Source: http://patentarcade.com/category/lawsuit/page/22
Timestamp: 2019-04-19 08:16:41+00:00

Document:
669 F.2d 852 (2nd Cir. 1982).
In late 1980, Konami Industry Co., Ltd. developed a video game titled “Scramble,” to which, in early 1981, Stern Electronics, Inc., a video game equipment manufacturer, obtained the exclusive right to distribute in North and South America. Stern quickly met with success after the start of sales on March 17, 1981, selling approximately 10,000 units and generating about $20 million in revenue within two months. In April 1981, the United States Copyright Office granted a copyright to Konami for the audiovisual work “Scramble,” based on video tape recordings of the game submitted by Konami.
Stern brought suit against Omni, and the trial court granted a preliminary injunction enjoining Omni from infringing the Stern’s copyright in “Scramble” and from using the trademark “SCRAMBLE” in connection with video games. Omni appealed, arguing that the sights and sounds of a video game should not be afforded copyright protection because the work is neither “fixed in any tangible medium of expression” nor “original” within the meaning of 17 U.S.C. § 102(a) because the sequence of images and sounds vary depending on the actions taken by the player during each time the game is played.
Midway Manufacturing Co. v. Omni Video Games, Inc.
Midway, the creator of the games Pac-Man, Rally-X, and Galaxian, sued Omni for copyright infringement of these games. During the course of this suit, Midway filed a motion for an ex parte hearing seeking to impound any infringing items in Omni’s possession. A single machine, holding an allegedly infringing version of Pac-Man, was seized from Omni and impounded. However, several days later, the District Court vacated this impound order and not only returned the potentially infringing machine to Omni, but also suppressed this machine from evidence admissible at trial and ordered Midway to pay the attorney’s fees incurred by Omni as they sought return of this machine.
Midway immediately appealed to the 1st Circuit Court of Appeals, requesting reversal of the decision disallowing impoundment of the machine, suppressing it as evidence, and the award of attorney’s fees. However, Midway’s brief and oral arguments failed to address the main legal issue of this case, appellate court jurisdicion under the “collateral order” doctrine.
Under the “collateral order” doctrine, an interlocutory appeal, or an appeal to a higher court before the lower court has issued a final judgment, is rarely allowable. Such an appeal is proper only when (1) the order being appealed is a final order on an issue of law, rather than judicial discretion, (2) the issue is separable from the other issues to be presented at trial, and (3) that the appeal cannot wait until after the final judgment of the court, because irreparable harm would be probable.
Thus, the question in this case was not whether Midway’s arguments had merit, but whether Midway could appeal while its trial was still in progress. The Court of Appeals held that Midway could not appeal the orders of the District Court until after final judgment of the case.
The Court reasoned that the interlocutory appeal was improper because no irreparable damage would be done if Midway was forced to wait until after trial to appeal. At this time, Midway appeared likely to find more evidence of copyright infringement during discovery, therefore the appeal might ultimately be unnecessary. Further, even if Midway were to lose at final judgment, and Omni’s allegedly infringing machine had since disappeared, Midway could still rely on the accounts of the individuals involved in the seizure. These individual accounts, in lieu of the machine itself, would be credible evidence because they were from the neutral agents of the court who had performed the seizure. These agents had also been accompanied by a Midway engineer who could verify the technical details of the machine.
The Court further noted that under 17 U.S.C. s 503(a), the statute authorizing impoundment, a judge “may” order impoundment if he deems it reasonable. The Court interpreted this statute to establish discretionary power on the trial judge to order an impoundment, which would make an interlocutory appeal improper on this issue. Similarly, the Court reasoned that the order to suppress the machine from admissibility at trial, and the award of attorney’s fees to Omni were discretionary and reparable decisions of the District Court. Therefore, the Court denied Midway’s interlocutory appeal, and allowed the trial to resume in District Court.
Thanks to Brian Brisnehan for his assistance in the preparation of this case summary.
The 8th Circuit Court of Appeals in St. Louis will hear arguments at 9 a.m. today in this case that may decide how the Digital Millennium Copyright Act, or DMCA, applies to computer software and the important practice of reverse engineering. As you may recall, the charges center on “bnetd,” free software developed to allow individuals to run servers for hosting online versions of popular Blizzard games such as “Diablo II” and “StarCraft.” Blizzard runs its own online service, Battle.net, for those games, but many people have claimed the service is erratic, buggy, and riddled with players who cheat.
Ahn et al. v. Midway Mfg Co. et al.
I always look forward to reading a video game case that starts with “Plaintiff Philip Ahn is a fourth degree black belt in Tae Kwon Do and has practiced martial arts for approximately twenty years. Plaintiff Elizabeth Malecki holds a degree in ballet and modern dance and is a professional dancer, actress, and aerobics instructor. Plaintiff Katalin Zamiar is a first degree black belt in Karate and has twelve years of experience.” (emphasis added) This is also an interesting case in that it is one of the few that deals with preemption of state law by the federal Copyright Act of 1976 (here, state law rights of publicity get preempted).
The games at issue are Mortal Kombat (MK) and Mortal Kombat II (MKII), and the defendants are Midway (copyright owner in MK and MKII), Williams Electronics (makes the coin-operated versions of MK and MKII), Acclaim Entertainment (developed version of MK and MKII for Nintendo and Sega game consoles), Nintendo of America (game console mfr and game publisher), and Sega of America (then a game console mfr and game publisher), each of which is well known in the industry.
Each plaintiff alleges that, on separate occasions between 1992 and 1993, they were approached by Midway’s agents about the possibility of using their images, names and performances for various characters in the coin-operated arcade format of MK and MKII. Plaintiff Malecki modeled the character Sonja Blade for MK (see above screenshot). Plaintiff Ahn modeled the character Shang Tsung in the coin-operated version of MKII, while plaintiff Zamiar modeled for three characters, Kitana, Mileena, and Jade, all of whom appeared in MKII. Midway videotaped each plaintiff’s movements, digitized the images, and incorporated the digitization into the coin-operated arcade games. The games were successful, and Sega and Nintendo soon released game console versions of MK and MKII.
As is generally the case, each plaintiff signed a release form with Midway at the time of the videotaping. This agreement authorized Midway to film each plaintiff in a martial arts performance in order to use that plaintiff’s name or likeness in connection with the manufacture, design, advertising, promotion, sale, and use of the coin-operated video games. The agreement also made Midway the sole and exclusive owner of all of plaintiffs’ copyrightable expression, defining any such expression as “works for hire,” and permitted Midway, at its sole discretion, to use plaintiffs’ likeness in any copyright obtained in connection with the coin-operated arcade games.
At this juncture in the case, the remaining issues are common law right of publicity, copyright infringement, and common law quantum meruit. The court initially dealt with the common law right of publicity, finding that the right of publicity claim was preempted by federal copyright law. A state law is preempted when 1) the work in which the right is asserted is fixed in a tangible form and falls within the subject matter of copyright under § 102 of the Copyright Act, and 2) the right asserted is equivalent to any of the rights specified in § 106 of the Copyright Act. In this case, plaintiffs’ images were videotaped and, as a result, became fixed in a tangible form (because plaintiffs’ consented to the videotaping, the definition of ‘fixed’ is satisfied). Further, the choreographic works were all original works of authorship, and choreographic works fall within the subject matter of copyright. Finally, applying the § 106 test, the right of publicity is equivalent to one of the rights in § 106 because it is infringed by the act of distributing, performing or preparing derivative works. The right of publicity claim was therefore preempted.
The crux of the plaintiffs’ argument with respect to copyright infringement was that each plaintiff was a joint author of both MK and MKII, and defendants therefore owed an accounting to each plaintiff. Under 17 U.S.C. § 104, a joint work is defined as “a work prepared by two or more authors with the intention that their contribution be merged into inseparable or interdependent parts of the unitary whole.” However, There was never any intent for the plaintiffs to be joint authors, as evidenced by the “work make for hire” clause in the contract, and Midway at all times had control and final authority over what was used in MK and MKII. In addition, the court applied the copyrightable subject matter test, where in addition to the presence of intent, a collaborative contribution will not produce a joint work, and a contribution will not obtain a co-ownership interest, unless the contribution represents original expression that could stand on its own as the subject matter of copyright.
In analyzing the plaintiffs contributions, the court stated that “it is apparent to the court, in viewing videotapes of the actual games, that the superhuman gyrations and leaps high into the air of the characters, including plaintiffs’ characters, are fanciful products of the imaginations of the creators of the source codes.” Thus, while the plaintiffs contributed their images and movements to the creation of the games, it was Midway alone that translated the ideas into a fixed, tangible expression entitled to copyright protection. The court thus denied the claim of copyright infringement.
Lastly, the court swept aside the remaining quantum meruit claim, noting that in Illinois a claim for quantum meruit cannot succeed where there is a valid, enforceable agreement between the parties, which there was in this case.
Accolade, Inc. v. Distinctive Software, Inc.
Accolade was seeking a preliminary injunction again Distinctive Software, which makes this case intriguing because Distinctive is a developer for whom Accolade sometimes acts as the publisher. It’s also intriguing because, unlike early video game copyright infringement cases, it primarily dealt not with the overall look and feel of video games, but rather with the underlying source code.
Distinctive developed the game The Duel—Test Drive II for Accolade, and Distinctive later developed the game Outrun (for publisher Sega) using some of the same underlying “computer codes” as were used in The Duel. There is no dispute as to whether the look and feel of the games were similar—they’re not. The issue was whether Distinctive’s re-use of computer code in Outrun was an infringement of the Accolade’s copyright in The Duel. As part of the contract between Accolade and Distinctive, Distinctive assigned certain copyrights to Accolade, as further discussed below.
There was no question that certain subroutines and computer code, originally used in The Duel, were reused in Outrun. Distinctive argued, however, that only standard libraries and routines were re-used to perform basic functions. Distinctive argued that similar codes are contained in many computer games, since they are necessary to perform functions such as “clearing the screen or operating the joystick.” Distinctive further asserted that these library codes are not game-specific, but were routinely transferred from one computer game to another so the program writer need not duplicate the task of developing them. Distinctive also asserted a fallback position that its licensing agreement with Accolade never contemplated the transfer of copyright in the library codes and, even if it did, the computer codes were mere mechanical devices rather than copyrightable expression, and thus not subject to copyright protection in the first place.
The court noted that, when seeking a preliminary injunction, a showing of a likelihood of success on the merits in a copyright case raises a presumption of irreparable harm. To succeed in showing copyright infringement, Accolade must show that it owned a valid copyright in The Duel, and that Distinctive infringed that copyright by copying protectable material into Outrun. The court cites back to Apple Computers Inc. v. Formula Int’l Inc. for the proposition that all portions of computer programs are the proper subject matter for copyright, even those that communicated only with the machine (computer) itself and not with human users. The underlying subroutines and functions are therefore proper statutory subject matter for copyrights, and are not merely mechanical devices.
Next the court analyzed what, if any, copyrights Distinctive transferred to Accolade. The court determined that the scope of copyright assigned to Accolade by Distinctive depended on the contract language. Specifically, the contract stated, at para. 5.5, that Accolade owns the copyright to the licensed product. “Licensed product” was defined, at para. 1.1, as “the concepts to be designed and implemented by the developer.” The final piece of the puzzle was para. 4.7 of the licensing agreement, which required Distinctive to deliver to Accolade the computer codes underlying the video game. Accolade argued that para. 4.7, in conjunction with paras. 5.5 and 1.1, operated to confer copyright to Accolade of all source code delivered by Distinctive to Accolade. The court disagreed, stating that “our reading of ¶ 4.7 at the present juncture, however, is that it requires [Distinctive] to deliver the underlying codes in addition to the licensed product. Thus, we believe that the licensing agreement transfers to Accolade the copyright to the concept and design of the video game but not the underlying source code.” (emphasis added).
In a last ditch effort, and with a little circular reasoning thrown in for good measure, Accolade argued that Outrun still infringed Accolade’s copyright in The Duel based on the theory that the two games were substantially similar because—yes, you guessed it—Distinctive used the same underlying subroutines and functions in Outrun as were used in The Duel (the same subroutines and functions for which the court just declined to find that Accolade owned the copyright). Needless to say, the court didn’t buy it, and denied Accolade’s motion for a preliminary injunction.
Nota Bene: This case came down to the contract language. While Distinctive won its day in court, had there been a more clearly written contract in the first place, Distinctive might have avoided this conflict altogether, or Accolade could have secured its rights up-front.
Midway Mfg. Co., v. Dirkschneider et al.
In one of the earliest decisions in a video game infringement case, the court issues a preliminary injunction in favor of Midway, to enjoin the defendants from infringing Midway’s copyrights in its coin-operated Pac-Man, Rally-X, and Galaxian electronic video games. The court also ruled in Midway’s favor with respect to Trademark and other Lanham Act claims.
Midway is a designer and manufacturer of coin-operated electronic video games. In the United States, Midway sells its video games to regional distributors who sell the video games to operators. The operators place the machines in arcades and other places for public use. Among other games, Midway owns the U.S. rights to Pac-Man, Rally-X, and Galaxian, which it acquired from Namco. As per the findings of fact in the decision, over 40,000 Galaxian games had been sold since February 1980, generating royalties of over $3.5M to Namco. Similarly, over 25,000 Pac-Man games and 2,500 Rally-X games have generated another $1M in royalties to Namco.
Each defendant makes or sells conversion kits for one or more of the Galactic Invader, Kamikaze III, Mighty Mouth or Rally-X games. Galactic Invader and Kamikaze III are nearly identical to Glaxian. Mighty Mouth is nearly identical to Pac-Man, and the defendants’ version of Rally-X is nearly identical to Midway’s version of Rally-X, and also uses the same name.
The court went through the usual analysis to determine whether a preliminary injunction was proper: 1) Probable success on the merits, 2) Irreparable harm and balancing of equities, and 3) The public interest. In determining success on the merits, the court analyzed, for each game, the validity of the copyright, and copying of protectable material. The court provided a thorough analysis in its determination that the copyrights are valid, especically in view of the fact that the court has no previous video game case law, controlling or otherwise, to draw from.
Midway Mfg. Co. v. Artic. Int’l, Inc., 704 F.2d 1009 (7th Cir. 1983), cert. denied, 464 U.S. 823 (1983).
Artic manufactured a computer chip to speed up the game play in Midway’s Galaxian video games. The Court of Appeals for the Seventh Circuit ruled this infringed on Midway’s copyright. The court ruled that the speeded up version of the video game constituted a derivative work. While Artic argued that speeding up the video game was like speeding up a phonograph record and so should not be considered a derivative work, the court rejected the argument based on the fact that there is a market for speeded up video games while there is no market for speeded up phonograph records. The court did acknowledge that the definition of derivative work had to be stretched to reach this result.
Artic sold circuit boards, manufactured by others, which contain electronic circuits including a microprocessor and memory devices (ROMs). These memory devices incorporate a computer program which is virtually identical to Williams’ program for the Defender game. The result is a circuit board “kit” which is sold by Artic to others and which, when connected to a cathode ray tube, produces audiovisual effects and a game almost identical to the Williams’ Defender game, including both the attract mode and the play mode. The play mode and actual play of Artic’s game, entitled “DEFENSE COMMAND,” is virtually identical to that of the Williams game, i.e., the characters displayed on the cathode ray tube including the player’s spaceship are identical in shape, size, color, manner of movement and interaction with other symbols. Also, the attract mode of the Artic game is substantially identical to that of Williams’ game, with minor exceptions such as the absence of the Williams name and the substitution of the terms “DEFENSE” and/or “DEFENSE COMMAND” for the term “DEFENDER” in its display.
Specifically, Artic argued that there is a lack of “fixation” because the video game generates or creates “new” images each time the attract mode or play mode is displayed, notwithstanding the fact that the new images are identical or substantially identical to the earlier ones. The court gave little weight to this argument, stating that the fixation requirement is met whenever the work is “sufficiently permanent or stable to permit it to be * * * reproduced, or otherwise communicated” for more than a transitory period, and that the original audiovisual features of the DEFENDER game repeat themselves over and over. The court also noted the unnsuccessful results of Artic’s same argument in other cases.
Artic also argued that the player’s participation withdraws the game’s audiovisual work from copyright eligibility because there is no set or fixed performance, and the player becomes a co-author of what appears on the screen. The court rejected this argument as well, noting that although there is player interaction with the machine during the play mode which causes the audiovisual presentation to change in some respects from one game to the next in response to the player’s varying participation, there is always a repetitive sequence of a substantial portion of the sights and sounds of the game, and many aspects of the display remain constant from game to game regardless of how the player operates the controls. In addition, there is no player participation in the attract mode which is displayed repetitively without change.
The court went on to reject Artic’s additional arguments in its defense, namely that Williams was trying to copyright a utilitarian object, and that copyright infringement only occurs when the source code is copied, not when the object code is copied. The court did, however, reverse the finding of willful infringement and remanded for further proceedings on that issue.
MARVEL ENTERPRISES, INC., et al.
The case is in the early stages, and the present ruling is on a motion to strike and motion to dismiss various claims. Marvel contends that NCSoft marketed, distributed and hosted a computer game that allows players to play online and create characters that are virtually identical in name, appearance, and characteristics to characters owned by Marvel. Marvels allegations include (1) direct, (2) contributory, and (3) vicarious copyright infringement under 17 U.S.C. § § 101, et seq., (4) direct, (5) contributory, and (6) vicarious registered trademark infringement under 15 U.S.C. § 1114, (7) direct, (8) contributory, and (9) vicarious common-law trademark infringement under 15 U.S.C. § 1125, (10) intentional interference with actual and prospective economic advantage, and (11) declaratory relief.
The motion to strike was granted-in-part, because the allegedly infringing works depicted in the exhibits and referred to in the pleadings were created by Plaintiffs themselves.
The motion to dismiss was granted as to Plaintiffs’ 4th, 5th, 6th, 8th, 9th, and 11th causes of action (the trademark-related issues, as well as the DJ claim).
Even though the trademark claims were dismissed, this will be a case to watch on the copyright side of the aisle, given that the scope of protection in copyrightable characters with respect to video games will inevitably be an issue. The specific Marvel characters involved inclue Captain America, Wolverine, Incredible Hulk, Magneto, The Thing, Phoenix, and Iron Man.
We’ll keep you posted as this case progresses.
ATARI, INC., Plaintiff, v. JS & A GROUP, INC., Defendant. 597 F.Supp. 5 (N.D. Ill. 1983) This appears to be the first case to analyze and consider 17 U.S.C. sec. 117, which provides that owners of copies of computer software can make copies of the software for “archival” purposes.
Atari manufactures and sells a home computer video game system, the “2600”, and game cartridges such as “CENTIPEDE” and “PAC-MAN” for use in the 2600. In order to play the games at home, the consumer connects the Atari computer to a television set and plugs his controls, or “joysticks”, into the computer. A game cartridge, which is usually purchased separately, is then inserted into the computer. The computer program in the cartridge causes the audiovisual aspects of the game to emanate from the television. Atari has copyrighted its video games as audiovisual works. In addition, it is seeking to register a copyright of the computer program for the CENTIPEDE game.
JS&A is a retailer of electronic products. It began to market its PROM BLASTER, a device for the duplication of those video games which are compatible with the Atari 2600 home computer. The PROM BLASTER has two slots, one for a 2600-compatible cartridge and one for a blank cartridge sold by JS&A for $10. In the words of JS&A’s advertisements, “[y]ou simply plug in your Atari or Activision cartridge in one slot and a blank cartridge in another, press a button and three minutes later you’ve created an exact duplicate.” JS&A markets the PROM BLASTER primarily as a means of making “back-up” copies of 2600-compatible games.
The court finds that JS&A’s PROM BLASTER does not make a backup copy to protect against “mechanical or electrical failure,” as is required by section 117, but instead protects against accidental physical dangers due to the nature of the unerasable and nonreprogrammable ROM inside each cartridge. This danger is no different than accidentally shredding a handwritten literary work, and is thus not protected under section 117. JS&A also argued that since they offered a series of 9 games that they permitted to be copied and sold without restriction, the device had substnatial noninfringing use (the court didn’t buy it, given the massive number of other games on the market for the Atari 2600 game console). There being no other substantial noninfringing use, the court grants Atari a preliminary injunction enjoining JS&A from selling the PRO BLASTER. Note that the court in Vault v. Quaid (case summary to follow later) declined to follow the reasoning in this case.
History of Video Game Case Law – New Every Tues.!
As you may (or may not) be aware, there are well over 30 major cases that deal with intellectual property protection of video games, and that’s just patents and copyrights. We have dissected these cases and, over the next few months, will be publishing an analysis of each case. New case analysis posts will be up every Tuesday, and the title will begin with “Case:”. You can also subscribe to our Atom/RSS site feed for automatic updates.
While RADgames patents are primarily directed to board games, the claims (at least on their face) are not all limited to physical creations, and could also apply to versions of the game implemented as a video game or computer game.
The case is Hasbro, Inc. v. Radgames, Inc., case no. 1:05-cv-02324-GEL, U.S. District Court for the Southern District of New York.

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