United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY United States District Judge
Incorporated (GC2) has filed suit against 1) International
Game Technology PLC along with International Game Technology,
IGT NV, and DoubleDown Interactive LLC (DoubleDown)
(collectively, IGT), 2) Masque Publishing and Masque
Publishing Inc. (collectively, Masque), 3) WD Encore Software
and WD Encore Software, LLC (collectively, WD Encore), and 4)
the consumers of IGT, Masque, and WD Encore, alleging that
they have infringed GC2's copyright. IGT, Masque, and WD
Encore have moved under Federal Rule of Procedure 12(b)(6) to
dismiss all claims against them.
Court takes the following factual allegations from GC2's
amended complaint and exhibits.
develops videos and images for games that are primarily
displayed on physical wagering machines, such as slot
machines. Am. Compl. ¶¶ 22-23. GC2 has created
artwork and videos for a series of wagering games, including
games called Coyote Moon, Lucky Lion Fish, and Pharaoh's
Fortune. Id. ¶ 24.
licensed its artwork to IGT NV-a wholly owned subsidiary of
IGT PLC- from 2003 to 2007. Id. ¶ 81. GC2 and
IGT's relationship was described in their original
agreement and seven amendments to the agreement. GC2 agreed
to "provide IGT with video graphics and artwork
necessary for implementing the GC2 Projects on the IGT
Platform." Compl., Ex. 18 (Agreement) § 3.14.
IGT's Platform is defined as "IGT electronic gaming
machines and conversion kits . . . ." Id.
§ 1.1. GC2 also agreed to "assist IGT engineers in
the implementation of such video graphics and artwork onto
the IGT Platform." Id. § 3.14. GC2 granted
to IGT "the sole and exclusive worldwide right and
license to make, manufacture, use, market, and sell gaming
equipment (utilizing the IGT Platform) incorporating the GC2
Projects for use in legalized gaming jurisdictions."
Id. § 3.2. The license applied to stand-alone
games on "video gaming devices operated on licensed
gaming premises." Id. The license did not apply
to certain wagering devices, such as "devices used for
mobile gaming" and "internet gaming." Compl.,
Ex. 20 (Amend. 7) § 1. The license also did not apply to
"nonwagering devices, machines and systems such as: (a)
pinball, (b) arcade machines, and (c) gaming consoles,
including but not limited to general purpose computers, for
non-wagered gaming." Id. In exchange for
GC2's exclusive license, IGT agreed to pay GC2 royalty
fees. Agreement § 3.6(a). The Agreement defines the
royalty fee as "the particular fee  paid to GC2 for
each gaming unit sold by IGT that utilizes the IGT Platform
and incorporates a GC2 Project." Id. §
IGT also agreed on terms of ownership regarding intellectual
property. Specifically, the parties agreed to the following
Except as otherwise provided in this Agreement, each Party
shall retain all rights to ownership, title or interests to
any proprietary information, any inventions and any
Intellectual Properties independently developed by them prior
to the Commencement Date of this Agreement and during the
Term of this Agreement. All independently developed
Intellectual Properties shall remain the property of the
Party that developed it.
Id. § 4.1. The "Intellectual
Properties" are defined as "patents, copyrights,
trade secrets, trademarks, trade names . . . or improvements
including any and all devices and computer software, whether
or not patentable." Id. § 1.13.
parties agreed to some exceptions to the general rule of
intellectual property ownership set out in section 4.1 of the
Agreement. Specifically, they agreed that "ownership of
the copyrights in and to the software for the GC2 Projects
developed by or on behalf of IGT shall remain the sole and
exclusive property of IGT." Id. § 4.2. GC2
also granted to IGT "any and all rights it may
have" in GC2 Bonus Concepts sold to IGT, so that IGT
could obtain a patent on such works. Id. § 4.3.
In the event IGT was awarded a patent, the "[o]wnership
of any and all patents related to GC2 Bonus Games [would]
remain the sole and exclusive property of IGT."
after IGT ended its relationship with GC2, IGT entered the
online gaming industry and sold games through its
subsidiaries online. For example, IGT owns the company
DoubleDown. Am. Compl. ¶ 104. IGT, through DoubleDown,
offers the product DoubleDown Casino to consumers on its
website and on third-party websites, such as Facebook.
Id. DoubleDown Casino "operates as a single
casino application with multiple games where all games are
available to the player within a single application."
Id. IGT's games incorporating GC2's artwork
are among the games available on DoubleDown Casino.
Id. ¶ 114. DoubleDown does not hold a license
from GC2 to display GC2's artwork.
also licenses games containing GC2's artwork to
third-party publishers, including Masque and WD Encore.
Masque runs a website, www.masque.com, where it sells
licenses to IGT games. Id. ¶ 60-61.
Masque's customers may download IGT games directly from
the website or purchase them in CD/DVD format. Several of the
IGT games made available on Masque's website contain
GC2's copyrighted images and videos, such as Lucky Lion
Fish and Pharaoh's Fortune. Id. ¶ 148.
Masque also sells these games on third-party websites, such
as Amazon.com. Id. ¶ 150. Masque has a
licensing agreement with IGT to sell these games but no
agreement with GC2. Pl.'s Resp. to Masque Mot. to Dismiss
at 1 n.1.
also maintains a license agreement with WD Encore. WD Encore
is a provider of pre-packaged software services. Am. Compl.
¶ 65. On its website, WD Encore sells licenses to
IGT's games to its end users. WD Encore's customers
may purchase a license for IGT games in either digital or
CD/DVD format. Id. ¶¶ 66, 68. Many of
these games include GC2's artwork. WD Encore also sells
these games on third-party websites, such as Amazon.com.
Id. ¶ 69.
and WD Encore require their end users to agree to a license
agreement before they can the IGT game they purchased,
regardless of where or in what format they purchased the
game. Masque's license agreement states:
The Software is licensed, not sold. By installing, copying,
downloading, accessing or otherwise using the Software, You
agree to be bound by the terms of this SOFTWARE LICENSE. If
You do not agree to the terms of this SOFTWARE LICENSE, do
not install, access or use the Software.
Pl.'s Resp. to Masque's Mot. to Dismiss, Ex. A
(Masque License). WD Encore's license agreement states:
ENCORE IS WILLING TO GRANT YOU THE LICENSE TO USE THE
SOFTWARE ACCORDING ONLY ON THE CONDITION THAT YOU ACCEPT ALL
TERMS IN THIS AGREEMENT. . . . IF YOU DO NOT AGREE TO ANY OF
THE TERMS BELOW, YOU SHOULD CLICK ON THE "NO" OR
"DO NOT ACCEPT" BUTTON BELOW OR OTHERWISE
DISCONTINUE THE INSTALLATION PROCESS.
Pl.'s Resp. to WD Encore's Mot. to Dismiss, Ex. A
(Encore License). Once an end user agrees to the license
agreement, the user is permitted to make a copy of the game
on her personal computer. Under both agreements, if an end
user violates the licensing agreement by, for example, making
an unauthorized copy of the game, Masque and WD Encore have
the authority to terminate the license and pursue legal
action against the end user. Specifically, Masque's
licensing agreement states:
Masque Publishing, Inc.  grants to you a nontransferable,
right to use the copy of the software program being
installed[.] You may not copy the Software or any
accompanying materials , except that you may make one copy
for backup purposes. You may not place the Software on a
computer that would allow multiple users to access it. You
may not reverse engineer, disassemble, decompile, modify,
adapt, translate, or create derivative works of the Software
or Documentation. MASQUE retains all rights, title, and
ownership in the Software. MASQUE may terminate this license
immediately if you fail to comply with its terms.
License § 1. WD Encore's license states:
Except as expressly permitted by applicable law, You may not
decompile, modify, reverse engineer, disassemble or otherwise
reproduce the Software. . . . You may not evade the digital
rights management technology, copyright protection, access
restrictions or other authorization mechanisms for the
. . . .
This Agreement will terminate automatically without notice
from Encore if You fail to comply with any provision of this
Agreement. Upon notice of termination, You agree to promptly
destroy all of Your copies of the Software. There shall be no
refund if this Agreement is terminated by Encore for Your
failure to comply with the terms of this Agreement. All
provisions of this Agreement as to warranties, limitation of
liability, remedies and damages will survive termination. The
parties agree to waive any provisions, procedures and the
operation of any legislation to the extent that a court order
or approval is required to terminate this Agreement.
Encore License §§ 6, 8.
filed its complaint in this case on September 9, 2016 and
amended it on October 28, 2016. GC2 alleges that IGT, along
with Masque, WD Encore, and their end users, infringed its
copyrights by selling games containing its artwork without a
license. GC2 alleges that IGT is liable for direct copyright
infringement (count 1 and 2), vicarious copyright
infringement (counts 7 and 8), contributory copyright
infringement (count 11), providing false copyright management
information (count 12), and consumer fraud under Illinois law
(count 13). GC2 asserts that Masque is liable for direct
copyright infringement (count 3) and vicarious copyright
infringement (count 9). GC2 also alleges that WD Encore is
liable for direct copyright infringement (count 4) and
vicarious copyright infringement (count 10). GC2 also alleges
that IGT, Masque, and WD Encore's consumers-sued as
"John Doe" defendants-directly infringed GC2's
copyrights (counts 5 and 6).
Masque, and WD Encore have all moved to dismiss GC2's
claims against them pursuant to Federal Rule of Civil
Procedure 12(b)(6). IGT PLC has also moved to dismiss
GC2's claims pursuant to Federal Rule of Civil Procedure
12(b)(2). The latter ...