){kind=logo}
District court grants in part and denies in part defendants’ motion to dismiss Take-Two Interactive Software Inc.’s claims related to defendants’ operation of online marketplace for users to sell enhanced player accounts for plaintiff’s Grand Theft Auto (GTA) video game series, finding that plaintiff adequately alleged its copyright claims, despite having registered copyrights in only some versions of GTA, and that defendants’ nominative fair use defense to plaintiff’s trademark claims was premature, but that Take-Two failed to allege an independently wrongful act as required for its intentional interference with contractual relations claim.
Plaintiff Take-Two, the publisher and copyright owner of the video game series Grand Theft Auto (GTA), brought suit against PlayerAuctions, the operator of an online marketplace where users can sell enhanced GTA player accounts, alleging that these sales listings infringe GTA content. Take-Two also named as defendants IMI Exchange LLC and Paiao Network Technology Co. Ltd., which share a unified interest and ownership with PlayerAuctions. PlayerAuctions and IMI filed a motion to dismiss, arguing that Take-Two failed to adequately plead its causes of action for direct copyright infringement, contributory copyright infringement, vicarious copyright infringement, inducement of copyright infringement, trademark infringement, false designation of origin and intentional interference with contractual relations. The district court rejected all of PlayerAuctions and IMI’s arguments except as to the interference with contractual relations claims, finding that Take-Two was required—but failed—to allege an independent wrongful act.
PlayerAuctions and IMI moved to dismiss Take-Two’s copyright, trademark and interference with contractual relations causes of action, arguing that Take-Two did not adequately allege its claims. Defendants first argued that Take-Two should not be permitted to assert claims based on infringement of GTA Online because Take-Two only alleges copyright registration for GTA V (the latest game in the series), not GTA Online. The court concluded that it is sufficient that Take-Two properly registered “at least some” of the subjects in dispute with the U.S. Copyright Office.
As to the direct copyright infringement cause of action, defendants argued that Take-Two’s allegations of infringement were too vague and did not allege any “volitional conduct” by defendants. The court disagreed. With respect to the vagueness argument, the court found that because Take-Two alleged the subject (the GTA V images) and location (the online marketplace) of the infringement, Take-Two sufficiently alleged that defendants directly infringed its copyrighted content. The court further concluded that defendants were on notice as to the type of infringing content because Take-Two alleges that all GTA V content found on PlayerAuctions’ website infringes plaintiff’s copyrights.
With respect to the volitional conduct argument, the court found that Take-Two’s allegations that defendants instigate copying, storage and distribution of “Modded Accounts,” which infringe Take-Two’s copyright through unauthorized copying of the source code, and that defendants incentivize, market and assist in distributing the infringing content are sufficient to satisfy the volitional conduct requirement.
As to the secondary copyright infringement claims—contributory infringement, vicarious infringement and inducement of copyright infringement—defendants argued that the claims are based on breaches of covenants, not conditions, which are not actionable infringement. The court rejected this argument, noting that because Take-Two’s Terms of Service include explicit conditional language (i.e., “Subject to”) in setting out the scope of its license and Take-Two alleges that it conditions its limited license on users agreeing to not modify or hack GTA V’s software, Take-Two sufficiently alleged that the at-issue terms were conditions.
As to the intentional interference with contractual relations claim, defendants argued that this claim must fail because Take-Two does not allege an independent wrongful act, which is required to state such a claim. The court agreed, and on this basis dismissed Take-Two’s interference with contractual relations claim with leave to amend.
Summary prepared by Safia Hussain and Jennifer Kahn
