In a lawsuit, filed in the U.S. early January 2022, videogame giant Activision targeted German companies EngineOwning UG and CMN Holdings S.A, plus various individuals connected with their operation.
Running along similar lines as several other lawsuits filed by competitor Bungie, Activision claimed that the defendants trafficked in circumvention devices, in violation of the DMCA. The company aimed to hold the alleged cheat makers to account while sending a deterrent message to others considering the same conduct.
For more than a year, the EngineOwning defendants and their United States-based attorneys put up quite a fight. Characterizing the lawsuit as a battle between a $50 billion dollar company and mostly overseas defendants with limited resources to fight back, the defendants argued that being dragged all the way to the United States would be unfair, not to mention unnecessary; two of them are already being sued by Activision in a German case, they claimed.
These complaints appeared to have little effect on Activision. In February 2023, two of the defendants – Ignacio Gayduchenko (1) and Manuel Santiago (2) – broke ranks and settled with the plaintiffs for $2m and $1m, respectively. Court documents suggest that money wasn't the first thing to be handed over.
Motion to Dismiss
This January some of the defendants (Valentin Rick, Alex Kleeman, Bennet Huch, Leon Frisch, Leon Schlender, Leonard Bugla, Marc-Alexander Richts, Pascal Claβen, Remo Löffler) filed a lengthy motion to dismiss in response to Activision's amended complaint which had added new claims under the Computer Fraud and Abuse Act, and two further counts of racketeering (RICO).
In brief, the German defendants predicted the lawsuit would face difficulties. Evidentiary problems and the physical attendance of the defendants at a trial in California, for example. There was also the question of whether unwilling witnesses could even be compelled to travel. Beyond that, it might even prove difficult to enforce any judgment, they added.
Activision Pulls No Punches
Activision's response was robust. The "disingenuous" representations of the defendants to avoid appearing in a U.S. court failed to take into account their "hugely profitable online business" which had generated millions of dollars in revenue from 400,000 mostly U.S.-based customers, at Activision's expense. But more was to follow.
With help from two former EngineOwning participants, Activision had gained access to internal and private correspondence in which the defendants "routinely trade detailed instructions on how best to illegally launder" their shared profits, "engage in fraudulent tax-dodging schemes" and "concoct a story that EngineOwning had been sold to unknown buyers in 2018.
As for the objections against traveling to the United States, the defendants shouldn't have profited from illegal activities there, Activision informed the court. And besides, traveling hadn't been a problem in the past.
"Defendant Rick used [EngineOwning] profits to fund far more substantial international travel costs than those contemplated in his declaration, including rental of a 'presidential suite in a hotel in Zurich' for several weeks," the company added.
In January 2022, not long after Activision filed its lawsuit, the company's legal team at Mitchell Silberberg & Knupp claimed that the defendants had trolled and harassed them online, including making Steam groups called 'suck my d***, Activision' and using the initials of the law firm, 'MSK Crime'.
That was always likely to act as a motivator, even over a year later.
"Elsewhere, Defendant [Marc-Alexander Richts] sneeringly ponders whether it is better to spend [EngineOwning] earnings on 'a random lawyer in the US' or '10k cocaine,' before he admits the real reason he would like to avoid U.S. travel. He simply does not 'plan visiting (sic) that shithole country'."
Claims that Activision is already suing the defendants in Germany along broadly the same lines were also dismissed.
"The actual complaint asserts wholly different claims under German law, by a different entity. The German lawsuit is focused on the European market, does not address U.S. distribution or damages, does not assert claims for trafficking in circumvention technology, does not include most of the defendants in this action, and will not resolve the issues presented here," the company informed the court (pdf).
Can't Take Attorneys' Calls Anymore
The Court subsequently issued an order denying in part and granting in part the motion to dismiss filed by defendants Rick, Bugla, Frisch, Richts, Kleeman, Schlender, Huch, Classen, Loffler, and EngineOwning UG ('foreign defendants'). Activision was given the opportunity to file a second amended complaint, which it did not. After agreement was reached on a series of extensions, the defendants were given time to file their answer to the first amended complaint.
In the wake of several lengthy filings (pdf) and a lawsuit that now names more than 25 defendants (pdf) plus a company in Belize, Activision has been serving defendants in Europe under the Hague Convention (pdf). In the background, however, the relationship between the 'foreign defendants' and their U.S. attorneys appears to have collapsed.
Court records describe a "breakdown in communications." Due to the difference in time zones, contact between the parties had taken place over email and text messages. That had worked for well over a year, until the Court allowed the lawsuit to continue.
"Despite the Firm's efforts in attempting to communicate with the Foreign Defendants on more than a dozen occasions, including reaching out to Markus Kompa, EngineOwning's and Mr. Rick's attorney in the German litigation, this breakdown in communication has not been resolved," the defendants' attorneys informed the Court.
Not All Defendants Maintain Silence
The law firm advised the defendants by email, text message, and letter, that they intended to withdraw, and because there was no response, the company concluded that meant there would be no opposition (1,2).
The defendants were advised to inform the Court if they have retained new counsel and file a status report by June 2023. Since EngineOwning cannot proceed pro se, failure to appoint new counsel would result in an entry of default on the first amended complaint.
The Court extended the deadline to file an answer until July 17, 2023, but for up to four of the defendants, the end of this dispute may come a little sooner.
In a letter to the Court dated July 4, Marc-Alexander Richts confirmed he would be defending himself moving forward (pdf). However, a letter dated late June reveals that new levels of cooperation may be the way forward.
In the meantime, it appears to be business as usual for EngineOwning.
From: TF, for the latest news on copyright battles, piracy and more.
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