Source: https://h2o.law.harvard.edu/cases/5103
Timestamp: 2019-04-25 04:03:58
Document Index: 638637909

Matched Legal Cases: ['§ 8', '§ 102', '§ 102', '§ 106', '§ 1', '§ 106', '§ 8', '§ 106', '§ 107', '§ 2', '§ 102', '§ 107', '§ 107', '§ 107', '§ 906']

Atari Games Corp. v. Nintendo of America Inc. | 975 F 2d 832 | September 10, 1992
975 F.2d 832 (1992)
Rehearing Denied; Suggestion for Rehearing Declined November 17, 1992.
[833] [834] [835] M. Laurence Popofsky, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., argued, for plaintiffs-appellants. With him on the brief were Robert S. Venning, Peter A. Wald, Kirk G. Werner, Robert B. Hawk, Michael K. Plimack and Dale A. Rice. Also on the brief were James B. Bear, Knobbe, Martens, Olson & Bear, of Newport Beach, Cal., and G. Gervaise Davis, II, Schroeder, Davis & Orliss, Inc., Monterey, Cal.
Rehearing Denied; Suggestion for Rehearing In Banc Declined November 17, 1992.
Nintendo's home video game system — the NES — includes a monitor, console, and controls. The console is a base unit into which a user inserts game cartridges. These cartridges contain the various game programs for the NES. As dictated by the program on the cartridge, the console controls an image on a video monitor, often a television set. In response to this video display, the user interacts with the system by manipulating the controls. Thus, by operating the controls in response to the video image, an individual plays the game on the cartridge in the NES console.
For instance, the game program may control a maze or set of obstacles on the video display. The user then manipulates the controls to guide an object through the maze or set of obstacles. The game program [836] then awards the user points for proficiently passing through the maze or obstacles.
Nintendo designed a program — the 10NES — to prevent the NES from accepting unauthorized game cartridges. Both the NES console and authorized game cartridges contain microprocessors or chips programed with the 10NES. The console contains a "master chip" or "lock." Authorized game cartridges contain a "slave chip" or "key." When a user inserts an authorized cartridge into a console, the slave chip in effect unlocks the console; the console detects a coded message and accepts the game cartridge. When a user inserts an unauthorized cartridge, the console detects no unlocking message and refuses to operate the cartridge. Nintendo's 10NES program thus controls access to the NES.
Atari first attempted to analyze and replicate the NES security system in 1986. Atari could not break the 10NES program code by monitoring the communication between the master and slave chips. Atari next tried to break the code by analyzing the chips themselves. Atari analysts chemically peeled layers from the NES chips to allow microscopic examination of the object code.[1] Nonetheless, Atari still could not decipher the code sufficiently to replicate the NES security system.
After deciphering the 10NES program, Atari developed its own program — the Rabbit program — to unlock the NES. Atari's Rabbit program generates signals indistinguishable from the 10NES program. The Rabbit uses a different microprocessor. The Rabbit chip, for instance, operates faster. Thus, to generate signals recognizable by the 10NES master chip, the Rabbit program must include pauses. Atari also programmed the Rabbit in a different language. Because Atari chose a different microprocessor and programming language, the line-by-line instructions of the 10NES and Rabbit programs vary. Nonetheless, as the district court found, the [837] Rabbit program generates signals functionally indistinguishable from the 10NES program. The Rabbit gave Atari access to NES owners without Nintendo's strict license conditions.
The Ninth Circuit sustains preliminary injunctions if the movant shows "either a likelihood of success on the merits and the possibility of irreparable injury, or that serious questions going to the merits were raised and the balance of hardships tips sharply in its favor." Johnson Controls v. Phoenix Control Sys., 886 F.2d 1173, 1174 (9th Cir.1989); accord Ocean Garden v. Marktrade Co., 953 F.2d 500, 506 (9th Cir. 1991). In a claim for copyright infringement, "a showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm." Johnson Controls, 886 F.2d at 1174.
The Ninth Circuit vacates a preliminary injunction "only if the district court abused its discretion, or based its decision on an erroneous legal standard or clearly erroneous findings of fact." Id.; accord Ocean Garden, 953 F.2d at 502; Associated Gen. Contractors of Cal. v. Coalition for Economic Equity, 950 F.2d 1401, 1405 (9th Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1670, 118 L.Ed.2d 390 (1992). The Ninth Circuit reviews "de novo the correctness of the legal standards employed by the district court in evaluating the plaintiff's likelihood of success on the merits." Associated Gen. Contractors, 950 F.2d at 1405.
Thus, following Ninth Circuit case-law, this court must determine whether Nintendo has shown a likelihood of success on its prima facie case of copyright infringement and a likelihood that it will overcome Atari's copyright misuse defense. See H.H. Robertson, Co. v. United Steel Deck, 820 F.2d 384, 388-89 (Fed.Cir.1987) (entitlement to preliminary injunction "is determined in the context of presumptions and burdens that inhere at trial on the merits"); Gutierrez v. Municipal Court of the Southeast Judicial District, County of Los Angeles, 838 F.2d 1031, 1038-45 (9th Cir.1988); Half Moon Bay Fishermans' Marketing v. Carlucci, 857 F.2d 505, 507-12 (9th Cir.1988); Hale v. Department of Energy, 806 F.2d 910, 915-18 (9th Cir. 1986).
To 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. Feist Publications v. Rural Tel. Serv. Co., ___ U.S. ___, 111 S.Ct. 1282, 1296, 113 L.Ed.2d 358 (1991); Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1472 (9th Cir.1992); Johnson Controls, 886 F.2d at 1175. The parties do not dispute that Nintendo owns the 10NES copyright. Therefore, Nintendo need only prove that Atari copied protectable expression from the 10NES program.
Nintendo can show copying by proving that Atari made literal copies of the 10NES program. Alternatively, Nintendo can show copying by proving that Atari had access to the 10NES program and that Atari's work — the Rabbit program — is substantially [838] similar to Nintendo's work in ideas and the expression of those ideas. Johnson Controls, 886 F.2d at 1176; Landsberg v. Scrabble Crossword Game Players, 736 F.2d 485, 488 (9th Cir.), cert. denied, 469 U.S. 1037, 105 S.Ct. 513, 83 L.Ed.2d 403 (1984). The parties do not dispute that Atari had access to the 10NES program. Thus, to show non-literal copyright infringement, Nintendo must ultimately prove substantial similarity between the 10NES and the Rabbit in protectable expression. To determine whether Nintendo is likely to so prove, this court must first distinguish protectable expression from the unprotected elements of the 10NES program. Johnson Controls, 886 F.2d at 1175.
Article I, § 8, cl. 8, of the Constitution gives Congress power "[T]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." The Constitution thus gives Congress the authority to set the parameters of authors' exclusive rights. Sony Corp. of Am. v. Universal City Studios, 464 U.S. 417, 429, 104 S.Ct. 774, 782, 78 L.Ed.2d 574 (1984)[2]. The Copyright Act of 1976, in general, protects "original works of authorship fixed in any tangible medium of expression." 17 U.S.C. § 102(a) (1988). To explain the term "works of authorship," the Act sets forth a statutory list of categories within the term. The first category on this non-exclusive list is "literary works." Id.
The 1976 Act, however, sets limits on the scope of copyright protection. In the words of the Supreme Court, "[t]he mere fact that a work is copyrighted does not mean that every element of the work may be protected." Feist, ___ U.S. at ___, 111 S.Ct. at 1289; accord Harper & Row, Publishers v. Nation Enter., 471 U.S. 539, 547-48, 105 S.Ct. 2218, 2224, 85 L.Ed.2d 588 (1985). Section 102(b) of title 17 states:
Some concern has been expressed lest copyright in computer programs should extend protection to the methodology or processes adopted by the programmer, rather than merely to the "writing" expressing [839] his ideas. Section 102(b) is intended, among other things, to make clear that the expression adopted by the programmer is the copyrightable element in a computer program, and that the actual processes or methods embodied in the program are not within the scope of the copyright law.
In addition, copyright protection does not "extend to any ... procedure, process, system [or] method of operation." 17 U.S.C. § 102(b). In conformance with the standards of patent law, title 35 provides protection for the process or method performed by a computer in accordance with a program. See Arrhythmia Research Technology v. Corazonix Corp., 958 F.2d 1053 (Fed.Cir.1992). Thus, patent and copyright laws protect distinct aspects of a computer program. See Baker v. Selden, 101 U.S. 99, 103, 25 L.Ed. 841 (1879). Title 35 protects the process or method performed by a computer program; title 17 protects the expression of that process or method. While title 35 protects any novel, nonobvious, and useful process, title 17 can protect a multitude of expressions that implement that process. If the patentable process is embodied inextricably in the line-by-line instructions of the computer program, however, then the process merges [840] with the expression and precludes copyright protection. See Formula Int'l, 725 F.2d at 525; Apple Computer v. Franklin Computer, 714 F.2d 1240, 1253 (3d Cir. 1983), cert. dismissed, 464 U.S. 1033, 104 S.Ct. 690, 79 L.Ed.2d 158 (1984).
Next, this court must determine whether the district court correctly determined that Nintendo has shown sufficient evidence that Atari either literally copied the 10NES or had access to the 10NES and produced a substantially similar copy. Nintendo argues that Atari's unauthorized acquisition of a copy from the Copyright Office literally infringed the 10NES program. Nintendo also argues that copies of the 10NES program made in the reverse engineering process literally infringe the 10NES copyright. Finally, Nintendo argues that Atari's Rabbit program is substantially similar to the 10NES and therefore infringes the 10NES copyright. A single copy is sufficient to support a claim of copyright infringement. See 17 U.S.C. § 106; 1 U.S.C. § 1 (1988) ("words imparting the plural include the singular"); S.Rep. No. 94-473 at 58 (1975); H.R.Rep. No. 94-1476 at 61 (1976). Even for works warranting little copyright protection, verbatim copying is infringement. [841] See Data East USA v. Epyx, Inc., 862 F.2d 204, 209 (9th Cir.1988); Sid & Marty Krofft Television Prods. v. McDonald's Corp., 562 F.2d 1157, 1168 (9th Cir.1977).
Id. Under this regulation, Atari requested the 10NES program in 1988.[3]
Section 201.2(d)(2) refers to "litigation, actual or prospective." The term "prospective litigation," as used in the regulation, means more than a subjective expectation of litigation at some unspecified future time. Otherwise, anyone desiring a copy of a deposited work would only need to allege a speculative future dispute. Instead, the regulation repeatedly refers to and requests information about an actual controversy between parties. This language, in context, clarifies that the regulation requires an objective, reasonable apprehension of litigation.[4]
In this case, Nintendo is likely to show that Atari had no reasonable apprehension of litigation in 1988. In fact, Atari was not in a position to infringe before acquiring the 10NES program from the Copyright Office. Atari was Nintendo's licensee in 1988. Atari had no product, allegedly infringing or not, to perform the function of the 10NES program. Without any allegedly infringing program at all in 1988, Atari had no reason to fear a copyright infringement suit from Nintendo. Therefore, no controversy at all existed when Atari acquired the 10NES program from the Copyright Office. Without an actual controversy, Atari's acquisition of [842] the 10NES source code violated Copyright Office rules. Reproduction of an unauthorized copy from the Copyright Office violates 17 U.S.C. § 106(1).
Atari made copies of the 10NES program in its attempts to "reverse engineer" Nintendo's program. Atari made intermediate copies in two very different settings. Before obtaining the Copyright Office copy of 10NES, Atari tried to understand the program. Atari stripped some 10NES chips and copied portions of the 10NES object code from the chips.[5]
The Copyright Act encourages authors to share their creative works with society. The Constitution sets forth the purpose of copyright protection as the promotion of "the Progress of Science", not the rewarding of authors. U.S. Const. art. I, § 8, cl. 8; Feist, ___ U.S. at ___, 111 S.Ct. at 1290; see also, Harper & Row, 471 U.S. at 546, 105 S.Ct. at 2223; Sony Corp., 464 U.S. at 429-30, 104 S.Ct. at 782-83; Twentieth Century Music v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2044, 45 L.Ed.2d 84 (1975); Fox Film Corp. v. Doyal, 286 U.S. 123, 127, 52 S.Ct. 546, 546, 76 L.Ed. 1010 (1932). The Copyright Act thus balances "the interests of authors ... in the control and exploitation of their writings ... on the one hand, and society's competing interests in the free flow of ideas, [and] information ... on the other hand." Sony Corp., 464 U.S. at 429-30, 104 S.Ct. at 782-83. Thus, while providing exclusive rights to expression, the Act "encourages others to build freely upon the ideas and information conveyed by a work." Feist, ___ U.S. at ___, 111 S.Ct. at 1290. The Act grants authors enumerated exclusive rights, see 17 U.S.C. § 106, subject to limitations, see 17 U.S.C. §§ 107-112.
The author does not acquire exclusive rights to a literary work in its entirety. Under the Act, society is free to exploit facts, ideas, processes, or methods of operation in a copyrighted work. See, e.g., Feist, ___ U.S. at ___, 111 S.Ct. at 1289-90. To protect processes or methods of operation, a creator must look to patent laws. See Bonito Boats v. Thunder Craft Boats, 489 U.S. 141, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989); Arrhythmia Research, 958 F.2d at 1053; see also The Law & Business of Computer Software, § 2.07 (D.C. Toedt III ed. 1991). An author cannot acquire patent-like protection by putting an idea, process, or method of operation in an unintelligible format and asserting copyright infringement against those who try to understand that idea, process, or method of operation. See, e.g., Feist, ___ U.S. at ___, 111 S.Ct. at 1290; 17 U.S.C. § 102(b). 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 operation.
This permission appears in the fair use exception to copyright exclusivity. Section 107 of the Copyright Act states that "fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as criticism, comment, news reporting, teaching ... scholarship or research" [843] is not infringement. 17 U.S.C. § 107. The legislative history of section 107 suggests that courts should adapt the fair use exception to accommodate new technological innovations. H.R.Rep. No. 1476, 94th Cong., 2d Sess. 66 (1976), reprinted in U.S.C.C.A.N. 5659, 5679-80; 17 U.S.C. § 107; see also Twentieth Century, 422 U.S. at 156, 95 S.Ct. at 2044 ("When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of [its] basic purpose.").
New Kids on the Block v. News Am. Publishing, 971 F.2d 302, 307 n. 6 (9th Cir. 1992). See also Harper & Row, 471 U.S. at 549, 105 S.Ct. at 2224 (fair use implied when "promoting progress of science and the useful arts").
Section 107 also requires examination of the nature of the work when determining if a reproduction is a fair use. 17 U.S.C. § 107(2). When the nature of a work requires intermediate copying to understand the ideas and processes in a copyrighted work, that nature supports a fair use for intermediate copying. Thus, reverse engineering object code to discern the unprotectable ideas in a computer program is a fair use. See Feist, ___ U.S. at ___, 111 S.Ct. at 1290, ("[C]opyright does not prevent subsequent users from copying from a prior author's work those constituent elements that are not original — for example ... facts, or materials in the public domain — as long as such use does not unfairly appropriate the author's original contributions."); cf. New Kids, at 307 n. 6; contra Sega Enter. v. Accolade, Inc., 785 F.Supp. 1392, 1395-96 (N.D.Cal.1992).
Reverse engineering, untainted by the purloined copy of the 10NES program and necessary to understand 10NES, is a fair use. An individual cannot even observe, let alone understand, the object code on Nintendo's chip without reverse engineering. [844] Atari retrieved this object code from NES security chips in its efforts to reverse engineer the 10NES program. Atari chemically removed layers from Nintendo's chips to reveal the 10NES object code. Through microscopic examination of the "peeled" chip, Atari engineers transcribed the 10NES object code into a handwritten list of ones and zeros. While these ones and zeros represent the configuration of machine readable software, the ones and zeros convey little, if any, information to the normal unaided observer. Atari then keyed this handwritten copy into a computer. The computer then "disassembled"[6] the object code or otherwise aided the observer in understanding the program's method or functioning. This "reverse engineering" process, to the extent untainted by the 10NES copy purloined from the Copyright Office, qualified as a fair use.
Even in the absence of verbatim copying, a copyright owner may show infringement "by showing that the infringer had access to the work and that the two works are substantially similar." Shaw v. Lindheim, 919 F.2d 1353, 1356 (9th Cir. 1990); accord Baxter v. MCA, Inc., 812 F.2d 421, 423 (9th Cir.), cert. denied, 484 U.S. 954, 108 S.Ct. 346, 98 L.Ed.2d 372 (1987). This doctrine prevents a plagiarist from escaping infringement by making immaterial changes in the protected work.
In applying this test, the district court correctly considered expert testimony recounting striking similarities between the Rabbit and 10NES programs. Moreover, the trial court detected similarities between the programs beyond the similarities necessary to accommodate the programming environment, or similarities necessary to embody [845] the unprotectable idea, process, or method of the 10NES program.
Specifically, the district court noted that the Rabbit program incorporates elements of the 10NES program unnecessary for the chip's performance. The 10NES slave chip performs some functions beyond unlocking the NES console. For example, the 10NES slave chip shuts down upon receipt of an erroneous message from a master chip. The Rabbit program too contains this feature. This disabling feature is unnecessary to achieve Atari's stated purpose — unlocking the NES console.
In another example, the district court noted that Nintendo modified its 10NES slave chip program in 1987. This modification deleted some instructions from the original 10NES program. Nonetheless the Rabbit program contains instructions equivalent to those deleted from the original 10NES program. These unnecessary instructions strongly suggest that the Rabbit program is substantially similar to the 10NES program. See, e.g., M. Kramer Mfg. Co. v. Andrews, 783 F.2d 421, 446 (4th Cir.1986) ("Courts have consistently viewed `common errors' as strongest evidence of copying."); E.F. Johnson Co. v. Uniden Corp. of Am., 623 F.Supp. 1485, 1496 (D.Minn.1985) ("The existence of the identical unnecessary instructions in both codes is strong proof of substantial similarity."); SAS Inst. v. S & H Computer Sys., 605 F.Supp. 816, 824, 826 (M.D.Tenn.1985) (inclusion of unnecessary statement "explained only as a result of slavish copying of structural detail").
[846] The district court granted Nintendo's motion for preliminary injunction in response to which Atari asserted the copyright misuse defense. Atari contends Nintendo's copyright misuse should prevent copyright enforcement. The district court did not discuss copyright misuse in its order granting the preliminary injunction. However, on Atari's earlier motion for summary judgment, the court held, as a matter of law, that Nintendo did not misuse its copy-right:
Several circuit courts, including the Ninth Circuit, have entertained defenses of copyright misuse. Lasercomb Am. v. Reynolds, 911 F.2d 970 (4th Cir.1990); United Tel. Co. v. Johnson Publishing Co., 855 F.2d 604, 610-12 (8th Cir.1988); Supermarket of Homes v. San Fernando Valley Bd. of Realtors, 786 F.2d 1400, 1408 (9th Cir.1986); F.E.L. Publications v. Catholic Bishop, 214 U.S.P.Q. 409, 413 (7th Cir.), cert. denied, 459 U.S. 859, 103 S.Ct. 131, 74 L.Ed.2d 113 (1982); Edward B. Marks Music v. Colorado Magnetics, 497 F.2d 285, 290 (10th Cir.1974), cert. denied, 419 U.S. 1120, 95 S.Ct. 801, 42 L.Ed.2d 819 (1975); Broadcast Music v. Moor-Law, 527 F.Supp. 758, 772 (D.Del.1981), aff'd without opinion, 691 F.2d 490 (3rd Cir.1982); Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852, 865 (5th Cir. 1979), cert. denied, 445 U.S. 917, 100 S.Ct. 1277, 63 L.Ed.2d 601 (1980). Only one circuit has sustained the defense. Lasercomb, 911 F.2d at 970. Although no Ninth Circuit case has applied the defense to prevent enforcement of a copyright infringement claim, the Ninth Circuit suggests that, under the appropriate factual setting, copyright misuse may be a viable defense against a claim of copyright infringement. Supermarket of Homes, 786 F.2d at 1408; see also, Sega Enter., at 1399.
In the absence of any statutory entitlement to a copyright misuse defense, however, the defense is solely an equitable doctrine. Any party seeking equitable relief must come to the court with "clean hands." Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 147, 78 L.Ed. 293 (1933). The Ninth Circuit has noted that the doctrine of unclean hands can also preclude the defense of copyright misuse. Supermarket of Homes, 786 F.2d at 1408. The district court states, "Atari lied to the Copyright Office in order to obtain the copyrighted 10NES program." Atari Games v. Nintendo of Am., Nos. 88-4805, 89-0027, 89-0824, slip op. at 14, 1991 WL 57304 (N.D.Cal. Apr. 11, 1991). This record supports the district court's conclusion and suggests that Atari's unclean hands prevent it from invoking equity. Thus, even if the Ninth Circuit permits an equitable copyright misuse defense, Atari appears ineligible to invoke the defense. This court discerns no reversible error in the district [847] court's assessment of Nintendo's likelihood of success on the merits of its copyright infringement claim.
[1] Object code is machine readable, binary code, represented on paper as a series of ones and zeroes. In actuality, those ones and zeroes represent "on" and "off" states of switches on a computer chip. In the 10NES chips, the object code, contained in chip memories, is implemented when the chips are operational. When operational, the chips generate a series of "ons" and "offs" in a particular sequence. That results in a pulsating signal which conveys messages to the computer.
[2] For a thorough historical presentation of Congress's copyright enactments, see Lotus Development v. Paperback Software International, 740 F.Supp. 37, 47-51 (D.Mass.1990).
[3] In 1991, the Copyright Office circulated the following notice:
56 Fed.Reg. 12,957 (1991).
[4] Patent law applies an analogous test to determine an actual controversy. See Sony Corp. of Am. v. Universal City Studios, 464 U.S. 417, 439, 104 S.Ct. 774, 787, 78 L.Ed.2d 574 (1984) (appropriate to refer to patent case law in copyright cases "because of the historic kinship between patent law and copyright law"). In the patent declaratory judgment context, a two-prong analysis defines an actual controversy. Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 634 (Fed. Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 658, 116 L.Ed.2d 749 (1991). First, an alleged patent infringer must have infringed or be in a position to infringe. Id. Second, the patentee's "conduct must create an objectively reasonable apprehension on the part of the accused infringer that the patent holder will initiate suit if the allegedly infringing activity continues." Id.
[5] The Semiconductor Chip Protection Act of 1984 permits, in some limited circumstances, reverse engineering to reproduce a mask work. 17 U.S.C. § 906 (1988). This Act, while supporting reverse engineering to help disseminate the ideas embodied in a mask work, does not apply in this case. Atari did not reproduce or copy Nintendo's chip or mask work. In fact, Atari used an entirely different chip. Atari instead allegedly copied the program on Nintendo's chip. Therefore, the 1984 Act does not apply.
[6] Computer programs are normally written in a high-level language such as C or FORTRAN. Once written, the program is translated from the high-level language to machine-readable object code. This translation process, called compiling, is performed by a computer as instructed by a compiling program. As mentioned previously, the idea or process expressed in a program is not easily discernible from object code. Object code is disassembled to facilitate understanding the idea or process expressed. Disassembly is basically the reverse of compilation. Object code is translated via a disassembly program to a higher, more intelligible language called assembly language.
Decision date: 1992-09-10
Citations: 975 F 2d 832
Docket Numbers: 91-1293.