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LOS ANGELES (Reuters) - U.S. prosecutors have charged three men with copyright infringement for selling modified Xbox consoles that enabled the original video game machine from Microsoft Corp. (Nasdaq:MSFT - news) to play pirated games.

...

Jones and Bryant demonstrated the modified Xbox game consoles in their Melrose Avenue store. They charged from $225 to more than $500 for the modifications, depending on the extent of the modifications and the number of games preloaded onto the hard drive, according to a statement from prosecutors and the complaint affidavit obtained by Reuters.

Read article here.
Ever want to own a video game? Now's your chance. The bankruptcy trustee for Acclaim is auctioning off their portfolio, around 200 games! Some have bids, but some are just waiting for a bidder. Who knows what the IP includes, so do your due diligence, or else you'll get what you pay for. There are a number of interesting titles in there, and more that its share of duds.

The auction list can be viewed here.

News story here.
Electronic Arts faces a lawsuit in the California Superior Court, San Mateo County, based on the claim that the publisher stole an idea for a game feature that was later incorporated into Madden NFL 06.

Read TeamXbox story here.
There not only is money in making video games, but as is quickly becoming more evident, there is also money in PLAYING video games. The two most popular methods are item farming in MMOGs, and professional video game tournaments.

For those who thought anyone who just played video games would never amount to anythiny, talk to Jonathan Wendel, aka Fatal1ty. On November 23, 2005, Jon won the Cyberathlete Professional League World Tour Grand Finals and the $150,000 payday that goes with it. Being that the Xbox 360 just launched a few days ago, I will keep this short, as I have practicing to do...

Read CNN news story.
Today marks the launch of Microsoft's new Xbox360 game console and upgraded Xbox Live online gaming service. Interesting is the inclusion of Gotham TV on Project Gotham Racing 3, where anyone can spectate live races. Unlike previous games that allow spectating, you don't have to be in the game session to watch it. That means anyone can watch it, not just the 8 or 16 people in the game. I would hesitate to call these "public" broadcasts, since you have to pay to play, but there is undoubtably IP in these broadcasts. What steps are being taken to protect it? It raises some interesting new questions on which I suspect people will start commentary very shortly.
Is the price of virtual property getting out of hand? Jon Jacobs, a Miami resident, has bought a virtual space station in the game Project Entropia for $100,000 and wants to turn it into a cross between Jurassic Park and a disco. Mr. Jacobs plans to hire famous DJs to entertain visitors one a week or so at the "resort" space station (which he calls Club Neverdie), and thinks he can net $20,000/month (real money) from the "hunting tax and other income."

Read CNN article here.

In an interesting twist, Mr. Jacobs bought the space station from the game developer itself, MindArk PE AB. This raises some interesting legal implications regarding the developer's ability to shut the game down. If the game goes under tomorrow, does Mr. Jacobs get his money back. I sure hope he didn't mortgage his house for that purchase... oh wait, he did! The deal was brokered by IGE, a broker of game property.
In a major video game IP licensing deal, Atari has licensed the Unreal 3 game engine and related development tools from Epic Games to develop games for next-generation platforms. With the Unreal and Doom engines being the only two FPS engine families out there, licensing of source code and development tools can be a tidy little income stream for Epic Games and id Software.

Read more here.
B&W Wins Summary Judgment of No Copyright Infringement
September 29, 2005

Banner & Witcoff is pleased to announce that a legal team representing prominent video-game manufacturers and developers--Team Play, Inc., P&P Marketing, Inc., and Cosmodog, Ltd.--prevailed on a motion for summary judgment of no copyright infringement in Team Play et al. v. Stephen W. Boyer d/b/a Skyboy Productions.

The two, full-size, arcade, video games at issue on this motion were Sharpshooter and Police Trainer® 2. In 1997, P&P Marketing paid Mr. Boyer on a contract development basis to make portions of the Sharpshooter game. P&P Marketing then manufactured and sold the Sharpshooter game. Years later, Cosmodog independently created a video game called Police Trainer® 2. Cosmodog contracted with Team Play to manufacture and sell Police Trainer® 2. As a result of the foregoing, Mr. Boyer claimed that Team Play, P&P Marketing, and Cosmodog allegedly infringed Mr. Boyer's copyright registration in the Sharpshooter game.

On September 29, 2005, a federal court in Chicago held that there was no copying of source code from Sharpshooter to Police Trainer® 2. In addition, the Court held that there was no substantial similarity between any of the graphical art in the two games.

The legal team on this case representing Team Play, P&P Marketing, and Cosmodog included Banner & Witcoff attorneys Tim Meece, Mark Banner, and Jason Shull as well as Sheri Pellegrini from the Law Offices of Sheri Pellegrini. The decision citation is Team Play, Inc. v. Boyer, __ F.Supp.2d __, 2005 WL 2413344 (N.D.Ill. Sep 28, 2005) (NO. 03 C 7240).

Police Trainer 2:

Please note, the facts of every case are different. Prior results don't guarantee future success.
From Form 10-Q, dated 5/10/05, as filed with the SEC.

International Gamco, Inc. v. Multimedia Games (PENDING) S.D. Cal.

International Gamco, Inc.
International Gamco, Inc., or Gamco, claiming certain rights in United States Patent No. 5,324,035, or the ‘035 Patent, brought suit on May 25, 2004 against the Company in the United States District Court for the Southern District of California, claiming that the Company’s central determinant system, as operated in the New York State Lottery, infringes the ‘035 Patent. The Company currently sublicenses the right to practice the technology stated in the ‘035 Patent in Native American gaming jurisdictions in the United States, pursuant to an agreement between it and Bally Gaming, Inc. Bally obtained the right to sublicense those rights to the Company from Oasis Technologies, Inc., or Oasis, a previous owner of the ‘035 Patent.
As summarized by David Webber of the Melbourne office of Davies Collison Cave in Australia, the Australian High Court has allowed an appeal by Eddie Stevens who was previously found to have circumvented a technical protection measure in Sony’s PlayStation console.

"The High Court considered that the PlayStation did not include a 'technical protection measure', as defined in the Australian Copyright Act 1968 (Cth) because it did not prevent any copyright infringement. It was considered that any infringement would have already occurred through burning a CD-ROM for play in the console, and the mod chip installed by Mr Stevens was used for a different purpose, ie subsequent play of the game. Based on the evidence submitted by Sony, it was not established that any infringement under the Act occurred merely by playing the game."

Read entire article here.
As reported by the IP Law Bulletin, Sony and Immersion are back in court:

Sony has accused Immersion of fraud, alleging the company withheld statements from the inventor of the technology in question. Immersion fired back, saying Sony has initiated a smear campaign and accusing the company of misconduct.

In July, Sony Computer Entertainment filed a motion before Judge Wilken seeking relief from the final judgment on the grounds of alleged “fraud” and “newly discovered evidence” of purported prior art which Sony Computer Entertainment contends Immersion concealed and withheld.

“Immersion disputes and intends to vigorously defend itself against these allegations,” Immersion said in a recent Securities and Exchange Commission filing.

A hearing has been set for Nov. 4, at which time the various motions for discovery filed by both parties will be consolidated and heard by a California district court judge.

The misconduct allegations are the latest development in an extended legal battle that began over vibrating videogame controller technology.

In September 2004, a federal court awarded Immersion, a relatively unknown electronics developer, $84 million in damages after ruling that Sony infringed its patents for a technology that lets video game controllers vibrate in-sync with on-screen effects.

Sony appealed the decision, but the final judgment upheld both the infringement ruling and the monetary award. In addition, the court awarded Immersion $8.7 in prejudgment interest. The judge also ordered an injunction against Sony PlayStation controllers that used the infringing technology.

Sony appealed both the decision and the injunction in the U.S. District Court of Appeals for the Federal Circuit.

The lower court judge stayed the injunction while the federal appeals court processed Sony’s claim, ordering Sony to pay 1.37% in compulsory licensing fees for the duration of the stay.

Sony also appealed the compulsory licensing fee in federal appeals court.

Immersion had sued both Sony and Microsoft, claiming that Sony's controllers for its PlayStation and PlayStation 2 console, as well as Microsoft's Xbox controllers, infringe two of Immersion's patents on its sensory feedback technology.

The Sony and Microsoft video game consoles have controllers that rumble and vibrate in conjunction with certain events, like explosions, in some of their video games.

Microsoft later settled the case out of court, agreeing to pay $26 million to Immersion.
In July of last year, Microsoft said it would pay Immersion $20 million to obtain licensing rights to the touch-based technology and $6.million to buy a 10% stake in the small company.

In 2001, Immersion settled another lawsuit over similar technology against InterAct Accessories, the largest distributor of gaming accessories in the U.S.

Immersion is represented in this matter by attorneys for Irell & Manella LLP. Sony is represented by Weil Gotshal & Manges.

The case is Immersion Corporation v. Sony Computer Entertainment America Inc. et al, case no. 4:02-cv-00710, U.S. District Court for the Northern District of California.
EA and Steven Spielberg Team Up to Develop Videogames - Xbox

This is yes another example of a hollywood director teaming up with a major video game developer. Perhaps people will begin to take IP rights in video games a little more seriously...
JVW Enterprises, Inc. v. Interact Accessories, Inc.
__ F.3d __ (Fed. Cir. 2005)

Interact Accessories Inc., a major video game accessories maker in the U.S., suffered a setback Monday after a lower court decision for the company was partially reversed by the U.S. Court of Appeals for the Federal Circuit.

Rival company JVW Enterprises Inc. sued Interact in September 1999 in the U.S. District Court for Maryland, asserting its patent for a video game accessory that reduces physical stress on hands and wrists while operating a control device. The Federal Circuit found the district court erred in its claims construction and, as a result of the lower court’s erroneous construction, Interact’s V3 and V4 racing-wheel products were cleared of infringement in a May 2003 judgment. The products simulate driving in certain games. The Federal Circuit determined, using revised claims construction on the adjustability of the devices, that the V3 product infringes JVW’s patent, while the V4 product still does not infringe (for different reasons).

JVW’s patent covers a controller-holding device that extends from a small base between the player's legs to support a platform over the player's lap. The platform holds the controller in place. That allows the player to use both hands to operate the game controls, rather than having to hold the controller itself.

The claims construction at the heart of the decision related to the patented device’s “lockability” feature for adjusting the controller’s position and allowing interchangeability of controllers on the mounting device. The district court’s bench trial focused on that feature, finding that Interact’s accused products cannot lock and unlock because they are sealed in place. JVW sought to eliminate the word “lockably” from its patent claim to more effectively assert it against Interact’s non-locking device, but the district court rejected the argument.

With the Federal Circuit’s new interpretation of the claims construction, the accused products are found to be lockable, even though tools would be required to unlock the controller from the mount to adjust it or attach a different controller. As a result, the V3 product was found to infringe JVW’s patent. “Neither of Interact’s alternative arguments to support the [district court] judgment are persuasive. Both would require us to limit claim language to the specific embodiment disclosed in the written description. This would be improper. We do not import limitations into claims from examples or embodiments appearing only in a patent’s written description,” the court wrote. The V4 product fared better, despite the new claims construction. The court ruled that even though the district court’s finding of non-infringement for the V4 was based on an incorrect claim construction, the product’s locking ability and interchangeability with other controllers was still not similar enough to the claims in the patent.

The patent in question was issued in 1985 to an inventor for JVW in, entitled “Apparatus for playing home video games”. It was intended to solve the problem of fatigue in the wrists, experienced after holding an Atari joystick. The patent at issues is U.S. Patent Number 4,494,754.

Read Opinion Here.
Roginski v. Time Warner Interactive, Inc.
967 F.Supp. 821 (M.D. Penn. 1997)

Plaintiff Paul A. Roginski (Roginski) filed a copyright infringement action against defendants Time Warner Interactive, Inc., Atari Games Corp. and Sega of America, Inc., alleging that defendants copied Roginski's unpublished manuscript entitled "Awesome Possum" when the defendants created a video game and accompanying comic book--"Awesome Possum Kicks Dr. Machino's Butt." On March 31, 1993, Roginski filed a copyright application with a copy of the manuscript with the Copyright Office. On July 17, 1992, one of the defendant’s employees presented his "Rad Rhino and Awesome Possum" game proposal to the management of Tengen and obtained approval for the development of the game. Tengen was the corporate predecessor of defendant Time Warner Interactive. These events are significant because they occurred before Roginski began writing his manuscript. Therefore, these facts demonstrate that the concept of the "awesome possum" in a video game setting with an environmental theme was independently created by Tengen's design team.

The defendants filed a motion for summary judgment, claiming that their products were independently created and that there was no evidence that the defendants had access to Roginski's manuscript. In a copyright infringement case, a plaintiff must show (1) that he owned a valid copyright; and (2) that the defendant copied protectable expression from the plaintiff's work. More precisely, as Roginski observed, "the principal issue on summary judgment is whether Plaintiff has produced sufficient evidence so that a reasonable juror, drawing all justifiable inferences in favor of Plaintiff and presuming Plaintiff's version of any disputed fact to be correct, could conclude that Defendants copied Plaintiff's work."

Given defendants' strong evidence that it was in the process of creating the "awesome possum" video game prior to Roginski's work, he could not maintain a claim for infringement based upon the video game. Roginski argued, however, that defendants copied his manuscript in their comic book, which was included in the "Awesome Possum Kicks Dr. Machino's Butt" instruction manual. Therefore, the narrow issue left to resolve was whether there was sufficient evidence to support a claim that defendants copied Roginski's story in the production of their comic book. One manner in which copyright infringement could be established was by demonstrating inferentially that: (1) the defendant had access to the material; and (2) the defendant's work was substantially similar to the plaintiffs work.

There was no evidence of direct access in this case. Roginski argued that the defendants could have received copies of the manuscript from the Copyright Office or the Library of Congress. In terms of access, the plaintiff must have demonstrated that such access was reasonably possible. A finding of access, however, could not be the product of speculation or conjecture. Since there was absolutely no evidence that the defendants had access to Roginski's manuscript, in order to prove copyright infringement, Roginski had to demonstrate that there were "striking similarities" between his product and the defendant's product. Regardless of whether additional evidence of access should be required, a comparison of Roginski's and defendants' works did not disclose the type of similarities that would permit a reasonable juror to infer that defendants copied Roginski's product.

Roginski's possum did not really resemble an average cartoon superhero, as he never used any "superpowers" to protect the forest. On the other hand, the defendants' possum was initially portrayed in a superhero garb and pose on the first page of the comic. The fact that defendants' possum had a family was not striking as compared to Roginski’s, especially where the family structure between the two works was different--defendants' possum was a sibling, while Roginski's possum was a father and husband. It was undisputed that the term "awesome possum" was created independent of Roginski's manuscript. It could not be considered striking that another animal used the term awesome to describe a possum who was a superhero. Also, the oath in the comic book directly related to defendants' video game, and therefore, was not strikingly similar to the oath of the manuscript.

Not only was Roginski's manuscript not strikingly similar to the defendants' work, there were overwhelming differences between the two stories. The possums had different missions and personalities. The general mood and pace of the two works was different. The settings of the two stories were also dissimilar. Finally, the characters were not even remotely similar. Roginski had demonstrated a few coincidental similarities, but he had not, however, presented evidence which would preclude a reasonable juror from determining that the defendants could not have independently created their comic book. Therefore, defendants' motion for summary judgment was granted.
Nintendo of America, Inc. v. Brown
94 F.3d 652 (9th Cir. 1996)

This was largely an open and shut case, which only lasted as long as it did due to the defendant’s fruitless attempts to extend the litigation. Defendant / Appellant, Kenneth Brown, was enjoined in federal district court from selling Nintendo video games nearly identical to those sold by Nintendo. Nintendo owned the copyright and trademark rights on all its games, and the video game giant took notice when Brown began selling nearly identical game cartridges. Brown and a group of associates were selling knock-off Nintendo games, differing from Nintendo’s games only in that the knock-offs lacked the Nintendo copyright symbol. Even the Court found that “as a matter of law” the games were “strikingly similar.”

The Court of Appeals for the 9th Circuit affirmed the district court’s summary judgment ruling in favor of Nintendo for copyright and trademark infringement under federal law and unfair competition under Arizona law. It was undisputed in the case that the game cartridges sold by Brown were “strikingly similar” to Nintendo’s games, and such similarity creates an inference of copyright infringement under 15 U.S.C. § 101 that Brown did not offer evidence to refute. Further, since these games were “virtually identical,” there would undoubtedly be customer confusion as to the origin of the games. That is, purchasers were likely to believe that the Defendant was selling Nintendo-made game cartridges. This “customer confusion” test is the standard for trademark infringement under 15 U.S.C. § 1114, false designation of origin under 15 U.S.C. § 1125(a), and unfair competition under Arizona law. Accordingly, the summary judgment in favor of Nintendo on all issues was appropriate.

The court decided two more issues in favor of Nintendo based on procedural errors made by the Defendant. Brown had also appealed the summary judgment ruling of trademark counterfeiting under 15 U.S.C. § 1117(b). However, the court noted that the defendant had received and failed to respond to an interrogatory from Nintendo requesting that Brown admit to knowingly and intentionally selling game cartridges using Nintendo’s counterfeits marks. Brown’s failure to respond was properly deemed an admission, and accordingly, the summary judgment ruling as to trademark counterfeiting was affirmed. Finally, the court noted that Brown’s request for a jury trial had come more than 10 days after the service of the last pleading. Thus, under Federal Rule of Civil Procedure 38(b), this request was invalid and Brown’s request was properly denied.

Thanks to Brian Brisnehan for his assistance with the preparation of this case summary.
Interactive Network, Inc. v. NTN Communications, Inc.
875 F.Supp. 1398 (N.D. Cal. 1995)

NTN, the Defendant and Counterclaimant, is popularly known as the creator of “QB1,” an interactive game played in conjunction with televised football games. QB1 allows players to earn points by predicting the next play of the game – allowing superfans from across the bar or across the country to compete to see who would make the best coach. Interactive Networks (“IN”) was an early licensee of NTN’s, selling a modified version of QB1 to its subscribers. However, in 1993, IN announced that it had developed its own interactive football home game, “IN the Huddle,” designed to compete with QB1. The similarities between “IN the Huddle” and QB1 disturbed NTN, and litigation ensued. IN filed for a declaratory judgment, seeking assurances that IN the Huddle did not infringe NTN’s intellectual property rights. NTN responded with counterclaims for copyright infringement, trade dress infringement, and unfair competition, prompting IN to move for summary judgment on those claims.

Copyright Infringement
Before applying the “substantial similarity” test to the alleged infringing game, “IN the Huddle,” the court first examined each feature of QB1, focusing on the idea of “protectable expression.” Animation and displayed images in video games are protectable expression. However, copyright protection does not extend to the idea of the video game, only to the author’s expression of that idea. Further, if an element of a video game is essential to the idea of the game, then that element is not protectable expression. As the court notes, granting copyright protection on an essential element would be the same as granting a monopoly on the entire idea. Also, when an element is deemed essential to the idea, the court will not find substantial similarity without virtually identical copying. Thus, although IN the Huddle’s play-prediction scheme was identical to the scheme used by QB1, the court granted summary judgment in favor of IN on this feature. The court reasoned that the idea of play-prediction (e.g. deep-pass, run-left, punt, etc.) is an essential aspect of interactive TV football games, therefore NTN’s prediction scheme was not protectable expression.

However, with respect to other elements of QB1, such as the “clutch pick” and “consecutive bonus” game features, the court denied IN’s summary judgment motion. The court reasoned that these game features were not essential to an interactive football game, and were therefore NTN’s protectable expression. Similarly, the court decided that QB1’s scoring system -- awarding specific point values for predicting certain plays -- was not essential to an interactive football game. While some scoring system certainly is essential, QB1’s specific scoring system may have equally functional alternatives. The court found no evidentiary support for IN’s argument that these specific point values are necessitated by the statistical likelihood of those plays occurring in an NFL game. Thus, the court held that QB1’s specific scoring system is not essential – but just one possible scoring system implementation – and is protectable expression.

The court then addressed QB1’s data feed structure and the various animation screen displays of QB1. While these elements of the game are protectable expression, summary judgment of noninfringement was nevertheless awarded to IN. With respect to the data feed structure, NTN had only offered evidence that IN’s version of QB1 had a similar data feed to NTN’s version. NTN had produced no expert evidence that IN the Huddle, the alleged infringing game, used a similar data feed structure. Finally, with respect to the screen displays and animation sequences, IN had not infringed NTN’s copyright as a matter of law because IN, not NTN, was the author of these animation screens for IN the Huddle.

Trade Dress Infringement
The court next considered whether the trade dress, or total product image, of QB1 was infringed by IN the Huddle. As with the copyright infringement analysis, trade dress protection under the Lanham Act does not apply to the functional elements of a product, otherwise trade dress protection could provide a perpetual monopoly over unpatentable features.

However, determining what trade dress is functional is not always obvious. It is a question of fact which requires consideration of the utilitarian advantages of the particular design, and of the possible similarly functioning alternatives. With respect to NTN’s three-level prediction scheme, and it’s scoring and bonus system, the court held that these features are not, as a matter of law, protectable as trade dress. The prediction-scheme, scoring, and bonus features are wholly functional. The Court reasoned that the absence of any commonly practiced alternative (i.e., no other game in this genre had ever not used such features) indicated that the features were so closely related to the purpose of an interactive football game, that they must be considered functional, and were therefore unprotectable.

The court next addressed the alleged infringement of the Interactive-created instruction manual for game. Given the parties’ previous licensing arrangement for QB1, a difficult question arose: can a licensor acquire trade dress rights in those features of a licensed product that are added by the licensee? The court answered in the negative for this case; NTN did not acquire trade dress rights to the IN-created features of QB1. Although consumers may associate IN’s instruction manual with NTN’s game, the QB1 licensing agreement implied that IN would add its own intellectual property to the game it provided its subscribers. While NTN had the right to require IN to protect its trademark and the appearance of the game, it could not claim the trade dress rights on the IN-created features built into the game.

Thus, regardless of the likelihood of customer confusion, the court granted IN’s summary judgment motion for noninfringement with respect to NTN’s trade dress. The court found no features of QB1’s trade dress that were created by NTN and were not essential to the game and functional in nature.

Thanks to Brian Brisnehan for his assistance in the preparation of this case summary.
South Korea has developed new software that would allow the same computer game to be played on multiple devices, not just personal computers. Read more here:
Associated Press
News.blog | CNET News.com
In a decision with ramifications for reverse engineering of software, the U.S. Court of Appeals for the 8th Circuit has affirmed a lower court’s decision to bar “add-on” technology being used to mirror a popular online gaming network.

According to the court, California-based Blizzard Entertainment Inc.’s end-user license agreement was enforceable and had been infringed by copycat online gaming organization BnetD.net and its creators.

Read the opinion here.

EFF website here has more info.

News Article.
The events over the past week down in New Orleans are simply tragic. The repercussions will be far reaching, long felt, and immense in scale. Even the Patent Arcade was down for a few days because our ISP is in the French Quarter (not that that compares to the tragedies that hurricane victims have had to endure, it's just an indication of the far reaching repercussions of Katrina). Thus, in the vein of the Patent Arcade, it's nice to see the gaming community doing something to help out.

Bungie, developer of Halo and Halo 2, is selling "Fight the Flood" t-shirts, and every cent of profit goes to hurricane relief. On top of that, all profit from the Bungie online store in the month of September, 2005, also goes to hurricane relief. Want to help out, and have a cool t-shirt to show for it? Buy one.
Atari Corp. v. Sega of America Inc.
869 F. Supp. 783 (N.D. Cal. 1994)

Atari brought a motion for a preliminarily injunction against the manufacture and distribution of Sega’s games on the basis of patent infringement regarding horizontal scrolling of a video game display. To obtain a preliminary injunction, the Atari had to show: (A) a reasonable likelihood that it would succeed on the merits, (B) that irreparable injury would result if the injunction was not granted, (C) that the balance of hardships weighed in Atari’s favor, and (D) that the granting of the injunction would not disserve the public interest. Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446 (Fed.Cir. 1987).

The analysis concerning a reasonable likelihood to succeed on the merits began with the scope of the patent, which hinged on the delay technology built within the horizontal scrolling. The delay means had to be positioned in the data stream between the memory and the display so as to operate on the data. On a motion for preliminary injunction, the alleged infringer had to come forward with clear and convincing evidence of defenses to the patent. If it did so, the burden then shifted to the patent owner to show that it was likely to overcome those defenses, that is, to show that the challenges to the patent lacked substantial merit. New England Braiding Co. v. AW Chesterson Co., 970 F.2d 878, 883 (Fed.Cir. 1992). Sega had only argued that the patent was not supported, but had not made a showing to overcome the presumption of validity, which was strengthened by the PTO's consideration of all prior art. The presumption was sufficient at that stage to find that the Patent was likely to be found valid. Atari provided convincing expert testimony that Sega's products performed the identical function claimed in the Patent, in that the Sega devices achieved fine scrolling by placing delay means in the data stream between the memory and the display. It was undisputed that Sega's products implement fine scrolling with a structure that was different than that disclosed in the Patent. However, there was a disputed issue of fact as to whether the structures were equivalent. Given that the function was simply to impose a delay positioned between the memory and the display, there was no apparent reason why placement of the delay before rather than after the parallel-to-serial converter was a substantial change or added anything of significance. Sega raised the equitable defense of unenforceability of the Patent due to alleged inequitable conduct, but did not make a threshold showing of intent to deceive the PTO. For the reasons stated above, the Court found that Atari was likely to succeed on the merits in this action.

If both validity of the patent and its infringement were "clearly shown," irreparable harm would be presumed. H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384, 390 (Fed.Cir. 1987). However, Atari's showing, particularly with respect to whether the accused structure was equivalent to that disclosed in the Patent was not strong enough to merit a finding that infringement had been "clearly shown." Accordingly, the presumption could not be applied in this case. See Nutrition 21 v. United States, 930 F.2d 867 (Fed.Cir. 1991). Irreparable harm may be shown if failure to issue the injunction would erode the patent owner's market share. Hybritech, 849 F.2d at 1456. There were several indications that no irreparable harm would result from the denial of a preliminary injunction. First, when negotiations failed, Atari delayed more than three years before filing the action. The second indication of lack of irreparable harm was the fact that Atari had licensed Nintendo under the Patent. The third was the fact that Atari itself no longer used the Patent. The fourth was that it appeared likely that Sega would be able to satisfy any award of damages against it. Atari argued irreparable harm in Sega's dominance in the market prevented Atari from attracting independent software designers, but it made no showing that Sega's absence from the market would enable it to attract them. Sega's showing that Nintendo, rather than Atari, was Sega's relevant competitor undermined Atari's unsupported argument. Accordingly, Atari's showing was too speculative to support a finding of the likelihood of irreparable harm, particularly in light of the factors discussed above that weigh against Atari.

Concerning the balance of hardships, the certainty of harm to Sega and the non-party retailers, software developers and peripheral manufacturers outweighed the speculative possibility of irreparable harm to Atari. Thus, the balance tipped against issuance of a preliminary injunction. Atari did not make a sufficient showing of irreparable harm, especially in light of the countervailing factors, and the balance of hardships did not favor issuance of the injunction. Therefore, the motion was denied.

Capcom U.S.A. Inc. v. Data East Corp.

1994 WL 1751482 (N.D. Cal. 1994)

Capcom filed a motion for preliminary injunction to enjoin Data East from distributing the video game “Fighter's History,” which Capcom alleges infringes upon its copyrights for the “Street Fighter II” series of video games. Capcom introduced Street Fighter II in 1991, whereas Data East introduced Fighter’s History in 1993. Capcom alleges that Data East's Fighter's History copied the distinctive fighting styles, appearances, special moves and combination attacks of many of Street Fighter II's characters, as well as the control sequences used to execute their moves. Data East claimed that there was nothing original about Street Fighter II, which used stereotypical characters and common fighting maneuvers.

To prevail on its motion for a preliminary injunction, Capcom had to show either: (1) a likelihood of success on the merits and the possibility of irreparable injury, or (2) that serious questions going to the merits existed and the balance of hardships tipped sharply in its favor. Johnson Controls, Inc. v. Phoenix Control Systems, Inc., 886 F.2d 1173, 1174 (9th Cir. 1989). A showing of a substantial likelihood of success on the merits of a copyright claim raises a presumption of irreparable harm. Johnson Controls, 886 F.2d at 1174. After establishing valid copyrights, Capcom needed to prove that they were in fact copied. Capcom had no direct evidence, but instead relied on the circumstantial weight of Data East's project proposal for Fighter's History which made repeated references to Street Fighter II in addition to the similarities in characters and moves between the two games. Because there was no direct evidence of copying, the Court applied the two part test of access and substantial similarity to assess Capcom's claim of copyright infringement.

First, Capcom easily proved access, as Street Fighter II had been widely disseminated before the development of Fighter’s History. Also, the proposal for Fighter’s History was a nine page document that contained twenty-two references to Street Fighter II. Data East put forth direct evidence of original work including cartoon characters, comic books, movie advertisements, etc., from which Data East claimed to have drawn its inspiration for its Fighter's History characters. The court did not find Data East’s evidence persuasive, as while other outside sources may have influenced the development of the Fighter's History characters, there was no doubt that Street Fighter II characters also provided a significant source of inspiration. Second, Capcom had to establish that Fighter's History was substantially similar to Street Fighter II and that the similarity resulted from protectable expression. Roth Greeting Cards v. United Card Co., 429 F.2d 1106, 1109 n. 3 (9th Cir.1970). The test to establish substantial similarity consists of extrinsic and intrinsic prongs.

To analyze extrinsic similarity a court must filter out those elements of the copyrighted work that are deemed unprotectable, and reserve only protectable expression for comparison under the subjective test. Apple Computer, Inc. v. Microsoft Corp., 821 F.Supp. 616, 623 (N.D.Cal.1993). Capcom had identified a number of alleged similarities between Street Fighter II and Fighter's History. These similarities could be divided into four primary categories: (1) similarities in characters; (2) similarities in special moves and combination attacks; (3) similarities in control sequences; and (4) miscellaneous similarities in the general presentation and flow of the games. Concerning (3), the control sequences could not be expressed in limitless ways. Rather, the expression of an idea and the underlying idea frequently merge in the area of control sequences because the player simply pressed the button corresponding to the move he wishes to have produced on the screen. On the practical level, the universe of possible joystick combinations was further restricted by the need to have the control sequence emulate the natural movements of the body. While the Court was disturbed by these "coincidences" in some of the arbitrary control sequences, it concluded that because the control sequences did not constitute protectable expression, these isolated similarities were not actionable. Concerning (4), Capcom sought to protect a variety of miscellaneous features in Street Fighter II including its "attract mode" and "VS." screens and its method of selecting characters, designating winners and tracking a fighter's vitality during a fight. These features, however, were commonplace and unprotectable under the doctrine of scenes-à-faire. Concerning (1) and (2), Capcom urged that Data East had copied the physical appearance of seven of Street Fighter II's eight playable characters and had reproduced twenty-seven of the characters' special moves for use in its game. The court found that three characters and five special moves in Fighter's History were similar to protectable characters and special moves in Street Fighter II.

The intrinsic prong was applied once all the unprotected similarities and those elements that were not similar as a matter of law had been filtered out through analytic dissection, the remaining protectable expression in the plaintiff's video was compared to corresponding expression in the defendant's video in a subjective analysis of similarity. The subjective determination involved in the intrinsic test employed a reasonable person standard and examined the works for similarity in "total concept and feel." Shaw v. Lindheim, 919 F.2d 1353, 1357 (9th Cir. 1990). Although the Court had concluded that three Fighter's History characters--Matlok, Feilin and Ray, were similar to Guile, Chun Li and Ken in Street Fighter II, the characters were not virtually identical and Data East certainly had not bodily appropriated them for use in its game.

Applying the Ninth Circuit standard for granting a preliminary injunction to the facts infra, the court determined that Capcom had failed to demonstrate a likelihood of success on the merits or even serious questions concerning the merits. The advantage Capcom gained in relying on these stock characters and standard moves was that they were immediately recognizable and familiar to the player. One of the risks consequent to that tactic, however, was that much of Street Fighter II was left unprotectable from competitors' simulations. Based on this analysis, the preliminary injunction was denied.

Thanks to Adam Trost for his assistance with the preparation of this case brief.

Gamestop: Click here.

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Midway Manufacturing Co. v. Publications Int’l, Ltd.
1994 WL 188531 (N.D. Ill 1994)

Thinking of writing a tell-all book of strategies for your favorite video game? You may want to think twice.

Publications International (“PIL”) published a book, entitled “Action Strategies for Mortal Kombat,” subtitled, “An Unauthorized Players’ Guide.” Midway, owners of the copyright and trademark registrations for the popular video game, promptly sued PIL for copyright infringement and trademark infringement. Midway’s Complaint referenced the 200+ game screen images from the book, the use of the trademark names “Midway” and “Mortal Kombat” in the book title and text, and the use of characters and character names from the game.

PIL moved to dismiss the copyright claims on the grounds that its use of names and photographs from the game constituted “fair use” under 17 U.S.C. § 107. This statutory defense to copyright infringement provides that, “the fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement of copyright.”

Using the summary judgment standard, the Court denied almost all of PIL’s dismissal motions. Regarding the copyright infringement claim, the key issue was whether PIL’s book used a substantial portion of the copyrighted work to make it a derivative work. The determination of whether the borrowing was substantial requires a qualitative and quantitative review of the facts in the case. Accordingly, the Court denied summary judgment for copyright infringement, holding that PIL had not met its required burden of proving insubstantial borrowing.

Regarding trademark infringement of the name, “Mortal Kombat,” the Court also refuses to grant PIL’s summary judgment motion. The Court did not accept PIL’s argument that the front cover disclaimer, “An Unauthorized Players’ Guide” prevented any potential customer confusion as to the source of the book. Rather, the Court stressed that likelihood of customer confusion is another issue of fact, and that summary judgment is inappropriate until more discovery can be done.

However, regarding trademark infringement of the name “Midway,” the Court granted PIL’s motion to dismiss. The book did not mention Midway in the title or use Midway’s mark at all. In fact, only once in the book is Midway even mentioned, in a passage identifying them as the licensor of the home versions of the video game. The Court held that this usage, as a matter of law, is not trademark infringement.
A man has been arrested in Japan on suspicion carrying out a virtual mugging spree by using software "bots" to beat up and rob characters in the online computer game Lineage II. The stolen virtual possessions were then exchanged for real cash via an online auction site.

Read more here and here.
The Magnavox Co. v. Activision, Inc.
1985 WL 9469 (N.D. Cal. 1985)


In a case of infringement involving one of the earliest video game patents, Magnavox asserted its exclusive licensing rights on television console “ball and paddle” games like the classic PONG.

Pong:

(Photo courtesy of David Winter, Pong Story; (c) David Winter)
The patent-in-suit was U.S. Letters Patent Re. 28,507, a reissue patent originally issued on April 25, 1972. The ‘507 reissue patent was one of several related patents obtained by Sanders Associates, another Plaintiff in this case. In 1967, Sanders became the first to combine toys, games, and television, defining the brand new art of television video games. Sanders’ subsequent patents claimed exclusive rights on a large variety of television games. Two of the asserted claims in the ‘507 patent read as follows:

51. Apparatus for generating symbols upon the screen of a television receiver to be manipulated by at least one participant, comprising:
means for generating a hitting symbol; and
means for generating a hit symbol including means for ascertaining coincidence between said hitting symbol and said hit symbol and means for imparting a distinct motion to said hit symbol upon coincidence.

52. The combination of claim 51 wherein said means for generating a hitting symbol includes means for providing horizontal and vertical control signals for varying the horizontal and vertical positions of said hitting symbol.

Deciphering the above legalese, the ‘507 patent described a common gaming scenario: a player (the hitting symbol) moving around the screen and making contact with a ball (the hit symbol), sending the ball off in a different direction. Sanders, having become a TV console gaming pioneer, had now secured the rights to a set of actions that countless video game designers would want when creating sports games, combat games, and puzzle games, etc.

In 1971, Sanders sold the exclusive licensing rights under the ‘507 patent to Magnavox, who shortly thereafter introduced the first of the ball and paddle, under the name “Odyssey.” It didn’t take long for other game designers to catch on. Atari released the television console classic “PONG” in 1975, after securing a license from Magnavox for the right to make and sell the ‘507-type ball-and-paddle game. More game designers flocked to this new market, and Activision was among the youngest and most ambitious of them.

Odyssey:
Activision designed and manufactured television console games for the Atari 2600, the Commodore 64, and for IBM and Apple computers. It produced a Tennis, Hockey, and Grand Prix game, among others, which followed the general ‘ball and paddle’ format covered by the ‘507 patent. When Activision failed to obtain a license from Magnavox before developing these games, Magnavox and Sanders filed this infringement suit.

Magnavox had much at stake in this case; they had already made approximately $40 million in licensing royalties based on the ‘507 patent and had no desire to be cut out of the loop. The stakes were raised even higher when Activision responded to the infringement action by promptly challenging the validity of the ‘507 patent with 9 pieces of prior art brought before the court. If the court invalidated the ‘507 patent, Magnavox risked losing its entire royalty stream, and being left completely behind by Atari and its television gaming competitors.

Fortunately for Magnavox, the ‘507 patent had previously endured and survived validity challenges in two previous cases. In, The Magnavox Co. v. Chicago Dynamic Industries, 201 U.S.P.Q. 25 (N.D.Ill.1977) and The Magnavox Co. v. Mattel, Inc., 216 U.S.P.Q. 28 (N.D.Ill.1982), ‘507 patent had been challenged against many of the same pieces of prior art offered by Activision. However, since Activision was not a party to those cases, the judge in this case performed an exhaustive review of the technology and the cited prior art references before making an independent decision. In the end, as in the previous cases, the court found that ‘507 patent was valid over the prior art.

Activision now faced an uphill battle, proving that its games did not infringe the claims of the ‘507 patent. Activision’s main argument was that the “means-plus-function” language of the claims (i.e. the means ascertaining coincidence, the means for imparting a distinct motion to said hit symbol, etc.) should be narrowly construed to apply ONLY to the circuitry described in the language of the ‘507 patent. Game circuitry had, of course, changed significantly in the last 10 years, and Activision wanted Magnavox’s claims to apply only to “slicer circuits that make sawtooth waveforms,” the dominant circuit technology of 1970. Most modern games, including Activision’s, now used a microprocessor design. The court, however, declined to limit ‘507 patent, “The use of the microprocessor technology, which became available only after the invention of the ‘507 reissue patent … does not alter the basic nature of those games or avoid the ‘507 reissue patent.”

After holding that Activision’s games did literally infringe, the court further noted that the Doctrine of Equivalents would have also applied in favor of Magnavox. Magnavox had enjoyed wide licensing and much commercial success based on the ‘507 patent. These facts justified a wide range of equivalents, and support the conclusion that Activision’s games were substantially the same as those claimed in the ‘507 patent.

Activision next argued that since Atari had acquired a license from Magnavox to develop games under the ‘507 patent, all purchasers of the Atari 2600 console had either an explicit or implied license to buy and use other games falling under the same patent. The court quickly rejected the explicit license argument, holding that Atari 2600 purchasers only had a license to use that gaming console, not to buy and use other infringing games. Similarly, Atari console buyers did not acquire an implicit license to buy and use Activision games. No evidence had been shown that any game purchasers relied on this legal theory of implicit licensing while purchasing an Activision game. Further, any thoughts by purchasers concerning their freedom to use Activision games came from Activision itself and not from statements or actions of the Plaintiffs. The court similarly dismissed Activision’s argument that using its games in an Atari console constituted a “permitted adaptation” of the license given to every purchaser.

The only minor victory for Activision came when the court found that its infringement of the ‘507 patent had not been willful. Activision’s founders, before starting the company, had brought their business plan to a patent attorney to seek legal advice regarding their proposed games. Since their counsel had failed to mention the ‘507 patent, Activision had acted reasonably in believing that there was no such patent.

Atari Games Corp. v. Nintendo of Am., Inc.
975 F.2d 832 (Fed. Cir. 1992)

I. Statement of Facts

Nintendo designed a program, the 10NES, for its Nintendo Entertain System (NES) to prevent the NES from accepting unauthorized game cartridges. The 10NES was programmed onto chips located in the NES console and in each game cartridge. Thus, only 10NES-enabled cartridges could “unlock” access to the NES console.

After a failed attempt to replicate the 10NES program, Atari, in December 1987, licensed the technology from Nintendo under strict licensing terms. Nintendo themselves placed Atari’s games in 10NES-enabled cartridges, and limited Atari, as well as other licensees, to five new NES games per year.

In early 1988, Atari applied to the Copyright Office for a reproduction of the 10NES source code, which the Copyright Office provided to Atari based on a false allegation by Atari that Atari needed the copy for pending litigation. There in fact was no pending litigation.

Based on the acquired source code, Atari developed its own program, the Rabbit program, which generated signals indistinguishable from the 10NES program and gave Atari access to the NES without Nintendo’s license conditions. The line-by-line instructions of the programs vary because Atari used a different microprocessor and programming language.

Nintendo brought suit against Atari alleging copyright infringement (and patent infringement, among other allegations). Atari brought several claims against Nintendo and asserted a copyright misuse defense. The United States District Court for the Northern District of California granted Nintendo’s request for a preliminary injunction based on copyright infringement. Atari appealed.

II. Argument

The Federal Circuit observed that while it had jurisdiction based on patent infringement claims included in the action, the court applies the law of the regional circuits, the Ninth Circuit in this case, to resolve issues of copyright law.

The Federal Circuit stated that “[t]o prevail on its copyright infringement claim, Nintendo must show ownership of the 10NES program copyright and copying by Atari of protectable expression from the 10NES program.” Ownership of the 10NES program was not in dispute, and thus, Nintendo had to prove only the copying of protectable expression.

A. Copyright Protection Extends to Computer Programs

The court determined that computer programs fall under the statutory definition of “literary works,” and thus copyright protection extends to computer programs and to instructions encoded on computer chips. “The expression adopted by the programmer is copyrightable element of a computer program,” but “the actual processes or methods embodied in the program are not within the scope of copyright law.” Thus, “[a]t a minimum, Nintendo may protect under copyright the unique and creative arrangement of instructions in the 10NES program.”

B. Reproduction of an Unauthorized Copy from the Copyright Office Is Infringement

Next, the court held that “Nintendo is likely to show successfully that Atari infringed the 10NES copyright by obtaining and copying the source code from the Copyright Office.” Atari obtained a copy from the Copyright Office by providing false information about a pending litigation, therefore obtaining an unauthorized reproduction. Thus, Atari infringed Nintendo’s copyright based on the reproduction of an unauthorized copy from the Copyright Office.

C. Efforts to Reverse Engineer Alone Do Not Support Copyright Infringement

Next, the court determined that the “Copyright Act permits an individual in rightful possession of a copy of a work to undertake necessary efforts to understand the work’s ideas, processes, and methods of operations.” Thus, “reverse engineering object code to discern the unprotectable ideas in a computer program is fair use.” This fair use, however, does not extend to commercial exploitation of protectable expression, and in addition, requires an individual to possess an authorized copy. The court thus held that reverse engineering of an authorized copy of the 10NES program that is necessary to understand 10NES is fair use, however, “Atari could not use reverse engineering as an excuse to exploit commercially or otherwise misappropriated protected expression.”

D. Substantial Similarity Exists Between Atari’s Rabbit Program and Nintendo’s 10NES Program

The court then also held that “Nintendo is likely to prove substantial similarity between the Rabbit and 10NES programs sufficient to support its infringement claims.” The court primarily relied on the fact that Rabbit incorporated unnecessary features, including features that were deleted from the original 10NES program. Thus, the court concluded that “copying of fully extraneous instructions unnecessary to the 10NES program’s functionality” suggests copying, not independent creation.

E. Copyright Misuse

Atari argued as a defense to copyright infringement that Nintendo misused its copyright. Because there was no statutory basis for the copyright misuse defense, the court determined that the defense was solely an equitable doctrine. Therefore, while copyright misuse may be a viable defense, any party seeking the defense must have clean hands. Atari was ineligible to invoke the defense because of its lie to the Copyright Office to obtain a copy of the 10NES program.

The court therefore held that the district court did not err by granting the preliminary injunction against Atari.
Atari Games Corp. v. Nintendo of America, Inc.
30 U.S.P.Q.2d 1401 (N.D. Cal. 1993)
(Atari II)

Following a 1992 Federal Circuit ruling upholding a preliminary injunction in favor of Nintendo (see Atari Games Corp. v. Nintendo of America, Inc., 975 F.2d 832 (Fed. Cir. 1992) (Atari I)), the District Court for the Northern District of California now settled several summary judgment motions in the quarrel over Atari’s alleged infringement of Nintendo’s 10NES security program.

As described in Atari I, the 10NES program is a combination of “lock” software embedded into a chip in the NES gaming console, and “key” software in each Nintendo game cartridge. The lock and key send synchronized encoded data streams back and forth which unlock the console when an authorized game is inserted. When an unauthorized game is inserted, the console remains locked, thus preventing game manufacturers for designing NES-compatible games without receiving keys from Nintendo.

In 1986, Atari began efforts to replicate the 10NES program, hoping to make its own games compatible with Nintendo’s more popular console. When Atari’s attempts to dissect the microchips and reverse engineer the program failed, Atari obtained the source code from the United States Copyright Office. Using this copy of the source code, Atari successfully created its own “Rabbit” program, to mimic the interactions of the Nintendo games / console. Although the Rabbit was developed using a different microprocessor and different computer language, it sent data streams to the Nintendo console identical to those sent by Nintendo games. Since Nintendo could no longer stop Atari from building Nintendo-compatible games technologically, it was determined to stop them legally. This lawsuit followed; Nintendo filed for copyright infringement of the 10NES security program and infringement of U.S. Patent No. 4,799,635 (“the ‘635 patent”).

Copyright Infringement
The Court first took on the issue of whether the data streams sent from the game cartridges to the gaming console constituted copyrightable expression. Nintendo argued that these “data songs,” were copyrightable, since Congress had explicitly extended copyright protection to computer software. The Court disagreed, drawing the distinction between a copyrightable computer program and mere computer data which was not eligible for copyright protection. Computer statements that manipulate data fall within the definition of computer program, but the data being manipulated does not. Likewise, the periods of “silence” in communication between the game cartridge and the console are not protectable by copyright. The Court noted that while data notes and variable silences might be copyrightable within a musical composition, they are not copyrightable as a means to enable data communication. Accordingly, the Court granted Atari’s summary judgment motion on the issue of copyrightable expression.

However, the Court limited Atari to copying only the portions of the 10NES program required to send the correct data sequence to the Nintendo console. Atari sought to copy the entire 10NES program to ensure compatibility with future versions of the Nintendo console. Atari feared that if it didn’t copy the entire 10NES program, Nintendo may update the next version of the console to monitor portions of the data stream that are currently unmonitored, allowing the console to once again distinguish between Nintendo and Atari games. The Court sided with Nintendo on this issue, holding that Atari may not copy portions of the program needed only for future compatibility. The Court noted the importance of the balance in public policy between the dissemination of valuable ideas within an industry and the protection of a manufacturer’s “lead time” in the market. In other words, Atari has the right to adopt Nintendo’s technology, but only after Nintendo presents it to the marketplace. If Atari could copy present code for future compatibility, it could drastically reduce the time needed to reverse engineer Nintendo’s next version of the 10NES. This would tip the balance in favor of game developers, and inhibit the market for new gaming consoles.

Patent Infringement
Nintendo, largely unable to avail itself of copyright protection for its 10NES data stream sequences, also relied on a traditional patent infringement claim. The key issue in the infringement of Nintendo’s ‘635 patent, covering the 10NES program, was largely one of claim construction. Claim 1 of the ‘635 patent recited, in part:
“[R]esetting said main data processor unit unless the execution of said first authenticating program by said first processor device exhibits a predetermined relationship to the execution of said second authenticating program by said second processor device” (emphasis added).

The Court faced a problem with claim 1, namely that a predetermined relationship between the execution of programs is an inherently ambiguous statement. Treating Nintendo as its own lexicographer, the Court relied on the specification and prosecution history of the ‘635 patent to hold that claim 1 requires a predetermined relationship between the data exchanged by the programs, rather than just a predetermined relationship between the programs themselves.

Having determined the meaning of the ‘635 patent claims, the Court held that the data output by Atari’s Rabbit program did indeed have a predetermined relationship to the data output by Nintendo’s gaming console. The Court points out that Atari does not manufacture both the games and the console, and therefore cannot literally infringe on the language of claim 1, which requires two devices. However, Atari’s accused Rabbit program has no other use besides interaction with the NES console; therefore Atari’s liability may be based on contributory infringement. Accordingly, the Court granted Nintendo’s summary judgment motion for patent infringement on this claim.

Nintendo also moved for dismissal of Atari’s anticipation and obviousness defenses to infringement. The Court examined the standards for anticipation and obviousness, then examined U.S. Patent No. 4,736,419 (“the Roe patent”) under both of these standards. Indeed, the Roe patent, which described an electronic locking system based on physically implanted electronic keys, resembled the ‘635 patent in many respects. The abstract of Roe even notes, “[T]his lock system may be used in video game hardware, personal computers, and the like to prevent use of copied or ‘pirated’ software programs.”

The Court noted that despite many similarities, Roe fails to teach the use of reset pins which generate RESET signals to prevent unauthorized chip use. Accordingly, the Court holds that the ‘635 patent is not anticipated by Roe, and grants summary judgment on this issue to Nintendo.

However, the Court denied Nintendo’s summary judgment motion with respect to obviousness. The Court noted that reset pins were common in the microprocessor field at the time of the invention, referring specifically to the Famicom home computer system (“Famicom”), designed in part by the inventor of the ‘635 patent, which uses reset pins to disable a microprocessor. The Court reasons that the combination of these references likely makes the ‘635 patent obvious. Further, the motivation to combine these references can be found in the Roe patent itself, which mentions its possible adaptation to video games. Although the Court stopped short of granting summary judgment to Atari on the issue of obviousness, it noted that Atari would likely prevail at trial. The Court reasoned that Atari would likely succeed in showing that there are no significant differences between the usage of the reset pins in the ‘635 patent and the usage of the reset pins in the Famicom system. Two months later, however, an eight-member jury rejected Atari's position, and found that the infringed claims of the ‘635 patent were not invalid for obviousness.

Nintendo had won on patent infringement, but before they enforce this ruling they would also need to address Atari’s patent misuse defense and antitrust counterclaims. In March 1994, before the adjudication of these issues, the two sides settled.
In an elegant display of its interopability, developer Newbie has demonstrated the Xbox 360's ability to connect to portable media devices such as the PlayStation Portable (PSP) and iPod devices. Read more at Team Xbox.
Lewis Galoob Toys, Inc. v. Nintendo of America, Inc.
964 F.2d 965 (9th Cir. 1992).


I. Background


Lewis Galoob Toys developed a device called the Game Genie, which allowed the player of a Nintendo Entertainment System game to alter up to three features of the game, such as a game character’s speed or strength, or the character’s number of lives. The Game Genie, which is inserted between a game cartridge and the Nintendo system, functions by replacing the value for a single data byte sent by the game cartridge to the Nintendo system. The Game Genie’s effects are temporary, having no affect on the data that is stored on the game cartridge.

Game Genies:

Nintendo brought suit against Galoob, alleging contributory infringement because the marketing, advertising, promoting, and selling the Game Genie contributed to the creation of infringing derivative works. The district court concluded that (1) “the audiovisual displays created by the Game Genie are not derivative works” and (2), even if the displays were derivative works, “the displays are a fair use.” Nintendo appealed.

II. Analysis

1. Derivative Works


The Ninth Circuit first looked at whether the audiovisual displays created by the Game Genie constituted derivative works. The court began by emphasizing that “a derivative work must incorporate a portion of a protect work in some concrete or permanent form.” The court determined that the derivative work does not have to be “fixed,” as required for copyright protection, but an independent work must be created.

The Ninth Circuit agreed with the district court that no independent work is created by the Game Genie. In making this determination the court made a distinction between products that “enhance” copyrighted works and products that “replace” copyrighted works. In this case, the Game Genie “enhances” the Nintendo game, but it does not “replace” the Nintendo game. The Game Genie, by itself, cannot produce an audiovisual display.

Additionally, the court distinguished this case between two prior cases. In Mirage Editions, Inc., v. Albuquerque A.R.T. Co., 856 F.3d 1341 (9th Cir. 1988), the Ninth Circuit held that ceramic tiles displaying art work taken from a commemorative book constituted derivative works. The ceramic tiles physically incorporated a protected work in a form that could be sold. In addition, the court distinguished Mirage by noting that “sales of the tiles supplanted purchasers’ demand for the underlying work.”

In Midway Manufacturing Co. v. Artic International, Inc., 704 F.2d 1009 (7th Cir. 1983), Artic sold computer chips that could be inserted into a Midway’s arcade game to speed up the rate of play. The Seventh Circuit held that the speeded-up version of Midway’s game constituted a derivative work. The Artic chip “substantially copied and replaced” the original Midway chip. The court also distinguished Midway by noting that the purchasers of the Artic chip benefited financially by selling an altered game to the public.

Therefore, because the Game Genie “does not contain or produce a Nintendo game’s output in some concrete or permanent form, nor . . . supplant demand for Nintendo game cartridges, the court held that the audiovisual displays created by the Game Genie do not constitute a derivative work.

2. Fair Use

The district court held that even if the audiovisual displays created by the Game Genie did constitute a derivative work, Galoob was not liable because the displays are fair use. The Ninth Circuit first made clear that “a party cannot authorize another party to infringe a copyright unless the authorized conduct would itself be unlawful.” Thus, if the use of the Game Genie is a fair use, Galoob cannot be liable for infringement.

The court recognized that the users of the Game Genie are engaged in a non-profit activity, and thus their use is presumptively fair. Nintendo was unable to overcome this presumption. First, relying on Sony Corp. of Am. v. Universal Studios, Inc., 464 U.S. 417 (1984), the court recognized that “a party who distributes a copyrighted work cannot dictate how that work is to be enjoyed.” Thus, once users have paid for the Nintendo game, the Game Genie may be used to make the experience of Nintendo game play more enjoyable.

Focusing on the fourth fair use factor in 17 U.S.C. § 107(4), the court also concluded that Nintendo failed to show harm to the existing and future markets for its copyrighted games. Because the Game Genie is used for a noncommercial purpose, the future harm may not be presumed. The court relied on testimony of Galoob’s expert witness that there would be very little market interest for “junior or expert versions of existing Nintendo games” because the original version “already has been designed to appeal to the largest number of consumers,” and the consumer would feel “cheated or robbed” buying a new game that does not include new material. Additionally, Nintendo admitted to having no plans to market such games.

Therefore, the court held that a consumer’s use of the Game Genie in conjunction with a Nintendo game was a fair use.

US District Court hands eight-month sentence to Pandora's Cube employee for "Super Xboxes." 31-year-old Hitesh Patel was an employee of Pandora's Cube, a game retailer in the Washington, DC area.


Read article here.
On July 25, 2005, the Court of Appeals for the 8th Circuit affirmed the Western District of Missouri's dismissal of Frosty Treat's complaint against Sony Computer Entertainment America, Inc. Frosty Treats asserted claims under state and federal law for trademark infringement and dilution, and for unfair competition, based on Son'y depiction of an ice cream truck and clown character in Sony's Twisted Metal video game series. A complete case summary will be forthcoming, but for now the opinion can be obtained here.
In Re Coin-Operated Audio-Visual Games and Components Thereof
No. 337-TA-87, 214 USPQ 217 (ITC 1981)

A complaint was filed against numerous competitors with the U.S. International Trade Commission by Midway Mfg. Co. alleging common law trademark infringement, passing off, imitation of trade dress, false designation of origin, and copyright infringement. The complaint sought cease and desist orders against domestics respondents and exclusion orders against international respondents. The products in question were coin-operated audiovisual games and components. Midway purchased from Namco exclusive rights to manufacture and sell within the United States “Galaxian,” a game introduced in Japan in 1979. The agreement prohibited any changes to the game itself and limited those pertaining to the game’s trade dress. An ITC attorney did an investigation, the results of which the court often notes. This decision was based purely on evidence produced by the claimant, so the findings were rebuttable.

Galaxian:


The court found that the term “Galaxian” was protectable as a common law trademark because it was arbitrary and distinctive in it stylization, lettering, and coloring, making it exempt from proving secondary meaning; it is also nonfunctional. After establishing these facts, Midway had to prove a likelihood of confusion to be successful on this claim. The court stated that the consuming public playing the game was irrelevant since they did not care who was the manufacturer, but instead focused on those companies and individuals purchasing consoles directly from the manufacturer. The court decided that those games using the word “Galaxian” did create a likelihood of confusion and infringed. The court also found that those games using “Galaxy” and “Galaxip” also infringed because of the similarity in the words along with the similarity in gameplay.

Regarding the claim of false designation of origin, the court found for Midway against those respondents that did not conspicuously present the manufacturer’s name on the screen and console.

The court also found that there was copyright ownership of the game. Midway proved originality since they purchased the rights from the creator Namco and validity by providing the copyright registrations. There was no direct evidence of copying, so the court examined whether there was prior access to Galaxian and substantial similarity between it and the other games. The alleged infringing games were released subsequent to trade show displays and the release of Galaxian, therefore, the court found that access existed. Determination of substantial similarity is much more difficult to quantify. The court cited the “ordinary observer” test where such a relationship is found when someone not attempting to discern disparities would regard the aesthetic appeal as the same. Another test cited was two-pronged, which first looks at the general ideas of the works, and second, examines the response of the ordinary and reasonable person. The court found that all but one game was nearly identical, and further found the remaining game substantially similar under both tests because of its rolling star background, shape and color of aliens, alien formation, movement of aliens while attacking, and scoring table.

There was clear evidence of damage to the Galaxian sales by Midway. The court found the in rem remedy of exclusion appropriate as it was created to overcome the problem of in personam remedies against foreign companies that have no offices or assets within the United States. The court granted an exclusion remedy directed at those games that clearly infringed on the common law trademark by using “Galaxian,” “Galaxy,” or “Galaxip.” Concerning the copyright claim, the court limited exclusion to those parties that have been specifically identified by the court as infringing. The reason for the limitation was to ease the process for Customs, as it would be exceedingly difficult to have them determine whether a game infringed on Midway’s copyright. The court denied the use of cease and desist letters to domestic respondents as they were all distributors and since no evidence of stockpiles existed, such a remedy would have been unnecessary given the exclusionary order.

Thanks to Adam Trost for his assistance in the preparation of this case summary.
The 'hot coffee' mod for Grand Theft Auto resulted in the game's rating being changed from Mature to Adults Only. Many games not only don't mind modding, but the game's developer actually encourages it. There any many legal implications to modding, and who owns the resultant IP. See, for example, Microstar v. Formgen Inc., 154 F.3d 1107 (9th Cir. 1998).

But that's not the point of this post. I just wanted to point out a Yahoo! article with some interesting musings about modding.
Data East USA, Inc. v. Epyx, Inc.
862 F.2d 204 (9th Cir. 1988).

In July 1984, Data East USA, Inc. began distributing in Japan a video game titled “Karate Champ,” and later in October 1985, began distributing the game in the United States. In November 1985, Epyx began distributing a similar video game in the United States titled “World Karate Championship.” Data East subsequently brought a suit against Epyx, alleging that Epyx’s game infringes Data East’s copyright for “Karate Champ.” The district court agreed with Data East, granting a permanent injunction that enjoined Epyx from distributing “World Karate Championship. Epyx appealed.

Karate Champ:


The Ninth Circuit first discussed an evidentiary issue involving whether photographs constituted sufficient evidence for the contents of a video game’s audiovisual work. The court found that “still photographs which depict all images and all moves that occur when the game sequences through the various skill levels, along with testimony,” was sufficient to make a fair comparison between the two games.

The court then directed its attention to the copyright infringement claim. Because there was no direct evidence of copying, the court employed the test for establishing copying by circumstantial evidence, which requires evidence of (1) the defendant having access to the copyrighted work, and (2) “substantial similarity of both the general ideas and expression between the copyrighted work and the defendant’s work.” Because the court found the works were not substantially similar, it declined to consider whether the defendant had access.

World Karate Championship:


After setting forth the “axiom of copyright law that copyright protects only an author’s expression of an idea, not the idea itself,” the court explained the two-step test for determining substantial similarity. The first step is an objective test asking whether the two ideas are substantially similar. Finding that the ideas were substantially similar, if not identical, the court immediately moved to the second step, which is a subjective test asking whether the forms of expression are substantially similar from the perspective of the ordinary reasonable person.

The court established that the proper analysis requires a comparison of the similarities, while avoiding comparison of dissimilarities or forms of expression that necessarily flow from an idea, i.e., scenes a faire. The court found that both games encompassed the idea of a karate video game in fifteen respects, including the number of different moves available, one player or two player options, a number of the same type of moves, the ability to change the background scenes, the length of the rounds, and having a referee for each round. The court recognized that there are constraints inherent to the sport of karate, such as the types of moves and the use of a referee, and also inherent to the computer, such as the use of sprites to create the graphical images and the limited access to color. Because of these constraints, the court held that the aforementioned similarities necessarily flowed from the idea of a karate video game.

The Ninth Circuit therefore held that the district court erred by not limiting the scope of Data East’s copyright protection to the author’s contribution, i.e., the scoreboard and the background scenes. Because the backgrounds were dissimilar and the method of scorekeeping was similar but inconsequential, the court found that a typical purchaser of the game, a 17.5 year old boy, would not regard the works as substantially similar. Therefore, the court held that Data East’s copyright was not infringed and remanded to the lower court to lift the injunction.

Thanks to Brandon Rash for this assistance with the preparation of this Case Summary.
Microsoft Corp. said on Thursday it won exclusive rights to develop and publish multiplayer online games starring Marvel Enterprises Inc.'s super heroes, including Spider-man, the X-men and the Hulk. The deal covers massively multiplayer online (MMO) game titles developed for Microsoft's upcoming Xbox 360 gaming console and published by the software giant's game studio.

Read more here.

Universal City Studios v. Nintendo Co. Ltd.
746 F.2d 112 (2nd Cir. 1984)

Tanks, soldiers, countless helicopters, and even Godzilla were no match for King Kong, so how did Nintendo manage to stop the giant gorilla?

King Kong:


The arcade game “Donkey Kong” was a quick success for Nintendo. The star of the game is the formidable yet humorous gorilla, who climbs buildings, hurls barrels and fireballs, all the while dragging along a blond damsel whom Mario must attempt to rescue. Gamers may have loved Donkey Kong, but Universal saw far too much resemblance to the 1933 classic film “King Kong,” for which Universal owned trademarks for the name, character, and story. Universal brought suit against Nintendo for trademark infringement under the Lanham Act, and for dilution of a trademark under New York’s anti-dilution act. When Nintendo’s summary judgment motion was granted in Southern District of New York, Universal appealed to the 2nd Circuit Court of Appeals.

Donkey Kong:


The Court of Appeals affirmed the decision of the district court. Even if Universal validly owned the trademark to King Kong, and the mark had acquired the “secondary meaning” required to be the basis of a successful action (issues not yet resolved at trial), the court nonetheless held that Nintendo’s Donkey Kong did not infringe upon the trademark. While there were undoubtedly resemblances between the two, there was no evidence to show that consumers would confuse Donkey Kong and King Kong. Universal introduced as evidence videogame reviews which shows that Donkey Kong’s theme “loosely evoked the film.” However, the Court held that the decisive question in trademark infringement is, “whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question.” Mushroom Markers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2nd Cir. 1978). Thus, even if purchasers are reminded of classic film, the trademark action would not succeed unless they actually thought they were buying a videogame sold by Universal.

Universal sought to show that the names were substantially confusing by conducting a telephone survey of 150 arcade and bowling alley owners who had purchased or leased a Donkey Kong game. 18% of the respondents answered “Yes” when asked, “To the best of your knowledge, was the Donkey Kong game made with the approval or under the authority of the people who produce the King Kong movies?” Universal argued that this survey proved confusion, yet the Court disagreed, reasoning that the question did not prove confusion with the item trademarked. Universal owned the name, character, and story of King Kong, but did not claim ownership rights to the film itself, thus the question was unfair because it did not connect Donkey Kong to the name King Kong. Further, the Court found the question to be unfairly leading, and that Universal’s survey was defective because it surveyed previous buyers instead of potential buyers.

Universal introduced further evidence, a letter from Nintendo stating that there was no connection between Donkey Kong and King Kong, to show that Nintendo implicitly admitted consumer confusion by writing the letter. The Court rejected this argument. Since the letter was written after the commencement of the lawsuit, it was clearly only meant to cut short Nintendo’s legal troubles. Besides, these statements would not be a substitute for actual evidence showing that there was no confusion about Donkey Kong’s source.

The Court also commented that Nintendo’s Donkey Kong paraphernalia, marketed separately from the videogame, had the potential to cause genuine confusion with King Kong. However, this argument was not raised by Universal, and the Court noted that it probably would not have been successful in this case. The videogame itself was the dominant marketing vehicle for any Donkey Kong toys, and these items had the same “total concept and feel” as the videogame. Therefore, the paraphernalia were just as unlikely to be confused as was the Donkey Kong game.

Finally, the Court addressed Universal’s request for an injunction under New York anti-dilution law. The Court used the same rationale to deny the injunction against Donkey Kong. Universal had failed to offer evidence that Donkey Kong had an “adverse effect on King Kong’s reputation” or would “deprive the mark of its distinctiveness.” Therefore, an injunction would be inappropriate, and the summary judgment in favor of Nintendo was affirmed.

Thanks to Brian Brisnehan for his assistance with the preparation of this case summary.
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