Court Opinion

ID: 205002
Source: CourtListenerOpinion
Date Created: 2011-02-17 19:09:37+00
Date Added: 2024-06-11T15:08:17.622473
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MDY INDUSTRIES, LLC,                   
       Plaintiff-counter-defendant-
                         Appellant,
                 v.
BLIZZARD ENTERTAINMENT, INC. and            No. 09-15932
VIVENDI GAMES, INC.,
  Defendants-third-party-plaintiffs-         D.C. No.
                                           2:06-CV-02555-
                         Appellees,             DGC

                 v.
MICHAEL DONNELLY,
  Third-party-defendant-Appellant.
                                       

MDY INDUSTRIES, LLC,                   
       Plaintiff-counter-defendant-
                          Appellee,         No. 09-16044
                 v.                           D.C. No.
BLIZZARD ENTERTAINMENT, INC. and           2:06-CV-02555-
VIVENDI GAMES, INC.,                           DGC
  Defendants-third-party-plaintiffs-        ORDER AND
                        Appellants,          AMENDED
                 v.                           OPINION
MICHAEL DONNELLY,
   Third-party-defendant-Appellee.
                                       
       Appeal from the United States District Court
                for the District of Arizona
       David G. Campbell, District Judge, Presiding

                            2657
2658    MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
                 Argued and Submitted
           June 7, 2010—Seattle, Washington

               Filed December 14, 2010
              Amended February 17, 2011

 Before: William C. Canby, Jr., Consuelo M. Callahan and
              Sandra S. Ikuta, Circuit Judges.

               Opinion by Judge Callahan
         MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT       2663
                        COUNSEL

Lance C. Venable (argued) and Joseph R. Meaney of Ven-
able, Campillo, Logan & Meaney, P.C., for plaintiff-
appellant/cross-appellee MDY Industries LLC and plaintiff-
appellant/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 Wil-
liams of Mitchell Silberberg & Knupp LLP, for amicus curiae
Motion Picture Association of America, Inc.
2664      MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
                           ORDER

   Our opinion filed on December 14, 2010, is amended to
include the following footnote at the end of Section V(E)(2):

    For the first time in its petition for rehearing, MDY
    raises the applicability of Section 1201(f) and the
    question whether Glider is an “independently created
    computer program” under that subsection and thus
    exempt from the coverage of Section 1201(a).
    Because this argument was not raised to the district
    court or presented in the parties’ briefs on appeal, we
    decline to reach it.

  With this amendment, the plaintiffs-appellants’ petition for
panel rehearing is DENIED. No further petition for rehearing
will be entertained.

                          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 Indus-
tries, LLC and its sole member Michael Donnelly
(“Donnelly”) (sometimes referred to collectively as “MDY”)
developed and sold Glider, a software program that automati-
cally 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 copy-
right 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 con-
          MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT        2665
tract under Arizona law. The district court found MDY and
Donnelly liable for secondary copyright infringement, viola-
tions of DMCA §§ 1201(a)(2) and (b)(1), and tortious inter-
ference 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 inter-
act 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 partici-
pating in quests and engaging in battles with monsters. As a
player advances, the character collects rewards such as in-
game 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.

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
2666       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
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. Play-
ers 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 per-
sonal 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 experi-
ence. Blizzard contends that Glider disrupts WoW’s environ-
ment for non-Glider players by enabling Glider users to
advance quickly and unfairly through the game and to amass
additional game assets. MDY contends that Glider has a mini-
mal effect on non-Glider players, enhances the WoW experi-
ence for Glider users, and facilitates disabled players’ access
to WoW by auto-playing the game for them.
         MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT        2667
  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 doc-
uments.

   In September 2005, Blizzard launched Warden, a technol-
ogy that it developed to prevent its players who use unautho-
rized third-party software, including bots, from connecting to
WoW’s servers. Warden was able to detect Glider, and Bliz-
zard 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 pro-
hibiting 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 run-
ning 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 reve-
nues 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
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 play-
ers. 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
2668       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
playing manually. Donnelly acknowledged in a November
2005 email that MDY’s business strategy was to make Bliz-
zard’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 let-
ter alleging that MDY’s website hosted WoW screenshots and
a Glider install file, all of which infringed Blizzard’s copy-
rights. Donnelly removed the screenshots and requested Bliz-
zard 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 Don-
nelly for, inter alia, contributory and vicarious copyright
infringement, violation of DMCA §§ 1201(a)(2) and (b)(1),
and tortious interference with contract.

   In July 2008, the district court granted Blizzard partial sum-
mary judgment, finding that MDY’s Glider sales contribu-
torily and vicariously infringed Blizzard’s copyrights and
         MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT        2669
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 Janu-
ary 2009 bench trial, the district court held MDY liable under
DMCA §§ 1201(a)(2) and (b)(1). It also held Donnelly per-
sonally liable for MDY’s copyright infringement, DMCA vio-
lations, and tortious interference with contract.

   On April 1, 2009, the district court entered judgment
against MDY and Donnelly for $6.5 million, an adjusted fig-
ure 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.
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.
2670       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
                                  IV.

   [1] We first consider whether MDY committed contribu-
tory or vicarious infringement (collectively, “secondary
infringement”) of Blizzard’s copyright by selling Glider to
WoW players.1 See 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 par-
ties.”). 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 contribu-
tory infringement if it has “intentionally induc[ed] or
encourag[ed] direct infringement” by Glider users. MGM Stu-
dios 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 vicari-
ous 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
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
  1
   Alternatively, MDY asks that we determine whether there are any gen-
uine 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             2671
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 soft-
     ware 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 uti-
lization 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);
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) speci-
fies that the user is granted a license; (2) significantly restricts
the user’s ability to transfer the software; and (3) imposes
2672       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
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, lim-
ited license. Blizzard also imposes transfer restrictions if a
player seeks to transfer the license: the player must (1) trans-
fer 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
may infringe unless their usage is within the scope of Bliz-
zard’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 copy-
right infringement, and it may sue only for breach of con-
          MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT          2673
tract.” 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 copy-
right 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 consis-
tent 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 play-
ing WoW while violating a ToU term that is a license condi-
tion. To establish copyright infringement, then, Blizzard must
demonstrate that the violated term — ToU § 4(B) — is a con-
dition rather than a covenant. Sun I, 188 F.3d at 1122. Bliz-
zard’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
that the promisee is justified in understanding that the promi-
sor 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 Con-
tracts § 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
2674      MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
(Second) of Contracts § 224. Conditions precedent are disfa-
vored because they tend to work forfeitures. AES, 429 F.
Supp. 2d at 717 (internal citations omitted). Wherever possi-
ble, equity construes ambiguous contract provisions as cove-
nants 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 soft-
ware are covenants rather than copyright-enforceable condi-
tions. 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 sec-
tion conditions Blizzard’s grant of a limited license on play-
ers’ 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 obliga-
tions” were covenants because the license was not specifically
conditioned on their fulfillment).

   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 com-
plaint 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.,
            MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT                   2675
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 copy-
     ing 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

   [11] Here, ToU § 4 contains certain restrictions that are
   2
     See also S.O.S., 886 F.2d at 1089 (remanding for infringement determi-
nation where licensee exceeded the license’s scope by preparing a modi-
fied 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
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).
2676       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
grounded in Blizzard’s exclusive rights of copyright and other
restrictions that are not. For instance, ToU § 4(D) forbids cre-
ation 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 exclu-
sive 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 vio-
late the contractual covenants with Blizzard, it would not vio-
late any of Blizzard’s exclusive rights of copyright. The anti-
bot 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 copy-
right owners far greater rights than Congress has generally
conferred on copyright owners.3
  3
    A copyright holder may wish to enforce violations of license agree-
ments as copyright infringements for several reasons. First, breach of con-
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
            MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT                   2677
   [12] We conclude that for a licensee’s violation of a con-
tract 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 copy-
right 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 Bliz-
zard commits copyright misuse. Copyright misuse is an equi-
table 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 judg-
ment to Blizzard on its secondary copyright infringement
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.”

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.
   4
     A 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 licen-
sor’s exclusive statutory rights. We view payment as sui generis, however,
because of the distinct nexus between payment and all commercial copy-
right licenses, not just those concerning software.
2678       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
                               V.

   After MDY began selling Glider, Blizzard launched War-
den, 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 mod-
ule 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 War-
den, MDY reconfigured Glider to circumvent scan.dll by not
loading itself until after scan.dll completed its check. War-
den’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 Intel-
lectual Property Organization (“WIPO”) treaties, which
require contracting parties to provide effective legal remedies
against the circumvention of protective technological mea-
sures 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 pre-
          MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT          2679
sented by copyright enforcement in the digital age. Id. The
DMCA contains three provisions directed at the circumven-
tion 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 technol-
ogy that circumvents a technological measure that “effec-
tively 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 pro-
tects” 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 compo-
nents. First, the district court considered the game client soft-
ware’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 ele-
ments: that is, the “real-time experience of traveling through
different worlds, hearing their sounds, viewing their struc-
tures, 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 lit-
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 connect-
ing to a game server and encountering Warden; they need
2680       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
only install the game client software on their computers. The
district court also ruled for MDY following trial as to Bliz-
zard’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 expe-
rience” 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 War-
den’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 soft-
ware.

D.     Construction of § 1201

   One of the issues raised by this appeal is whether certain
provisions of § 1201 prohibit circumvention of access con-
trols when access does not constitute copyright infringement.
To answer this question and others presented by this appeal,
          MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT         2681
we address the nature and interrelationship of the various pro-
visions 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 stat-
utes 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 gov-
erning 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, ser-
vice, device, component, or part thereof, that —
2682     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 technolo-
gies 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                     2683
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, distri-
bution, public performance, public display, and creation of
derivative works. 17 U.S.C. § 106. Historically speaking, pre-
venting “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 “ef-
fectively 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 exclu-
sive 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.” Nei-
ther 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 technologi-
cal measure” means “to descramble a scrambled work, to
decrypt an encrypted work, or otherwise to avoid, bypass,
remove, deactivate, or impair a technological measure, with-
out 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 “protec-
tion is also quite different from the traditional exclusive rights of the copy-
right holder . . . [where the] exclusive rights never implicated access to the
work, as such”).
2684       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
§ 1201(a)(3)(A). These two specific examples of unlawful cir-
cumvention under § 1201(a) — descrambling a scrambled
work and decrypting an encrypted work — are acts that do
not necessarily infringe or facilitate infringement of a copy-
right.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 repro-
ducing, distributing, publicly performing, or publicly display-
ing 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 traffick-
ing in circumventing devices, but does not prohibit circum-
vention itself because such conduct was already outlawed as
copyright infringement. The Senate Judiciary Committee
explained:

      This . . . is the reason there is no prohibition on con-
      duct in 1201(b) akin to the prohibition on circum-
      vention 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 copy-
      right law has long forbidden copyright infringe-
      ments, 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
  6
    Perhaps for this reason, Congress did not list descrambling and decryp-
ting as circumventing acts that would violate § 1201(b)(1). See 17 U.S.C.
§ 1201(b)(2)(A).
            MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT                   2685
§ 1201(a) as granting copyright owners a new anti-
circumvention right.

   Fourth, in § 1201(a)(1)(B)-(D), Congress directs the
Library of Congress (“Library”) to identify classes of copy-
righted 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 pub-
lic’s right to access the work. Cf. H.R. Rep. No. 105-551, pt.
2, at 26 (1998) (specifying that the House Commerce Com-
mittee “endeavored to specify, with as much clarity as possi-
ble, 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
  7
     For 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
2686       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
   Our reading of §§ 1201(a) and (b) ensures that neither sec-
tion 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 prohib-
its 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 facili-
tate 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) pro-
tects 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 dif-
ferences in structure between §§ 1201(a) and (b) as reflecting
Congress’s intent to address distinct concerns by creating dif-
ferent 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 anti-
circumvention 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 dis-

technological 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            2687
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 technologi-
    cal 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 pro-
tection measure put in place by a copyright owner to control
2688       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 encour-
aging copyright owners to make their works available in digi-
tal 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 unsuccess-
fully, to move § 1201 out of Title 17 altogether “because these regulatory
provisions have little, if anything, to do with copyright law. The anti-
circumvention provisions (and the accompanying penalty provisions for
violations of them) would be separate from, and cumulative to, the exist-
ing claims available to copyright owners.” H.R. Rep. No. 105-551 (1998),
pt. 2, at 23-24.
            MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT                   2689
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 anti-
circumvention right distinct from copyright infringement,
while section (b) strengthens the traditional prohibition
against copyright infringement.10 We now review the deci-
sions of the Federal Circuit that have interpreted § 1201 dif-
ferently.

  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 demon-
strate that the circumventing technology infringes or facili-
tates 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 Con-
sulting, 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
  10
      The Copyright Office has also suggested that § 1201(a) creates a new
access control right independent from copyright infringement, by express-
ing 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 Sum-
mary 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 unautho-
rized access to a work, the act of circumventing a technological measure
in order to gain access is prohibited.”).
   11
      The 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 Cham-
berlain. 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.
2690      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 pro-
grams and that its rolling code security system was a techno-
logical measure that controlled access to those programs. Id.
at 1183. Accordingly, plaintiff alleged that the defendant —
by selling GDO transmitters that were compatible with plain-
tiff’s GDOs — had trafficked in a technology that was pri-
marily 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 copy-
righted 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 copy-
right owners a new anti-circumvention right, but instead,
established new causes of action for a defendant’s unautho-
rized 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 demon-
strate a nexus to infringement — i.e., that the defendant’s traf-
ficking 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           2691
    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 sepa-
rate from copyright infringement, for six reasons.

   First, Chamberlain reasoned that Congress enacted the
DMCA to balance the interests of copyright owners and infor-
mation 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 copy-
right 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 aftermar-
ket 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, Cham-
berlain viewed an infringement nexus requirement as neces-
sary 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.
2692      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 Cham-
berlain 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 copy-
right 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         2693
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 lan-
guage.

    i.   Statutory inconsistencies

   Were we to follow Chamberlain in imposing an infringe-
ment 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 anti-
circumvention 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) Con-
gress’s creation of a mechanism in § 1201(a)(1)(B)-(D) to
exempt certain non-infringing behavior from § 1201(a)(1) lia-
bility, a mechanism that would be unnecessary if an infringe-
ment nexus requirement existed.

   Though unnecessary to our conclusion because of the clar-
ity of the statute’s text, see United States v. Gallegos, 613
F.3d 1211, 1214 (9th Cir. 2010), we also note that the legisla-
tive 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 non-
infringing access — for instance, copyright owners who make
movies or music available online, protected by an access con-
trol 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
2694         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 per-
ceived tension is relieved by our recognition that § 1201(a)
creates a new anti-circumvention right distinct from the tradi-
tional exclusive rights of a copyright owner. It follows that
§ 1201(a) does not limit the traditional framework of exclu-
sive rights created by § 106, or defenses to those rights such
as fair use.12 We are thus unpersuaded by Chamberlain’s read-
ing 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 argu-
ments, which we review briefly in order to address the par-
ties’ 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 (copy-
  12
      Like the Chamberlain court, we need not and do not reach the rela-
tionship 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. Accord-
ingly, we too leave open the question whether fair use might serve as an
affirmative defense to a prima facie violation of § 1201. Id.
   13
      Copyright 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                  2695
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 require-
ment as necessary to prevent “absurd and disastrous results,”
such as the existence of DMCA liability for disabling a bur-
glary 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 require-
ment, § 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 Copy-
right Act. Moreover, § 1201(a)(1)(B)-(D) allows the Library
of Congress to create exceptions to the § 1201(a) anti-
circumvention right in the public’s interest. If greater protec-
  14
    The 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.”).
2696       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 (sup-
ported 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 con-
cerns 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 vio-
lated §§ 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 ele-
ments. First, Warden does not control access to WoW’s literal
elements because these elements — the game client’s soft-
ware code — are available on a player’s hard drive once the
game client software is installed. Second, as the district court
found:
  15
    We 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          2697
    [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 pur-
    chased 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 deci-
sion 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, veri-
fied 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:
2698        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 “effec-
       tively,” 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 Lex-
mark, 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 sig-
nificant use other than (4) circumventing a technological mea-
            MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT                  2699
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 copy-
righted 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 soft-
ware program code, even though the audiovisual display gen-
erated is partially dependent on user input).
  16
    To “circumvent a technological measure” under § 1201(a) means to
“descramble a scrambled work, to decrypt an encrypted work, or other-
wise to avoid, bypass, remove, deactivate, or impair a technological mea-
sure, 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 cir-
cumventing 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 plain-
tiff to show that the accused device enables third parties to access the
work without the copyright owner’s authorization. Thus, Blizzard has sat-
isfied the “circumvention” element of a § 1201(a)(2) claim, because Bliz-
zard has demonstrated that it did not authorize MDY to circumvent
Warden.
2700        MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
   [20] The fifth element is met because Warden is an effec-
tive 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 “re-
quire[ ] the application of information, or a process or a treat-
ment . . . 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 con-
trols 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
  17
      The 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 pro-
vide 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 with-
hold protection precisely where protection is essential.”).
   18
      We 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                     2701
affirm the district court’s entry of a permanent injunction
against MDY to prevent future § 1201(a)(2) violations.19

F.     Blizzard’s § 1201(b)(1) claim

  [21] Blizzard may prevail under § 1201(b)(1) only if War-
den “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 cove-
nant 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 copy-
ing.20 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
  19
      For the first time in its petition for rehearing, MDY raises the applica-
bility of Section 1201(f) and the question whether Glider is an “indepen-
dently created computer program” under that subsection and thus exempt
from the coverage of Section 1201(a). Because this argument was not
raised to the district court or presented in the parties’ briefs on appeal, we
decline to reach it.
   20
      No 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.
2702       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
rights under the Copyright Act, and MDY is not liable under
§ 1201(b)(1) for Glider’s circumvention of Warden.21

                                 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 interfer-
ence. We review the district court’s grant of summary judg-
ment 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 genu-
ine 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
  21
    The 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.
          MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT         2703
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 relation-
ship: 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 War-
den to ban a majority of Glider users in September 2005,
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 Restate-
ment (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 proxim-
ity 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 evi-
2704       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
dence 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. Bliz-
zard’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
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 intro-
duced 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 pro-
hibit bots.22 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 pro-
scribe 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.
  22
    When 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         2705
  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 custom-
ers 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 evi-
dence that Glider allows players with limited motor skills to
continue to play WoW, improves some users’ romantic rela-
tionships by reducing the time that they spend playing WoW,
and allows users who work long hours to play WoW. We fur-
ther 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 continu-
ing 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 contin-
ued 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 inde-
pendently 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.
2706       MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
Accordingly, we vacate the district court’s grant of summary
judgment to Blizzard.23

B.     Copyright Act preemption

   MDY contends that Blizzard’s tortious interference claim
is preempted by the Copyright Act. The Copyright Act pre-
empts state laws that confer rights equivalent to the exclusive
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 Copy-
right 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 previ-
ously 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 analy-
sis 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 par-
ties; 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 pre-
empt 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,
  23
    Because the district court entered a permanent injunction based on
MDY’s liability for tortious interference, we also vacate that permanent
injunction.
            MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT                  2707
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 contract-
enforceable covenants rather than copyright-enforceable con-
ditions. We conclude that since Blizzard seeks to enforce con-
tractual 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
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.24

                                   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
  24
    Because 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.
2708        MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT
reconsider the issue of Donnelly’s personal liability.25 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.

  25
     If MDY is found liable at trial for tortious interference with contract,
the district court may consider Donnelly’s personal liability for that tor-
tious 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 liabil-
ity, 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.