NCSoft and Cryptic Studios have scored a big first-round victory in defending their City of Heroes (CoH) game character-creator against a far-reaching lawsuit by Marvel, Inc.
Although some charges remain, Judge Klausner gave NCSoft significant latitude. For example, he ruled that Marvel could not sue over certain alleged infringing works because the works were created by Marvel itself rather than players. In essence, Marvel was trying to prove that CoH's character creator system allowed players to make copies of trademarked superhero characters. However, since Marvel couldn't produce evidence of players actually doing this, the judge found no infringement and thus no basis for proceeding on those claims.
In addition, he rejected Marvel's call for a declaratory judgement that NCSoft are not an online service provider, as defined in the DMCA. If the game company can successfully show that it is such a provider then it will enjoy wide shielding in liability from potentially infringing acts by its users (players). The judge cited Betamax in noting that CoH has substantial non-infringing uses.
There are some interesting passages in the judge's decision, which may be key should this complaint ever go to trial. For example, Marvel has had to admit that it has trademark only on the phrase "Captain America" and not on the visual image we tend to associate with that phrase. The judge has declined to construe this trademark broadly, which I think means that Marvel will have to show that a CoH character could be named "Captain America" and not that someone copied the visual depiction. Even if it can show this, the judge has already pointed out that the players are not using the name in connection with any commercial purpose. Thus, Marvel will have a hard time making a contributory infringement claim stick.
All online games have naming policies that players agree to adhere to. Generally these ban the use of "offensive" language, including epithets, racial or ethnic slurs, and often reference to popular individuals or current real-world events. All games include self-reporting mechanisms whereby players can bring naming violations to the attention of game masters (GMs) who are usually charged with enforcement of the policies. My bet is that NCSoft will simply point out that they have a policy, they enforce it, and poof away go Marvel's claims.
If, however, claims against the heart of the character creation engine are allowed to proceed that could be much more troubling. From a software perspective it's not at all clear how one could employ a generic engine, which is one of the major attractions of CoH, and yet still screen out a priori trademark-violating images.
Decision at: http://www.authorslawyer.com/case/DCAC-04-09253a.pdf