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MDY Industries, LLC v Blizzard Entertainment, Inc.

Case No. 09-15932 (C.A. 9, Dec. 14, 2010)

Blizzard Entertainment, Inc. (“Blizzard”) is the creator of World of Warcraft (“WoW”), a popular multiplayer online role-playing game in which players interact in a virtual world while advancing through the game’s 70 levels. MDY Industries, LLC and its sole member Michael Donnelly (“Donnelly”) (sometimes referred to collectively as “MDY”) developed and sold Glider, a software program that automatically plays the early levels of WoW for players.

MDY brought this action for a declaratory judgment to establish that its Glider sales do not infringe Blizzard’s copyright or other rights, and Blizzard asserted counterclaims under the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201 et seq., and for tortious interference with contract under Arizona law. The district court found MDY and Donnelly liable for secondary copyright infringement, violations of DMCA §§ 1201(a)(2) and (b)(1), and tortious interference with contract. We reverse the district court except as to MDY’s liability for violation of DMCA § 1201(a)(2) and remand for trial on Blizzard’s claim for tortious interference with contract.

A. World of Warcraft

In November 2004, Blizzard created WoW, a “massively multiplayer online role-playing game” in which players interact in a virtual world. WoW has ten million subscribers, of which two and a half million are in North America. The WoW software has two components: (1) the game client software that a player installs on the computer; and (2) the game server software, which the player accesses on a subscription basis by connecting to WoW’s online servers. WoW does not have single-player or offline modes.

WoW players roleplay different characters, such as humans, elves, and dwarves. A player’s central objective is to advance the character through the game’s 70 levels by participating in quests and engaging in battles with monsters. As a player advances, the character collects rewards such as ingame currency, weapons, and armor. WoW’s virtual world has its own economy, in which characters use their virtual currency to buy and sell items directly from each other, through vendors, or using auction houses. Some players also utilize WoW’s chat capabilities to interact with others.


Judge(s): Consuelo Callahan
Jurisdiction: U.S. Court of Appeals, Ninth Circuit
Related Categories: Entertainment
Circuit Court Judge(s)
Consuelo Callahan
William Canby, Jr.
Sandra Ikuta

Trial Court Judge(s)
David Campbell

Plaintiff Lawyer(s) Plaintiff Law Firm(s)
Goseph Meaney Venable Campillo Logan & Meaney PC
Lance Venable Venable Campillo Logan & Meaney PC

Defendant Lawyer(s) Defendant Law Firm(s)
Christian Genetski Sonnenschein Nath & Rosenthal LLP
Shane McGee Sonnenschein Nath & Rosenthal LLP
Jacob Sommer Sonnenschein Nath & Rosenthal LLP

Amicus Lawyer(s) Amicus Law Firm(s)
Steven Metalitz Mitchell Silberberg & Knupp LLP
Robert Rotstein Mitchell Silberberg & Knupp LLP
Matthew Williams Mitchell Silberberg & Knupp LLP
David Almeling O’Melveny & Myers LLP
David Eberhart O’Melveny & Myers LLP
George Riley O’Melveny & Myers LLP
Scott Bain Software & Information Industry Association
Mark Bohannon Software & Information Industry Association
Keith Kupferschmid Software & Information Industry Association
Jef Pearlman Univeristy of California
Brian Carver University of California
Sherwin Siy University of California



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chamberlain also viewed an infringement nexus require- additional game assets. mdy contends that glider has a mini- does not allow a player to avoid paying monthly subscription conclusion that blizzard had not prohibited bots in those doc- in light of the immediately following phrase . . . ." united duced evidence that mdy's motive was its three and a half three operative provisions, 1201(a)(1), 1201(a)(2), and 19985mdy industries v. blizzard entertainment relationship" to the protections that the copyright act affords exclusively fair uses of their material even absent feared foul can be circumvented." see universal city studios v. reimerdes, 111 f. interfered with blizzard's contracts. after blizzard used war- that mdy's interest depends on inducing blizzard's custom- that the statute protects "only successful or efficacious technological if mdy is found liable at trial for tortious interference with contract, wow players own their copies, as mdy contends, then sive rights under the copyright act. in contrast, tou equivalent to any of the exclusive rights [of copyright]." 17 we note that the dmca allows innocent violators to seek reduction copyright act. blizzard contends that warden protects its copyright owner authorizes to circumvent an access control measure, not in protecting mdy's and blizzard's respective interests [3] in vernor v. autodesk, inc., we recently distinguished sion in lexmark international v. static control components, 1201(a)(3)(a) plainly exempts from 1201(a) liability those whom a counterclaims and third-party claims against mdy and don- 12 that this provision does not naturally extend to a fifth, chamberlain stated that an infringement nexus reproduction right against unauthorized copying. we disagree. 20020 mdy industries v. blizzard entertainment ble, equity construes ambiguous contract provisions as cove- den to ban a majority of glider users in september 2005, elements multiplayer online role-playing game" in which players inter- of its operation, require[ ] the application of information, or the transmitter signal necessary to open the door. id. at 1183. relationship; (2) mdy's knowledge of the relationship; (3) 10 legislative history and attorneys' fees. 17 u.s.c. 502-03, 505. third, as amicus software supp. 2d 294, 318 (s.d.n.y. 2000) ("defendants would have the court [4] applying vernor, we hold that wow players are copyright infringement, and dmca violations. we vacate the in addition to these four textual differences, we note that 1201(a)(2) in limiting the owner's right to control ii. empts state laws that confer rights equivalent to the exclusive selling glider. finally, mdy has introduced evidence that of its copyright clause authority rational. id. at 1200. the righted computer programs. id. at 1202-03. the linchpin of 1201(a)(2) and (b)(1) are "not interchangeable": they were logical measure that controlled access to those programs. id. findings of fact for clear error. twentieth century fox, 429 this is logical, because warden was designed to reduce a license agreement, (1) the copying must exceed the scope of resulting damages. see safeway ins. co. v. guerrero, 106 ("donnelly") (sometimes referred to collectively as "mdy") zard to clarify why the install file was infringing, but blizzard eula and tou, or unaware that using glider breached their 14 ment . . . to gain access to the work." for a player to connect ch. dec. 5, 2008); see also restatement (second) of con- gain access to a home containing copyrighted materials. id. library of congress ("library") to identify classes of copy- digital millennium copyright act of 1998: u.s. copyright office sum- breach; (4) the impropriety of mdy's interference; and (5) at 1183. accordingly, plaintiff alleged that the defendant -- wow. the meaning of these contractual terms, including whether they access and (2) revoke access if a secondary check determines bot provisions at issue in this case, tou 4(b)(ii) and (iii), wrote in an email interview, "avoiding detection is rather rate from copyright infringement, for six reasons. relationship between mdy and blizzard mdy industries, llc, termination, players must immediately destroy their copies of 19984 mdy industries v. blizzard entertainment however, if the licensee acts outside the scope of the license, a special reward, and to allow the public access to the products of their failed because its authentication sequence did not effectively secondary copyright infringement claims. we find none. th[is] weakness and try to make it a bad idea or make cumventing device enables third parties to access the copyrighted work technological measure to "control access" but control measure under 1201(a)(2). however, in our view, an excess resources; (2) interferes with wow players' ability to copyright clause gives congress "the task of defining the gaming centers without blizzard's permission. players may plaint must be grounded in an exclusive right of copyright blizzard's claim for tortious interference with contract under determination where defendant allegedly violated a license architects, inc. v. concordia homes, inc., 434 f.3d 1150, 1154-57 (9th 381 f.3d at 1200. both concerns appear to be overstated,14 warden. 16 tries, llc and its sole member michael donnelly non-movant mdy in determining whether there are any genu- 19995mdy industries v. blizzard entertainment liability. of a work only to those with authorized access, but game, such as a visual image of a monster or its audible roar. 1201 is best understood to create two distinct types of of first impression in this circuit. however, we have previ- thus promote the public's right to access by allowing the ducing, distributing, publicly performing, or publicly display- each side shall bear its own costs. berlain. however, its revised opinion, 622 f.3d (5th cir. sept. 20, 2010), it received 465,000 complaints about wow bots, several only install the game client software on their computers. the derivative works. 17 u.s.c. 106. historically speaking, pre- world. contracts, by contrast, generally affect only their par- nant rather than a condition. thus, a glider user who violates fer all original packaging and documentation; (2) permanently infringement nexus requirement, congress arguably would tal formats such as "on-demand" or "pay-per-view," which cumvention under 1201(a) -- descrambling a scrambled gain an advantage over other wow players by advancing circuits have also held that the copyright act does not pre- computer must report portions of wow code running in ram fied by the printer's copyrighted software, that ensured that decision in sony corp. of america v. universal city studios, inc., which like the chamberlain court, we need not and do not reach the rela- [23] mdy's glider sales are the but-for cause of glider demonstrate that the violated term -- tou 4(b) -- is a con- 1635 (5th cir. 2010), embraced the federal circuit's approach in cham- 20027mdy industries v. blizzard entertainment prior to marketing glider, donnelly reviewed blizzard's id. focus of subsection 1201(a)(2) is circumvention of technolo- performing copyrighted music with representations of movie scenes, code. trols when access does not constitute copyright infringement. measure in place that the public is not allowed to circumvent. owners to protect their existing exclusive rights under the our reading of 1201(b) as strengthening copyright owners' cheats. if it detects a bot or cheat, it boots the player from the nexus requirement as necessary for the copyright act to be on the other hand, mdy proffered evidence that it created we review de novo the district court's (1) orders granting district court's decision is vacated and the case is after mdy began selling glider, blizzard launched war- literal elements15 donnelly liable for secondary copyright infringement, viola- respect to these elements. ers who do not accept both the eula and the tou may return c. development of glider and warden 19993mdy industries v. blizzard entertainment impute this lack of symmetry to congress' need to balance game must be used only for non-commercial entertainment we consider whether wow players, including glider users, and individual non-literal elements, because measures that protect the copyright itself: it entitles copyright word with a consistent meaning in a given context." graham county soil intent, in light of the current digital age, to grant copyright tory or vicarious infringement (collectively, "secondary circumvention right in 1201(a) distinct from infringement. [24] whether, in these circumstances, tortious interference the district court, however, ruled for blizzard following ment to blizzard on its secondary copyright infringement work and decrypting an encrypted work -- are acts that do manufacturers' cartridges compatible with plaintiff's printers. and fourth elements are met because blizzard has established 19989mdy industries v. blizzard entertainment access control right independent from copyright infringement, by express- conduct occurs while the player's computer is copying the no clear issue of anti-competitive behavior in this case tortiously interfered with blizzard's contracts. the district qualified to maintain balance between the interests of content because we determine that there are triable issues of fact, we need not, [14] our construction of 1201 is compelled by the four produced, or marketed for, or has limited commercially sig- tiff's gdos -- had trafficked in a technology that was pri- vii. right infringement by using glider in violation of the tou. ing the copyrighted work, or creating derivative works based and loot. accordingly, we plaintiff-counter-defendant- the digital millennium, 1.02 (2009) (stating that the dmca's "protec- ("faq") on mdy's website for glider: the player to connect and play. after blizzard launched war- school of information, and sherwin siy and jef pearlman, for the district court may consider donnelly's personal liability for that tor- explained: warden to access wow's various elements. mdy contends claim under arizona law is not preempted by the copyright v. brog, no. 3751-cc, 2008 del. ch. lexis 183, *9 (del. vivendi games, inc., d.c. no.defendants-third-party-plaintiffs- 2:06-cv-02555- avoids the issue by determining that mge had not shown circumvention architectural plans for project outside the license's scope, where licensee's 4. the federal circuit's decisions d. construction of 1201 ("tortious interference") under arizona law and held that hence subject to the limitations in, dmca 1201(a)(1).8 receives the key to the lock, it does not make sense ary 2009 bench trial, the district court held mdy liable under rized access of copyrighted material when it infringes upon a infringement, violation of dmca 1201(a)(2) and (b)(1), 2004); storage tech. corp. v. custom hardware eng'g con- infringement, including fair use, under this title." the cham- v. dition rather than a covenant. sun i, 188 f.3d at 1122. bliz- 878, 884-85 (d.c. cir. 1989) (the audiovisual display of a scope of the limited monopoly that should be granted to 20018 mdy industries v. blizzard entertainment the eldred decision, however, was quoting the supreme court's previous the district court granted mdy partial summary judgment just as one would not say that a lock on the back thus, by late 2005, mdy was aware that blizzard was pro- donnelly is a wow player and software programmer. in protected under title 17, i.e., copyrighted works. 1201(a)(1)(a) prohibits "circumvent[ing] a technological ferently. room in order to read or view a copyrighted work would not because blizzard does not seek to put a direct competitor who machine." 17 u.s.c. 117(a)(1). 11 requirement might be necessary to render congress's exercise "[n]o person shall manufacture, import, offer to the public, accordingly, the federal circuit held that a dmca accordingly, we reject the imposition of an infringement corp. v. clear logic, inc., 424 f.3d 1079, 1089-90 (9th cir. faq. it added a subscription service, glider elite, which under the dmca only for violation of 1201(a)(2) with claims. first, 1201(a) prohibits the circumvention of any prohibit even non-infringing circumvention and trafficking in tion of copyright owners' technological measures. the access but leaves another route wide open. (9th cir. 2005); laws v. sony music entm't, inc., 448 f.3d is copyright infringement. this would allow software copy- that circumvent rights controls necessarily facilitate sandra s. ikuta, circuit judges. designed to protect the traditional copyright rights of the a. world of warcraft protect access to a copyrighted work," while 1201(b)(1) "is 1396, (2010) (quoting erlenbaugh v. united states, 409 u.s. 239, 243 tively," 17 u.s.c. 1201(a)(2), and it seems clear dence that glider allows players with limited motor skills to glider is an innovative, profitable software program that has to recover for tortious interference under arizona law, or denying summary judgment; (2) conclusions of law after a quire[ ] the application of information, or a process or a treat- f.3d 1211, 1214 (9th cir. 2010), we also note that the legisla- first demonstrate direct infringement. see a&m records, inc. pendently warrant a grant of summary judgment to blizzard. first, chamberlain reasoned that congress enacted the through vendors, or using auction houses. some players also vide some degree of control over access to a copyrighted work. as one displaying, performing or distributing the work, then weapon against copyright infringement in 1201(b)(1). for [21] blizzard may prevail under 1201(b)(1) only if war- court permanently enjoined mdy from distributing glider. add a non-textual element to the statute. see in re dumont, trol measure, in exchange for direct or indirect payment. june 7, 2010--seattle, washington under 106. the first provision, 17 u.s.c. 1201(a)(1)(a), is a general vored because they tend to work forfeitures. aes, 429 f. 19987mdy industries v. blizzard entertainment donnelly was personally liable for mdy's tortious interfer- infringement") of blizzard's copyright by selling glider to of congress to create exceptions to the 1201(a) anti- copy of the book, but read the last ten pages, the commerce committee explained: grounded in blizzard's exclusive rights of copyright and other of an infringement nexus. as 1201(a) creates a distinct [7] "a copyright owner who grants a nonexclusive, limited able, campillo, logan & meaney, p.c., for plaintiff- implicates one of the licensor's exclusive statutory rights. see, sures used by copyright owners. see universal city studios, reading of 1201: that section (a) creates a new anti- eral elements. the district court reasoned that warden does v. no. 09-16044 ganadera de cananea, s.a., 385 p.2d 691, 697-98 (ariz. 1963). respect to these two most important factors. blizzard's evi- 421 f.3d 1307, 1315-16 (fed. cir. 2005). contractual rights, that it satisfies the other elements of contributory and vicari- ence. we review the district court's grant of summary judg- a. elements of blizzard's tortious interference claim thousand of which named glider. blizzard spends $940,000 of, blizzard's copyrights in wow software." here, wow players do not commit copy- rights of copyright, the copyright act does not preempt its 20014 mdy industries v. blizzard entertainment 2009). we view the evidence in the light most favorable to infringe any of blizzard's exclusive rights. for instance, the s. rep. no. 105-90, at 11 (1998). this difference reinforces assessment techs. of wi, llc v. wiredata, inc., 350 f.3d licensees of wow's game client software. blizzard reserves 20010 mdy industries v. blizzard entertainment exclusive rights under 106. put differently, descrambling & information industry association highlights, copyright law allows looks for patterns of code associated with known bots or monthly subscription fees from glider users, who were able is to break into houses. pating in quests and engaging in battles with monsters. as a district court also ruled for mdy following trial as to bliz- of "cheats" and "unauthorized third-party software" in connection with excludes bots. it contends, as the district court determined, robot) that automates play of wow's early levels, for his per- provisions have little, if anything, to do with copyright law. the anti- these factors favor blizzard, we do not think that they inde- (emphasis added). however, use the term "work protected under this title." nei- considerations to support its reading of 1201(a). as a right.6 cir. 2006) (licensor likely to prove infringement where licensee used out the authority of the copyright owner." 17 u.s.c. display of the plans); frank music corp. v. metro-goldwyn-mayer, inc., rights. donnelly removed the screenshots and requested bliz- chamberlain. see also s.o.s., 886 f.2d at 1089 (remanding for infringement determi- 20008 mdy industries v. blizzard entertainment 1201(b)(1)'s prohibition is thus aimed at circumventions of but a movie on a pay-per-view basis). to operate in this detects that a bot is running, such as glider, it will not allow for instance, pursuant to 1201(a), the library of congress recently circumvention-proof. rather, it requires an access control measure to pro- access control measure, whereas 1201(b) prohibits traffick- to mdy's liability for violation of dmca 1201(a)(2) and dmca to balance the interests of copyright owners and infor- f.3d 516, 520 (9th cir. 1997). since we have held that 1201(a) creates authorize mdy to sell glider to its users. even accepting that amicus curiae public knowledge. (3) transfer only to a recipient who accepts the eula. a in order to gain access is prohibited."). 1201(a)(3)(a) (emphasis added). a circuit split exists with respect to the a.r.s. 23-1501. the seven factors are (1) the nature of game, which halts the computer's copying of copyrighted district court's holding that mdy did not violate dmca was concerned that, without an infringement nexus require- before: william c. canby, jr., consuelo m. callahan and wow's literal elements and individual non-literal elements, david g. campbell, district judge, presiding wow players can access the literal elements without connect- offers a competing role-playing game out of business and the text." (quoting bhd. of r.r. trainmen v. balt. & ohio r.r., in september 2005, blizzard launched warden, a technol- helena, inc. v. unsworth, 556 f.3d 1021, 1027 (9th cir. use: (1) distorts wow's virtual economy by flooding it with "essential step" defense provides that the player does not ambiguous contract provisions is a jury question. see clark v. compania to wow by auto-playing the game for them. judgment to blizzard.22 copy of the game's software in the computer's random access iii. place that the public was not allowed to circumvent. if not remedies and defenses." 381 f.3d at 1200. this per- two components have the same purpose: to prevent players gress's creation of a mechanism in 1201(a)(1)(b)-(d) to 331 u.s. 519, 528--29 (1947))). although tou 4 is titled, because of the distinct nexus between payment and all commercial copy- ficking in circumventing technology had a "reasonable e.g., sun i, 118 f.3d at 1121-22 (remanding for infringement negatively affected by mdy's glider sales, because glider ties; strangers may do as they please, so contracts do not mdy responded by modifying glider to avoid detection and where you want to kill things, and when you want to e. blizzard's 1201(a)(2) claim new anti-circumvention right and antitrust law. den's scan.dll and resident components together because the market; rather, mdy's profits appear to depend on the contin- provisions v. i.n.s., 358 f.3d 1161, 1170 (9th cir. 2004) (we analyze the cheats, bots, "mods," and/or hacks, or any other tractual rights that are not equivalent to any of its exclusive 20006 mdy industries v. blizzard entertainment access controls in ways that facilitate infringement create a coherent regulatory scheme"). mdy added these features only after blizzard added warden this case, however, they would not persuade us to adopt an bility, a mechanism that would be unnecessary if an infringe- right infringement. id. at 1120. we refer to all other license while playing the game by harassing another player with measure that effectively controls access to a work protected 21 pt. 2, at 23-24. because on the current record, taking the facts in the light p.3d 102, 1025 (ariz. 2005); see also antwerp diamond by use of a password, it would violate 1201(a)(2)(a) 20007mdy industries v. blizzard entertainment make sure that they are compensated for valuable non- unsuccessful. on april 29, 2009, mdy timely filed this found: materials. 381 f.3d at 1201. in addition, the federal circuit openers ("gdos") with a "rolling code" security system that tent with federal copyright law and policy. foad consulting address copyright misuse in this case. of derivative works). 17 u.s.c. 301(a). however, the copy- "limitations on your use of the service," nothing in that sec- aig life ins., 290 f.3d 1121, 1124 (9th cir. 2002); twentieth monster. liable for copyright infringement because the copy- rights to" wow. because we conclude that mdy is not liable under blizzard satisfies four of these five elements based on ceased selling glider and remitted all profits to blizzard. sary to prevent "absurd and disastrous results," such as the the game and uninstall the game client from their computers, infringement of a copyright owner's traditional exclusive are owners or licensees of their copies of wow software. if 17 with mdy's and donnelly's 1201(b)(1) liability. v. napster, inc., 239 f.3d 1004, 1019, 1022 (9th cir. 2001). authentication sequence thus blocked only one form of access: under 1201(a)(2), but not under 1201(b). injunction. to the roar a particular monster makes within the 1201(b)(1) for glider's circumvention of warden.20 alia, the defendant's universal gdo transmitters did not rights of copyright under 17 u.s.c. 106 (i.e., reproduction, this term as extending a new form of protection, i.e., the right zard has demonstrated that it did not authorize mdy to circumvent 4 ity, we also vacate in toto the district court's permanent injunction against interact with other human players in the virtual world; and (3) there are outstanding issues of material fact.23 on the copyrighted work. controlled access to these elements, which could not be that warden detects or prevents such allegedly infringing copy- distribution, public display, public performance, and creation avoiding or bypassing its detection features, and that mdy to reach wow's highest levels in fewer weeks than players iphone and similar wireless phone handsets known as "smartphones," in different worlds, hearing their sounds, viewing their struc- 1201(b), which does not contain an analogous prohibition tionships by reducing the time that they spend playing wow, the licensor may sue for copyright infringement. id. (citing warden has two components. the first is a software mod- ously addressed a similar tortious interference cause of action software code into ram in order for it to run, the violation not. because all defendants who traffic in devices laser printers equipped with an authentication sequence, veri- liability under 1201(a)(1) whether they infringe or tive access control measure. to "effectively control access to 400,000+ discrete visual and audible components of the 1201(a) created a new cause of action linked to copyright establish that its glider sales do not infringe blizzard's copy- effectively protect "a right of a copyright owner." section ferent rights with different elements. city of new york, 551 u.s. 193, 197 (2007)). section ported by legislative history) indicates that congress created at 455 (antitrust); assessment techs., 350 f.3d at 647 (copy- those whom a copyright owner authorizes to access the work. corley, 273 model, where the work is effectively "borrowed" by see procd, inc. v. zeidenberg, 86 f.3d 1447, ments: that is, the "real-time experience of traveling through on april 1, 2009, the district court entered judgment of a device designed to circumvent the measure lies that the defendant did not violate 1201(a)(2) because, inter u.s.c. 301(b)(3). plain language of the statute. in addition, the federal circuit the game client for a refund. does not apply to violations of 1201(a)(1). u.s. copyright office, the circumvention provisions (and the accompanying penalty provisions for their authorized copying into ram. den's second component is a "resident" component that runs ers. blizzard introduced evidence that it may have lost third-party-defendant-appellant. advance quickly and unfairly through the game and to amass appeal. on may 12, 2009, blizzard timely cross-appealed the 1201(a)(2). id. at 1185. the plaintiff alleged that its gdos 772 f.2d 505, 511 (9th cir. 1985) (hotel infringed copyright by publicly generating an authentication sequence that rendered other 1201(a) as granting copyright owners a new anti- dynamic non-literal elements against copying. we conclude the ability to make use of the printer. however, it left intact that denies the copyright holder the right to enforce its copyright during ram while playing the game, blizzard's eula and tou the trick here is that blizzard has a finite amount of 19988 mdy industries v. blizzard entertainment & water conservation dist. v. united states ex rel. wilson, 130 s. ct. players with a particular role-playing game experience that 2 2001). order to allow users to install and run third-party software applications on code into ram. right infringement. id.; see also storage tech., 421 f.3d 1307 accessed without connecting to blizzard's servers. it also it would "limit the application of the statute to access control measures and transmitters both contained copyrighted computer pro- parties have not argued this issue. if a 1201(a)(2) defendant from connecting to the wow servers. blizzard used warden not liable for secondary copyright infringement and is liable are triable issues of material fact, we vacate and remand for circumvention right distinct from copyright infringement, these elements: the ability to access them while connected to cerns do not authorize us to override congressional intent and license. alternatively, if the licensee made a single "we begin, as always, with the text of the statute." hawaii 1. text of the operative provisions sented by copyright enforcement in the digital age. id. the the scope of her license and violate one of blizzard's exclu- lated 1201(a)(2) and (b)(1). work, as such"). aftermarket monopolies, in tension with antitrust law and the we also consider the legislative history in order to address the systems, inc. v. ge consumer and industrial, inc., 95 u.s.p.q.2d 1632, 1201(b)(1)'s language -- "right of a copyright owner under accordingly, we hold that blizzard's tortious interference infringement nexus requirement. thus, even accepting the ceived tension is relieved by our recognition that 1201(a) intention to act or refrain from acting in a particular way, such strate that the circumventing technology infringes or facili- actual damages and the infringer's actual profits, or statutory damages of sive rights created by 106, or defenses to those rights such 551, at 26 (1998)). second, chamberlain feared that copy- to say that this provision of the dmca applies to use may have included unauthorized reproduction, distribution, and public creates a genuine issue of material fact that precludes an 1201(b). defendants who use such devices may be ing wow while violating a tou term that is a license condi- technological measure." in our view, these terms have the same meaning, or remittance of damages. see 17 u.s.c. 1203(c)(5). plaintiff-counter-defendant- stipulated that donnelly would be personally liable for the interest that mdy seeks to advance; the social interest we also agree with the district court that there are no genuine issues to "circumvent a technological measure" under 1201(a) means to connecting to wow's online servers. wow does not have ability to control glider users' putatively infringing activity its trafficking in devices that facilitate circumvention of 387 f.3d 522 (6th cir. 2004). in lexmark, the plaintiff sold ments, so no new prohibition was necessary. from piracy. validity of the concerns expressed in chamberlain, those con- significant textual differences between 1201(a) and (b). mdy is thus not liable for secondary copyright infringement, omitted). were we to hold otherwise, blizzard -- or any software trump the statute's plain text and structure. gallegos, 613 7 b. copyright act preemption our reading of 1201(a) and (b) ensures that neither sec- memory ("ram"), a form of temporary memory used by wise to avoid, bypass, remove, deactivate, or impair a technological mea- right holder . . . [where the] exclusive rights never implicated access to the copyright infringement and granted copyright owners a new 1201(a)(2) and (b)(1) with respect to three wow compo- humans, elves, and dwarves. a player's central objective is to motivate the creative activity of authors and inventors by the provision of 2005). in so holding, we relied on the seventh circuit's analy- copyright act, it "would clearly affect rights and limitations, playing manually. donnelly acknowledged in a november order for the user to continue accessing the work: the user's detection code to find glider, since glider's negative blizzard entertainment, inc. and d.c. no. ware are covenants rather than copyright-enforceable condi- ued popularity of wow. blizzard, however, chose not to "activities violating legal or equitable rights that are not vi. 20000 mdy industries v. blizzard entertainment ther of these two subsections explicitly refers to traditional restricting access.7 mal effect on non-glider players, enhances the wow experi- antitrust law, we will then consider the interplay between this ogy that circumvents a technological measure that "effec- 20026 mdy industries v. blizzard entertainment its dmca anti-circumvention right in a manner that violates movies or music available online, protected by an access con- vention itself because such conduct was already outlawed as u.s.c. 1201 et seq., and for tortious interference with con- med. ass'n, 121 f.3d 516, 520 (9th cir. 1997). the remedy online service, so a player agrees to it both when creating an enforces this new prohibition on conduct. the copy- marketed glider for use in circumventing warden. that facilitate infringement. sections 1201(a)(1) and (a)(2), against the circumvention of protective technological mea- vention conduct in 1201(a)(1). the prohibition in tech. corp. v. custom hardware eng'g & consulting, inc., ous infringement. lance c. venable (argued) and joseph r. meaney of ven- but need not return the software to blizzard. 18 blizzard must prove: (1) the existence of a valid contractual to ban most glider users in september 2005. blizzard claims advance the character through the game's 70 levels by partici- 19997mdy industries v. blizzard entertainment during software use as copyright infringement, by purporting license ordinarily waives the right to sue licensees for copy- blizzard. tional exclusive rights of a copyright owner. it follows that client software's individual non-literal elements: the mittee "endeavored to specify, with as much clarity as possi- 2. wow's dynamic non-literal elements we address the nature and interrelationship of the various pro- achieved that balance. id. at 1196 (citing h.r. rep. no. 105- the title introduces any ambiguity, under delaware law, tou e. pre-litigation contact between mdy and blizzard 1201(a)(3)(b). both of warden's two components "re- inc. v. skylink techs., inc., 381 f.3d 1178, 1203 (fed. cir. work, but is designed to prevent that work from this covenant does not infringe by continuing to copy code ers' compliance with tou 4's restrictions. to the extent that ing to sell glider. again, the parties' differing evidence perhaps for this reason, congress did not list descrambling and decryp- visions of 1201 in the overall context of the copyright act. copyright, the copyright act's preemption clause usually the user's ability to transfer the software; and (3) imposes for copyright misuse is to deny the copyright holder the right note that bypassing a password and breaking into a locked ers to breach their contracts. in contrast, mdy argues that and decrypting do not necessarily result in someone's repro- environment, content providers will need both the when you return, you'll have a lot more experience agree that when playing wow, a player's computer creates a right or other rights, and blizzard asserted counterclaims that warden does not effectively protect any of blizzard's that warden's scan.dll and resident components are separate, affirm the district court's entry of a permanent injunction annually to respond to these complaints, and the parties have circumvention of effective technological access controls.9 dues to blizzard, and has no commercial use independent of claims. accordingly, we must also vacate the portion of the nificant use other than (4) circumventing a technological mea- ment for non-glider players by enabling glider users to and defenses." id. on the keyboard. you tell it about your character, terms. in fact, after blizzard first attempted to ban glider congress's intent to address distinct concerns by creating dif- affect rights, remedies, limitations, or defenses to copyright knowingly assisted glider users to breach their contracts, and ing.19 right act. moreover, 1201(a)(1)(b)-(d) allows the library finally, defendants whose circumvention devices do infringe by making a copy of the computer program where the no. 09-15932blizzard entertainment, inc. and information from or through the program or service. glider in 2005, when blizzard's tou did not explicitly pro- uine issues of material fact that warrant a remand for trial on blizzard's tection measure put in place by a copyright owner to control in vernor, we held "that a software user is a licensee rather ments. first, warden does not control access to wow's literal the federal circuit rejected the plaintiff's claim, holding aging copyright owners to make their works available in digi- we to use the licensed work while failing to make required payments, even 20012 mdy industries v. blizzard entertainment tion is also quite different from the traditional exclusive rights of the copy- appellant/cross-appellee mdy industries llc and plaintiff- than an owner of a copy where the copyright owner (1) speci- [2] as a copyright owner, blizzard possesses the exclusive understood 1201 to create the following regime: we begin by considering the scope of dmca 1201's ing claims available to copyright owners." h.r. rep. no. 105-551 (1998), ter alleging that mdy's website hosted wow screenshots and right licenses, not just those concerning software. failed to recognize the rationale for the statutory construction though a failure to make payments otherwise lacks a nexus to the licen- up to $150,000 per work. 17 u.s.c. 504; see frank music corp. v. gies designed to prevent access to a work"). second, and in by enabling glider users to avoid warden's interruption of ii. additional interpretive considerations congress enacted the dmca in 1998 to conform united filed december 14, 2010 ing to a game server and encountering warden; they need id. at 12. the house judiciary committee similarly states of tracts 2 (1981). a condition precedent is an act or event that dios inc. v. grokster, ltd., 545 u.s. 913, 930 (2005). mdy 20004 mdy industries v. blizzard entertainment mdy's conduct, (2) mdy's motive, (3) blizzard's interests accompanying visual representations). provisions of 1201 prohibit circumvention of access con- from engaging in contributory or vicarious copyright infringement and we read this legislative history as confirming congress's ing in circumventing devices, but does not prohibit circum- ferences in structure between 1201(a) and (b) as reflecting to enforce its copyright during the period of misuse. since and only scan.dll should be considered as a potential access of 1201. chamberlain, 381 f.3d at 1199 n.14. mdy has not claimed that or otherwise reproducing copyrighted wow material. circumvention right in the public's interest. if greater protec- late any of blizzard's exclusive rights of copyright. the anti- of action against those who traffic in circumventing devices running. as explained in the frequently asked questions indeed, the house commerce committee proposed, albeit unsuccess- [22] second, although wow players can theoretically appellee, id. if glider users directly infringe, mdy does not dispute glider enhances some players' experience of the game, del. 2006) (citing delaware state law); see also restatement nents. first, the district court considered the game client soft- to the public by putting an effective access control measure in that mdy did not violate dmca 1201(a)(2) with respect to purchase a certain number of uses, or viewers watch use. id. at 1201. third, chamberlain feared that 1201(a) authors . . . in order to give the public appropriate access to right act does not preempt state law remedies with respect to against mdy to prevent future 1201(a)(2) violations. ation of derivative works based on wow without blizzard's we turn to consider whether glider violates dmca 13 the district court found that donnelly was personally liable nexus to infringement, we would deprive copyright owners of expressed by the federal circuit in chamberlain, we are threshold matter, we stress that such considerations cannot the parties dispute glider's impact on the wow experi- program's literal code. id. the sixth circuit explained: donnelly from "infringing, or contributing to the infringement 20005mdy industries v. blizzard entertainment something else, like eat dinner or go to a movie, and for five dollars a month. 23 of o'melveny & myers llp, for amicus curiae business means to do so, as long as the primary purpose of the with which mdy interfered, (4) the interests mdy sought to detected glider. as of september 2008, mdy had gross reve- decrypt an encrypted work, or otherwise to avoid, bypass, transmitters for use with plaintiff's gdos, under 19994 mdy industries v. blizzard entertainment internally consistent. it reasoned that 1201(c)(1), enacted images or the recorded sounds within the game client that a player installs on the computer; and (2) the game server (7) the relations between mdy and blizzard. id. a court creates a new anti-circumvention right distinct from the tradi- ine issues of material fact. id. because we conclude that there 1335-36 (9th cir. 1995); wall data, inc. v. los angeles 1201(a)(2) and (b)(1) by allowing users to circumvent 20017mdy industries v. blizzard entertainment 19998 mdy industries v. blizzard entertainment strains blizzard's servers because bots spend more continuous at 1192-93. thus, it held that 1201(a) did not grant copy- a distinct anti-circumvention right under 1201(a) without an there is a genuine issue of material fact as to these factors. glider has no function other than to facilitate the playing of including players who might otherwise not play wow at all. required, congress can provide such protection by amending righted work. see, e.g., atari games corp. v. oman, 888 f.2d rights under the copyright act, and mdy is not liable under 460 (2006)). in november 2004, blizzard created wow, a "massively remand for trial on blizzard's claim for tortious interference bution, public performance, public display, and creation of exempt certain non-infringing behavior from 1201(a)(1) lia- 1201(a) does not limit the traditional framework of exclu- same amount if found personally liable at trial. after a janu- against copyright infringement.10 finally, the chamberlain court viewed an infringement not facilitate infringement are not subject to 1201 zard immediately used warden to ban most glider users. ram while playing, and mdy is not secondarily liable for [19] we conclude that mdy meets each of the six textual right infringement, and it may sue only for breach of con- impracticable consequences, the words employed are to be 640, 647 (7th cir. 2003) (copyright misuse)). fourth, cham- first, 1201(a)(2) prohibits the circumvention of a measure owner, to gain access to the work." 17 u.s.c. arizona law. accordingly, on remand, the district court shall copyright owners. id. at 1202-03. the federal circuit bench trial; and (3) interpretations of state law. padfield v. 19990 mdy industries v. blizzard entertainment necessarily an infringement of a copyright owner's traditional county sheriff's dep't, 447 f.3d 769, 784-85 (9th cir. 2006). appeal from the united states district court tion. to establish copyright infringement, then, blizzard must contrast to 1201(a), 1201(b)(1) prohibits trafficking in 5. we decline to adopt an infringement nexus requirement own their copies of the software, glider users may not claim hibit bots.21 hibiting bots. mdy modified its website to indicate that using late the contractual covenants with blizzard, it would not vio- descrambling or decrypting only enables someone to mary judgment, finding that mdy's glider sales contribu- requires the measure to control that access "effec- copyright act as set forth in 106 of the copyright act. id. wow. the sixth element is met because, as the district court 325 a.2d 383, 386 (del. ch. 1974). however, if the contract 20 mdy's efforts to stay injunctive relief pending appeal were then helped to conceal those breaches from blizzard. bliz- automatically to a higher level of the game. thus, mdy hold protection precisely where protection is essential."). v. [c]onsider a license in which the copyright owner defendant trafficked in a device that did not facilitate copy- we now review the deci- must occur before a duty to perform a promise arises. aes supp. 2d 1085, 1096 (n.d. cal. 2004) (same). a. essential step defense [9] a glider user commits copyright infringement by play- cal measure" means "to descramble a scrambled work, to dmca 1201(a)(2) and (b)(1). it also held donnelly per- interpreted according to delaware law. accordingly, we first sun microsystems, inc. v. microsoft corp., 81 f. supp. 2d berlain court opined that if 1201(a) creates liability for argued and submitted (1972)) (internal quotation marks omitted). 20003mdy industries v. blizzard entertainment 20002 mdy industries v. blizzard entertainment loading itself until after scan.dll completed its check. war- unlawful. the device limitation on 1201(a)(2) measures in particular situations where it concludes that the construe them under delaware law, and then evaluate whether by selling gdo transmitters that were compatible with plain- currency to buy and sell items directly from each other, the important enforcement tool that congress granted them to protected work and grants copyright owners the right to ditions. we conclude that since blizzard seeks to enforce con- in sum, we conclude that a fair reading of the statute (sup- technological measure that restricts one form of of an enactment is clear or, in modern parlance, plain, and rized third-party software, including bots, from connecting to ogy that it developed to prevent its players who use unautho- no triable issues of material fact as to the fourth element of in a future case claims that a plaintiff is attempting to enforce strate a nexus to infringement -- i.e., that the defendant's traf- ban bots at the time that mdy created glider, the fact-finder appellants, opinion 17 u.s.c. 106; see also jay dratler, cyberlaw: intellectual prop. in with contract. under both 1201(a) and (b). nonetheless, we read the dif- indeed, copyright ownership and violation of one of its exclusive the intersection of copyright and contract law." id. at 1122. ingly, we too leave open the question whether fair use might serve as an would not say that a lock on any door of a house ning at all, it's a violation to use them." following mdy's [11] here, tou 4 contains certain restrictions that are id. at 547. ther note that, if the fact-finder decides that blizzard did not risk banning or crashing innocent customers. without encountering the authentication sequence. id. the existence of dmca liability for disabling a burglary alarm to [10] applying these principles, tou 4(b)(ii) and (iii)'s individual non-literal elements, warden does not effectively given the presumption that a "legislative body generally uses a particular the chamberlain court reasoned that if 1201(a) creates iv. utes as a whole. thus, the [term to be construed] must be read 1201(a)(2). conversely, if an effective technologi- glider users do not infringe by reproducing wow software in united states court of appeals 20022 mdy industries v. blizzard entertainment player's knowledge or permission, and may terminate the because the district court entered a permanent injunction based on glider use is a "fair use" of wow's dynamic non-literal elements. accord- printers. id. at 530. the defendant sold microchips capable of blizzard claims that from december 2004 to march 2008, for the district of arizona the defendant's license and (2) the copyright owner's com- id. (citing eastman, 504 u.s. commit copyright infringement because glider does not genius after the limited period of exclusive control has expired."). to this the fact that the dmca not only requires the copyright or other rights. in february 2007, blizzard filed marily used for the circumvention of a technological measure promoting its new anti-detection features on its website's you agree that you will not . . . (ii) create or use 1201(a)(2) action was foreclosed to the extent that the user license agreement ("eula") and terms of use consistent with this opinion. customers used the gdos' transmitters to send the changing under california law and found it not preempted. see altera that 1201(a)(1)(a) prohibits circumventing an effective work" does not require that an access control measure be strong or while section (b) strengthens the traditional prohibition tiff to show that the accused device enables third parties to access the copyright misuse is an equitable defense to copyright infringement though we need no further evidence of congress's intent, [13] for the reasons set forth below, we believe that that construction is consistent with federal copyright law and tinct classes of devices," and "many devices will be subject "designed to protect two distinct rights and to target two dis- software, which the player accesses on a subscription basis by grants a person the right to make one and only one 20025mdy industries v. blizzard entertainment improper. to determine whether a defendant's conduct was [8] we refer to contractual terms that limit a license's under contract law. id. we distinguish between conditions and tions" were covenants because the license was not specifically [6] since wow players, including glider users, do not sis in procd, 86 f.3d 1447, which explained that because infringement nexus requirement. chamberlain feared that warden does not effectively control access to these wow ele- prohibits the circumvention of "a technological measure," and their computers copy wow software into ram, the players thus satisfying the requirement of 1201(a)(2)(c).16 u.s.c. 117(a). as to the scope of the license, tou 4(b), we thus reverse the district court's grant of summary judg- ule called "scan.dll," which scans a computer's ram prior to in summer 2005, donnelly began selling glider through fied version of software programs without licensor's authorization); lgs nation where licensee exceeded the license's scope by preparing a modi- grams and that its rolling code security system was a techno- 20013mdy industries v. blizzard entertainment opinion prohibitions against bots and unauthorized third-party soft- requirement on a 1201(a)(2) plaintiff: to show that the defendant's cir- donnelly, though the district court may consider the propriety of an reconsider the issue of donnelly's personal liability.24 lization of the computer program in conjunction with a (e.g., unlawful reproduction or distribution). see storage software has two components: (1) the game client software player advances, the character collects rewards such as in- under the digital millennium copyright act ("dmca"), 17 hold that mdy is liable under 1201(a)(2) with respect to violates the covenants with blizzard, but does not thereby vivendi games, inc., 2:06-cv-02555- righted works for which "noninfringing uses by persons who ence for glider users, and facilitates disabled players' access though descrambling and decrypting devices may only enable nexus between the condition and the licensor's exclusive right misuse)). concerning antitrust law, we note that there is for publication that we have proffered. also, its approach is based on policy right to appropriately access copyright works during the copyright term, this . . . is the reason there is no prohibition on con- "descramble a scrambled work, to decrypt an encrypted work, or other- exch. of am., inc. v. better bus. bur. of maricopa county, developed and sold glider, a software program that automati- of material fact on blizzard's 1201(a)(2) claim regarding wow's literal 381 f.3d at 1200, cited eldred v. ashcroft, 537 u.s. 186, 204-05 (2003). held, wow's dynamic non-literal elements constitute a copy- "the heading of a section cannot limit the plain meaning of the stipulated that glider is the principal bot used by wow play- copyright infringement. which two and a half million are in north america. the wow our conclusion is in accord with the sixth circuit's deci- the copyright owner." accordingly, warden effectively con- unsolicited instant messages. although this conduct may vio- technological measure that effectively controls access to a and tortious interference with contract. [25] this action concerns the anti-bot provisions of tou game. or the user may call up a virtual image of that for mdy's tortious interference with contract, secondary 1201(b)(1), we vacate the aspect of the permanent injunction dealing and allows users who work long hours to play wow. we fur- ket monopolies, in potential violation of antitrust law and the defendants-third-party-plaintiffs- dgc 19991mdy industries v. blizzard entertainment should give greatest weight to the first two factors. id. we the fifth circuit in its subsequently withdrawn opinion in mge ups den, its technology designed to prevent players who used bots approved circumvention of the technological measures contained on the zard's anti-bot detection attempts financially prohibitive: see also wagonseller v. scottsdale mem'l hosp., 710 p.2d aes, 429 f. supp. 2d at 717 (citing 17 am. jur. 2d contracts the chamberlain court's analysis is its conclusion that dmca 1102, 1108-09 (9th cir. 2010; see also mai sys. corp. v. as to blizzard's 1201(a)(2) claim with respect to wow's lit- glider does not alter or copy wow's game client software, to answer this question and others presented by this appeal, title in the software and grants players a non-exclusive, lim- motive) that the arizona courts deem most important. player may not sell or give away the account. v. 1212, (9th cir. 2010) ("[h]eadings and titles are not meant to nexus requirement. we now consider whether mdy has vio- create `exclusive rights.' "). the fourth, fifth, and eighth does not violate dmca 1201(a)(2) with respect to wow's between blizzard and its customers based on the operative role-playing game in which players interact in a virtual world infringe or facilitate infringement of the plaintiff's copy- fies that the user is granted a license; (2) significantly restricts blizzard entertainment, inc. ("blizzard") is the creator of as fair use.12 of action and blizzard's contractual interests, (6) the proxim- by contrast, if the player owns the copy of the software, the non-literal elements, reasoning that these elements could also michael donnelly, taking this evidence in the light most favorable to mdy, access to a copyrighted work is the electronic equivalent of to moderate the new anti-circumvention right created by, and remanded to the district court for further proceedings 893 f.2d 1488, 1501 (5th cir. 1990); acorn structures, inc. eula and tou. second, mdy was aware of this relation- 546. rather, the mere purchase of one of plaintiff's printers mark, warden leaves open the ability to access these elements the district court assessed whether mdy violated dmca necessary to create an anti-circumvention right that truly affirmative defense to a prima facie violation of 1201. id. by the breach. see 24 richard a. lord, williston on contracts 65:1 (4th 3. proximity of mdy's conduct to the interference; fourth, in 1201(a)(1)(b)-(d), congress directs the effect on the game is debatable . . . . [w]e attack language of the statute. moreover, there is significant textual computer ram and confirm the absence of any bots or contractual rights are not equivalent to the exclusive rights of right, it does not disturb the balance between public rights and circumvention right in 1201(a)(2) independent of traditional software alliance. library to exempt circumvention of effective access control for the ninth circuit infringing access -- for instance, copyright owners who make ware that intercepts, "mines," or otherwise collects 1201(b)(2)(a). ment nexus requirement, we would have to disregard the plain copyright act]." the second prohibits trafficking in technol- the third significant difference between the subsections is million judgment against mdy for the copyright infringement enforce that prohibition. cf. corley, 273 f.3d at 441 ("[t]he game client software may use independently pur- 1989)). enforcing a copyright license "raises issues that lie at ment, 1201(a) would allow copyright owners to deny all advance, (5) the social interests in protecting mdy's freedom its tortious interference claim: whether mdy's actions were ware program code, even though the audiovisual display gen- allowed "access" to the copyrighted program. any purchaser guage. player seeks to transfer the license: the player must (1) trans- a licensee arguably may commit copyright infringement by continuing the essential step defense. 17 u.s.c. 117(a)(1). thus, when tively controls access" to a copyrighted work. 17 u.s.c. ("tou") on multiple occasions. the eula pertains to the consent. a player who violates this prohibition would exceed mdy are not competitors in the online role-playing game provides no additional protection against copying, this title," whereas 1201(b)(1) concerns a measure that "ef- ment (second) of torts 767. see safeway, 106 p.3d at 1027; is preempted by the copyright act. the copyright act pre- 1201(b)(1). we consider them side-by-side, because "[w]e do place by blizzard, and thus, function "with the authority of [1] we first consider whether mdy committed contribu- tion of the public's ability to access copyrighted works is concerns that are best directed to congress in the first ment de novo. see canyon ferry rd. baptist church of east mdy programmed glider to be undetectable by warden. parties' arguments concerning it. our review of that history mary 4 (1998), available at http://www.copyright.gov/legislation/dmca.pdf control access to those elements. for a limited time or a limited number of uses. as the house roughly analogous to making it illegal to break into breaking into a locked room in order to obtain a copy of a tionship between fair use under 107 of the copyright act and violations to the server. moreover, warden's provisions were put into award of summary judgment. statute's language, and conclude that 1201(a)(2) does not require a plain- century fox film corp. v. entm't distrib., 429 f.3d 869, 879 undisputed facts. first, a valid contractual relationship exists adversely affected, and the [anti-circumvention] prohibition evidence showing congress's intent to create a new anti- district court has observed, if the word "effectively" were read to mean sulting, inc., 421 f.3d 1307 (fed. cir. 2005).11 triad sys. corp. v. se. express co., 64 f.3d 1330, 1333, a wow server. however, analogously to the situation in lex- 20028 mdy industries v. blizzard entertainment be accessed on a player's hard drive without encountering access to the public by putting an effective access control brian w. carver of the university of california, berkeley, doctrine of copyright misuse.13 wow's dynamic non-literal elements, or the "real-time expe- the manufacturer of a device designed to circumvent against mdy and donnelly for $6.5 million, an adjusted fig- cally plays the early levels of wow for players. have allowed copyright owners in 1201(a) to deny all access are still being defined. see practice mgmt. info. corp. v. am. "limitations on your use of the service," provides: tious interference. moreover, the district court may determine whether subject to liability for copyright infringement. and 1025, 1042-43 (ariz. 1985), superseded in other respects by ing of the dmca's text and structure. a covenant is a contractual promise, i.e., a manifestation of circumvents a technological measure that "effectively pro- duct in 1201(b) akin to the prohibition on circum- though unnecessary to our conclusion because of the clar- in light of the foregoing disposition regarding donnelly's personal liabil- a glider install file, all of which infringed blizzard's copy- we are thus unpersuaded by chamberlain's read- a right distinct from copyright infringement, we conclude that we need not tects" a copyright owner's right. 17 u.s.c. 1201(b)(1). [15] our review of the legislative history supports our to condition the license on the player's abstention from the glider violated blizzard's tou. in november 2005, donnelly kill. then it kills for you, automatically. you can do period." there is no analogous provision in 1201(b). we computers to run software programs. this copy potentially cheats. the resident component also requires a "process" in with other sun software, microsoft's "compatibility obliga- 19996 mdy industries v. blizzard entertainment and (2) derives a direct financial benefit from their activity. as set forth supra, this evidence includes: (1) congress's states copyright law to its obligations under two world intel- framework to ensure they can protect their work directly via the user's computer. we conclude that warden is means was to perform this kind of act. this is licensed microsoft to create only derivative works compatible ware's literal elements: the source code stored on players' and tortious interference with contract claims. they further mdy immediately commenced this action. using detectable bots from continuing to access wow soft- 19999mdy industries v. blizzard entertainment construction according to its terms does not lead to absurd or thus, blizzard is entitled to summary judgment if there are because it thereafter programmed glider to avoid detection by lectual property organization ("wipo") treaties, which traditional rights against copyright infringement and of means of controlling access," it would "gut" dmca 1201(a)(2), because that "effectively controls access to a work protected under court also granted mdy partial summary judgment, finding a. sommer of sonnenschein nath & rosenthal llp, for protected by copyright law. to four million dollar profit. computer game is copyrightable independently from the soft- 20011mdy industries v. blizzard entertainment only cause of action would be for breach of contract, covenants according to state contract law, to the extent consis- cir. 2004). in chamberlain, the plaintiff sold garage door they are not in privity of contract. see procd, inc., 86 f.3d at 1454. as noted, we cannot hold that five of the seven "impropriety" infringement, rather than a new anti-circumvention right sepa- game experience. id. a player might violate this prohibition copy of the software. see sun microsystems, inc. v. microsoft in a device that circumvents that measure could be liable rights of copyright.4 at 1193.the second circuit has adopted a different view, explaining that provide, or otherwise traffic in any technology, product, ser- sonally liable for mdy's copyright infringement, dmca vio- ment nexus requirement existed. circumvention right. conclude that summary judgment was inappropriate here, the parties have presented conflicting evidence with third-party-defendant-appellee. lations, and tortious interference with contract. ship: it does not contend that it was unaware of the operative [16] while we appreciate the policy considerations scribe bots such as glider explicitly until after mdy began periodically in the background on a player's computer when hard drives. second, the district court considered the game is liable for vicarious infringement if it (1) has the right and as was demonstrated during trial, an owner of the b. contractual covenants vs. license conditions supreme court has yet to construe these provisions, and they sor has made a commitment. see travel centers of am. llc "honestly persuaded" people to buy glider. glider initially had no anti-detection features. (same). instance, or for which there appear to be other reasons that do choice to link only 1201(b)(1) explicitly to infringement; (2) while advancing through the game's 70 levels. mdy indus- anti-detection modifications, warden only occasionally weigh in either side's favor, thus creating a genuine issue of f.3d at 1214. even were they permissible considerations in tract under arizona law. the district court found mdy and wow's servers. warden was able to detect glider, and bliz- to blizzard's servers which provide access to wow's rights by glider users. id. at 1013. mdy is liable for contribu- v. swantz, 846 f.2d 923, 926 (4th cir. 1988). from violating the dmca with respect to blizzard's copyrights in and appellees, dgc the traditional rights of owners of copyright under the copy- the essential step defense. vernor v. autodesk, inc., 621 f.3d mdy industries, llc, b. blizzard's use agreements 24 ed. 2007). in contrast, copyright damages include the copyright owner's erated is partially dependent on user input). ting as circumventing acts that would violate 1201(b)(1). see 17 u.s.c. sure, without the authority of the copyright owner." 17 u.s.c. 15 [wow's] individual nonliteral components may be mdy's website for fifteen to twenty-five dollars per license. unable to follow its approach because it is contrary to the sor's exclusive statutory rights. we view payment as sui generis, however, right owners far greater rights than congress has generally den, mdy reconfigured glider to circumvent scan.dll by not ence. blizzard contends that glider disrupts wow's environ- would allow companies to leverage their sales into aftermar- the federal circuit has adopted a different approach to the accordingly, we vacate the district court's grant of summary has its own economy, in which characters use their virtual 20024 mdy industries v. blizzard entertainment non-literal elements. warden blocks one form of access to cal protection measure limits access to the plain text dynamic non-literal elements. that is, mdy (1) traffics in (2) ties."). to establish secondary infringement, blizzard must not effectively control access to the literal elements because to establish direct infringement, blizzard must demonstrate between "owners" and "licensees" of copies for purposes of allowing the player to connect to wow's servers. if scan.dll the statute. 581 f.3d 1104, 1111 (9th cir. 2009) ("[w]here the language the period of misuse. practice mgmt. info. corp v. am. med. ass'n, 121 20021mdy industries v. blizzard entertainment world. contracts, by contrast, generally affect only their par- access, the library does not, and is not permitted to, authorize f. blizzard's 1201(b)(1) claim ure to which the parties stipulated based on mdy's dmca ments, which we review briefly in order to address the par- circumventing devices. moreover, in mandating a 1201(a) zard's eulas and tous provide that they are to be notable use" restrictions. 621 f.3d at 1111 (internal footnote federal circuit has concluded that this definition imposes an additional mdy contends that blizzard's tortious interference claim tion conditions blizzard's grant of a limited license on play- v. office of hawaiian affairs, 129 s. ct. 1436, 1443 (2009) instance, the senate judiciary committee report explains that to recover for copyright infringement based on breach of rized access to a work, the act of circumventing a technological measure the measure lies under 1201(b)(1), but not under book." see h.r. rep. no. 105-551, pt. 1, at 17 (1998). we reproduction and would exceed the scope of the third-party software designed to modify the world of infringement, they may be subject to liability under 1454 (7th cir. 1996) ("a copyright is a right against the right law has long forbidden copyright infringe- even accepting them, arguendo, as legitimate concerns, they [20] the fifth element is met because warden is an effec- right to reproduce its work. 17 u.s.c. 106(1). the parties copyright owner." id. thus, the senate judiciary committee explained that tou 4(b)'s bot prohibition is a license cove- mgm, inc., 772 f.2d 505, 512 n.5 (9th cir. 1985). second, copyright law empt a party's enforcement of its contractual rights. see nat'l s.o.s., inc. v. payday, inc., 886 f.2d 1081, 1087 (9th cir. it bad business to spend that much time altering their tures, encountering their inhabitants and monsters, and works are being distributed using a "client-server" trial as to its 1201(a)(2) and (b)(1) claims with respect to congress's provision in 1201(a)(3)(a) that descrambling infringement. of course, if a copyright owner puts in place an f.3d at 879. ity or remoteness of mdy's conduct to the interference, and 20015mdy industries v. blizzard entertainment without the copyright owner's authorization. see chamberlain, 381 f.3d see h.r. rep. no. 105-551 pt. 2, at 23 (1998). software. for instance, a user may call up and listen of its software protections. notably, the revised opinion does not cite work without the copyright owner's authorization. thus, blizzard has sat- contained in [ 1201(a)(1)(a)] shall not apply to such users tract damages are generally limited to the value of the actual loss caused dmca contains three provisions directed at the circumven- 1201(a) would allow companies to leverage their sales into their changes very risky, since they don't want to are users of a copyrighted work are, or are likely to be, and do not, address mdy's further contentions: that (1) blizzard has on december 1, 2006, mdy filed an amended complaint a copyright holder may wish to enforce violations of license agree- ited license. blizzard also imposes transfer restrictions if a under this title." sections 1201(a)(2) and (b)(1) provide that defendants who traffic in devices that circumvent right owners could use an access control right to prohibit 1 zard's limited license. conferred on copyright owners.3 sive rights under 106 by granting them an additional cause f.3d at 444 & n.15; see also 321 studios v. mgm studios, inc., 307 f. copyright owners' new anti-circumvention right with the pub- act in a virtual world. wow has ten million subscribers, of that the promisee is justified in understanding that the promi- another form of access: the review and use of the computer "infringement nexus requirement"). see chamberlain group, amicus curiae software & information industry association. 2005 email that mdy's business strategy was to make bliz- car rental sys., inc. v. comp. assoc. int'l, inc., 991 f.2d 426, where its public performance license expressly prohibited the use of plaintiff sued the defendant, who sold "universal" gdo 4(c)(ii) prohibits a player's disruption of another player's id. at 1316. consistent with this approach, we have held that states v. morton, 467 u.s. 822, 828 (1984); see also padash 20009mdy industries v. blizzard entertainment the and decrypting devices can lead to 1201(a) liability, even defendants-appellees/cross-appellants blizzard entertainment, otherwise-readily-accessible copyrighted works. add infringes unless the player (1) is a licensee whose use of the not an effective access control measure with respect to 8 the presence of cheats and bots, not to protect wow's the dmca, congress sought to mitigate the problems pre- dence tends to demonstrate that mdy helped glider users authorize all licensed wow players to do so. we have district court's permanent injunction that barred mdy and technology or part thereof" -- that is, it sells glider. the third tects against copyright infringement, a defendant who traffics may be subject to liability under 1201(a)(2). access control measure can both (1) attempt to block initial ing would violate the copyright act's prohibition on improper, arizona employs the seven-factor test of restate- blizzard argues that it seeks to provide its millions of wow 19 injunction against donnelly if it finds him liable for mdy's 1201(a)(2) 186, 204-05 (2003) (internal citation omitted)). without an 105-190, at 12 (1998). that is, 1201(a)(2) "is designed to [12] we conclude that for a licensee's violation of a con- watch or listen to a work without authorization, which is not scott e. bain, keith kupferschmid, and mark bohannon, for we find the second circuit's view to be the sounder construction of the to challenge only under one of the subsections." s. rep. no. each wow player must read and accept blizzard's end a house using a tool, the primary purpose of which 1201(a), congress was particularly concerned with encour- scope as "conditions," the breach of which constitute copy- effective measure that both (1) controls access and (2) pro- it is connected to wow's servers. it asks the computer to are similarly covenants rather than conditions. a glider user which prohibits circumvention itself, will not be a violation of material fact. take the place of the detailed provisions of the text," and . . . sonal use. a user need not be at the computer while glider is counsel 1201(a) liability with no nexus to infringement, stating that ment as necessary to prevent "absurd and disastrous results," being copied, then a potential cause of action against finally, blizzard has proffered evidence that it was damaged p.r., l.p. v. alstom power, inc., 429 f. supp. 2d 713, 717 (d. did not respond. in october 2006, blizzard's counsel visited torily and vicariously infringed blizzard's copyrights and game currency, weapons, and armor. wow's virtual world v. image tech. servs., 504 u.s. 451, 455 (1992) (antitrust); fectively protects a right of a copyright owner under this title on circumvention. a violation of 1201(a)(2), which prohib- zard's 1201(a)(2) claim with respect to wow's individual 19992 mdy industries v. blizzard entertainment access control measures, will not always be a violation of in august 2006, blizzard sent mdy a cease-and-desist let- elements. allows access to the game's literal elements and individual 6 elements for violating 1201(a)(2) with respect to wow's were we to follow chamberlain in imposing an infringe- motion picture association of america, inc. blizzard may alter the game client itself remotely without a accessed by a user without signing on to the server. v. record game play by taking screen shots, there is no evidence mdy brought this action for a declaratory judgment to this title" -- to reinforce copyright owners' traditional exclu- the district court granted blizzard summary judgment on 1201(a)(2), "the act of circumventing a technological pro- corp., 188 f.3d 1115, 1121 (9th cir. 1999) ("sun i"); 17 into ram. accordingly, mdy does not violate 1201(b)(1) including the two (nature of mdy's conduct and mdy's creators and information users."). sections 1201(a)(1)(b)-(d) 433 (8th cir. 1993); taquino v. teledyne monarch rubber, appellant, copy is created and used solely "as an essential step in the uti- grokster, 545 u.s. at 930. does nothing to prevent access to the plain text of the act, but we vacate the grant of summary judgment because 1026, 1031-32 (n.d. cal. 2000) ("sun ii") (where sun is unambiguous, the court construes it according to its terms. wow's dynamic non-literal elements.18 not read the last ten pages. obviously, a licensee copy of a book with the caveat that the licensee may in 2, at 26 (1998) (specifying that the house commerce com- the first two elements are met because mdy "traffics in a in july 2008, the district court granted blizzard partial sum- remove, deactivate, or impair a technological measure, with- access to plaintiff's copyrighted works. id. ware code -- are available on a player's hard drive once the george a. riley, david r. eberhart, and david s. almeling a work," a technological measure must "in the ordinary course 417, 429 (1984) ("[t]he limited grant [of copyright] . . . is intended to statutory provision to be construed "in the context of the gov- nelly for, inter alia, contributory and vicarious copyright that mdy is liable under dmca 1201(a)(2) and (b)(1) however, can be much broader: doctrine of copyright misuse. id. (citing eastman kodak co. in september 2008, the parties stipulated to entry of a $6 [t]o defeat or bypass the password and to make the game client software is installed. second, as the district court 2. our harmonization of the dmca's operative ments as copyright infringements for several reasons. first, breach of con- d. financial and practical impact of glider mdy does not infringe, we do not consider whether blizzard simultaneously, provides that "nothing in this section shall factors compel a finding in blizzard's favor at this stage, restrictions that are not. for instance, tou 4(d) forbids cre- ware. 1. nature of mdy's conduct and mdy's motive trols access to wow's dynamic non-literal elements.17 use does not alter or copy wow software. their work product." id. (citing eldred v. ashcroft, 537 u.s. table defense to copyright infringement, the contours of which mdy's intentional interference in inducing or causing the world of warcraft ("wow"), a popular multiplayer online [5] blizzard also imposes a variety of use restrictions. the group v. musil govan azzalino, 270 f.3d 821, 827 (9th cir. technologies that circumvent technological measures that berlain viewed an infringement nexus requirement as neces- 19980 mdy industries v. blizzard entertainment with respect to such classes of works for the ensuing 3-year glary alarm to gain access to a home containing copyrighted 20001mdy industries v. blizzard entertainment 1201(a)(2) and (b)(1) as to the game software's source b. the digital millennium copyright act its claim against mdy for tortious interference with contract purportedly reduced the risk of crime by constantly changing users, mdy modified its website to notify customers that the copyright office has also suggested that 1201(a) creates a new policy. not require such a convoluted construction of the statute's lan- exciting, to be sure. since blizzard does not want bots run- 22 tions of dmca 1201(a)(2) and (b)(1), and tortious inter- robert h. rotstein, steven j. metalitz, and j. matthew wil- 4(b) is not a condition, but is a contractual covenant. cf. account and upon first connecting to the online service. play- it follows that because mdy does not infringe blizzard's procd, 86 f.3d at 1454 ("a copyright is a right against the ends a player's license to access and play wow. following a potential cause of action against the manufacturer taken as the final expression of the meaning intended."). defendants who use such devices may be subject to development and test resources, so we want to make purposes and may not be used in cyber cafes and computer public's right to access outweighs the owner's interest in second, as used in 1201(a), to "circumvent a technologi- tortious interference claim. cf. altera, 424 f0.3d at 1089-90. a process or a treatment, with the authority of the copyright that mdy markets glider for use in circumventing warden, tion is rendered superfluous. a violation of 1201(a)(1)(a), warden. finally, it considered the game's dynamic non-literal ele- peak computer, inc., 991 f.2d 511, 519 n.5 (9th cir. 1993); venting "access" to a protected work in itself has not been a lic's right to access the work. cf. h.r. rep. no. 105-551, pt. although the text suffices to resolve the issues before us, 1201(a)(2). the third prohibits trafficking in technology that uments. zard's evidence also supports the conclusion that blizzard was signal, which in turn opened or closed their garage doors. id. mation users, and an infringement nexus requirement was game client and upon first running it. the tou pertains to the the potential for infringement exists only where the licensee's the district court permanently enjoined "mdy and michael donnelly 4(b)(ii) and (iii), which we have held are contract- wow players.1 donnelly is personally liable for mdy's violation of dmca 1201(a)(2). ity of the statute's text, see united states v. gallegos, 613 nants rather than conditions. see wilmington tr. co. v. clark, ble, how the right against anti-circumvention (sic) would be copyright act. those exclusive rights are reproduction, distri- infringe on any of the copyright owner's exclusive rights accessing the game software's source code. time in-game than do human players. finally, blizzard intro- 20023mdy industries v. blizzard entertainment allow consumers effectively to "borrow" a copy of the work id. the senate judiciary committee proffered an example of coverage is limited to a copyright owner's rights under the 1201(b)(1) prohibits the circumvention "of protection afforded by a copyright infringement under 106. accordingly, we read which requires the existence of direct copyright infringement. meaning of the phrase "without the authority of the copyright owner." the and therefore, that mdy does not violate 1201(a)(2) with ing its view that the fair use defense to traditional copyright infringement respect to wow's dynamic non-literal elements. in addition, one of the issues raised by this appeal is whether certain opinion by judge callahan tive history supports the conclusion that congress intended to that effectively controls access to a work protected under [the right of a copyright owner arising from the copyright act.5 offers injunctive relief, seizure of infringing articles, and awards of costs i. statutory inconsistencies raise questions of first impression in this circuit. donnelly's home, threatening suit unless mdy immediately seeking a declaration that glider does not infringe blizzard's that thwart circumvention, but withhold protection for those measures that isfied the "circumvention" element of a 1201(a)(2) claim, because bliz- because reading a book does not violate any right tions. see greenwood v. compucredit corp., 615 f.3d 1204, established new causes of action for a defendant's unautho- to wow. blizzard did not change the eula or tou to pro- 2. blizzard's interests with which mdy interferes; the 9 rights under the copyright. rather, the library is only entitled inc. and vivendi games, inc. copyright holder -- could designate any disfavored conduct single-player or offline modes. offered "additional protection from game detection software" disfavored conduct. the rationale would be that because the (the rolling code security system) that effectively controlled fully, to move 1201 out of title 17 altogether "because these regulatory access without regard to the remainder of the copyright act, since a player need not encounter warden to access wow's not . . . construe statutory phrases in isolation; we read stat- sions of the federal circuit that have interpreted 1201 dif- 3 callahan, circuit judge: 3. our construction of the dmca is consistent with the inc. v. corley, 273 f.3d 429, 440 (2d cir. 2001). in enacting id. at 1195 (emphasis added). chamberlain concluded that march 2005, he developed glider, a software "bot" (short for not concurrently use unauthorized third-party programs. also, owners an independent right to enforce the prohibition against in a work or portion thereof." (emphasis added). we read may infringe unless their usage is within the scope of bliz- "controls access" to the house after its purchaser copyright owner's rights under 106. id. at 1192, 1194. users' breach of the operative tou. moreover, blizzard and with contract is preempted by the copyright act is a question that access was unauthorized. our analysis considers war- ference with contract. we reverse the district court except as work. see 17 us.c. 1201(a)(2). only plaintiff's own toner cartridges could be inserted into the who made a hundred copies of the book would be to prevent circumvention of access controls, broadly to works no evidence establishes that glider users engage in this practice, and wow's more interesting levels. mdy has introduced evi- violations or for tortious interference with contract. does not affect private contracts. altera, 424 f.3d at 1089; see ("since the fair use doctrine is not a defense to the act of gaining unautho- door of a house "controls access" to a house whose tory infringement if it has "intentionally induc[ed] or wow. glider was not initially designed to avoid detection by 1201(a)(1) is necessary because prior to this act, the encountering other players." utilize wow's chat capabilities to interact with others. using glider violated the tou. third, mdy intentionally report portions of the wow code running in ram, and it unclean hands because it changed the tou to ban bots after this litigation 1134, 1137 (9th cir. 2006). we review the district court's glider . . . moves the mouse around and pushes keys the seminal decision is chamberlain, 381 f.3d 1178 (fed. prohibit bots such as glider, is ambiguous. in arizona, the construction of such as the existence of dmca liability for disabling a bur- could read the program code directly from the printer memory enforceable covenants rather than copyright-enforceable con- trial. tract." sun i, 188 f.3d at 1121 (internal quotations omitted). software is within the scope of the license or (2) owns the i. tates infringement of the plaintiff's copyright (an discussed the public's right of access after the copyright term. 464 u.s. c. the district court's decision den "effectively protect[s] a right" of blizzard under the action (1) exceeds the license's scope (2) in a manner that wow players roleplay different characters, such as (quoting permanent mission of india to united nations v. prohibition against "circumventing a technological measure district court's decision because we determine that mdy is tract to constitute copyright infringement, there must be a supports the view that congress created a new anti- committed copyright misuse. 1. wow's literal elements and individual non-literal 19979 [i]f an effective technological protection measure christian s. genetski (argued), shane m. mcgee, and jacob dmca. in essence, it requires 1201(a) plaintiffs to demon- chased computer programs to call up the visual term regulating the creation of derivative works).2 dynamic non-literal elements, scan.dll must scan the player's encourag[ed] direct infringement" by glider users. mgm stu- zard commits copyright misuse. copyright misuse is an equi- the sixth circuit held that plaintiff's 1201(a)(2) claim mdy's liability for tortious interference, we also vacate that permanent 20019mdy industries v. blizzard entertainment violations of them) would be separate from, and cumulative to, the exist- [18] here, a player's purchase of the wow game client construe the statute to offer protection where none is needed but to with- accordingly, a 1201(a)(2) plaintiff was required to demon- erning statute as a whole, presuming congressional intent to it "would clearly affect rights and limitations, if not remedies the parties, citing chamberlain, proffer several other argu- explained: copyrights, we need not resolve mdy's contention that bliz- not necessarily infringe or facilitate infringement of a copy- inc., 637 p.2d 733, 740 (ariz. 1981). conduct of circumvention was never before made nues of $3.5 million based on 120,000 glider license sales. warden. supp. 2d at 717 (internal citations omitted). wherever possi- if an owner effectively protected access to a copyrighted work tate circumvention of measures that protect against copyright control access to its copyrighted computer program. id. at 20016 mdy industries v. blizzard entertainment vice, device, component, or part thereof, that -- [17] we agree with the district court that mdy's glider the chamberlain court's assertion that the public has a constitutional do not permit reading the statute as requiring the imposition right owners a new anti-circumvention right, but instead, might conclude that mdy had a legitimate interest in continu- 19986 mdy industries v. blizzard entertainment alternatively, mdy asks that we determine whether there are any gen- these phones. see http://www.copyright.gov/fedreg/2010/75fr43825.pdf. eula and tou if players violate their terms. termination warcraft experience; or (iii) use any third-party soft- when mdy created glider in 2005, blizzard's tou prohibited the use continue to play wow, improves some users' romantic rela- found that glider allowed its users to circumvent warden by delete all of the copies and installation of the game client; and most favorable to mdy, the first five factors do not clearly positively affected its users' lives by advancing them to a. the warden technology (second) of contracts 224. conditions precedent are disfa- technology to make new uses possible and the legal the statutory definition of the phrase "effectively control access to a require contracting parties to provide effective legal remedies game client, so a player agrees to it both before installing the terms as "covenants," the breach of which is actionable only the user (e.g., infrequent users of expensive software copyright owners a remedy against "downstream" infringers with whom began; and (2) mdy is not liable for tortious interference because it only sure (5) that effectively controls access (6) to a copyrighted eula and client-server manipulation policy. he reached the appellant/third-party-defendant-appellee michael donnelly. michael donnelly, ties' contentions. chamberlain relied heavily on policy liability and post-summary judgment glider sales. the district front door does not contain a lock and just as one non-infringing access to a copyrighted work; and (3) con- 5 copyright infringement. the senate judiciary committee first, although wow players copy the software code into we conclude that summary judgment is inappropriate as to [a]n increasing number of intellectual property conditioned on their fulfillment). a technology or part thereof (3) that is primarily designed, elements because these elements -- the game client's soft- liams of mitchell silberberg & knupp llp, for amicus curiae 1201(a)(3)(a). these two specific examples of unlawful cir- glider itself does not provide a software mechanism for taking screenshots liability for access without regard to the remainder of the rience" of playing wow. it reasoned that warden effectively 1201(b)(1), which prohibits trafficking in devices that facili- by mdy's conduct.

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