30 U.S.P.Q.2d 1401 (N.D. Cal. 1993)
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”).
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.
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.