Bungie, Inc. v. Thorpe

BUNGIE, INC., et al., Plaintiffs, v. ANDREW THORPE, et al., Defendants.

No. 21-cv-05677-EMC

United States District Court, N.D. California

February 21, 2023

ORDER DENYING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT

DOCKET NO. 64

EDWARD M. CHEN United States District Judge

Plaintiffs are companies that own and publish video games. At issue are two of the companies' online multiplayer video games: (1) “Destiny 2,” which is owned and published by Bungie, Inc. and (2) “Tom Clancy's Rainbox Six Siege,” which is owned and published by Ubisoft Entertainment and Ubisoft, Inc. Plaintiffs filed suit against four individuals, including Andrew Thorpe, alleging that these individuals participated in an online business venture known as “Ring-1,” which sells software that enables players to cheat in Plaintiffs' games.

Pending before the Court is Plaintiffs' motion for default judgment against Mr. Thorpe, a resident of the United Kingdom. Having considered the papers submitted as well as the oral argument of counsel, the Court hereby DENIES the motion.

I. FACTUAL & PROCEDURAL BACKGROUND

Plaintiffs' complaint and evidence in support of their motion for default judgment reflect as follows.

Bungie and Ubisoft own and publish video games. Specifically:

• Bungie owns and publishes the video game “Destiny 2.” Compl. ¶ 1. Destiny 2 is an open, “shared-world” multiplayer, “first-person shooter” game where players either cooperate to fight against computer-controlled opponents or compete against other players. Id. ¶ 23.

• Ubisoft owns and publishes the video game “Tom Clancy's Rainbow Six: Siege” (“R6S”). Id. ¶ 1. R6S is a team-based, online multiplayer, military-themed, “first-person shooter” game where players cooperate with their team members, against a competing team of players. Id. ¶ 27.

Collectively, Destiny 2 and R6S are referred to as the “Games.” The intensity of competition in the Games gives rise to a demand for cheating software that gives players an unfair advantage. Id. ¶¶ 24, 28.

To protect the Games from cheating, Plaintiffs employ anti-cheat technologies installed on players' computers when the Games software is installed. Id. ¶ 52. The anti-cheat software functions to detect whether malicious code has been inserted into a computer's memory, or whether a player is using cheating software. Id. ¶ 53. Once cheating software is detected, Plaintiffs will deny the player access to the remote multiplayer server. Id. In some circumstances, Plaintiffs may also permanently delete the player's accounts, or ban the player's computer from subsequent access to the Games through a new account or email address. Id. ¶¶ 53, 55.

Ring-1 is an enterprise^[1] that develops, markets, and sells on its website certain software (“Cheating Software”) that circumvents Plaintiffs' anti-cheat technologies and enables players to cheat in the Games. Id. ¶¶ 2, 64, 81. Ring-1 advertises its Cheating Software as “100% guaranteed to always play with an undetected cheat.” Id. ¶ 81. The Cheating Software has numerous features that help avoid detection, including technologies that purport to bypass bans and disguise cheating activities. Id. ¶ 82. Even when the Cheating Software is detected by Plaintiffs, Ring-1 will promptly update and test its Cheating Software until it is undetectable again. Id. ¶ 84.

Apparently, Ring-1 markets and sells Cheating Software through its website, as well as a network of authorized resellers, including resellers in the United States. Mayer Decl. ¶¶ 2, 17; see also Compl. ¶¶ 14-16 (alleging that three of the four individual defendants, i.e., Jonathan Agueda, Ahmad Mohammed, and Wesam Mohammed are resellers, all based in the United States). The Ring-1 website and all message boards are in English, and prices are currently listed in U.S. dollars. Id. ¶ 6. Thus far, Bungie has banned about 2,295 accounts for using the Cheating Software. About 1,099 of those accounts were from an IP address that originates in the United States. Kaiser Decl. ¶¶ 7-8. As for Ubisoft, it has banned about 1,823 players for using the Cheating Software, and, of those accounts, about 592 players appear to be located in the United States based on the IP address. Muraccini Decl. ¶¶ 7-8.

As indicated above, Plaintiffs filed suit against four individuals affiliated with the Ring-1 enterprise: Mr. Agueda, the two Mohammeds, and Mr. Thorpe. All are based in the United States, except for Mr. Thorpe who is a resident of the United Kingdom.

None of the four individuals sued is claimed to be the owner of the Ring-1 website. Mayer Decl., Ex. 12 (Mr. Agueda stating in an unidentified message board that “[t]he devs [i.e., developers] own the website”). According to Plaintiffs, both Mr. Agueda and the two Mohammeds are resellers of the Cheating Software. Compl. ¶¶ 14-16. Mr. Agueda also “run[s]” the Ring-1 website, along with Mr. Thorpe. Mayer Decl., Ex. 12. Plaintiffs have characterized Mr. Thorpe as a prominent member of the Ring-1 enterprise based on his role in “running” the website. Supp. Br. at 2-3 (asserting that Mr. Thorpe is a “lead,” “high-level,” and “prominent” administrator of the website). However, the evidence submitted by Plaintiffs in support of their motion for default judgment suggests otherwise.^[2] Mr. Thorpe is not an original developer of the software or an original participant in the Ring-1 enterprise, but only joined after Ring-1 had already attracted many users. Mayer Decl., Ex. 13(a) (“@Krypto Is now a new support to the team ! He showed alot of potential and helped alot of users even without the role ! Welcome mate^AA”).^[3] His role at the Ring-1 enterprise appears to be akin to a customer service representative.

For example, customers have asked him for information related to the Cheating Software such as its features, operations, and updates. Mayer Decl., Ex. 13(c)-(d). Also, Mr. Thorpe has given advice to customers about where and how the Cheating Software can be purchased, and confirmed that purchases have gone through. Mayer Decl., Ex. 13(f)-(h).

Plaintiffs initiated this lawsuit against the four individuals, asserting the following claims for relief: (1) trafficking in circumvention devices (a violation of the Digital Millennium Copyright Act (“DMCA”), (2) copyright infringement, (3) trademark infringement, (4) false designation of origin, (5) intentional interference with contractual relations, (6) unfair competition, and (7) violation of Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030 et seq. Compl. ¶¶ 91146. Mr. Agueda and the two Mohammeds eventually made appearances and reached settlements with Plaintiffs. The settlement agreements provided for injunctions, as well as monetary relief ($600,000 total). Docket Nos. 62, 70.

Mr. Thorpe has not made an appearance in this suit, even though the Court has already determined that service was properly made on him. Docket Nos. 33, 35, 41 (orders initially denying entry of default against Mr. Thorpe based on improper service but eventually granting entry of default based on proper service). Mr. Thorpe's default was entered in April 2022. Docket No. 42 (notice of entry of default).

Following entry of default, Plaintiffs filed the currently pending motion for default judgment. In the motion, Plaintiffs argued that this Court has personal jurisdiction over Mr. Thorpe, even though he is a resident of the United Kingdom, and that the Court should find Mr. Thorpe liable for three out of the seven claims asserted in the complaint - specifically, (1) trafficking in circumvention devices (a violation of the DMCA), (2) copyright infringement, and (3) intentional interference with contractual relations. In terms of relief, Plaintiffs asked for a permanent injunction, over $2.3 million in statutory damages (under both Section 1201 of the DMCA and Section 504 of the Copyright Act), and attorneys' fees and costs in the amount of $126,505.42. Prior to the hearing on the motion for default judgment, the Court asked Plaintiffs to provide additional information about Mr. Thorpe and his role in Ring-1.

II. DISCUSSION

A. Legal Standard

Under Federal Rule of Civil Procedure 55(b)(2), a court may enter a default judgment when the clerk has already entered a party's default. Fed.R.Civ.P. 55(a)-(b). “The district court's decision whether to enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon default, “all well-pleaded allegations regarding liability are taken as true, except with respect to damages.” DiscoverOrg Data, LLC v. Bitnine Glob., Inc., No. 19-CV-08098-LHK, 2020 WL 6562333, at *2 (N.D. Cal. Nov. 9, 2020). However, a court still may conduct hearings or make referrals where needed to “establish the truth of any allegation by evidence, or investigate any other matter.” Fed.R.Civ.P. 55(b)(2).

A court may dismiss a motion for default judgment for lack of personal jurisdiction because “[a] judgment entered without personal jurisdiction over the parties is void.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Where proof is limited to written materials rather than an evidentiary hearing, a plaintiff's burden is to make a prima facie showing of personal jurisdiction. APL Co. Pte v. TDR Logistics Inc., No. 2:20-CV-05999-SB-PD, 2022 WL 16859648, at *1 (C.D. Cal. Apr. 7, 2022); see also Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990).

B. Personal Jurisdiction

In the instant case, the critical issue is whether this Court has personal jurisdiction over Mr. Thorpe, who is a resident of the United Kingdom.

Federal Rule of Civil Procedure 4(k)(2) provides that, “[f]or a claim that arises under federal law, serving a summons establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any...