Order Granting In Part Defendant's Motion for Attorneys' Fee, Lewis v. Activision Blizzard, Inc., No. C 12-1096 CW (Judge Wilken)

Activision Blizzard, Inc. has had a memorable month. Along with its partner Bungie, on September 9, the company behind the wildly popular "Call of Duty" franchise of videogames introduced "Destiny," a Massively Multiplayer Online ("MMO") videogame reputed to have a $500 million budget – which, if true, makes it the most expensive videogame ever developed (and more expensive than cost of all three of the Lord of the Rings movies combined). While it remains to be seen whether and to what extent Destiny revolutionizes the videogame industry, Activision can at least take solace that Northern District Judge Claudia Wilken just awarded it a modest award of attorneys' fees related to a dispute about its earlier successful franchise, "World of Warcraft" (commonly referred to in the gaming community as "WoW").

In Lewis v. Activision Blizzard, Inc., No. C 12-1096 CW, the Plaintiff Amanda Lewis sued her former employers, defendants Activision Blizzard, Inc. and Blizzard Entertainment, Inc. (collectively, "Activision"), for copyright infringement, commercial misappropriation of voice pursuant to § 3344 of the California Commercial Code and quantum meruit. World of Warcraft, like Destiny, is an MMO. Lewis was employed by Activision as a "game master," a customer service position in which she answered players' questions and offered them assistance. During her employ, she auditioned to do voiceover work for the game and was selected to be the voice for a new character, the "baby murloc." Lewis was compensated for her time at her usual hourly rate and did not seek additional compensation. After Lewis' employment was terminated, she learned the recordings were being used not only for promotional purposes, as she initially thought, but also in the game itself. Lewis then filed suit and lost. The court initially dismissed the state law claims as both preempted by the Copyright Act and time-barred. Lewis then filed an amended complaint alleging only a copyright claim, but the court ruled in Activision's favor on summary judgment. It was following this ruling that Activision moved for its attorneys' fees and costs, and prevailed.

Turning first to the state law claims, Activision requested attorneys' fees incurred only in defending against Lewis' right of publicity claim. The relevant fee shifting statute for this claim, California Civil Code 3344(a), states that a prevailing party "shall also be entitled to attorney's fees and costs." The court found that this language rendered an award of attorney's fees and costs to the prevailing party mandatory. Lewis, however, argued that Activision was not the prevailing party because (1) Activision did not prevail on the claim, but merely "prevailed on the argument that Ms. Lewis' claim was preempted by federal copyright law" and (2) that because her claim was preempted, Activision's claim to attorneys' fees was also preempted. Judge Wilken was not persuaded and found that when a plaintiff brings a claim under § 3344 and loses as a matter of law, the defendant has prevailed and is entitled to fees.

Turning to the copyright claim, 17 U.S.C. § 505 allows a court to award reasonable attorneys' fees and costs to the prevailing party at its discretion. The Ninth Circuit has created a list of non-exclusive factors that courts may consider in determining whether to grant fees. Judge Wilken listed the factors she considered as (1) the degree of success obtained; (2) frivolousness; (3) motivation; (4) objective unreasonableness; (5) the need in the particular circumstance to advance considerations of compensation and deterrence; and (6) promotion of the Copyright Act's objectives. Judge Wilken found that these factors favored a fee award.

The first factor favored an award because Activision prevailed on summary judgment and its success was complete. The second and fourth factors favored an award for each of the following reasons: (1) Lewis knew or should have known from the outset that her copyright claim would fail because the training manual Lewis admitted to reading clearly identified content creation as one of her official responsibilities; (2) she was paid her normal rate for the recording sessions and did not seek additional compensation; (3) she admitted to being motivated by a desire to serve Activision's interests when making the recordings; and (4) the recordings took place on Activision property, using Activision's equipment, under the supervision of Activision's sound engineer. Thus, she knew or should have known that Activision owned the recordings. The third factor also favored Activision because there was evidence that Lewis' litigation strategy was to force a settlement with a wealthy defendant with little basis for doing so. Even though Lewis' claims were objectively unreasonable, she threatened that Activision "will likely be required to spend more than $1 million on its defense," and argued that "Activision may find that litigation of this matter constitutes poor public relations." Lewis then demanded $1.2 million to settle. Further, Activision repeatedly made generous settlement offers, including an offer to forego any claim to attorneys' fees if Lewis dropped the case after Lewis acknowledged in her deposition that her job description expressly included creation of game content. Judge Wilken found that this combination of an unreasonable claim, an unreasonable settlement demand, and continued refusal of settlement offers evidenced an improper motive. Finally, Judge Wilken found that the fifth and six factors favored an award because "deterring such meritless claims supports the objective of the Copyright Act" and that a fee award may deter baseless suits.

Finding that an award of fees was appropriate on both the right of publicity and copyright claims, Judge Wilken then moved to calculating the fees. She granted Activision its full reasonable fees for the publicity claim (with a minor reduction for time billed that was not attributable to this claim), since the California statute made reasonable attorneys' fees mandatory. She took pity on Lewis with regard the copyright claim, however, and greatly reduced that fee. She held that an award of fees should be informed by the relative financial strength of the parties, and should not be excessive in light of the losing party's resources. Finding Lewis to be an unemployed junior college student with less than $10,000 in total assets, Judge Wilken reduced the otherwise reasonable fee of $152,104.50 to $15,000.

In the World of Warcraft universe, a baby murloc is the child of an amphibious creature that inhabits the shorelines of swamps, seacoasts and rivers. A quest exists within the MMO that rewards the gameplayer with uncommon clothing/armor for releasing baby murlocs back into the wild. In the Northern District, however, Activision has proven that its continued ownership of baby murlocs as intellectual property can result in its being rewarded with attorneys' fees under the Copyright Act and California Civil Code 3344(a) – something that surely even video game afficianados can appreciate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.