Opinion
22-55137
10-06-2022
SUZHOU ANGELA ONLINE GAME TECHNOLOGY CO., LTD; IMPERIUM INTERACTIVE ENTERTAINMENT LIMITED, a Chinese corporation, Plaintiffs-counter- defendants-Appellants, v. SNAIL GAMES USA, INC., a California Corporation; WILDCARD PROPERTIES LLC, a Florida Limited Liability Company, Defendants-counter- claimants-Appellees.
NOT FOR PUBLICATION
Argued and Submitted September 21, 2022 Pasadena, California
Appeal from the United States District Court for the Central District of California, D.C. No. 2:21-cv-09552-CAS-SK Christina A. Snyder, District Judge, Presiding
Before: WARDLAW and IKUTA, Circuit Judges, and VRATIL, District Judge.
MEMORANDUM [*]
Suzhou Angela Online Game Technology Co., Ltd. (Angela) appeals the district court's denial of preliminary injunctive relief that would have directed Wildcard Properties, LLC (Wildcard) and Snail Games USA, Inc. (Snail Games) (collectively, SWC) to withdraw a takedown letter sent to Valve Corporation (Valve) pursuant to 17 U.S.C. § 512(c)(3). The takedown letter (Valve Letter) charged that Valve's distribution of Angela's video game, Myth of Empires, on the Steam platform constituted trade secret misappropriation and copyright infringement of SWC's rights in its game, Ark: Survival Evolved.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the legal premises underlying a preliminary injunction de novo, but the application of those standards for abuse of discretion. A&M Records, Inc. v. Napster, Inc., 284 F.3d 1091, 1096 (9th Cir. 2002).
1. For the first time on appeal, SWC argues that Angela lacks standing to move for a preliminary injunction because withdrawal of the Valve Letter would not redress Angela's alleged injury. As "a jurisdictional defect [such as standing] is a non-waivable challenge that may be raised at any time, including on appeal," we may consider SWC's standing challenge. Wash. Env't Council v. Bellon, 732 F.3d 1131, 1139 (9th Cir. 2013).
Angela's alleged injury centers on the fact that Valve's removal of Myth of Empires from the Steam platform put Angela in "potentially fatal financial straits." While SWC is correct that, even if SWC were ordered to retract its takedown notice, it is not certain that Valve would restore Myth of Empires to its platform, "[p]laintiffs need not demonstrate that there is a 'guarantee' that their injuries will be redressed by a favorable decision." Novak v. United States, 795 F.3d 1012, 1019 (9th Cir. 2015) (alteration in original) (citation omitted). The Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860 (1998) (DMCA), offers third-party service providers, like Valve, safe harbors from liability that are triggered by a takedown notification. See 17 U.S.C. § 512(c)(1), (g)(1). If the Valve Letter were retracted, Valve would lose access to these statutory protections and face increased legal exposure, including a potential suit from Angela for removing Myth of Empires in violation of its distribution agreement with Valve.
By altering Valve's legal incentives, the preliminary injunction would result in "change in a legal status" where the "practical consequence of that change would amount to a significant increase in the likelihood that the plaintiff would obtain relief that directly redresses the injury suffered." Novak, 795 F.3d at 101920 (citation omitted). Accordingly, Angela has standing to seek a preliminary injunction.
2. The district court did not err in denying Angela preliminary injunctive relief. Angela argues that SWC bears the burden of proving the preliminary injunction standard is met because, under § 512 of the DMCA, SWC is required to obtain its own preliminary injunction to keep the Valve Letter in effect. But nothing in the language of § 512 indicates that such a requirement exists. And even if it did, Angela is the party that moved for the preliminary injunction at issue on appeal. Our precedent makes clear that "[the movant] must demonstrate that it meets all four elements of the preliminary injunction test." DISH Network Corp. v. F.C.C., 653 F.3d 771, 776 (9th Cir. 2011). Angela offers no law-in § 512 of the DMCA or from applicable case law-that dictates otherwise.
Moreover, while the Supreme Court has stated that the final burden of proof in a declaratory judgment action lies with the rightsholder, that case did not speak to the burden for preliminary injunctive relief. See Medtronic, Inc. v. Mirowski Fam. Ventures, LLC, 571 U.S. 191, 194 (2014); see also Beyond Blond Prods., LLC v. Heldman, 479 F.Supp.3d 874, 881 (C.D. Cal. 2020). The district court correctly held that Angela maintained the burden to show a preliminary injunction was warranted.
3. Because Angela's requested injunction would require SWC to "take [the] affirmative action" of retracting the Valve Letter, the district court properly concluded that Angela sought a mandatory injunction. Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015). A request for a mandatory injunction should be denied unless the movant can "establish that the law and facts clearly favor [its] position, not simply that [it] is likely to succeed." Id.
4. The district court did not abuse its discretion in finding that Angela failed to make a "clear showing" that the preliminary injunction factors were met. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). The law and facts did not "clearly favor" Angela's position because there is a "plethora of circumstantial evidence" indicating that Myth of Empires copied source code from SWC's video game, Ark: Survival Evolved. For instance, 60 out of 82 Angela Games employees credited with working on Myth of Empires were former employees of Snail Games, one of whom was given access to and confirmed the download of Ark: Survival Evolved's source code. Preliminary analyses show significant similarities in the existing code. Angela did not offer any contrary evidence sufficient to demonstrate that the law and facts "clearly favor" its position, and therefore support a mandatory injunction. See Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH &Co., 571 F.3d 873, 879 (9th Cir. 2009). "Because it is a threshold inquiry, when a plaintiff has failed to show the likelihood of success on the merits, we need not consider the remaining three [Winter elements]." Garcia, 786 F.3d at 740 (alteration in original) (internal quotation marks and citation omitted).
AFFIRMED.
[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
The Honorable Kathryn H. Vratil, United States District Judge for the District of Kansas, sitting by designation.