The Battle Beyond the Game: A Legal Deep Dive into the Call of Duty League Monopoly Lawsuit

Background of the Call of Duty League Monopoly Lawsuit

In late 2019, a shift occurred in the Call of Duty esports scene. Activision Blizzard transformed the open tournament format – see our reporting on a proposal on how to conduct esports tournaments in Stormgate – into the exclusive Call of Duty League, requiring a hefty USD 27.5 million entry fee from 12 teams and imposing strict revenue-sharing and sponsorship conditions. This move, plaintiffs argue, unfairly restricted competition and monetization opportunities for teams and players, establishing what they claim to be an unlawful monopoly.

The Allegations

The plaintiffs contend that Activision Blizzard’s control over the Call of Duty esports ecosystem—spanning both professional and amateur levels—violates antitrust laws. Plaintiffs highlight several restrictive practices, including:

• Prohibiting teams from participating in external tournaments or securing sponsorships from certain industries.
• Mandating a 50% revenue share from various income streams.
• Restricting players’ ability to monetize their gameplay outside of CDL.

These conditions, the plaintiffs argue, not only stifled competition but also placed undue financial burdens on teams and players, effectively limiting the market to those who could adhere to Activision Blizzard’s stringent terms.

Activision Blizzard’s Defense

In response, Activision Blizzard has dismissed the lawsuit as “meritless,” accusing the plaintiffs, including high-profile figures like Hector “H3CZ” Rodriguez and Seth “Scump” Abner, of seeking a payout to avoid litigation. The publisher defends its league structure as a legitimate business model aimed at consolidating and elevating the Call of Duty esports scene, countering allegations of monopolistic behavior by emphasizing the investments made by team owners, players, and fans in the league’s success.

Legal Framework

The legal framework surrounding the Rodriguez v. Activision Blizzard Inc. case is grounded in antitrust laws, specifically referencing the Sherman Act and the California Business and Professions Code, including the Cartwright Act and the Unfair Competition Law (UCL). These laws are central to the plaintiffs’ allegations against Activision Blizzard, arguing that the company’s practices in managing the Call of Duty League have unlawfully restricted competition and harmed both competitors and consumers.

Sherman Act Analysis

The Sherman Act, particularly Section 2, which deals with monopolization, is a foundational piece of U.S. antitrust legislation. It prohibits monopolistic practices and attempts to monopolize any part of the trade or commerce. The plaintiffs argue that Activision Blizzard’s control over the Call of Duty esports market constitutes an unlawful monopoly. They claim that Activision has used its monopoly power to impose restrictive conditions on teams and players, effectively controlling and limiting the professional Call of Duty esports market to its own league. This, according to the lawsuit, stifles competition and innovation, restricts players’ earning potential, and limits consumer choice, all hallmarks of anticompetitive behavior prohibited by the Sherman Act.

California Business and Professions Code: Cartwright Act and UCL

The Cartwright Act is California’s antitrust law that mirrors the Sherman Act’s prohibitions against anticompetitive practices but applies within the state of California. It targets a broader range of anticompetitive behavior and is often invoked alongside the Sherman Act in lawsuits alleging antitrust violations.

The UCL, on the other hand, prohibits any unlawful, unfair, or fraudulent business act or practice, providing a wide berth for litigation against practices that may not strictly fall under the definition of antitrust violations but are detrimental to competitive market conditions and consumer welfare. The plaintiffs allege that Activision Blizzard’s practices not only constitute a violation of the Sherman Act but also transgress the Cartwright Act and UCL by creating an unlawful trust and restraint of trade, further restricting the competitive landscape within the esports market in California.

Legal and Economic Implications

Should the court find Activision Blizzard’s practices to violate these legal frameworks, it could lead to significant changes in how esports leagues are structured and operated. It would potentially open up the market for more competition, allowing independent leagues and tournaments to flourish alongside those operated by game publishers. Such a ruling could also influence the negotiation power of teams and players, granting them more freedom and leverage in terms of sponsorships, streaming rights, and participation in multiple competitions.

Conversely, a ruling in favor of Activision Blizzard could reinforce the status quo, where game publishers maintain significant control over their intellectual properties and the associated esports competitions. This could affirm the legality of the franchise league model, where participation is exclusive and tightly controlled, potentially leading to similar structures in other esports titles.

Conclusion

The legal battle between Rodriguez, Abner, HECZ LLC, and Activision Blizzard Inc. is a landmark case with the potential to reshape the esports industry’s legal and competitive landscape. It challenges the balance between protecting intellectual property rights and ensuring a competitive and open market, highlighting the tension between traditional sports league models and the unique dynamics of the esports industry. The outcome of this case will likely have far-reaching implications for how esports competitions are organized, governed, and monetized in the future.

Case Information for Rodriguez v. Activision Blizzard Inc.

Court: U.S. District Court for the Central District of California

Case Number: Rodriguez v. Activision Blizzard Inc., No. 2:24-cv-01287

Filing Date: February 15, 2024

Counsel Information:

For Plaintiffs (Hector Rodriguez, Seth Abner, HECZ LLC):

• Firm: Dynamis LLP and Aaron Katz Law LLC
• Eric Rosen, Constantine P. Economides, Brianna K. Pierce
• Aaron M. Katz
• Locations: Not specified in the provided information

For Defendant (Activision Blizzard Inc.):

• Counsel information not provided in the available documentation.

Image source: thebusinessofesports