FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MDY INDUSTRIES, LLC, 

Plaintiff-counter-defendantAppellant,

v.

BLIZZARD ENTERTAINMENT, INC. and No. 09-15932

VIVENDI GAMES, INC., D.C. No.  Defendants-third-party-plaintiffs- 2:06-CV-02555-

Appellees, DGC

v.

MICHAEL DONNELLY,

Third-party-defendant-Appellant. 

MDY INDUSTRIES, LLC, 

Plaintiff-counter-defendantAppellee,

v. No. 09-16044

BLIZZARD ENTERTAINMENT, INC. and D.C. No.

VIVENDI GAMES, INC.,  2:06-CV-02555-

Defendants-third-party-plaintiffs- DGC

Appellants, OPINION

v.

MICHAEL DONNELLY,

Third-party-defendant-Appellee. 

Appeal from the United States District Court

for the District of Arizona

David G. Campbell, District Judge, Presiding

19979
Argued and Submitted

June 7, 2010—Seattle, Washington

Filed December 14, 2010

Before: William C. Canby, Jr., Consuelo M. Callahan and

Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Callahan

19980 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
COUNSEL

Lance C. Venable (argued) and Joseph R. Meaney of Venable, Campillo, Logan & Meaney, P.C., for plaintiff19984 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
appellant/cross-appellee MDY Industries LLC and plaintiffappellant/third-party-defendant-appellee Michael Donnelly.

Christian S. Genetski (argued), Shane M. McGee, and Jacob

A. Sommer of Sonnenschein Nath & Rosenthal LLP, for

defendants-appellees/cross-appellants Blizzard Entertainment,

Inc. and Vivendi Games, Inc.

George A. Riley, David R. Eberhart, and David S. Almeling

of O’Melveny & Myers LLP, for amicus curiae Business

Software Alliance.

Scott E. Bain, Keith Kupferschmid, and Mark Bohannon, for

amicus curiae Software & Information Industry Association.

Brian W. Carver of the University of California, Berkeley,

School of Information, and Sherwin Siy and Jef Pearlman, for

amicus curiae Public Knowledge.

Robert H. Rotstein, Steven J. Metalitz, and J. Matthew Williams of Mitchell Silberberg & Knupp LLP, for amicus curiae

Motion Picture Association of America, Inc.

OPINION

CALLAHAN, Circuit Judge:

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 INDUSTRIES v. BLIZZARD ENTERTAINMENT 19985
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.

I.

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. 

19986 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
B. Blizzard’s use agreements

Each WoW player must read and accept Blizzard’s End

User License Agreement (“EULA”) and Terms of Use

(“ToU”) on multiple occasions. The EULA pertains to the

game client, so a player agrees to it both before installing the

game client and upon first running it. The ToU pertains to the

online service, so a player agrees to it both when creating an

account and upon first connecting to the online service. Players who do not accept both the EULA and the ToU may return

the game client for a refund.

C. Development of Glider and Warden

Donnelly is a WoW player and software programmer. In

March 2005, he developed Glider, a software “bot” (short for

robot) that automates play of WoW’s early levels, for his personal use. A user need not be at the computer while Glider is

running. As explained in the Frequently Asked Questions

(“FAQ”) on MDY’s website for Glider:

Glider . . . moves the mouse around and pushes keys

on the keyboard. You tell it about your character,

where you want to kill things, and when you want to

kill. Then it kills for you, automatically. You can do

something else, like eat dinner or go to a movie, and

when you return, you’ll have a lot more experience

and loot.

Glider does not alter or copy WoW’s game client software,

does not allow a player to avoid paying monthly subscription

dues to Blizzard, and has no commercial use independent of

WoW. Glider was not initially designed to avoid detection by

Blizzard. 

The parties dispute Glider’s impact on the WoW experience. Blizzard contends that Glider disrupts WoW’s environment for non-Glider players by enabling Glider users to

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19987
advance quickly and unfairly through the game and to amass

additional game assets. MDY contends that Glider has a minimal effect on non-Glider players, enhances the WoW experience for Glider users, and facilitates disabled players’ access

to WoW by auto-playing the game for them.

In summer 2005, Donnelly began selling Glider through

MDY’s website for fifteen to twenty-five dollars per license.

Prior to marketing Glider, Donnelly reviewed Blizzard’s

EULA and client-server manipulation policy. He reached the

conclusion that Blizzard had not prohibited bots in those documents. 

In September 2005, Blizzard launched Warden, a technology that it developed to prevent its players who use unauthorized third-party software, including bots, from connecting to

WoW’s servers. Warden was able to detect Glider, and Blizzard immediately used Warden to ban most Glider users.

MDY responded by modifying Glider to avoid detection and

promoting its new anti-detection features on its website’s

FAQ. It added a subscription service, Glider Elite, which

offered “additional protection from game detection software”

for five dollars a month.

Thus, by late 2005, MDY was aware that Blizzard was prohibiting bots. MDY modified its website to indicate that using

Glider violated Blizzard’s ToU. In November 2005, Donnelly

wrote in an email interview, “Avoiding detection is rather

exciting, to be sure. Since Blizzard does not want bots running at all, it’s a violation to use them.” Following MDY’s

anti-detection modifications, Warden only occasionally

detected Glider. As of September 2008, MDY had gross revenues of $3.5 million based on 120,000 Glider license sales.

D. Financial and practical impact of Glider

Blizzard claims that from December 2004 to March 2008,

it received 465,000 complaints about WoW bots, several

19988 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
thousand of which named Glider. Blizzard spends $940,000

annually to respond to these complaints, and the parties have

stipulated that Glider is the principal bot used by WoW players. Blizzard introduced evidence that it may have lost

monthly subscription fees from Glider users, who were able

to reach WoW’s highest levels in fewer weeks than players

playing manually. Donnelly acknowledged in a November

2005 email that MDY’s business strategy was to make Blizzard’s anti-bot detection attempts financially prohibitive:

The trick here is that Blizzard has a finite amount of

development and test resources, so we want to make

it bad business to spend that much time altering their

detection code to find Glider, since Glider’s negative

effect on the game is debatable . . . . [W]e attack

th[is] weakness and try to make it a bad idea or make

their changes very risky, since they don’t want to

risk banning or crashing innocent customers.

E. Pre-litigation contact between MDY and Blizzard

In August 2006, Blizzard sent MDY a cease-and-desist letter alleging that MDY’s website hosted WoW screenshots and

a Glider install file, all of which infringed Blizzard’s copyrights. Donnelly removed the screenshots and requested Blizzard to clarify why the install file was infringing, but Blizzard

did not respond. In October 2006, Blizzard’s counsel visited

Donnelly’s home, threatening suit unless MDY immediately

ceased selling Glider and remitted all profits to Blizzard.

MDY immediately commenced this action.

II.

On December 1, 2006, MDY filed an amended complaint

seeking a declaration that Glider does not infringe Blizzard’s

copyright or other rights. In February 2007, Blizzard filed

counterclaims and third-party claims against MDY and Donnelly for, inter alia, contributory and vicarious copyright

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19989
infringement, violation of DMCA §§ 1201(a)(2) and (b)(1),

and tortious interference with contract.

In July 2008, the district court granted Blizzard partial summary judgment, finding that MDY’s Glider sales contributorily and vicariously infringed Blizzard’s copyrights and

tortiously interfered with Blizzard’s contracts. The district

court also granted MDY partial summary judgment, finding

that MDY did not violate DMCA § 1201(a)(2) with respect to

accessing the game software’s source code.

In September 2008, the parties stipulated to entry of a $6

million judgment against MDY for the copyright infringement

and tortious interference with contract claims. They further

stipulated that Donnelly would be personally liable for the

same amount if found personally liable at trial. After a January 2009 bench trial, the district court held MDY liable under

DMCA §§ 1201(a)(2) and (b)(1). It also held Donnelly personally liable for MDY’s copyright infringement, DMCA violations, and tortious interference with contract.

On April 1, 2009, the district court entered judgment

against MDY and Donnelly for $6.5 million, an adjusted figure to which the parties stipulated based on MDY’s DMCA

liability and post-summary judgment Glider sales. The district

court permanently enjoined MDY from distributing Glider.

MDY’s efforts to stay injunctive relief pending appeal were

unsuccessful. On April 29, 2009, MDY timely filed this

appeal. On May 12, 2009, Blizzard timely cross-appealed the

district court’s holding that MDY did not violate DMCA

§§ 1201(a)(2) and (b)(1) as to the game software’s source

code.

III.

We review de novo the district court’s (1) orders granting

or denying summary judgment; (2) conclusions of law after a

bench trial; and (3) interpretations of state law. Padfield v.

19990 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
AIG Life Ins., 290 F.3d 1121, 1124 (9th Cir. 2002); Twentieth

Century Fox Film Corp. v. Entm’t Distrib., 429 F.3d 869, 879

(9th Cir. 2005); Laws v. Sony Music Entm’t, Inc., 448 F.3d

1134, 1137 (9th Cir. 2006). We review the district court’s

findings of fact for clear error. Twentieth Century Fox, 429

F.3d at 879.

IV.

[1] We first consider whether MDY committed contributory or vicarious infringement (collectively, “secondary

infringement”) of Blizzard’s copyright by selling Glider to

WoW players.1See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447,

1454 (7th Cir. 1996) (“A copyright is a right against the

world. Contracts, by contrast, generally affect only their parties.”). To establish secondary infringement, Blizzard must

first demonstrate direct infringement. See A&M Records, Inc.

v. Napster, Inc., 239 F.3d 1004, 1019, 1022 (9th Cir. 2001).

To establish direct infringement, Blizzard must demonstrate

copyright ownership and violation of one of its exclusive

rights by Glider users. Id. at 1013. MDY is liable for contributory infringement if it has “intentionally induc[ed] or

encourag[ed] direct infringement” by Glider users. MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). MDY

is liable for vicarious infringement if it (1) has the right and

ability to control Glider users’ putatively infringing activity

and (2) derives a direct financial benefit from their activity.

Id. If Glider users directly infringe, MDY does not dispute

that it satisfies the other elements of contributory and vicarious infringement.

[2] As a copyright owner, Blizzard possesses the exclusive

right to reproduce its work. 17 U.S.C. § 106(1). The parties

agree that when playing WoW, a player’s computer creates a

1Alternatively, MDY asks that we determine whether there are any genuine issues of material fact that warrant a remand for trial on Blizzard’s

secondary copyright infringement claims. We find none. 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19991
copy of the game’s software in the computer’s random access

memory (“RAM”), a form of temporary memory used by

computers to run software programs. This copy potentially

infringes unless the player (1) is a licensee whose use of the

software is within the scope of the license or (2) owns the

copy of the software. See Sun Microsystems, Inc. v. Microsoft

Corp., 188 F.3d 1115, 1121 (9th Cir. 1999) (“Sun I”); 17

U.S.C. § 117(a). As to the scope of the license, ToU § 4(B),

“Limitations on Your Use of the Service,” provides:

You agree that you will not . . . (ii) create or use

cheats, bots, “mods,” and/or hacks, or any other

third-party software designed to modify the World of

Warcraft experience; or (iii) use any third-party software that intercepts, “mines,” or otherwise collects

information from or through the Program or Service.

By contrast, if the player owns the copy of the software, the

“essential step” defense provides that the player does not

infringe by making a copy of the computer program where the

copy is created and used solely “as an essential step in the utilization of the computer program in conjunction with a

machine.” 17 U.S.C. § 117(a)(1).

A. Essential step defense 

We consider whether WoW players, including Glider users,

are owners or licensees of their copies of WoW software. If

WoW players own their copies, as MDY contends, then

Glider users do not infringe by reproducing WoW software in

RAM while playing, and MDY is not secondarily liable for

copyright infringement. 

[3] In Vernor v. Autodesk, Inc., we recently distinguished

between “owners” and “licensees” of copies for purposes of

the essential step defense. Vernor v. Autodesk, Inc., 621 F.3d

1102, 1108-09 (9th Cir. 2010; see also MAI Sys. Corp. v.

Peak Computer, Inc., 991 F.2d 511, 519 n.5 (9th Cir. 1993);

19992 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
Triad Sys. Corp. v. Se. Express Co., 64 F.3d 1330, 1333,

1335-36 (9th Cir. 1995); Wall Data, Inc. v. Los Angeles

County Sheriff’s Dep’t, 447 F.3d 769, 784-85 (9th Cir. 2006).

In Vernor, we held “that a software user is a licensee rather

than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts

the user’s ability to transfer the software; and (3) imposes

notable use” restrictions. 621 F.3d at 1111 (internal footnote

omitted).

[4] Applying Vernor, we hold that WoW players are

licensees of WoW’s game client software. Blizzard reserves

title in the software and grants players a non-exclusive, limited license. Blizzard also imposes transfer restrictions if a

player seeks to transfer the license: the player must (1) transfer all original packaging and documentation; (2) permanently

delete all of the copies and installation of the game client; and

(3) transfer only to a recipient who accepts the EULA. A

player may not sell or give away the account.

[5] Blizzard also imposes a variety of use restrictions. The

game must be used only for non-commercial entertainment

purposes and may not be used in cyber cafes and computer

gaming centers without Blizzard’s permission. Players may

not concurrently use unauthorized third-party programs. Also,

Blizzard may alter the game client itself remotely without a

player’s knowledge or permission, and may terminate the

EULA and ToU if players violate their terms. Termination

ends a player’s license to access and play WoW. Following

termination, players must immediately destroy their copies of

the game and uninstall the game client from their computers,

but need not return the software to Blizzard. 

[6] Since WoW players, including Glider users, do not

own their copies of the software, Glider users may not claim

the essential step defense. 17 U.S.C. § 117(a)(1). Thus, when

their computers copy WoW software into RAM, the players

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19993
may infringe unless their usage is within the scope of Blizzard’s limited license. 

B. Contractual covenants vs. license conditions

[7] “A copyright owner who grants a nonexclusive, limited

license ordinarily waives the right to sue licensees for copyright infringement, and it may sue only for breach of contract.” Sun I, 188 F.3d at 1121 (internal quotations omitted).

However, if the licensee acts outside the scope of the license,

the licensor may sue for copyright infringement. Id. (citing

S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir.

1989)). Enforcing a copyright license “raises issues that lie at

the intersection of copyright and contract law.” Id. at 1122.

[8] We refer to contractual terms that limit a license’s

scope as “conditions,” the breach of which constitute copyright infringement. Id. at 1120. We refer to all other license

terms as “covenants,” the breach of which is actionable only

under contract law. Id. We distinguish between conditions and

covenants according to state contract law, to the extent consistent with federal copyright law and policy. Foad Consulting

Group v. Musil Govan Azzalino, 270 F.3d 821, 827 (9th Cir.

2001). 

[9] A Glider user commits copyright infringement by playing WoW while violating a ToU term that is a license condition. To establish copyright infringement, then, Blizzard must

demonstrate that the violated term — ToU § 4(B) — is a condition rather than a covenant. Sun I, 188 F.3d at 1122. Blizzard’s EULAs and ToUs provide that they are to be

interpreted according to Delaware law. Accordingly, we first

construe them under Delaware law, and then evaluate whether

that construction is consistent with federal copyright law and

policy.

A covenant is a contractual promise, i.e., a manifestation of

intention to act or refrain from acting in a particular way, such

19994 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
that the promisee is justified in understanding that the promisor has made a commitment. See Travel Centers of Am. LLC

v. Brog, No. 3751-CC, 2008 Del. Ch. LEXIS 183, *9 (Del.

Ch. Dec. 5, 2008); see also Restatement (Second) of Contracts § 2 (1981). A condition precedent is an act or event that

must occur before a duty to perform a promise arises. AES

P.R., L.P. v. Alstom Power, Inc., 429 F. Supp. 2d 713, 717 (D.

Del. 2006) (citing Delaware state law); see also Restatement

(Second) of Contracts § 224. Conditions precedent are disfavored because they tend to work forfeitures. AES, 429 F.

Supp. 2d at 717 (internal citations omitted). Wherever possible, equity construes ambiguous contract provisions as covenants rather than conditions. See Wilmington Tr. Co. v. Clark,

325 A.2d 383, 386 (Del. Ch. 1974). However, if the contract

is unambiguous, the court construes it according to its terms.

AES, 429 F. Supp. 2d at 717 (citing 17 Am. Jur. 2d Contracts

§ 460 (2006)).

[10] Applying these principles, ToU § 4(B)(ii) and (iii)’s

prohibitions against bots and unauthorized third-party software are covenants rather than copyright-enforceable conditions. See Greenwood v. CompuCredit Corp., 615 F.3d 1204,

1212, (9th Cir. 2010) (“[H]eadings and titles are not meant to

take the place of the detailed provisions of the text,” and . . .

“the heading of a section cannot limit the plain meaning of the

text.” (quoting Bhd. of R.R. Trainmen v. Balt. & Ohio R.R.,

331 U.S. 519, 528—29 (1947))). Although ToU § 4 is titled,

“Limitations on Your Use of the Service,” nothing in that section conditions Blizzard’s grant of a limited license on players’ compliance with ToU § 4’s restrictions. To the extent that

the title introduces any ambiguity, under Delaware law, ToU

§ 4(B) is not a condition, but is a contractual covenant. Cf.

Sun Microsystems, Inc. v. Microsoft Corp., 81 F. Supp. 2d

1026, 1031-32 (N.D. Cal. 2000) (“Sun II”) (where Sun

licensed Microsoft to create only derivative works compatible

with other Sun software, Microsoft’s “compatibility obligations” were covenants because the license was not specifically

conditioned on their fulfillment). 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19995
To recover for copyright infringement based on breach of

a license agreement, (1) the copying must exceed the scope of

the defendant’s license and (2) the copyright owner’s complaint must be grounded in an exclusive right of copyright

(e.g., unlawful reproduction or distribution). See Storage

Tech. Corp. v. Custom Hardware Eng’g & Consulting, Inc.,

421 F.3d 1307, 1315-16 (Fed. Cir. 2005). Contractual rights,

however, can be much broader:

[C]onsider a license in which the copyright owner

grants a person the right to make one and only one

copy of a book with the caveat that the licensee may

not read the last ten pages. Obviously, a licensee

who made a hundred copies of the book would be

liable for copyright infringement because the copying would violate the Copyright Act’s prohibition on

reproduction and would exceed the scope of the

license. Alternatively, if the licensee made a single

copy of the book, but read the last ten pages, the

only cause of action would be for breach of contract,

because reading a book does not violate any right

protected by copyright law.

Id. at 1316. Consistent with this approach, we have held that

the potential for infringement exists only where the licensee’s

action (1) exceeds the license’s scope (2) in a manner that

implicates one of the licensor’s exclusive statutory rights. See,

e.g., Sun I, 118 F.3d at 1121-22 (remanding for infringement

determination where defendant allegedly violated a license

term regulating the creation of derivative works).2

2

See also S.O.S., 886 F.2d at 1089 (remanding for infringement determination where licensee exceeded the license’s scope by preparing a modified version of software programs without licensor’s authorization); LGS

Architects, Inc. v. Concordia Homes, Inc., 434 F.3d 1150, 1154-57 (9th

Cir. 2006) (licensor likely to prove infringement where licensee used

architectural plans for project outside the license’s scope, where licensee’s

use may have included unauthorized reproduction, distribution, and public

19996 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
[11] Here, ToU § 4 contains certain restrictions that are

grounded in Blizzard’s exclusive rights of copyright and other

restrictions that are not. For instance, ToU § 4(D) forbids creation of derivative works based on WoW without Blizzard’s

consent. A player who violates this prohibition would exceed

the scope of her license and violate one of Blizzard’s exclusive rights under the Copyright Act. In contrast, ToU

§ 4(C)(ii) prohibits a player’s disruption of another player’s

game experience. Id. A player might violate this prohibition

while playing the game by harassing another player with

unsolicited instant messages. Although this conduct may violate the contractual covenants with Blizzard, it would not violate any of Blizzard’s exclusive rights of copyright. The antibot provisions at issue in this case, ToU § 4(B)(ii) and (iii),

are similarly covenants rather than conditions. A Glider user

violates the covenants with Blizzard, but does not thereby

commit copyright infringement because Glider does not

infringe any of Blizzard’s exclusive rights. For instance, the

use does not alter or copy WoW software.

Were we to hold otherwise, Blizzard — or any software

copyright holder — could designate any disfavored conduct

during software use as copyright infringement, by purporting

to condition the license on the player’s abstention from the

disfavored conduct. The rationale would be that because the

conduct occurs while the player’s computer is copying the

software code into RAM in order for it to run, the violation

is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally

conferred on copyright owners.3

display of the plans); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc.,

772 F.2d 505, 511 (9th Cir. 1985) (hotel infringed copyright by publicly

performing copyrighted music with representations of movie scenes,

where its public performance license expressly prohibited the use of

accompanying visual representations). 

3A copyright holder may wish to enforce violations of license agreements as copyright infringements for several reasons. First, breach of conMDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19997
[12] We conclude that for a licensee’s violation of a contract to constitute copyright infringement, there must be a

nexus between the condition and the licensor’s exclusive

rights of copyright.4 Here, WoW players do not commit copyright infringement by using Glider in violation of the ToU.

MDY is thus not liable for secondary copyright infringement,

which requires the existence of direct copyright infringement.

Grokster, 545 U.S. at 930.

It follows that because MDY does not infringe Blizzard’s

copyrights, we need not resolve MDY’s contention that Blizzard commits copyright misuse. Copyright misuse is an equitable defense to copyright infringement, the contours of which

are still being defined. See Practice Mgmt. Info. Corp. v. Am.

Med. Ass’n, 121 F.3d 516, 520 (9th Cir. 1997). The remedy

for copyright misuse is to deny the copyright holder the right

to enforce its copyright during the period of misuse. Since

MDY does not infringe, we do not consider whether Blizzard

committed copyright misuse.

We thus reverse the district court’s grant of summary judgment to Blizzard on its secondary copyright infringement

tract damages are generally limited to the value of the actual loss caused

by the breach. See 24 Richard A. Lord, Williston on Contracts § 65:1 (4th

ed. 2007). In contrast, copyright damages include the copyright owner’s

actual damages and the infringer’s actual profits, or statutory damages of

up to $150,000 per work. 17 U.S.C. § 504; see Frank Music Corp. v.

MGM, Inc., 772 F.2d 505, 512 n.5 (9th Cir. 1985). Second, copyright law

offers injunctive relief, seizure of infringing articles, and awards of costs

and attorneys’ fees. 17 U.S.C. §§ 502-03, 505. Third, as amicus Software

& Information Industry Association highlights, copyright law allows

copyright owners a remedy against “downstream” infringers with whom

they are not in privity of contract. See ProCD, Inc., 86 F.3d at 1454. 

4A licensee arguably may commit copyright infringement by continuing

to use the licensed work while failing to make required payments, even

though a failure to make payments otherwise lacks a nexus to the licensor’s exclusive statutory rights. We view payment as sui generis, however,

because of the distinct nexus between payment and all commercial copyright licenses, not just those concerning software. 

19998 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
claims. Accordingly, we must also vacate the portion of the

district court’s permanent injunction that barred MDY and

Donnelly from “infringing, or contributing to the infringement

of, Blizzard’s copyrights in WoW software.”

V.

After MDY began selling Glider, Blizzard launched Warden, its technology designed to prevent players who used bots

from connecting to the WoW servers. Blizzard used Warden

to ban most Glider users in September 2005. Blizzard claims

that MDY is liable under DMCA §§ 1201(a)(2) and (b)(1)

because it thereafter programmed Glider to avoid detection by

Warden. 

A. The Warden technology

Warden has two components. The first is a software module called “scan.dll,” which scans a computer’s RAM prior to

allowing the player to connect to WoW’s servers. If scan.dll

detects that a bot is running, such as Glider, it will not allow

the player to connect and play. After Blizzard launched Warden, MDY reconfigured Glider to circumvent scan.dll by not

loading itself until after scan.dll completed its check. Warden’s second component is a “resident” component that runs

periodically in the background on a player’s computer when

it is connected to WoW’s servers. It asks the computer to

report portions of the WoW code running in RAM, and it

looks for patterns of code associated with known bots or

cheats. If it detects a bot or cheat, it boots the player from the

game, which halts the computer’s copying of copyrighted

code into RAM. 

B. The Digital Millennium Copyright Act

Congress enacted the DMCA in 1998 to conform United

States copyright law to its obligations under two World Intellectual Property Organization (“WIPO”) treaties, which

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 19999
require contracting parties to provide effective legal remedies

against the circumvention of protective technological measures used by copyright owners. See Universal City Studios,

Inc. v. Corley, 273 F.3d 429, 440 (2d Cir. 2001). In enacting

the DMCA, Congress sought to mitigate the problems presented by copyright enforcement in the digital age. Id. The

DMCA contains three provisions directed at the circumvention of copyright owners’ technological measures. The

Supreme Court has yet to construe these provisions, and they

raise questions of first impression in this circuit.

The first provision, 17 U.S.C. § 1201(a)(1)(A), is a general

prohibition against “circumventing a technological measure

that effectively controls access to a work protected under [the

Copyright Act].” The second prohibits trafficking in technology that circumvents a technological measure that “effectively controls access” to a copyrighted work. 17 U.S.C.

§ 1201(a)(2). The third prohibits trafficking in technology that

circumvents a technological measure that “effectively protects” a copyright owner’s right. 17 U.S.C. § 1201(b)(1).

C. The district court’s decision

The district court assessed whether MDY violated DMCA

§§ 1201(a)(2) and (b)(1) with respect to three WoW components. First, the district court considered the game client software’s literal elements: the source code stored on players’

hard drives. Second, the district court considered the game

client software’s individual non-literal elements: the

400,000+ discrete visual and audible components of the

game, such as a visual image of a monster or its audible roar.

Finally, it considered the game’s dynamic non-literal elements: that is, the “real-time experience of traveling through

different worlds, hearing their sounds, viewing their structures, encountering their inhabitants and monsters, and

encountering other players.”

The district court granted MDY partial summary judgment

as to Blizzard’s § 1201(a)(2) claim with respect to WoW’s lit20000 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
eral elements. The district court reasoned that Warden does

not effectively control access to the literal elements because

WoW players can access the literal elements without connecting to a game server and encountering Warden; they need

only install the game client software on their computers. The

district court also ruled for MDY following trial as to Blizzard’s § 1201(a)(2) claim with respect to WoW’s individual

non-literal elements, reasoning that these elements could also

be accessed on a player’s hard drive without encountering

Warden.

The district court, however, ruled for Blizzard following

trial as to its §§ 1201(a)(2) and (b)(1) claims with respect to

WoW’s dynamic non-literal elements, or the “real-time experience” of playing WoW. It reasoned that Warden effectively

controlled access to these elements, which could not be

accessed without connecting to Blizzard’s servers. It also

found that Glider allowed its users to circumvent Warden by

avoiding or bypassing its detection features, and that MDY

marketed Glider for use in circumventing Warden. 

We turn to consider whether Glider violates DMCA

§§ 1201(a)(2) and (b)(1) by allowing users to circumvent

Warden to access WoW’s various elements. MDY contends

that Warden’s scan.dll and resident components are separate,

and only scan.dll should be considered as a potential access

control measure under § 1201(a)(2). However, in our view, an

access control measure can both (1) attempt to block initial

access and (2) revoke access if a secondary check determines

that access was unauthorized. Our analysis considers Warden’s scan.dll and resident components together because the

two components have the same purpose: to prevent players

using detectable bots from continuing to access WoW software.

D. Construction of § 1201

One of the issues raised by this appeal is whether certain

provisions of § 1201 prohibit circumvention of access conMDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20001
trols when access does not constitute copyright infringement.

To answer this question and others presented by this appeal,

we address the nature and interrelationship of the various provisions of § 1201 in the overall context of the Copyright Act.

We begin by considering the scope of DMCA § 1201’s

three operative provisions, §§ 1201(a)(1), 1201(a)(2), and

1201(b)(1). We consider them side-by-side, because “[w]e do

not . . . construe statutory phrases in isolation; we read statutes as a whole. Thus, the [term to be construed] must be read

in light of the immediately following phrase . . . .” United

States v. Morton, 467 U.S. 822, 828 (1984); see also Padash

v. I.N.S., 358 F.3d 1161, 1170 (9th Cir. 2004) (we analyze the

statutory provision to be construed “in the context of the governing statute as a whole, presuming congressional intent to

create a coherent regulatory scheme”).

1. Text of the operative provisions

“We begin, as always, with the text of the statute.” Hawaii

v. Office of Hawaiian Affairs, 129 S. Ct. 1436, 1443 (2009)

(quoting Permanent Mission of India to United Nations v.

City of New York, 551 U.S. 193, 197 (2007)). Section

1201(a)(1)(A) prohibits “circumvent[ing] a technological

measure that effectively controls access to a work protected

under this title.” Sections 1201(a)(2) and (b)(1) provide that

“[n]o person shall manufacture, import, offer to the public,

provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that — 

20002 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
(emphasis added).

2. Our harmonization of the DMCA’s operative 

provisions

[13] For the reasons set forth below, we believe that

§ 1201 is best understood to create two distinct types of

claims. First, § 1201(a) prohibits the circumvention of any

technological measure that effectively controls access to a

protected work and grants copyright owners the right to

enforce that prohibition. Cf. Corley, 273 F.3d at 441 (“[T]he

focus of subsection 1201(a)(2) is circumvention of technologies designed to prevent access to a work”). Second, and in

contrast to § 1201(a), § 1201(b)(1) prohibits trafficking in

technologies that circumvent technological measures that

effectively protect “a right of a copyright owner.” Section

1201(b)(1)’s prohibition is thus aimed at circumventions of

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20003
measures that protect the copyright itself: it entitles copyright

owners to protect their existing exclusive rights under the

Copyright Act. Those exclusive rights are reproduction, distribution, public performance, public display, and creation of

derivative works. 17 U.S.C. § 106. Historically speaking, preventing “access” to a protected work in itself has not been a

right of a copyright owner arising from the Copyright Act.5

[14] Our construction of § 1201 is compelled by the four

significant textual differences between §§ 1201(a) and (b).

First, § 1201(a)(2) prohibits the circumvention of a measure

that “effectively controls access to a work protected under

this title,” whereas § 1201(b)(1) concerns a measure that “effectively protects a right of a copyright owner under this title

in a work or portion thereof.” (emphasis added). We read

§ 1201(b)(1)’s language — “right of a copyright owner under

this title” — to reinforce copyright owners’ traditional exclusive rights under § 106 by granting them an additional cause

of action against those who traffic in circumventing devices

that facilitate infringement. Sections 1201(a)(1) and (a)(2),

however, use the term “work protected under this title.” Neither of these two subsections explicitly refers to traditional

copyright infringement under § 106. Accordingly, we read

this term as extending a new form of protection, i.e., the right

to prevent circumvention of access controls, broadly to works

protected under Title 17, i.e., copyrighted works.

Second, as used in § 1201(a), to “circumvent a technological measure” means “to descramble a scrambled work, to

decrypt an encrypted work, or otherwise to avoid, bypass,

remove, deactivate, or impair a technological measure, without the authority of the copyright owner.” 17 U.S.C.

5

17 U.S.C. § 106; see also Jay Dratler, Cyberlaw: Intellectual Prop. in

the Digital Millennium, § 1.02 (2009) (stating that the DMCA’s “protection is also quite different from the traditional exclusive rights of the copyright holder . . . [where the] exclusive rights never implicated access to the

work, as such”). 

20004 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
§ 1201(a)(3)(A). These two specific examples of unlawful circumvention under § 1201(a) — descrambling a scrambled

work and decrypting an encrypted work — are acts that do

not necessarily infringe or facilitate infringement of a copyright.6

 Descrambling or decrypting only enables someone to

watch or listen to a work without authorization, which is not

necessarily an infringement of a copyright owner’s traditional

exclusive rights under § 106. Put differently, descrambling

and decrypting do not necessarily result in someone’s reproducing, distributing, publicly performing, or publicly displaying the copyrighted work, or creating derivative works based

on the copyrighted work. 

The third significant difference between the subsections is

that § 1201(a)(1)(A) prohibits circumventing an effective

access control measure, whereas § 1201(b) prohibits trafficking in circumventing devices, but does not prohibit circumvention itself because such conduct was already outlawed as

copyright infringement. The Senate Judiciary Committee

explained:

This . . . is the reason there is no prohibition on conduct in 1201(b) akin to the prohibition on circumvention conduct in 1201(a)(1). The prohibition in

1201(a)(1) is necessary because prior to this Act, the

conduct of circumvention was never before made

unlawful. The device limitation on 1201(a)(2)

enforces this new prohibition on conduct. The copyright law has long forbidden copyright infringements, so no new prohibition was necessary. 

S. Rep. No. 105-90, at 11 (1998). This difference reinforces

our reading of § 1201(b) as strengthening copyright owners’

traditional rights against copyright infringement and of

6Perhaps for this reason, Congress did not list descrambling and decrypting as circumventing acts that would violate § 1201(b)(1). See 17 U.S.C.

§ 1201(b)(2)(A). 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20005
§ 1201(a) as granting copyright owners a new anticircumvention right.

Fourth, in § 1201(a)(1)(B)-(D), Congress directs the

Library of Congress (“Library”) to identify classes of copyrighted works for which “noninfringing uses by persons who

are users of a copyrighted work are, or are likely to be,

adversely affected, and the [anti-circumvention] prohibition

contained in [§ 1201(a)(1)(A)] shall not apply to such users

with respect to such classes of works for the ensuing 3-year

period.” There is no analogous provision in § 1201(b). We

impute this lack of symmetry to Congress’ need to balance

copyright owners’ new anti-circumvention right with the public’s right to access the work. Cf. H.R. Rep. No. 105-551, pt.

2, at 26 (1998) (specifying that the House Commerce Committee “endeavored to specify, with as much clarity as possible, how the right against anti-circumvention (sic) would be

qualified to maintain balance between the interests of content

creators and information users.”). Sections 1201(a)(1)(B)-(D)

thus promote the public’s right to access by allowing the

Library to exempt circumvention of effective access control

measures in particular situations where it concludes that the

public’s right to access outweighs the owner’s interest in

restricting access.7 In limiting the owner’s right to control

access, the Library does not, and is not permitted to, authorize

infringement of a copyright owner’s traditional exclusive

rights under the copyright. Rather, the Library is only entitled

to moderate the new anti-circumvention right created by, and

hence subject to the limitations in, DMCA § 1201(a)(1).8

7For instance, pursuant to § 1201(a), the Library of Congress recently

approved circumvention of the technological measures contained on the

iPhone and similar wireless phone handsets known as “smartphones,” in

order to allow users to install and run third-party software applications on

these phones. See http://www.copyright.gov/fedreg/2010/75fr43825.pdf.

8

In addition to these four textual differences, we note that § 1201(a)(2)

prohibits the circumvention of “a technological measure,” and

§ 1201(b)(1) prohibits the circumvention “of protection afforded by a

20006 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
Our reading of §§ 1201(a) and (b) ensures that neither section is rendered superfluous. A violation of § 1201(a)(1)(A),

which prohibits circumvention itself, will not be a violation of

§ 1201(b), which does not contain an analogous prohibition

on circumvention. A violation of § 1201(a)(2), which prohibits trafficking in devices that facilitate circumvention of

access control measures, will not always be a violation of

§ 1201(b)(1), which prohibits trafficking in devices that facilitate circumvention of measures that protect against copyright

infringement. Of course, if a copyright owner puts in place an

effective measure that both (1) controls access and (2) protects against copyright infringement, a defendant who traffics

in a device that circumvents that measure could be liable

under both §§ 1201(a) and (b). Nonetheless, we read the differences in structure between §§ 1201(a) and (b) as reflecting

Congress’s intent to address distinct concerns by creating different rights with different elements.

3. Our construction of the DMCA is consistent with the

legislative history

Although the text suffices to resolve the issues before us,

we also consider the legislative history in order to address the

parties’ arguments concerning it. Our review of that history

supports the view that Congress created a new anticircumvention right in § 1201(a)(2) independent of traditional

copyright infringement and granted copyright owners a new

weapon against copyright infringement in § 1201(b)(1). For

instance, the Senate Judiciary Committee report explains that

§§ 1201(a)(2) and (b)(1) are “not interchangeable”: they were

“designed to protect two distinct rights and to target two distechnological measure.” In our view, these terms have the same meaning,

given the presumption that a “legislative body generally uses a particular

word with a consistent meaning in a given context.” Graham County Soil

& Water Conservation Dist. v. United States ex rel. Wilson, 130 S. Ct.

1396, (2010) (quoting Erlenbaugh v. United States, 409 U.S. 239, 243

(1972)) (internal quotation marks omitted). 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20007
tinct classes of devices,” and “many devices will be subject

to challenge only under one of the subsections.” S. Rep. No.

105-190, at 12 (1998). That is, § 1201(a)(2) “is designed to

protect access to a copyrighted work,” while § 1201(b)(1) “is

designed to protect the traditional copyright rights of the

copyright owner.” Id. Thus, the Senate Judiciary Committee

understood § 1201 to create the following regime:

[I]f an effective technological protection measure

does nothing to prevent access to the plain text of the

work, but is designed to prevent that work from

being copied, then a potential cause of action against

the manufacturer of a device designed to circumvent

the measure lies under § 1201(b)(1), but not under

§ 1201(a)(2). Conversely, if an effective technological protection measure limits access to the plain text

of a work only to those with authorized access, but

provides no additional protection against copying,

displaying, performing or distributing the work, then

a potential cause of action against the manufacturer

of a device designed to circumvent the measure lies

under § 1201(a)(2), but not under § 1201(b).

Id. The Senate Judiciary Committee proffered an example of

§ 1201(a) liability with no nexus to infringement, stating that

if an owner effectively protected access to a copyrighted work

by use of a password, it would violate § 1201(a)(2)(A)

[T]o defeat or bypass the password and to make the

means to do so, as long as the primary purpose of the

means was to perform this kind of act. This is

roughly analogous to making it illegal to break into

a house using a tool, the primary purpose of which

is to break into houses.

Id. at 12. The House Judiciary Committee similarly states of

§ 1201(a)(2), “The act of circumventing a technological protection measure put in place by a copyright owner to control

20008 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
access to a copyrighted work is the electronic equivalent of

breaking into a locked room in order to obtain a copy of a

book.” See H.R. Rep. No. 105-551, pt. 1, at 17 (1998). We

note that bypassing a password and breaking into a locked

room in order to read or view a copyrighted work would not

infringe on any of the copyright owner’s exclusive rights

under § 106.

We read this legislative history as confirming Congress’s

intent, in light of the current digital age, to grant copyright

owners an independent right to enforce the prohibition against

circumvention of effective technological access controls.9 In

§ 1201(a), Congress was particularly concerned with encouraging copyright owners to make their works available in digital formats such as “on-demand” or “pay-per-view,” which

allow consumers effectively to “borrow” a copy of the work

for a limited time or a limited number of uses. As the House

Commerce Committee explained:

[A]n increasing number of intellectual property

works are being distributed using a “client-server”

model, where the work is effectively “borrowed” by

the user (e.g., infrequent users of expensive software

purchase a certain number of uses, or viewers watch

a movie on a pay-per-view basis). To operate in this

environment, content providers will need both the

technology to make new uses possible and the legal

framework to ensure they can protect their work

from piracy.

9

Indeed, the House Commerce Committee proposed, albeit unsuccessfully, to move § 1201 out of Title 17 altogether “because these regulatory

provisions have little, if anything, to do with copyright law. The anticircumvention provisions (and the accompanying penalty provisions for

violations of them) would be separate from, and cumulative to, the existing claims available to copyright owners.” H.R. Rep. No. 105-551 (1998),

pt. 2, at 23-24. 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20009
See H.R. Rep. No. 105-551 pt. 2, at 23 (1998). 

[15] Our review of the legislative history supports our

reading of § 1201: that section (a) creates a new anticircumvention right distinct from copyright infringement,

while section (b) strengthens the traditional prohibition

against copyright infringement.10 We now review the decisions of the Federal Circuit that have interpreted § 1201 differently.

4. The Federal Circuit’s decisions

The Federal Circuit has adopted a different approach to the

DMCA. In essence, it requires § 1201(a) plaintiffs to demonstrate that the circumventing technology infringes or facilitates infringement of the plaintiff’s copyright (an

“infringement nexus requirement”). See Chamberlain Group,

Inc. v. Skylink Techs., Inc., 381 F.3d 1178, 1203 (Fed. Cir.

2004); Storage Tech. Corp. v. Custom Hardware Eng’g Consulting, Inc., 421 F.3d 1307 (Fed. Cir. 2005).11

The seminal decision is Chamberlain, 381 F.3d 1178 (Fed.

Cir. 2004). In Chamberlain, the plaintiff sold garage door

10The Copyright Office has also suggested that § 1201(a) creates a new

access control right independent from copyright infringement, by expressing its view that the fair use defense to traditional copyright infringement

does not apply to violations of § 1201(a)(1). U.S. Copyright Office, The

Digital Millennium Copyright Act of 1998: U.S. Copyright Office Summary 4 (1998), available at http://www.copyright.gov/legislation/dmca.pdf

(“Since the fair use doctrine is not a defense to the act of gaining unauthorized access to a work, the act of circumventing a technological measure

in order to gain access is prohibited.”). 

11The Fifth Circuit in its subsequently withdrawn opinion in MGE UPS

Systems, Inc. v. GE Consumer and Industrial, Inc., 95 U.S.P.Q.2d 1632,

1635 (5th Cir. 2010), embraced the Federal Circuit’s approach in Chamberlain. However, its revised opinion, 622 F.3d (5th Cir. Sept. 20, 2010),

avoids the issue by determining that MGE had not shown circumvention

of its software protections. Notably, the revised opinion does not cite

Chamberlain.

20010 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
openers (“GDOs”) with a “rolling code” security system that

purportedly reduced the risk of crime by constantly changing

the transmitter signal necessary to open the door. Id. at 1183.

Customers used the GDOs’ transmitters to send the changing

signal, which in turn opened or closed their garage doors. Id.

Plaintiff sued the defendant, who sold “universal” GDO

transmitters for use with plaintiff’s GDOs, under

§ 1201(a)(2). Id. at 1185. The plaintiff alleged that its GDOs

and transmitters both contained copyrighted computer programs and that its rolling code security system was a technological measure that controlled access to those programs. Id.

at 1183. Accordingly, plaintiff alleged that the defendant —

by selling GDO transmitters that were compatible with plaintiff’s GDOs — had trafficked in a technology that was primarily used for the circumvention of a technological measure

(the rolling code security system) that effectively controlled

access to plaintiff’s copyrighted works. Id. 

The Federal Circuit rejected the plaintiff’s claim, holding

that the defendant did not violate § 1201(a)(2) because, inter

alia, the defendant’s universal GDO transmitters did not

infringe or facilitate infringement of the plaintiff’s copyrighted computer programs. Id. at 1202-03. The linchpin of

the Chamberlain court’s analysis is its conclusion that DMCA

coverage is limited to a copyright owner’s rights under the

Copyright Act as set forth in § 106 of the Copyright Act. Id.

at 1192-93. Thus, it held that § 1201(a) did not grant copyright owners a new anti-circumvention right, but instead,

established new causes of action for a defendant’s unauthorized access of copyrighted material when it infringes upon a

copyright owner’s rights under § 106. Id. at 1192, 1194.

Accordingly, a § 1201(a)(2) plaintiff was required to demonstrate a nexus to infringement — i.e., that the defendant’s trafficking in circumventing technology had a “reasonable

relationship” to the protections that the Copyright Act affords

copyright owners. Id. at 1202-03. The Federal Circuit

explained:

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20011
Defendants who traffic in devices that circumvent

access controls in ways that facilitate infringement

may be subject to liability under § 1201(a)(2).

Defendants who use such devices may be subject to

liability under § 1201(a)(1) whether they infringe or

not. Because all defendants who traffic in devices

that circumvent rights controls necessarily facilitate

infringement, they may be subject to liability under

§ 1201(b). Defendants who use such devices may be

subject to liability for copyright infringement. And

finally, defendants whose circumvention devices do

not facilitate infringement are not subject to § 1201

liability.

Id. at 1195 (emphasis added). Chamberlain concluded that

§ 1201(a) created a new cause of action linked to copyright

infringement, rather than a new anti-circumvention right separate from copyright infringement, for six reasons. 

First, Chamberlain reasoned that Congress enacted the

DMCA to balance the interests of copyright owners and information users, and an infringement nexus requirement was

necessary to create an anti-circumvention right that truly

achieved that balance. Id. at 1196 (citing H.R. Rep. No. 105-

551, at 26 (1998)). Second, Chamberlain feared that copyright owners could use an access control right to prohibit

exclusively fair uses of their material even absent feared foul

use. Id. at 1201. Third, Chamberlain feared that § 1201(a)

would allow companies to leverage their sales into aftermarket monopolies, in potential violation of antitrust law and the

doctrine of copyright misuse. Id. (citing Eastman Kodak Co.

v. Image Tech. Servs., 504 U.S. 451, 455 (1992) (antitrust);

Assessment Techs. of WI, LLC v. WIREdata, Inc., 350 F.3d

640, 647 (7th Cir. 2003) (copyright misuse)). Fourth, Chamberlain viewed an infringement nexus requirement as necessary to prevent “absurd and disastrous results,” such as the

existence of DMCA liability for disabling a burglary alarm to

gain access to a home containing copyrighted materials. Id. 

20012 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
Fifth, Chamberlain stated that an infringement nexus

requirement might be necessary to render Congress’s exercise

of its Copyright Clause authority rational. Id. at 1200. The

Copyright Clause gives Congress “the task of defining the

scope of the limited monopoly that should be granted to

authors . . . in order to give the public appropriate access to

their work product.” Id. (citing Eldred v. Ashcroft, 537 U.S.

186, 204-05 (2003) (internal citation omitted)). Without an

infringement nexus requirement, Congress arguably would

have allowed copyright owners in § 1201(a) to deny all access

to the public by putting an effective access control measure in

place that the public was not allowed to circumvent. 

Finally, the Chamberlain court viewed an infringement

nexus requirement as necessary for the Copyright Act to be

internally consistent. It reasoned that § 1201(c)(1), enacted

simultaneously, provides that “nothing in this section shall

affect rights, remedies, limitations, or defenses to copyright

infringement, including fair use, under this title.” The Chamberlain court opined that if § 1201(a) creates liability for

access without regard to the remainder of the Copyright Act,

it “would clearly affect rights and limitations, if not remedies

and defenses.” Id.

Accordingly, the Federal Circuit held that a DMCA

§ 1201(a)(2) action was foreclosed to the extent that the

defendant trafficked in a device that did not facilitate copyright infringement. Id.; see also Storage Tech., 421 F.3d 1307

(same).

5. We decline to adopt an infringement nexus requirement

[16] While we appreciate the policy considerations

expressed by the Federal Circuit in Chamberlain, we are

unable to follow its approach because it is contrary to the

plain language of the statute. In addition, the Federal Circuit

failed to recognize the rationale for the statutory construction

that we have proffered. Also, its approach is based on policy

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20013
concerns that are best directed to Congress in the first

instance, or for which there appear to be other reasons that do

not require such a convoluted construction of the statute’s language.

i. Statutory inconsistencies

Were we to follow Chamberlain in imposing an infringement nexus requirement, we would have to disregard the plain

language of the statute. Moreover, there is significant textual

evidence showing Congress’s intent to create a new anticircumvention right in § 1201(a) distinct from infringement.

As set forth supra, this evidence includes: (1) Congress’s

choice to link only § 1201(b)(1) explicitly to infringement; (2)

Congress’s provision in § 1201(a)(3)(A) that descrambling

and decrypting devices can lead to § 1201(a) liability, even

though descrambling and decrypting devices may only enable

non-infringing access to a copyrighted work; and (3) Congress’s creation of a mechanism in § 1201(a)(1)(B)-(D) to

exempt certain non-infringing behavior from § 1201(a)(1) liability, a mechanism that would be unnecessary if an infringement nexus requirement existed.

Though unnecessary to our conclusion because of the clarity of the statute’s text, see United States v. Gallegos, 613

F.3d 1211, 1214 (9th Cir. 2010), we also note that the legislative history supports the conclusion that Congress intended to

prohibit even non-infringing circumvention and trafficking in

circumventing devices. Moreover, in mandating a § 1201(a)

nexus to infringement, we would deprive copyright owners of

the important enforcement tool that Congress granted them to

make sure that they are compensated for valuable noninfringing access — for instance, copyright owners who make

movies or music available online, protected by an access control measure, in exchange for direct or indirect payment.

The Chamberlain court reasoned that if § 1201(a) creates

liability for access without regard to the remainder of the

20014 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
Copyright Act, it “would clearly affect rights and limitations,

if not remedies and defenses.” 381 F.3d at 1200. This perceived tension is relieved by our recognition that § 1201(a)

creates a new anti-circumvention right distinct from the traditional exclusive rights of a copyright owner. It follows that

§ 1201(a) does not limit the traditional framework of exclusive rights created by § 106, or defenses to those rights such

as fair use.12 We are thus unpersuaded by Chamberlain’s reading of the DMCA’s text and structure. 

ii. Additional interpretive considerations

Though we need no further evidence of Congress’s intent,

the parties, citing Chamberlain, proffer several other arguments, which we review briefly in order to address the parties’ contentions. Chamberlain relied heavily on policy

considerations to support its reading of § 1201(a). As a

threshold matter, we stress that such considerations cannot

trump the statute’s plain text and structure. Gallegos, 613

F.3d at 1214. Even were they permissible considerations in

this case, however, they would not persuade us to adopt an

infringement nexus requirement. Chamberlain feared that

§ 1201(a) would allow companies to leverage their sales into

aftermarket monopolies, in tension with antitrust law and the

doctrine of copyright misuse.13 Id. (citing Eastman, 504 U.S.

at 455 (antitrust); Assessment Techs., 350 F.3d at 647 (copy12Like the Chamberlain court, we need not and do not reach the relationship between fair use under § 107 of the Copyright Act and violations

of § 1201. Chamberlain, 381 F.3d at 1199 n.14. MDY has not claimed that

Glider use is a “fair use” of WoW’s dynamic non-literal elements. Accordingly, we too leave open the question whether fair use might serve as an

affirmative defense to a prima facie violation of § 1201. Id. 

13Copyright misuse is an equitable defense to copyright infringement

that denies the copyright holder the right to enforce its copyright during

the period of misuse. Practice Mgmt. Info. Corp v. Am. Med. Ass’n, 121

F.3d 516, 520 (9th Cir. 1997). Since we have held that § 1201(a) creates

a right distinct from copyright infringement, we conclude that we need not

address copyright misuse in this case. 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20015
right misuse)). Concerning antitrust law, we note that there is

no clear issue of anti-competitive behavior in this case

because Blizzard does not seek to put a direct competitor who

offers a competing role-playing game out of business and the

parties have not argued this issue. If a § 1201(a)(2) defendant

in a future case claims that a plaintiff is attempting to enforce

its DMCA anti-circumvention right in a manner that violates

antitrust law, we will then consider the interplay between this

new anti-circumvention right and antitrust law.

Chamberlain also viewed an infringement nexus requirement as necessary to prevent “absurd and disastrous results,”

such as the existence of DMCA liability for disabling a burglary alarm to gain access to a home containing copyrighted

materials. 381 F.3d at 1201. In addition, the Federal Circuit

was concerned that, without an infringement nexus requirement, § 1201(a) would allow copyright owners to deny all

access to the public by putting an effective access control

measure in place that the public is not allowed to circumvent.

381 F.3d at 1200. Both concerns appear to be overstated,14 but

even accepting them, arguendo, as legitimate concerns, they

do not permit reading the statute as requiring the imposition

of an infringement nexus. As § 1201(a) creates a distinct

right, it does not disturb the balance between public rights and

the traditional rights of owners of copyright under the Copyright Act. Moreover, § 1201(a)(1)(B)-(D) allows the Library

of Congress to create exceptions to the § 1201(a) anticircumvention right in the public’s interest. If greater protec14The Chamberlain court’s assertion that the public has a constitutional

right to appropriately access copyright works during the copyright term,

381 F.3d at 1200, cited Eldred v. Ashcroft, 537 U.S. 186, 204-05 (2003).

The Eldred decision, however, was quoting the Supreme Court’s previous

decision in Sony Corp. of America v. Universal City Studios, Inc., which

discussed the public’s right of access after the copyright term. 464 U.S.

417, 429 (1984) (“[T]he limited grant [of copyright] . . . is intended to

motivate the creative activity of authors and inventors by the provision of

a special reward, and to allow the public access to the products of their

genius after the limited period of exclusive control has expired.”). 

20016 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
tion of the public’s ability to access copyrighted works is

required, Congress can provide such protection by amending

the statute. 

In sum, we conclude that a fair reading of the statute (supported by legislative history) indicates that Congress created

a distinct anti-circumvention right under § 1201(a) without an

infringement nexus requirement. Thus, even accepting the

validity of the concerns expressed in Chamberlain, those concerns do not authorize us to override congressional intent and

add a non-textual element to the statute. See In Re Dumont,

581 F.3d 1104, 1111 (9th Cir. 2009) (“[W]here the language

of an enactment is clear or, in modern parlance, plain, and

construction according to its terms does not lead to absurd or

impracticable consequences, the words employed are to be

taken as the final expression of the meaning intended.”).

Accordingly, we reject the imposition of an infringement

nexus requirement. We now consider whether MDY has violated §§ 1201(a)(2) and (b)(1).

E. Blizzard’s § 1201(a)(2) claim

1. WoW’s literal elements and individual non-literal 

elements

[17] We agree with the district court that MDY’s Glider

does not violate DMCA § 1201(a)(2) with respect to WoW’s

literal elements15 and individual non-literal elements, because

Warden does not effectively control access to these WoW elements. First, Warden does not control access to WoW’s literal

elements because these elements — the game client’s software code — are available on a player’s hard drive once the

game client software is installed. Second, as the district court

found: 

15We also agree with the district court that there are no genuine issues

of material fact on Blizzard’s § 1201(a)(2) claim regarding WoW’s literal

elements. 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20017
[WoW’s] individual nonliteral components may be

accessed by a user without signing on to the server.

As was demonstrated during trial, an owner of the

game client software may use independently purchased computer programs to call up the visual

images or the recorded sounds within the game client

software. For instance, a user may call up and listen

to the roar a particular monster makes within the

game. Or the user may call up a virtual image of that

monster.

Since a player need not encounter Warden to access WoW’s

individual non-literal elements, Warden does not effectively

control access to those elements.

Our conclusion is in accord with the Sixth Circuit’s decision in Lexmark International v. Static Control Components,

387 F.3d 522 (6th Cir. 2004). In Lexmark, the plaintiff sold

laser printers equipped with an authentication sequence, verified by the printer’s copyrighted software, that ensured that

only plaintiff’s own toner cartridges could be inserted into the

printers. Id. at 530. The defendant sold microchips capable of

generating an authentication sequence that rendered other

manufacturers’ cartridges compatible with plaintiff’s printers.

Id. 

The Sixth Circuit held that plaintiff’s § 1201(a)(2) claim

failed because its authentication sequence did not effectively

control access to its copyrighted computer program. Id. at

546. Rather, the mere purchase of one of plaintiff’s printers

allowed “access” to the copyrighted program. Any purchaser

could read the program code directly from the printer memory

without encountering the authentication sequence. Id. The

authentication sequence thus blocked only one form of access:

the ability to make use of the printer. However, it left intact

another form of access: the review and use of the computer

program’s literal code. Id. The Sixth Circuit explained:

20018 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
Just as one would not say that a lock on the back

door of a house “controls access” to a house whose

front door does not contain a lock and just as one

would not say that a lock on any door of a house

“controls access” to the house after its purchaser

receives the key to the lock, it does not make sense

to say that this provision of the DMCA applies to

otherwise-readily-accessible copyrighted works. Add

to this the fact that the DMCA not only requires the

technological measure to “control access” but

requires the measure to control that access “effectively,” 17 U.S.C. § 1201(a)(2), and it seems clear

that this provision does not naturally extend to a

technological measure that restricts one form of

access but leaves another route wide open.

Id. at 547.

[18] Here, a player’s purchase of the WoW game client

allows access to the game’s literal elements and individual

non-literal elements. Warden blocks one form of access to

these elements: the ability to access them while connected to

a WoW server. However, analogously to the situation in Lexmark, Warden leaves open the ability to access these elements

directly via the user’s computer. We conclude that Warden is

not an effective access control measure with respect to

WoW’s literal elements and individual non-literal elements,

and therefore, that MDY does not violate § 1201(a)(2) with

respect to these elements.

2. WoW’s dynamic non-literal elements

[19] We conclude that MDY meets each of the six textual

elements for violating § 1201(a)(2) with respect to WoW’s

dynamic non-literal elements. That is, MDY (1) traffics in (2)

a technology or part thereof (3) that is primarily designed,

produced, or marketed for, or has limited commercially significant use other than (4) circumventing a technological meaMDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20019
sure (5) that effectively controls access (6) to a copyrighted

work. See 17 US.C. § 1201(a)(2).

The first two elements are met because MDY “traffics in a

technology or part thereof” — that is, it sells Glider. The third

and fourth elements are met because Blizzard has established

that MDY markets Glider for use in circumventing Warden,

thus satisfying the requirement of § 1201(a)(2)(C).16 Indeed,

Glider has no function other than to facilitate the playing of

WoW. The sixth element is met because, as the district court

held, WoW’s dynamic non-literal elements constitute a copyrighted work. See, e.g., Atari Games Corp. v. Oman, 888 F.2d

878, 884-85 (D.C. Cir. 1989) (the audiovisual display of a

computer game is copyrightable independently from the software program code, even though the audiovisual display generated is partially dependent on user input).

16To “circumvent a technological measure” under § 1201(a) means to

“descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner.” 17 U.S.C.

§ 1201(a)(3)(A) (emphasis added). A circuit split exists with respect to the

meaning of the phrase “without the authority of the copyright owner.” The

Federal Circuit has concluded that this definition imposes an additional

requirement on a § 1201(a)(2) plaintiff: to show that the defendant’s circumventing device enables third parties to access the copyrighted work

without the copyright owner’s authorization. See Chamberlain, 381 F.3d

at 1193.The Second Circuit has adopted a different view, explaining that

§ 1201(a)(3)(A) plainly exempts from § 1201(a) liability those whom a

copyright owner authorizes to circumvent an access control measure, not

those whom a copyright owner authorizes to access the work. Corley, 273

F.3d at 444 & n.15; see also 321 Studios v. MGM Studios, Inc., 307 F.

Supp. 2d 1085, 1096 (N.D. Cal. 2004) (same). 

We find the Second Circuit’s view to be the sounder construction of the

statute’s language, and conclude that § 1201(a)(2) does not require a plaintiff to show that the accused device enables third parties to access the

work without the copyright owner’s authorization. Thus, Blizzard has satisfied the “circumvention” element of a § 1201(a)(2) claim, because Blizzard has demonstrated that it did not authorize MDY to circumvent

Warden. 

20020 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
[20] The fifth element is met because Warden is an effective access control measure. To “effectively control access to

a work,” a technological measure must “in the ordinary course

of its operation, require[ ] the application of information, or

a process or a treatment, with the authority of the copyright

owner, to gain access to the work.” 17 U.S.C.

§ 1201(a)(3)(B). Both of Warden’s two components “require[ ] the application of information, or a process or a treatment . . . to gain access to the work.” For a player to connect

to Blizzard’s servers which provide access to WoW’s

dynamic non-literal elements, scan.dll must scan the player’s

computer RAM and confirm the absence of any bots or

cheats. The resident component also requires a “process” in

order for the user to continue accessing the work: the user’s

computer must report portions of WoW code running in RAM

to the server. Moreover, Warden’s provisions were put into

place by Blizzard, and thus, function “with the authority of

the copyright owner.” Accordingly, Warden effectively controls access to WoW’s dynamic non-literal elements.17 We

hold that MDY is liable under § 1201(a)(2) with respect to

WoW’s dynamic non-literal elements.18 Accordingly, we

affirm the district court’s entry of a permanent injunction

against MDY to prevent future § 1201(a)(2) violations.

17The statutory definition of the phrase “effectively control access to a

work” does not require that an access control measure be strong or

circumvention-proof. Rather, it requires an access control measure to provide some degree of control over access to a copyrighted work. As one

district court has observed, if the word “effectively” were read to mean

that the statute protects “only successful or efficacious technological

means of controlling access,” it would “gut” DMCA § 1201(a)(2), because

it would “limit the application of the statute to access control measures

that thwart circumvention, but withhold protection for those measures that

can be circumvented.” See Universal City Studios v. Reimerdes, 111 F.

Supp. 2d 294, 318 (S.D.N.Y. 2000) (“Defendants would have the Court

construe the statute to offer protection where none is needed but to withhold protection precisely where protection is essential.”). 

18We note that the DMCA allows innocent violators to seek reduction

or remittance of damages. See 17 U.S.C. § 1203(c)(5). 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20021
F. Blizzard’s § 1201(b)(1) claim

[21] Blizzard may prevail under § 1201(b)(1) only if Warden “effectively protect[s] a right” of Blizzard under the

Copyright Act. Blizzard contends that Warden protects its

reproduction right against unauthorized copying. We disagree.

First, although WoW players copy the software code into

RAM while playing the game, Blizzard’s EULA and ToU

authorize all licensed WoW players to do so. We have

explained that ToU § 4(B)’s bot prohibition is a license covenant rather than a condition. Thus, a Glider user who violates

this covenant does not infringe by continuing to copy code

into RAM. Accordingly, MDY does not violate § 1201(b)(1)

by enabling Glider users to avoid Warden’s interruption of

their authorized copying into RAM. 

[22] Second, although WoW players can theoretically

record game play by taking screen shots, there is no evidence

that Warden detects or prevents such allegedly infringing copying.19 This is logical, because Warden was designed to reduce

the presence of cheats and bots, not to protect WoW’s

dynamic non-literal elements against copying. We conclude

that Warden does not effectively protect any of Blizzard’s

rights under the Copyright Act, and MDY is not liable under

§ 1201(b)(1) for Glider’s circumvention of Warden.20

19No evidence establishes that Glider users engage in this practice, and

Glider itself does not provide a software mechanism for taking screenshots

or otherwise reproducing copyrighted WoW material. 

20The district court permanently enjoined “MDY and Michael Donnelly

from engaging in contributory or vicarious copyright infringement and

from violating the DMCA with respect to Blizzard’s copyrights in and

rights to” WoW. Because we conclude that MDY is not liable under

§ 1201(b)(1), we vacate the aspect of the permanent injunction dealing

with MDY’s and Donnelly’s § 1201(b)(1) liability. 

20022 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
VI.

The district court granted Blizzard summary judgment on

its claim against MDY for tortious interference with contract

(“tortious interference”) under Arizona law and held that

Donnelly was personally liable for MDY’s tortious interference. We review the district court’s grant of summary judgment de novo. See Canyon Ferry Rd. Baptist Church of East

Helena, Inc. v. Unsworth, 556 F.3d 1021, 1027 (9th Cir.

2009). We view the evidence in the light most favorable to

non-movant MDY in determining whether there are any genuine issues of material fact. Id. Because we conclude that there

are triable issues of material fact, we vacate and remand for

trial.

A. Elements of Blizzard’s tortious interference claim

To recover for tortious interference under Arizona law,

Blizzard must prove: (1) the existence of a valid contractual

relationship; (2) MDY’s knowledge of the relationship; (3)

MDY’s intentional interference in inducing or causing the

breach; (4) the impropriety of MDY’s interference; and (5)

resulting damages. See Safeway Ins. Co. v. Guerrero, 106

P.3d 102, 1025 (Ariz. 2005); see also Antwerp Diamond

Exch. of Am., Inc. v. Better Bus. Bur. of Maricopa County,

Inc., 637 P.2d 733, 740 (Ariz. 1981).

Blizzard satisfies four of these five elements based on

undisputed facts. First, a valid contractual relationship exists

between Blizzard and its customers based on the operative

EULA and ToU. Second, MDY was aware of this relationship: it does not contend that it was unaware of the operative

EULA and ToU, or unaware that using Glider breached their

terms. In fact, after Blizzard first attempted to ban Glider

users, MDY modified its website to notify customers that

using Glider violated the ToU. Third, MDY intentionally

interfered with Blizzard’s contracts. After Blizzard used Warden to ban a majority of Glider users in September 2005,

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20023
MDY programmed Glider to be undetectable by Warden.

Finally, Blizzard has proffered evidence that it was damaged

by MDY’s conduct. 

Thus, Blizzard is entitled to summary judgment if there are

no triable issues of material fact as to the fourth element of

its tortious interference claim: whether MDY’s actions were

improper. To determine whether a defendant’s conduct was

improper, Arizona employs the seven-factor test of Restatement (Second) of Torts § 767. See Safeway, 106 P.3d at 1027;

see also Wagonseller v. Scottsdale Mem’l Hosp., 710 P.2d

1025, 1042-43 (Ariz. 1985), superseded in other respects by

A.R.S. § 23-1501. The seven factors are (1) the nature of

MDY’s conduct, (2) MDY’s motive, (3) Blizzard’s interests

with which MDY interfered, (4) the interests MDY sought to

advance, (5) the social interests in protecting MDY’s freedom

of action and Blizzard’s contractual interests, (6) the proximity or remoteness of MDY’s conduct to the interference, and

(7) the relations between MDY and Blizzard. Id. A court

should give greatest weight to the first two factors. Id. We

conclude that summary judgment was inappropriate here,

because on the current record, taking the facts in the light

most favorable to MDY, the first five factors do not clearly

weigh in either side’s favor, thus creating a genuine issue of

material fact.

1. Nature of MDY’s conduct and MDY’s motive

The parties have presented conflicting evidence with

respect to these two most important factors. Blizzard’s evidence tends to demonstrate that MDY helped Glider users

gain an advantage over other WoW players by advancing

automatically to a higher level of the game. Thus, MDY

knowingly assisted Glider users to breach their contracts, and

then helped to conceal those breaches from Blizzard. Blizzard’s evidence also supports the conclusion that Blizzard was

negatively affected by MDY’s Glider sales, because Glider

use: (1) distorts WoW’s virtual economy by flooding it with

20024 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
excess resources; (2) interferes with WoW players’ ability to

interact with other human players in the virtual world; and (3)

strains Blizzard’s servers because bots spend more continuous

time in-game than do human players. Finally, Blizzard introduced evidence that MDY’s motive was its three and a half

to four million dollar profit.

On the other hand, MDY proffered evidence that it created

Glider in 2005, when Blizzard’s ToU did not explicitly prohibit bots.21 Glider initially had no anti-detection features.

MDY added these features only after Blizzard added Warden

to WoW. Blizzard did not change the EULA or ToU to proscribe bots such as Glider explicitly until after MDY began

selling Glider. Finally, MDY has introduced evidence that

Glider enhances some players’ experience of the game,

including players who might otherwise not play WoW at all.

Taking this evidence in the light most favorable to MDY,

there is a genuine issue of material fact as to these factors.

2. Blizzard’s interests with which MDY interferes; the

interest that MDY seeks to advance; the social interest

in protecting MDY’s and Blizzard’s respective interests

Blizzard argues that it seeks to provide its millions of WoW

players with a particular role-playing game experience that

excludes bots. It contends, as the district court determined,

that MDY’s interest depends on inducing Blizzard’s customers to breach their contracts. In contrast, MDY argues that

Glider is an innovative, profitable software program that has

positively affected its users’ lives by advancing them to

WoW’s more interesting levels. MDY has introduced evi21When MDY created Glider in 2005, Blizzard’s ToU prohibited the use

of “cheats” and “unauthorized third-party software” in connection with

WoW. The meaning of these contractual terms, including whether they

prohibit bots such as Glider, is ambiguous. In Arizona, the construction of

ambiguous contract provisions is a jury question. See Clark v. Compania

Ganadera de Cananea, S.A., 385 P.2d 691, 697-98 (Ariz. 1963). 

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20025
dence that Glider allows players with limited motor skills to

continue to play WoW, improves some users’ romantic relationships by reducing the time that they spend playing WoW,

and allows users who work long hours to play WoW. We further note that, if the fact-finder decides that Blizzard did not

ban bots at the time that MDY created Glider, the fact-finder

might conclude that MDY had a legitimate interest in continuing to sell Glider. Again, the parties’ differing evidence

creates a genuine issue of material fact that precludes an

award of summary judgment.

3. Proximity of MDY’s conduct to the interference; 

relationship between MDY and Blizzard

[23] MDY’s Glider sales are the but-for cause of Glider

users’ breach of the operative ToU. Moreover, Blizzard and

MDY are not competitors in the online role-playing game

market; rather, MDY’s profits appear to depend on the continued popularity of WoW. Blizzard, however, chose not to

authorize MDY to sell Glider to its users. Even accepting that

these factors favor Blizzard, we do not think that they independently warrant a grant of summary judgment to Blizzard.

As noted, we cannot hold that five of the seven “impropriety”

factors compel a finding in Blizzard’s favor at this stage,

including the two (nature of MDY’s conduct and MDY’s

motive) that the Arizona courts deem most important.

Accordingly, we vacate the district court’s grant of summary

judgment to Blizzard.22

B. Copyright Act preemption

MDY contends that Blizzard’s tortious interference claim

is preempted by the Copyright Act. The Copyright Act preempts state laws that confer rights equivalent to the exclusive

22Because the district court entered a permanent injunction based on

MDY’s liability for tortious interference, we also vacate that permanent

injunction. 

20026 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
rights of copyright under 17 U.S.C. § 106 (i.e., reproduction,

distribution, public display, public performance, and creation

of derivative works). 17 U.S.C. § 301(a). However, the Copyright Act does not preempt state law remedies with respect to

“activities violating legal or equitable rights that are not

equivalent to any of the exclusive rights [of copyright].” 17

U.S.C. § 301(b)(3). 

[24] Whether, in these circumstances, tortious interference

with contract is preempted by the Copyright Act is a question

of first impression in this circuit. However, we have previously addressed a similar tortious interference cause of action

under California law and found it not preempted. See Altera

Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1089-90 (9th Cir.

2005). In so holding, we relied on the Seventh Circuit’s analysis in ProCD, 86 F.3d 1447, which explained that because

contractual rights are not equivalent to the exclusive rights of

copyright, the Copyright Act’s preemption clause usually

does not affect private contracts. Altera, 424 F.3d at 1089; see

ProCD, 86 F.3d at 1454 (“A copyright is a right against the

world. Contracts, by contrast, generally affect only their parties; strangers may do as they please, so contracts do not

create ‘exclusive rights.’ ”). The Fourth, Fifth, and Eighth

Circuits have also held that the Copyright Act does not preempt a party’s enforcement of its contractual rights. See Nat’l

Car Rental Sys., Inc. v. Comp. Assoc. Int’l, Inc., 991 F.2d 426,

433 (8th Cir. 1993); Taquino v. Teledyne Monarch Rubber,

893 F.2d 1488, 1501 (5th Cir. 1990); Acorn Structures, Inc.

v. Swantz, 846 F.2d 923, 926 (4th Cir. 1988). 

[25] This action concerns the anti-bot provisions of ToU

§ 4(b)(ii) and (iii), which we have held are contractenforceable covenants rather than copyright-enforceable conditions. We conclude that since Blizzard seeks to enforce contractual rights that are not equivalent to any of its exclusive

rights of copyright, the Copyright Act does not preempt its

tortious interference claim. Cf. Altera, 424 F0.3d at 1089-90.

Accordingly, we hold that Blizzard’s tortious interference

MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT 20027
claim under Arizona law is not preempted by the Copyright

Act, but we vacate the grant of summary judgment because

there are outstanding issues of material fact.23

VII.

The district court found that Donnelly was personally liable

for MDY’s tortious interference with contract, secondary

copyright infringement, and DMCA violations. We vacate the

district court’s decision because we determine that MDY is

not liable for secondary copyright infringement and is liable

under the DMCA only for violation of § 1201(a)(2) with

respect to WoW’s dynamic non-literal elements. In addition,

we conclude that summary judgment is inappropriate as to

Blizzard’s claim for tortious interference with contract under

Arizona law. Accordingly, on remand, the district court shall

reconsider the issue of Donnelly’s personal liability.24 The

district court’s decision is VACATED and the case is

REMANDED to the district court for further proceedings

consistent with this opinion.

Each side shall bear its own costs.

23Because we determine that there are triable issues of fact, we need not,

and do not, address MDY’s further contentions: that (1) Blizzard has

unclean hands because it changed the ToU to ban bots after this litigation

began; and (2) MDY is not liable for tortious interference because it only

“honestly persuaded” people to buy Glider. 

24If MDY is found liable at trial for tortious interference with contract,

the district court may consider Donnelly’s personal liability for that tortious interference. Moreover, the district court may determine whether

Donnelly is personally liable for MDY’s violation of DMCA § 1201(a)(2).

In light of the foregoing disposition regarding Donnelly’s personal liability, we also vacate in toto the district court’s permanent injunction against

Donnelly, though the district court may consider the propriety of an

injunction against Donnelly if it finds him liable for MDY’s § 1201(a)(2)

violations or for tortious interference with contract. 

20028 MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT