MapleStory Enforcement Action Leads to Ridiculously Large Anti-Circumvention Damages–Nexon v. Kumar

By Eric Goldman

Nexon America Inc. v. Kumar, 2012 WL 1116328 (C.D. Cal. April 3, 2012)

It can be disconcerting when UGC websites turn into IP enforcement plaintiffs. Perhaps the biggest offender has been Craigslist, which has brought numerous ill-advised lawsuits (see, e.g., this post) that have developed novel Internet law precedent that seems destined to come back and bite Craigslist in the ass. But I can think of many other ill-advised enforcement actions by websites that are normally defendants, including eBay, Facebook and Zynga. Just remember, guys: live by the sword, die by the sword.

Today’s opinion is a default judgment brought by MapleStoy, a MMORPG, against UMaple, a service that runs an unauthorized MapleStory server, i.e., UMaple users can play MapleStory (using the MapleStory client software) without ever touching MapleStory’s servers. UMaple then solicits “donations” that lead to enhanced privileges in the UMaple environment.

As usual in a default judgment, the court doesn’t question the absentee defendants’ liability. Thus, the action moves to damages.

MapleStory sought profit disgorgement under copyright law. All that MapleStory can make stick is UMaples’ AdSense revenue, a paltry $400. MapleStory can’t get at any of the alleged donations because it can’t connect the dots that the revenue was solely attributed to UMaple and not other properties or activities:

Given the myriad electronic commerce transactions allowing for-even encouraging-payment processing through trusted third-party processors like PayPal, AlertPay, and Plimus, the Court could just as easily infer that the bulk of payments Kumar received through these services were earned through legal means of electronic commerce.

It’s rare to see a judge so skeptical in a default judgment. This suggests that MapleStory’s advocacy failed to engender a high degree of sympathy. Instead, it looks like MapleStory’s advocacy (handled by a team from Mitchell, Silberberg & Knupp) alienated the judge. Later in the opinion, the judge calls out MapleStory’s lawyers for their arguments about the appropriate anti-circumvention damages calculations in various precedent cases. The judge says ominously that the advocacy led “the Court to question very seriously whether Plaintiff intended to actively mislead the Court or whether these oversights were merely the result of poor legal research.” If it weren’t obvious, neither conclusion would be a credit to MapleStory’s lawyers. The worst part is that no stretching was required in a layup case like this. It’s a default judgment, and judges will usually bless all reasonable requests.

After a paltry copyright infringement damages award, the opinion turns to anti-circumvention damages. Dun dun DUN. 17 USC 1203 sets a statutory damages minimum of $200 per act of circumvention. UMaples’ client, the “UMaple Launcher,” allegedly bypassed the access controls in MapleStory’s client software. UMaple had 17,938 users. At $200/user (assuming 1 act of circumvention per user), the tally reaches a total of $3.5M+ in statutory damages, but the judge doesn’t think this is right:

even the minimum statutory amount awardable under the DMCA in this case [is] a significant windfall to Plaintiff far in excess of any amount necessary to deter future infringing conduct. Further, the minimum award here likely bears little plausible relationship to Plaintiff’s actual damages.

Nevertheless, the judge had no choice based on the formula it felt was binding, so this produces a massive anti-circumvention award. If it were collectible, it would be quite noteworthy as one of the biggest anti-circumvention awards of all time. But, it’s not collectible.

As a final dis of the plaintiffs, the judge rejects the attorneys’ fee award automatically produced by a formula in the local rules (about $71k). Instead, the judge only promises to award actual fees incurred.

It’s hard for the plaintiff to feel good about this win. You don’t expect to see such palpable skepticism from a judge when the defendant doesn’t even show to protect its own interests. But this case does provide an excellent example of the ridiculousness of anti-circumvention statutory damages. $3.5M+ can’t be the right damages award in this case, and it’s so guffaw-inducing that it further erodes the legitimacy of our copyright rules.