Federal Judge Dismisses Claims and Strikes Allegations in Marvel Lawsuit Against NCsoft
Makers of City of Heroes online computer game score favorable decision; judge labels Marvel allegations as “false and sham” and throws out trademark claims

LOS ANGELES, March 11, 2005—A U.S. district court judge in Los Angeles dismissed several key claims by comic book publisher Marvel Enterprises, Inc in the company’s trademark and copyright infringement case against online computer game publisher NCsoft® Corporation and game developer Cryptic Studios™. Marvel sued NCsoft and Cryptic Studios in November of last year, claiming that the City of Heroes® online computer game allows players to imitate comic book characters owned by Marvel.

In a March 9 order, U.S. District Court Judge R. Gary Klausner agreed with NCsoft that some of Marvel’s allegations and exhibits should be stricken as “false and sham” because certain allegedly infringing works depicted in Marvel’s pleadings were created not by users, but by Marvel itself.

The judge also dismissed more than half of Marvel’s claims against NCsoft and Cryptic Studios, including Marvel’s claims that the defendants directly infringed Marvel’s registered trademarks and are liable for purported infringement of Marvel’s trademarks by City of Heroes’ users. In addition, he dismissed Marvel’s claim for a judicial declaration that defendants are not an online service provider under the Digital Millennium Copyright Act. The judge dismissed all of these claims without leave to amend, meaning that Marvel cannot refile these claims.

Although the judge allowed certain claims to survive the motion to dismiss, NCsoft and Cryptic Studios are pleased with the result and are confident that both the law and the facts will support their case. In fact, citing a 1984 Supreme Court case holding that the sale of video cassette recorders did not violate copyright law, the Court noted that “It is uncontested that Defendants’ game has a substantial non-infringing use. Generally the sale of products with substantial non-infringing uses does not evoke liability for contributory copyright infringement.” Only “where a computer system operator is aware of specific infringing material on the computer system, and fails to remove it, the system operator contributes to infringement,” the Court stated.

The defendants have 10 days in which to answer and dispute Marvel’s allegations and to assert legal defenses to the remaining claims as well as to assert any counterclaims.