Which, again, doesn't preclude them from paying damages. They sought the source code to undermine the bots but didn't go after the company they knew was selling it, but rather the guy who made it. Not only could Blizzard not sue the guy who made it (because he had no rights to it and it wasn't illegal to make anyway), but they knowingly did an end run round the company by not going after THEM first. I don't see how a judge isn't going to look at that and tell them they aren't covered under the indemnity clause because they clearly knew who to target to get the code and his association with the company selling it.
End run or not, it totally revolves around ownership of copyright and perception thereof. It doesn't matter who was selling the
bot software. What matters is who had the right to sell the
source code. How the source code was going to be used, and why Blizzard wanted it, and the fact that it caused harm to the other company is kind of irrelevant if they can wiggle free of the source code theft claims.
If the guy who wrote the code wrote it work-for-hire, then the company owns it. If Blizzard knew this, then yes, they acted in bad faith by getting the code from the guy who wrote it. But work-for-hire is defined very narrowly. A lot of people who think they're getting the copyrights because of work-for-hire rules are actually mistaken.
If the guy was an independent contractor, legally, he owns the code, and the company would have to have executed some document giving them rights. If they were exclusive rights, and Blizzard knew it, then again, they've got an uphill fight. But in most cases, companies don't realize that independent contractors own the rights to the code they write, even if they are given an implied license to use it.
If the guy wrote the code first and then later sold it to the company, his ownership of the code is clear. Now it all depends on how that contract was written up, and if he sold his copyrights. And the copyright assignment language in the document has to be in a very specific format, or it's not valid. See the SCO Group lawsuits around unix.
If he merely licensed them, then again, it depends on which copyrights he licensed and if it was exclusive.
And if Blizzard knew about it. If the guy executed an exclusive license but told Blizzard he didn't, again it's on him, not Blizzard.
So it's not that cut and dried. If Blizzard has an indemnity clause, it's entirely reasonable for the judge to say "Well, the guy swore he owned the rights to sell that code, and it was reasonable for you to assume he did. Since he indemnified you against lawsuits, it's all on him." That's what indemnity clauses are for.
Here's an example: I wrote some software as a contractor back in 2000. The company who hired me would occasionally hire me again to update it over the next 10 years or so. Then they decided to hire a consulting company to update it for Windows 7, and asked me for the source code. I quoted them a price that they didn't like, and they made noise about suing because they "owned" it. But they didn't. I did. They just had an implied license to use the executables. When I pointed that out, and sent them the specific copyright clauses, I stopped hearing from them. They could still have sued, but I would likely have won.
Here's another copyright example, I made a music CD with my band in Dallas. I never executed any copyright documents with the band. While we were together, they sold CDs and everyone got a cut. When I moved to Virginia, I wasn't with the band any more, so I took the CD and removed every tune where I didn't personally play. Every tune that was left (meaning every one I
did play on), I had full and equal copyright on--I could legally sell it. And so I packaged them up with a few other tunes that I made with other bands (from Houston), and sold it on Amazon as "Gregory Mahan and Friends". Totally legal, because of the way the copyright is handled on collaborative works that don't have a specific copyright assignment or document executed.
If the band had cared, they might have been mad about it and wanted to sue because I used 80% of the "band cd" to make my own. But it wouldn't have mattered, because of the way copyright law works.
Now, granted, I'm speaking from a US point of view, since that's what I'm most familiar with. I'm certainly not a lawyer, but I do have a lot of experience dealing with copyright issues due to my own personal and work history.
This case is in Germany. German law is bound to have differences. But Blizzard has beat this company many times in court in Germany already, and I assume that Blizzard's legal team is probably more well versed in the law than a bunch of bot-writing guys, even if they've formed a small company. I'm guessing that they made sure all their t's were crossed--they'd have been dumb not to.
http://www.shakelaw.com/blog/indemnity-clauses-understanding-basics/
Let’s say you are a freelance software developer and you agree to indemnify your client against copyright claims related to the code you are writing for them. After the client deploys the software, they get sued by another company claiming that the software is a copy of theirs. Per the indemnity clause, you would be obligated to cover your client’s costs in defending against this lawsuit, and you would be responsible for your client’s damages if they were found liable to the third party.
edit: (sorry to keep adding to this..hehe). While copyright laws are different from country to country, Germany is one of the signatories of the
Berne Convention, which means that their copyright laws do work at least similarly to our own.