Court Denies Mgame’s Knight Online 3D Game TRO and Preliminary Injunction Against K2 Network

mgame-k2-lawsuit-knight-online-3d-preliminary-injunction-tro-restraining-order.jpgUPDATE: Court Denies Mgame’s Second Attempt For Temporary Restraining Order.

Mgame licensed K2 Network in 2003 to operate and distribute the “Knight Online 3D” multiplayer, role-playing game in return for payment of royalties. Mgame claims that it terminated the written license on February 23, 2012 due to K2’s failure to pay royalties. Despite the termination, K2 is allegedly continuing to operate and distribute the game without payment of royalties. Also, K2 is accused of illegally accessing Mgame’s secured servers without authorization and illegally copying user and billing databases and has refused to return Mgame’s servers. “K2, in short, has hijacked the Game to Mgame’s detriment and has continued to operate and distribute it using Mgame’s own computer hardware, software, and Game-related intellectual-property.”

Although the parties’ licensing agreement provides for Arbitration, Mgame sued K2 in Federal Court for a more expedited ruling since “it could easily take 60 days after Mgame files its Notice of Arbitration, and possibly much longer, before the arbitral tribunal is fully constituted and capable of entertaining a request for interim measures.” That delay, Mgame contends, will cause and is currently causing irreparable harm. Thus, Mgame asks the Court to issue a temporary restraining order and a preliminary injunction prohibiting K2’s conduct.

The Court denied Mgame’s motion for a temporary restraining order because Mgame failed to establish the Court’s jurisdictional authority to do so in light of the parties’ arbitration provision in their licensing agreement. The Court found that the complaint asserts only a single cause of action for “TRO and Preliminary Injunction,” which is insufficient to establish the Court’s jurisdiction to grant the requested relief. F.T.C. v. H.N. Singer, Inc., 668 F.2d 1107, 1109 (9th Cir. 1982). “Plaintiff does not point to any jurisdictional authority that allows the Court to provide preliminary injunctive relief without an underlying claim. While Plaintiff states that this case “arises under” federal copyright laws and the Computer Fraud and Abuse Act, neither of these claims is actually asserted in the Complaint.” Further, the Court could not find a likelihood of success on Mgame’s copyright and Computer Fraud and Abuse Act claims because they were not asserted in the complaint, but are claims Mgame intends to assert in arbitration.

Other Courts in the Ninth Circuit have granted injunctions despite agreements to arbitrate. PMS Distrib. Co. v. Huber & Suhner, A.G., 863 F.2d 639 (9th Cir. 1988) (holding court retains jurisdiction to issue injunction despite order to arbitrate). Mgame’s loss may be based on a technicality, its failure to include a cause of action for copyright infringement and Computer Fraud & Abuse Act claim to provide the Federal Court with jurisdiction to grant the requested relief.

The case is Mgame Corp. v. K2 Network, Inc., SACV12-438 JST (C.D. Cal. 2012).

It also appears that K2 sued Mgame a day earlier in Orange County Superior Court for breach of licensing agreement and fraud. K2 alleges that a March 1, 2012 audit revealed it overpaid Mgame by $1,903,254.07 in royalties. K2 also claims that Mgame’s February 23, 2012 termination letter is a repudiation of their 2011 extension because it constitutes a termination without cause and excludes the accompanying payment. Mgame is also accused of breaching the contract by failing to use its best commercial efforts to maximize the sales of electronic serial numbers (“ESNs”), selling in specific territory after its right to do so had been terminated, failing to sell country specific versions, and publishing a competing game through “eNTiTy Games” and “NFinity Games”. Defendant Chris Hwang — part owner of Mgame — is also accused of intentionally interfering with K2’s contractual relations with Mgame by establishing competing corporations to disrupt Mgame’s performance of the K2 agreements.

The state court case is K2 Network, Inc. v. Mgame Corporation, et al., Orange County Superior Court Case No. 30-212-00555196-CU-BC-CJC.


7 responses to “Court Denies Mgame’s Knight Online 3D Game TRO and Preliminary Injunction Against K2 Network”

  1. Flaming_spirit says:

    Hi, I am a player of the Knight Online World version of the game. We, the players of said game, have had it with all the poor programing, bugs, and Mgame’s inability to provide service to see these problems end. We the player base have had to wait months for Mgame to fix an event based area called BiFrost. We have had to wait months for Mgame to increase the deffensive turret’s powder in Colony Zone (A area where people of opposing nations kill eachother). What Gamer’sFirst has done is to call into question Mgame’s inability to provide respect and survice to the KO World community. Good for Gamer’sfirst. Hopefully they will win all the preceding court cases.

  2. mensur says:

    +10 Knight each item as the current owners sell their licenses will be revoked. May your court, and this irregularity immediately ceased. Or the player will not play ..

  3. Megatr0N says:

    We the gamers? Who died and made you president of the united nerds of the internet? God I’ve been waiting a LONG time for this. Everyone who has played for 6+ years has seen the sheisty way this company has operated, and I personally can’t wait until MGames shuts these abusers down. Finally Fail2NeverWorks will be put to justice. Good luck finding another forum willing to put up with your sh*t nothos, chucky, pelos. You should bring eachother PB&J’s at the unemployment line, I heard they are long in California.

  4. iPredator says:

    I’m a player of Knight Online USKO Game from in-game server: Beramus. The support from Mgame and k2 is also too bad. For single illigal bot use, they were pain for the premium users, and what did Mgame or K2 do? Nothing, they were making patches to fix a single bugged quest, and with the same patch they broke 5 or 10 other quests. It was always the same story, the KO players don’t want K2 or Mgame. They see the profit of K2 and Mgame, and K2 was just crying about low staff while it was receiving large amount of money. After hunderds of patches they couldnt get rid off the illigal bot use inside KO World. They (k2) has implemented a sherif system where the Players could report illigal bot users. Last weeks the Knight Cash event has significantly increased like: Who buys 3200 kc in 10 minutes will receive 10 trina’s. (this is absoluty freaking, becuz 1 trina is in PUS worth upto 800kc (*10 = 8000 kc), u see how k2 makes cash events to make large amount of profits. And on the same time there came large amount of illigal maked/edited items into game, that destroyed the economy and balance of the game. This has been sold by K2 (u can see proves, where K2 staf members were openly saying that they are selling illigal edited items). This game has significant high players population thanks to pvp. but people are starting to leave it, so mgame and k2 started blaming each other.

  5. M4 says:

    K2 has stood idle while the intellectual content that they were responsible for has degraded to almost nothing. Let it be made completely transparent that the general consensus among its player base is that K2 has failed to maintain the most basic functionality of the game it hosts. To put simply, if K2 were a landlord whose responsibility was he upkeep of a residence, the living conditions maintained by K2 would have been deemed uninhabitable. Let it also be known that any assertion by mgame that K2 has failed to adequately promote its game and maintain viable customer service to its player base, and said neglect has directly contributed to a decline in game activity, should be taken as credible.

  6. Ed Murphy says:

    Well MGame has taken KnightOnline back..and in the first 2 weeks, Customer Service is None Existant (Refusing to reply to People even those that pay2play) The ONLY answer you will receive is “We will research the issue and get back to you” No further contact will be received, MGame has been busy removing Premium members items and Purchase Game points called Knight Cash, because it was purchased before the Transition back to MGame..

  7. kubilay says:

    CLOSE K2 !!!!!!