This one has already made quite a big tour throughout the news/media websites, but we’ll trust gamasutra for now. It seems that last year, Blizzard Entertainment sued Alyson Reeves, operator of Scapegaming, for copyright infringement. Scapegaming was offering its users access to private World of Warcraft servers, asking donations for the service. Apparently, Alyson Reeves raised $3,052,339 out of this operation. An U.S. District Court judge awarded Blizzard $88M, including, as gamasutra states, “over $3 million in disgorged profits, $85.4 million in statutory damages and $64,000 in attorney’s fees.” WoW, Alyson Reeves must have had a pretty lousy lawyer.
So, how did it happen? Is this ammount correct? Is the legal system faulty, was it a mock trial or simply did Alyson Reeves get what she deserved?
Well, I have a background in law. I never practised (and this is a good example why), but at least I can understand what’s going on and try to explain what happened in the end. Of course, the law I was taught is a lot different than the US one, as it’s a different legal system, but some of the basic principles are everywhere the same. One of these basic principles states that the injured party’s position should be restored, as if the infringement has never happened. The verdict should restore both parties to their initial positions.
Of course, this is not always easy, especially when we’re talking copyright. One way of doing it is by analyzing the losses the injured party suffered and the profits the injured party never made. Sometimes you have to choose between them, as you cannot ask for both of them. In the US, there is another way, by asking for statutory damages. What are they? Well, you can read here, but I think it’s too complicated for many of you, so it’s better if you try Wikipedia. When it is too difficult to establish how many copies were made or how many times the infringement took place, the owner can choose to receive compensation per work, instead of per copy (when the judge should have calculated the losses and the profits).
It seems that, during the trial, Alyson Reeves lawyers said that Scapegaming users were not aware they were accessing private, not legitimate, servers. It also seems the judge bought it and that’s why he calculated 427,000users times 200USD. The Scapegaming community had 427,000 members in June 2008. Blizzard submitted evidence showing that during the very same month Scapegaming hosted 32,000 users on a given day. Reeves stated that 40,000 people were playing on Scapegaming’s servers every day. These contradictory statements could have lead the judge to use the total number of members, instead of counting the active accounts.
So, what should have happened?
First of all, Alyson Reeves and her lawyers should have sent the full logs of the servers to Blizzard. Let them digg through the logs and check how many active accounts were on their servers at any given time. Alyson Reeves could have retrieved the statistics quite easily and if she said that there were around 40,000 accounts, let’s believe her for the sake of our (legal) exercise.
So, how much did Blizzard actually lose?
40,000 accounts times 15USD which is the regular WoW subscription means Blizzard lost $600,000 a month. Lets say the service operated for 3 years. I don’t know how long it actually operated, but let’s just assume it was 3 years. That’s 36 months. In this case, we have $600,000 times 36 months. $21,600,000. It actually makes more sense to say that Blizzard should have been awarded $21.6 million instead of $85.4 million.
From this point of view, Blizzard could have chosen to receive either the losses Alyson Reeves provoked, or the profit Alyson Reeves made out of the operation. Why not both? Because the profits she made, in this case, should be included in Blizzard’s losses. If the profits were higher, Blizzard could have asked for them, instead of the losses. This is where the system is faulty. If the aim is to restore both parties to their initial position (executing compensations in order to do that), then those $3 million dollars Alyson Reeves made do not belong to the parties, but to the people who donated, because the verdict should have put the parties in a state where THE INFRINGEMENT NEVER TOOK PLACE. If Alyson Reeves would have been forced to pay damages to Blizzard for copyright infringement, she should have been forced to return the money she made to the people she conned. So, any way, those $3 million should have never been awarded to Blizzard. Unfortunately, that’s theory we’re talking here. Or not!
Blizzard submitted evidence of the PayPal transactions. Blizzard asked for statutory damages, instead of losses (and profits). OK, why not summon to the trial all those who have donated? Why assume they did not know these were not official servers? This would have been a very good defence and this should have slowed Blizzard quite a lot. A judge cannot rule on assumptions. Burrying Blizzard’s lawyers in server logs and PayPal transactions could have lead to an understanding between the parties where Alyson Reeves had to return the profits and MAYBE go free.
Well, in the end, was it a mock trial? I don’t think so. I just think Alyson Reeves’ lawyers didn’t have the experience necessary to handle such a case and, of course, the system in its current form is faulty. Alyson Reeves has undoubtedly committed copyright infringement but, in the same time, $88 million is a ridiculous ammount, pretty much like the statutory damages concept. The system should adhere to the “reasonable royalty” concept, which tries to define what someone would have paid the copyright owner if a royalty system was available before the infringement.
The legal system should be used to restore the balance and put both parties in the initial situation, not give one party the chance for profit. Unfortunately, many legal systems today, including the US one, are geared towards profit, competition and marketing. If one serial killer gets 200 years in prison, the next one thinks something like “I can beat that, no problem!”. This way, the system generates competition and unwanted advertising. The system should never be used for such things. Give all serial killers prison for life (or death sentence if available) and that’s it, no more competition, hence lower criminal activity. All copyright owners who sue other parties should have the obligation to show how many times their rights were infringed or how many illegal copies were made and award them the right ammount of money for their losses. That’s just common sense.
Of course, Blizzard will never get those $88 million. What they get is what they intended to get in the first place, free advertisement. All the media picked up on this, but nobody judged Blizzard (or its parent company Activision) for it. They used the system to get free advertisement and to send a clear message to those who use their copyrighted content illegaly. I’m sorry, but IT’s WRONG. This is not what the legal system should be used for. If they actually tried to obtain some money from Scapegaming, then I would have believed their intentions were to shut down the servers and obtain damages, which would have been very well their right. Unfortunately, they used the system for other purposes, exposed in this article, and the system allowed them to do it. If this is not a faulty system, I don’t really know what is. Leave a comment below or discuss this in the forum (registration pending approval).
UPDATE: This is just one side of the coin. For the other side, check the comments below.

