Nexus Crystals: Crystallizing Limits on Contractual Control of Virtual Worlds
Washington and Lee University - School of Law
February 15, 2012
William Mitchell Law Review, Vol. 38, No. 1, 2011
Washington & Lee Legal Studies Paper No. 2012-6
Can a video game developer or publisher successfully sue a video game player for copyright infringement for not “playing a game nicely,” “cheating,” or “buying software from a third party”? This article suggests a new reason why it cannot.
The consequences of this legal debate are immediate and personal, although the law governing these rules is always in flux and sometimes incoherent. You may “jailbreak” your iPhone or “root” your droid without implicating copyright issues no matter what your license says. But if you “mod” your PlayStation 3 (PS3) in violation of your software license agreement (or, worse, show others how to do so), then you risk a major lawsuit. The only way to understand this area of law is to identify the legal questions at the center of the debate because, while the answers courts give to these questions are not stable, the questions themselves have been. The center of the debate is the interaction between the grant of exclusive rights in the core provisions of the Copyright Act and the later additions by the Digital Millennium Copyright Act (DMCA) — the statute that protects technological locks against technological circumvention. The connection between contracts and technological measures is direct but not immediately clear. Contracts that restrict access to software are legally enforceable documents, but also technological protective measures that control access to copyrighted material. This creates a catch-22 for the end user: either the end user clicks through the EULA and gives up a panoply of rights, often including fair use, or the end user circumvents the contract and is liable for that circumvention under the DMCA.
The question is whether corporations can use EULAs to control consumer behavior that has little or nothing to do with copyright. It is clear that a copyright license that restricts a licensee from making copies makes use of a power that Congress intended to give to copyright holders. It is less clear that Congress intended to permit companies to turn actions such as “being rude while playing a video game,” “criticizing the game company while commenting on game message boards,” or “cheating while playing a game” into copyright infringements. Companies can, of course, contract with users to use the software in certain ways, but it is not at all certain that any resulting breach of contract claims should be transformed into copyright infringements and/or DMCA violations.
A number of courts have therefore held that there must be a “nexus” between a license restriction that a corporation seeks to enforce on penalty of DMCA violation and some right granted by the Copyright Act. The Ninth Circuit has held otherwise: a clause unconnected to any core right granted by the Act would be enforceable as a copyright infringement if the user violated the EULA and as a DMCA violation if the user either circumvented the EULA or sought to avoid surveillance programs, such as Blizzard’s Warden, intended to enforce these contractual clauses.
Yet the Ninth Circuit has now recently recognized the dissonance caused by permitting corporations to turn every breach of contract into a claim for copyright infringement, an infringement of the DMCA, or even a criminal hacking claim. In a recent case, MDY Industries, LLC v. Blizzard Entertainment, Inc., the Ninth Circuit adopted a novel approach to contractual construction that may serve to separate “play nice” contract clauses from “don’t illegally copy” core copyright license terms. This article argues that such an approach might serve as a “nexus crystal”; a doctrinal catalyst around which doctrines that take seriously these important issues of consumer control could crystallize. MDY does not adopt a nexus test for DMCA claims in the Ninth Circuit. But it nevertheless succeeds in separating social control from copyright licensing through a closer examination of the contractual clauses themselves; it does so by arguing that a mere rule of social control (“play nice”) is a contractual condition and not a condition of the intellectual property license.
This article proceeds in three parts. The first part discusses some pertinent legal literature and case law concerning the contractual control of online communities. The second part discusses case law that I believe describes coalescing limits on contractual control. One limit is familiar: some circuits require a nexus between a DMCA-protected technological lock and the exercise of some right granted by the Copyright Act to the copyright holder with respect to the locked-up material. But a second limit is potentially significantly more far-reaching: a contractual construction that limits the kinds of social control a copyright holder can exercise via mass-market consumer contracts of adhesion. Simply put, can software providers require their mass-market consumers to not criticize the company on public forums or to not do business with an aftermarket software provider, as conditions of the intellectual property license? This article argues that they cannot and that the MDY decision is one of the first cases to confront this issue head-on and resolve it correctly.
The third part examines the district and appellate decisions in MDY v. Blizzard and discusses how the court navigates the labyrinth between copyright holders’ rights and their ability to dictate patterns of social behavior to online communities under threat of copyright infringement. I then offer some conclusions.
Number of Pages in PDF File: 54
Keywords: Contracts, Copyright Law, Virtual Worlds
JEL Classification: K10, K12
Date posted: February 17, 2012