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Blizzard Entertainment, Inc. v. Lilith Games (Shanghai) Co. Ltd.

United States District Court, N.D. California

May 16, 2017

BLIZZARD ENTERTAINMENT, INC., AND VALVE CORPORATION, Plaintiffs,
v.
LILITH GAMES (SHANGHAI) CO. LTD., AND UCOOL, INC., Defendants.

          ORDER DENYING MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING MOTION FOR RULE 11 SANCTIONS

          CHARLES R. BREYER, UNITED STATES DISTRICT JUDGE

         The various video games at issue in this copyright case take players to fantastical worlds populated by elves, demons, and at least one elf-demon.[1] The earliest of these games, Plaintiff Blizzard Entertainment's “Warcraft III: Reign of Chaos, ” lets them build their own fantastical worlds populated by custom characters. Playing off the word modification, players call this process “modding” and their modding creations “mods.”

         Eventually, this rather remarkable chance to play God, like too many human endeavors, devolved into a fight over money. In the early 2000s, a particular Warcraft III mod called “DotA” (short for “Defense of the Ancients”) took the gaming community by storm. Companies took notice. In 2013, Plaintiff Valve Corporation released a stand-alone game modeled on DotA called “Dota 2, ” which also took the gaming community by storm.[2]Still more companies took notice. Defendants Lilith Games and uCool, Inc. released their own iterations-“DotA Legends” and “Heroes Charge, ” respectively-built specially for smart phones. Blizzard and Valve, who themselves settled copyright disputes between them, are now suing Lilith and uCool. uCool has moved for partial summary judgment against Valve, arguing that Valve does not own copyrights in the original DotA and subsequent mods, and thus has no viable copyright claims against uCool.

         I. BACKGROUND

         A. Statutory Framework

         Under the Copyright Act of 1976, copyright protects “original works of authorship fixed in any tangible medium of expression, ” like books and paintings. 17 U.S.C. § 102. It also protects “audiovisual works, ” like movies and video games. Id.; Micro Star v. Formgen Inc., 154 F.3d 1107, 1109-10 (9th Cir. 1998). A work is “created” when it is “fixed.” 17 U.S.C. § 101. When a work is created “over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time.” Id. And when it “has been prepared in different versions, each version constitutes a separate work.” Id. The owner of a copyright has the exclusive right to, among other things, “reproduce” and “distribute” their works. Id. §§ 106(1), (3).

         Copyright “vests initially in the author or authors of” a work. Id. § 201(a). But being an “author” requires more than making a creative contribution, even a “valuable and copyrightable” one. Aalmuhammed v. Lee, 202 F.3d 1227, 1232 (9th Cir. 1999). An author must have “superintended the whole work, ” acting as a “master mind” with “creative control.” Id. at 1233 (quoting Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 61 (1884)). When two or more people superintend a work and intend that their contributions will “be merged into inseparable or interdependent parts of a unitary whole”-like a novel or song-they have authored a “joint work.” 17 U.S.C. § 101; Aalmuhammed, 202 F.3d at 1232. Joint authors are joint owners of the copyright in a joint work, 17 U.S.C. § 201(a), and so may “sue third-party infringers without joining [their] fellow co-owners.” Corbello v. DeVito, 777 F.3d 1058, 1065-66 (9th Cir. 2015).

         By contrast, when a person superintends the assembly of a number of “separate and independent works” into “a collective whole”-like a magazine or encyclopedia-he or she has authored a “collective work.” 17 U.S.C. § 101. The author of a collective work holds copyright “in the collective work as a whole, ” but “is presumed to have acquired only the privilege of reproducing and distributing” the contributions that make up the collection. Id. § 201(c). The authors of contributions retain those copyrights. See id. § 201(c); § 103(b) (“The copyright in a compilation . . . extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work.”); id. § 101 (“The term ‘compilation' includes collective works.”).

         A work that is “based upon one or more preexisting works” is a “derivative work, ” id. § 101, if it “substantially incorporate[s] protected material from the preexisting work, ” Micro Star, 154 F.3d at 1111; see also 17 U.S.C. § 101 (noting that a derivative work may consist of “editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship”). The owner of a copyright “has the exclusive right” to “prepare derivative works based upon the copyrighted work” or authorize others to do the same. Id. § 106(2). Copyright in a derivative work protects “the material contributed by the author” of a derivative work, provided that it does not “affect or enlarge” copyright protection of the preexisting material. Id. § 103(b). Copyright in a derivative work “does not imply any exclusive right in the preexisting material, ” id., nor does it “extend to any part of the work in which [preexisting] material has been used unlawfully, ” id. § 103(a).

         A work “prepared by an employee within the scope of his or her employment” is a “work made for hire.” Id. § 101. Parties may agree to treat a work as one made for hire, so long as they do so in writing. Id. Either way, “the employer or other person for whom the work was prepared is considered the author, ” unless otherwise agreed. Id. § 201(b).

         Like most assets, “ownership of a copyright may be transferred in whole or in part by any means of conveyance.”[3] Id. § 201(d)(1). Any copyright transfer must be made in writing, id. § 204(a), except for a nonexclusive license, id. § 101, which may be granted orally or implied by conduct, Effects Associates, Inc. v. Cohen, 908 F.2d 555, 558 (9th Cir. 1990). Copyright may also be abandoned if the owner performs “some overt act indicating an intention to abandon.” Micro Star, 154 F.3d at 1114. Abandonment, like a transfer, may be made in whole or in part. See id.

         Registration with the Copyright Office is not necessary to own a valid copyright, 17 U.S.C. § 408(a), but it does create a presumption of ownership if made within five years after first publication.[4] 17 U.S.C. § 410(c).

         B. Factual Background

         This story is far from linear, but the Court will try to make sense of the sprawl.[5] And as it confronts a motion for partial summary judgment, the following facts cast the record in the light most favorable to the non-moving party, Valve. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         1. Warcraft III

         In 2002, Blizzard released “Warcraft III: Reign of Chaos, ” what was then the latest installment in its popular fantasy franchise. Like its predecessors, Warcraft III was a computer strategy game. Eul Decl. ¶ 2. Players controlled armies made up of humans, orcs, elves, and zombies fighting for dominance over the fictional, computer-generated world of Azeroth. Id. ¶ 2. To aid in the quest, Warcraft III armies came not just with standard soldiers but also “heroes, ” special warriors that grew more and more powerful with more and more game play. Id. ¶¶ 2-3.

         But fantasy afficionados had reason to rejoice besides their new ability to hone a hero into a force to be reckoned with. Warcraft III also included a program called the “World Editor, ” which enabled players to create new settings, characters, storylines, and rules-and then share them online with the gaming community. Id. ¶¶ 4, 6; see also Micro Star, 154 F.3d at 1110 (discussing similar program available with another video game, “Duke Nukem 3D”). Other players could then choose from a list of these “mods” (also called “maps”), download them, and join the custom-designed fray. Eul Decl. ¶ 6. They could even take an existing mod and make further changes themselves. See Guinsoo Depo. 17:4-10. The catch was that mods could not stand alone; players needed a copy of Warcraft III to build or play them. Eul Decl. ¶ 6.

         Despite affording players formidable tools for creative expression, Blizzard did not ensure that Warcraft III's End User License Agreements (“EULAs”) assigned intellectual property created using the World Editor back to the company.[6] See EULAs (dkts. 120-8 & 120-9). The EULAs did, however, make clear that players could not “use or allow third parties to use the [World Editor or mods] created thereby for commercial purposes including, but not limited to, distribution of [mods] on a stand-alone basis or packaged with other software or hardware through any and all distribution channels, including, but not limited to, retail sales and on-line electronic distribution without the express written consent of Blizzard.” Id. ¶ 3.C.iii. Mods were for play, not pay.

         2. DotA

         Some mods proved more contagious than others. A high-school student named Kyle Sommer, operating under (and hereinafter referred to by) his online moniker “Eul, ” was Patient Zero for one of the most infectious: “Defense of the Ancients” a/k/a “DotA.” His mod pitted two teams of heroes against one another, each trying to destroy the other's “central structure” while defending one's own. Eul Decl. ¶ 8. Eul conceived of DotA's setting, heroes, rules, and name-and then built them using the World Editor in late 2002. Eul Depo. at 46:19-50:7. A video game called “Diablo II” and a card game called “Magic: The Gathering” inspired many of Eul's heroes, while another video game called “Aeon of Strife” inspired DotA's rules. Id. at 55:11-56:4. Eul continued working on DotA for roughly two years, adding, subtracting and changing heroes and their powers in subsequent versions. Id. at 62:1-4. He also changed many other game elements. Id. at 62:4-7. In an attempt to retain control over the process, Eul “locked” his mod, meaning that he deliberately corrupted DotA's code to stop others from building directly off of it (though copycat versions appeared just the same). Guinsoo Depo. at 18:6-20:6; id. at 33:8-36:1.

         By late 2004, Eul wanted to go to college and didn't have time to continue updating DotA. Eul Depo. at 53:3-8. On September 23 of that year, he posted on a gaming community web forum, declaring that “from this point forward, DotA is now open source. Whoever wishes to release a version of DotA may without my consent, I just ask for a nod in the credits to your map.” Eul Online Post (dkt. 120-17); see also Eul Depo. at 59:16-60:8; id. at 64:2-67:18. The eighteen-year-old Eul then moved on to other things.[7] Eul. Depo. at 60:3-11. Despite believing that he owned what he had created, and despite knowing that other players were building their own versions of DotA, Eul does not remember trying to register a copyright. Id. at 68:8-69:24.

         3. DotA Allstars

         Different strains of DotA quickly grew out of Eul's original mod-well before he open-sourced it. See Eul Depo. at 69:12-24; Guinsoo Depo. at 18:2-20:13. Much of this case concerns a super-strain of DotA called DotA Allstars.

         a. Meian & Madcow

         At some point in 2003, two still-unidentified players who called themselves “Meian” and “Madcow” took what they thought were “the best, most enjoyable characters from all the other version of DotA and put them in one” mod. Guinsoo Depo. at 14:24-15:1, 18:23-19:18. They called it DotA Allstars. Id. Meian and Madcow's mod was not locked like Eul's, so anyone could build off of their code. Id. at 17:4-10, 33:8-34. That feature allowed Stephen Feak, a/k/a “Guinsoo, ” to transform DotA Allstars into a DotA super-strain.

         b. Guinsoo

         In late 2003, Guinsoo started building off one of Meian and Madcow's unlocked versions of DotA Allstars. Guinsoo Depo. at 14:24-15:1; id. at 18:23-19:18. Guinsoo picked this mod as a base because it was “the most stable” and “the most played version at the time.” Id. at 30:19-20. He looked at lists of customs games, figured out which one the most people were playing, and ran with it. Id. at 30:22-31:6. Guinsoo did not tell Meian and Madcow what he was doing. Id. at 41:4-8.

         Early on, Guinsoo simply hoped fix problems and “polish” DotA Allstars by, for example, ensuring that heroes were evenly matched. Id. at 28:23-29:20. It was only after he finished “fixing the really low hang[ing] fruit, ” that he transitioned to expanding the mod's content. Id. at 29:16-30:9; see also id. at 213:15-215:10. Unlike Eul, Guinsoo welcomed input from others, friends and strangers alike. Id. at 41:16-43:20. Contributors had varying levels of input. Some, like Stephen Moss a/k/a “Neichus” and the still-unidentified players “Syl-la-ble” and “Zetta, ” were in a top tier that contributed “really heavy design” work and actual programming; they also helped Guinsoo with “intimate decision-making” about the broader vision for DotA Allstars. Id. at 46:18-48:12; Neichus Depo. at 23:16-21. Others, such as Derek Baker a/k/a “Terrorblaze, ” were in a tier below that pitched detailed ideas to Guinsoo and sometimes helped make them a reality. For example, Terrorblaze and Guinsoo did “a hand-in-hand design” of a character called “Terrorblade, ” which Guinsoo-as the mod “authority”-then chose to include. Guinsoo Depo. at 49:9-50:18. People in the bottom tier posted ideas on public forums that Guinsoo read, or gave him direct feedback about what was good or bad about existing versions, but left it at that. Id. at 53:3-54:16.

         Throughout this process Guinsoo considered himself a “chieftain” of sorts. Id. at 85:7. Others held him in similarly high esteem. See Neichus Depo. at 22:25-23:3; id. at 45:22-47:13; Terrorblaze Depo. at 87:18-88:8. Guinsoo gave credit to his helpers but controlled what made it into the mod and what did not-and he kept it locked. Guinsoo Depo. at 41:13-43:24; id. at 198:9-199:23.

         By early 2005, Guinsoo had shepherded DotA Allstars from version 2.0 to 6.0, iterations that added some 40 new heroes, wrought substantial changes to other game elements, and rewrote a majority of the code. Id. at 207:16-210:3; id. at 235:19-236:24. He then called it quits. But rather than open-source DotA Allstars, Guinsoo gave Neichus an unlocked version so that he could keep developing what was fast becoming the dominant line of DotA mods. See id. at 218:16-219:21; Neichus Depo. at 100:1-9.

         c. Icefrog

         Neichus promptly enlisted Abdul Ismail a/k/a “Icefrog” to work “work jointly as developers of DotA Allstars.” Icefrog Depo. at 25:19-28:6. Icefrog had done some work on DotA Allstars while Guinsoo was the lead developer, Neichus Depo. at 58:13-15, and also had “much greater skills and training in programming” than Neichus, [8] id. at 57:2-16. Although Guinsoo “hadn't really considered” Icefrog taking on a leadership role, he knew-indeed hoped-that subsequent modders would keep DotA Allstars alive. Guinsoo Depo. at 219:6-220:12. Icefrog therefore had his “blessing” to continue developing the mod. Icefrog Depo. at 248:7-249:4.

         Before long, DotA Allstars's increasing popularity “scared” Neichus and made working on the mod feel “more like a job” than a hobby, so he stopped. Neichus Depo. at 99:22-100:9. Icefrog then became the sole lead developer. Icefrog Depo. At 25:17-26:9. Much like Guinsoo before him, Icefrog took suggestions from others and decided what elements made it into the mod and what elements did not. Id. at 34:7-43:18. And like Guinsoo, Icefrog often credited those whose suggestions made the cut. Id. at 45:24-46:2. But while Guinsoo's oversight had been somewhat informal, Icefrog regularly enlisted a team of helpers. See Terrorblaze Depo. at 96:12-99:6.

         At some point in early 2006, Marc DeForest, the founder of a company called S2 Games (“S2”), contacted Icefrog online.[9] Icefrog Depo. at 76:21-77:2. DeForest was a fan of DotA Allstars, id. at 77:20-22, and eventually convinced Icefrog to join S2 as a designer, id. at 75:4-9. While there, Icefrog mainly worked on a game called “Heroes of Newerth.” Id. at 132:3-134:15. Initially, Icefrog's employment agreement gave him all intellectual property rights “created in connection” with Heroes of Newerth, but was later revised to grant S2 those rights. See 2006 S2 Agreement (dkt. 120-29) ¶ 5; Icefrog Depo. at 125:25-129:8. Icefrog also agreed from the get-go to “continually update DotA Allstars and its associated websites so as to maintain the current player base.”[10] Id. at 122:15-23. Because DotA Allstars inspired Heroes of Newerth's game play, S2 looked to capitalize on continued interest in DotA Allstars. See id. at 133:16-134:20.

         4. Dota 2

         In 2009, Valve began developing Dota 2, a stand-alone computer game based on DotA and DotA Allstars. Lynch Depo. at 144:23-145:12. That same year, Valve hired Icefrog as a developer. On May 24, 2010, Icefrog assigned any and all of his rights in DotA and DotA Allstars to Valve for a handsome price. See Icefrog Assignment (dkt. 120-10) at 1, 3. Four months later, Eul did the same with this ...


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