The DMCA Re-Fanged: Courts Now At Odds Over Copyright Protection for Software Security Devices

By Thomas Carey. Chair of the Business Practice Group

December 2010 IP Update

The Digital Millennium Copyright Act makes it unlawful to circumvent a technological measure that effectively controls access to a work protected by copyright, and to traffic in devices designed to accomplish that end.

In last month’s IP Update, we expressed wonderment at the reasoning of the Fifth Circuit Court of Appeals in MGE UPS Systems Inc. v. GE Consumer and Industrial Inc.  In that case, the court was unable to find a violation of the DMCA where software had been modified without authorization so that it would not check for the presence of an external hardware device that the software vendor distributed only to authorized users of the software.

The Fifth Circuit relied on a 2004 opinion of the Federal Circuit Court of Appeals involving garage door openers and their remote control devices.  Chamberlain, a manufacturer of these devices, had developed an opener that uses an algorithm to frequently change the codes required to open the garage door.  The Chamberlain remote controller uses the same algorithm to generate the code that it sends to the opener.

Skylink, a competitor that makes its own openers and remote controllers, also makes a “universal” controller that can replicate Chamberlain’s algorithm, permitting its openers to operate Chamberlain’s openers.

Chamberlain alleged that the sale of Skylink’s controller was a DMCA violation.  It pointed out that its openers and controllers had embedded software protected by copyright; and that the algorithm for changing codes was a technological measure that controlled access to that embedded software.

Despite this clear mapping of the facts to the wording of the DMCA, the Federal Circuit found no DMCA violation because operating the Skylink universal remote did not result in any copying of the Chamberlain software; it only caused the software to function.  Thus, the court said, there was no connection between the defendant’s thwarting of the plaintiff’s scrambling algorithm and any copyright infringement.

Relying on this Federal Circuit precedent, the Fifth Circuit concluded in MGE UPS Systems that the unauthorized use of the hacked software was not a DMCA violation because there was no evidence that the defendant had created the hacked version of the software.  The court did not view the DMCA as giving a copyright owner the power to prevent the use of the software it had created.

Now another court of appeals, the Ninth Circuit, has issued an opinion with a very different reading of the statute, one that provides much greater support to copyright owners.  It starts with a video game . . .

World of Warcraft is a multiplayer video game that operates over the internet.  Users purchase software that allows them to play.  They engage in fantasy adventures in which they collect in-game currency, weapons and armor.  As they become more skilled, they advance through as many as 70 skill levels.

Those wishing to advance through these levels and accumulate fantasy rewards without actually playing the game are able to purchase Glider, a software product made by MDY Industries, LLC.   Glider plays the game for them while they are off doing something in the real world.

Players who earned their fantasy booty the hard way were miffed to learn of this practice.  Blizzard, the purveyor of World of Warcraft, responded by banning the use of Glider in its license agreement and by installing Warden, software that inspects the habits of players to detect and banish those using Glider.  MDY Industries responded by offering, on a subscription basis, a premium version of Glider that Warden could not detect.

War broke out in the real world in the form of a lawsuit in which Blizzard alleged that MDY Industries was guilty of copyright infringement and violations of the DMCA.

The appellate court held that Glider neither created nor facilitated copyright infringement.  While Glider users did violate the terms of the Blizzard license, those terms were not related to the protection of Blizzard’s copyright.  Thus, while there may have been a valid claim based upon inducing breach of contract, there was no copyright claim.

As to Blizzard’s DMCA claims, however, the court was much more receptive. If the court had followed the precedent of the Fifth and Federal Circuits, those claims would have been doomed because no copyright infringement was occurring. Warden was not designed to prevent copying, but to protect the integrity of the game experience for other users.

Instead, the Ninth Circuit spurned the Federal Circuit precedent. It held that the DMCA’s proscription is not limited to the circumvention of technological measures intended to thwart copyright infringement.  The DMCA, said the court, creates a new right not previously available to copyright holders:  the right to control access to their works.

Since Warden was a technological measure designed to control access to the World of Warcraft game experience, and since the enhanced version of Glider was specifically designed to thwart Warden, MDY Industries was found to be trafficking in a circumvention device prohibited by the DMCA.

The DMCA was enacted at least in part at the behest of the film industry, which eagerly sought additional protection for the content that it was about to release for the first time in digital format.  The film industry was concerned not only with unauthorized copying of its content, but with its unauthorized use.

It is no surprise, therefore, that the Motion Picture Association of America filed an amicus brief in this case, as did the Business Software Alliance.  The Ninth Circuit’s opinion accepted many of the MPAA’s arguments regarding the DMCA.

The analysis of the Ninth Circuit in this case is clear and compelling, yet it espouses an interpretation of the DMCA that no other court of appeals has accepted, and which two courts have rejected.

The Federal and Fifth Circuits have narrowed the application of the DMCA by reading into it a restriction for which there is little support in the text or legislative history of the Act.  In contrast, the Ninth Circuit has recognized that Congress meant to give greater rights to copyright holders in order to encourage them to pursue content digitization, despite the obviously increased risk of piracy.

Congress did so by providing legal muscle to back the content protection schemes that were then being developed.  To that end, the DMCA bans circumventing those schemes.

At some point this disagreement among the courts of appeals may require the Supreme Court to provide definitive guidance.  In the meanwhile, copyright holders need to be aware of the perilous state of their rights under the DMCA.  If they choose to enforce those rights, they will be well advised to do so in a district where the Ninth Circuit Court of Appeals has appellate jurisdiction.