Midasplayer.Com Ltd v Watkins [2006] EWHC 1551 (Ch)

[2006] EWHC 1551 (Ch)Case No HC 06 C 01101
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 12 th June 2006
Before
HIS HONOUR JUDGE NORRIS QC(Sitting as a Judge of the High Court)
Between
MIDASPLAYER.COM LIMITEDClaimantJOHN WATKINSDefendant
Digital Transcription by Marten Walsh Cherer Ltd.,Midway House, 27/29 Cursitor Street, London EC4A 1LT.Telephone No: 020 7405 5010. Fax No: 020 7405 5026
MR. MATTHEW SHANKLAND (instructed by Weil, Gotshal & Manges) for Claimant for THE DEFENDANT did not appear and was not represented
Judgment
[1]Midasplayer.com Limited operates an online Internet skilled gaming site. It uses the vehicles of King.com and Midasplayer.com. The games in which registered players participate are games of skill. They do not involve gambling. According to the evidence King.com is the largest skilled gaming site hosting some 50 million games every month. The structure of the business is such that a visitor can visit any King.com game site and play the game for free without having to become a member. But if a participant wishes to win prize money then that participant must register as a member and can then open an account. This is credited as soon as the participant is registered and can be topped up by debits from the participants' credit or debit cards to provide the prize money for the separate tournaments in which the registered member participates as a gamer.[2]When a visitor accesses the King.com site the visitor is provided with a set of terms and conditions. Clause 1 of the terms and conditions is in these terms so far as material:
"By registering for the King.com Service, you agree to the terms of this Agreement, and you re-affirm that agreement every time you use it. Visitors to the King.com Service who do not register to become a Member ... similarly affirm that they are bound by this Agreement each time they access the King.com Service."
[3]Accordingly, a visitor has the status of a licensee who is permitted access to the site on the terms stated in the terms and conditions. A member is contractually bound to King.com to observe the terms and conditions in order to become entitled to the prize money payable under the games supervised by King.com.[4]Paragraph 2 of the terms and conditions sets out the nature of the service provided. It is in these terms:
"The King.com Service provides its Member with the ability to play the games we provide here and to participate in tournaments with other Members. Our games are, in fact, games of pure skill; there is no chance element to them. Thus, when participating in a tournament with other Members, it is your speed and skill in playing the game that is assessed against other Members, and the winner will be the Member who, through skill and judgment, scores the most points in the relevant game."
[5]Paragraph 9 of the terms and conditions provides:
"Members may not use unfair methods on the King.com Service. Any technique which facilities a Member to deploy anything other than pure skill in the conduct of a game is unfair for these purposes. Such techniques may include, but are not limited to, ... the use of program codes or commands or any adapted hardware or software to assist play ... Further, Members may not conduct themselves in such a way as to produce a disruption or malfunction of the King.com Service."
[6]The defendant, John Watkins, became a registered member of King.com in August 2005. He came to the attention of the claimant because he appeared to use a credit card that was not issued in his registered participant name. It has become apparent that the reason for this is that the defendant is bankrupt. In the course of events arising out of investigation of the defendant's participation in the claimant's games it came to the attention of King.com that the defendant had been promoting the sale of cheater software or cheater programs.[7]The defendant operates a website known as “King.com Cheater.” On it he advertises three applications, (for three games on the King.com site) and boasts that with these little applications he has won over £500 and rising on Midas Miner alone. He states:
"The programs work by playing the games for you. They can not be detected as they pretend to be your keyboard & mouse."
He offers these cheater programs to purchasers for £20 for 30 days' use and boasts "I made £350 in my first week".[8]As the website indicates the cheater software simulates mouse clicks in the targeted game window, just like a real human participant would but with greatly advanced speed and precision. The result is that the cheater program generates considerably higher scores than a human user could achieve. This enables the owner of the cheater program to win more tournaments and, therefore, to win more money.[9]It is the evidence of the claimant, to which there has been no challenge, that the presence of such cheater software on an Internet game site lowers the reputation of the gaming site because no player will want to play skill games for money against a program which is designed to maximize the score of an opponent using processor chips. The active and open promotion of the cheating programs has meant that undoubtedly many current and potential members of the game site have become aware of the existence of cheater programs. This has the consequence of lowering the reputation of King.com and of damaging or threatening its relations with its partner companies through which 85% of its growing business is introduced. The position is summarized in the witness statement of Toby Rowland, the chief operating officer of the claimant, in these terms:
"Reputationally and financially, the prospect of extended cheating in the games would be disastrous for the Claimant."
[10]In these circumstances the claimant commenced proceedings against the defendant within a matter of days of discovering his activities. On 17th March 2006 it obtained a without notice order from Mann J, the return date for which was 24th March. The order restrained the defendant from using or distributing any software information or technique, the purpose of which was to cheat the claimant's online computer games or computer entertainment systems.[11]The concept of cheating embodied in the order was that cheating meant facilitating a user to deploy anything other than pure skill in the conduct of any game or in any other way to circumvent the rules or electronic architecture of the games with a view to gaining an advantage or winning money. Other ancillary relief was also granted. This without notice injunction was continued by Peter Smith J on 24th March 2006.[12]The application now before me is for summary judgment in lieu of a trial of the action. By Part 24 summary judgment may be given if the court is of the view that a defendant has no real prospect of successfully defending the claim and that there is no other compelling reason why the case should be disposed of at trial; but the court can only give summary judgment after a defendant has filed an acknowledgment of service or a defence unless the court gives permission.[13]Prior to the service of an acknowledgement or defence the usual regime covering the disposal of the action is the default judgment regime. In the instant case the claimant does not wish to use the administrative machinery of a default judgment for, essentially, two reasons. First, it requires a public vindication of its right to maintain the integrity of its gaming site. Secondly, it takes the view, correctly in my judgment, that this is not a defendant who simply ignores the court. To his credit the defendant has engaged in the process of litigation by responding in some degree to the claimant and not simply ignoring its claim. It would be wrong to treat the defendant as having no interest in the outcome of the claim, so that it can be disposed of administratively rather than in exercise of a judicial power and wrong to penalize him simply for having failed to file an acknowledgment of service. Accordingly, I intend to give permission for a Part 24 claim to be pursued, notwithstanding that no acknowledgment of service has been filed.[14]That said, the defendant has not participated in the hearing before me and has not attended. He sent an e-mail to the claimant on Friday in these terms:
"Hi, I don't have the time or money to come on the 12th (same position as on previous occasions), if this can be done on the phone then that's be grand. I've still absolutely no idea how your client expects to be able to get any cash from me."
[15]The defendant accordingly has notice of the hearing and has not attended by his own choice. No application was made for a telephone hearing (and there are in any event some inconveniences in conducting telephone hearings with litigants in person). None the less, I have ensured that in the course of this hearing my attention has been drawn to everything that Mr. Watkins has filed with the court or has responded with in answer to the evidence served upon him, and I am grateful for the care which has been taken in drawing these matters to my attention so that I may properly bear them in mind in exercising my discretion.[16]In my judgment, this is a plain case on three heads. First, the claimant submits that there is an undoubted breach of contract between itself and Mr. Watkins. Mr. Watkins is a registered participant contractually bound by all of the terms and conditions including in particular clause 9. He himself, according to the terms of his website, has used a technique which facilitated him deploying something other than pure skill in the conduct of a game. That constituted unfair conduct and is a breach of clause 9.[17]Secondly, the claimant says that Mr. Watkins has induced a breach of contract in other site users by offering for sale cheat software. They rely on the provisions of clause 1 of the Terms and Conditions in relation to visitors who are licensed for access for the purpose of practice games and the terms of clause 9 in the case of registered users contractually bound by the terms and conditions. The submission made is that by offering cheat software Mr. Watkins induces a breach of contract either in relation to the terms of access of licence users or the terms contractually binding on registered members. I agree.[18]The third head of claim is that Mr. Watkins has been guilty of unlawful interference with the claimant's business. The interference is the distortion of the “fair play” rule which lies at the heart of the gaming site. The consequence of the interference is that which I have summarized from Mr. Rowland's witness statement, namely that the proliferation of cheating destroys the reputation of the site and has an immediate financial impact. It diverts winnings properly payable to those who use their skill to those who cheat.[19]This interference with the business of the claimant is unlawful because Mr. Watkins is bound by the terms of the contract which he entered when he became a registered participant and, as was conveniently stated by Nourse LJ in Kuwait Oil and Tanker Co. SAK v. Al-Bader [2000] 2 All ER (Comm) 271 in a passage at page 319, “unlawful means” may be both tortious and criminal or both tortious and a breach of contract or all three. Accordingly, a breach of contract is capable of constituting unlawful interference. (Other causes of action were included in the particulars of claim, but they were not, and in my judgment rightly not, pressed on an application for summary judgment.)[20]These three claims are well founded in law and are supported by evidence which Mr. Watkins has not challenged. I do not consider that there is any reasonable prospect that if afforded the opportunity of a trial Mr. Watkins could challenge these conclusions. I cannot see that anything that he has so far said discloses a real prospect of a successful defence. The material that he has generated on the contrary establishes the claimant's case on the three heads indicated.[21]First, in a witness statement which he made on 21st March following Mann J's order he disclosed the following matters. a) in paragraph 7, he stated that his Midas cheater software was very basic and that it employed no special methods to hide itself from the claimant's security software. b) he disclosed that he was licensing his cheater software for use by third parties and that his charging structure was not on what he described as "per cheat basis". c) he explained that the mode of operation of his cheat software does not make the cheat any harder to detect than a cheat that does not have the features of a license key and server authentication. d) he made plain that a purchaser of his licensed cheat software "is only able to use one cheat at a time". e) he asserted a belief that the claimant had not tried to use the technical resources at its disposal to attempt detection of his cheater software. f) he disclosed that he had been working on cheat software for other games on the claimant's website but that the claimant had started to employ anti cheat methods which had slowed his developments down.[22]It seems to me plain that such evidence is an acknowledgment both that he himself is in breach of contract by his admitted conduct and that he has no answer to any case that he has been inducing a breach of contract in others. The nearest he came to raising a point which cannot be dismissed as fanciful was in paragraph 5. There he pointed out that new members were not required to register their agreement to terms and conditions until such time as they wished to participate in prize money games. In my judgment this does not disclose an issue which has a real prospect of success. Every person seeking access to the King.com site is only afforded access on the footing that they observe the terms and conditions even if they do not become registered participants.[23]The second category of material generated by Mr. Watkins is the website. As I have indicated this website confirms rather than undermines the claimant's case. It discloses that in breach of the specific terms of clause 9 of the terms and conditions Mr. Watkins is using something other than pure skill to participate in the game, namely by using a program that pretends to be a player's keyboard and mouse. Further, it acknowledges that he himself has used this to participate in games and to win prize money which it is implicit he would not have won had he not used the program, (that is why he said "I made £350 in my first week" and "with these little applications I have won over £500 and rising on Midas Miner").[24]The third category of material that has been produced by Mr. Watkins is his participation in a forum conducted on the Nochex site which he uses to market his games. These disclose that in that forum Mr. Watkins reminds forum members of the availability of his cheat programs, that the cheat programs can be left running overnight to enable the number of games to be increased and that the participation is effectively automatic and that the programs are manifestly game cheats which enable people to recover daily jackpots greater than they would otherwise achieve.[25]Taking into account all of the material which was produced by Mr. Watkins and has been drawn to my attention in the context of this application, I reach the view that he has no defence to the claimant's case which has any real prospect of success.[26]That, therefore, brings me to the relief to which the claimant is entitled. He seeks a perpetual injunction. Injunctive relief is a discretionary matter. The forum to which I have just referred indicates that the prize money that potential users of the cheat software will obtain is relatively small. The website indicated total winnings of £500 and of £350 by Mr. Watkins. The forum traffic indicates that Mr. Watkins had won jackpots of up to £67 and he was promoting games in which there were jackpots of £27 and £31 and that the winnings per play could be £4.25.[27]Mr. Shankland fairly drew to my attention the fact that these sums are small. He also drew my specific attention to the passage in Mr. Watkins' witness statement which said:
"I believe that it would be a better approach for the Claimant to prevent their games from being so easily cheated and issue injunctions against everyone that creates basic cheats. I am willing to come to an agreement regarding this; however, I believe that an injunction is excessive and not best practice."
[28]In my judgment the fact that individual winnings from particular cheats may not be themselves sizeable is not an indicator against granting an injunction. Very often an injunction is the only proper remedy when financial consequences are relatively small. The claimant faces the difficulty that it does not at present know the full extent of the utilization of the defendant's cheat software. It therefore does not know how many jackpots of whatever size are reaching the wrong designation.[29]It is important that it should control the integrity and honesty of its gaming site and an injunction is the only effective vehicle for conferring on it the necessary power. I shall, therefore, grant injunctive relief in the form of the draft minute which has been placed before me, but subject to three areas requiring further consideration.[30]First, the present injunctions relate to software, to businesses and to websites, the purpose of which is to cheat “the claimant's online computer games or computer entertainment systems.” I think it would be prudent if these were more precisely defined than the present order contemplates.[31]Secondly, one limb of the injunction seeks to restrain the defendant from committing any act or omitting to do anything, the purpose or effect of which is to interfere unlawfully or to allow any person to interfere with claimant's trade or business. As drawn, that limb of the injunctive relief seems to me imprecise and to expose the defendant to the risk of unwitting non-compliance.[32]Thirdly, the injunction sought to retrain the defendant from directly or indirectly informing anyone of the content of the evidence, save for the purpose of obtaining legal advice. Again, as drawn, that seems to me to be too wide and I require in its place for there to be reference to a redacted volume of evidence to which the defendant is free to refer, but to the redacted parts of which he is forbidden to refer. I will deal with that matter without a further hearing in chambers if a redacted volume of evidence can be placed before me.[33]Subject to those observations I will grant the relief sought. JUDGE NORRIS: Mr. Shankland, given the relief, are you going to proceed by doing a revised minute of order and lodging it for me to have a look at? 34. My Lord, I ask also for my costs to be assessed if not agreed. I would have asked your Lordship to do a summary assessment but we have not been able to get a schedule to Mr. Watkins and, therefore, I simply ask for assessed if not agreed, my Lord. JUDGE NORRIS: I have no difficulty with the principle that you should have your costs. The one question which I would like to be addressed is whether you should have your costs of this hearing. This hearing was significantly for your benefit because you want a public vindication of your right and not to proceed by way of default judgment. Why should Mr. Watkins have to pay for that? MR. SHANKLAND: My Lord, in the general scheme of things I would press for an order in the usual basis that Mr. Watkins lost but I understand your Lordship's comments and if it means that there is no order as to costs I think my client would accept that. There is no point in ---- JUDGE NORRIS: The only point, it seems to me you are entitled to your costs of commencing the proceedings; there is the injunctive relief, you are entitled to that. I find it very difficult to see what the answer to those claims is. It is just the costs of this particular hearing so that what I was minded to do is to say that you should have your costs of the action except for the costs of today's hearing. MR. SHANKLAND: Very good, my Lord, yes. JUDGE NORRIS: Do you want to address me on that at all? MR. SHANKLAND: Obviously the only basis on which I would ask for my costs of today is on the basis that Mr. Watkins lost, but your Lordship is correct, it was necessary for us to obtain this order for a number of commercial reasons. We could have entered default judgment and I would accept an order that gives us our costs excluding today, my Lord. JUDGE NORRIS: In that case I will order that the defendant will pay the costs of the action to be assessed on the standard basis in default of agreement, save and except for the costs of attendance today. That, effectively, gives you the costs of the one witness statement you put in on Part 24, the rest was injunctive witness statements. If you will lodge a minute of order, please. MR. SHANKLAND: I will do so. JUDGE NORRIS: Thank you very much for your help and for the convenient bundle. MR. SHANKLAND: I am grateful, my Lord.