Bungie Inc. v. L.L.
| Decision Date | 09 May 2023 |
| Docket Number | 2:22-cv-0981-RAJ |
| Parties | BUNGIE, INC., a Delaware corporation, Plaintiff, v. L.L., a minor, Defendant. |
| Court | U.S. District Court — Western District of Washington |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
THIS MATTER comes before the Court on Defendant's Motion to Dismiss (“Motion”). Dkt. # 18. Having reviewed the briefing, the relevant record, and applicable law, the Court GRANTS IN PART and DENIES IN PART the Motion.
The following is taken from Plaintiff's complaint, which is assumed to be true for the purposes of Defendants' motion to dismiss. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007); see also Dole Food Co. v. Watts, 303 F.3d 1104, 1107 (9th Cir. 2002).
On July 15, 2022, Plaintiff Bungie, Inc. (“Bungie”) filed a complaint against Defendant L.L. for (1) breach of contract, (2) copyright infringement, (3) fraud, (4) Digital Millennium Copyright Act (“DMCA”) anti-circumvention, and (4) violation of the Washington Consumer Protection Act (“CPA”). Dkt. # 1. Plaintiff developed a first- person shooter video game called Destiny 2. Id. ¶ 1. Plaintiff claims that Defendant breached the Limited Software License Agreement (“LSLA”) when he used cheating software to gain a competitive advantage, streamed himself on Twitch playing Destiny 2 using that cheating software, and sold Destiny 2 emblems (digital art badges obtained by in-game achievements) on “OGUsers,” a hacking and selling forum. Id. ¶¶ 1, 2, 5, 6. Moreover, Plaintiff claims Defendant committed fraud and circumvented Plaintiff's technological measures when he continuously agreed, then subsequently violated, the LSLA by making new accounts (thirteen in total) every time he was banned for cheating. Id. ¶¶ 2, 173-175. Lastly, Plaintiff claims Defendant also circumvented Plaintiff's technological measures by using cheat software designed to avoid detection by Plaintiff's anti-cheat software. Id. ¶¶ 164, 169, 172.
Plaintiff also provides statements from Twitter written by Defendant that detail his alleged cheating, streaming, and selling. Id. ¶¶ 65-77, 87. These statements also detail purported threats to Defendant's content moderators. Id. ¶¶ 54-64.
Pursuant to RCW § 26.28.030, Defendant properly disaffirmed all contracts between himself and Plaintiff due to his status as a minor. Dkt # 17. Defendant moved to dismiss for failure to state a claim, which is currently before the court. Dkt. # 18.
Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While courts do not require “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 570.
In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court must assume that the plaintiff's allegations are true and draw all reasonable inferences in the plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the Court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).
Defendant's Motion argues Plaintiff's claims for (1) breach of contract, (2) fraud in the inducement, (3) copyright infringement, (4) circumvention of technological measures, and (5) violation of the CPA must be dismissed under Rule 12(b)(6) for failure to state a claim. Dkt. # 18 at 1. The Court will address each claim in turn.
Defendant argues the breach of contract claim should be dismissed because there is no enforceable contract between Defendant and Plaintiff. Dkt. # 18 at 11-2. Defendant was a minor when he agreed to the LSLA and, pursuant to RCW § 28.28.030, has properly disaffirmed the contract for lack of capacity. Dkt. # 17. Defendant therefore asserts that there is no basis for Plaintiff's breach of contract claim. Id. at 12. In response, Plaintiff concedes that Defendant's disaffirmance of the contract renders the contract void and eliminates any breach of contract liability. Dkt. # 19 at 9. As such, Plaintiff recommends the Court dismiss the breach of contract claim. Id. at 10.
Because Defendant properly disaffirmed the contract under RCW § 28.28.030, Defendant is no longer bound by its terms. See Paulson v. McMillan, 8 Wn.2d 295, 299 (1941) (). Accordingly, the Court grants Defendant's motion to dismiss the breach of contract claim without prejudice.
Defendant contends that Plaintiff did not rely on any misstatement of material fact as required for fraud because Plaintiff either knew that minors would assent to the LSLA or chose to “look the other way” and rely on software that provided access to anyone who agreed to abide by the LSLA. Dkt. # 18 at 12-13. In response, Plaintiff argues that (1) they have plead clearly all nine elements required for fraudulent inducement, Dkt. # 19 at 10, and (2) reliance is a factual issue that must be taken as true on a motion to dismiss. Id. at 11.
The Court agrees with Plaintiff. There are nine essential elements that a plaintiff must show to bring a claim of fraudulent inducement: “(1) a representation of existing fact, (2) its materiality, (3) its falsity, (4) the speaker's knowledge of its falsity, (5) the speaker's intent that it be acted upon by the person to whom it was made, (6) ignorance of its falsity on the part of the person to whom the representation is addressed, (7) the latter's reliance on the truth of the representation, (8) the right to rely upon it, and (9) consequent damage.” Elcon Const., Inc. v. Eastern Washington University, 174 Wn.2d 157, 166 (2012). Reasonable reliance is a question of fact. Aliya Medcare Finance, LLC v. Nickell, 156 F.Supp.3d 1105, 1123 (C.D. Cal. May 26, 2015); see also Living Designs, Inc. v. E.I. Dupont de Nemours and Co., 431 F.3d 353, 363 (9th Cir. 2005) ().
Defendant's argument that Plaintiff did not rely on any misrepresentation fails. In the complaint, Plaintiff states they relied on Defendant's purported acceptance of the LSLA because Plaintiff had no way of knowing the account accepting the LSLA was an account made by Defendant. Dkt. # 1 ¶¶ 143-5. Because the Court must assume the facts alleged in the complaint are true, Plaintiff's contention that they relied on Defendant's misrepresentation that he would abide by the LSLA is assumed to be true. Whether Plaintiff reasonably relied on any alleged misrepresentation by Defendant is a question to be addressed at a later stage of the litigation. See Cleverly v. Ballantyne, No. 212CV00444GMNGWF, 2013 WL 12320134, at *10 (D. Nev. Aug. 29, 2013). Plaintiff has alleged sufficient facts to state a claim. Id. ¶¶ 68, 75, 114, 119, 135-146. Therefore, the Court denies Defendant's motion to dismiss the fraudulent inducement claim.
Defendant argues the use of ancillary software to gain an advantage in gameplay is not copyright infringement because (1) the use of the cheat software did not create a derivative work, and (2) the anti-cheat language in the LSLA are covenants, not conditions, which requires any remedy pursued to be based in contract, not copyright infringement. Dkt. # 18 at 14-17. Plaintiff counters that Defendant's disaffirmance of the LSLA renders each of his uses of Destiny 2 infringing and any subsequent play on new accounts unlicensed because Defendant fraudulently represented his intent to abide by the LSLA. Dkt. # 19 at 12.[1]Plaintiff also asserts that even without the disaffirmance and the alleged fraudulent inducement, Defendant still infringed for two reasons: (1) the anticheat language in the LSLA are conditions, and (2) the cheating created an unauthorized creation of derivative work. Id. at 15-17.
Plaintiff's arguments are persuasive. To establish a copyright infringement, Plaintiff must show (1) ownership of the allegedly infringed material, and (2) that the alleged infringers violated exclusive rights granted to the copyright holder under the Copyright Act. Disney Enters., Inc. v. VidAngel. Inc., 869 F.3d 848, 856 (9th Cir. 2017). The owner of a copyright has the exclusive right to prepare derivative works based on its original work. DC Comics v. Towle, 803 F.3d 1012, 1023 (9th Cir. 2015). A derivative work is a “work based upon one or more preexisting works that recasts, transforms, or adapts the preexisting work.” Id. If a third party creates a derivative work without consent from the copyright owner, the owner may sue for copyright infringement. Id.
First it is undisputed that Plaintiff owns copyrights to Destiny 2 both as a software program and an audiovisual work. Dkt. # 1 ¶ 149. Second, the cheat software transformed Destiny 2 by manipulating the software to add visual elements overlayed on the original visuals in the game. Id. ¶¶ 151-2. Defendant did not have consent from Plaintiff to do so. See Id. ¶ 22. Plaintiff therefore...
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