Entertainment Legal News

Online IP Theft Is Not a Game

It must have seemed like the perfect scheme—buy the stolen source code of a popular online game, rent some servers to run the game as your own, and then hang a shingle on the web inviting gamers to come play at a steep discount.

A California man who followed that path must have thought he’d never get caught. He was even warned once by the game’s rightful owner, a large South Korean company, to shut down. He didn’t.

“They don’t think that a company is going to come after them at any point,” says Christopher Thompson, a special agent on a cyber squad in the FBI’s office in Austin, Texas. “He said he was going to stop doing it and he didn’t.”

So the company, which has offices in Austin, called the FBI. The suspect was apparently lining his own pockets from “donations” and ads on his site while his pirated version of the game, “Lineage II,” was siphoning $750,000 a month in potential revenues from the company.

According to Agent Thompson, here’s how the scheme evolved:

In 2003, a computer user in China obtained the “Lineage” source code from an unprotected website. The proprietary code was then placed on the underground market, where a Texas man, among others, bought it in 2004. He then passed it along to his business partner in California, who set up a website, www.l2extreme.com, to offer the “Lineage” game at a discount. Gamers arrived in droves—as many as 50,000 active users by 2006—which pinched the legitimate game’s bottom line.

“It’s comparable to the music-downloading and file-sharing problem in the late ‘90s—thousands of people engaging in activity that is inherently illegal,” Agent Thompson said.

The California man soon assumed full control of the site and ramped up operations. In late 2005, just months after promising to shut down the site, he rented more powerful servers—enough to accommodate 4,000 simultaneous gamers. He solicited donations from users to help defray the costs and collected more than $25,000 in less than two days.

“Even if game sites collect no money, they still operate in violation of copyright laws,” Agent Thompson said. “But he just got greedy because the money was there.” Indeed, online gaming is estimated to be a $1 billion industry and growing. And massive, multi-player online games (MMOGs in the gamers’ parlance) are one of the leading categories.

Last November, Agent Thompson led a raid on the California man’s home, shut down the game, seized the l2extreme domain, and posted the FBI anti-piracy warning on the site. Meanwhile, the company posted a press release on its website announcing the raid. “We’ve taken this action because we strongly believe in defending the intellectual property rights that we’ve worked so hard to create,” the company said in the release.

The result: several other servers running pirated games “ran for the hills,” Agent Thompson said. There are others, to be sure, but the case serves as a reminder that stealing intellectual property is a criminal offense. As our warning clearly states, “ Criminal copyright infringement, including infringement without monetary gain, is investigated by the FBI and is punishable by up to 5 years in federal prison and a fine of $250,000."

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	Did You Know?
	The title of Option is a defined factor When a creative entity, such as producer, artist, or studio, discovers a property and evaluates the rights status, they will, in most cases, attempt to negotiate an 'option' for the rights. An option is the right to acquire ownership of an intellectual property for a pre-determined amount of time. Size of the option payment often determines length of the agreement as well as how many forms of the rights will be included in the deal. While most option payments are subject to negotiation, script deals often work out to an even percentage of the purchase price.