As a previous Wilson Sonsini Alert reported, Snail Games USA Inc. and Wildcard Properties LLC (collectively, “Snail”) sent a Digital Millennium Copyright Act (DMCA) takedown notice to Valve Corporation (Valve) in order to have Suzhou Angela Online’s (“Angela”) game removed from Valve’s Steam platform.1 In general, the DMCA incentivizes companies like Valve to take down third-party content for which they have received takedown notices, so that the companies can make use of statutory safe harbors from copyright infringement liability. Consistent with those incentives, Valve took down the game.
Angela sued Snail, seeking to force Snail to retract the takedown notice. But both the federal district court and the federal court of appeals rejected the plaintiff’s request for a temporary restraining order that would have forced the competitor to retract the takedown notice. Now Angela must first prove its case in court before its game can be reinstated, which could take years.
The Ninth Circuit’s recent unpublished opinion2 is notable because it rejected Angela’s novel argument about burdens under the DMCA. Angela argued that 1) the court should not treat its request as a request for a mandatory injunction and 2) Snail should bear the burden of proving infringement.
A mandatory injunction requires the defendant to take affirmative action, altering the status quo. A prohibitory injunction, on the other hand, prohibits the defendant from taking action, preserving the status quo. The burden for a party seeking a mandatory injunction is higher than that for a party seeking a prohibitory injunction: “Mandatory injunctions are ‘particularly disfavored,’ and should be denied ‘unless the facts and law clearly favor the moving party.’”3
Background
Snail created ARK: Survival Evolved, a successful game. Snail alleged that one or more of its parent company’s former employees had gained access to ARK’s source code and used a copy of that code to create the game Myth of Empires at Angela. Myth of Empires was distributed on Valve’s digital games platform, Steam.
On December 1, 2021, Snail sent a DMCA takedown notice to Valve, asserting that “Valve’s distribution of the video game Myth of Empires is . . . facilitating trade secret misappropriation and copyright infringement” (the “Valve Letter”). As a result of the allegations, Valve removed Myth of Empires from the Steam store.
Angela requested a temporary restraining order directing Snail to withdraw the Valve Letter and any other takedown notice Snail may have sent to any Myth of Empires distributor. Among other things, Angela argued that Snail’s takedown notices were themselves tantamount to an injunction under the DMCA “without having satisfied or proved a basis for preliminary injunctive relief.”4 In other words, Angela argued, Snail should have had to prove its entitlement to relief or retract its takedown notice. In doing so, Angela sought to avoid having to meet the higher burden of proof as the party seeking a mandatory injunction even though it wanted the court to force Snail to retract the takedown notice.
On January 31, 2022, the district court denied Angela’s request for injunctive relief. Among other things, Angela failed to show a likelihood of success on the merits in light of Snail’s substantial circumstantial evidence of similarities in the code between ARK and Myth of Empires. Angela also failed to provide sufficient evidence that it had suffered an irreparable injury in the form of non-monetary damages.
Additionally, the district court held that Angela’s requested injunctive relief was mandatory, as opposed to prohibitory, because it required a responsible party to take action; it required Snail to retract the Valve Letter. Accordingly, Angela had to establish that the law and facts “clearly favor [its] position, not simply that [it] is likely to succeed.”5
The Appeal
While the litigation has continued in the district court, Angela appealed the district court’s denial of preliminary injunctive relief, emphasizing on appeal that its burden should be lighter because it was essentially seeking a prohibitory injunction in seeking to make Snail withdraw the Valve Letter. Angela explained that it had provided a DMCA counter-notification. Angela further noted that, at that point, Valve could maintain its safe harbor under the DMCA only if Snail provided notice to Valve that it had “filed an action seeking a court order to restrain [Angela] from engaging in infringing activity” relating to the material on Valve’s system or network.6 Angela argued that this process put the burden on Snail to seek injunctive relief, and therefore Snail should have the same burden even though Angela actually filed the instant lawsuit.7
On October 6, 2022, the Ninth Circuit rejected Angela’s argument: “[N]othing in the language of § 512 indicates that . . . a requirement [that Snail obtain its own preliminary injunction] exists. And even if it did, Angela is the party that moved for the preliminary injunction at issue on appeal.”8 Therefore, Angela would have to meet the normal burden of an applicant for a mandatory injunction “[b]ecause Angela's requested injunction would require [Snail] to ‘take [the] affirmative action’ of retracting the Valve Letter.”9 Finally, the Ninth Circuit held that the district court did not abuse its discretion in finding that Angela failed to meet that higher burden.
The litigation continues in the district court.
Wilson Sonsini Goodrich & Rosati has represented clients in several landmark copyright cases involving the DMCA. For more information, please contact a member of the firm’s trademark and copyright litigation practice. Wilson Sonsini is also actively following developments around the country with respect to trade secret litigation and counseling. For more information, please contact any member of the firm’s trade secret litigation practice. For more information about gaming companies generally, please contact any attorney of the firm's electronic gaming practice.
Angela Chan and Brian Levy contributed to the preparation of this Wilson Sonsini Advisory.
[1] Christopher Paniewski et al., Are Trade Secret Takedowns Real or a Myth?, Wilson Sonsini Client Alert (Feb. 22, 2022), https://www.wsgr.com/en/insights/are-trade-secret-takedowns-real-or-a-myth.html.
[2] Consistent with Rule 32.1 of the Federal Rules of Appellate Procedure and Ninth Circuit Rule 36-3, unpublished opinions are not binding precedent but may be cited. Federal district courts often take note of unpublished federal circuit court opinions when there is no binding precedent on an issue.
[3] Fellowship of Christian Athletes v. San Jose Unified Sch. Dist. Bd. of Educ., 46 F.4th 1075, 1091 (9th Cir. 2022) (quoting Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 879 (9th Cir. 2009), and Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir. 1994)) (citations omitted).
[4] Mem. Supp. Ex Parte Application at 4:14–20, 6:25–7:9, Suzhou Angela Online Game Tech. Co., Ltd. v. Snail Games USA Inc., No. 2:21-CV-09552 CAS (SKX) (C.D. Cal. Dec. 17, 2021), ECF No. 15; Pls.’ Notice of Ex Parte Application at 2:11–14, Suzhou Angela Online Game Tech. Co., Ltd. v. Snail Games USA Inc., No. 2:21-CV-09552 CAS (SKX) (C.D. Cal. Dec. 17, 2021), ECF No. 15.
[5] Suzhou Angela Online Game Tech. Co., Ltd. v. Snail Games USA Inc., 2022 U.S. Dist. LEXIS 20164, at *19 (C.D. Cal. Jan. 31, 2022) (quoting Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015)).
[6] 17 U.S.C. § 512(g)(2)(C); see also Suzhou Angela Online Game Tech. Co., Ltd. v. Snail Games USA Inc., No. 22-55137, Appellants’ Opening Br. at 26–29, 30, 38-39(9th Cir. Mar. 3, 2022), Dkt. 7.
[7] Suzhou Angela Online Game Tech. Co., Ltd., No. 22-55137, Appellants’ Opening Br. at 31–32, 37–41, Dkt. 7.
[8] Suzhou Angela Online Game Tech. Co. v. Snail Games USA, Inc., 2022 U.S. App. LEXIS 27971, at *4 (9th Cir. Oct. 6, 2022).
