers. See Will Knight, Gamer Wins Back Virtual Booty in Court
Battle, NewScientist.com, December 23, 2003,
http://www.newscientist.com/article/dn4510-gamer-wins-back-virtual-booty-in-court-
battle.html (last visited Mar. 1, 2010). In that case, Li Hongchen, a twenty-four year
old gamer, spent over two years and $1,210 buying virtual goods in the online game,
“Red Moon.” Id. A hacker infiltrated Red Moon’s servers and raided Hongchen’s
account. Id. Hongchen told the Chinese news site Xinhuanet, “I exchanged the
equipment with my labour, time, wisdom and money, and of course they are my
belongings.” Id. Hongchen argued “that the developer inadequately protected his
virtual belongings from theft by hackers.” Westbrook, supra note 35, at
805. Indeed,
“the line between online games and the real world have [sic] begun to blur. Some
gamers already trade game goods and characters for real money through online auction
sites like eBay.” Knight, supra; see also Thomas Claburn, Virtual Property Rights Are
No Game, I
NFORMATION WEEK, Dec. 16, 2006, available at
www.informationweek.com/story/showArticle.jhtml?articleID=196604327 (describing
the Bragg v. Linden Research case, 487 F. Supp. 2d 593 (E.D. Pa. 2007), which later
settled, where “Bragg claim[ed] that Linden Lab froze $8,000 worth of virtual assets
and refused to reimburse him” when Bragg acquired the assets by “taking advantage of
a loophole in its code”). The Bragg case is different in that Second Life, unlike WoW,
allows players to own the items they acquire. Id. A final adjudication in this case would
have been significant in that it would provide some clarification on what gamers who
possess virtual items actually own.
225
Horowitz, supra note 27, at 451.
226
“Whatsoever then he removes out of the State that Nature hath provided,
and left it in, he hath mixed his Labour with, and joined to it something that is his
own, and thereby makes it his Property.” J
OHN LOCKE, TWO TREATISES OF
GOVERNMENT 306 (Peter Laslett ed., Cambridge Univ. Press 1988) (1690).
2010] LICENSE TO KILL 1045
the asset’s value.
227
When one person labors to acquire a good,
that person is entitled to reap its benefit over one who
expended no labor.
228
Under the “Enough as Good” proviso,
Locke limited application of this theory to situations where
“there is enough, and as good left in common for others.”
229
In the case of a WoW purchaser, commentators suggest
that there are two competing Lockean claims.
230
The operator,
Blizzard, has a Lockean claim because it created and operated
the commons, which in this case, is the virtual world of WoW.
231
Because Blizzard is responsible for creating the mechanisms by
which WoW players seek to exercise a Lockean claim, a
MMORPG player’s Lockean claim may not be assertive enough
to claim full ownership rights over her virtual property. The
virtual world creator not only created the software, but in
Lockean terms, the creator also supplied the “raw materials”
that the users gathered to create or claim the items that they
call “property.”
232
Thus, before the user ever entered the world,
before the user heard about the game, or even before the game
was placed on the shelf, the virtual world operator expended
not only its labor, but original, innovative thought in creating
the new cyber-world.
233
On the other hand, the player, prior to entering the
game, created a customized avatar, without which the gaming
experience would fail to exist at all.
234
Due to WoW’s focus on
creating a social network to enhance game-play,
235
the network
effects of having many players “laboring” in the virtual world
are invaluable.
236
Indeed, the distinguishing and most valuable
227
JOHN LOCKE, SECOND TREATISE OF CIVIL GOVERNMENT § 28 (1690). “If I
own a can of tomato juice and spill it in the sea so that its molecules . . . mingle evenly
throughout the sea, do I thereby own the sea. . . ?” R
OBERT NOZICK, ANARCHY, STATE
AND UTOPIA 175 (1974).
228
Westbrook, supra note 35, at 792; id. at 794.
229
LOCKE, supra note 226, at 288.
230
See Horowitz, supra note 27, at 451-56.
231
Thus, it is possible that the operator’s Lockean claim in creating and
maintaining the virtual world is strong enough to swallow up the user’s claim. See id.
232
Id. at 451-53.
233
Id. at 433.
234
See Westbrook, supra note 35, at 792-93.
235
See supra Part II.A.3.
236
However, there is a good question as to what actually constitutes “labor.”
See infra notes 240-246. Network effects increase “[t]he utility that a subscriber derives
from a communications service. . . as others join the system.” Jeffrey Rohlfs, A Theory
of Interdependent Demand for a Communications Service, 5 The Bell Journal of
Economics and Management Science 1 at 16 (Spring 1974). Historically, network effects
have been critical in the development of the telegraph, telephone, broadcast radio,
1046 BROOKLYN LAW REVIEW [Vol. 75:3
feature of a MMORPG is the “massive” number of players.
Further, all of the in-game assets players acquire, and all of the
loot that users create, arose as a result of their time and labor
investment. Players spend thousands of hours playing WoW,
leveling their avatar, acquiring or crafting rare, high-level
items,
237
and may even earn a living in the virtual world.
238
Moreover, the deep virtual world connection causes some
players to consider themselves to be dual citizens of their
virtual world and the “real world.”
239
Because of these competing Lockean claims, users may
not have a strong enough Lockean claim to assert full
ownership rights over their virtual items and thus insulate
themselves from breach of contract claims against violating the
provider’s EULA and TOU terms. But the labor that users
expend into their virtual world assets should be a considerable
factor in considering a user’s classification as a software
“owner” instead of as a mere licensee.
Indeed, there is a fundamental distinction between the
user’s claim and the operator’s claim. While Blizzard’s
competing Lockean claim may be strong as to the entire virtual
world’s framework, a user’s Lockean claim may be stronger as
to the particular WoW account and avatar.
240
In Lockean terms,
the WoW purchaser is responsible for the greatest value of the
asset, his avatar, because of his expended time and labor.
While the operator created the virtual universe, the user
created something unique to the commons that was not present
before.
241
The intense labor investment does not cease once an
avatar reaches maximum level. Even after reaching maximum
level, a WoW player’s adventure has just begun in terms of the
television, cellular phones, and most recently, the internet. See Robert M. Metcalfe, It’s
All in Your Head,
FORBES, May 7, 2007, available at
http://www.forbes.com/forbes/2007/0507/052.html.
237
Westbrook, supra note 35, at 792.
238
See Rob Hof, Second Life’s First Millionaire, BUSINESS WEEK, Nov. 26,
2006, available at http://www.businessweek.com/the_thread/techbeat/archives/2006/11/
second_lifes_fi.html.
239
Kayser, supra note 71, at 60. “Participants make sizable investments of
social, human, and economic capital in these virtual worlds, often with the
questionable expectation that the items they have collected and creations they have
developed are their property.” Sheldon, supra note 55,
at 751; “Virtual environments
are now one of the most important forms of entertainment. More South Koreans play in
virtual worlds than watch television.” Fairfield, supra note 70, at
1061.
240
See Horowitz, supra note 27, at 452-53.
241
See Sheldon, supra note 55, at 761 (comparing WoW with the popular
online game “Second Life,” where users invent new objects).
2010] LICENSE TO KILL 1047
amount of labor required to find the best weapons, armor, and
other items that WoW has to offer.
242
In other words, while an
operator is enabling the avatar’s existence, a user is
contributing her labor to distinguish her avatar from the rest of
the commons (the virtual world) in terms of appearance, items,
guild affiliation, and social standing in the online community.
243
From this creation and labor, the user creates not only the
avatar, but also greatly increases the value of the avatar from
zero to as high as $9,700.
244
Entrepreneurs have created
companies whose purpose is to buy and sell virtual items for
real money,
245
and some make hundreds of thousands of dollars
per year selling virtual items on eBay.
246
This commodification
and increased value would fail to exist without the user’s labor.
Further, Locke’s limiting “Enough as Good” proviso,
where one may only claim property to the extent the claimant
leaves “enough and as good” in common for others, is a non-
issue in most virtual worlds. In contrast with “real world”
rivalrous goods where there is only a finite amount of resources
for distribution, in virtual worlds, the supply of goods is limited
only by the amount of time that a purchaser invests into the
game.
247
Additionally, some players have invested so much time
into WoW and have become so skilled at the game that WoW
supports their career as professional gamers.
248
Every year,
Blizzard sponsors a gaming event titled “Blizzcon” that players
can attend to meet with and compete against other players.
249
“Blizzcon” sponsors a WoW player versus player tournament
where the winning three-person team takes home $75,000.
250
Among the entrants to the WoW Tournament are high-profile
242
Id.
243
“[W]ithout the inputs of the user, the avatar would not exist at all.”
Westbrook, supra note 35, at
792.
244
See supra note 221.
245
Westbrook, supra note 35, at 790.
246
Lastowka & Hunter, supra note 217, at 39.
247
Id. at 47-48; see also Fairfield, supra note 70, at 1048-50 (discussing the
distinction between rivalrous and nonrivalrous goods).
248
Westbrook, supra note 35, at 789.
249
Blizzard.com, What is Blizzcon, http://us.blizzard.com/blizzcon/index.xml
(last visited Jan. 6, 2010).
250
Blizzard.com, Tournaments, http://www.blizzard.com/blizzcon/tournaments/
(last visited Mar. 1, 2010).
1048 BROOKLYN LAW REVIEW [Vol. 75:3
professional gaming groups that have earned corporate
sponsorship.
251
The fundamental distinction between Blizzard’s
Lockean claim as an operator of a commons and a WoW
purchaser’s Lockean claim as a user of an avatar provides
another illustration as to why MDY was wrongly decided, and
gives further support to the proposition that a WoW user
should be classified as an “owner” of the software and not a
licensee for the purposes of a Section 117 defense under the
Copyright Act.
Blizzard, as the operator and greatest Lockean
stakeholder of the virtual world, must equitably allocate the
rights among the players. It does this by acting as WoW’s
gatekeeper, enacting a EULA and TOU barring Glider use and
other player conduct.
252
If a player acquired full virtual property
rights to his online commodities, the user would undermine
Blizzard’s gate-keeping role to the detriment of other users.
Notwithstanding any profit-seeking motive, Blizzard must
retain its breach of contract claim in order to protect other
WoW users’ rights. But the ability to file copyright
infringement actions against a player makes little sense,
because Blizzard is acting outside its Lockean claim as
protector of the commons and trespassing into the user’s
Lockean claim as to the player’s own individual virtual avatar.
In MDY, however, arguing that a WoW purchaser
should be treated as an “owner” instead of a licensee because of
the purchaser’s labor and time investment may be somewhat
paradoxical. Under Lockean labor desert theory, rights should
be allocated to players based upon the player’s labor
investment in the game. However, those rights may not be as
strong when a player uses Glider, because Glider reduces the
net amount of a player’s labor by operating the game for the
player. Indeed, Glider users are not physically sitting at the
computer investing their time and labor into the virtual
commons.
253
Instead, players are simply inputting parameters
251
TeamPandemic.net, Pandemic Partners, http://www.teampandemic.net/
index.php?page=partners (last visited Mar. 1, 2010). Outside of WoW, other
professional internet gamers describe themselves as “cyber-athletes” and in addition to
practicing their games eight to twelve hours a day, exercise to maintain high energy
levels, preserve quick reflexes, and improve hand to eye coordination. See Daniel
Schorn, Cyber Athlete ‘Fatal1ty’, Aug. 6, 2006, CBS
NEWS, available at,
http://www.cbsnews.com/stories/2006/01/19/60minutes/main1220146.shtml.
252
See supra notes 63-68.
253
See supra notes 84-85.
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into the Glider program and letting it “do the work.”
254
It is
difficult to argue that WoW purchasers are investing labor into
their avatars or into WoW’s social experience while operating
Glider. However, because Glider markets to experienced
players who have already completed much of the basic WoW
game, and does not market to beginning players, this paradox
does not mean that the purchasers have not previously
invested a great deal of time into the game. It only suggests
that they cheat and thereby lessen the value of others’ labor.
Even though Lockean labor desert theory may not be a
strong enough argument to afford WoW players a unilateral
virtual property right sufficient to overcome Blizzard’s EULA
and TOU, it should influence a user’s classification as an
“owner” rather than a licensee when determining her eligibility
for a Section 117 defense. This is because the user’s actual
usage of the game informs the economic realities of the
transaction. While Blizzard created the software and the
virtual world, the players created their avatars and added
value.
255
Thus, purchasers should be classified as “owners” and
accordingly be free from fear of copyright infringement’s
statutory damages. WoW players neither think nor act like
licensees. The players maintain exclusive possession of the
software, invest a great deal of time and money into the game,
and do not expect the virtual world operator to have the right
to arbitrarily terminate their account or take their in-game
earnings.
256
Indeed, as one Second Life player explained:
When a character in the game ‘owns’ something, I feel I ‘own’ it in a
similar sense. If the character has the right to destroy it, I feel I
have the right to destroy it. If the character has the right to give it
away for arbitrary reasons, I feel I have a similar right. Note this
isn’t a roleplaying argument, it is quite the opposite. It relies on the
avatar and the player being equivalent.
257
Looking through a Lockean lens at the software
transaction and gamers’ subsequent investment in the virtual
world, it is counterintuitive to classify these players as
254
See supra notes 89.
255
See supra note 246.
256
See Todd David Marcus, Fostering Creativity in Virtual Worlds: Easing the
Restrictiveness of Copyright for User-Created Content, 52
N.Y.L. SCH. L. REV. 67, 80
(2007) (describing the user’s frustration and lack of recourse against an operator who
deletes the user’s in-game goods due to TOU and EULA restrictions).
257
Kurt Hunt, This Land Is Not Your Land: Second Life, CopyBot, and the
Looming Question of Virtual Property Rights, 9
TEX. REV. ENT. & SPORTS L. 141, 159
(2007).
1050 BROOKLYN LAW REVIEW [Vol. 75:3
software licensees instead of “owners.”
258
While the software
purchasers may not have a strong enough Lockean claim to
assert full ownership rights over their avatar, courts should
consider the Lockean argument and the user’s ex post handling
of the software when determining whether the purchaser is an
“owner” or a licensee of the software. Further, the underlying
principles of copyright law counsel in favor of granting software
purchasers more substantial protections for their online
commodities.
C. Copyright Policies
Copyright protections that are too favorable to software
providers stymie creative development far out of proportion to
what Congress intended. Copyright law must evolve in order to
foster creativity and innovation in online worlds. WoW
provides a perfect example.
In the past, users have developed “illegal” third-party
programs, many of which Blizzard bought and incorporated
into WoW’s user interface in order to improve the gaming
experience.
259
This practice allows both Blizzard and the user to
benefit from the user’s labor, creativity, and innovation in
creating the third-party program. However, the uncertainty of
whether the third-party programs will be treated as
investment opportunities or copyright infringements expunges
any incentive for third-party program developers to innovate
on a game. This disincentive is exacerbated if the law allows
companies such as Blizzard to irrebutably characterize its sales
as “licenses” rather than transfers of ownership.
260
The
uncertainty of who the software provider will favor and who
the software provider will abhor may lead third-party program
developers to cease improving upon the software provider’s
original work without permission. Essentially, by frustrating
and discouraging further innovation, there is a net societal
loss.
258
Id.
259
Harald Warmelink, Blizzard-Cosmos. Negotiating Add-On Development,
Mar. 1, 2007, http://sybil.nl/2007/index2.php?option=com_content&do_pdf=1&id=14.
260
See Marcus, supra note 256, at 80. However, increased commodification of
in-game items may incentivize a shift to allow players to retain copyrights over their
virtual property because players will spend most of their time where they will be
“best . . . rewarded for their efforts.” Id. at 86. “Creating a new virtual platform that
allows users to retain copyrights for their creations becomes a safer investment for
those seeking new avenues of financial opportunity.” Id.
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While it may be difficult to argue that Glider improved
WoW, for other third-party programs, the line between
improvement and harm may be more unclear.
261
Further, in addition to fostering creativity, Congress
intended to protect the incidental copying of software to RAM
as a necessary part of everyday software use.
262
Indeed,
Congress foresaw the exact problem at issue in MDY and
recognized that due to the software provider’s restrictive EULA
language, software purchasers that exceed any provision of the
provider’s terms, no matter how insignificant, might not
qualify for a Section 117 defense under the Copyright Act.
263
More significantly, virtual worlds such as WoW may be
planting the seeds of a future where people may not just
inhabit virtual worlds to level a character, but to meet other
people, date, or study.
264
There may come a time where the
“real” and “virtual” self become so intertwined that there is
little distinction between them. Blizzard has the right to make
the rules governing how it runs WoW; however, it should not
have the right to evade Congressional laws protecting software
users from copyright infringement claims under Section 117
defense of the Copyright Act.
265
261
Consider the popular third-party program “Atlas,” which allows players to
view the layouts of every WoW dungeon without ever visiting the dungeon. See
Curse.com, Atlas, available at http://wow.curse.com/downloads/wow-
addons/details/atlas.aspx (last visited Jan. 26, 2009).
262
Senator Hatch stated:
Second, I am concerned about the interplay between criminal liability for
reproduction in the bill and the commonly-held view that the loading of a
computer program into random access memory (RAM) is a reproduction for
purposes of the Copyright Act. Because most shrink-wrap licenses purport to
make the purchaser of computer software a licensee and not an owner of his
or her copy of the software, the ordinary purchaser of software may not be
able to take advantage of the exemption provided by sec. 117, allowing the
owner of a copy to reproduce the work in order to use it in his or her
computer.
143 C
ONG. REC. S12689 (Nov. 13, 1997) (statement of Sen. Hatch), available at
http://digital-law-online.info/lpdi1.0/quotes/fn2-36.htm#q.
263
Id.
264
“In the future, virtual worlds platforms will be adopted for commerce, for
education, for professional, military, and vocational training, for medical consultation
and psychotherapy, and even for social and economic experimentation to test how
social norms develop.” Balkin, supra note 30, at 2044.
“[I]t is possible, if not likely, that
many virtual spaces will effectively become shopping malls for both real and virtual
goods.” Id. at 2067. “The United States military uses virtual worlds for training . . . [as
t]he [virtual] environment re-creates sections of Baghdad down to street signs and
palm trees.” Fairfield, supra note 70, at
1060.
265
See supra note 117.
1052 BROOKLYN LAW REVIEW [Vol. 75:3
The rules of the “real world” still apply in the virtual
world. Here, Blizzard utilized restrictive EULA language to
limit the rights of purchasers, and asserted a copyright
infringement claim against MDY when Congress clearly
intended to protect the underlying users from copyright
liability by enacting Section 117. Courts should reject
arguments which advocate that software providers’ rules
garner more weight than Congress’ intention of protecting
software purchasers.
266
V. C
ONCLUSION
MDY was wrongly decided because courts should afford
software purchasers and their labor investments greater
protection from the statutory damages of copyright liability.
The Ninth Circuit recognized this concern and granted
software users such protection when it invoked the First Sale
Doctrine in Wise and Vernor. This enhanced protection is
supported by John Locke’s labor desert theory, and the
underlying purposes of copyright law to encourage innovation.
Courts should interpret Section 117 of the Copyright Act
as the consumer expects to be treated, looking to the practical
realities of the sale, unconstrained by the “four corners” of the
EULA that the provider forces upon its customers. The
incidental copying of the software to RAM, even if the copying
is in violation of the software provider’s EULA, is the type of
benign copying that Congress intended to shield from liability
under Section 117 of the Copyright Act. Such expansive
copyright liability for users incentivizes software providers to
license everything, and “sell” nothing.
Looking forward, under the MDY reasoning, software
providers, in boilerplate fashion, will continue to incorporate
restrictive EULAs into every agreement. The agreement will
provide that the purchasers are only licensed to use the
software and own nothing. Once the provider exceeds the
EULA license terms, instead of relying on a breach of contract
claim, software providers may unleash the brutal statutory
damages of copyright infringement upon users that never
realized that they were copying anything. To avoid this
injustice, courts should invoke the First Sale Doctrine, which
266
See Tobold’s MMORPG Blog, Virtual Property Rights,
http://tobolds.blogspot.com/2008/03/virtual-property-rights.html (Mar. 23, 2008, 14:30
EST).
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more equitably allocates the rights between software providers
and software purchasers by considering the economic and
social realities of the transaction without giving dispositive
weight to a software provider’s restrictive EULA terms.
Further, because MMORPG users invest substantial
amounts of labor into their games, courts should consider this
ex post activity in determining whether purchasers are
“owners” or licensees. MMORPG players neither think nor act
as mere licensees. Instead, they act like “owners.” Players
spend hundreds of hours in virtual worlds and other online
communities where they customize an avatar and immensely
increase its value. WoW users also form friendships and take
part in other social in-game activities. As technology opens
doors to new possibilities in virtual worlds, adhering to
precedent that ignores many of the similarities between the
“real world” and the virtual world will frustrate innovation and
over-protect software providers while abrogating basic rights
that Congress afforded to software purchasers.
Ross Shikowitz
†
†
J.D. Candidate, Brooklyn Law School, 2010; M.M., Indiana University-
Bloomington, 2005; B.A., Skidmore College, 2003. I would like to thank the Brooklyn
Law Review editors and staff for their diligent, professional review as well as their
thoughtful comments in the publication of this Note. I would also like to thank
Professors Derek Bambauer and Beryl Jones-Woodin for their guidance, and critique.
Most importantly, I would like to thank my parents Hillary and Alan Shikowitz, my
sister Sara Shikowitz, my aunt Adrienne Kapel, my grandmother Barbara Kapel, and
my girlfriend Erica Levy, without whose love, encouragement, and understanding this
Note would not have been possible.
