The 14 Most Scandalous Legal Battles in Gaming History

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Are Developers To Blame for Game Addiction?

Smallwood vs. NCSoft (2009)

Lineage II is an MMORPG launched for Windows computers in 2003, which is still available as a free-to-play game now. Some might find it easy to switch off -- but Craig Smallwood, who was based in Hawaii, became “psychologically dependent and addicted to playing Lineage II”.

In September 2009, he discovered that he had been locked out of the game. NCSoft banned Smallwood because he was allegedly involved in a scheme “to make real money transfers”. Smallwood denied this allegation and claimed that being addicted to the game caused him psychological trauma which required regular hospital treatment and therapy.

The defendants’ (NCSoft’s) main argument was that the User Agreement Smallwood had signed precluded him from pursuing the case. The section read:

“IN NO EVENT SHALL NC INTERACTIVE, NOR ANY OF ITS CONTENT PROVIDERS, SHAREHOLDERS, PARTNERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUPPLIERS, BE LIABLE TO YOU OR TO ANY THIRD PARTY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES…”

The defendant also claimed that the plaintiff could not raise an action in Hawaii, as the UA stated that any legal action must be in Texas (where their company was based).

Surprisingly, Smallwood won against the software company. Texan law had recently found that “choice-of-law clauses apply only to the interpretation and enforcement of the contract itself; they do not encompass all disputes between the parties”. As summarized by The Register, District Judge Alan C. Kay ruled that both Hawaiian and Texan law bars contracts which try to waive gross negligence claims. He also upheld the plaintiff’s claims for negligence, defamation, and negligent infliction of emotional distress.

Choice of law is an important issue, and one that companies are finding it harder to enforce. This case also serves as a warning to any makers of free-to-play games with microtransactions – be careful in setting the timescales for objects to appear and put a cap on players’ spending.

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Published Jul. 6th 2017
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