In a previous blog post, we looked at Bungie’s successful legal battles against a few profitable cheat software developers.

Since then, Bungie has continued to see success on additional legal fronts, all resulting in payment by the cheat developers. In this article, we provide updates as to Bungie’s prior and ongoing lawsuits against cheatmakers and review the claims made against these companies:

1. Bungie v. VeteranCheats
   • Legal Claims: Copyright infringement, circumvention of technological measures, trafficking in circumvention technology, breach of contract, tortious interference with contractual relations, violation of consumer protection laws
   • Status: In April 2023, a U.S. court ordered a default judgment against the defendant cheat software operator, based in Romania, in the amount of $12 million.
   • Take-Away: Foreign defendants who do not respond to anti-cheating lawsuits may receive a default judgment against them. Further, this case displays how studios can subpoena important personal and transactional data from third-party websites (here, Stripe), thereby implicating the individuals who buy and use the cheats in-game.
2. Bungie v. Aimjunkies.com
   • Legal Claims: Copyright infringement, trademark infringement, designation of false origin
   • Status: On June 13, 2023, the court ruled that the defendants had to pay over 4.3 million from arbitration, to which the co-defendants filed notice that they were appealing the case to the federal Court of Appeals for the Ninth Circuit. On August 10, 2023, the court approved co-defendants’, Aimjunkies and Phoenix Digital, motion to substitute an expert witness. By October 2023, the defendants hope to convince the court (through an expert witness) that Bungie acted improperly by reverse-engineering the cheat loader that the defendants made for cheaters.
   • Take-Away: Even though a judge agreed with Bungie and confirmed the arbitration decision in their favor, cheat maker defendants can file appeals to prolong the legal dispute until it is ultimately resolved by the highest court in that state.
3. Bungie v. Lavicheats
   • Legal Claims: Copyright infringement, trademark infringement
   • Status: On May 8, 2023, Bungie secured a default judgment against Lavicheats, in the amount of $6.7 million.
   • Take-Away: This case shows the difficulty of bringing these lawsuits; even after spending over two years in court and over $2 million in anti-cheat measures, the studio may not actually recover a cent from an absentee cheat maker. This is especially true for cheat website operators that are based outside of the United States.
4. Bungie v. L.L.
   • Legal Claims: Breach of contract, copyright infringement, fraud in the inducement, circumvention of technological measures, and violation of consumer protection laws
   • Status: Bungie filed suit against the teenaged defendant in July 2022, who had repeatedly (1) streamed himself using cheats on Twitch; (2) harassed Bungie employees on social media; and (3) made continuous threats against the Bungie headquarters and staff members over social media. In September 2023, the court ordered payment of $500,000 by the defandant for the use of in-game cheats, as well as circumventing Destiny’s anti-cheat measures.
   • Take-Away: Even minors may be subject to these harsh court orders against cheaters; this greatly expands the scope of people liable for the use of cheats in online games in addition to the cheat manufacturers themselves. In addition, this aggressive strategy against a studio’s harasser was also leveraged successfully in July 2023, when Bungie won a lawsuit against an online troll who levied a hateful, persistent attack on community manager of the studio.
5. Bungie v. Ring-1 Defendants
   • Legal Claims: Copyright infringement, trademark infringement, trafficking in circumvention devices, violations of the Computer Fraud and Abuse Act, racketeering, breach of contract, and intentional interferfence with contractual relations
   • Status: Ring-1 is a popular cheat manufacturer and distributor. Bungie and Ubisoft initially brought a lawsuit against the individuals in charge of Ring-1 in 2021, for creating and selling cheats for use in Destiny and Rainbow Six Siege. Bungie failed to settle the case for $2.2 million against a U.K.-based defendant in February 2023 since the studio could not identify which specific illegal acts the British citizen directed at the U.S. As of August 2023, Bungie has expanded its lawsuit against Ring-1 to include additional legal claims for continuing to operate the cheat software marketplace, despite settling lawsuits against the website in 2021.
   • Take-Away: Even though some courts may rule in default against foreign defendants (see above), other courts within the same state may not issue such a harsh decision without more evidence. This means that no matter in which state a studio brings an anticheating lawsuit, a foreign-based defendant may avoid payment or punishment from the U.S. court. This case also marks two distinctive evolutions in Bungie’s legal strategy against cheaters: (1) naming unknown/unidentified defendants who use, market, or develop the ullegal software, with the hope that they will learn the identifies of these people through discovery; and (2) the inclusion of a civil racketeering claim against the cheat website for conspiracy to commit wire fraud, money laundering, and organized copyright infringement.

These successes make it clear that if a studio believes a cheat software manufacturer is harming their game, settling the matter in court could be an option. Bungie’s legal team has paved the way for studios to streamline anti-cheating lawsuits and hopefully will dissuade commercial cheat makers from continuing to develop such software. As a game developer, always remember to consult a lawyer who specializes in the gaming industry to assess which method of enforcement is best for your studio.

Author: Matthew Vernace

Release: TBD

While we are all getting ready for the Holiday season, it is also time to uncover the new tax provisions for 2024!

Tax Rates for 2024

35% for incomes over $243,725 ($487,450 for married couples filing jointly)
32% for incomes over $191,950 ($383,900 for married couples filing jointly)
24% for incomes over $100,525 ($201,050 for married couples filing jointly)
22% for incomes over $47,150 ($94,300 for married couples filing jointly)
12% for incomes over $11,600 ($23,200 for married couples filing jointly)

Standard Deduction

The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024; and for heads of households, the standard deduction will be $21,900 for tax year 2024.

Capital Gain Tax Rates

The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than or equal to $47,025 for single and married filing separately, $94,050 for married filing jointly or qualifying surviving spouse or $63,000 for head of household.

A capital gain rate of 15% applies if your taxable income is more than $47,025 but less than or equal to $518,900 for single; more than $94,050 but less than or equal to $583,750 for married filing jointly or qualifying surviving spouse; more than $63,000 but less than or equal to $551,350 for head of household or more than $47,025 but less than or equal to $291,850 for married filing separately.

However, a net capital gain tax rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15%capital gain rate.

Estate Tax and Lifetime Exclusion on Gift Tax

Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000 (including Lifetime Exclusion for Gift Tax); the annual exclusion for gifts increases to $18,000 for calendar year 2024.

Foreign Earned Income Exclusion

For taxable years beginning in 2024, the foreign earned income exclusion amount is $126,500.

Notice of Large Gifts Received from Foreign Persons

For taxable years beginning in 2024, authorities require recipients of gifts from certain foreign persons to report these gifts if the aggregate value of gifts received in the taxable year exceeds $19,570.

Failure to File Tax Return.

In the case of any return required to be filed in 2024, the amount of the addition to tax for failure to file an income tax return within 60 days of the due date of such return (determined with regard to any extensions of time for filing) will not be less than the lesser of $510 (previously $435) or 100 percent of the amount required to be shown as tax on such return.

The following points will assist you when selecting a tax return preparer:

• Be wary of tax return preparers who claim they can obtain larger refunds than others can.
• Avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of your refund into their financial accounts.
• Ensure you use a preparer with a PTIN. Paid tax return preparers must have a PTIN to prepare all or substantially all of a tax return.
• Use a reputable tax professional who enters his or her PTIN on the tax return, signs the tax return, and provides you a copy of the return (as required).
• Consider whether the individual or firm will be around for months or years after filing the return to answer questions about the preparation of the tax return.
• Never sign a blank tax form.
• Good preparers will ask to see your records and receipts. They'll also ask questions to figure things like the total income, tax deductions and credits.
• Check the preparer’s history. Taxpayers can ask the local Better Business Bureau about the preparer.
• Check the person's credentials. Only attorneys, CPAs, and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collections, and appeals. Other tax return preparers who participate in the IRS Annual Filing Season Program have limited practice rights to represent taxpayers for audits of returns they prepared and signed. See Annual Filing Season Program for more information.

In a previous blog post, we looked at Bungie’s successful legal battles against a few profitable cheat software developers.

Since then, Bungie has continued to see success on additional legal fronts, all resulting in payment by the cheat developers. In this article, we provide updates as to Bungie’s prior and ongoing lawsuits against cheatmakers and review the claims made against these companies:

1. Bungie v. VeteranCheats
   • Legal Claims: Copyright infringement, circumvention of technological measures, trafficking in circumvention technology, breach of contract, tortious interference with contractual relations, violation of consumer protection laws
   • Status: In April 2023, a U.S. court ordered a default judgment against the defendant cheat software operator, based in Romania, in the amount of $12 million.
   • Take-Away: Foreign defendants who do not respond to anti-cheating lawsuits may receive a default judgment against them. Further, this case displays how studios can subpoena important personal and transactional data from third-party websites (here, Stripe), thereby implicating the individuals who buy and use the cheats in-game.
2. Bungie v. Aimjunkies.com
   • Legal Claims: Copyright infringement, trademark infringement, designation of false origin
   • Status: On June 13, 2023, the court ruled that the defendants had to pay over 4.3 million from arbitration, to which the co-defendants filed notice that they were appealing the case to the federal Court of Appeals for the Ninth Circuit. On August 10, 2023, the court approved co-defendants’, Aimjunkies and Phoenix Digital, motion to substitute an expert witness. By October 2023, the defendants hope to convince the court (through an expert witness) that Bungie acted improperly by reverse-engineering the cheat loader that the defendants made for cheaters.
   • Take-Away: Even though a judge agreed with Bungie and confirmed the arbitration decision in their favor, cheat maker defendants can file appeals to prolong the legal dispute until it is ultimately resolved by the highest court in that state.
3. Bungie v. Lavicheats
   • Legal Claims: Copyright infringement, trademark infringement
   • Status: On May 8, 2023, Bungie secured a default judgment against Lavicheats, in the amount of $6.7 million.
   • Take-Away: This case shows the difficulty of bringing these lawsuits; even after spending over two years in court and over $2 million in anti-cheat measures, the studio may not actually recover a cent from an absentee cheat maker. This is especially true for cheat website operators that are based outside of the United States.
4. Bungie v. L.L.
   • Legal Claims: Breach of contract, copyright infringement, fraud in the inducement, circumvention of technological measures, and violation of consumer protection laws
   • Status: Bungie filed suit against the teenaged defendant in July 2022, who had repeatedly (1) streamed himself using cheats on Twitch; (2) harassed Bungie employees on social media; and (3) made continuous threats against the Bungie headquarters and staff members over social media. In September 2023, the court ordered payment of $500,000 by the defandant for the use of in-game cheats, as well as circumventing Destiny’s anti-cheat measures.
   • Take-Away: Even minors may be subject to these harsh court orders against cheaters; this greatly expands the scope of people liable for the use of cheats in online games in addition to the cheat manufacturers themselves. In addition, this aggressive strategy against a studio’s harasser was also leveraged successfully in July 2023, when Bungie won a lawsuit against an online troll who levied a hateful, persistent attack on community manager of the studio.
5. Bungie v. Ring-1 Defendants
   • Legal Claims: Copyright infringement, trademark infringement, trafficking in circumvention devices, violations of the Computer Fraud and Abuse Act, racketeering, breach of contract, and intentional interferfence with contractual relations
   • Status: Ring-1 is a popular cheat manufacturer and distributor. Bungie and Ubisoft initially brought a lawsuit against the individuals in charge of Ring-1 in 2021, for creating and selling cheats for use in Destiny and Rainbow Six Siege. Bungie failed to settle the case for $2.2 million against a U.K.-based defendant in February 2023 since the studio could not identify which specific illegal acts the British citizen directed at the U.S. As of August 2023, Bungie has expanded its lawsuit against Ring-1 to include additional legal claims for continuing to operate the cheat software marketplace, despite settling lawsuits against the website in 2021.
   • Take-Away: Even though some courts may rule in default against foreign defendants (see above), other courts within the same state may not issue such a harsh decision without more evidence. This means that no matter in which state a studio brings an anticheating lawsuit, a foreign-based defendant may avoid payment or punishment from the U.S. court. This case also marks two distinctive evolutions in Bungie’s legal strategy against cheaters: (1) naming unknown/unidentified defendants who use, market, or develop the ullegal software, with the hope that they will learn the identifies of these people through discovery; and (2) the inclusion of a civil racketeering claim against the cheat website for conspiracy to commit wire fraud, money laundering, and organized copyright infringement.

These successes make it clear that if a studio believes a cheat software manufacturer is harming their game, settling the matter in court could be an option. Bungie’s legal team has paved the way for studios to streamline anti-cheating lawsuits and hopefully will dissuade commercial cheat makers from continuing to develop such software. As a game developer, always remember to consult a lawyer who specializes in the gaming industry to assess which method of enforcement is best for your studio.

Author: Matthew Vernace

Release: TBD