CoH Lawsuit Dismissed

[DPDarkPrimus]

LOS ANGELES, March 11, 2005—A U.S. district court judge in Los Angeles dismissed several key claims by comic book publisher Marvel Enterprises, Inc in the company’s trademark and copyright infringement case against online computer game publisher NCsoft® Corporation and game developer Cryptic Studios™. Marvel sued NCsoft and Cryptic Studios in November of last year, claiming that the City of Heroes® online computer game allows players to imitate comic book characters owned by Marvel.

In a March 9 order, U.S. District Court Judge R. Gary Klausner agreed with NCsoft that some of Marvel’s allegations and exhibits should be stricken as “false and sham” because certain allegedly infringing works depicted in Marvel’s pleadings were created not by users, but by Marvel itself.

The judge also dismissed more than half of Marvel’s claims against NCsoft and Cryptic Studios, including Marvel’s claims that the defendants directly infringed Marvel’s registered trademarks and are liable for purported infringement of Marvel’s trademarks by City of Heroes’ users. In addition, he dismissed Marvel’s claim for a judicial declaration that defendants are not an online service provider under the Digital Millennium Copyright Act. The judge dismissed all of these claims without leave to amend, meaning that Marvel cannot refile these claims.

Although the judge allowed certain claims to survive the motion to dismiss, NCsoft and Cryptic Studios are pleased with the result and are confident that both the law and the facts will support their case. In fact, citing a 1984 Supreme Court case holding that the sale of video cassette recorders did not violate copyright law, the Court noted that “It is uncontested that Defendants’ game has a substantial non-infringing use. Generally the sale of products with substantial non-infringing uses does not evoke liability for contributory copyright infringement.” Only “where a computer system operator is aware of specific infringing material on the computer system, and fails to remove it, the system operator contributes to infringement,” the Court stated.

The defendants have 10 days in which to answer and dispute Marvel’s allegations and to assert legal defenses to the remaining claims as well as to assert any counterclaims.

Source

[Meest]

Sadly this is still a waste of money for everyone. Hope it didn't cost Cryptic too much and ruin their games future.

[Assassin X]

Thank god. It would have been so sad if they won, imagine all the whiney companies suing starting a mass chain of events!

:Goes and makes a Marvel charecter in all his MMORPG games:

[Joe]

Marvel still has a case...this isn't over yet.

link

In a ruling Wednesday, a US District Court judge dismissed several key claims brought by Marvel, and limited the scope of the suit, and the damages Marvel was seeking against NC Soft and Cryptic Studios, makers of the massively multiplayer online roleplaying game (MMORPG), City of Heroes.

Marvel brought suit against the game publisher and developer on November 10th, 2004, alleging that, among other things, City of Heroes allowed players to create characters that violated Marvel’s copyrights and trademarks. Marvel also claimed several of CoH’s proprietary characters, such as Statesman, were in violation of Marvel copyrights as well.

According to a press release issued by NC Soft, the ruling by Judge R. Gary Klausner “agreed with NCsoft that some of Marvel’s allegations and exhibits should be stricken as ‘false and sham’ because certain allegedly infringing works depicted in Marvel’s pleadings were created not by users, but by Marvel itself.”

That is, according to the defendants, the exhibits used by Marvel to show how easily characters could be created that were similar to Marvel characters were in fact, created by Marvel or its legal team, not characters that actually existed within the game. As the judge agreed, this is an important point, as everyone and their MMORPG-playing mother, since the suit was announced, has tried to create characters that were similar to Marvel characters to see if there was ay weight in the comic company’s argument.

As has been pointed out many times since, creating a character and playing a character in Paragon City (the game's virtual environment) are two very different things, as NC Soft and Cryptic's EULA specifically states that players are forbidden from having their characters resemble or be named after copyrighted characters.

The press release also states:

”The judge also dismissed more than half of Marvel’s claims against NCsoft and Cryptic Studios, including Marvel’s claims that the defendants directly infringed Marvel’s registered trademarks and are liable for purported infringement of Marvel’s trademarks by City of Heroes’ users. In addition, he dismissed Marvel’s claim for a judicial declaration that defendants are not an online service provider under the Digital Millennium Copyright Act. The judge dismissed all of these claims without leave to amend, meaning that Marvel cannot refile these claims."


What was left intact then, includes several of Marvel's copyright claims, which are distinct from the dismissed trademark claims. Specifically, the Judge let stand the claims of direct (by NC Soft and Cryptic) copyright infringement, and contributory (the publisher and developer provided the tools to the players, who then violated Marvel's copyrights). Both claims are still quite serious for both parties, and will be dealt with at a later, to be named, date.

From the NC Soft press release: “Although the judge allowed certain claims to survive the motion to dismiss, NCsoft and Cryptic Studios are pleased with the result and are confident that both the law and the facts will support their case. In fact, citing a 1984 Supreme Court case holding that the sale of video cassette recorders did not violate copyright law, the Court noted that 'It is uncontested that Defendants’ game has a substantial non-infringing use. Generally the sale of products with substantial non-infringing uses does not evoke liability for contributory copyright infringement.' Only 'where a computer system operator is aware of specific infringing material on the computer system, and fails to remove it, the system operator contributes to infringement,' the Court stated.

“The defendants have 10 days in which to answer and dispute Marvel’s allegations and to assert legal defenses to the remaining claims as well as to assert any counterclaims.”

Newsarama has obtained a copy of the Minutes from the Judge's meeting. Boiling it down -

Claims allowed to stand: (again, the judge did not rule in Marvel's favor on these claims, he merely agreed that Marvel did, in fact, have a legitimate claim, as defined by the law and legal precedent)

1) Direct Copyright Infringement - the judge agreed with Marvel, ruling that the plaintiffs are not required to identify the times, similarities or other details of the alleged infringements in their pleading, as the motion to dismiss as filed by the defendants had requested.

2) Contributory Copyright Infringement - the judge also agreed that Marvel had a valid claim in regards to the developer and publisher knowing or should have known that several players were committing a direct infringement of Marvel’s characters.

In terms of how this was spun - the above quote from NC Soft’s press release about “Generally the sale of products with substantial non-infringing uses does not evoke liability for contributory copyright infringement” came from the portion of the judge’s decision wherein he ruled that Marvel’s claim for contributory copyright infringement could stand.

3) Vicarious Copyright Infringement – the judge agreed that Marvel did have a claim in this regard as well, stating that they had sufficiently pled a casual connection between the alleged infringement by game users and a financial benefit to the defendants. That is, the judge agreed that Marvel had a claim when it alleged that people were induced to buy City of Heroes because they could create characters that infringed Marvel copyrights.

4) Direct Infringement of a Common Law Trademark – defendants stated that Marvel failed to plead what mark was allegedly infringed. The judge stated that Marvel did identify the mark that was infringed in their complaint – it was Captain America, and thus the claim is allowed to stand.

5) Intentional Interference with Actual and Prospective Economic Advantage – the judge agreed with Marvel that the defendants knew, or should have known about Marvel’s deal with Activision/Universal, and its copyright infringements have now damaged that relationship. That is, Marvel’s plans for its own MMORPG have been damaged by the copyright infringement alleged by Marvel in CoH. The judge allowed this claim to stand.

Claims Dismissed: (these were dismissed by the judge so that Marvel cannot amend and refile them)

1) Direct Infringement of a Registered Trademark – the judge agreed with NC Soft/Cryptic that “Statesman” by name or appearance, infringed on the trademark of “Captain America.”

2) Contributory Infringement of a Registered Trademark – the judge ruled that as no players are using any characters with alleged copyright infringement in commerce, there is no contributory component by which the defendants would be liable.

3) Vicarious Infringement of Registered Trademark – see above.

4) Contributory Infringement of Common-Law Trademark – Again, related to use of the marks in goods or services, which, the judge ruled, the defendants had not used.

5) Vicarious Infringement of Common-Law Trademark – see above.

6) Declaratory Judgment – Marvel’s claims that the defendants should not be allowed protection under the Digital Millennium Copyright Act do not resolve the controversy between the parties, but merely seek determination of a collateral legal issue governing certain aspects of the dispute. Defendants could use the DMCA as an affirmative defense, and therefore, Marvel cannot seek an advance ruling on it, that is, since the DMCA may be part of the defense, it cannot be thrown out at this point.