COURT FILE NO.: CV-12-453889

DATE: 2012-07-23

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Blizzard Entertainment, Inc., Applicant

AND:
Michael Simpson, Respondent

BEFORE: Carole J. Brown J.

COUNSEL:
Andy Radhakant, for the Applicant
Michael Simpson, representing himself

HEARD: July 20, 2012

ENDORSEMENT

[ 1 ] The applicant, Blizzard Entertainment, Inc. (" Blizzard") seeks to have recognized and enforced in Ontario a judgment of the United States District Court for the Central District of California (the "California Court") granted by United States District Judge Cormac J. Carney dated July 20, 2011, which granted an injunction and damages against the respondent, Michael Simpson (" Mr. Simpson"). The defendant/respondent did not defend the California action, nor appeal the judgment, and has not provided any responding materials or evidence to this application, although duly and properly served in both the California action and in this application. The respondent did, however, appear before this Court and make oral submissions.

[ 2 ] The California judgment concerns Simpson's infringement of Blizzard's copyrights and other rights in the computer game StarCraft® II – Wings of Liberty ("StarCraft II"). Blizzard, in its action in California, had specifically alleged that Simpson's online sale of unauthorized "map hacks" designed to alter and impair the online, multiplayer functionality of StarCraft II violated Blizzard's copyright and contractual rights. Specifically, as set forth in the affidavit of the California attorney involved in this matter, Marc E. Mayer, the map hack software, CraniX Map Hack allowed users to alter the gameplay of StarCraft II in order to gain an unfair competitive advantage in StarCraft II, thereby disrupting and impairing the competitive multiplayer aspect of the game. In the California action, and the judgment which the applicant seeks to have recognized and enforced in Ontario, Simpson was enjoined from infringing Blizzard's StarCraft II copyright and from violating the applicable Terms of Use and End User License Agreement ("EULA"). The California Court also awarded damages plus interest, fees and costs payable by Mr. Simpson to Blizzard.

[ 3 ] As set forth in the affidavit of Marc E. Mayer, referred to above, the District Court of California granted leave on December 15, 2010 to obtain discovery in order to learn of the identities of the defendants and to serve subpoenas on PayPal, Inc., Google, Inc. and CrowdGather, Inc. under the United States Federal Rules of Civil Procedure in order to obtain such identities. Following investigation, it was determined that the StarCraft II Map Hack Software and the website affiliated with it were linked to Mr. Simpson.

[ 4 ] Blizzard thereafter served Mr. Simpson, who resides in Carlton Place, Ontario, by making requests with Canada's designated Central Authority under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the “ Hague Convention ”). Mr. Simpson was properly served pursuant to the Hague Convention on March 1, 2011. The applicant submits that Mr. Simpson acknowledged receipt of the Summons and Complaint by posting the full text of the Summons and Complaint along with his comments on his website www.SC2hackdev.org on March 1, 2011. Mr. Simpson admitted during his appearance in this Court that he, in fact, received service of the Summons and Complaint.

[ 5 ] However, Mr. Simpson did not serve or file a defence or otherwise respond to the California action or appear at the California proceeding. He was noted in default in the California action on April 11, 2011 and default judgment was obtained following proper service of the motion for default judgment on Simpson, who again did not respond.

[ 6 ] On July 11, 2011, the Hon. Judge Cormac J. Carney of the United States District Court (California) heard argument on Blizzard's motion for entry of the default judgment and issued the judgment now sought to be recognized and enforced in Ontario. The judgment granted is as follows:

Mr. Simpson is ordered to pay Blizzard statutory damages in the amount of $150,000 plus postjudgment interest pursuant to 28 U.S.C. § 1961 at the rate of 0.16%, attorneys fees of $41,792.75 and costs of $3645.21. Furthermore, Mr. Simpson and his officers, agents, servants, employees, attorneys, successors, licensees, partners, and assigns, and all those acting directly or indirectly in concert or participation with any of them, are permanently enjoined from: (1) infringing Blizzard's StarCraft II copyrights by engaging in activities including without limitation the development, sale, and/or distribution of software products designed to modify or hack Blizzard's online videogame StarCraft II including without limitation the "CraniX Map Hack," (2) including or contributing to third party infringements of Blizzard's StarCraft II copyrights, (3) intentionally interfering with Blizzard's contract with StarCraft II players, and (4) violating the StarCraft II End User License Agreement ("EULA") and Battle.net terms of use ("TOU").

[ 7 ] The California judgment was properly served on Mr. Simpson on August 1, 2011. Mr. Simpson took no steps to satisfy, appeal, vary or set aside the California judgment, which remains valid and unsatisfied.

Law and Analysis

[ 8 ] In order to determine whether the California judgment should be recognized and enforced in Ontario, the Ontario Court must be satisfied that the California Court properly assumed jurisdiction according to Canadian conflict of laws rules, that there are no applicable defences of fraud, breach of natural justice, or public policy, established upon which this Court could refuse to enforce the California judgment and that the injunctive relief granted in the foreign judgment is enforceable in Canada.

[ 9 ] The Supreme Court of Canada in Beals v Saldanha , 2003 SCC 72 , [2003] 3 S.C.R. 416 sets forth a two-stage approach for the recognition and enforcement of foreign judgments. Firstly, the moving party must establish that the foreign court took jurisdiction according to Canadian conflict of laws rules, i.e. there must be "real and substantial connection" to the jurisdiction. This test requires a significant connection between the cause of action and the foreign court and is "the overriding factor in the determination of jurisdiction". As stated in Van Breda v Village Resorts Limited , 2012 SCC 17 , 2012 S. C. C. 17, the most recent pronouncement of the Supreme Court of Canada on the "real and substantial connection" test, jurisdiction may be based on traditional grounds, such as the defendant's presence in the jurisdiction or consent to submit to the court's jurisdiction, if established (paragraph 79). In this case, based on the documentation produced by the applicant, including the StarCraft II End User License Agreement and the respondent's acceptance of the terms therein, including the governing law (stipulated to be the Laws of the United States of America) and the location of the court of competent jurisdiction to determine disputes (stipulated to be the County of Los Angeles, State of California), the applicant submits that the real and substantial connection test has been satisfied, as the defendant consented to the jurisdiction.

[ 10 ] Where the real and substantial connection test has been satisfied, the responding party has the onus of establishing any applicable defences, including fraud, public policy and lack of natural justice in resisting the foreign judgment. In this case, the respondent, Mr. Simpson, did not defend the California action nor appear at the California proceeding. Mr. Simpson has not raised any defences which would satisfy his onus in resisting the foreign judgment.

[ 11 ] I am satisfied, based on all of the evidence before me and the caselaw cited and considered, including Beals v. Sakhara, supra ., United States of America v. Yemec , 2012 ONSA 414 and Facebook Inc. v. Guerbuez , 2010 QCCS 4649 aff’d 2011 QCCA 268 , that the defences of fraud, denial of natural justice and breach of public policy are not applicable.

[ 12 ] Mr. Simpson did appear at the application hearing before this Court and argued, for the first time, that Blizzard had committed a breach of Mr. Simpson’s hacker software website. He submitted that Blizzard had accessed his hacker website to determine his identity, and in so doing breached the user terms and conditions set forth in his website. He argued that the applicant had produced as evidence in this Court the screenshot of his forum posted on his www.SC2hackdev.org website, which contained his comments regarding receipt of the Summons and Complaint in the California action, and that such access was in breach of the contractual terms of his website and software. While he did not provide any responding material, he did refer to the applicant's materials which included the snapshot of Mr. Simpson's hacker software website with his comments, and also a copy of his posted registration, with “terms of use”.

[ 13 ] The terms of use on Mr. Simpson’s StarCraft II hacker software website included the following:

By using our website, you agree to the terms described below...

1. You are not an employee or know an employee of any companies listed:

• Activision Blizzard,
• Vivendi,
• Blizzard Entertainment, Inc.,
• Activision.

[ 14 ] Mr. Simpson submitted that the Blizzard lawyers must have gained access to his website and, in so doing, given the terms and conditions, would have breached those conditions, being affiliated with Blizzard. I note that the snapshot was taken in the context of the investigation pursuant to the California Court order. He further admitted that he did accept service of and received all material served on him pursuant to the Hague Convention . He further submitted that he had developed the map hack software and marketed it, making $5000 on the map hack software.

[ 15 ] With respect to the Blizzard lawyers accessing Mr. Simpson’s map hack website and breaching the terms of his user agreement, Mr. Radhakant submitted that if infringers could protect themselves from infringement actions by posting terms and conditions on their websites, this would be an untenable position in IP law. I agree with the Applicant’s submissions, Mr. Simpson has not satisfied the onus of establishing any applicable defences to enforcement of the California judgment.

[ 16 ] I find, on all the evidence before me, and on the submissions of the parties, that the California Court did properly assume jurisdiction and that there are no defences to enforcement of the judgment which are applicable.

[ 17 ] Based on the evidence before me, the submissions of Mr. Radhakant and Mr. Simpson, and the case law upon which the plaintiff relies, I am satisfied that the plaintiff has met the test for recognition and enforcement of foreign judgments, as set forth by the Supreme Court of Canada in Beals v Saldana, supra, and that none of the defences to enforcement are applicable, including fraud, denial of natural justice or breaches of public policy. I am satisfied that the injunctive relief sought is enforceable in this Court, that the terms of the Order of the California Court are clear and specific and that the considerations set forth in Pro Swing Inc. v Elta Golf Inc., 2006 S.C.C. 612 have been satisfied. Accordingly, I order that the judgment of the United States District Court of the Central District of California, Southern Division CV – 01495 – CJC (MLG) dated July 20, 2011 be recognized and enforced as a judgment of this Court.

Costs

[ 18 ] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.

Carole J. Brown J.

DATE: July 23, 2012