Opinion ID: 6985084
Heading Depth: 3
Heading Rank: 4

Heading: Effect of the use-upon the potential market ''

Text: We also find that the fourth factor, effect of the use upon the potential market, favors Conneetix. Under this factor, we consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also “whether unrestricted and widespread conduct of the sort engaged in by the defendant ... would result in a substantially adverse impact on the potential market” for the original. Acuff-Rose, 510 U.S. at 590, 114 S.Ct. 1164 (quoting 3 M. Nimmer & D. Nimmer, Nimmer on Copyright, § 13.05[A][4], at 13-102.61 (1993)). Whereas a work that merely supplants or supersedes another is likely to cause a substantially adverse impact on the potential market of the original, a transformative work is less likely to do so. See id. at 591, 114 S.Ct. 1164; Harper & Row, Publishers, Inc. v. Nation Enters., Inc.; 471 U.S. 539, 567-69, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). The district court found that “[t]o the extent that such a substitution [of Connectix’s Virtual Game Station for Sony PlayStation console] occurs, Sony will lose console sales and profits.” Order at 19. We recognize that this may be so. But because the Virtual Game Station is trans-formative, and does not merely supplant the PlayStation console, the Virtual Game Station is a legitimate competitor in the market for platforms on which Sony and Sony-licensed games can be played. See Sega, 977 F.2d at 1522-23. For this reason, some economic loss by Sony as a result of this competition does not compel a finding of no fair use. Sony understandably seeks control over the market for devices that play games Sony produces or licenses. The copyright law, however, does not confer such a monopoly. See id. at 1523-24 (“[A]n attempt to monopolize the market by making it impossible for others to compete runs counter to the statutory purpose of promoting creative expression and cannot constitute a strong equitable basis for resisting the invocation of the fair use doctrine.”)- This factor favors Connectix. The four statutory fair use factors must be “weighed together, in light of the purposes of copyright.” Acuff-Rose, 510 U.S. at 578, 114 S.Ct. 1164. Here, three of the factors favor Connectix; one favors Sony, and it is of little weight. Of course, the statutory factors are not exclusive, Harper & Roto, 471 U.S. at 560, 105 S.Ct. 2218, but we are unaware of other factors not already considered that would affect our analysis. Accordingly, we conclude that Connectix’s intermediate copying of the Sony BIOS during the course of its reverse engineering of that product was a fair use under 17 U.S.C. § 107, as a matter of law. With respect to its claim of copyright infringement, Sony has not established either a likelihood of success on the merits or that the balance of hardships tips in its favor. See Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 826 (9th Cir.1997), cert. denied, 523 U.S. 1118, 118 S.Ct. 1795, 140 L.Ed.2d 936 (1998). Accordingly, we need not address defenses asserted by Connectix under 17 U.S.C. § 117(a)(1) and our doctrine of copyright misuse. We reverse the district court’s grant of a preliminary injunction on the ground of copyright infringement. 11