IP Law Daily Court puts brakes on sales of ‘Grand Theft Auto’ cheat programs
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Friday, August 17, 2018

Court puts brakes on sales of ‘Grand Theft Auto’ cheat programs

By Thomas Long, J.D.

The developer and publisher of the popular "Grand Theft Auto" video game series has been granted a preliminary injunction by the federal district court in New York City, barring an individual from creating and distributing software used for cheating in and manipulating the game "Grand Theft Auto V" and its multiplayer feature "Grand Theft Auto Online," in violation of the game developer’s copyrights. The court ruled that it had subject-matter jurisdiction over the game developer’s adequately pleaded copyright infringement claims and personal jurisdiction over the individual, who was a Georgia resident but had consented to jurisdiction in New York by agreeing to the terms of the game’s end-user license agreement. The game developer was likely to succeed in showing that the individual infringed its copyrights and that the infringement caused it irreparable harm to its reputation and its revenue model (Take-Two Interactive Software, Inc. v. Zipperer, August 16, 2018, Stanton, L.).

Plaintiff Take-Two Interactive Software, Inc., owned a registered copyright in its "Grand Theft Auto V" game ("GTAV"). Before installing GTAV, users must affirmatively assent to a license agreement under which they agree not to prepare derivative works based on, or to otherwise modify the game software. Defendant David Zipperer created and sold two programs called "Menyoo" and "Absolute," which allowed users of the GTAV multiplayer feature "Grand Theft Auto Online" ("GTAO") to perform unauthorized actions, such as advantaging themselves and interfering with and "griefing" the gameplay of other players. Griefing refers to irritating and harassing online video game players in various ways. According to Take-Two, Zipperer was in breach of the GTAV user license agreement by creating and selling these programs. In addition, Zipperer allegedly infringed Take-Two’s copyrights in the game. Take-Two filed suit against Zipperer, seeking injunctive and monetary relief, and moved for a preliminary injunction. Zipperer opposed the motion and moved to dismiss the complaint on jurisdictional and venue grounds and for failure to state a claim.

Subject-matter jurisdiction. Zipperer argued that the complaint did not properly raise a federal cause of action because it failed adequately to allege that he infringed any of Take-Two’s exclusive rights under Section 106 of the Copyright Act. According to Zipperer, Take-Two’s only right to relief was in breach of contract, a state law claim over which the court lacked jurisdiction. The court disagreed, stating that the complaint adequately stated a claim for copyright infringement. The complaint asserted that Take-Two owned a valid copyright in GTAV, that Zipperer made and sold programs that were alternate and derivative versions of GTAV without Take-Two’s authorization, and that Zipperer kept using GTAV on his computer after breaching the license agreement.

Personal jurisdiction; venue. Zipperer was a resident of Georgia and had few, if any, contacts with New York. However, he consented to the court’s jurisdiction in the GTAV user license agreement that he accepted in order to play the game. The agreement provided that actions related to the agreement would he adjudicated in New York. The agreement was enforceable even though it was in "fine print." Zipperer was presumed to have read, understood, and agreed to the terms of the agreement. The inconvenience to Zipperer of defending himself in New York was not sufficient to render the forum selection provision unreasonable, in the court’s view. In addition, Zipperer agreed to venue in the Southern District of New York in the license agreement, and the court denied his request to transfer the case to the Southern District of Georgia.

Unfair competition. Take-Two asserted a claim for common-law unfair competition based on Zipperer’s alleged interference with the proper operation of GTAV and with the gaming experience of other players, as well as his alleged bad-faith misappropriation of Take-Two’s labor and expenditures. This claim was preempted by Section 301(a) of the Copyright Act. The unfair competition claim was not qualitatively different from the copyright infringement claim, the court said.

Preliminary injunction. Take-Two sought to preliminarily enjoin Zipperer from infringing Take-Two’s copyrights in its video games; creating derivative works based the games; producing or distributing any computer programs that alter the games, including without limitation Menyoo and Absolute; and participating or assisting in any infringing activity.

With respect to Take-Two’s likelihood of success on the merits, the court noted that Take-Two had shown that it held a valid copyright in GTAV. Take-Two also had submitted unrebutted declarations showing that Zipperer infringed its copyright by: (1) creating an alternative version of GTAV based on Take-Two’s GTAV but with added features not available in the original version; and (2) creating unauthorized copies of GTAV when he ran GTAV on his computer after creating the cheat programs, because using GTAV violated the terms of the user license agreement. The court concluded that Take-Two was likely to prevail on its infringement claims.

Turning to the question of irreparable harm, Take-Two asserted that Zipperer’s cheat programs caused it to lose control over its plan for how GTAV’s multiplayer feature GTAO was designed to be played. In addition, the programs allegedly harmed Take-Two’s reputation among video game consumers regarding the integrity of its game systems, and it allegedly undercut Take-Two’s price point by allowing users to get unlimited game "currency" without purchasing it from Take-Two. According to the court, it would be impossible to quantify the reputational harm resulting from the infringement, or to calculate the number of players who stop playing the game because of unpleasant experiences caused by Zipperer’s cheat programs. Nor would it be possible to know how many users bought Zipperer’s software for the purpose of obtaining unlimited game currency without purchasing it from Take-Two. Finally, even if the harm to Take-Two could be redressed monetarily, there was a high risk that Zipperer would not be able to pay the damages owed, as he appeared to be insolvent.

The balance of equities favored Take-Two, the court said. Zipperer did not identify any injury that he would sustain if enjoined, and any harm to him would be a result of his own actions. The public had an interest in enforcing Take-Two’s IP rights. In addition, injunctive relief would serve the interests of game users in playing the game without being affected by players using cheat programs.

Accordingly, the court denied Zipperer’s motion to dismiss the complaint and granted Take-Two’s motion for a preliminary injunction.

This case is No. 1:18-cv-02608-LLS.

Attorneys: Joshua Levicoff Simmons (Kirkland & Ellis LLP) for Take-Two Interactive Software, Inc. Joel Benjamin Rothman (Schneider Rothman Intellectual Property Law Group) for David Zipperer.

Companies: Take-Two Interactive Software, Inc.

MainStory: TopStory Copyright TechnologyInternet NewYorkNews

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