New Ruling Will Impact Software Licensing Agreements

An appeals court has weighed in on a software-licensing dispute in the online gaming business, and the result will have an impact well beyond that industry. After yesterday’s ruling, software and content owners will still be able to use license agreements to prevent unauthorized uses and hacks of their content; but the punishments for breaking those license agreements may not be as tough as the content owners would like.

That’s the takeaway from an appeals court ruling in MDY v. Blizzard, where Blizzard Entertainment, maker of the popular World of Warcraft online game, was fighting against the maker of the “Glider bot”-a sort of hack of the WoW system that allows a player to keep playing the game-killing enemies, and getting more gold-even while they’re away from the computer.

The ruling will have an effect that goes well beyond online gaming. It’s one of a few key cases now being litigated that will determine how powerful software licensing agreements are. Those “end user license agreements” or EULAs, are used to limit what users can do with “software” of all kinds-including hardware like iPhones, and digital content like iTunes downloads.

In this case, Blizzard came out on top because the court said that by avoiding the company’s bot-detection tools, the Glider developer, Michael Donnelly, had violated the “anti-circumvention” clause of copyright law. That’s the same law that prevents hackers from getting around copy protection by making copies of DVDs, for example.

However, Blizzard lost on another point. It wanted the court to find that the violation of its software licensing agreement was a violation of copyright law in and of itself-but the court said, at least in this case, that such violations don’t fall under copyright, and can be litigated under contract law.

That gives less power to any content or software owners who use software licensing agreements, since enforcing those under contract law is more difficult than doing so under copyright law. Copyright law offers large damage awards and court-ordered injunctions that aren’t usually available under contract law.

While it’s a mixed ruling, it’s ultimately a setback for Donnelly and his company, MDY Industries. His Glider bot is still banned and he’s still liable under copyright law under the “anti-circumvention” clause. Donnelly’s lawyer told Wired News that he is considering an appeal to the Supreme Court.

The World of Warcraft game is the most popular of the so-called “massively multi-player” online games. About 10 million people play WoW around the world, 2.5 million of which are in the U.S. (Using bots isn’t the only trick players use to get ahead in the game; some developed-country players even hire Chinese gamers to play for them and help them get ahead, in a practice known as “gold farming.“)