# Appendix — North American Philips Consumer Electronics Corp. v. Atari, Inc.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0126%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1982
- **Citation:** 459 U.S. 880

## Text

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in the
Anited States Court of Appeals
Bar the Sruenth Cirrutt

No. 81-2920

ATARI, a Delaware corporation, and Mipway Mrc.
Co., an corporation,

ARGUED JANUARY 19, 1982—Decipep Marcu 2, 1982

Before Woop and EscHpacu, Circuit Judges, and
Gorpon, District Judge.*

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> Before the Honorable

SUMER ELECTRONICS CORP., a George N. Leighton,
Tennessee and PARK | United States District Judge

In accordance with the Opinion and Order, each dated
March 2, 1982, of the United States Court of Appeals for the
Seventh Circuit in Appeal No. 81-2920 in this matter ( copies of
which are attached heretc ), defendants, North American Phil-
ips Consumer Electronics Corp. ( North American), and Park
Television, d/b/a Park Magnavox Home Entertainment Center
(Park), and all of their respective officers, agents, servants,
employees, and attorneys, and those persons in active concert or
participation with them who receive actual! notice of the order
by personal service or otherwise, are hereby enjoined and
forming, selling, or offering for sale a video game cartridge
known as “K. C. Munchkin”, or in any other manner violating
plaintiffs’ exclusive rights under the copyright in the Pac-Man
audiovisual work pending final disposition of Appeal No. 81-
2920. This injunction shall be supervised by this court in
accordance with the order of the United States Court of

Appeals for the Seventh Circuit. This order shall be effective
upon the filing with the Clerk of the United States District
Court for the Northern District of Illinois by plaintiffs of a boad
in the amount of One Hundred Thousand Dollars
($100,000.00).

Dated: March 5, 1982

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RELEVANT PARTS OF STATUTES
INVOLVED

Copyright Act of 1976, 17 U.S.C. §§ 101 ef seg.

$101. Definitions
As used in this title, the following terms and their variant
forms mean the following:

“Audiovisual works” are works that consist of a series of
related images which are intrinsically intended to be shown by
the use of machines, or devices such as projectors, viewers, or
electronic equipment, together with accompanying sounds, if
any, regardless of the nature of the material objects, such as
films or tapes, in which the works are embodied.

§ 102. Subject matter of copyright; In general
(a) Copyright protection subsists, in accordance with this
title, in original works of authorship fixed in any tangible
medium of expression, now known or later developed, from
which they cen be perceived, reproduced, or o:herwise commu-
nicated, either directly or with the aid of a machine or device.
Works of authorship include the following categories:
(1) literary works;
(2) musical works, including any accompanying
words;
(3) dramatic works, including any accompanying
music;

(4) pantomimes and croreographic works;
. (5) paccorial, graphic, and sculptural works;

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(6) motion pictures and audiovisual works; and
(7) sound recordings.

(b) In no case does copyright protection for an original
work of authorship extend to any idea, procedure, process,
system, method of operations, concept, principle, or discovery,
regardless of the form in which it is described, explained,
illustrated, or embodied in such work.

§ 501. Infringement of copyright

(a) Anyone who violates any of the exclusive rights of the
copyright owner as provided by sections 106 through 118, or
who imports copies or phonorecords into the United States in
violation of section 602, is an infringer of the copyright.

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

ATARI, INC.
v. CIVIL NO. Y-81-803

Benjamin Lipsitz, Esquire, Baltimore, Maryland, and Arthur J
Levine, Esquire, Washington, D.C.. counsel for the defendant.

YOUNG, United States District Judge

MEMORANDUM OPINION AND ORDER

Atari, Inc., holder of a copyright on the electronic video
game “Asteroids,” seeks to enjoin defendants Amusement
World, Inc., and its president Stephen Holniker, from manufac-
turing or distributing any product in violation of plaintiff's
copyright.

$125,000,000 making “Asteroids” the largest-selling video

corporation employing a total of five people. Its business has
consisted largely of repair work on coin-operated games, but

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recently it has attempted to enter the lucrative video business by
producing and distributing a video game called “Meteors.”

On March 13, 1981, plaintiff first became aware that
defendants were selling “Meteors,” which plaintiff alleges is
substantially similar to “Asteroids.” On March 18, 1981, plain-
tiff sent defendants a cease and desist letter, which defendants
have ignored. Plaintiff then filed suit and now seeks injunctive
relief.

THE GAMES

Each of the two video games is contained in a cabinet with
a display screen and a control panel for the player. The course
of the game is controlled by a computer program, which has
been chemically implanted to printed circuit boards inside the
cabinet. When no one is playing the game, the machine is in
the so-called “attract mode,” in which there appears on the
display screen an explanation of the. game and/or a short
simulated game sequence, which is intended to attract custom-
ers. Placing a coin in the machine causes it to go into “play
mode,” in which the computer program generates scenes of
dangerous situations, to which the player responds by pressing
various buttons on the control panel.

The principle of the two games is basically the same. The
player commands a spaceship, represented by a small symbol
that appears in the center of the screen. During the course of
the game, symbois representing various sized rocks drift across
the screen and, at certain intervals, symbols representing enemy
spaceships enter and move around the screen and attempt to
shoot the player’s spaceship. Four control buttons allow the
player to rotate his ship clockwise or counterclockwise, to move
the ship forward, and to fire a weapon. A variety of appropri-
ate sounds accompany the firing of weapons and the destruction
of rocks and spaceships.

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Many of the design features of the two games are similar
or identical. In both games:

(1) There are three sizes of rocks.

(2) The rocks appear in waves, each wave being
composed initially of larger rocks.

(3) Larger rocks move more slowly than smaller ones.

(4) When hit, a large rock ¢plits into two medium
rocks, a medium rock splits into two small ones, and a
small rock disappears.

(5) When a rock hits the player’s spaceship, the ship
’ is destroyed.
(6) There are two sizes of enemy spaceships.

(7) The larger enemy spaceship is an easier target
than the smaller one.

(8) The player’s ship and enemy ships shoot projec-
tiles.

(9) When a spaceship’s projectiles hit a rock or
another ship, the latter is destroyed immediately.

(10) The destruction of any rock or spaceship is
accompanied by a symbol of an explosion.

(11) When an enemy spaceship is on the screen, the
player hears a beeping tone.

(12) There is a two-tone beeping noise in the
background throughout the game, and the tempo of this
noise increases as the game progresses.

(13) The player gets several spaceships for his quar-
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scenes portraying sex between male slaveowners and fe-
male slaves and the resentment of female slave owners . . .

slave owners complaining about the high price of slaves

Id. at 45 and n.7.

In Franklin Mint Corp. v. Nat. Wildlife Art Exchange, 575
F.2d 62 (3d Cir. 1978), cert. denied, 439 U.S. 880, the court
considered two paintings of a pair of cardinals. The court noted
that:

The court also observed that the nature of the idea, namely a
painting of cardinals, necessarily limits the forms of expression
that can be utilizec in articulating the idea:

Expert testimony described conventions in ornithological

art which tend to limit novelty in depictions of the birds.
Given this, the court said that “[a] pattern of differences is
sufficient to establish a diversity of expression rather than only
an echo,” and the court affirmed the lower court holding of no
copyright infringement.

This Court has held that plaintiff is entitled to a copyright
on “Asteroids,” because the idea of a videogame in which the
player shoots his way through a barrage of space rocks is an
idea that is sufficiently general so as to permit more than one

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form of expression. However, under the doctrine set forth
above, the Court must be careful not to interpret plaintiff's
copyright as granting plaintiff a monopoly over those forms of
expression that are inextricably associated with the idea of such
a videogame. Therefore, it is not enough to observe that there
are a great number of similarities in expression between the two
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musical and sound effects. A game may be copied by elec-
tronically copying the PROMSs. (Tr. 55-56; Ex. #17, 42; Ex.
#25, pp. 29-30, #1; Ex. #26, pp. 25-31).

9. Prior to the insertion of 4 coin, the video games operate
in a repeating attract mode which summarizes each game for
prospective players. When a coin is deposited and the start
button is depressed, the shifts into the play mode. In the
play mode, some of playing sumbois or images on the
screen are responsive to operation of the player control panel,
and others move in a predetermined sequence and interact with
the player-contolied images in a preset manner. [ Ex. #17, 13;
Ex. #26, p. 36].

10. The market for audiovisual games is very unpredict-
able. A game’s commercial popularity often terminates abrupt-
ly after a short period of time. The average game generally
would lose its 4 peai within a year of being introduced on the
market. [Ex. #17. ¥ 12}.

Il. The elements of the Galaxian video game appear on a
background star pattern consisting of twinkling colored lights
that roll from the top of the screen to the bottom. The game
involves a missile-firing rocket ship operated by the player, plus
a formation of enemy aliens. The aliens are arranged in a
convoy of five horizontal rows. There are four denominations
or ranks of aliens, with the highest ranking nearest the player’s
alien is shaped like a rocket ship, but the other ranks have
flapping wings. Individual aliens unpredictably invert and
sweep down to bomb the player’s ship. Sometimes the alien
attack consists of miniformations involving the alien flagship or
chief, as well as flying alien escorts. Whenever a ship is
destroyed, a bright explosion appears on the screen, with
appropriate sound effects. The player’s score is measured by
the number and rank of aliens destroyed. {Ex. #17, 45; Ex.
#18}.

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12. The Galazian video game was created by Namco in
1979, and was first published by Namco on September 15,
1979, in Japan. Midway became aware of Galaxian at a
private showing at Namco’s offices in Tokyo on October 17,
1979. Because of the game's unique features, Midway decided
to acquire rights in the game. (Tr. 82-83; Exs. #11, #12; Ex.
#17, 15).

13. In an assignment dated February 2, 1980, Namco
assigned all United States rights in Galaxian to Midway. The
considerxtion for this assignment was the payment of substan-
tial advances and royalties. The amount of payments made
through March of 1981 has amounted to approximately 3.5
million dollars {Tr. 83-84; Ex. #10].

14. Since February, 1980, the plaintiff has sold in excess of
game has a notice of Midway's claim of copyright, the name of
the game, and Midway’s name. The notice is affixed near the
screen of the video game. [Tr. 99-100, 107; Ex. #17, 1 11; Ex.
#18).

15. The plaintiff made video tape recordings of the
audiovisual presentation of the Galaxian play and attract
modes. The video tapes were made in Franklin Park, Illinois.
The video tapes and applications to register the copyright on
the Galaxian audiovisual work were submitted by Midway to

the Copyright Office. A certificate of copyright registration, No. _

PAS59-977, effective March 6, 1980, was issued for the audiovi-
sual work found in the Galaxian’s play mode. A second
certificate of registration, No. PA68-323, effective May 23,
1980, was issued for the audiovisual work found in the Gala-
xian’s attract mode. [Tr. 94-95; Ex. #11; Ex. #12). —

16. The Pac-Man video game centers on a maze which
covers the entire screen. The player guides the Pac-Man
character through the maze. Points are scored when the Pac-
Man eats dots in his path. Four ghost monsters, Inky, Blinky,

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Pinky and Clyde, chase after the Pac-Man, trying to capture
and deflate him. The Pac-Man can counterattack by eating a
big power capsule that enables him to overpower the monsters
for additional scores, After all the dots are gobbled up, the
screen is cleared, and the Pac-Man game continues for another
round. Each round or rack features a special fruit target in the
maze, which, if eaten, earns bonus points. Audio and musical
effects accompany the play of the game. [Tr. 113; Ex. #17, 17:
Ex. #19}.

17. The Pac-Man video game was created by Namco in
1980 and was first published by Namco on May 22, 1980, in
Japan.* At the invitation of Namco, Midway representatives
first viewed the Pac-Man game in Japan on August 13, 1980.
This showing convinced Midway’s representative that the
game's extraordinary presentation made it a good target for
acquisition. [Tr. 84-85; Ex. #15; Ex. #17, 16].

18. An assignment dated October 10, 1980, gave Midway
all United States rights in Pac-Man. The consideration for this
assignment was the payment of substantial advances and
royalties. To date, the plaintiff has paid over | million dollars

for use of Namco’s rights in the Pac-Man and Rally-X video

games. (Tr. 86-87; Ex. #13; Ex. #17, 14].

19. Twenty-five thousand Pac-Man games have been sold
by Midway since sary, 1980. Each game has a notice of
Midway’s claim of yr the name of the game, and
Midway’s name. The copyright notice is affixed near the screen
and is also contained in the game's attract mode. [Tr. 99-100,
107; Ex. #17, 7 11; Ex. #19}.

20. A video tape recording of the audiovisual presenta-
tions of the Pac-Man attract and play modes was made by the
plaintiff in Franklin Park, Illinois. Midway submitted this video

4 When originally developed by Namco, the game was called “Puck Man.” Nameo
and Midway, however. ‘ater agreed that the game would be marketed in the United
States under the same * Pac-Man.” Tr. 85. 104-051.

tape and an application to register the copyright on the Pac-
Man audiovisual work to the Copyright Office. A certificate of
copyright registration, No. PA 83-768, effective November 13,
1980, was issued for the audiovisual work found in the Pac-
Man attract and play modes. [Tr. 94-95; Ex. #15].

21. Rally-X is a combination maze chase and race game.
Each player begins the game with a full fuel tank. The object
of the game is to drive a car through the maze clearing vatious
checkpoint flags before the fuel is exhausted. Increasing point
values are scored for each checkpoint flag cleared. The player
is aided in his race rhrough the maze by a radar screen which
shows the position of the checkpoint flags and red pursuit cars.
This radar is necessary because, unlike Pac-Man, the entire
Rally-X maze is not projected on the screen. Rather, the player
only views the area of the maze over which his car is passing.
The red pursuit cars try to wreck the player’s car. The player
can outmaneuver the pursuit cars by releasing a smoke screen
that causes the cars to spin and stall. If the pursuit cars run into
the player’s car, an explosion effect and the word “BANG”
appear on the screen. The play of the game is accompanied by
sound effects and music. [Tr, 114-15; Ex. #17, 78, Ex. #20).

22. The creator of the Rally-X game is Namco. The first
publication of the game occurred in Japan on October 3, 1980.
At the invitation of Namco, Midway representatives first
viewed the Rally-X game in Japan on August 13, 1980.
Midway’s representatives were impressed by the Rally-X’s
extraordinary presentation and decided that the game was a
good target for acquisition. [Tr. 84-85; Ex. #16,; Ex. #17, 16}.

23. An assignment dated October 10, 1980, gave Midway
all United States rights in Rally-X. The consideration for this
assignment was the payment of substantial advances and
royalties. To date, the plaintiff has paid over | million dollars
for the use of Namco’s rights in Pac-Man and Rally-X. [ Tr. 86-
87; Ex. #14, Ex. #17, 14).

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24. Twenty-five hundred Rally-X video games have been
sold by Midway. Each game has a notice of Midway's claim of
copyright, the name of the game and Midway's name. The
copyright notice appears on the screen after a coin is inserted in
the game. [Tr. 99-100, 107; Ex. #17, 411: Ex. #20).

25. Midway has made a video tape of the attract and play
modes of the Rally-X game. This tape was made in Franklin
Park, Illinois. This tape and an application to register the
copyright on the Rally-X audiovisual work were submitted by
Midway to the Copyright Office. A certificate of copyright
registration, No. PA88-049, effective January 6, 1981, was
issued for the audiovisual work found in the Rally-X attract and
play modes. [Tr. 94-95; Ex. #16).

26. The promotion of the Galaxian, Rally-X and Pac-Man

in full color, and contains prominent displays of the name of the
game and explicit pictorial and graphic representations of the
visual elements of the game. These brochures, in turn, are used
by the distributor to advertise and promote the new game to the
distributor's customers, who are generally operators.

Midway also places advertisements in trade magazines,
such as Replay, Play Meter, Vending Times, Market Place and
Canadian Coin Box. The advertisements are similar to
Midway’s bro. )wures. Midway promotes its new games at
national and local trade shows. Finally, Midway distributes
Promotional items such as mugs and T-shirts. [Tr. 88-89, 90-
93; Ex. #17, 99; Filing #14 attachments).

27. Midway has invested over 20 million dollars in parts,
inventory and equipment for the mass production of the
- Galaxian, Pac-Man and Rally-X video games. [ Ex. #17, #10).

110

28. The defendants’ Galactic Invaders games is for all
practical purposes identical to the plaintiff's Galaxian game.* A
few of the specific similarities between the games are discussed
below to illustrate the extent to which they are the same. This
discussion is not intended to list all the similariues between the

games.

The attract mode of these games may be divided into two
parts. The first part of the attract mode is a display of the alien
attackers and the amount of points scored for destroying them.
The shape of the aliens in the Galactic Invaders jame is
identical to the shape of the aliens in the Galaxian game and
the points awarded are the same. In addition, the manner in
which these aliens are presented is the same in each game. The
only difference between the games in this part of the attract
mode is that the defendants’ game does not have certain
nonessential textual material found in the plaintiff's game.

The second part of the attract mode is a demonstration of
how the game is played. The only difference between the
games in this part of the attract mode is that the Galaxian
demonstration varies, whereas the Galactic Invader demonstra-
tion is always the same. This difference is so minute that it
would not be notices unless the games were subject to a side-by
side comparison.

In addition to the attract mode, the sound effects of each
game are identical. Among the distinctive sound effects
common to both games are: the musical sound activated when
the play button is pushed; the pulsating sound heard through-
out the play mode; the sound heard when the aliens swoop out
of the convoy to attack; and the explosion and other sound
effects heard when the player's ship is destroyed.

_ The play modes of each game are also virtually identical.
This may be illustrated by placing the player's ship in the center

* Unlike the Galaman. the Galacuc Invaders game offered into evidence 1s not in
color. (Ex. #2). ;

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This discussion is not intended to list all the similarities between
the games.

The attract mode «f the Mighty Mouth game contains the
only readily apparent differences between the games. The
names of the Mighty Mouth characters are different from the
names given the Pac-Man characters. The other difference is
the speed at which the attract modes run. The Mighty Mouth
attract mode runs somewhat faster than the Pac-Man. This
difference in speed can only be observed when the games are
sted dda iendite

In all other respects, the attract modes of each game are

identical. The color and shape of the characters of each game
are the same. The maze through which these characters move
is the same color and configuration. Each game presents these
characters in identical fashion. The attract modes demonstra-
tion of the games’ play is identical. The monster character and
the player puck in each game’s demonstration moves in the
same directions and stop at the same place.

The sound effects of each game are also the same. Several
of these sound effects deserve brief mention be :use of their
distinctive qualities. Each game has the same sound effects
when the play button is pushed; when the player puck is
gobbling dots; and when the player puck is caught by the
monster characters.

The progression of play appears to be identical. If the
games are placed in the play mode without moving the player's
control stick, the monster caaracters in each game will move
along the same routes and will ultimately destroy the player
puck in the same manner. In addition, the visual display when
the player puck eats a power capsule is the same in each game.
When this occurs, the monster characters turn a Jark blue and
race around the maze. Finally, in each game, a player puck
which is caught by a monster character defiates and disappears
from the screen. [Ex. #6; Ex. #9; Ex. #19).

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31. The defendants’ Rally-X game is, for ail practical

purposes, identical to the plaintiff's Rallv-. games. A few of
the specific similarities are discussed below to illustrate the
extent to which the giimes are the same. This discussion is not
meant to list all the similarities between the games.
- The ateract mode of each game may be divided into two
parts. First, the attract modes contain a description of the rules
of the games. Aside from the name of the manufacturer, these
displays are the same. Second, the attract modes contain a
demonstration of the games’ play. The color and shape of the
cars and maze are the same in each game. The demonstrations
are different in that the cars often follow different routes
through the maze. This difference, however, can only be
observed if the games are compared side-by-side. In all other
respects, the attract modes are the same.

The Rally-X play modes are also very similar. The sound
effects accompanying the games’ play are the same. Particu-
larly striking are the sound effect which is heard when the play
button is pushed and the monotonous melody which is played
when the cars are moving. In addition, each game has an

32. Soo Vaaley Distributing has assembled Galactic
Invaders, Kamikaze Ill, Mighty Mouth, and Rally-X video
games and conversion kits. The conversion kits were all sold.
The video games were sold or were placed on routes operated
by Soo Valley Vending. Defendant Kraayenbrink knew that
these games were substautially similar to the games manufac-
tured by Midway.® He admits that he had received notice of the

*Some of the Mighty Mouth games assembled by Soo Valley Distributing had
features different from the Mighty Mouth descnned above The Mighty Mouth games
Coe a amy amaree were made from Venture Line primed circun boards The
Court has & video tape of the auract mode of the Venture Line board | Ex. #24).
Although this Mighty Mouth is more distinctive than the Mighty Mouth described
above. the game is sull similar to the plasnuff's Pac-Man game. (Ex. #25. pp. 124-26).

114

. plaintiff's claim of infringement, but did not cease distributing |

: or operating the allegedly infringing goods. (Ex. #26, pp. 30

| 35-49, 53-54, 60-61, 62, 63-64, 72-73, 75-76, 77-81, 83-85, 86-

88, 89-90, 91, 151, 152, 153-54, 104-05, 107, 109, 142-43, 168-
71}.

33. On at least one occasion, a cusiomer contacted
defendant Kraayenbrink to purchase a conversion kit for a
Gaiaxian game. The defendant's response to such an inquiry
was to offer to sell the customer a Galactic Invaders conversion
kit. He would tell the potential customer that Galactic Invader
was the same thing as a Galaxian. [ Ex. $25, p. 136].

34. Soo Valley Distributing and Soo Valley Vending
currently own few Galactic Invader, Kamikaze [ll], Mighty
Mouth or Rally-X video games or printed circuit boards. No
printed circuit boards are currently on order. [ Ex. #26, pp. 60-
62, 121, 143-161].

35. Defendants Peterson and Dirkschneider, through their
partnership, A-| Machines, have purchased Galactic Invaders,
Mighty Mouth and Rally-X video games from Soo Valley
Distributing. Of these games, all but five have been sold. A-!
Machines is currently operating the remaining machines at
various locations. The defendants were aware that these games
were similar to the games manufactured by the plaintiff. (Ex.
#27, pp 14-16, 17, 18, 23-27, 28, 53-54, 55-57, 63; Ex. # 28, pp.
5, 7-9, 13-15, 16}.

36. On at least one occasion, a customer called A-|
Machines and asked to purchase a Pac-Man game. Defendant
Dirkschneider offered tw sell the customer a Mighty Mouth
game, explaining that it was similar to the Pac-Man game. The j
customer ultimately purchased the Mighty Mouth In A
Dirkschneider’s opinion, one of the selling points of the Mighty ‘
Mouth game was its similarity to the Pac-Man game. (Ex. #26,
pp. 7-8, 13-14].

ship has no outstanding orders to purchase any of these games.
(Ex. #27, pp. 14-16, 19-20; Ex. #28, pp. 20-21, 25-26}.

38. A-l Machines has received complaints abort the
Performance of its Mighty Mouth ame These complaints
came from two young persons wh. were playing the Mighty
Mouth game. They told Dirkschneider that they didn’t like the
way the game played and’ that they wamted “a regular factory
game.” Dirkschneider interpreted this to mean that the custom-
ers wanted a Midway game. [Ex. #28, pp. 8, 17-20).

Il. The Preliminary Injunction Standard

The determination of whether a preliminary injunction
should be issued is entrusted to the discretion of the trial court.
The factors which should guide the exercise of this discretion
are:

(1) the threat of irreparable harm to the plaintiff; (2) the

state of the balance between this harm and the injury that

Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109, 113
( 8th Cir. 1981). No one of these factors is determinative.’ The

" The interrelationship of these factors is illustrated by the following passage from
Dataghe ¢-

strongly in his favor, the showing of success on the merits can be less.
he at

Court will therefore discuss each of these factors as it applies to
the plaintiff's various causes of action.®

ILL. Copyright Infringement
A. Probable Success on the Merits

In order to prevail on its claim of copyright infringement,
the plaintiff must prove that it is the owner of a valid copyright
and that the defendants have performed and distributed games
copied from the plaintiff's audiovisual works. See Ferguson v.
National Broadcasting Co., 584 F. 2d 111, 113 (Sth Cir, 1978);
Novelty Textile Mills v. Joan Fabrics Corp., 558 F. 2d 1090,
1092 (2d Cir. 1977); Testa v. Janssen, 492 F Supp. 198, 202
( W.D. Pa.1980). For the reasons discussed below, the Court is
of the opinio: that the plaintiff has established that it will
probably succeed on the merits of its infringement cause of
action.

1. Validity of Copyright

Under the Copyright Act, a certificate of copyright registra-
tion, obtained within five years of first publication, constitutes
“prima facie evidence of the validity of the copyright and of the
facts stated in the certificate.” 17 U.S.C. § 410(c) (1976). The
plaintiff has offered into evidence its certificates of copyright
registration for the audiovisual works contained in the Pac-
Man, Galaxian and Rally-X games. These copyright registra-
tions were obtained within five years of the first publication of
these works. Through this evidence, the plaintiff has made a
prima facie showing that its audiovisual works are copyrigh-
table subject mattet, that the works are original, that the
statutory formalities of registration have been satisfied, and that
the plaintiff is the owner of the copyrights. 3 M. Nimmer,
Nimmer on Copyright §12.11[A], [B], [C] (1980) [{here-
inafter cited as “Nimmer on Copyright”]. See also Dolicraft

* The plaintiff can obtain the relief 1 requests based on its copyright and Lanham
Act claims. The Court will therefore not discuss the plaintiff's state law claim.

as toatl ae

i7

Industries, Lid. v. Well-Made Toy Manufacturing Co.,, 479 F.
Supp. 1105, 1114 (E.D. N.Y. 1978). This showing places of the
defendants the burden of coming forward with evidence which
rebuts the plaintiff's claim to ownership of valid copyrights in its
audiovisual we rks. Dolicraft Industries, Lid. v Well-Made Toy

copyrightable subject matters enumerated in the Act. 17 U.S.C.
§ 102(a). Second, the Court must determine whether the wr-k
is fixed in 2 tangible medium of expression.

ray tube my means of elctronic equipment. These character-
_ istics of the plaintiff's games clearly extablish that the plainuff’s

The Act provides that copyright protection may be obtained “in

works of authorship fixed in any tangible medium of ,
expression, now known or later developed, from which they can
be perceived, reproduced, or otherwise communicated, either
directly or with the aid of a machine or device.” 17 U.S.C.
$102(a) (emphasis supplied). A work is fixed in a tangible
medium of expression “when its embodiment in a copy or
phonorecord, by or under the authority of the author, is
sufficiently permanent or stable to permit it to be perceived,
reproduced, or otherwise communicated for a period of more
than transitory duration.” 17 U.S. C. $101. The Act contains
no restrictions on the type of material objects suitable for
fixation. See | Nimmer §§ 2.03 [B]{1], 2.09(D][1]. See also
H. Rep. No. 94-1476, 94th Cong., 2d Sess. 52 ( 1976) reprinted
in [1977] U.S. Code Cong. & Ad. News 5665.

Under these statutory provisions, it is clear that the piain- —
tiff’s audiovisual works are fixed in the printed circuit boards.
audiovisual works may be perceived for a period of time more
than transitory. The fact that the audiovisual works cannot be
viewed without a machine does not mean the works are not
fixed. The Court therefore is of the opinion that the plaintiff's
audiovisual works are fixed, and thus may be copyrighted.

The defendants’ second challenge to the validity of the
plaintiff's copyrights focuses on the distinction between an idea

. and an expression. Under the Act, a copyright holder may not

monopolize an idea, but is limited to protecting his expression
of an idea. 17 U.S.C. §102(b). See generally, Durham
Industries, Inc. v. Tomy Corp., 630 F.2d 905, 912-13 (2d Cir.
1980); Franklin Mint Corp. v. National Wildlife Art Exchange,

1i9

575 F.2d 62, 64-65 (3d Cir. 1978), cert. denied 439 U.S. 880
(1978); Sid & Marty Krofft Television v. McDonald’s Corp., 562
F.2d 1157, 1163, 1167-69 (9th Cir. 1977). The defendants
contend that the plaintiff is attempting to use its copyrights to
monopolize an idea. As an example, the defendants suggest
that the plaintiff's Galaxian copyright is an attempt to monopo-
lize “the very idea of a video game in which alien ships break
away from a convoy to attack a defender ship.” Defendants’
Brief of May 15, 1981, at p. 7. The Court disagrees.

The plaintiff's copyrights cover the plaintiff's audiovisual
expression of various game ideas. This expression includes the
distinctive color and design of the space ships and other
players, as well as the sounds accompanying the playing of the
games. Such expressions of game ideas are an appropiate
subject of copyright protection. See Midway Manufacturing v.
Arctic International, Inc., supra, Slip op. at 13-14, 1 Nimmer on
Copyright § 2.18[H][3]. Cf Durham Industries, Inc. v. Témy
Corp., supra, 630 F.2d 2d at 914-15 (illustrates how identical
games may be expressed in different ways).

In addition to challenging the subject matter of the plain-
tiffs copyrights, the defendants also raise the issue of whether
the plaintiff has complied with the statutory formalities of
copyright registration. The Act requires that a copyright
applicant submit, “in the case of a work first published outside
the United States, one complete copy or phono-record as so
published.” 17 U.S.C. $408(b)(3). The plaintiff has submitted
to the Copyright Office a videotape of each of its games in their
attract and play modes. These videotapes were made in the
United States.

Videotapes are “copies” within the meaning of that term as
defined in the Act. 17 U.S.C. $101. The defendants, however,
contend that the videotapes submitted by the piaintiff are not
copies of the works as first published in Japan. The defendants
have offered no evidence which suggests that the games which
were videotaped were not the same as those first published in

‘ot : RO ae licati n Le
issues, however, are closely related to the validity issue, and will
therefore be considered in connection therewith.

A copyright registration is a prerequisite to the institution
of an infringement suit. 17 U.S.C. § 411(a). The defendants
contend that the plaintiff has failed to satisfy this requirement
because no copyright registration has been obtained in the
computer programs underlying the plaintiff's games. The basis
of this contention is the defendants’ argument that the instant
action is not a suit to prevent the infringement of the plain‘it’s
audiovisual works, but is rather a suit to protect the computer
programs contained in the games’ printed circuit boards. Since
the computer programs are not the subject of a copyright
bring the instant action. A challenge, very similar to the one
raised by the defendants, was rejected by the United States
District Court for the Eastern District of New York. Stern
Electronics Inc. v. Harold Kaufman, et al., No. 80 C 3248, Slip
op. at 7-9 (E.D. N.Y. May 22, 1981). For the reasons
discussed in Stern Electronics, the Court finds that the plaintiff's
failure to obtain copyright registrations on the computer pro-
grams underlying its audiovisual works does not preclude the
plaintiff from bringing a suit to prevent infringement of its
audiovisual works.

forward with evidence that Proper notice has been given.
Dollcraft Industries, Lid. vy. Well-Made Toy Manufacturing Co.,
supra, 479 F Supp. at 1116.

§ 12.41(B}.

122

§ 201.20(g)(1) & (3) reprinted in 4 Nimmer on Copyright
Appendix 3. This pivposed regulation clearly comports with
the spirit of § 401(c) of the Act since the regulation would
place the notice where it would be most likely to be observed by
those viewing the work. Although the proposed regulations are
not binding on the Court, they do suggest a persuasive inter-
pretation of the requirements of § 401(c). The Court therefore
finds that the plaintiff has satisfied the Act's notice requirements
for each of its games.

2. Copying of the Plaintiff's Work

’ The second element of an infringement action is copying of
the plaintiff's work. For the purposes of this case, the copying
requirement should be divided into two parts. See 2 Nimmer
on Copyright § 8.01{A]. First, the plaintiff must prove that the
defendants’ games are copies of the plaintiff's games. In other
words, the plaintiff must show that the allegedly infringing
games did not have an origin independent of the plaintiff's
works. Second, the plaintiff must establish that the defendants’
conduct infringed one of the piaintiff’s rights enumerated in the
Act. In this regard, the plaintiff contends that the defendants
infringed its rights to exclusive distribution and performance of
its audiovisual works. 17 U.S.C. § 106(3) & (4).

Because of the difficulty of producing direct evidence of
copying, a plaintiff in a copyright cction generally proves
copying “by showing that the person who composed the
defendants’ work had access to the copyrighted work and that
the defendants’ work is substantially similar to the plaintiff's.”
Ferguson v. National ”-oadcasting Co., supra, $84 F.2d at 113.
However, if the similarity between the works is so striking that
the possibility of independent creation is precluded, a court may
find tha. copying occurred without direct proof of access.
Ferguson v. National Broadcasting Co., supra, 584 F.2d at 113:
Testa v. Janssen, supra, 492 F Supp. at 202-204; Knickerbocker
Tay Co. v. Genie Toys, Inc., 491 F.Supp. $26,528 (E.D. Mo.
1980). In the instant case, the similarities between the works

Ee ioe tee ef
ie Sci mS 5 yey

23

are so striking that copying may be inferred without direct
proof of access.

A comparison of the defendants’ games and the plaintiff's
games shows that the games are virtually identical. The Court
will briefly discuss a few of the similarities between the
games. '°
© The plaintiff's Pac-Man game has four characters or mon-
sters which chase the player puck through 2 maze. These
monsters are colored red, pink, aqua and yellow. They have a
semicircular shape with feet or legs on the flat, bottom side, and
have eyes which look in the direction of their movement. The

_ design of these characters is unique. The monster characters in

the defendants’ Mighty Mouth game are identical to those in
the plaintiff's game.

The plaintiff's Galaxian game has a convoy of aliens
approaching the player’s defense ship. These aliens are unique
in their shape and movement. In formation, the aliens fly with
aliens break away from the convoy to swoop down on the
defense ship, their wings are extended upward in a stationary
position. Although the defendants’ Galactic Invaders game
offered in evidence is not in color, the shape and movement of
its aliens are identical to the plaintiff's game.

The plaintiff's Rally-X game is a chase game in which the
player’s car is pursued through a maze by several pursuit cars.
One way of avoiding the pursuit cars is for the player's car to
release a smoke screen which sends the pursuit car into a
whimsical spin. The defendants’ Rally-X game incorporates a
smoke screen escape device and spin-out identical w the
plainufl’s.

"© The burden on the plainaff of proving that (wo works are strikingly smular ts 2
heavy one. ee eee enn bee OTS. Dest dommeteinse ston
such
comedence.

are of a kind that can oaly be explained by copying. rather than by
cfeation of por common source ~ Testa v Johnson. supra.
492 F Supp. at 203. ithustranve sumilanues discussed herein clearly sansfy hes

4

This list of similarities is intended merely to illustrate the
extent to which the defendants’ games are similar to the
plaintiff's. It is not meant to be exhausuve. It cannot be
overemphasized that, in virtually every detail, the defendants’
games are identical to the plaintiff's. See Sid & Marty Krofft
Television v. McDonald's Corp., supra, 562 F.2d at 1164. See
also Franklin Mint Corp. v. National Wildlife Art Exchange,
supra, $75 F.2d at 65-66.

In addition to specific similarities, the overall appearance
of the games is identical. A reasonable observer, comparing the
overall appearances of these games, could anly conclude that
the defendants’ games not only copy plaintiff's ideas, but
capture the plaintiff's unique expression of those ideas. See
generally, Durham Industries, Inc. v. Tomy Corp., supra, 630
F.2d at 911-13; Sid & Marty Krofft Television v. McDonaid’s
Corp., supra, $62 F.2d at 1164-65; Universal Athletic Sales Co.
vy. Salkeid, $11 F.2d 904, 907, 908-09 ( 3d Cir. 1975); McMahon
v. Prentice-Hall, Inc., 486 F.Supp. 1296, 1304 (E.D. Mo.
1980); Dolicraft Industries, Lid. v. Well-Made Tay Manufac-
turing, supra, 479 F Supp. at 1116-17.

In light of the foregoing discussion, the Court finds that the
defendants’ games are so strikingly similar to the plaintiff's
works that a finding of independent origin is precluded. The
Court therefore concludes that the defendants’ games are copies
of the plaintiff's.

The remaining issue to be resolved is whether the defend-
ants have infringed any of the plaintiff's statutory rights. A
copyright holder has the exclusive right to distribute to the
public copies'’ of his work, and to perform in public the
copyrighted work. Both of the defendants have adm‘ed that

'’ The defendants did not reproduce copies of the plainuff™s work. Rather. they
distributed copies of the wort This distribuuon ovcurred when the defendants sold
games which housed copies of the plainuff™s work. The copres of the work were the
printed circu boards which contained the plainuffs work and which were manufac
tured by Venture Line. Inc.

“* This conclusion is mor ahered by the defendants’ iack of knowledge that its
games were copies of plaintiff's games. see Knickerbocker Toy Co. v. Genie Toys. inc.
supra 49| F. Supp. at 529. or by the fact thar the defendants did not themselves make
the copes which were distributed ov performed. See Amencan Imernavona) Pictures.
Inc. v. Foreman, 576 F.2d 661. 663 a. |, 664 (Sth Cir. 1978).

_ Balanced against the harm to the defendants is the harm
suffered by the plaintiff if the injunction is not issued. Allowing
the defendants’ infringing activity to continue would cause the
plaintiff substantial harm. The popularity of audiovisual games
is notoriously short-lived. Despite this fact, the plaintiff has
invested large sums of money in the acquisition and devel-
opment of the games . issuc here. Without an injunction, the
public interest in the plaintiff's copyrighted works may dissipate
before plaintiff is able to vindicate its rights. In such a situation,
a preliminary injunction is the only effective means of protect-
ing the copyright. Siern Electronics v. Harold Kaufman, supra,
Slip op. at 5. See Dollarcraft Industries, Lid. v. Well-Made Tay
Manufacturing, supra, 479 F Supp. at 1117. The Court there-
fore finds that the balancing of the equities favors the issuing of
an injunction.

C. The Public Interest

The Copyright Act evidence a public interest in encour-
By granting the plaintiff the relief requested, the Court would.
_ be furthering this public interes: by rewarding the plaintiff's
development of new and challenging audiovisual games. In
addition, one court has noted that counterfeits of copyrighted
games post a threat to the health of the video game industry.
Stern Electronics, Inc. v. Kaufman, supra, Slip op. at 6. The
Court can conceive of no public interest served by permitting
the defendants to engage in the continued distribution and
performance of games which are virtual replicas of the plain-
would be served by the issuance of an injunction.

D. Summary

The plaintiff has made a strong showing of probable
success on the merits. This showing is sufficient to establish that
the plaintiff will suffer irreparable harm. Balanced against this
harm is the rather insubstantial harm which an injunction will

07

cause the defendants. Based on these findings, the Court will
issue a preliminary injunction prohibiting the defendants from
engaging in further infringing conduct.

The plaintiff's second cause of action is founded on alleged
violations of §43(a) of the Lanham Act. 15 U.S. C. $1125(a).

likely to cause confusion in the marketplace."3 Truck Equipment
Service Co. v. Fruehauf Corp., $36 F.2d 1210, 1217-21 ( 8th Cir.
1976), cert. denied 429 US. 861 (1976). For the reasons
discussed below, the Court is of the opinion that the plaintiff
will probably succeed on the merits of its Lanham Act cause of

action.

|. Nonfunctional Design Features of the Plaintiff's Games.
design features is not always bright, certain established prin-
ciples guide the Court’s consideration of this issue. In the
Fruehauf case, the Eighth Circuit held:

“Imitation of the physical details and design of a com-

petitor’s product may be actionable, if the !

: commercial success of the product, the interests in free
competition permits its imitation in the absence of a patent

"2 The defendants do not dispute that this suit involves goods affecting intersate
commerce.

“ =.
a
, * .

coloring of the characters in the plaintiff's games are
nonfunctional.

source. RJR Foods, Inc. v. White Rock Corp.. 03 F.2d 1058,
1059 (2d Cir. 1969); see Trek Equipment Service Co. v.
Fruehauf Corp., supra, $36 F.2d at 1220.

such goods * * * that it serves to identify
distinguish them from the goods * * * of others. When
such an association exisis, the name, mark, or symbol is
said to have acquired a ‘secondary meaning,’ in
original user has . property right which equity will protect
against unfair appropriation by a competitor." * * *

Truck Equipment Service Co. y. Fruehauf Corp., supra, $36
F.2d at 1219. Secondary meaning may be established by
circumstantial evidence. Faberge, inc. v. Saxony Products, Inc.,
605 F.2d 426, 428 (9th Cir. 1979).

The existence of a secondary meaning may be inferred
from evidence that the defendants have consciously imitated
the nonfunctional design features of the piaintiff’s products.
Faberge, Inc. v. Saxony Products, Inc., supra, 60$ F.2d at 428:
RJR Foods v. White Rock Corp., supra, 603 F.2d nt 1060: Truck
Equipment Service Co. v. Fruehauf Corp., supra, 536 F.2d at

" 1220 n. 13. This inference is based on the expectation that a

businessman would not adopt a specific nonfunctional design
feature without a purpose. Since the design feature could not
have been adopted because of its functional usefulness, the only
reasonable motivation for such conscious imitation would be to
take advantage of the secondary meaning associated with the
design.'* Absent proof of other motivation, evidence of con-
scious imitation . sufficient to create an inference that the
imitated design feature did in fact have a secondary meaning.

Applying this analysis to the instant action, the Court finds
that the defendants were aware of the existence of the plaintiff's
games and of the similarities between their games and the
plaintiff's. The games are for all practical purposes identical.
The record also reveals that customers who wished to purchase
plaintiff's games from the defendants were offered the defend-
ant’s games as substitutes. This substitution suggests that the
defendants were attempting to take advantage of consumer
interest in the plaintiff's games. Based on this evidence, the
Court finds that the defendants consciously imitated the
nonfunctional design features of the plaintiff's games with the
intent to enjoy some of the consumer acceptance of the
plaintiff’s games. See generally Fleischmann Distilling Corp. v.
Maier Brewing Co., supra 314 F.2d at 157; Markel v. Scovill
Manufacturing Co., 471 F Supp. 1244, 1252 (W.D. N.Y. 1979)
aff'd without opinion 610 F.2d 807 (2¢ Cir. 1979); Armstrong
Cork Co. v. Armstrong Plastic Covers Co., 434 F.Supp. 860, 871

“4 The rauonale behind this inference was explained in Flerschman Disulling Corp
v. Maier Brewing Co.. 314 F. 2d 149 ( 9th Cir. 1963).

We canaot conclude but that Maier deliberately adopted the name knowing
that Black & White was the name and wademark of Buchanan and they must have
done so with some purpose in mind. The only possible purpose could have been to
capitalize upon the popularity of the name chosen. This popularity. they must have
known. would extend to their product because the public would associate the name

Black & White with something old and reliable and meritorious in the way of an
alcoholic beverage.

id. at 157. See also Audio Fidelity, Inc. v. ers oro" gee me 283 F. 2d
551, 558 ( Mh Cir. 1960).

(E.D. No. 1977); Mortellito v. Nina of California, Inc., 335
F.Supp. 1288, 1292-93 (S.D. N.Y. 1972). This conscious
imitation is evidence that the nonfunctional design features of
the plaintiff's games had acquired secondary meaning.

A finding of secondary meaning is also supported by the
evidence of consumer complaints about the defendants’ games.
Dale Dirkschneider testified that customers piaying his Mighty
These customers told Dirkschneider that they wanted “a regu-
lar factory game” which Dirkschneider interpreted to mean a
Midway game.

This testimony indicates that something about the appear-
ance of the defendants’ games suggested to the customers that
their money would purchase a type of game action associated
with the plaintiff's games. These customers’ beliefs could not
have been created by the games’ cabinets which are not similar
to the cabinets used on the plaintiff's games. Since the attract
mode of the defendants’ games prominently displayed charac-
ters identical to those used in the plaintiff's games, it is
‘reasonable to infer that the customers’ expectations were in part
engendered by the fact that the defendants’ games imitated the
nonfunctional design feature of the plaintiffs games. This
consumer expectation is evidence that the nonfunctional design
features of the plaintiff's games had acquired a secondary
meaning. See Harlequin Enterprises Lid. v. Gulf & Western
Corp., 503 F.Supp. 647, 649 (S.D. N.Y. 1980).

There is one other factor which suggests that the design
features of plaintiff's games have acquired a secondary mean-
ing. The substantial number of games sold by the plaintiff is
evidence of secondary meaning. Truck Equipment Service Co.
v. Fruehauf Corp., supra, 536 F.2d at 1220. Since early 1980,
the plaintiff has sold 40,000 Galaxian games, 25,000 Pac-Man
games and 2,500 Rally-X games. From these sales, it may be
inferred tha: customers are familiar with the plaintiff's games,

132

and associate the design features of these games with a single
source. '§

The preceding discussion summarizes the evidence of
secondary meaning.'* This evidence by no means conclusively
establishes the existence of secondary meaning. Although the
issue is a close one, the Court is of the opinion that the plaintiff
has represeuted sufficient evidence to establish that it will
probably succeed in proving that the nonfunctional design
features of its games have acquired secondary meaning.

3. Likelihood of Confusion

The determination of whether the defendant's conduct is
likely to cause confusion depends upon the perceptions of the
reasonable consumer. See RJR Foods, Inc. v. White Rock
Corp., supra, at 1060; Armstrong Cork Co. v. Armstrong Plastic
Covers Co., supra, 434 F.Supp. at 671.'7 The plaintiff must
show that the defendants’ use of the plaintiff's game characters
is likely to confuse a reasonable consumer about the source of
the defendants’ games or the plaintiff's connection with them.

*® This conciusion is reinforced by the operations! characteristics of the plaintiff's
games. Each game has an attract mode which prominently displays the games’
characters. This display of the games’ characters makes « more likely that the public
would associate the characters with games made by the piainuff, The significance of the
attract mode is considered in greater detail in the Court's discussion of likelihood of
confusion.

® Adverusing is another factor which is relevant to resolving the issue of secondary
meaning. Truck Equipment Service Co. v. Fruehauf Corp.. mpra. $36 F.2d at 1220.
The plainuff has offered evidence of its substanual adverusing campaigns designed to
promote its games. This advertising was directed primarily at distributors who
purchase games from the piainuff. The piainuff. however. does not appear w contend
that its games’ design features have acquired secondary meaning among distributors.
among those persons who actually play :he games. Adverusing directed at distributors
is of little probative value in proving secondary meaning recognized by ultimate
consumers.

The Armstrong case is a tradema.. infringement action under 15 U.S.C.
§$ 1114(1). Although the current action involves a claim under 15 U.S.C. §1125( a).
cases such as Armstrong provide authority for assessing the likelihood of confusion in
the instant action. See generally, Biack Hills Jeweiry Manufacturing Co. v. Gold Rush.
Inc.. 633 F.2d 746, 753 a. 7 (8th Cir, 1980).

3
o

133

See Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Lid.,
supra, 604 F.2d at 204-05. Whether the plaintiff has satisfied
this burden depends upon a variety of factors, no one of which
is determinative. SqguirtCo v. Seven-Up Co., 628 F.2d 1086,
1091 (8th Cir. 1980).

The strength of plaintiff's mark is one factor which should
be considered in assessing the likelihood of confusion.
SquirtCo v. Seven-Up Co., supra, 628 F.2d at 1091. If the
plaintiff's mark has strong secondary meaning in the public’s
mind, the defendants’ use of that mark is likely to cause greater
confusion than the use of a weaker mark would cause. In the
instant case, the showing of secondary meaning does not
suggest that the plaintiff's mark has a strong secondary meaning
among the consuming public. The weakness of the plaintiff's
mark, however, does not mean that likelihood of confusion
cannot be proven. Rather, it means that a strong showing on
the other factors must be made if the plaintiff is to prevail.
Alpha Industries, Inc. v. Alpha Steel Tube & Shapes, Inc., 616
F.2d 440, 445-46 (9th Cir. 1980). The plaintiff has clearly
made such a showing. :

One factor which should be considered in assessing the
likelihood of confusion is the similarity of the design features
used by the parties. The design of the defendants’ game
characters is virtually identical to the design of the plaintiff's
game characters. Because of this striking similarity, the overall
impression created by the defendants’ characters is in-
distinguishable from the impression conveyed by the plaintiff's
characters. SguirtCo v. Seven-Up Co., supra, 628 F.2d at 1091;
RJR Foods, Inc. v. White Rock Corp., supra, 603 F.2d at 1060.
This similarity strongly suggests that the defendants’ use of the
plaintiff's design features would cause confusion in the market-
place.

The risk of confusion created by the striking similarity of
the design features is exacerbated by the manner in which these

-

134 *

games operates.'* Each of the parties’ games has an attract
mode, which is a display continuously shown on the cathode
ray tube whenever the game is attached to a power source and
not in the play mode. The attract mode is designed to entice
passersby into playing the game. The game's characters are
prominently displayed in the attract mode.

The attract modes of the plaintiff's and defendants’ games
are identical in their overall appearance. The attract modes of
the defendants’ games imitate not only the design features of
the plaintiff's game characters but also the plaintiff's manner of
presenting these characters. For example, in both the plaintiff's
Pac-Man game and the defendants’ Mighty Mouth game, the
attract mode features the game characters and their nicknames
in a vertical column. Although the names given the characters
in defendants’ games are different from plaintiff's, the general
impression created by the presentation is the same. After the
characters are introduced, a number of them engage in a chase
underneath the column of characters and nicknames. This
chase is identical in both games.

The operation of the attract mode enhances the likelihood
of confusion from the defendants’ use of characters identical to
the plaintiffs. A person interested in playing a game must
make his choice based on the attract mode. Since the defend-
ants’ attract mode features characters identical to the plaintiff's
and presents these characters in a manner very similar to the
plaintiff's, the ordinary consumer viewing the attract mode
would likely think the game being advertised was the plaintiff's.
In other words, the ordinary consumer would likely be confused
about the source of the game.

“Similarity of the marks . .. mus be considered as they are encountered in the
marketplace. Although similarity is measured by the marks as entities. semilaruies
weigh more heavily than differences.” AMP, inc.. $99 F. 2d at 351. The comparison
should be made “in light of what occurs in the marketplace.” taking into account the
circumstances surrounding the purchase of the goods.

Alpha Industries, Inc. v. Alpha Steel Tube & Shapes, Inc.. supra. 616 F. 2d at 444.

135

An additional factor which should be considered is the
degree of care likely to be used by potential customers.
SquirtCo v. Seven-Up Co., supra, 628 F.2d at 1091; RJR Foods,
Inc. v. White Rock Corp., supra, 603 F.2d at 1061. The cost of
playing the parties’ games is a quarter. This alone suggests that
customer care would not be particularly keen. In addition, the
atmosphere surrounding the games in their normal setting
indicates that a customer would not be likely w scrutinize a
game with such intensity that he would be able to distinguish
the plaintiff's and defendants’ games. This lack of consumer
care is further evidence that there is a likelihood of confusion in
the marketplace.

Two other factors which are related to the degree of
consumer care deserve brief mention. These factors are degree
of similarity between the parties’ products and the competitive
proximity of the products. Alpha Industries, Inc. v. Alpha Steel
Tube & Shapes, Inc., supra, 616 F.2d at 445; Markel v. Scovill
Manufacturing Co., supra, 471 F.Supp. at 1250-51, 1252.
When the parties’ products are similar, defendants’ use of the
plaintiff's mark is likely to cause greater confusion than when
dissimilar products are involved. The likelihood of confusion is
further increased if the parties’ products are distributed through
similar channels of trade to the same ultimate customers. In the
instant case, the parties’ games are identical aad are distributed
through similar trade channels. These facts are further proof of
likelihood of confusion.

Actual incidents of consumer confusion is another impor-
tant factor which should be considered. Although actual
confusion is not an essential element of a Lanham Act cause of
action, it is positive proof of likelihood of confusion. SguirtCo
v. Seven-Up Co., supra, 628 F.2d at 1091; Markel ¥. Scovill
Manufacturing Co., supra, 471 F.Supp. at 1251. See also Truck
Equipment Service Co. v. Fruehauf Corp., supra, 536 F.2d at
1220-2!. The Court has already discussed the consumer
complaints received by Dirkschneider. These complaints in-

136

dicate that some customers placed their money in the defend- —
ants’ games expecting that the games would perform like the
plaintiff's. These complaints are evidence of actual consumer
confusion and provide further proof that the defendants’ con-
duct is causing a likelihood of confusion in the marketplace-

The final factor relevant to the issue of likelihood of
confusion is the defendants’ conscious imitation of the plaintiff's
game characters.'® RJR Foods, Inc. v. White Rock Corp., supra,
603 F.2d at 1060. See also Truck Equipment Service Co. v.
Fruehauf Corp., supra, $36 F.2d at 1220. In the instant action,
the defendants had knowledge of the plaintiff's games and used
characters in their games identical to the characters used by the
plaintiff. This conduct suggests that the defendants were
seeking to capitalize on the public recognition of the plaintiff's
characters. The defendants’ intent to capitalize gives rise to an
inference that the defendants were successful in capitalizing on
the plaintiff's reputation by confusing the public. Markel v.
Scovill Manufacturing Co., supra, 471 F.Supp. at 1252; D C
Comics, Inc. v. Powers, 465 F Supp. 843, 848 (S.D. N.Y. 1978).
Thus, the defendants’ conscious imitation is evidence of likeli-
hood of confusion.

The evidence of likelihood of confusion is substantial. The
Court therefore finds that the plaintiff will probably succeed in
proving that the defendants’ use of the plaintiff's game charac-
ters is likely to cause confusion in the mind of the average
consumer.

B. irreparable Harm and Balancing of the Equities.

The plaintiff need not present specific evidence of irrepa-
rable harm. Once the plaintiff proves the tendency of the
defendants’ conduct to deceive, the requirement of irreparable
harm is satisfied. Black Hills Jewelry Manufacturing Co. v. Gold
Rush, Inc., supra, 633 F.2d at 753; Markel v. Scovill Manufac-
turing Co., supra, 471 F.Supp. at 1254. The plaintiff has clearly
established a tendency to deceive.

® The issue of intent is thoroughly discussed in the Court's consideration of
secondary meaning ;

Id. at 753 n. 7 quoting J. McCarthy, Trademarks & Unfair
Competition §27:5A at 250-5! (1973). The plaintiff has made
4 substantial -howing that the public is likely to be confused.
Thus, an injunction in the instant case would further the public
interest by protecting consumers from the danger of confusion
created by the defendants’ products.

D. Summary

The plaintiff has made a substantial showing that it will
Probably succeed in proving that its game characters are

~ nonfunctional, and that the defendants’ use of the characters

creates a likelihood of confusion. Although the evidence of
secondary meaning is not as substantial, this does not preclude
the Court from issuing a preliminary injunction.

The record contains overwhelming evidence of the likeli-
hood of confusion caused by the defendants’ products. This
confusion is evidence of the substantial injury which both the
plaintiff and public will suffer if a preliminary injunction is not
issued. In light of this injury, the Court is of the opmion that
the plaintiff has made a sufficient showing that it will probably
succeed in proving secondary meaning. The Court therefore
finds that the plaintiff is entitled to a preliminary injunction

the defendants from further violations of the Lan-
ham Act.

An Order will be issued contemporanecously with this
Memorandum Opinion.
Dated this 15th day of July, 1981.

Warren K. Upham
Chief Judge

FILED
District of Nebraska
at

JUL 15 1981
ss a

™ (T}he court ordinarily is not required at an carly stage wo draw the fine line
between a mathemanca!l probability and a substanual possibility of success. This
endeavor may. of course.. be necessary in some circumstances when the balance of
equities may come to require a more careful evaluation of the merits. But where the
balance of other (actors ups decdedly toward plainuff a preliminary injunction may
issue if plainnff has raised quesuons so senous and difficult a3 to call for more deliberate
invesuganon.

Dataphase Systems. Inc. v. C L Systems. Inc. supra, 640 F.2d at 113. See also now |
npre. .

ax

lat ‘ ao, Mh! a a se FT ia
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In the Matter of

CERTAIN COIN-OPERATED
AUDIO-VISUAL GAMES AN igation No. 337-TA-87
COMPONENTS THEREOF

COMMISSION ACTION AND ORDER

Introduction
On May 22, 1980, Midway Mfg. Co., 10750 West Grand

15. Kyugo Co., Ltd.

16. Miyabi Inc., d/b/a Compu Game, Inc.

17. Nihon Bussan Co., Ltd., a/k/a Nichibutsu
18. Stan Rousso, Inc.

19. Taito of Japan

20. T.T. Sales & Service, a/k/a Enterprise, Inc.
21. Wesco Co.

The names of the games at issue are the following: Moon Alien,
Cosmic Alien, Fuso Karateco, Hoei Galaxy, Kyugo Galaxy,
Fuso Galaxian, and Artic Galaxian.

The complainant in this investigation, Midway Mfg. Co.
(Midway ), is an Illinois corporation engaged in the business of
ponents thereof. Galaxian is Midway's trademark for its coin-
operated audio-visual game.

J4

Because of the complexity of the copyright issue, the
Commission published a Notice of Request for Fur.ser Briefing
on May 4, 1981. As a result of the notice; the Commission
received 15 amicus briefs on the copyright question.?

On June 9, 1981, at a public meeting, the Commission
unanimously determined that there is a violation of section 337
of the Tariff Act of 1930 (19 U.S.C. § 1337) in the importation
and sale of certain coin-operated audio-visual games, kits and
components thereof which infringe complainant's copyrights or
common-law trademark or bear false designation of origin as to
an exclusion is the appropriate remedy. The Commission also
unanimously determined that public interest considerations do
not preclude the granting of an exclusion order in this in-
vestigation and that a bond of 54 percent of the c.i.f. value of
the imported articles is appropriate during the Presidential
review period.‘

Action
Having reviewed the record compiled in investigation No.

337-TA-87 and the recommended determination of the ALJ,
the Commission, on June 9, 1981, determined —

3 Briefs were submitted by the following: Richard Kinney,

Esq., Richard H. Stern, Esq., and Jeffrey L. Squires, Esq.;
Harold L. Novick, Esq.; Sega Enterprises, Inc., and Gremlin
Industries Inc., (Sega/Gremlin ); Omni Video Games, Inc., and
Ferncrest Distributors, Inc.; Intel Corp.; Arthur L. Levine, Esq.;
Finnegan, Henderson, Farabow, Garret & Dunner, IBM;
Kaye, Scholer Fierman, Hays & Handler, Williams Electronics,
Inc.; and Atari, Inc.

“The Commission also voted to deny the joint motion of
complainant and respondent Nichibutsu to terminate Nichi-
butsu as a party respondent based upon a consent order
agreement.

hs

J5

1. To deny the joint motion to terminate respondent
Nichibutsu as a party respondent:

tendency of which is to substantially injure an industry, effi-
ciently and economically operated. in the United States;

3. That the appropriate remedy for such violation of
section 337 is an exclusion order, Pu uant to subsection (d) of
section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337(d)),
Preventing the importation of certain coin-operated audio-
visual games, kits and components thereof as follows:

Play mode of that game: (1) Moon Alien, (2) Kyugo
Galaxy, (3) Hoei Galaxy, (4) Taito Galaxian, (5) Kara-
teco and Fuso Galaxian, and (6) Artic Galaxian.

B. Exclusion of coin-ope’ ated audio-visual games,
kits or components thereof which infringe Midway's com-
mon law trademark through the use of the names Gala-
xian, Galaxy or Galaxip or which bear a false designation
of origin.

4. That the public interest factors enumerated in subsec-
tion (d) of section 337 of the Tariff Act of 1930 (19 U.SiC.
§ 1337(d)) do not preclude the issuance of an exclusion order
in this investigation; and

§, That, as provided in subsection (g)(3), of section 337
vw me Tariff Act of 1930 (19 U.S.C. § 1337(g)(3)) the

propriate bond during the period this mauer is pending

yaw am. f q -
ese Ne Ba?

9

P

before the President is in the amount of 54 percent of the c.i.f. :
value of the imported articles.

Order

Accordingly, it is hereby ORDERED THAT—

1. The joint motion (Motion 87-16) of complainant
and respondent Nihon Bussan Co., Inc., d/b/a/ Nichi-
butsu to terminate Nichibutsu as a party respondent on the
basis of a consent order agreement is denied;

2. Certain coin-operated audio-visual games, kits and
components thereof which infringe complainant's attract
mode and the first few moments of the play mode before
the player takes control of the game are excluded from
entry into the United States—specifically, Moon Alien,
Kyugo Galaxy, Hoei Galaxy, Taito Galaxian, Karateco :
and Fuso Galaxian, and Artic Galaxian.

3. All games, kits and components which infringe
complainant’s trademark or bear false designation of ori-
gin are excluded from entry into the United States.

4. The articles to be excluded from entry into the
United States shall be entitled to entry under bond in the
amount of 54 percent of the c.i.f. value of the imported
articles from the day after this order is received by the
President pursuant to subsection (g) of section 337 of the
Tariff Act of 1930 (19 U.S.C. § 1337(g)) until such time
as the President notifies the Commission that he approves
or disapproves this action, but, in any event, not later than
60 days after the date of receipt; :

5. Notice of this Action and Order be published in the
Federal Register;

6 A copy of this Action and Order, and of the Commis-
sion opinivn in support thereof be served upon each party of

a

ae OFT Sy cae WE ee Sth Oy A

37

record to this investigation and upon the Department of Health
and Human Services, the Department of Justice, the Federal
Trade Commission, and the Secretary of the Treasury; and

7. The Commission may amend this Order in accordance
with the procedure described in rule 211.57 of the Commis-
sion’s Rules of Practice and Procedure (46 F.R. 17533, Mar. 18,
1981).

By order of the ©~=mmission.

KENNETH R. MASON
Secretary

Issued: June 25, 1981

ps

yg *
OPINION OF THE COMMISSION

1. PROCEDURAL HISTORY'

On May 22, 1980, Midway Mfg. Co., 10750 West Grand
Avenue, Franklin Park, Illinois, filed a complaint with the U.S.
International Trade Commission under section 337 of the Tariff
Act of 1930 (19 U.S.C. $1337). An amendment to the
complaint was filed on July 9, 1980. The amended compiaint
alleges unfair methods of competition and unfair acts in the
unauthorized importation of certain coin-operated audiovisual
games into the United States, or in the unauthorized sale of
such articles in the United States based upon common-law
trademark infringement; passing off,? imitation of trade dress,?
and false designation of origin. The complaint alleges that the
effect or tendency of these unfair methods of competition and
unfair acts is to substantially injure an industry, efficiently and
economically operated, in the United States.

Complainant seeks cease and desist orders against the
domestic respondents and an exclusion order against the alleg-
edly offending imported games and kits (i.e., circuit boards).

On June 19, 1980, the Commission instituted an in-
vestigation based on Midway's amended complaint. On June
20, 1980, a notice of investigation was issued and thereafter

' In this opinion, the following abbreviations will be used:
ALJ means the Administrative Law Judge. RD means Recom-
mended Determination of the ALJ. CX means exhibit filed

2 This count was subsequently waived by complainant and
therefore the Commission need not address this issue. (Com-
plainant's Pre-hearing Brief, p. 5, Aug. 11, 1980.)

3 This count was also waived by complainant and thus wilil
not be considered by the Commission. (Complainant’s Brief,
p. 2, Dec. 30, 1980.)

: Se Pa) RAO ie, ee Oh ea
as “aoe ese es are Gee SK, ei ae © 2 t re *“

J9

Published in the Federal Register (45 F.R. 42891, June 25,
1980). On October 8, 1980 on complainant's motion, the notice
of investigation was amended to add a count of copyright
infringement.

Eight foreign and 12 domestic respondents were named in
the original notice of investigation. Since institution of the
investigation, several motions to add and/or terminate respond-
ents have been granted by the Commission.é

The following respondents remained in this investigation
at the time the record was certifed to the Commission:
- Active Amusement Co.
. Artic Electronics Co., Ltd.
. Arjay Export Co.
Bonanza Enterprises, Ltd.

|
Tee

15. Kyugo Co., Ltd.

16. Miyabi Inc., a/k/a Compu Game, Inc.

17. Nichibutsu, a/k/a Nihon Bussan Co., Ltd.
18. Stan Rousso, Inc.

:
|
:
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>

J10

19. Taito of Japan
20. T.T. Sales & Service, a/k/a M. Enterprise, nc.

21. Wesco Company
The games at issue are Moon Alien, Cosmic Alien, Hoei
Galaxy, Kyugo Galaxy, Fuso and Karateco Galaxian, Artic
Galaxian. The kits are Wesco Galaxian Kit, KEK Galaxian
Kit, Hobby Galaxian Kit, and En’sco Galaxian Kit.

The ALJ has recommended that the Commission deter-
mine that there is g violation of section 337 by the following
respondents: Hoei Sangvo, Nihon Bussan Co., Ltd., a/k/a
Nichibutsu, Artic Electronics Co., Ltd., Fuso Corporation,
Kyugo Company, Ltd., Chens International, Inc., Arjay Export
Co., LJ.S., Inc., General Vending Sales Corp., Taito Corpo-
ration, Stan Rousso, Inc., Compu-Game, Inc. (Miyabi), M.
Enterprise, Inc. a/k/a T.T. Sales & Service, and Circle Inter-
national. The ALJ also recommended that 10 other respond-
ents be dismissed. The ALJ found that each of the respondents
listed above committed one or more of the following unfair
acts: (1) common law trademark infringement, (2) false
designation of origin, (3) simulation of trade dress, and, (4)
copyright infringement.

Only the IA filed exceptions to the R.D.¢

* Hobby Industries, Ltd., En’sco Co., Ltd., Universal Co.,
Lid., Universal U.S.A., Inc., Wesco Co., Active Amusement
Co., International Trademarks, Bonanza Enterprises, Inc., KEK
Industries, Inc., and Sunrise New Sound, Inc. As noted in
footnote 4, supra, Universal U.S.A., Universal Co., Ltd., and
Sunrise New Sound have already been dismissed.

*IA Pre-hearing Brief (p. 8). The Commission in-
vestigative attorney disagrees with and takes exception to that
part of the R.D. which finds that:

|. Respondents Nichibutsu, Generai Vending, and
1J.S. violated section 337 by infringing both of complainant's
copyrights, by the manufacture and sale of The Moon Alien

( Footnote continued on following page)

Jil

Because of the complexity of the copyright issue, the
Commission published a notice of request for further briefing
on May 4, 1981 As a result of that Notice, the Commission
received fifteen amicus briefs on the copyright question’

IL. PRELIMINARY ISSUE

On November 19, 1980, complainant and respondent
Nichibutsu, Ltd., filed a motion to terminate as to Nichibutsu
based upon a proposed consent order and a proposed consent
order agreement. The IA opposed that motion because he was

J12

lll. FACTUAL BACKGROUND

The products involved in the investigation are certain coin-
operated audiovisual games 2~“ kits. The “Galaxian” game
was introduced by Namco, Lid., the Japanese company that
created the game, at a trade fair of the Japan Amusement
Trade Association in Tokyo in October 1979. (TR 367.) The
game became popular almosi immediately in Japan. (TR 37.)

Shortly after the introduction of the Galaxian game in
Japan, on November 13, 1979, Midway purchased from Nam-
co the exclusive right to manufacture and sell the Galaxian
game in the United States. (CX 25.) The license agreement
includes the “attract mode” for the game, and the game itself
(the “play mode”). As part of the license agreement with
Namco, Midway agreed to make no changes in the game itself,
and only a few minor changes, expressly agreed to by Namco,
could be made in the trade dress of the game.

The Galaxian game has both a “play mode” and an
“attract mode.” The attract mode is a short sequence of images

nity for public comment. The general rule set forth by the
Administrative Procedure Act in 5 U.S.C. 556(c)(1) that an
“agency shail give all interested parties opportunity for the

a rr 7 —?
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lated game, which ends with the destruction of the player's
rocket base defense ship.

Once a coin is inserted the game enters the “play mode” in
which the player controls the lateral movement of the defense
ship and fires missiles at the attacking aliens.

Galaxian is Midway's trademark for a coin-operated
audio-visual game which incorporates numerous distinctive
design features in both its video screen and cabinctry. The
video screen of the Galaxian game displays a visual work
incorporating five rows of “alien” figures swinging in a slow
sideways movement back and forth across the top of the screen.
For scoring purposes, there are four denominations or ranks of
these aliens, which are reflected in different colors for the
different rows, with the highest ranking near the top of the
screen and the lowest ranking near the bottom. The top-most
row of aliens consists of two rocket-shaped figures with station-
ary wings, and the lower rows of aliens have flapping wings. At
the bottom of the Galaxian screen is a two-color rocket figure or
defense ship (Galaxip) that shoots yellow missiles in a vertical
trajectory toward the aliens. When the missiles collide with an
alien, the alien is destroyed. accompanied by a multicolored
“explosion” appears on the screen. Surviving aliens invert and
swoop down to bomb the defense ship. This “peeling off” from
the alien convoy occurs either by single aliens or by aliens in
formation. The defense ship is shifted horizontally along the
base of the screen under control of the player to avoid a
destructive collision with the aliens and the shower of bombs
dropping from the aliens as they descend. Behind the aliens
appears a twinkling star background of multicolored lights
which rolls from the top of the screen to the bottom. In the
lower right corner of the screen, the number of alien convoys
destroyed is recorded by means of images shaped as pennants,
and at the lower left corner of the screen the number of defense
ships is recorded by means of images of defense ships remain-
ing to be played.

Ji4

The visual features of the Galaxian game are acco.npanied
by distinctive sound effects, including musical phrases and
sounds of firing rockets and explosions.

Midway’s Galaxian game is manufactured in two models,
an upright console, approximately 6 feet by 2 feet by 2 feet, and
a cocktail table configuration, approximately 3 feet by 3 feet by
2 feet. Both types of cabinet contain a logo characterized by the
word “Galaxian” in distinctive lettering with a distinctive style
in the form of a large arc over the letters and a star as the dot of
the “I”. This logo appears in the upper part of the front of the
upright cabinet and on the top horizontal surface of the cocktail
table. The logo without the star appears on the sides of the
upright cabinet. The sides of the upright cabinet also depict a
large robotic insect in flight over an extraterrestrial landscape.
(CPX-i2)

IV. COMMON LAW TRADEMARK INFRINGEMENT.

The elements necessary to prove ccmmon law trademark
infringement are as follows:
1. The mark must be distinctive;
2. The mark must be arbitrary or created for the
express purpose of serving as a trademark;
3. The mark, if a design, must be nonfunctional;

4. The mark must have achieved secondary meaning,
unless the mark is either “suggestive”® or non-descriptive,
5. There must be likelihood of confusion.

‘eibacncaiietineess at enade atnicaane measoemtoaen anes
quality or ingredients of goods as opposed to a descnptve mark
(1 J.T. MeCarthy, Trademarks an Unfair Competition.

wor (fa
ais Cenain Novelty Glasses, 337-TA-SS, USITC Pub. 991
(1979).

hat

Ji5

There isa conflict between the IA and complainant as to
whether secondary meaning’' is a necessary element of
Midway’s common law trademark infringement claim.'? The
IA concedes, and the ALJ found, however, that secondary
meaning as to “Galaxian” has been established, and that the
name “Galaxian” has acquired a common law trademark
status. The Commission also agrees that the use of the word
“Galaxian” by any other manufacturer would misappropriate
complainant’s proprietary interest in the name “Galaxian”.

The term “Galaxian” .

The ALJ found that the word “Galaxian” is arbitrary and
id atari Ste ceilliiiinn: Mataiieen: Hatitieasinn titi tal
i a common law trademark not requiring proof of secondary
meaning." All parties agreed that the term “Galaxian” is
nonfunctional. The ALJ noted that complainant does not claim
that there is confusion of the playing public by the use of the
cares who manufactured the game. Rather, Midway is con-
cerned about the confusion of the operator who buys the games
from the distributor.'* An operator is the owner of an arcade or
a person who buys a game, finds a restaurant or bar location for
it, and splits the income from it with the owner of the restaurant
or bar. We agree with the ALJ and we believe that the word
Galaxian is entitled to protection.

" Secondary meaning occurs when the name of a product
is associated with a particular manufacturer in the minds of
consumers. Carter-Wallace v. Proctor & Gamble Co., 434 F.2d
794 (9th Cir. 1970).

5g jammecn get Grad: xa iehcaamsmmmamna aed

3 R.D., p. 10; See also Miller Brewing Co. v. G. Heilman
Brewing Co., Inc., 561 F.2d (7th Cir. 1977), J. T. McCarthy,
ee ee eee

» P.

er ak

J16

The Restatement of Torts § 729 sets forth four criteria to

4 be considered in determining likelihood of confusion:

eh (a) the degree of similarity between the designation
a _ amd the trademark or trade name‘in

| (i) appearance;

(ii) pronunciation of the words used;
(iti) verbal translation of the pictures or designs
involved;
(iv) suggestion;
(b) the intent of the actor in adopting the designation;
(c) the relation in use and manner of marketing

between the goods and services marketed by the actor and
those marketed by the other;

(d) the degree of care likely to be exercised by

The three-part test of Restatement § 729(a) has been
characterized as the “sound, sight and meaning” trilogy. | J. T.
McCarthy, § 23:4. That is, the conflicting marks are to be
compared with respect to similarity of pronunciation, appear-
ance, and verbal translation. /d.

As to the other elements of likelihood of confusion, there is
testimony of actual confusion in the record. (CX 61 p. 5-6)

viewing respondent's games are misled into thinking

#

= = a

+

The terms “Galaxy” and “Galaxip”
The remaining question is whether using the words “Ga-
laxy” and “Galaxip” infringe Midway's trademark because of

respondents who used the words “Galaxy” and “Galaxip” had
also infringed complainant’s trademark rights. The LA argued
that “Galaxy” and “Galaxip” are not similar enough to “Gala-
xian” to infringe the common law trademark accorded to the

‘word Galaxian.

A discussion of the test for likelihood of confusion based
upon similarity in sound, meaning and appearance as to each
game follows: '¢

The ARTIC GAME is manufactured by Artic Electronics,
Inc., and sold in the United States by Chens International. A
comparison of the Artic game and Midway's game shows that
they are extremely similar. Both use the name “Galaxian” on
the game cabinet, and in both names there is an arc between
the “G” and the “N”, and a star above the “I”. Although the
colors are different, in both games the colors are split horizon-
tally. The words “Galaxip” and “Galaxians” appear in the
attract mode.

Since there is a likelihood of confusion between the Artic
game and the Midway game, both Chens and Artic have
infringed Midway's common law trademark “Galaxian.”

© The Moon Alien Game does not use the name Galaxian
or any similar sounding name. No allegation of common law
trademark infringement was made against Nichibutsu, General
Vending, or LJ.S., Inc.

Ji8

As to the KARATECO GAME, manufactured by Fuso
Corp. and imported by Arjay, there is a lik-lihood of confusion
between the two games because the name “Galaxian” is used
by both games, and because the Karateco game and the
Midway Galaxian game are almost identical. The Karateco
game uses the aame “Galaxians” and the word “Galaxip” in
the attract mode, but not on the cabinet. (CPX-I1). We agree
with the ALJ that Fuso has infringed Midway's common law
trademark.

The TAITO GALAXIAN GAME (CPX-Q) is manufac-
tured by respondents Taito of Japan and is imported and
distributed in the United States by a wholly owned subsidiary,
Taito of Hawaii, Corp. The game uses the word “Galaxians,”
Midway’s common law trademark, in the attract mode. We
therefore determine that TAITO has infringed the common law
trademark of Midway. .

The HOEI G4ME, manufactured by Hoei Sangyo
distributed by Stan Rousso and Miyabi, Inc., d/b/a Compu-
Game, uses the name “Galaxy” on the cabinet. (CPX-F).
Because the Hoei Galaxy game and the Midway Galaxian
game are so similar and the name “Galaxy” is so close to the
name “Galaxian” the use of the name “Galaxy” creates a
likelihood of confusion. In addition, the attract mode of the
Hoei game uses the word “Galaxians”. We therefore deter-
mine that Hoei Sangyo, Stan Rousso, and Compu-Game, Inc.,
have infringed Midway’s common law trademark.

The FUSO GALAXIAN GAME manufactured by Fuso
Corp. and distributed by M. Enterprise, Inc., uses the word
“Galaxian”. We determine that Fuso and M. Enterprise, Inc.,
have infringed Midway's common law trademark.

The Commission finds that the complainaat’s common law
trademark has been infringed by the following respondents by

_

ot)

seh ee

Ji9

use of the terms “Galaxian”, “Galaxy” or “Galaxip”:'7 Chens
International, Inc.; Taito of Japan, Ltd.; Artic Electronics Co.,
Ltd.; Fuso Corporation; T.T. Sales and Service; Hoei Sangyo;
Stan Rousso, Inc.; and Miyabi. Ind., d/b/a Compu-Game,

Kyugo Co. Ltd. and Circle International, Inc. ,

FALSE DESIGNATION OF ORIGIN

The complainant has alleged the count of false designation
of origin. The same elements which establish common-law
trademark infringement also establish a prim facie case of false
designation of origin, i.e. of the manufacturer. We, therefore,
find that Taito of Japan, Lid., Hoei Sangyo, Stan Rousso, Ina,
Miyabi, Inc., Fuso Corporation, Circle International, Inc., and
T.T. Sales & Service have violated sectidn 337 by reason of
false designation of origin.'* Respondents Chens International
and Artic Electrouics, because of the conspicuous use of the
name of the manufacturer (Artic) in the attract mode, on the
sides of the cabinet, and on the instruction panel as well as such
instructions being in Japanese, are not found to have falsely

‘7 It is interesting to note that, when complainant filed its
application for federal registration of the Galaxian trademark,
the application was objected to on the ground that there was
another mark registered as “Galaxy Ranger.” tr., p. 17. How-
ever, upon a showing by the complainant that it also owned
that mark, the objection was withdrawn and complainant is
currently awaiting publication of the trademark “Galaxian.”
The initial objection to the use of the name “Galaxian” was
based upon the finding by the examiner in the Pa: nt and
Trademark Office that there might be the likelihood of con-
fusion between “Galaxian” and “Galaxy Ranger.”

*® Chairman Alberger, Vice Chairmar Calhoun, and Com-
missioner Bedell note that there is no respondent found to have
engaged in false designation of origin which is not also covered
under the common-law trademark findings. Furthermore, there
is no additional or more appropriate relief available under
section 337 for this particular violation beyond that which the
Commission is already granting for common-law trademark
infringement.

J20

designated the manufacturer of origin. Additionally, there is no
finding made against Kyugo Company Ld. as there was no
evidence presented that Kyugo had misrepresented the origin
of its Galaxy game.

VL UNFAIR ACTS REGARDING COPYRIGHT

In order to sustain a claim of copyright infringement, a
plaintiff in federal court’? is required to demonstrate two
elements: (1) ownership of the copyright in question; and (2)
copying by the defendant. Samet & Wells, Inc. v. Shalom Tay
Co., Inc., 429 F. Supp. 895 (E.D.N.Y. 1977), aff'd 578 F.2d
1369 (2d Cir. 1978); Russ Berrie & Co., Inc. v. Jerry Elsner Co.,
Inc., 482 F. Supp. 980 (S.D.N.Y. 1980); Sid & Marty Krofft
Television Productions, inc. v. McDonald’s Corp., 562 F.2d
1157, 1162 (9th Cir. 1977); M. Nimmer, Nimmer on Copyright
§ 13.01 (hereinafter Nimmer). We deal with each of these
elements separately.

A. COPYRIGHT OWNERSHIP

According to Professor Nimmer, the copyright law of the

made. 3 Nimmer § 13.01[a} and cases cited therein. These
elements are as follows:

1. Originality in the author;

19 At least one of the briefs rec _- ‘ed by the Commission as
a result of our request for further briefing of copyright issues
suggested that the Commission has the power to remedy an

2
er
os)

J21

eo

2. Copyrightability of the subject matter;

3. Citizenship status of the author such as to permit a.
claim of copyright;

4. Compliance with applicable statutory formalities;
and

5. If the plaintiff is not the author, a transfer of right

or other relationship between the author and the plaintiff
sO as to constitute the plaintiff the valid copyright claimant.

Complainant alleges that it has made a prima facie showing of
each of these elements and, therefore, that the Commission
should conclude that it is the copyright owner.

A review of the record in this investigation reveals that the
complainant has alleged facts tending to prove each of these
elercents. It appears to us that, in the absence of any rebuttal,
the evidence brought forth by the complainant in support of
those allegations is sufficient to meet threshold levels of reliabil-
ity and probative value.

In finding that ownership of the copyright has been
established in this case, we note that the respondents in this
investigation are in default—that is, none of the named re-
spondents participated in the fact-finding phase before the
Commission's. ALJ. the record certified to the Commission
consists exclusively of evidence presented by the complainant
and by the commission investigative attorney. Since no evi-
dence was presented by any of the respondents, we are
constrained to rely upon that evidence presented by the com-
plainant and the IA. Therefore, while our factual conclusions
are based upon the record before us, we will not speculate
whether we would reach the same conclusions after examining
the record of a fully litigated proceeding.

We turn now to each of the requisite elements.

Originality. As cited above, there is evidence on the record
that the game known as Galaxian was created by Namco of

J22

Japan, and there is alsc evidence that Namco transferred ail its
rights, title, and interest in the game, at least for the U.S.
market, to the complainant. The document of transfer, in fact,
has been filed with the Copyright Office. No evidence has been
brought forward to rebut this evidence of originality and
transference of rights. Therefore, we find chat Midway is the
proprietor of all legal rights in the Galaxian game.

Validity. The record of this investigation reveals that the

certificates of registration have been made a part of the record
of this investigation. The certificates of registration recite
complainant’s claim that copyright extends to all audiovisual or
cinematographic work.

The Copyright Act of 1976 treats the existence of certifi-
cates of registration as evidence relevant to the prowf of the
validity of copyright:

$410. Registration of claim and issuance of certificate.

_(¢) In any judicial proceedings, the certificate of a
made before or within 5 years after first

within the discretion of the court. (Emphasis supplied.)

17 US.C. 410(c). Since registration appears to have been
made within five years of the date of first publication, the
certificates of registration constitute prima facie evidence of the
validity of the claimed copyright.” This follows the principles
of case law enunciated under the Copyright Act of 1909.

22 Although the record is not specific, the first publication

of Galaxian appears to have occurred in 1979 and registration
was made in 1980.

J23

The legislative history makes it clear that § 410(c) is a
codification of the principles developed in judicial decisions
under the Copyright Act of 1909. H.R. Rep. 94-1476, 94th
Cong., 2d Sess, p. 157 (1976). It is well settled in that case law
that once a copyright certificate is issued, it constitutes prima
Sacie evidence of the facts stated therein.2' The issuance of a
certificate of registration by the Copyright Office gives rise to a
presumption of ownership and validity of the claimed copy-
right.22 The presumption so created is rebuttable, and the
burden of going forward shifts to the defendant.2* These

2" Monogram Models v. Industro Motive Corp., 448 F.2d
284 (6th Cir. 1971); Herbert Rosenthal Jewelry Corp. v.
Grossbardt, 428 F.2d 551 (2d Cir. 1970).

22 Novelty Textile Mills, Inc. v. Joan Fabrics Corp., 558
F.2d 1090 (2d Cir. 1977); Kieselstein-Cord v. Accessories by
Poor, Tes, 498 F- Supp. 732 (S.D.N.Y. 1980).

23 Monogram Models, Inc. v. Industro Motive Corp., 448
F.2d 284 (6th Cir. 1971); Rohauer v. Friedman, 306 F.2d 933
(9th Cir. 1962); Jerry Vogel Music Co. v. Forster Music
Pubeion, 147 F.2d 614 (2d Cir. 1945).

24 Monogram Models, Inc. v. Industro Motive Corp., 448
F.2d 284 (6th Cir. 1971); Rohauer v. Frielman, 306 F.2d 933
(9th Cir. 1962); Samet & Wells, Inc. v. Shalom Toy Co., Inc.,
429 F. Supp. 895 (E.D.N.Y. 1977), aff'd 578 F.2d 1369 (2d
Cir. 1978); Stratchborneo v. Arc Music os 357 F. Supp.
1393 (S.D.N.Y. 1973); See also Epoci. ‘'roducing Corp. v.
Killiam Shows, Inc. 522 F.2d 737 (2d Cir. het den. 424
U.S. 955 (1976); Plymouth Music Co. v. Magnus Organ Co.,
456 F. Supp 676 (S.D.N.Y. 1978).

J24

Complainant's certificates of registration create, at law, the
presumption of validity of the claimed copyright. Since no
evidence to rebut that presumption has been brought forward
by any of the respondent parties or by the Commission
investigative attorney, we must conclude that complainant has a
valid copyright.75

Citizenship, Statutory Formalities, and Transference. The
same reasoning also dictates our conclusions with regard to the
citizenship status of the author, compliance with applicable

the basis of the lack of any evidence to rebut the presumptions
created by the certificates of registration and the facts brought
forward by the complainant, we find that the complainant has
estabiished a prima facie case for each of these elements.

28 We note that the Commission has recently instituted an
based upon another complaint by Midway, which
appears to involve similar allegations of copyright in-
fringement. Since our conclusions today are based upon an
uarebutted presumption, we expressly reserve judgment on the
copyrightability of the games covered by the new investigation,
particularly the audiovisual displays of those games.
Chairmas Alberger and Commissioner Stern note further

form of deposit and regis.cation, whether the work was first
published in Japan or the United States.

J25

B. Copying

The second substantive element necessary to sustzin a
copyright infringement action is copying by the defendant.
Since it is rare for the plaintiff to be able to prove copying by
direct evidence, the courts have developed the principle that
evidence of access and substantial similarity create an inference
of copying. The plaintiff has the burden of showing both.
Jewel Music Publishing Co. v. Leo Feist, Inc., 62 F Supp. 596
(S.D.N.Y. 1945); Sarkadi v. Wiman, 135 F.2d 1002 (24 Cir.
1943). As Professor Nimmer has stated:

It has been held tt.at where the plaintiff has made a strong
prima facie case of copying by proving both access and a
convincing number of similarities there is a high probabil-
ity that copying whether intentional or unintentional has in
fact occurred so that at that point the burden of going
forward with evidence shifts to the defendant who must
either negative the probability of copying by evidence of
independent creation, or justify the copying by evidence of
authority from or through the plaintiff. Ouce a prima facie
case of copying has been made by evidence of access and
substuntial similarity, it has been said that in the absence
of countervailing evidence of independent creation by
defendant (or, presumably of authority from or through
plaintiff), a finding that there has been no copying would
be clearly erroneous. (Citations omitted )

3 Nimmer § 12.11[D], pp. 12-83-85.

In this investigation, there is no direct evidence of copying.
Therefore, we must look to see whether the respondents had
access to plaintiff's work and whether there is substantial
similarity. There is evidence in the record that the respondents
had access to the Galaxian games. There were at least two
trade shows at which the games were displayed. In addition,
the games have been available in the market place for some
time, and respondents’ alleged infringing games did not appear

ei Ml a:

Ss
r, especially where any attemp:
to copyright the rules would so limit the possible number of
forms of expression as to permit, by monopolizing the forms of
expression of the rules, establishment of a monopoly in the
system to which the rules pertain. Morrissey, supra; Affiliated
Hospital Products, supra.

For these reasons, we specifically note that our findings do
not extend to the copyrightability of the Galaxian game itself,
but only to the modes of expression used in the attract mode
and the first few moments of the play mode. We do nor decide
whether any performance of one of the infringing games could
conceivably infringe a valid copyright, if one exists, in the play
mode of the game itself. We do so for three reasons.

First, for statistical reasons, it is virtually impossible for a
performance of Galaxian ever to duplicate that performance
fixed in the video tape. If we were to hold that such
performances could infringe a copyright in the play mode, we
might be protecting the game itself or its mode of play, items
which are specifically not subject to copyright protection.
Second, each performance of the Galaxian play mode depends.
in part, on the player. It is therefore possible that the player
may be considered a “coauthor” of each performance of the
play mode. Our research has indicated no legislative history or
case law on whether coauthored works of this sort are subject of
copyright, and we decline to rule on this issue. Third, in view of
the remedy we are granting in this investigation, a ruling on
either copyrightability or infringement of the play mode is

J31
unnecessary. We are ordering the exclusion of those games and
cabinetry which infringe complainant's trademark rights and
copyright in the attract mode and in the first few moments of

(TRI 7-8 CX10).

At its facilities for the manufacture of the Galaxian game,
Midway employs 1,200 People. The modern facilities consis: of
ri, Grand Avenue plant and the Belmont Avenue building in
Franklin Park, Illinois.

equipment. Complains :t’s Belmont Avenue building contains
approximately 144,000 square feet and houses Midway’s Engi-
neering Department. TR. ! 7, 8.

Midway maintains a large network of distributors which
covers the entire United States. Midway has made a substantial
investment in the Galaxian game and has devoted substantial
manhours to its production.

Effect or Tendency to Substantially Injure

The complainant did not take exception to the ALJ's
finding that there is no showing of effect to substantially injure.
Complainant states that it took no exception to the ALJ's
finding in this regard because of the belief that the finding of
tendency to injure meets the statutory test for injury and is
sufficient to support a finding of violation. It nevertheless
argues in its post hearing brief that the record does support a
finding that Midway has suffered substantial injury. Com-
plainant’s position regarding the claim of present injury has
thus been inconsistent. It’s failure to take exception to the
ALJ’s recommended findings under these circumstar.2s com-
pels us to conclude it has waived it’s right to further argue this
claim. See 19 CFR 210.54.

There was evidence before the ALJ which establishes lost
sales, and, as is explained below, a tendency to substantially
injure the domestic industry.

Complainant experienced 4 decline in monthly production
of Galaxian games from 5,000 in February 1980, to 2200 in
July 1980 (CX 67). This is more than a 50% declwe in a period

eet ig |

333

of six months. Although the complainant acknowledges a short
lifespan for these games. there was testimony at the temporary
exclusion order hearing that there is still a market for the games
in the United States, and that Midway would have sold more

games but for the infringing imports. (TR.I pp. 315-318.)

Complainant also claims that importations by respondents
would have been even greater ( making the loss greater) but for
this investigation, which has caused importers to be miore
cautious. While such an assertion has not been proven, it does
seem likely that the Commission’s investigation may have
deterred importers somewhat.

There is evidence of actual lost sales. (CX 17, 55). The
ALJ notes “the record contains evidence of a number of
imported games sold to purchasers who had requested
Midway’s game and this shows actual sales lost by Midway.”
(RD p. 35, CX 17, CX 55). The record shows 295 lost sales of
games (CX 96) and 71 lost sales of kits (CX 96 p.2). These
sales would have gone to Midway but for the presence of the
infringing games. Complainant further claims that there is
competition for the limited space in which to install individual
games,?” making each imported game tantamount to a lost sale
for Midway.

The record indicates that imported games underselil
Midway’s games by margins of up to 37% (CX 74). The
imported kits undersell complainant’s product by approxi-

mately 30% of the price of the completed Galaxian games.

In this case, the complainant has presented evidence which
demonstrates that foreign respondents have placed advertise-
ments in the United States offering “Galaxian” games for

27 Meprobamate, TC Pub. 389 ( 1971}; Luggage Products,
Pub. 932 (1978), 337-TA-44 ITC; Convertible Game Tables,
337-TA-02 (1974) TC Pub. 705 ( Doc. A-74).

sale.2® Further, complainant presented evidence that there are a
large number of games waiting in Japan to enter the US.
market.2® These games use th Midway Galaxian name and
logo. The record also shows it is the intention of the owners of
these games to ship them to the United States.*° Testimony by
Japanese distributors and manufacturers reveals that there are
at lezot 100,000 similar or identical games, or kits capable of
producing such games, in Japan and the Far East. (TR. I pp.
141-142; p. 243). At least half of these games have been shown
to specifically bear the Galaxian name and logo (TR. |, pp.
246, 249, and 304). There is testimony that these games are
wired anJ suitable for immediate use in the United States
without the need for modification (TR. I p. 320).

The ability and intention of the respondents to ship these
games to the United States has been corroborated by the
respondents. Respondent KEK testified as to the capacity to
make a limitless supply of infringing games in Japan and as to
the ability of the Japanese to ship these games rapidly to the
United States (CX 57, p. 11). There is testimony in the record
that the United States is the oniy available marke: for the
Galaxian game today. (TR-1, p. 266).

We believe that the complainant has made a prima facie
showing of tendency to injure. Absent any evidence to the
contrary, we concur with the ALJ that there is a tendency to
substantially injure an industry in the United States.

VIL. REMEDY

An exclusion order against the infringing games is the
more effective remedy since they are numerous and easily
recognizable. Because an exclusion order operates in rem and
will exclude all garnes which fall within its protective scope, we

tr. at 25.

CX 5, 19, 22, 23, 24, 27, 62.
9 Id.

ns SSS elie

J35

have attempted to design a remedy which does not affect non-
infringing exporters. Therefore, the exclusion order is directed
against those games and kits which are clearly marked or use
the words “Galaxian”, “Galaxy,” or “Galaxip” so that there is
no chance that it will exclude only infringing articles.3' Fi ally,
since many of the respondents apparently have no offices or
assets in the U.S., the only effective remedy which the Commis-
sion could issue as to these respondents is an exclusion order.

In Sealed Air Corp. v. USITC and Unipak (H. K.) Lid. v.
USITC, Nos. 79-35, 80-4 (C.C.P.A. March 12, 1981), the
Court pointed out that an exclusion order operates against
goods, not parties. The Court stated that—

the purpose of the exclusion remedy was to get away from
in personam procedures which United States business
found unsatisfactory. Being unable in most cases to sue a
foreign supplier, a U.S, business faced with infringing
products from abroad was forced to pursue a multiplicity
of individual importers, and if a court enjoined one,
another could be found to take his place. Thus, the
exclusion remedy was conceived.

Id. (Opinion of Nies & Baldwin, J.J. concurring with respect to
79-35, and dissenting with respect to 80-4). The Court in
affirming the Commission's jurisdiction to issue exclusion orders
said, “an exclusion order operated against goods, not parties.”
Therefore, we have issued an exclusion order against any games
of foreign origin which infringe complainant's common law
trademark by engaging in false designation of origin.

With regard to the copyright violations, however, the more
prudent course is to issue an exclusion order against only those
games and kits which we have specifically found to infringe
complainants copyright.5? We do so for several reasons. First,

tr. p. 31.

32 A list of those games specifically found to infringe
ee ee ee

opinion.

and foremost, there is ease of application of such an order by
the U.S. Customs Service. By giving the Customs Service the
specific names of each infringing game, we give them a means
to distinguish between infringing and other games and kits.
Secondly, any attempt to enumerate the specific elements found
to infringe complainant’s copyright would be extremely difficult
and fraught with ambiguities. Not only would such a document
be difficult for the Commission to draft, but we fear it would be
exceedingly difficult for Customs to enforce, expecially if Cus-
toms is called upon to judge which elements infringe the
copyright. Finally, we note that no other allegedly infringing
games have been brought before the Commission. The Com-
mission cannot make any finding as to whether any such games
infringe complainant’s copyright, since this requires a factual
determination on case-by-case basis.%%

The Commission has the power to remedy unfair methods
of competition in the importation of goods or in the sale of
those imported goods. Complainant and the IA argued that
cease and desist orders would be an appropriate remedy v“th
regard to the domestic respondents. Such a remedy, ey
argued, would be effective as to those companies that are
known to be engaged in importing or selling infringing games
in the United States. The cease and desist orders could be
issued against those respondents engaged in false designation of
origin and common law trademark infringement. This would

%3 Commissioners Alberger and Stern note that an ex-

clusion order which may be viewed as directed to more than the
games specifically before us today may be a prior restraint on

Minnesota, 283 U.S. 697 (1931); Organization for a Better

Austin v. Keefe, 402 U.S. 415 (1971); New York Times Co. v.

United States, 403 US. 713 (197k). Therefore, the Commis-

sion properly does not.extend its remedy beyond those games
this investigation.

3
:
;
e
;

- c rs : m ] -—
Pe see, > *.* . mth sc oe

IX. PUBLIC INTEREST FACTORS.

Subsection (d) of section 337 provides that exclusion is to
be ordered unless the Commission finds that such relief would
not be in the public interest.

Because of the nature of the articles involved ( audio-visual
gaines), it is unlikely that such relief would have detrimental
impact on the public health and welfare. The record establishes
that Midway is capable of supplying the U.S. market with
Galaxian games as long as the demand for them continues.
TRI, CX 10. Because the unfair competition laws of the United
States have as their goal both the protection of the consumer
from deceptive practices and the protection of property rights
inherent in valid trademarks, the public interest is best served
by the issuance of an exclusion order.

No Government agencies or departments, either orally or
in writing, expressed an opinion on the public interest question.
There was one public interest witness at the Commission
hearing of March 16, 1981, but his concerns were directed, as

The Commission must set a bond for such infringing
articles entered during the period the Commission's determina-
tion is pending before the President. 19 U.S.C. 1337(g)(3)..
The Commission’s rules provide that the Commission is to
determine a bond “taking into consideration... the amount

538

which would offset any competitive advantage resulting from
the violation.” ( 19 C.F.R. 210.14(a)(3).) The Commission has
generally set a bond equal to the difference between the selling
prices of the domestic and imported articies.*¢

The IA has indicated that a bond in this case should not
exceed 54% of the ad valorem price of the imported articles.
His recommendation is based upon the wholesale price of the
domestically manufactured games compared with the whole-
sale price of the imported games. We agree with his recom-
mendation and therefore determine that a bond of 54 percent
should offset any competitive advantage accruing to respond-
ents.

XL CONCLUSIONS.

After reviewing the record of this investigation, including
the recommended determination, the briefs of the parties and
the public interest witness, and the transcript of the hearing of
March 16, 1981, we determine:

1. That the following respondents have violated
section 337 of the Tariff Act of 1930 by reason of common

law trademark infringement:

Fuso Corp.
M. Enterprise, Inc., a/k/a T.T. Sales & Service
Hoei Sangyo
% See, for example, Certain Roller Units, supra, at 12. But
Doxycycline: Inv. No. 337-TA-3, USITC Pub. 964,
1979, at 21 (concurring opinion of Commissioner Alber-
ger), and Certain Thermometer Sheath Packages: Inv. No. 337-
TA-56, USi EC Pub. 992, July 1979, at 30, where a bond of 10
eras Ee tee ie lie cies ce le os

he . 7 o
i 4 ¥ 4 ¥ >, ‘ -? = ., , ¢ . J “a 4
ie a ae ae ~~ wee) 3 Oe nt ORE RE Oem Sire on

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USETC PUBLICATION 1220 . e
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PESRUARY 1962 a ; t

Je cee Spe. “ernetmene ede Lome eeme eeeningm 0 Ok

UNITED STATES INTERNATIONAL

K3

UNITED STATES INTERNATIONAL
TRADE COMMISSION

Washington, D.C. 20346

In the Matter of :

CERTAIN COIN-OPERATED Ee
AUDIOVISUAL GAMES AND ; prem
COMPONENTS THEREOF

(VIZ, RALLY-X AND PAC MAN)

COMMISSION ACTION AND ORDER
Introduction

Midway Manufacturing Company, Chicago, Illinois, filed a

complaint with the Commission on April 17, 1981, and supple-
mented the complaint on April 20, May 7, June 15, and June
17, 1981. The complaint alleged that unfair methods of
competition and unfair acts have occurred, including the in-
fringement of complainant's copyrights in the Rally-X and the
Pac-Man games and the infringement of complainant's com-
mon law trademark rights in those games. The complaint
alleged that the unfair methods of competition and unfair acts
have the effect or tendency to destroy or substantially injure an
industry, efficiently and economically operated, in the United
States. The complainant requested both temporary and per-
manent relief.
The c ey Se Se oa aE ee
allegations and published notice thereof in the Federa/ Register
of July |, 1981 (46 F.R. 34436). Thirty-five respondents were
named in the investigation.

On July 24, 1981, complainant moved w amend the

by the joinder of 33 additional respondents. On
September 21, 1981, the Commission granted the motion with
respect to 20 of the 33 proposed respondents The Commission

er 2. ey ros. os “de ™ =a ates “FE i

K4

stated that the 20 parties joined thereby were not required to
appear at the hearing on temporary relief and would not be
subject to any in personam temporary relief issued pursuant
thereto. Notice of the naming of the additional respondents
was published in the Federal Register of September 30, 1981
(46 F.R. 47891).

A hearing on temporary relief was held be.ore the Com-
mission’s Administrative Law Judge (ALJ) commencing on
September 21, 1981. Only respondent Artic !nternational,
complainant Midway, and the Commission investigative at-
torney participated in the hearing. On November 16, 1981, the
ALJ certified the record and his recommended determination to
the C .

In his recommended determination, the ALJ found that the
Commission has subject matter jurisdiction in ths investigation.
He also found that there are two discrete domestic industries,
both operated by the complainant. One industry consists of the
manufacture, distribution, and sale of the Pac-Man games, and
the other consists of the manufacture, distribution, and sale of
the Rally-X games. He found that complainant had valid
copyrights in the Pac-Man and Rally-X audiovisual works
which were being infringed by respondents, and he found that
comiplainant had common law trademark rights in the Pac-Man
game which were also being infringed by respondents. He
determined that complainaiit has trademark rights in the Pac-
Man game, except in the Hawaiian market. He found that
these acts constitute unfair methods of competition or unfair
acts within the meaning of section 337 and that there ‘s reason
to believe that these unfair acts and methods cf competition
have injured an industry, efficiently and economically operated,
in the United States, with regard to the Pac-Man game, but not
with regard to the Rally-X game.

On December 11, 1981, the Commission held a public

on the ALJ's recommended determination and on
relief, and the public interest.

K5

On January 4, 1°82, the Commission determined (Com-
missioner Stern dissent. 1g} that, pursuant to section 337/e) (19
U.S.C. § 1337(e)), there is reason to believe that there is a
violation of section 337 by reason of copyright infringement
and common law trademark infringement witn regard to the
Pac-Man game, the effect or tendency of which is to destroy or
substantially injure an industry, effeciently and economically
operated, in the United States. The Commission also deter-
mined that there is no reason to believe that there is a violation
of section 337 with regard to the Rally-X game. Finally, the
Commission determined that the appropiate tzmporary relief
is cease and desist orders issued against respondents for whom
there is reason to believe that they are infringing complainent’s
copyright and trademark rights in the Pac-Man game.

sale of the Pac-Man coin-operated audiovisual game and

violation of section 337 with respect to the and
sale of Pac-Man games and
coubaanendited hide Witdnes tea coadiiaiatees cate:
mon law trademark rights;

vi, at ees -

K6
pa That there is no reason to believe that there is a

4. That the appropriate remedy for such violation is
temporary cease and desist orders issued pursuant to
section 337(f) (19 U.S.C. § 1337(f));

5. That the public terest factors enumerated in
section 337(f) do not preclude the issuance of temporary
cease and desist orders in this case; and

6. That the bond i for in sections 337(¢),
337(f), and 337(g)(3) (19 U.S.C. §§ 1337(e), 1337(f),
and 1337(g)(3)) of section 337 be in the amount of 54
percent of the entered value of the audiovisual games in
question or any components thereof during the period of
temporary relief.

Order

Accordingly, it is hereby ORDERED THAT—

1. Artic International, Inc.; Carlin Tiger Shokai, Ltd.;
Ferncrest Distributors; Inc., Formosa Products Industrial
Corp.; Friend Spring Industrial Co., Ltd.; International
Scientific Co., Ltd.; Jay's Industries; Loson Electrical Co

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and
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17533, Mar. 18, 1981; to be codified at 19 CFR 211.57).

By order of the Commission.

KENNETH R. MASON
Kenneth R. Mason

Secretary

g
E
E

Mii ok Sei A oe ol

K8
S-A-M-P-L-E

UNITED STATES INTERNATIONAL
TRADE COMMISSION

Washington, D.C.
In the Matter of )
CERTAIN COIN-OPERATED on

AUDIOVISUAL GAMES AND rage .
(VIZ RALLY-X AND PAC MAN)

J
ORDER TO CEASE AND DESIST

IT IS HEREBY ORDERED THAT ( Name and address of
respondent) cease and desist from violating section 337 of the
Tariff Act of 1930 (19 U.S.C. § 1337) with regard to the Pac-
Man coin-operated audiovisual game and certain components
thereof.

I
( Definitions )
As used in this Order:

(A) “Commission” shall mean the U.S. International
Trade Commission.

(B) “Complainant” shall mean Midway Manufac-
turing Co., 10750 West Grant Ave., Franklin Park, Illinois
60131.

(C) “Respondent” shall mean ( Name and address of
respondent ).

(D) “Person” shall mean any individual, or any non-
governmental partnership, firm, association, corporation or

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other legal or business entity other than the above Re-
spondent or its majority owned and/or controlled subsi-
diaries, their successors or assigns.

(E) “United States” shall mean the fifty States, the
District of Columbia and Puerto Rico.
(F) “Hawaii” shall mean the State of Hawaii.

(G) “Audiovisual work” shall mean a work that
consists of a series of related images which are intrinsically
intended to be shown by the use of electronic equipment,
together with accompanying sounds, if any.

(H) “Video game machine” shall mean any coin-
operated device or apparatus, as classified at section
734.20 of the Tariff Schedules of the United States, which
is designed or uniquely suited to the display of an audiovi-
sual work. A copy of Complainant's advertising brochure
containing depictions of three different video game ma-
chines is attached to this Order for illustrative purposes.
“Video game machine” shall include any of the following:

(1) A finished video game machine which at the
time of importation is fully assembled, whether or not
tested or packaged, for use or distribution to a pur-
chaser;

(2) A video game machine which at the time of
importation is not fully assembled:

‘(3) A kit which at the time of importation
contains all of the components necessary to make it a
video game machine.

(1) (1) “Pac-Man audiovisual work” shall mean the
audiovisual work which is subject to claim of copywright
by Complainant and registered with the Copyright Office
as Registration No. PA 83-768. A copy of Complainant’s
advertising brochure containing one depiction of the “Pac-

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Man audiovisual work” in the play mode is attached to this”
Order for illustrative purposes. “Pac-Man audiovisual
work” shall include either the “attract mode” or the “play
mode” or both.

(2) “Attract mode” shall mean that portion of
the “Pac-Man audiovisual work” which is displayed
repeatedly when the Pac-Man game is not being
played;

(3) “Play mode” shall mean that portion of the
“Pac-Man audiovisual work” which is displayed when
the Pac-Man game is being played and in which some
of the images, symbols, and sounds are responsive to
manipulation of the game machine’s controls by the
player.

(J) “Pac-Man game” shall mean any, video game
machine manufactured in any country other than the
United States for shipment or export to the United States
for resale or use in the United Sta

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0126%3A2. Public record. Not legal advice.