The Court on May 19 allowed both parties to submit an addendum to their pleadings by Monday, 27 June, and decided to continue the hearing scheduled for May 23 to Monday, July 11. And adds:

If Defendants’ illegality defense remains an issue before the Court following further discovery , the parties are instructed to include discussion of Dream Games of Arizona v. PC Onsite, 561 F. 3d 983 (Ninth Circuit).

In Dream Games the Court stated:

  1. As Professor Nimmer has written, the defense of illegality or unclean hands is “recognized only rarely, when the plaintiff’s transgression is of serious proportions and relates directly to the subject matter of the infringement action
  2. The Mitchell/Belcher principle leads to the conclusion that illegal operation of a copyrightable work neither deprives the work of copyright protection nor precludes generally available remedies. See 1  Nimmer on Copyright § 2.17 (applying the Mitchell principle to conclude that “the fact that a copyrightable work is being used for illegal purposes should not constitute a defense in a copyright infringement action”). If work that contains illegal content is copyrightable, then a work that contains legal content, but which may be used for illegal purposes is surely copyrightable.
  3. Thus, illegal operation of an otherwise copyrightable work does not deprive the work of copyright protection, nor is it a defense to infringement.
  4. Nothing in the Copyright Act suggests that plaintiff’s statutory right to elect the type of damages it seeks is forfeited upon presentation of evidence of illegality. Thus, we
    hold that an award of either type of damages available under the Copyright Act—actual or statutory—is not precluded by evidence of illegal operation of the copyrighted work, at least where the illegality did not injure the infringer.



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