The $200 billion video game industry is centered around positive experiences where developers challenge player skill through game mechanics, level design, and other creative tactics. Through the course of the gameplay experience players are supposed to grow their skills to overcome new challenges. However, this lucrative industry has spawned a secondary market of “cheat codes” that change the developer-intended experience, typically creating an unfair advantage. To protect their players, intellectual property, and the overall gaming experience, gaming publishers have brought suit against third-party providers of cheat codes.
What Are Cheat Codes?
Cheat codes are comprised of passwords, play combinations, software, or other exploitations that allow a game player to gain an advantage and experience the game other than as intended by the game developers. Cheat codes were originally created by game developers to facilitate play test and debugging of a video game during development and were never meant to be accessible to ordinary players after the development phase.
When cheat codes are accessed by players, the gaming experience can be drastically altered, e.g., by giving players perfect aim or the ability to see opponents through walls. Competitive multiplayer “shooter”-style games, like Call of Duty, are particularly vulnerable to the effects of cheat codes. Capabilities afforded by cheat codes are beyond that of an unassisted player, giving players using cheat codes an unfair advantage.
Recognizing the intensely competitive nature of video games, independent developers have built a secondary online market focused on creating, marketing, and distributing cheat code software, resulting in an increase in access to and use of cheat codes. When players opt to use cheat codes, they negatively impact the playing experience, causing other players to quit playing the game or leave the platform. As a result, cheat codes have disrupted the industry in multiple ways and video game publishers have turned to courts for protection and assistance.
Battleground in the Courts
Recently, major publishers Bungie and Activision turned to the courts to successfully push back against this secondary cheat code market.
In Bungie Inc. v. Aimjunkies.com et al.,1 Bungie brought claims of trademark and copyright infringement against Phoenix Digital Group LLC, alleging that the company sold cheat codes online for Bungie’s shooter game, Destiny 2. The jury agreed, and last month Bungie was awarded $63,210 in remedies, in addition to nearly $4.4 million in a related arbitration. The court found that the defendant copied Bungie's data structures and reverse engineered other parts of Destiny 2 to develop the cheat software. By manipulating the game programming to create the cheat software, Phoenix Digital generated an unauthorized derivative work of Bungie’s protected software and induced players to breach Bungie's Limited Software License Agreement. Bungie also argued that cheaters devalue the experience for players who earn in-game rewards, diluting the game's reputation among players and the gaming community. The outcome of this case is a warning to cheat code developers that game publishers and developers will use legal remedies to protect their players, intellectual property, and business interests against cheat codes.
Similarly, Activision triumphed in its claims against a German company selling cheat codes for Call of Duty. In Activision Publishing Inc. v. EngineOwning UG, et al.,2 Activision brought claims under the Digital Millennium Copyright Act, the Computer Fraud and Abuse Act, the Racketeer Influenced and Corrupt Organizations Act and California’s intentional interference with contracts and unfair competition laws. The court found that EngineOwning purposefully created and marketed software which resulted in multiple harms to Activision’s business and its player community: players were able to circumvent cheat code blocks built into Call of Duty, defendants caused players to violate license agreements, and defendants negatively impacted Activision’s revenue by allowing players to access in-game rewards without requisite payment or other means of earning the reward. Activision also argued that cheat codes are harmful since they cause honest players to become frustrated with the game and quit, resulting in financial and reputational damage. The court agreed and awarded Activision $14,465,000 in damages in a default judgment. The court also granted Activision’s request for permanent injunctive relief, which included control of the defendants’ web domain.
Even though one case was decided on the merits by a jury trial and the other was a result of an order granting a motion for default judgement after the defendants failed to appear in court both outcomes rested on multiple violations of the publisher’s software license agreement by the defendants compounded by financial and reputational harms to the plaintiffs. Both cases indicate that moving forward, courts may be inclined to side with the value of protecting the integrity of publishers’ games along with their intellectual property, proprietary, and contractual rights.
Why Are These Cases Important?
The copyright claims brought by Bungie and Activision and verdicts in favor of these publishers reflect the U.S. federal courts’ acknowledgement of how companies and the gaming community are harmed when the rights of developers are violated. Both cases offer legal groundwork for future claims favoring monetary and injunctive relief for publishers as well as accountability for cheat code developers who seek to manipulate online video gaming for profit.
For more information this matter or about gaming companies generally, please contact Scott McKinney, Chris Paniewski, or any attorney in the firm’s electronic gaming practice and learn more about the practice by reading The Scramble.
Mary Cruz contributed to the preparation of this alert.
[1] Bungie Inc. v. Aimjunkies.com et al., No. 2:21-cv-00811 (W.D. Wash. 2023).
[2] Activision Publishing Inc. v. EngineOwning UG, et al., No. 22-51-MWF (JCx) (C.D. Cal. 2024).
