Thursday, March 16, 2017

Blizzard's Legal Team Not Tired Of Winning Against Bossland Yet

The year 2017 is a very bad year so far in the courtroom for Bossland GmbH, maker of the Honorbuddy bot for World of Warcraft and many other bots. Blizzard's legal team had suffered setbacks in the past in German courts, but the tide has turned recently. On this side of the Atlantic, Blizzard is about to win a virtually uncontested case against the German bot maker in California. At the same time, the concept of End User License Agreements and Terms of Service may gain more legal weight.

Bossland's losing streak began 6 October 2016 when the Federal Court of Justice (BGH) ruled that that the use of the basic game for the purposes of the programming of the bots is not covered by the rights granted to the acquirer of the game. On 12 January 2017, the BGH further ruled that the decision of the Court of Appeals that the sale of such bots is contrary to the Unfair Competition Act (UWG). Felix Hilgert, writing for the German website Online.Spiele.Recht, offered this analysis of the decision:
In the judgment at first instance on this dispute, the Landgericht Hamburg distinguished between general conditions of business in the actual case and mere "rules of play", which the provider of a game could unilaterally establish and modify without having to be contractually agreed with the players. There are quite a number of arguments for such an approach .

In the second instance, the Court of Appeals had left open the question as to whether there was a real difference between the GTC and the "rules of play".

However, the BGH now finds clear words. In any event, if the "rules of the game" - as in the present case - are designed as restrictions on the granted license for the use of the software and the provider has a right of termination in the case of infringement, they should also be in the GTC and should be effective in accordance with the General rules are included in the contract and must be subject to a content check at the standards of the GTC law.

...

According to this decision of the Federal Court of Justice (BGH) "game rules" must be regarded as a GTC in any case if they restrict the actual possible use of the game legally and give the provider binding sanctions. Such rules must therefore also be accepted by the players as other GTCs. However, this is sufficient if this is done within the scope of account registration.

If the use of bots is prohibited in the game rules, this is effective and also leads to injunctions against third parties, which offer such bots for the on-line game.
The case is now heading for the Federal Constitutional Court (BVerfG), where the bot maker's lawyers will argue that the rulings infringe upon both Bossland and its managing director's fundamental rights under the Grundgesetz, or German constitution, specifically Articles 3 and 12.

In the United States, Blizzard filed a federal lawsuit, Blizzard Entertainment, Inc. v. Bossland GMBH et al, in the Central District of California on 1 July 2016. Bossland counted on dismissing the case due to a lack of jurisdiction of the court. Bossland published its rationale back in July 2016:
US courts in general think they can decide about the future of anyone, however even they have regulations. There are few ways how a company could be sued in the US. One of them are the "Long-arm Statutes", and Blizzard surely tried it the following among other writings:

(d) Defendants have entered into, and continue to enter into, hundreds or thousands of contracts with individuals in the United States and in the State of California,

(e) Defendants employ or engage individuals residing within the United States to create, code, develop, test, and support the Bossland Hacks;

(f) Defendants contract with numerous entities located in the United States and the State of California in connection with their business. This includes,
for example, domain name registries, hosting or content delivery services, and credit card processors and merchant banks; and

(g) Defendants distribute the Bossland Hacks via content delivery networks and servers located in the United States and the State of California.

That is tactically excellent, if it just where true, to make the "Long-arm Statutes" to work. But none of that is true and all of that is very vague, perfectly made for the court to believe. Neither we have employees in the US or in California, nor do we host our websites and download portals in the US. And we never used CDN, our french servers can handle it very well. But nice try.

Then there is the „Tag Jurisdiction“ based on U.S. Supreme Court im Fall Pennoyer v. Neff (1878). As you can see, this one is pretty old, for it to work, the person in interest must be in the state or country where he is to be sued. Best known case here is  Burnham v. Superior Court of California from 1990.

And of course, if the company has its residence in the US. But we for sure have no residence there yet. Anyhow, lets assume such a lawsuit passes the court and a company gets sued in the US, that would lead to payments of Punitive Damages. Everyone knows the MDY case and the Ceiling Fan cases, one for $6M, the other one for $7M in Punitive Damages. However, according to EU law, such an judgement would be not acccredited in the EU. The Ordre public clause is written in n § 328 Abs. 1 Nr. 4 ZPO, Art. 27 Nr. 1 EuGVÜ and Art. 34 Nr. 1 EuGVVO.
The presiding judge on the case, Judge David O. Carter, disagreed and denied Bossland's motion to dismiss due to lack of jurisdiction on 25 January. After some additional legal moves, Bossland defaulted the case on 16 February. On Monday (13 March), Blizzard submitted an entry of default judgement against the German bot maker.

A reading of Blizzard's motion for a default judgement is interesting. Blizzard maintains that Bossland committed three areas of illegal acts:

  • Bossland distributed and actively encouraged the use of software which, when used by the end user, creates a derivative work of one or more of the Blizzard Games. Bossland also encouraged and facilitated acts of copyright infringement by its freelance contractors and software developers. This conduct constitutes secondary copyright infringement.
  • Bossland created and distributed computer files designed to circumvent and bypass access controls put into place by Blizzard. This conduct violates Section 1201 of the DMCA.
  • Bossland, with knowledge that others had entered into valid and binding contracts with Blizzard, encouraged those people to engage in conduct that plainly violated those contracts 

Bossland's sins were violating copyright law, the Digital Millennium Copyright Act, and the World of Warcraft EULA. Violating a game EULA is against the law? In Blizzard Entm't Inc. v Ceiling Fan Software LLC, a federal court in California in 2013 ruled against the makers of the Pocket Gnome and Shadow Bot World of Warcraft bots to the tune of $7 million:
The publisher originally filed suit in December 2011 against Ceiling Fan, a company that developed two bots — Pocket Gnome and Shadow Bot — allowing World of Warcraft players to automate aspects of the game. Using bots is a violation of the World of Warcraft end-user license agreement and its terms of use.

The court agreed with Blizzard's contention that the bots constituted tortious interference with contractual relations under California law. That is, Ceiling Fan knowingly sold software that was a violation of World of Warcraft's terms of use, which is a legal contract between World of Warcraft players and Blizzard.
To confirm that an uneducated gaming journalist didn't get the legal facts wrong, Federal District Judge James V. Selna wrote in his decision:
In order to play WoW,3 a user must agree to two separate contracts, the “World of Warcraft End User License Agreement” (“EULA”) and the “Terms of Use” (“ToU”). ( Id. ¶ 28.) Both the EULA and the ToU prohibit players from using “cheats, automation software (bots), hacks, mods, or any other unauthorized third-party software designed to modify the World of Warcraft experience.”4 ( Id. ¶ 29.)
3. In a procedure that has become familiar to the vast majority of internet users, installation of WoW software requires assent to the EULA and ToU via a dialog box that conditions installation of the software upon the user's mouse click indicating acceptance of the software provider's terms. ( See Rice Decl. ¶¶ 28–31.) Access to game play requires such assent. ( Id. ¶ 31.)
4. Various versions of the EULA and the ToU have been used, but all versions used since at least October 2007 have contained this prohibition. (Rice Decl. Ex. 2.)
The reference to encouraging people to violate contracts in Blizzard's arguments against Bossland probably are directly related to California law related to tortious interference with contractual relations. Judge Selna spelled out the criteria for determining such an offense:
In California, “[t]he elements ... for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach of disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.”
Judging by the description above, any effort to sell products in contravention of a game's EULA probably violates California state law.

The next confirmed date on the legal calendar is 10 April, when Judge Carter will hold a hearing on the default judgement against Bossland. Blizzard's years-long legal effort against Bossland is reaching the end game, both in the U.S. and in Germany. Given the pace of the legal system in both countries, the cases could go another year, depending on appeals. However, Blizzard once again looks to have the upper hand over a bot maker.

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