Stephen S. Wu-- SL: Legal Writer,, (408) 573-5737, 50 W. San Fernando St., Ste. 750, San Jose, CA 95113

The Price of Piracy

The price of a little piracy can be rather steep, as proved in a recent California case. Blizzard Entertainment recently won an $88.5 million judgment against a woman running a business called Scapegaming that allowed players to play Blizzard’s World of Warcraft game without paying for it. Blizzard obtained the judgment in September in a case entitled Blizzard Entertainment, Inc. v. Alyson Reeves, d/b/a Scapegaming, No. CV 09-7621 SVW (AJWx), pending in the United States District Court for the Central District of California. For a copy of the order fixing the amount of damages, click here. For a copy of the judgment, click here.
Scapegaming had a private server permitting players to play World of Warcraft without paying Blizzard and bypassing protections against piracy used by the company. The court found that “Defendant’s website’s primary purpose was to enable users to circumvent Plaintiff’s technological protection measures.” To stop Reeves, Blizzard filed suit to redress what it considered copyright infringement.

Blizzard wrote, in its Terms of Use, that users promise not to “host, provide or develop matchmaking services for the Game or the Service, or intercept, emulate or redirect the communication protocols used by Blizzard in any way, for any purpose, including without limitation unauthorized play over the internet, network play, or as part of content aggregation networks.” This clause appears as a “license limitation” in Blizzard’s Terms of Use. Blizzard takes the position in the Terms of Use that any violation of one of these license limitations means that use of the game is outside the license, and therefore an infringement of Blizzard’s copyrights. The order shows that the court agreed with this view of the license violation, and said that Reeves willfully infringed Blizzard’s copyrights.

After Blizzard filed its complaint, it won a default judgment after Reeves failed to respond to the suit. The question then turned to the amount of damages to which Blizzard was entitled. Before obtaining a judgment, the court wanted Blizzard to “prove up” its damages, which the court would then reflect in a judgment. The court’s decision concerned the amount of various elements of damages to be included in the judgment. In particular, Blizzard sought the disgorgement of Reeves’ profits, statutory damages (a set amount per violation), and an award of attorneys’ fees.

The court was satisfied that Blizzard’s request for attorneys’ fees of $63,600 was reasonable. More interesting was the section on disgorgement of profits. Blizzard discovered through PayPal that Reeves received over $3 million in revenues from the site. In view of this evidence, the court was willing to award that amount to Blizzard. But Blizzard won the big money from Reeves through the operation of the statutory damages provision of the Digital Millennium Copyright Act, 17 U.S.C. § 1203(c)(3). The court awarded over $85 million based on the number of users in Scapegaming’s community, 427,393, multiplied times the $200 minimum amount of damages per act of circumvention.

Recognizing the large number that resulted from the court’s award of statutory damages, the court said, “To the extent that this figure appears unreasonably large, Congress has mandated this approach and the Court is unable to deviate from it.” Added to the disgorgement and attorneys’ fees, the total award was about $88.5 million. Reeves paid a high price for piracy indeed.