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--(BUSINESS WIRE)--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(R) Corporation and game developer Cryptic Studios(TM). Marvel sued NCsoft and Cryptic Studios in November of last year, claiming that the City of Heroes(R) 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.

About NCsoft North America

NCsoft - North America (NC-NA) is headquartered in Austin, Texas and is part of Korea-based NCsoft Corporation. NC-NA, with development and administrative offices in Texas and California, launched two ground-breaking titles in the first half of 2004, Lineage(R) II and City of Heroes. The company also works with NCsoft subsidiaries and third party developers throughout North America to develop and publish innovative online entertainment software products. More information about NCsoft - North America can be found at https://www.PlayNC.com.

About Cryptic Studios

Cryptic Studios, Inc., located in Los Gatos, California, was established in July of 2000 and is an independent developer of massively multiplayer online games for the PC and next generation consoles. Its first game, City of Heroes, launched in April 2004. The game takes place in a virtual world where thousands of people play simultaneously, take on the role of super-powered heroes, fight villains and help create a dynamic story in a visually-stunning, 3-D graphical world.

NCsoft, the interlocking NC logo, Lineage and all associated NCsoft logos and designs are trademarks or registered trademarks of NCsoft Corporation. City of Heroes is a registered trademark of Cryptic Studios, Inc. and NCsoft Corporation. Cryptic Studios is a trademark of Cryptic Studios, Inc. All other trademarks are the property of their respective owners.