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Evony, LLC and v. Philip Holland

March 31, 2011

EVONY, LLC AND REGAN MERCANTILE, LLC, PLAINTIFFS,
v.
PHILIP HOLLAND, D/B/A XANDIUM STUDIOS, D/B/A WWW.XANDIUMSTUDIOS.NET, A/K/A ZERO, DEFENDANT.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM OPINION AND ORDER OF COURT

Presently pending before the Court for disposition is the MOTION FOR PRELIMINARY INJUNCTION (Document No. 6)*fn1 and MOTION FOR ENTRY OF DEFAULT JUDGMENT AGAINST PHILIP HOLLAND (Document No. 16) filed by Plaintiffs, Evony LLC and Regan Mercantile, LLC.

On March 15, 2011, the Court conducted an evidentiary hearing / argument on the motions. Plaintiffs were represented by Andrew T. O‟Connor, Esquire of the law firm Edwards Angell Palmer & Dodge LLP and Eric G. Soller, Esquire of the law firm Pietragallo, Gordon, Alfano, Bosick & Raspanti, LLP. Defendant Philip James Holland appeared pro se.

Procedural History

On January 18, 2011, Plaintiffs filed a seven-count Verified Complaint in which they alleged Copyright Infringement (Count I), Violation of the Digital Millennium Copyright Act ("DCMA") (Count II), Infringement of Trademark (Count III), Infringement of Trade Dress (Count IV), Breach of Contract (Count V), Tortious Interference with Contractual Relations (Count VI), and Tortious Interference with Prospective Economic Advantage (Count VII).

Plaintiff Evony, LLC ("Evony") developed and operates a Massively Multiplayer Online Real-Time Strategy game entitled Evony (the "Evony Game"). Evony is the owner of all exclusive rights and privileges in U.S. Copyright Registration Nos. TX07175070 and TX007175079 for the Evony Game. Evony also owns all substantial rights and good will in U.S. Trademark Registration No. 3,878,532 for the EVONY trademark ("EVONY Mark") and in the look and feel of the Evony Game (the "Trade Dress"). The Evony Game is designed to be played online by accessing servers maintained and operated by Evony, which requires authorized players to agree to the Terms of Use agreement for playing the Evony Game ("Terms of Use"). Distilled to its essence, Plaintiffs allege that Defendant, through his website, is "devoted to cheating, hacking, and publishing unauthorized copies of the Evony Game using the EVONY trademark and Trade Dress." Verified Complaint at 3.

The Summons and Verified Complaint were personally served upon Defendant Philip James Holland on January 21, 2011. See Proof of Service, Document No. 12. The Summons specifically instructed Defendant that he must serve on the Plaintiffs an answer to the Verified Complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure within twenty-one(21) days after service of the summons. Defendant‟s answer due date was February 14, 2011. Id.

On January 21, 2011, Plaintiffs filed and served on Defendant their motion for preliminary injunction in which they sought to prohibit Defendant from continuing in his alleged infringing activities that are irreparably harming Plaintiffs‟ goodwill. See Document No. 5. No opposition to the motion for preliminary injunction has been filed by Defendant.

Defendant never requested an extension of the deadline by which to respond to the Verified Complaint, did not file an answer, motion or any other response to the Verified Complaint, never entered an appearance, or had an attorney enter an appearance on his behalf. Accordingly, on February 22, 2011, Plaintiffs requested the entry of Default against Philip Holland for failure to plead or otherwise defend. Without opposition, default was entered by the Clerk of Court on February 23, 2011.

On March 2, 2011, Plaintiffs filed the instant Motion for Default Judgment against Philip Holland. Not surprisingly, Holland did not file anything in response to the Motion for Default Judgment. For the reasons stated below, Plaintiffs‟ Motion for Default Judgment shall be granted and judgment entered in favor of Plaintiffs in the amount of $300,000.00, plus attorneys‟ fees and costs, with interest, in an amount to be determined.

DISCUSSION

I. Default Judgment Standard for Damages

Default judgment establishes the defaulting party‟s liability for the well-pleaded allegations of a complaint. United States v. Gant, 268 F.Supp.2d 29, 32 (D.D.C. 2003). "A consequence of the entry of a default judgment is that "the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." Comdyne I, Inc. v. Corbin, 980 F.2d 1142, 1149 (3d Cir. 1990) (quoting 10 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure, § 2688 at 444 (2d ed. 1983)). In other words, a party‟s default is almost universally deemed an admission of the Plaintiff‟s well-pleaded allegations of fact pertaining to liability. See also Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974) ("While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible of mathematical computation.")

II. Liability

The Court finds that Plaintiffs have sufficiently established Defendant‟s liability in this action. The facts pleaded in Plaintiffs‟ Verified Complaint sufficiently establish violations of the Copyright Act (Count I), the DMCA (Count II), and the Lanham Act (Counts III and IV). Specifically, Plaintiffs have established that Defendant literally copied the Evony Game and that his website and the products on his website infringe the intellectual property rights owned by Plaintiffs.

Accordingly, under these facts deemed by the Court to be admitted, the Court finds and rules that Defendant infringed Plaintiffs‟ copyright and trademarks in violation of the Copyright Act, 17 U.S.C. § 501(a), and the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125. The admissions also satisfy liability under the DMCA, which provides that "[n]o person shall circumvent a technological measure that effectively controls access to a work protected under this title." 17 U.S.C. § 1201(a)(1)(A).

To circumvent a technological measure "means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner." 17 U.S.C. § 1201(3)(A). Plaintiffs have proven that Defendant‟s three products, Evony Second Opinion, Evony Task Automater ("ETA"), and Evomap violate the DMCA as all three products allow players of the Evony Game to circumvent the Evony Game‟s login procedure and technological measure without Evony‟s permission or authorization. According to Plaintiffs, the technological measure that is being circumvented not only protects copyrighted material but also protects Evony‟s exclusive rights in the copyrighted material.

The Court finds that Defendant‟s three products, Evony Second Opinion, ETA, and Evomap, are designed to circumvent a technological measure that effectively controls access to Plaintiffs‟ copyrighted program. Accordingly, under these facts deemed by the Court to be admitted, the Court finds and rules that Defendant‟s actions have also violated the DMCA.

Furthermore, the Court finds that the facts pleaded in Plaintiffs‟ Verified Complaint also sufficiently establish violations under Delaware law of breach of contract and under Pennsylvania law of tortious interference with contractual relations and tortious interference with prospective economic advantage.

III. Damages

Plaintiffs do not seek actual damages as no discovery has taken place, but instead request assessment of statutory damages for each of Defendant‟s copyright, DMCA, and trademark violations.*fn2 The Copyright Act, DMCA, and Lanham Act all contain provisions authorizing an award of statutory damages in lieu of actual damages. See 17 U.S.C. § 504(c); 17 U.S.C. § 1203(c)(3)(A); 15 U.S.C. § 117(c). The award of statutory damages is especially fitting in the default judgment context where Plaintiffs are without the benefit of any disclosures by the infringer, leaving damages uncertain.

a. Statutory Damages

The Copyright Act provides, in relevant part, that:

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just.

(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of ...


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