Petition — Artic International, Inc. v. Midway Manufacturing Co.

Supreme Court brief1983

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flice-Supreme Court.

JUN 7 1983

No. 82-__ CLERK

ALEXANDER L. STEVAS.

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1982

ARTIC INTERNATIONAL, INC.

Petitioner,

Vv.

Mipway Mrs. Co..,

Respondent.

_—

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

RICHARD H. STERN

(Counsel of Record)

STERN & ROBERTS

2555 M Street N.W.

Washington, D.C. 20037

202) 785-0990

Attorneys for Petitioner

Of Counsel:

RICHARD G. KINNEY

KINNEY & ASSOCIATES

Suite 1645

55 E. Jackson Blvd.

Chicago, IL 60604

(312) 726-3966 “

June 1983

PRESS OF BYRON S. ADAMS PRINTING, INC.. WASHINGTON, D.C,

QUESTIONS PRESENTED

1. Whether claims of copyright may be asserted over every

one of the indefinitely large number of different visual displays

that ever did or ever will occur in the performance of a video

game, whenever a human being interacts with the computer

and computer program of the video game machine.

2. Respondent sold video game machines to customers.

The machines included as component parts computer chips

containing computer program material used to operate the

machines to play a video game work copyrighted by respon-

dent. Later, petitioner sold these machine owners substitute

computer chips containing enhanced versions of the original

computer program material. The enhanced computer program

speeded up and changed the video game. The purpose of using

the enhanced program was to improve the owners’ earnings

from their machines.

The question presented is whether petitioner is liable for

contributory copyright infringement for selling the substitute

computer chips to the machine owners.

3. Whether it was reversible error for the lower court to

disregard, in granting a preliminary injunction against alleged

use defense that respondent’s copyright infringement action

against petitioner was brought in furtherance of an unlawful

conspiracy to divide markets. *

*Rule 28.1 statement: Petitioner, Artic International, Inc., has no

parent, subsidiary, or affiliate.

TABLE OF CONTENTS

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D. Midway’s Acquisition of Rights to the Video Games

and the Agreement for Allocation of Markets ....

Reasons Form GRANTING THE WRIT . o.oo occ cc cn veces:

I. Video Game Displays Are Not Copyrightable

“Audiovisual Works” And Copyright Cannot Ex-

tend To Cover Each And Every Video Game Display

That Ever Occurred Or Ever Will Occur Whenever

The Video Game Was Or Will Be Played. But In Any

Event Only This Court, Not The Lower Courts,

Should Determine Whether Video Games, A Novel

Kind Of Work, Are Thus Copyrightable .........

II. Petitioner Cannot Be Liable For Contributory

bn yright Infringement, Because No Direct Copy-

ght Infringement Occurs When The Lawful Pur-

a Of The Te . Owner's Product Modifies

It To Restore Or Improve Its Economic Value ..

III. The Courts Below Committed Reversible Error By

Refusing To Consider Petitioner’s “Unclean hands”

Defense As A Factor In Deciding Whether To Grant

Injunctive Relief Against Petitioner ............

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APPENDICES:

Appendix A: Opinion of the United States Court of

Appeals for the Seventh Circuit (April 11, 1983) .

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Table of Contents Continued

Page

Appendix B: Opinion of the District Court (March 10,

OO hiibecie rk ceseucascencees

Appendix C: Opinion of the District Court (June 2, 1981) 38a

Appendix D: Opinion of the District Court (June 11, 1981) 62a

Appendix E: Preliminary Injunctive Order (March 10,

cc ken an sdesncutedennssuns 65a

Appendix F: Relevant Statutes ...........eeeee renee

TABLE OF AUTHORITIES

CASES: Page

Adams v. Burke, 84 U.S. (17 Wall.) 453 (1873) ....... 17

American Int'l Pictures, Inc. v. Foreman, 576 F.2d 661

ie a viaccess cde nccsns 18

Aro Mfg. Co. v. Convertible Top Co., 365 U.S. 336

TI ha ew hc veweuscnns 16, 17, 18

Bauer & Cie. v. O'Donnell, 229 U.S. 1 (1913) ........ 18

Blonder-Tongue Laboratories, Inc. v. University of [lli-

nois Foundation, 402 U.S. 318 (1971) ......... 19, 24

Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908) ..... 17

Boston Store Co. v. American Graphophone Co., 246

De cee nc nce ewenccs 18

Broadcast Music, Inc. v. Columbia Broadcasting Sys-

MO OEE Ue TD vi cas cccce cc cccs 23

Broadcast Music, Inc. v. Moor-Law, Inc., 484 F. Supp.

in von cece cvekevecceccs 23

Brulee ¥v. Tavs Co., S79 U.S. ZO UIGG4) jw. kw cece. 22

Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518

Ee Se ee 15

Fawcett Publications, Inc. v. Elliot Publishing Co., 46

©. CAT Oe. e FORE) oo ccivec se ecccscecs 18

Fortnightly Corp. v. United Artists Television, Inc., 392

DF oo reek cn enc ncscactunes 2

Independent News Co. v. Williams, 293 F. Supp. 510 (3d

8 EO ee oe 18

Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661

ahve scare ena e uence any ae

VUorton Sait Co. v. G.S. Suppiger Co., 314 U.S. 488

EO ee ee 22, 23

Motion Picture Patents Co. v. Universal Film Mfg. Co.,

pS a se ee 22, 23

Nichols v. Universal Pictures Corp., 45 F.2d 119 (2d Cir.

1980), cert. denied, 282 U.S. 902 (1981) .......... 12

rareer ¥. Plook, G37 U.S. GE4 (1978)... 5 6 cee cee 15

S.M. Paula Co. v. Logan, 355 F. Supp. 189 (S.D. Tex.

8 6 ESE a co Rao acre SE te eae 18

Table of Authorities Continued

Page

Peanock ¥. (iatogus, © Pet. 1 (i827) 2... ss, 22

Piper v. Chris-Craft Industries, Inc., 480 U.S. 1..... 24

Platt & Munk Co. v. Republic Graphics, Inc., 315 F.2d

OR ek cee kate bccn cde csneass 18

Timken Roller Bearing Co. v. United States, 341 U.S.

oie heck ee lee, 20

United States v. General Electric Co., 272 U.S. 476

oie ese e nie cus cncckancs 18

United States v. Singer Mfg. Co., 374 U.S. 174 (1963) = 21

United States v. Univis Lens Co., 316 U.S. 241 (1942) 18

Warner Bros. Pictures, Inc. v. Columbia Broadcasting

System, Inc., 216 F.2d 945 (9th Cir. 1954), cert.

Mammen, Fle Ue FECES)... ne cnn ese 12

Wilbur-Ellis Co. v. Kuther, 377 U.S. 422 (1964) .... 17, 18

CONSTITUTION AND STATUTES:

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CONGRESSIONAL AND MISCELLANEOUS:

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Final Rep. of Nat’| Comm’n on New Technological Uses of

Cope. Wores CCU Report’) ...........;... 12

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IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1982

No. 82-__.

ARTIC INTERNATIONAL, INC.

Petitioner,

Mipway Mre. Co.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

Artic International, Inc., petitions for the issuance of a writ

of certiorari to review the decision and judgment of the Court

of Appeals for the Seventh Circuit in Midway Mfg. Co. v. Artic

International, Inc., No. 82-1607, issued on April 11, 1983.

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. A, pp. 1la-9Ya,

infra ) is not yet officially reported. The March 10, 1982, opin-

ion of the district court (Pet. App. B, pp. 10a-37a, infra ) is

reported at 547 F. Supp. 999. Two earlier opinions of the

district court, dated June 2, 1981 (Pet. App. C, pp. 38a-61a,

infra ), and June 11, 1981 (Pet. App. D. pp. 62a-64a, infra ),

are not officially reported. The June 2 opinion is reported

unofficially at 211 U.S.P.Q. 1152. The June 11 opinion is re-

ported unofficially at 1981-2 Trade Cases (CCH) 64,170.

JURISDICTION

The decision of the court of appeals was issued on April 11,

1983. The jurisdiction of this Court rests on 28 U.S.C. 1254(1).

STATUTES INVOLVED

Sections 101, 102, 106, 117, and 501 of the Copyright Code,

as amended, 17 U.S.C. 101, 102, 106, 117, and 501, are repro-

duced in pertinent part in Appendix F, pp. 67a-69a, infra.

STATEMENT

A. Introduction

The petition seeks review of the grant below to respondent

Midway ofa preliminary injunction (Pet. App. E, p. 65, infra )

against petitioner Artic. The injunction prohibits Artic from

selling printed circuit boards to persons who compete with

Midway in the sale of video game machines similar to Midway’s

“Pac-Man” machines, and prohibits Artic from selling replace-

ment parts (known as “speed up kits”) to persons who bought

“Galaxian” video game machines from Midway. The judgment

of the court of appeals is a reviewable judgment under section

1254(1). Cf. Fortnightly Corp. v. United Artists Television,

Inc., 392 U.S. 390, 393 (1968) (§ 1292(b)). Moreover, for all

practical purposes these are also ultimate judgments in the

case adverse to Artic; this is, in fact, the end of the road for

Artic. The preliminary injunction has put Artic out of business.

Artic has no litigable defenses on which the courts below have

not already ruled adversely to it. It does not appear that any

factual or legal issues remain for determination on a remand,

which would absolve Artic from liability.

This case concerns the validity, scope, and enforceability ofa

novel kind of federal copyright—one that had never been heard

of before a few years ago, and one on which this Court has

never ruled. Midway sued Artic, and the courts below found

Artic liable to Midway, for infringing copyrights in two video

games, the “Pac-Man” and “Galaxian” games. Video games are

equally novel, although they now earn their proprietors be-

tween $5 and $10 billion annually—more than the motion pic-

ture and phonograph record industries combined. Business

Week, Dec. 6, 1982, p. 39 ($7 billion); Play Meter, Nov. 15,

1983, p. 44 ($7.7 billion in collections). Respondent Midway has

sold more than $200 million worth of machines to play the

“Pac-Man” video game.’ Clearly, there is a great deal of money

at stake on the question of copyrightability of video games.

B. The Video Games in Suit

Video games are games that a customer plays against a

computer. In the case of many such games, including those

involved in this case, the computer causes a simulated “attack”

against the customer to be played out on a TV screen display

directed by the computer. In the case of the arcade type video

games involved in this case, the customer, or player, pays a

quarter to pit his dexterity and wit against the computer. The

computer always defeats the player, eventually, but the longer

the player is able to withstand the attack directed by the

computer, the higher a point score he gains; the object of the

game is to gain as many points as possible from the computer,

before the computer eliminates the player.

In the “Pac-Man” game, the player manipulates a cartoon

figure known as “Pac-Man” through a maze on a TV screen;

“ghosts” alternately pursue or flee from Pac-Man, trying to

destroy him or avoid being destroyed by him. The object is for

Pac-Man (representing the player) to “gobble” up as many dots

as possible, within the maze, before being eliminated by the

ghosts. See Pet. App. B at 13a.

' The district court said that Midway had, by March 1982, sold over

40,000 “Galaxian” video game machines and over 80,000 “Pac-Man”

machines. Pet. App. B at 14a. The district court also said that “(t]he

goods are worth approximately $3,000-$4,000.” Pet. App. C. at 45a-

46a. The product of 80,000 and $3,000 is $240 million. The correspond-

ing value of the 40,000 “Galaxian” machines at the same $3000 per

machine is approximately $120 million.

In the “Galaxian” game, a horde of alien “insects” are sup-

posed to be dedicated t » the extermination of mankind, repre-

sented in the game by che customer. The player tries to destroy

as many aliens as possible before they overwhelm him. I/d.;

Pet. App. C at 39a.

The machines for playing these games contain printed circuit

boards in which computer “chips” (integrated circuit semicon-

ductor devices) are mounted. One such chip is known as a

microprocessor; it is the central processing unit of the machine,

and it manipulates electronic signals to produce the TV

screen's visual display of the games. Other chips are known as

“ROMs” (an acronym for read-only-memory). Some ROMs,

so-called “character ROMs,” have stored within them a pat-

tern of microscopic transistors (which act as switches) that the

microprocessor can call upon to produce electrical signals that

can be converted into visual displays of the game's “charac-

ters.” An example of such display material stored in the char-

acter ROMs is a set of figures of Pac-Man with his mouth

closed, partly open, and fully open. The display of these differ-

ent figures rapidly in the foregoing sequence and then in re-

verse, at the same location on the screen, gives the beholder

the visual impression of Pac-Man opening and closing his

mouth (“gobbling” or “munching”).

Other ROMs, so-called “program ROMs,” have stored with-

in them a pattern of microscopic transistors representing a

computer program, and the microprocessor can call upon them

to produce signals that move the figures of the characters to

one place or another on the TV screen, in response to what the

player does with a lever (known as a “joystick”) and push

button on the outside of the machine. See Pet. App. B at 12a.

For example, when the player moves the joystick to the right,

the figure of Pac-Man on the TV screen appears on the screen

to face right and move in that direction. Ifthe player moves the

Joystick up, the Pac-Man figure moves upward. The joystick

produces an electrical signal that the microprocessor combines

with signals derived from ROMs, thereby producing signals

that cause these figures to appear as part of the visual display

on the TV screen. The computer program also enables the

microprocessor to cause the figures of the player’s adversaries

(the “ghosts” of the “Pac-Man” game or “alien insects” of the

“Galaxian” game) to move on the screen in response to the

position of the character represented by the player and to the

action initiated by the player. For example, the computer

program has a routine within it that enables the “ghosts” to

chase after Pac-Man; that is, the figures of the ghosts can move

across the TV screen in a way that constantly decreases the

distance between them and the Pac-Man figure.

There is virtually an infinite number of possible overall

visual patterns that can appear on the TV screen ina particular

performance or play of a video game, because the player may

manipulate the joystick and button in virtually an infinite

number of patterns. Indeed, the probability is infinitesimal

that the exact same total visual pattern of a video game will

ever be repeated in any two actual customer performances of

the game, just as no one ever plays the same bridge game

twice. Accordingly, every real performance of the “Pac-Man”

game ever played by human customers is different—in the

sense that the specific sequence of images appearing on the TV

screen is never the same twice. The sequence of images is not

fixed and predetermined; it necessarily varies each time the

game is played, in response to when and how the individual

human customer manipulates the joystick and push button as

he plays the game.” The machine’s computer program has a

generic formula or algorithm that will generate the response

that the computer will make for any moves of the joystick or

button that the human player can make, and the microproces-

sor chip causes the machine to make such a response and

* However, there are a finite number of parts of images that are

encoded in the computer program material that is stored as patterns

of transistors in the character ROMs. For example, there is only one

figure of Pac-Man facing right with his mouth fully open, one of

Pac-Man facing right with his mouth half-open, one of Pac-Man with

his mouth closed, one of Pac-Man facing left with his mouth open, and

display the interaction as a visual image on the TV screen. In

sum, the total visual pattern of the game is never the same

twice, and the same total sequence of visual images never

occurs twice, although the visual pattern of every game that

did or will occur is brought into being by (and may be said to be

determined by) the set of inputs to the machine's microproces-

sor from the human player's motion of the joystick and the

machine’s computer program. (These facts significantly con-

tribute to the determination of the scope and validity of video

game copyrights.)

The decisions below are based only on the respondent’s

alleged copyrights relating to the visual imagery and sounds of

the Pac-Man (Registration No. PA 83-768) and Galaxian (No.

PA 59-977) video games—the so-called “audiovisual work”

copyrights. Respondent has not sued petitioner under its

claims of copyright (such as No. TX 753-817 for Pac-Man) on

the computer programs. Midway filed with the Copyright

Office videotapes depicting a single performance of each of the

two video games, a videotape of one player playing the game on

one occasion; Midway also filed computer program material. It

is not contended that Artic engaged in or caused to be per-

formed a visual display or sequence of sounds that contains

substantially the same sequence of images and sounds for a

whole video game as occurs in any videotape that Midway

deposited with the Copyright Office. Midway instead asserted,

and the courts below agreed with, the claim that the copyright

registration based on a videotape of one performance of a video

game is effective to confer on Midway a monopoly of all the

images, sounds, and visual or auditory patterns that ever did

so on; there is not an infinite number of individual figures of Pac-

Mans.

By way of comparison, there are a finite number (88) of keys ona

piano keyboard. There is an indefinitely large number of chords and

sequences that can be made with these keys. The court of appeals

suggested the analogy of different paints on a palette. See Pet. App.

A at 4a.

or ever will appear in all performances of the video game, by all

players, in the past or future.

C. The Speed Up Kits

Artic sold so-called “speed up kits” (also known in the trade

as “enhancement kits”) to video game arcade operators who

had bought “Galaxian” video game equipment from Midway.

After a video game has been in operation for a time and custom-

ers have become somewhat used to it, the revenues earned

from the machine fall off. Arcade owners use speed up kits to

try to reverse this decline in earnings. When the Artic kit is

inserted into one of Midway’s “Galaxian” machines, it alters

the play or performance of the game by making the same alien

figures move faster, by increasing the number of these alien

figures that attack the player at a time, and by making the

aliens drop a greater number of the same bomb figures on the

player’s figure; the visual figures, themselves, are not changed

even though their number and movements are. Pet. App. B. at

16a.

The Artic kits contain five program ROMs in a printed

circuit board that plugs into existing sockets in respondent's

main “Galaxian” printed circuit board in place of a similar

five-ROM printed circuit board originally supplied by respon-

dent with the machine. See Pet. App. B at 1la-12a, 16a. Artic’s

five program ROMs embody some of the same computer pro-

gram material as do Midway’s original five program ROMs,

and they also contain some different computer program mate-

rial. Pet. App. B at 17a. The different computer program

material causes the changes in performance and visual display

described in the preceding paragraph. The five program ROMs

do not contain electronic patterns for the figures of aliens or

other figures; the patterns for these figures are only in the

character ROMs that originally came with the machines.

Artic sold its kits for $150 (PX 58-60), which is less than

approximately 10% of the cost of a complete video game

machine (supra note 1). Midway sold complete video game

machines, but it did not sell speed up kits. Pet. App. C at 55a.

The courts below adopted Midway’s theory that by selling

these kits Artic was guilty of contributory copyright infringe-

ment:

[Bly marketing the speed-up kit, defendant has induced

others [owners of video game machines and their custom-

ers] to prepare derivative works of the plaintiff's copy-

righted work by using the speed up kits, and has also

induced others to perform distortions of the audio visual

images that appear when playing the game.

.. .[T]Jhe sale of the speed up kits enables others to

make and perform bernie ease alterations of plaintiff's

copyrighted material.

Pet. App. C at 47a, 5la. Because the speed up kit could be used

only with “Galaxian” video game equipment and was not useful

on other video game machines, the district court ruled that the

necessary elements of contributory infringement of the

“Galaxian” copyright had been shown. Pet. App. B at 35a.

The court of appeals recognized that “[i]t is not obvious from

this language [17 U.S.C. 101] whether a speeded-up video

game is a derivative work.” But the court concluded that “the

owner of the copyright on the game should be entitled to

monopolize it” against those customer-licensees who bought

speed up kits, because it would be profitable to the copyright

owner to do so:

[Licensees [video game arcade owners] will take in great-

er total revenues. Video game copyright owners would

undoubtedly like to lay their hands on some of that extra

revenue and therefore it cannot be assumed that licensees

are implicitly authorized to use speeded-up circuit boards

in the machines plaintiff supplies.

Pet. App. A at 7a-8a. Accordingly, the court of appeals

affirmed the ruling that petitioner’s sale of speed up kits was

contributory infringement of respondent’s Galaxian copyright

and should be enjoined.

D. Midway's Acquisition of Rights to the Video Games and

the Agreement for Allocation of Markets

Midway and its employees did not create or author the

Galaxian or Pac-Man video games or the computer programs

relating to them. Midway securedits rights, if any, from Nam-

co Limited, a Japanese video game equipment manufacturer.

A series of agreements then followed among or between Nam-

co, Midway, and also Atari, Inc. (Atari and Midway are the two

leading United States manufacturers and distributors of video

game equipment.*) Midway was allocated exclusive United

States rights in Pac-Man and Galaxian in the coin-operated

equipment field. (Its competitor Atari was allocated exclusive

United States rights in the non-coin-operated or home video

game field.) Namco had all non-United States rights. The

parties agreed with each other not to compete in the markets

assigned to another party.

Artic contended that Midway’s use of the copyrights in aid of

the conspiracy to allocate markets was a misuse of the copy-

rights and that Midway had “unclean hands” because of its

participation in the scheme. The defense was struck, however,

and the court below refused to consider it as a factor militating

against grant of injunctive relief to Midway. Among other

things, the court said that it is “the general rule that alleged

antitrust violations do not form valid defenses to an action for

said that it “could conceive of no public interest” factor militat-

ing against grant of the preliminary injunction. Pet. App. B at

37a.

>It is estimated that Midway accounts for 33% of the coin-operated

video game machine market, Atari for 23%, and the next two firms

for approximately 10% each. Play Meter, Nov. 15, 1982, p. 60. See

also Business Week, Dec. 6, 1982, p. 39 (Bally Midway in 1982 had

“50%-plus market share, up from last year’s estimated 35%”).

REASONS FOR GRANTING THE WRIT

Petitioner’s basic submission is that injunctive relief should

not have been granted against it, because as a matter of law

respondent Midway does not have any valid claim for such

equitable relief. First, video game TV screen displays, which

Midway seeks to monopolize, are uncopyrightable. Second, for

petitioner to supply speed up kits to respondent’s customers is

not contributory copyright infringement, because the custom-

ers’ use of the kits is not a direct infringement; rather, it is

something the customers have a right and license to do as

customers and as owners of the products that respondent sold

them. Third, the courts below committed reversible error in

refusing even to consider petitioner’s “unclean hands” defense

to the injunction. Any one of these grounds is sufficient to

warrant a reversal and remand. Each of these issues raises an

important question of federal law, which only this Court can

properly and authoritatively resolve.

I. Video Game Displays Are Not Copyrightable “Audiovisual

Works” And Copyright Cannot Extend To Cover Each And

Every Video Game Display That Ever Occurred Or Ever

Will Occur Whenever The Video Game Was Or Will Be

Played. But In Any Event Only This Court, Not The Lower

Courts, Should Determine Whether Video Games, A Novel

Kind Of Work, Are Copyrightable.

The copyrights in suit are claimed to be on the “audiovisual

works” embodied in the “Pac-Man” and “Galaxian” video

games, and these alleged works of authorship are identified

with the visual displays that are generated when the micro-

processor computer chip combines with the signals derived

from the player’s movements of the joystick with the signals

derived from the computer program and the character mate-

rial stored in the ROMs. It is said in support of copyrightability

that the display on the TV screen of the video game machine is

akin to a motion picture, and is therefore copyrightable under

the Act. See Pet. App. A at 3a; cf. 17 U.S.C. 102(a)(6).

The court of appeals observed, with considerable

understatement, that “{iJt is not immediately obvious that

video games fall within” the Act’s definition of “audiovisual

work.” Pet. App. A at 3a. The Act defines audiovisual works as

“works that consist of a series of related images.” 17 U.S.C.

101. The term “image” is not defined in the Act, but its use in

context indicates that it means an individual entire frame of a

motion picture or an individual, momentary, entire TV screen

display.* The question of copyrightability turns on what is a

series of related images, and how the images must be related to

one another. This Court has never interpreted this aspect of

the copyright laws. One meaning of the statutory language,

the natural and logical meaning we submit, is that the series of

related images must be a predetermined, fixed sequence of

images, with a particular, given beginning, middle, and end.

The other construction of the statute, adopted below, is that

the “related series” can be the character ROM figures in any

order—“any set of images displayed as some kind of unit.” Pet.

App. A at 3a.

The two competing interpretations of the Act may be illus-

trated by contrasting two concepts of the movie “Casablanca,”

a known audiovisual work. Under the ordinary concept of

“audiovisual work,” which corresponds to the first interpreta-

tion of the statutory phrase “series of related images,” the

copyrighted series of screen images should be a series of

frames that always show Bogart leaving Paris on the last train

‘Thus, in17 U.S.C. 101, the Act defines displaying a work to mean

showing a copy of the work “by means of a film, slide, television

image, or... in the case of a motion picture or other audiovisual

work, to show individual images nonsequentially.” Similarly, in 17

U.S.C. 106(5), the Act refers to displaying “the individual images of a

motion picture or other audiovisual work.”

Thus, the individual character figures are only parts of an image. _

Each ensemble of figures at any moment comprises the “image”

referred to in the Act, so that any momentary screen display of

Pac-Man at a particular place in the maze, and the maze, and the four

pursuing ghosts at four particular places in the maze — is an “image,”

while the figure of Pac-Man facing right with his mouth half-open is

not per se an “image.”

without Bergman, Bergman persuading Sam to play “As Time

Goes By,” Bergman getting on the plane to Lisbon without

Bogart, and Bogart shooting the Nazi officer.’ No one ever

suggested to Congress that it should, and Congress never

indicated that it desired to, grant copyrights on a kind of

“Casablanca” motion picture in which, depending each time on

audience participation, the series of screen images would

sometimes show Bergman catching the last train from Paris

together with Bogart, sometimes show Bergman trying to

persuade Sam to play “Deutschland Uber Alles,” sometimes

show Bogart getting on the Lisbon plane with Bergman, and

sometimes show the Nazi officer shooting Bogart—the plot

and display of images always being different, and the copyright

covering all possible variations that could ever be made on the

“Casablanca” theme. Under the second concept of audiovisual

work, a copyright on “The Maltese Falcon,” for example,

would cover any Sam Spade “private eye” movie ever made

thereafter; any play using the idea of a drunken and riotous

knight who disturbed his household with late night revelry

would infringe “Twelfth Night.” Cf. Warner Bros. Pictures,

Inc. v. Columbia Broadcasting System, Inc., 216 F.2d 945

(9th Cir. 1954), cert. denied, 348 U.S. 971 (1955) (copyright on

Maltese Falcon does not prevent other similar Sam Spade

stories); Nichols v. Universal Pictures Corp., 45 F.2d 119 (2d

Cir. 1930) (L. Hand, J.), cert. denied, 282 U.S. 902 (1931)

(Twelfth Night).

The court of appeals recognized that the first interpretation

of the Act would bar copyright for video game visual displays.

The figures and images of a video game appear in a different

pattern every time the game is played, since the timing and

>See Final Rep. of Nat’l Comm'n on New Technological Uses of

Copr. Works (“CONTU Report”) at 21-22 (1979): “When a phono-

record or motion picture is used in conjunction with a properly

working machine, the same result will occur on the first, the second,

and the thousandth running. The chorus will remain silent until the

fourth movement of Beethoven’s Ninth Symphony, and Bogart will

stay in Casablanca forever.”

nature of different game players’ “moves,” or even the same

player’s moves on different occasions, are at least slightly

different—which causes the computer to respond differently

and produce a different visual display. Accordingly, the court

held that the statutory phrase ought to “be construed more

broadly.” The court felt that “Congress probably wanted the

courts to interpret the definitional provisions of the new Act

flexibly, so that it would cover new technologies as they

appeared,” because this would save Congress from having

“periodically to update the Act.” Pet. App. A at 3a.

The court of appeals noted that “(t]here is a second difficulty

that must be overcome if video games are to be classified as

audiovisual works”—the visual display is created by the joint

action or authorship of the human player and the inanimate

computer. Cf. Art. I, § 8, cl. 8. The court analogized playing a

video game to “arranging words in a dictionary into sentences”

or “paints on a palette into a painting.” It therefore questioned

whether or not the creativity in the performance of the game

should be attributed to the human being playing it, as its real

“author.” But it decided that the answer was no, because

playing a video game “is more like changing channels on a

television than it is like writing a novel or painting a picture.”

The court of appeals felt that the critical fact was that the

player’s options are limited by the computer program; he can-

not create sequences of images not in the machine’s repertory

(just as a pianist cannot play notes for which there are no keys

onthe piano). Accordingly, the court held that video games are

copyrightable and that infringement of the “Pac-Man” and

“Galaxian” copyrights was caused or induced by Artic’s con-

duct.

We submit that the interpretation of the new Act adopted

below is wrong, and inconsistent with what everyone under-

stood as a motion picture or other audiovisual work in 1976

when Congress enacted the statutue. Until now, audiovisual

works were motion pictures such as the real “Casablanca” (not

the hypothetical one that changes each time it is performed) or

animated cartoons such as “Bugs Bunny.” The identity of the

audiovisual work was known; the images were displayed in a

fixed and predetermined sequence, which a particular human

being had “authored.” No one was given a copyright monopoly

on all the images of a kaleidoscope, that were different every

time another person (who was not the alleged “author”) shook

it, or a copyright monopoly on the sounds of a wind chimes. No

one was given a copyright on an idea ora plan for a work, a pian

that would be carried out and expressed differently every time

a different member of the public interacted with an inanimate

machine devised for generating sounds and a visual display on

a TV screen. Yet, that is the kind of copyright monopoly that

the courts below are giving respondent and other manufactur-

ers of video game equipment. The copyrights they are sustain-

ing grant blanket protection for every possible set of sounds,

images, and visual displays that ever were or ever will be

generated by use of this computer program or any one similar

to it, whenever the computer, the program, and a human video

game player interact. This new kind of so-called audiovisual

work is completely beyond anything Congress ever imagined

or intended to protect when it enacted the new copyright law

based on Congress’ power to protect writings of human au-

thors.

Moreover, the reasons the court below gave for its construc-

tion of the Act cannot withstand scrutiny. The court of appeals’

idea that Congress gave the courts a blank check to invent

monopoly protection for every new technology whenever the

courts felt it desirable to do so (Pet. App. A at 3a) is unsupport-

able. The analogies drawn to switching TV channels or select-

ing paints from a palette are defective and provide no sound

basis for interpreting the law. Instead of distorting and

stretching the Act to embrace video games, the court below

should have held them uncopyrightable. At the very least it

should have held the copyrights, if any, limited to the particu-

lar fixed sequences of images contained in the videotapes of

specific performances that respondent filed with the Copyright

Office. (Petitioner concededly did not reproduce or cause to be

reproduced the particular visual display sequence of the game

performance shown in those videotapes. )

We submit that a “clear and certain signal” must come from

Congress before the “beachhead of privilege” is expanded as

respondent has had it expanded below to this new, multi-billion

dollar industry, Deepsouth Packing Co. v. Laitram Corp., 406

U.S. 518, 531 (1972), and that more cautious progress is re-

quired when the courts are asked to extend copyright monopo-

ly rights “into areas wholly unforseen by Congress.” Parker v.

Flook, 437 U.S. 584, 596 (1978). Our submission may be right

or wrong, on the merits. This Court may conclude that video

game manufacturers are indeed entitled to the broad monopo-

lies that they claim—that Congress intended to grant such

rionopolies in order to promote the progress of science and

useful arts. The Court may even decide that computers can be

authors, within the meaning of Art. I, § 8, cl. 8. But it is

evident that all of this presents far too important a question of

federal law to be determined by the lower courts. If the beach-

head of privilege is to be judicially expanded, surely that is for

this Court, not the lower courts, to do in the first instance.

Certiorari should be granted to permit this Court to make an

authoritative interpretation of the 1976 Act as to whether the

regular stock in trade of this major new industry shall be

subject to copyright monopolies.

II. Petitioner Cannot Be Liable For Contributory Copyright

Infringement, Because No Direct Copyright Infringe-

ment Occurs When The Lawful Purchaser Of The Copy-

right Owner's Product Modifies It To Restore Or Improve

Its Economic Value.

The district court and court of appeals found petitioner guil-

ty of contributory infringement. Petitioner sold “speed up

kits” (also known as “enhancement kits”) to video game

arcades that had bought “Galaxian” video game machines from

respondent. These kits are sets of five computer chips, all of

which are program ROMs. When they are inserted into the

Galaxian video game machine that respondent sold, the compu-

ter program material in the new chips causes changes to occur

in the visual display of the Galaxian video game. For example,

the kit: increases the number of figures of alien “insects” in the

formations that peel off the main alien horde and attack the

player’s figure; makes the aliens attack faster; and makes the

aliens drop more bombs on the player.

After a time, video game players become accustomed to any

new video game, and the number of quarters per week that the

product earns for the arcade operator falls off. The $3000

investment in the machine no longer produces as much income

as it did. Arcade operators can reverse this decline and im-

prove their earnings by putting $150 speed up or enhancement

kits into their machines. As the court of appeals pointed out, by

using these kits, “licensees will take in greater revenues.” Pet.

App. A at 7a. Because Artic sold these kits to customer-

licensees of Midway, the court found that Artic had “induced”

these licensees to cause modified versions of the Galaxian game

to be displayed on the TV screens of the equipment they had

purchased from Midway. It was said that Artic committed

contributory infringement of the Galaxian copyright by caus-

ing the licensees to commit direct infringement of the copy-

right.

The court of appeals recognized that it is critical to any such

findings of contributory infringement that there first be a

direct infringement. Aro Mfg. Co. v. Convertible Top Co., 365

U.S. 336, 341 (1961). The court of appeals also recognized that

for it to find that the customer-licensees who placed petition-

er’s kits into their Galaxian machines were direct infringers of

the copyright would “stretch” the language of the Copyright

Act. But the court of appeals decided that Congress, if it had in

some way been able in 1976 to anticipate the marketing of video

games, would have wanted to have the Act “stretched to

accommodate speeded-up video games.” Pet. App. A at 8a.

The court brushed aside the argument that purchasers of re-

spondent’s equipment have a license to modify or enhance the

equipment. It said that those customer-licensees who use

these kits do so to “take in greater total revenues.” Yet, the

court said, “Video game copyright owners would undoubtedly

like to lay their hands on some of that extra revenue.” The

court of appeals found this factor decisive and therefore con-

cluded that the customer-licensees were not implicitly autho-

rized to put speed up kits into the machines; since the

customer-licensees lacked such authorization, they were direct

infringers and their supplier Artic was a contributory in-

fringer.

This case thus raises for copyrights precisely the issue that

this Court decided for patents twenty years ago in Aro Mfg.

Co. v. Convertible Top Co., 365 U.S. 337 (1961), and Wilbur-

Ellis Co. v. Kuther, 377 U.S. 422 (1964). In those cases, the

Court held that the legitimate purchaser of a patented product

has the unqualified right to repair and modify his property

subsequently in order to restore or enhance its economic value

to him. The property owner (or the owner’s supplier) did not

have to pay the monopoly owner a second royalty for the

privilege of modifying the product, because the authorized sale

of the product had liberated it from the monopoly, or had

“exhausted” the monopoly. As the Court noted in Kuther,

supra at 425, the latter has been the law and the right of

property owners in their property since at least as early as

Adams v. Burke, 84 U.S. (17 Wall.) 453 (1873). See also Bobbs-

Merrill Co. v. Straus, 210 U.S. 339 (1908) (applying Adams

doctrine to copyrighted products).* The judgment below there-

fore squarely conflicts with the rule of decision followed in this

5 In so ruling, the court of appeals ignored the fact that Midway did

not make and sell speed up kits. Pet. App. C at 55a. The only way

Midway could “lay their hands on” the revenue of the arcade opera-

tors was to compel them to junk their used Galaxian machines and

buy new Pac-Man machines, or other Midway machines, from Mid-

way. Denying owners the right to use $150 speed up kits, of course,

does compel them to junk their used $3000 machines and buy new

$3000 machines, or at least make them do so sooner.

‘Since Adams, it has been the consistent and unvarying rule in this

Court that the first authorized sale of patented or copyrighted prop-

erty liberates it from the monopoly of the seller, who then can no

Court. That rule is that a lawful BFP owner of a machine has

the right to exercise thrift and Yankee ingenuity in repairing,

reconditioning, and preserving the economic life of his proper-

ty, without having to grovel before or account to the patent or

video game machine owners had a right to put speed up kits

into their own machines, which they had purchased outright

from respondent, and petitioner had a right to sell them the

kits that they wanted to use with their property. Aro, supra.

Although this Court has not had occasion to apply the rule

followed in the Aro and Kuther cases to the restoration or

modification of the economic value of copyrighted products,

lower federal courts have. Generally, the federal courts have

held that the first authorized sale of a copyrighted product

exhausts the copyright monopoly, so that the copyright owner

cannot thereafter exercise any remote control over what pur-

chasers do with the copyrighted product. See, e.g., American

Int'l Pictures, Inc. v. Foreman, 576 F.2d 661, 664 (5th Cir.

1978); Platt & Munk Co. v. Republic Graphics, Inc., 316 F.2d

847, 852-54 (2d Cir. 1963) (Friendly, J.); Independent News Co.

v. Williams, 293 F.2d 510 (3d Cir. 1961). Moreover, federal

variety of repairs, modifications, and enhancements of books,

magazines, and pictures, even for resale to others than the

original customer (which goes beyond what occurred here).

See, e.g., S. M. Paula Co. v. Logan, 355 F. Supp. 189 (S.D.

Tex. 1973) (transforming greeting card pictures into ceramic

plaques); Fawcett Publications, Inc. v. Elliott Publishing Co.,

46 F. Supp. 717 (S.D.N.Y. 1942) (rebinding used comic books

of various brands and combining them in single volumes). The

settled doctrine of exhaustion of monopoly rights by autho-

longer control the use or disposition of the property. See, e.g.,

United States v. Univis Lens Co., 316 U.S. 241, 249-50, 252 (1942):

United States v. General Electric Co., 272 U.S. 476, 489 (1926):

Boston Store Co. v. American Graphophone Co., 246 U.S. 8, 25

(1918); Bauer & Cie. v. O'Donnell, 229 U.S. 1, 17 (1913).

rized sale of the product subject to the monopoly, and the

property owner's right of preservation and improvement of his

property, therefore should be fully dispositive of the second

question presented. The judgment below is in conflict with this

entire line of authority.

In the event that in some way the foregoing considerations

are not dispositive, the Court may wish to take into account a

further consideration that should dispose of the second ques-

tion presented, purely as a matter of law under the 1980

computer software Copyright Act amendment. The ROM com-

puter chips in video game machines contain computer program

material. In the 1980 amendment to the Copyright Act, Con-

gress expressly authorized the lawful owner of a copy of a

computer program “to make or authorize the making of

another copy or adaptation of that computer program,” if the

adaptation is an essential step in utilizing the computer pro-

gram ina machine. 17 U.S.C. 117. One of the stated purposes of

the 1980 amendment was to permit owners of copies of compu-

ter programs to make enhancements of the original program to

provide features not present in the original. Accordingly, it

would not have been direct infringement for one of the owners

of one of the “Galaxian” video games (i.e., one of the arcade

owners to whom Artic sold a speed up or enhancement kit) to

make an adaptation of the computer program material in the

program ROM chips that respondent originally sold to him as

part of and for use in the machine. The speeding up and

enhancement of the video game computer program material

originally contained in the purchased machine is the lawful

right of the owner of the machine. Section 117 therefore fur-

nishes an alternative and purely iegal ground for reversal of

the judgment below, since section 117 removes the stigma of

held to be the direct infringement requisite to this charge of

contributory infringement.* Cf. Blonder-Tongue Laborator-

*To be sure, Midway has registered separate claims of copyright

on the computer program and on the visual imagery and display that

it generates. Midway may therefore argue: “Section 117 would not

ies, Inc. v. University of Illinois Foundation, 402 U.S. 313,

320 n.6 (1971).

III. The Courts Below Committed Reversible Error By

Refusing To Consider Petitioner's “Unclean Hands” De-

fense As A Factor In Deciding Whether To Grant Injunc-

tive Relief Against Petitioner.

Petitioner contended below that Midway’s copyrights were

unenforceable because of Midway’s “unclean hands” and mis-

use of copyrights. Petitioner alleged the following conspiracy,

which in the posture of this case must be assumed to be true:

Midway agreed with its competitor Namco that Midway shall

sell “Galaxian,” “Pac-Man” and other video game equipment in

the United States and not inJapan; Namco agreed that it would

not sell such equipment in the United States.* Cf. Timken

Roller Bearing Co. v. United States, 341 U.S. 593 (1951).

affect the outcome of this case, which concerns infringement of audio-

visual works, not computer programs” (Midway C.A. 7 Br. at 26).

But the function of the computer program is to cause the performance

and display of the Galaxian video game; indeed, the only value of the

computer program is in its use to perform the Galaxian video game.

Accordingly, that Midway has separate copyright registrations on

the Galaxian computer program and on the Galaxian audiovisual

work generated by the program should not negate the value of

section 117 to the arcade owner who bought from Midway and lawful-

ly owns a copy of the computer program. The owner's right under

section 117 to adapt and enhance the computer program must carry

with it a correlative right to cause adaptation and modification of the

visual display generated by the computer program. Without the

latter, the former would be an empty and useless right.

‘Further, the coin-operated and non-coin-operated (home video)

fields for this equipment within the United States were divided

between the leading two video game equipment competitors, Mid-

way and Atari. Thus, Midway sells arcade type “Pac-Man” machines

in the United States; Atari sells home video “Pac-Man” cartridges;

Namco can sell both products in Japan; none of the companies sells

the products in the market allocated to one of the others.

Midway's enforcement of these copyrights against Artic is

an act in furtherance and pursuance of a conspiracy to allocate

markets. Under the challenged agreement, Midway was

assigned United States copyrights to enable it to monopolize

the coin-operated equipment market for more than $200 mil-

lion worth of machines. Respondent Midway is enforcing those

copyrights against petitioner to wall off from competition the

market allocated to Midway, to keep petitioner from “trespass-

ing” on the territory assigned to Midway under the conspiracy.

In such circumstances, the copyright infringement action is an

integral element of the unlawful conspiracy, just as the patent

enforcement action was held an integral part of the antitrust

violation in United States v. Singer Mfg. Co., 374 U.S. 174

(1963).'° By the same token, for the federal courts to aid Mid-

way by lending their injunctive power to the accomplishment

of Midway’s conspiracy and monopolistic purpose, in effect

makes the federal courts a tool of these conspirators.

The refusal below to consider petitioner’s “unclean hands”

defense as a factor in deciding whether to grant respondent the

equitable relief it secured here was a clear mistake of law. (We

believe that it was clearly error, also, to strike the affirmative

defense. But that is not the point we make here. The order to

strike was an interlocutory order, and it is pertinent here only

because it illuminates the lower court’s reasoning on the ques-

tion of whether to grant the preliminary injunction.) Rather

than refusing to consider the unclean hands defense, the court

should have considered it, first, as a public interest factor that

must at least be weighed in deciding whether to grant an

Whether the illegality of the alleged conspiracy is to be tested by

the “rule of reason” or is to be regarded a division of markets that is

illegal per se need not detain us here. The conduct is surely not lawful

per se, and the court below did not so rule. It simply refused to

consider the matter, and struck Artic’s allegations. Pet. App. D at

62a. (We note that Midway’s estimated share of the coin-operated

video game machine market is between 33% and 50%-plus, and

Atari's is 23%. Note 3 supra.)

injunction; and, second, as a factor in determining the likeli-

hood of success on the merits, another factor that must be

weighed in determining whether to grant a preliminary injunc-

tion.

It has long been the law that the federal courts will not lend

their assistance to further an unlawful scheme. This Court has

repeatedly declared that the “unclean hands” doctrine is an

important part of federal equity law. E.g., Mercoid Corp. v.

Mid-Continent Inv. Co., 320 U.S. 661, 664-69 (1944); Morton

Salt Co. v. G. S. Suppiger Co., 314 U.S. 488, 492-94 (1941):

Motion Picture Patents Co. v. Universal Film Mfg. Co., 243

U.S. 502 (1917); ef. Brulotte v. Thys Co., 379 U.S. 29 (1964).

The unclean hands doctrine is of special importance in the

field of intellectual property—patent and copyright monopo-

lies granted by the government in the public interest. Since at

least as early as Pennock v. Dialogue, 2 Pet. 1 (1827), it has

been the law in this Court that the public interest is paramount

in the administration of these state-granted monopolies. Mer-

coid Corp., supra, 320 U.S. at 665. The unclean hands and

misuse doctrines are primarily intended to protect the public

from overreaching on the part of beneficiaries of these grants,

and to prevent the federal courts from being used as instru-

ments of oppression or in furtherance of unlawful schemes;

secondarily, and because it helps to accomplish the primary

purpose, the doctrines benefit accused infringers. Thus, the

unclean hands and misuse doctrines apply whether or not the

infringer is “a competitor with the patentee.” Worton Salt Co.

v. G. S. Suppiger Co., 314 U.S. 488, 493 (1942). In the same

opinion, the Court also held that it is immaterial even that the

defendant “is not injured by the alleged antitrust violation.”

The point, this Court said, is to protect the public interest:

It is the adverse effect upon the public interest of a suc-

cessful infringement suit in conjunction with the paten-

tee’s course of conduct which disqualifies him to maintain

the suit, regardless of whether the particular defendant

has suffered from the misuse of the patent.

Id. at 494. Misuse is not another species of antitrust claim for

relief; it is a nonstatutory doctrine of federal equity law, cre-

ated by this Court and based on such considerations as fair-

ness, overreaching, and abuse of a federal monopoly grant. See

generally Vercoid and Motion Picture Patents, supra. What-

ever limitations, if any, may be appropriate in curtailing anti-

trust plaintiffs have no bearing on the misuse defense.

The reasons given below for refusing to consider the defense

are all unsound. The most egregious was that “the court

adheres to the general rule that alleged antitrust violations do

not form valid defenses to an action for copyright infringe-

ment.” Pet. App. D at 64a. This supposed “general rule” flies in

the face of this Court’s decision in Broadcast Music, Inc. v.

Columbia Broadcasting System, Inc., 441 U.S. 1 (1979). In

remanding for a determination whether the challenged copy-

right licenses were unreasonably restrictive, the Court clearly

ruled that if copyrights were indeed used as part of or to

further an antitrust violation, the copyright owner would be

guilty of misuse. See 7d. at 6 and n.9, 24; see also Broadcast

Music, Inc. v. Moor-Law, Inc., 484 F. Supp. 357 (D. Del. 1980)

(defendant entitled to go to trial on same defense of copyright

misuse based on same alleged antitrust violation). The decision

below therefore conflicts with both the entire line of patent

misuse decisions of this Court and also the Court’s most recent

pronouncement as to copyright misuse. Unless corrected by

this Court, the declaration of a supposed general rule against

considering antitrust violations as a form of copyright misuse

will give judicial encouragement to a vast similar abuse of

monopoly power by copyright proprietors.

This is a case in which the federal court granted a prelimi-

nary injunction against petitioner and in favor of respondent,

where the purpose of the injunction was to help enforce respon-

dent’s scheme to divide and allocate markets. The court re-

fascd to consider this fact, and struck the allegation. In grant-

ing the injunction the district court said: “The court can con-

ceive of no public interest that is furthered by allowing defend-

ant to continue to distribute and sell its infringing material.”

Pet. App. B at 37a. When the court of appeals affirmed the

district court’s grant of preliminary injunction it did so because

it found no error below. Cf. Pet. App. A at 9a. The court of

appeals was obliged, we believe, to make its own analysis of the

record before it and the opinions below, in order to determine

whether it was in the public interest to grant a preliminary

injunction. The court of appeals had an obligation to correct

plain error; to prevent manifest injustice; and, swa sponte if

needs be, to protect the paramount and dominant public in-

terest reflected in, among other things, the misuse and unclean

hands doctrines. See Piper v. Chris-Craft Industries, Inc., 430

U.S. 1, 47 n.34 (1977). Failure to do so was plain error by the

court of appeals, which warrants supervisory correction here.

Therefore—although we recognize that there may be some

question whether, after the district court struck the misuse

and unclean hands defense, the issue was pressed with suffi-

cient vigor below as to preserve the issue in a case, unlike the

instant case, not involving the paramount interest of the public

in the patent or copyright systems—we believe that the dis-

trict court’s order striking the matter and refusing to consider

it further (see Pet. App. D at 64a) in the proceeding is sufficient

to have brought the matter to the attention of the court of

appeals and to preserve it for this Court. See, e.g., Blonder-

Tongue, supra. See also Piper, supra.

CONCLUSION

The court below misinterpreted an important new federal

law as it applies to an important new multi-billion dollar indus-

try. Its decision conflicts with those of this Court and other

federal courts as to the rights of customer-owners of patented

or copyrighted property. The refusal even to consider petition-

er’s misuse defense is based on an erroneous, imagined “gener-

al rule” contrary to the rule of law laid down in this Court. For

the foregoing reasons, a writ of certiorari should issue.

Respectfully submitted.

RICHARD H. STERN

(Counsel of Record)

STERN & ROBERTS

2555 M Street N.W.

Washington, D.C. 20037

(202) 785-0990

Attorneys for Petitioner

Of Counsel:

RICHARD G. KINNEY

KINNEY & ASSOCIATES

Suite 1645

55 E. Jackson Blvd.

Chicago, IL 60604

(312) 726-3966

June 1983

APPENDIX

APPENDIX A

IN THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

No. 82-1607

Mipway Mrc. Co., an Illinois corporation,

Plaintiff-Appellee.

ARTIC INTERNATIONAL, INC., a New Jersey corporation,

Defendant-Appellant.

Appeal From The United States District Court

For The Northern District Of Illinois, Eastern Division

No. 80-C-5863 — Bernard M. Decker, Judge.

ARGUED NOVEMBER 29, 1982 — DECIDED APRIL 11, 1983

Before CUMMINGS, Chief Judge, PosNER, Circuit Judge, and

SWYGERT, Senior Circuit Judge.

CumMINGs, Chief Judge. This appeal involves questions

regarding the scope of protection video games enjoy under the

1976 Copyright Act, 90 Stat. 2541, 17 U.S.C. § 101 et seq.

Plaintiff manufactures video game machines. Inside these

machines are printed circuit boards capable of causing images

to appear on a television picture screen and sounds to emanate

from a speaker when an electric current is passed through

them. On the outside of each machine are a picture screen,

sound speaker, and a lever or button that allows a person using

the machine to alter the images appearing on the machine’s

picture screen and the sounds emanating from its speaker.

Each machine can produce a large number of related images

and sounds. These sounds and images are stored on the

machine’s circuit boards—how the circuits are arranged and

connected determines the set of sounds and images the

machine is capable of making. When a person touches the

control lever or button on the outside of the machine he sends a

signal to the circuit boards inside the machine which causes

them to retrieve and display one of the sounds and images

stored in then. Playing a video game involves manipulating the

controls on the machine so that some of the images stored in the

machine’s circuitry appear on its picture screen and some of its

sounds emanate from its speaker.

Defendant sells printed circuit boards for use inside video

game machines. One of the circuit boards defendant sells

speeds up the rate of play—how fast the sounds and images

change—of “Galaxian,” one of the plaintiffs video games,

when inserted in place of one of the “Galaxian” machines’s

circuit boards. Another of defendant's circuit boards stores 4

set of images and sounds almost identical to that stored in the

circuit boards of plaintiffs “Pac-Man” video game machine! so

that the video game people play on machines containing de-

fendants circuit board looks and sounds virtually the same as

plaintiffs “Pac-Man” game.

Plaintiff sued defendant alleging that defendant’s sale of

these two circuit boards infringes its copyrights in its “Gala-

xian” and “Pac-Man” video games. In a memorandum opinion

and order reported at 547 F. Supp. 999 (N.D. Ill. 1982), the

district court granted plaintiff's motion for a preliminary in-

junction and denied defendant’s motion for summary judg-

ment. The district court’s order enjoins defendant from manu-

facturing or distributing circuit boards that can be used to play

video games substantially similar to those protected by plain-

tiffs copyrights. Defendant appeals from that order on the

ground that plaintiff has not shown a likelihood of succeeding

| We described the “Pac-Man” video game in some detail in Atari,

Inc. v. North American Philips Consumer Electronics Corp., 672

F.2d 607, 610, 611 (1982).

on the merits of its claim of copyright infringement. We affirm

for the reasons that follow.

Plaintiff claims that its “Pac-Man” and “Galaxian” video

games are “audiovisual works” protected under the 1976 Copy-

right Act. Section 101 of that Act defines audiovisual works as

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 equip-

ment, together with accompanying sounds, if any, regard-

less of the nature of the material objects, such as films or

tapes, in which the works are embodied. 17 U.S.C. § 101.

It is not immediately obviou. that video games fall within this

definition. The phrase “series of related images” might be

construed to refer only to a set of images displayed in a fixed

sequence. Construed that way, video games do not qualify as

audiovisual works. Each time a video game is played, a differ-

ent sequence of images appears on the screen of the video game

machine—assuming the game is not played exactly the same

way each time. But the phrase might also be construed more

broadly to refer to any set of images displayed as some kind of

unit. That is how we contrued it in WGN Continental

Broadcasting Co. v. United Video, Inc., 693 F.2d 622 (7th Cir.

1982), where we held that a news program and a thematically

related textual display (“teletext”) transmitted on the same

television signal but broadcast on different television channels

constituted a single audiovisual work. We see no reason to

construe it more narrowly here. As we noted there, the legisla-

tive history of the Copyright Act of 1976 suggests that “Con-

gress probably wanted the courts to interpret the definitional

provisions of the new act flexibly, so that it would cover new

technologies as they appeared, rather than to interpret those

provisions narrowly and so force Congress periodically to up-

date the act.” 693 F.2d at 627.

There is a second difficulty that must be overcome if video

games are to be classified as audiovisual works. Strictly speak-

ing, the particular sequence of images that appears on the

screen of a video game machine when the game is played is not

the same work as the set of images stored in the machine's

circuit boards. The person playing the game can vary the order

in which the stored images appear on the screen by moving the

machine's control lever. That makes plaving a video game a

little like arranging words in a dictionary into sentences or

paints on a palette into a painting. The question is whether the

creative effort in playing a video game is enough like writing or

painting to make each performance of a video game the work of

the player and not the game’s inventor.

We think it is not. Television viewers may vary the order of

images transmitted on the same signal but broadcast on differ-

ent channels by pressing a button that changes the channel on

their television. In the WGN case, we held that the creative

effort required to do that did not make the sequence of images

appearing on a viewer's television screen the work of the

viewer and not of the television station that transmitted the

images. Playing a video game is more like changing channels on

a television than it is like writing a novel or painting a picture.

The player of a video game does not have control over the

sequence of images that appears on the video game screen. He

cannot create any sequence he wants out of the images stored

on the game’s circuit boards. The most he can do is choose one

of the limited number of sequences the game allows him to

choose. He is unlike a writer or a painter because the video

game in effect writes the sentences and paints the painting for

him; he merely chooses one of the sentences stored in its

memory, one of the paintings stored in its collection.

Defendant suggests another reason why plaintiff's video

games are not copyrightable—because the printed circuit

boards in which the games are fixed are patentable. We reject

this argument for the same reason District Judge Decker re-

jected it. See 547 F. Supp. at 1008-1009. Plaintiff claims copy-

rights in audiovisual works—the distinctive set of images and

sounds stored in its circuit boards. It does not claim copyrights

in the design of those circuit boards, soit matters not that those

designs may be patentable. Recording images and sounds in

circuit boards does not destroy their copyrightability any more

than does recording them on rolls of celluloid film. Defendant

cites Apple Computer, Inc. v. Franklin Computer Corp., 545

F. Supp. 812 (E.D. Pa. 1982), and The Magnavor Co. v.

Mattell, Inc., 216 U.S.P.Q. 28 (N.D. III. 1982) in support of its

argument, but those cases are easily distinguished. Both dealt

with copyrights in computer programs, not with copyrights in

audiovisual works fixed in computer programs. We thus con-

clude that video games are copyrightable as audiovisual works

under the 1976 Copyright Act and we note that every other

federal court (including our own) that has confronted this issue

has reached the same conclusion. Williams Electronics, Inc. v.

Artic International, Inc., 685 F.2d 870 (8rd Cir. 1982); Atan,

Inc. v. North American Philips Consumer Electronics,

Corp., 672 F.2d 607, 617 (7th Cir. 1982); Stern Electronics,

Inc. v. Kaufman, 669 F.2d 852 (2nd Cir. 1982); Widway Manu-

facturing Co. v. Dirkschneider, 543 F. Supp. 466 (D. Neb.

1981). Cf. WGN Continental Broadcasting Co. v. United

Video, Inc., 693 F.2d 622, 625-626 (7th Cir. 1982).

Defendant next argues that plaintiff's copyrights are invalid

because the 1976 Copyright Act does not apply to plaintiff's

video games. Section 117 of the 1976 Copyright Act was

amended in 1980 to define the exclusive rights of owners of

copyrights in computer programs. As originally enacted, Sec-

tion 117 provided that the 1909 Copyright Act and common law

were to govern the rights of a copyright owner “with respect to

the use of the [copyrighted] work in conjunction with” compu-

ters. Defendant argues that the 1980 amendment does not

apply to copyrights, like those of plaintiff, in existence before

the amendment took effect and that the original Section 117

requires that we look to the 1909 Act and common law to

determine whether the circuit boards defendant manufactures

are copies of plaintiff's audiovisual works.

We disagree. Even if the 1980 amendment applies only to

copyrights issued after its effective date—an issue we do not

decide—the district court properly applied the 1976 Act. The

language and legislative history of the 1980 amendment are

convincing that original Section 117 was intended only to leave

unaltered the existing law governing the exclusive rights of

owners of copyrights in computer programs. See H. Rep. No.

96-1307, 96th Cong., 2nd Sess. 27 (1980) (Part I) (Judiciary

Committee), reprinted in 1980 U.S. Code Cong. & Ad. News

6486; id. at 19 (Part II) (Committee on Government Opera-

tions), reprinted in 1980 U.S. Code Cong. & Ad. News 6509;

Tandy Corp. v. Personal Micro Computers, Inc., 524 F. Supp.

171, 174-175 (N.D. Cal. 1981). It was not intended to permit

pirating of audiovisual works stored in computers.

Defendant also argues that even if plaintiffs video games are

copyrightable, plaintiffs asserted copyrights are invalid be-

cause the works they protect were originally published with-

out the notice of copyright required by Section 401 of the 1976

Act. Plaintiff purchased the copyrights it asserts in this suit in

1979 and early 1980 from a Japanese company that invented

the video game machines plaintiff now markets. Defendant

claims that the Japanese company published in Japan without

notice of copyright the audiovisual works stored in these

machines before it assigned its copyrights to plaintiff. Even if

that isso, however, the copyrights plaintiff purchased from the

Japanese company are valid. Plaintiff registered its works in

the United States in May and November 1980 (Supp. App. 102,

110)—within five years of the date they were originally pub-

lished in Japan. Section 405(a)(2) affords a copyright owner

five years within which to remedy the omission of a copyright

notice from published copies of a work. Defendant does not

allege that plaintiff has omitted to put a notice of copyright on

any of the machines plaintiff has distributed in the United

States or that its alleged infringement of plaintiff's copyrights

was in reliance upon the omission of such notice from these

copies originally published in Japan.

The final argument of defendant’s that we address is that

selling plantiff’s licensees circuit boards that speed up the rate

of play of plaintiff's video games is not an infrinement of plain-

tiffs copyrights. Speeding up the rate of play of a video game is

a little like playing at 45 or 78 revolutions per minute (“RPM’s”)

a phonograph record recorded at 33 RPM’s. If a discotheque

licensee did that, it would probably not be an infringement of

the record company’s copyright in the record. One might argue

by analogy that it is not a copyright infringement for video

game licensees to speed up the rate of play of video games, and

that it is not a contributory infringement for the defendant to

sell licensees circuit boards that enable them to do that.

There is this critical difference between playing records at a

faster than recorded speed and playing video games at a faster

than manufactured rate: there is an enormous demand for

speeded-up video games but there is little if any demand for

speeded-up records. Not many people want to hear 33 RPM

records played at 45 and 78 RPM’s so that record licensors

would not care if their licensees play them at that speed. But

there is a big demand for speeded-up video games. Speeding up

a video game’s action makes the game more challenging and

exciting and increases the licensee’s revenue per game.

Speeded-up games end sooner than normal games and con-

sequently if players are willing to pay an additional price-per-

minute in exchange for the challenge and excitement ofa faster

game, licensees will take in greater total revenues. Video

game copyright owners would undoubtedly like to lay their

hands on some of that extra revenue and therefore it cannot be

assumed that licensees are implicitly authorized to use

speeded-up circuit boards in the machines plaintiff supplies.

Among a copyright owner’s exclusive rights is the right “to

prepare deriv ative works based upon the copyrighted work.”

17 U.S.C. § 106(2). If, as we hold, the speeded-up “Galaxian”

game that a licensee creates with a circuit board supplied by

the defendant is a derivative work based upon “Galaxian,” a

licensee who lacks the plaintiffs authorization to create a

derivative work is a direct infringer and the defenant is a

contributory infringer through its sale of the speeded-up cir-

cuit board. See, e.g., Gershwin Publishing Corp. v. Columbia

Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971); Uni-

versal City Studios, Inc. vy. Sony Corp. of America, 659 F.2d

963, 975 (9th Cir. 1981), certiorari granted, 102 S. Ct. 2926

(1982).

Section 101 of the 1976 Copyright Act defines a derivative

work as “a work based upon one or more preexisting works,

such as a translation, musical arrangement, dramatization,

fictionalization, motion picture version, sound recording, art

reproduction, abridgement, condensation, or any other form in

which a work may be recast, transformed, or adapted.” It isnot

obvious from this language whether a speeded-up video game

is a derivative work. A speeded-up phonograph record probab-

ly is not. Cf. Shapiro, Bernstein & Co. v. Jerry Vogel Music

Co., 73 F. Supp. 165, 167 (S.D.N.Y. 1947) (“The change in time

of the added chorus, and the slight variation in the base of the

accompaniment, there being no change in the tune or lyrics,

would not be ‘new work’ ”); 1 Nimmer on Copyright § 3.03

(1982). But that is because the additional vaiue to the copyright

owner of having the right to market separately the speeded-up

version of the recorded performance is too trivial to warrant

legal protection for that right. A speeded-up video game is a

substantially different product from the original game. As

noted, it is more exciting to play and it requires some creative

effort to produce. For that reason, the owner of the copyright

on the game should be entitled to monopolize it on the same

theory that he is entitled to monopolize the derivative works

specifically listed in Section 101. The current rage for video

games was not anticipated in 1976, and like any new technology

the video game does not fit with complete ease the definition of

derivative work in Section 101 of the 1976 Act. But the amount

by which the language of Section 101 must be stretched to

accommodate speeded-up video games is, we believe, within

the limits within which Congress wanted the new Act to oper-

ate. Cf. WGN Continental Broadcasting Co., supra, 693 F.2d

at 627; Williams Electronics, Inc., supra, 685 F.2d at 873-874;

Atan, supra, 672 F.2d at 614-620.

Defendant raises other arguments on appeal, all of which we

reject for the reasons set forth in District Judge Decker’s

exhaustive opinion. See 547 F. Supp. at 1005-1012.

AFFIRMED.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

10a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

NO. 80 C 5863

Decided March 10, 1982

Mipway MFc. Co.,

Plaintiff,

Vv.

ARTIC INTERNATIONAL, INC.,

Defendant.

MEMORANDUM OPINION AND ORDER

Plaintiff, Midway Manufacturing, Inc. (“Midway”), brought

this action against defendant, Artic International, Inc. (“Ar-

tic”), raising claims based on copyright infringement, trade-

mark infringement, unfair competition at common law, viola-

tion of Section 43(a) of the Lanham Act of 1946, 15 U.S.C.

§ 1125(a), violation of the Illinois Deceptive Trade Practices

Act, Ill. Rev.Stat. ch. 121-1/2, § 312, and misappropriation at

common law. Pending are plaintiff's motion for preliminary

injunction and defendant’s motion for summary judgment on

a hearing and took testimony concerning Midway’s motion for

preliminary injunction. All post-hearing briefs requested by

the parties have now been filed, and, after consideration of

them and the transcript of the hearing, the court hereby enters

the following opinion and order.

Facts

The bulk of Midway’s business consists of manufacturing and

selling video games. Two of those games are the subjects of this

lawsuit, Galaxian and Pac-Man. Allegedly, Artic is selling

electronic devices that are intended to simulate Midway’s

lla

Galaxian and Pac-Man games as well as devices that are de-

signed to be inserted into Midway’s Galaxian game to speed up

and otherwise alter the play of the game (hereinafter “speed-

up kits”). Those devices form the basis of this suit.

Both of Midway’s games consist of an upright cabinet equip-

ped with controls manipulated by the player while playing the

game. The cabinet contains electronic circuitry in the form of a

printed circuit board, which is electrically connected to a tele-

vision picture tube. The tube serves as a screen on which the

visual images of the game are displayed. Before the player

begins a game by inserting a coin, Midway's Galaxian and

Pac-Man games operate in an “attract” mode, which is stored

in the electronic components of the game. The attract mode is

fairly short and repeats itself constantly until the game is

played. Its purpose is to summarize the game for the prospec-

tive player and to encourage him to play the game. Whena coin

is deposited and the start button depressed, the games shift

into the “play” mode. In that mode, some of the symbols of the

game appear to respond to the operation of the controls by the

player.

In general, the video games manufactured by Midway and

others, including Galaxian and Pac-Man, contain printed cir-

cuit boards “loaded” with the electronic components, which

cause the images of the game to be seen on the television screen

and which generate the sounds the game makes while it is

being played. Those components include a microprocessor,

which is a small computer processing unit, and computer chips

called ROMs. The term ROM stands for “read only memory.”

It is a device which contains the instructions for a computer

program in a permanently stored manner.

A printed circuit board used in Midway’s Galaxian was

shown to the court at the hearing. The board is two-tiered,

consisting of a relatively large “mother board” which served as

the base, and a smaller “piggyback memory board” mounted on

the top of the mother board. The mother board contained a

microprocessor and two “character ROMs,” in which the com-

12a

puter programs necessary to create the shapes seen on the

screen are stored. The Galaxian piggyback board is made up of

five ROMs on its top side and two sets of twenty-four pins

descending out from its bottom. The pins fit into sockets on the

mother board and connect the ROMs on the piggyback board to

the microprocessor on the mother board. The ROMs on the

piggyback board (hereinafter “program ROMs”) contain

permanently imprinted computer programs which direct the

microprocessor to cause the images created by the character

ROMs to appear in certain locations on the television screen.

When the Galaxian game is in the attract mode, the repeat-

ing sequence of images summarizing the game for the player is

generated by instructions from the program ROMs. After a

coin is inserted and the game goes into the play mode, the

images generated by the character ROMs move on the screen

in a finite but enormous number of sequences. The sequences

are determined by the program ROMs. In other words, whena

player moves the controls on the cabinet, an electric signal is

sent to the microprocessor, which scans the program ROMs for

the predetermined sequence in which the images are to move

on the screen. Ifa player were to move the controls of either a

Pac-Man or Galaxian video game in exactly the same way in

two different plays of the game, the images on the screen would

all move in exactly the same way.

Midway’s Pac-Man video game is made up of essentially

identical electronic equipment. The principles of operation for

the Pac-Man game are the same as those discussed above for

the Galaxian game. Of course, the programs contained in the

ROMs are considerably different.

The court observed both the Galaxian and Pac-Man games at

the hearing. The elements of the Galaxian 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 ship operated by the player, plus a

formation of enemy alien ships. The player’s ship moves

horizontally along the bottom of the screen, in response to the

l3a

manipulation of the controls by the player. The aliens are

arranged in a convoy of five horizontal rows at the top of the

screen. There are four denominations or ranks of aliens, with

the highest ranking farthest from the player's ship. Each rank

has a distinguishing color. The highest ranking alien is shaped

like a rocket ship, but the other ranks are birdlike with flapping

wings. During play, individual aliens unpredictably invert and

swoop down to bomb the player’s ship. Sometimes the alien

attack involves miniformations of up to three aliens, including

one of the highest ranking alien ships plus one or two alien

escort ships. The object of the game is to destroy as many of the

alien ships as possible while avoiding the destruction of your

missile ship by the alien bombers. Whenever a ship is des-

troyed, a bright explosion appears on the screen with appropri-

ate sound effects. The player’s score is measured by the num-

ber and rank of aliens destroyed.

The Pac-Man game centers on a maze which covers the

entire screen. Using the controls, the player guides the Pac-

Man character through the maze, scoring points by “munching

up” dots inits path. Four ghost monsters, named Inky, Blinky,

Pinky, and Clyde, chase after the Pac-Man, attempting to

capture and destroy him. The Pac-Man can counterattack by

eating one of four large power capsules in the maze. Fora short

time after eating the capsule, the Pac-Man can devour the

monsters for an additional score. After all the dots in the maze

are consumed, the screen is cleared, and the game continues

for another round. Each round features a special fruit target in

the maze, which if eaten earns bonus points.

Both the games in this suit were created by Namco Limited,

a Japanese company. Galaxian was created in 1979, and was

first published in Japan by Namco on September 15, 1979.

Pac-Man was created in 1980 and was first published in Japan

under the name “Puckman” on May 27, 1980. Midway became

aware of the two games and concluded that both could be

profitably marketed in the United States. On November 13,

1979, Midway and Namco entered into a know-how license

agreement in which Namco granted Midway an exclusive

l4da

license to make and sell the Galaxian game in the United

States. On February 2, 1980, Namco assigned to Midway,

effective as of the date of the license agreement, “the entire

right, title and interest in common law and statutory copy-

right” in the Galaxian game. The Galaxian agreements have

been amended a number of times, but they still remain in

effect. As of August 16, 1980, Namco assigned the U.S. copy-

right rights of the “Pac-Man or Puckman” game to Midway. On

November 4, 1980, Midway and Namco entered into a formal

know-how license agreement in which Midway received the

exclusive rights to market the Pac-Man game in the United

States under that name. The Pac-Man agreements are likewise

still in effect. Midway has made substantial royalty payments

to Namco under both agreements.

Both the Pac-Man and Galaxian video games have been

extremely successful products for Midway. Since February

1980, Midway has sold in excess of 40,000 Galaxian games, and

since October 1980, over 80,000 Pac-Man games. Prior to 1978,

the average production run on a video game was from 1500 to

2000 units.

Recognizing the value of these two games, Midway sought to

Midway initially attempted to register the copyright in the

Galaxian game in early March 1980. At that time, a Midway

attorney met with examiners in the Copyright Office visual

arts and performing arts groups to determine what would be

the proper form of deposit to register the visual images of the

game. After some discussion, the performing arts division

examiner agreed that a performing arts application should be

filed and that an acceptable deposit would consist of a video

tape of a performance of the game and a written “Synopsis of

Deposit.”

On March 6, 1980, Midway’s attorney filed a performing arts

application to register the Galaxian game and deposited a video

tape, a brochure for the game, and other materials including a

written “Synopsis of Deposit.” The video tape was recorded at

lda

Midway's plant in Franklin Park, Illinois. It presents a per-

formance of the play mode of the Galaxian game, and there is a

closeup of the game screen to show the copyright notices. At

the end of the tape is a view of the entire game showing the full

cabinet bearing Midway's name.

The Copyright Office granted the application and issued

Certificate of Copyright Registration No. PA 59-977, effective

as of March 6, 1980. The certificate states that the work for

which the copyright is registered is entitled “Galaxian” or

“Midway’s Galaxian,” that the work is an audiovisual work,

that Namco is the author of the work, that the work was

created in 1979, and that it was first published in Japan on

September 15, 1979.

Midway also obtained a Certificate of Copyright Registra-

tion No. PA 68-323 specifically for the Galaxian attract mode

which was not included in the videotape deposit for PA 59-977,

and Certificate of Copyright Registration PA 83-768 for the

entirety of the Pac-Man game. For each certificate, Midway

submitted a video tape and a written synopsis of the deposit

with the application.

In aJuly 14, 1981, letter, Ms. Marybeth Peters, Chief of the

Examining Division of the Copyright Office, confirmed that,

on an ongoing basis, the depos’* requirements for copyright

protection of video games woul onsist of a video tape of the

attract and play modes of the g.mes, a synopsis of the work,

and at least one piece of identifying material showing the

position of the copyright notice. The rationale for allowing such

a deposit was given as follows:

“The Copyright Office certainly does not want the

actual video games deposited for registration. Unfortun-

ately, under the present regulations, there is no specific

provision for the deposit of audiovisual works embodied in

video games. I am, therefore, granting your request for

special relief on an on-going basis.”

Every Galaxian and Pac-Man game sold by Midway contains

a number of copyright notices. One copyright notice appears on

l6a

the glass cover over the video screen of the Galaxian game an.

is in the form a clear decal. Also, the notice appears on the

Galaxian printed circuit board. In the Pac-Man game, one

mediately after a coin is deposited, and a notice is attached to

the Pac-Man circuit board and to each of its ROMs.

The evidence presented at the hearing showed that defend-

ant Artic sells two devices which Midway contends violate its

rights in the Galaxian and Pac-Man games. The first of those

items is a speed-up kit, which, when attached to the Galaxian

game, modifies the way the images move on the screen.

Essentially, the effect of the speed-up kit is to cause the aliens

to move faster and to increase to six the number of aliens that

attack the player’s ship in formation. In addition, the aliens in

the sped-up version drop more bombs on the player's ship. The

obvious result of attaching the speed-up kit to a Galaxian game

is to make the game more difficult to play, dramatically

shortening the time that it takes for a player to lose his rocket

ships and be forced to insert an additional coin to continue play.

Artic itself recognized that that was the purpose of the speed-

up kit in its earliest advertisements directed to video arcade

owners. The advertisements read in part:

“TRY OUR MEMORY BOARDS TO DOUBLE YOUR

GALAXIAN INCOME.”

Artic has sold at least 436 speed-up kits.

The Artic speed-up kit is made up of a relatively small

printed circuit board with five devices called “EPROMs”

(apparently similar to ROMs in function) on the top and two

sets of pin connectors on the bottom. The two sets of con-

nectors are spaced in such a way as to permit them to be

plugged into the sockets in the Galaxian mother board into

which the Galaxian piggyback memory board is normally plug-

ged. The EPROMs on the speed-up kit contain a complete set

of instructions necessary to cause the characters of the Gala-

xian game to move in a faster sequence.

l7a

Both the computer instructions in the ROMs on the Galaxian

piggvback board and the instructions in the speed-up kit’s

EPROMs can be printed out on paper by a standard industry

procedure using a machine known as a “development

machine.” That machine was used to print out the instructions

in the Midway’s ROMs and Artic’s EPROMs. Dr. Thomas

DeF anti, a professor of computer science at the University of

Illinois, compared the two printed versions of the instructions.

He found that out of about 10,000 “bytes” or computer words of

source code in the two sets of programs, there were only about

488 differences. Dr. DeFanti’s conclusion was, “[I]t is a clear

ease of copying here.”

The use of the speed-up kit is substantially limited to attach-

ing it to Galaxian games. In order for the kit to work on other

games, Artic’s printed circuit board would have been able to

plug into the mother board of those games. In other words, the

sockets on the mother board would have to be spaced in a

manner to correspond to the connector pins on the speed-up

kit. Also, the sockets would have to be properly connected

electrically to the microprocessor. Finally, the programming

language used in the EPROMs of the Artic kit would have to be

compatible with the language read by the microprocessor on

the mother board.

At the hearing, Artic demonstrated that the speed-up kit

could be attached to two video games called “Uniwars” and

“Moon Cresta.” However, attaching the speed-up kit to those

games substantially changed them. The kit caused the phrase

“WE ARE THE GALAXIANS"” to appear on the screen of

both games in the attract mode. With the kit attached, the

character images of the games assembled in a formation identi-

cal to the formation of the aliens in the Galaxian game and

moved in exactly the same way as in the sped up version of the

Galaxian game. When the games were played normally, with-

out the speed-up kit attached, the images did not appear in

such a formation, nor did they move in a manner similar to the

Galaxian aliens. Midway presented evidence at the hearing

lXa

showing that it was physically impossible to fit the speed-up kit

into the mother boards of several other video games.

The second item sold by Artic that is of interest in this

litigation is a printed circuit board that is used to create a

‘“Puckman” video game. Artic first sold a Puckman circuit

board on November 25, 1980, after it became aware of the

existence of Namco’s Puckman game. In sum, Artic has sold

between 500 and 1600 Puckman printed circuit boards in the

United States.

The court viewed the Puckman game generated by Artic’s

printed circuit board. The only differences between Artic’s

Puckman game and Midway’s Pac-Man game are (1) the names

of the ghost characters in Artic’s game are different from the

names of Midway’s characters, (2) the Midway copyright

notice does not appear on Artic’s game, and (3) the name of the

game is different. Other than those trivial differences, the

Artic game is absolutely identical to Midway's Pack-Man video

game described above. In fact, it was demonstrated at an

earlier hearing before the United States International Trade

Commission that Artic’s Puckman printed circuit board con-

tains an error common to Midway’s Pac-Man game.

Prior to the inception of this litigation, when Artic first

began to sell its speed-up kits and Puckman circuit boards, it

listed the names of its products on its invoices. Sometime in

early 1981, after this suit was instituted, Artic began referring

to its products by code designations. For example, the code “A

07” was used to refer to Puckman circuit boards. Then, in April

1981, Artic ceased referring to particular circuit boards entire-

ly on its invoices, and began writing the term “P. C. Board” or

its equivalent on invoices for the sale of Puckman circuit

boards.

Discussion

The following four factors are to be considered in determin-

ing whether plaintiff is entitled to the entry of a preliminary

injunction in its favor: (1) likelihood of success on the merits; (2)

19a

irreparable harm if the injunction is not issued; (3) that the

balance of hardships tips toward the plaintiff; and (4) whether

or not granting the injunction is in the public interest. See The

Machlett Laboratories, Inc. v. Techny Industries, Inc., 665

F.2d 795 (7th Cir. 1981); Helene Curtis Industries, Inc. v.

Church & Dwight Co., 560 F.2d 1325, 1330 (7th Cir. 1977), cert.

denied, 434 U.S. 1070 (1978); Banks v. Trainor, 525 F.2d 837,

841 (7th Cir. 1975), cert. denied, 424 U.S. 978 (1976).

I. Likelihood Of Success—Copyright Claim

Defendant Artic has launched a massive scattershot of argu-

ments against the validity and application of Midway’s copy-

rights in the games involved in this case. The court willattempt

to deal with each of defendant’s arguments in an organized

fashion below.

A. Scope Of Copyright Protection

In registering its copyrights with the U.S. Copyright Office,

Midway chose to register the sights and sounds of the Galaxian

and Pack-Man games as audiovisual works. See 17 U.S.C.

§ 102(a)(6). “Audiovisual works” are defined in the Copyright

Act as

“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 equip-

ment, together with accompanying sounds, if any, regard-

less of the nature of the material objects, such as films or

tapes, in which the works are embodied.”

17 U.S.C. § 101. At this point, it is useful to delineate exactly

what plaintiff contends its copyrights cover. Plaintiff claims

appearing on the screen on the Galaxian and Pac-Man games.

Specifically, the protection extends to the fanciful design of the

characters used to play the games, the distinctive manner in

which the characters move, and the sounds associated with

that movement. Several courts have recently concluded that

those aspects of plaintiff's video games are the proper subjects

20a

of copyright protection. See Atari, Inc. v. North American

Phillips Consumer Electronics Corp., No. 81-2920, Slip Op. at

14-21 (7th Cir. March 2, 1982); Stern Electronics, Inc. v. Kauf-

man, No. 81-7411 (2d Cir. Jan. 20, 1982); Midway Manufac-

turing Co. v. Drikschneider, No. 81-0-243 (D.Neb. July 15,

1981); Williams Electronics, Inc. v. Artic International, Inc.,

Civ. No. 81-1852 (D. N.J. June 24, 1981).

Throughout this litigation, Artic has contended that the

plaintiff's copyright protection extends only to the particular

videotapes submitted to the Copyright Office for registration.

Artic’s argument rests largely upon the general deposit re-

quirements of 17 U.S.C. § 408, which state:

“(b) Deposit for Copyright Registration.—Except as

provided by subsection (c), the material deposited for

registration shall include—

“(3) in the case of a work first published outside the

United States, one complete copy or phono-record as so

published[. ]”

Artic claims that since the videotapes were submitted as

“copies” of the works, the works that Midway sought to copy-

right were only those tapes, not the games themselves.

Midway sharply disagrees with the argument made by Ar-

tic. Midway argues that the videotapes were not “copies” of the

works but rather were identifying material submitted in lieu of

actual copies of the works, pursuant to Copyright Office

regulations authorized by 17 U.S.C. § 408(c). While Midway

does recognize that there are no regulations specifically cover-

ing video games, there are regulations for “[w]Jorks reproduced

in or on three-dimensional objects.” 37 C.F.R.

§ 202.20(c)(2)(ix). The deposit requirement for such works may

be met by submitting “identifying material,” 7d., which is

defined as:

“photographic prints, transparencies, photostats, draw-

ings, or similar two-dimensional reproductions or render-

ings of the work, ina form visually perceivable without the

aid of a machine or device.”

2la

37 C.F.R. § 202.21. The brochures submitted along with the

videotapes would best satisfy that definition, with the result

that the games themselves, not just the videotapes, are the

subjects of the copyrights.

While there is substantial force to Midway’s arguments, the

court finds that it does not need to rely on the technicalities of

the Copyright Office’s regulations to find that Midway’s copy-

rights cover the video games themselves, and not just the

videotapes. Artic’s argument to the contrary fails, because it

relies on a far narrower definition of the word “copy” than that

used in the Copyright Act. In the Act, the term “copies” is

defined as follows:

“‘*Copies’ are material objects, other than pho-

norecords, in which a work is fixed by any method now

known or later developed, and from which the work can be

perceived, reproduced, or otherwise communicated,

either directly or with the aid of a machine or device.”

17 U.S.C. § 101. That definition makes clear that a copy may be

made in any medium whatsoever, so long as the work can be

perceived from it. The videotape submitted to the Copyright

Office is no less a copy of Midway’s audiovisual work, than the

game machine itselfis. As this court said in an earlier opinion in

this case,

“It should be emphasized that merely because the work is

fixed in the tapes submitted to the Copyright Office, it

does not necessarily follow that the tapes are the works

themselves. The original work of the authorship should

not be confused with the material objects in which the

work must be fixed. See, 1 Nimmer on Copyrights § 2.03.”

Midway Manufacturing Co. v. Artic International, Inc., No.

80 C 5863, slip op. at 16 (N.D.IIl. June 2, 1981) (order denying

defendant’s motion for summary judgment). Here, the

videotapes were merely copies of the work. The work, for

which copyright protection was granted, is the audiovisual

display reflecting the author’s creativity.

22a

B. Validity of Midway's Copyrights

Section 410(c) of the Copyright Act, 17 U.S.C. § 410(¢),

provides that a certificate of registration from the Copyright

Office “shall constitute prima facie evidence of the validity of

the copyright.” As noted above, plaintiff Midway has received

Certificates of Copyright Registration from the Copyright

Office covering both its Galaxian and Pac-Man games. Artic

has the burden of overcoming that presumption of validity in

this case. See Flick-Reedy Corp. v. Hydro-Line Manufactur-

ing Co., 351 F.2d 546 (7th Cir. 1965), cert. denied, 383 U.S. 958

(1966).

Artic makes three arguments which it contends overcome

the presumption of validity. First, Artic contends that the

audiovisual aspects of Midway’s video games are not “fixed in

any tangible medium of expression,” 17 U.S.C. § 102(a), and so

do not qualify for copyright protection at all. Second, Artic

claims that the publication of the video games by Namco in

Japan, without the proper copyright notice attached, resulted

in forfeiture of the copyrights under 17 U.S.C. § 401. Finally,

Artic argues that the video games may not be copyrighted

because they are useful, mechanical devices not subject to

sidered in turn.

Before a copyright can attach in any original work of au-

thorship, the work must be “fixed in any tangible medium of

expression, now known or later developed, from which [it] can

be perceived, reproduced, or otherwise communicated, either

directly or with the aid of a machine or device.” 17 U.S.C.

§ 102(a). The phrase is defined in the Copyright Act as follows:

“A work is ‘fixed’ in a tangible medium of expression

when its embodiment in a copy or phono-record, by or

under the authority of the author, is sufficiently perma-

nent 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.

23a

Artic contends that the audiovisual displays of Midway’s

games do not meet that requirement. Artic’s argument is

based on the specific technology by which the images that

appear on the game screens are generated. Basically, Artic

notes that the ROMs in the video games do not contain enough

memory to store the entire picture that appears on the game's

screen at any one instant. Rather, the ROMs contain a number

of symbols or patterns which are combined in various ways by

the microprocessor to make up the images seen on the screen.

Artic argues, therefore, that the computer is simply generat-

ing a new set of pictures at all times, pictures that are them-

selves not fixed in any medium.

While Artic’s argument has a certain facial validity, it

nonetheless fails. The fixation requirement, as is clear from the

statute, does not require that the work be written down or

recorded somewhere exactly as it is perceived by the human

eye. Rather, all that is necessary for the requirement to be

satisfied is that the work is capable of being “reproduced...

with the aid of a machine or device.” 17 U.S.C. § 102(a). As was

amply demonstrated by Midway at the hearing, the audiovi-

sual features of its games may be reproduced over and over

again, for extended periods of time. The attract modes of the

two games, for instance, repeat themselves over and over

again, in identical fashion, for as long as the games are turned

on and no one is playing them. The copyrightable aspects of the

play mode likewise repeat themselves whenever the game is

played.

Artic attempts to draw support for its position from a state-

ment in the Report of House Judiciary Committee on the

“(T]he definition of ‘fixation’ would exclude from the con-

cept purely evanescent or transient reproductions such as

those projected briefly on a screen, shown electronically

on a television or other cathode ray tube, or captured

momentarily in the ‘memory’ of a computer.”

H.R. Rep. No. 94-1476, 94th Cong., 2nd Sess. 53, reprinted in

[1976] U.S. Code Cong. & Ad. News 5659, 5666. When read in

24a

context, however, the “purely evanscent or transient

reproductions” referred to by Congress are those arising from

live telecasts or performances that are nowhere separately

recorded. Clearly, the lack of any recording of such events

would preclude their ever again being identically reproduced.

In the instant case, the copyrighted material is recorded in the

ROMs and may be reproduced with the aid of the microp-

rocessor. While the technology of the reproduction is different

than that encountered with videotape, Congress has allowed

for that eventuality by allowing for fixation in mediums of

expression either “now known or later developed.” 17 U.S.C.

§ 102(a). The technology used in the video games is one such

later developed medium of expression.

Defendant also claims that Midway’s copyright in the video

games is void because Namco, the developer of both games,

published them in Japan without attaching any copyright

notice. 17 U.S.C. § 401(a) provides that”

“Whenever a work protected under this title is pub-

lished in the United States or elsewhere by authority of

the copyright owner, a notice of copyright as provided by

this section shall be placed on all publicly distributed

copies from which the work can be visually perceived,

either directly or with the aid of a machine or device.”

Evidence was presented at the hearing which showed that

Namco’s game machine did not display a copyright notice..

Artic argues that the failure to attach a copyright notice to

those games voids Midway’s copyrights.

Defendant’s argument is not supported by the Copyright

Act, however. The statute only requires notice to be placed on

those copies published “by authority of the copyright owner.”

Id. Midway is the owner of the United States copyright in the

games, as is evidenced by the certificates of registration. As

noted above, all copies of the games published or sold by

Midway contained sufficient notice to comply with the require-

ments set forth in the Act. Midway did all that it could reason-

ably do to comply with the Act. It has no control over the

actions taken by Namco in Japan. See Goldman-Morgen, Inc.

25a

v. Dan Brechner & Co., 411 F.Supp. 382, 389-90 (S.D.N.Y.

1976).

Finally, Artic suggests that Midway has attempted to ac-

quire copyright protection for utilitarian objects, which are not

the proper subjects of copyright protection. Artic’s argument

here is apparently in two parts. Artic initially claims Midway’s

attempt to copyright the audiovisual aspects of its games was,

in reality, an attempt te copyright the ROMs in the games.

Because the ROMs are utilitarian objects, they may not be

copyrighted. See Esquire, Inc. v. Ringer, 591 F.2d 796 (D.C.

Cir. 1978), cert. denied, 440 U.S. 908 (1979). While the court

agrees that utilitarian objects may not be copyrighted, it

appears that Artic has misconstrued the copyrights at issue in

this case. As noted above, Midway has sought and obtained

protection for the audiovisual aspects of its games that appear

on the screen. Midway no more restricts the use of ROMs than

an author with a valid copyright restricts the use of books.

The second part of defendant’s argument here apparently

rests on the contention that games are themselves utilitarian

objects and, therefore, cannot be the subject of copyright

protection. As it did in its earlier opinion, the court once again

must reject that argument. To again quote Professor Nimmer:

“It is true that no copyright may be obtained in the system

or manner of playing a game or in engaging in other

sporting or like activity. However, some limited copyright

protection is nevertheless available in connection with

games. It would seem that a relatively minimal artistic

expression, if — would render copyrightable labels

for games, as well as the pattern or design of game boards

1 Nimmer on Copyrights § 2.18{H][3]. As discussed above,

Midway has obtained copyright protection for the artistic ex-

pression which appears on the screen of its games (the “game

board” in this instance).

C. Registration Of Midway's Copyrights

Artic claims that Midway was guilty of several instances of

improper or fraudulent conduct before the Copyright Office

26a

when attempting to register its copyrights in the two video

games. The alleged fraud is the basis for Artic’s motion for

summary judgment on the copyright claims, which motion will

be discussed at the present time.

The legal effect of fraud on the Copyright Office has been

stated as follows:

“The knowing failure to advise the Copyright Office of

facts which might have occasioned a rejection of the appli-

cation constitute reason for holding the registration in-

valid and thus incapable of supporting an infringement

action, 1 Nimmer § 94, or denying enforcement on the

ground of unclean hands. . .”

Russ Berrie & Co. v. Jerry Elsner Co., 482 F.Supp. 980, 988

(S.D.N.Y. 1980). See Vogue Ring Creations, Inc. v. Hard-

man, 410 F.Supp. 609 (D.R.I. 1976). Defendant's motion for

summary judgment relies largely on its claim, discussed

above, that plaintiff Midway has succeeded in copyrighting

only the videotapes it submitted to the Copyright Office. On

the basis of that assumption, Artic says that a number of the

statements made by Midway on the applications for its copy-

rights were false. Specifically concerning the Galaxian applica-

tion, Midway stated that the work that it was copyrighting was

published in Japan on September 15, 1979, by Namco, Limited,

the author of the work. As Artic notes, those facts are not

correct if the “work” copyrighted was the videotape, which

was made by Midway in Illinois on February 14, 1980, and

never published at all.

In addition, Artic relies on the testimony of one David

Albee, Senior Copyright Examiner for the Copyright Office.

Mr. Albee was the examiner who handled Midway's Galaxian

and Pac-Man copyright applications. He testified at a hearing

held before the United States International Trade Commis-

sion, which was considering many of the issues currently be-

fore this court, and a transcript of his testimony was admitted

into evidence before the court during the preliminary injune-

tion hearing. To the extent that Mr. Albee was able to remem-

ber anything about the video game applications, he testified

27a

that an attorney for Midway told him that the videotapes had

been published and that the copies were used for promotional

purposes. Mr. Albee also testified that he viewed the tapes.

Finally, Artic points out that, in its cover letters submitted

with the copyright applications, Midway states that it is

depositing “one copy” of the work to be copyrighted. Artic

states that the videotapes were, at best, only “identifying

material” rather than copies of the work. Artic claims that

Midway never informed the Copyright Office that it was sub-

mitting “identifying material” instead of copies of the works

until long after the certificates of registration were issued.

Viewing the evidence presented by Artic as a whole, it is

clear that Artic has not met its burden of showing that Midway

defrauded the Copyright Office. Much of Artic’s alleged evi-

dence of fraud is based on the mistaken proposition that Mid-

way’s trademarks cover only the videotapes submitted to the

of the work to be copyrighted. Consequently, the statements

made by Midway in its letters and application to the Copyright

Office were, so far as the evidence shows, entirely proper and

certainly not fraudulent.

The court also is not persuaded by the testimony of Mr.

Albee. The Administrative Law Judge, who was in charge of

the hearing before the International Trade Commission and

who observed Albee’s testimony personally, stated as follows:

“The testimony of Examiner Albee does little to prove

Artic’s allegations. ... The witness stated repeatedly

that he did not recall specific details. To the extent he

could recall, that recollection was sketchy at best. This

fact is well illustrated by his testimony that he viewed the

entire videotape deposited with him. . . . Since the con-

tent of that tape clearly conflicts with some of his hazy

impressions of representations allegedly made to him by

Mr. Larson [Midway’s attorney], it is impossible to place

any credence in those recollections. The testimony of

Messrs. Deitz and Larson are substantially in agreement

as to the critical facts. Consequently, there is no basis fora

28a

finding of material :\isrepresentation as to what was

being deposited for what purpose.”

In re Certain Coin-Operated Audiovisual Games and Compo-

nents Thereof (viz Rally-X and Pac Man), Investigation No.

337-TA-105, slip op. at 55 (U.S. Int'l. Trade Comm. Nov. 16,

1981) (Recommended Determination of John J. Mathias, Ad-

ministrative Law Judge). The court has reviewed the trans-

cript of Mr. Albee’s testimony, and is in complete agreement

with the Adminstrative Law Judge. It is not surprising that a

facts surrounding a particular copyright application. Testi-

mony presented at the International Trade Commission hear-

ing indicated that each examiner reviews as many as 10,000

different applications per year.

The above analysis by the court should not be taken to mean

that the court totally disagrees with the propositions put forth

by Artic. It does appear that the applications and procedures

followed by Midway in registering its copyrights were not

entirely clear and straightforward. However, much of what-

ever confusion there was appears to have resulted from the

fact that Midway was attempting to copyright new technology

that the Copyright Office had never directly dealt with before.

Particularly in view of that situation, the court is guided by the

following statement in Freedman v. Milnag Leasing Corp., 20

F.Supp. 802, 804 (S.D.N.Y. 1937):

“It will not do to be overstrict as to the technicalities of the

good faith complied with by a person seeking copyright

protection and if others have not been misled intot inking

that the work is not copyrighted, it is enough.”

See also Johnson v. Salomon, 197 U.S.P.Q. 801, 820-21

(D.Minn. 1977); Champion Map Corp. v. Twin Printing Co.,

350 F.Supp. 1332 (E.D.N.C. 1971). No evidence has been

presented here that anyone was misled by any of Midway's

actions. Consequently, Artic’s motion for summary judgment

on the copyright issues is denied.

29a

In addition to claiming that Midway engaged in fraud before

the Copyright Office, Artic also argues that Midway failed to

comply with the requirements of 17 U.S.C. § 205(d). That

subsection provides:

“No person claiming by virtue ofa transfer to be the owner

of copyright or of any exclusive right under a copyright is

entitle d to institute an infringement action under this title

until the instrument of transfer under which such person

claims has been recorded in the Copyright Office, but suit

may be instituted after such recordation on a cause of

action that arose before recordation.”

Artic’s arguments under this section center on the Pac-Man

registration. The recorded document for that copyright is

dated October 10, 1980, and is entitled “Assignment of Copy-

rights.” It reads in part as follows:

“Namco Limited ... has assigned to and does hereby

assign to Midway Mfg. Co... . the entire right, title and

interest in common law and statutory copyrights in and to

said Game [Pac- Man] i in the United States and The West-

ern Hemisphere.”

On the following day, a representative of Midway signed and

dated a letter to the president of Namco relating to the assign-

ment of the copyrights. That letter states in full:

“Midway Manufacturing Co. fully understood and agreed

that the “ASSIGNMENT OF COPYRIGHTS” for both

[PAC-MAN] and [RALLY-X] which were signed by

Namco’s representative and granted to Midway Mfg. Co.

shall be governed and restricted by the License Agree-

ment of the above games. The License Agreement above

oe shall be finalized no later than November 15,

1980.”

Finally, on November 4, 1980, Namco and Midway entered

into a formal “LICENSE AGREEMENT” under which Mid-

way received the full rights to market the Pac-Man game in the

United States. Paragraph 2(b) of that document once again

purports to transfer from Namco to Midway all United States

copyrights in the Pac-Man game. Artic claims that the October

10 document which was recorded was not the “instrument of

30a

transfer” required by the statute. Rather, Artic says that

Midway should have recorded the November 4 license agree-

ment, which, Artic argues, actually transferred the copy-

rights.

The court begins its analysis by noting that the language of

the assignment, by its terms, clearly transfers Namco’s copy-

rights in the Pac-Man game to Midway. That transfer is not

repudiated in the subsequent letter from Midway to Namco.

The letter only states that the extremely general grant, reg-

istered with the Copyright Office, is subject to a more special-

ized agreement between the parties. It is instructive to note

that the more specialized license agreement, insofar as the

assignment. Apparently, the practice followed by Midway in

this case is well accepted by the Copyright Office. Professor

Nimmer states:

“A transferee sometimes hesitates to record his trans-

fer for the reason that he does not wish the amount or

nature of the consideration which he has paid to become a

matter of public knowledge. This problem is often solved

through the device of the so-called ‘short term’ document

of transfer. That is, at the same time the transferor ex-

ecutes the full contract of transfer which recites the con-

sideration which the transferee has or will thereafter pay

to the transferor, a second short form document is also

executed by the transferor which recites in full the rights

transferred but which refers to the consideration therefor

either in general terms (e.g., ‘for good and adequate con-

sideration’) or which refers to the longer document for a

recitation of the consideration. Only the short form is

While there are some technical differences between the

arties described by Professor Nimmer and that followed

y Midway in the instant case (i.e., the two documents

were not executed at the same time and the “short form”

that was recorded does not contain a purely formalistic

statement of consideration), the court does not believe

that those differences are significant. The court finds that

Midway adequately complied with the requirements of 17

U.S.C. § 205(d).

3la

D. Artic’s Infringement Of Midway's Copyrights

Section 106 of the Copyright Act provides the following

exclusive rights to the holders of valid copyrights:

“(1) to reproduce the copyrighted work in copies .

“@) to = derivative works based upon the copy-

righted work;

“(3) to distribute cupies . . . of the copyrighted work to

the public by sale or other transfer of ownership, or by

rental, lease, or lending;

“(4) in the case of . . . motion pictures and other audio-

visual works, to perform the copyrighted work publicly;

and

“(5) inthe case of. . . the individual images of a motion

picture or other audiovisual work, to display the copy-

righted work publicly.”

17 U.S.C. § 106. Midway claims that one or more of those

exclusive rights are violated by Artic’s sale of its Puckman

printed circuit boards and its Galaxian speed-up kits.

Turning first tothe Puckman printed circuit boards, Midway

contends that their sale violates its right to make copies. Ar-

tic’s circuit boards fit well within the definition of “copies”

under 17 U.S.C. § 101, because they are “material objects. . .

in which a work [here Puckman] is fixed . . . and from which

the work can be perceived . . . with the aid of a machine.”

Artic suggests that this court should not find that its circuit

boards infringe Midway's valid copyrights, because no evi-

dence showing direct proof of copying was presented at the

hearing. Courts, however, have recognized the difficulty that

plaintiffs are likely to have in finding direct proof of copying ofa

protected work, and have allowed a finding of copying from

evidence that the defendant had access to the copyrighted

work and that defendant’s work is substantially similar to

plaintiff's. See Walker v. University Books, Inc., 602 F.2d 859

(9th Cir. 1979); Granite Music Corp. v. United Artists Corp..,

532 F.2d 718 (9th Cir. 1976).

32a

Here, there is ample evidence of Artic’s access to the copy-

righted work. Artic’s president admitted that he became

aware of Namco’s Puckman game in Japan before Artic began

selling the printed circuit boards. In addition, Artic began

selling the boards after Midway's Pac-Man game was widely

distributed in the United States. It was also demonstrated at

the hearing that Artic’s Puckman game is not only “sub-

stantially similar” to Midway's Pac-Man, but that the two

games are, in fact, essentially the same. There is ample evi-

dence that Artic copied Midway’s Pac-Man game.

Artic makes two arguments which, it claims, preclude a

findig of infringement, even if the court finds that Artic copied

Midway’s Pac-Man game. First, Artic urges this court to fol-

low the district court holding in Data Cash Systems, Inc. v.

JS&A Group, Inc., 480 F.Supp. 1063 (N.D.IIl. 1979), affd on

other grounds, 628 F.2d 1038 (7th Cir. 1980). That case in-

volved a computer program designed to be used in a compute-

rized chess game. The written program itself was copyrighted

by the plaintiff in that case. The program was then embodied in

a ROM, which was made part of a hand-held computer chess

game. The defendants allegedly copied plaintiffs ROM and

used it in a computer chess game of their own. The district

court granted summary judgment for the defendants, stating,

“Even assuming that the ROM in plaintiff's Compu-

Chess was copied by defendants JS&A, Sugarman and

Stanke, the ROM is not a ‘copy’ of plaintiff's computer

program and therefore the copying is not actionable. Since

a complete defense as a matter of law with respect to

plaintiff's claim of copyright infringement exists, the mo-

tion of defendants JS& A, Sugarman and Stanke for sum-

mary judgment is granted...”

480 F.Supp. at 1069. Artic argues that, if it copied anything

from Midway's game, it copied the ROMs only. Therefore,

following Data Cash, the court should find as a matter of law

that no infringement took place.

The court, however, is unable to accept Artic’s argument.

Initially, it is important to note that, in affirming the district

33a

court’s outcome in Data Cash, the Seventh Circuit Court of

Appeals expressly refused to consider the grounds relied upon

by the lower court, saying, “The parties had neither briefed

nor argued that issue and neither side on appeal defends the

district court’s position, so we do not consider it further.” 628

F.2d at 1041. Also, another district court has expressly re-

jected the lower court’s reasoning in Data Cash. See Tandy

Corp. v. Personal Micro Computers, Inc., No. C-81-0744 RFP

(N.D.Cal. Aug. 31, 1981).

This court as well is not persuaded by the lower court’s

reasoning in Data Cash. To reach its conclusion that a ROM can

never, as a matter of law, be a “copy” of anything, that court

adopted the following definition of the word “copy”: “Both at

common law and under the 1909 Act, a ‘copy’ must be in a form

which others can see and read.” 480 F.Supp. at 1068. That

definition is far narrower than the one adopted by Congress

and included in the current Copyright Act. As noted above, the

word “copy” is there defined, among other things, as a material

object in which the work is fixed “and from which the work can

be perceived . . . with the aid of a machine.” 17 U.S.C. § 101.

By its very terms, that includes items like videotapes and tape

recordirgs that cannot be read with the naked eye, and

definitely covers the ROMs used by Midway in its Pac-Man

game. This holding is supported by the General Counsel of the

International Trade Commission. He said,

“Complainant further argues that if a work is embodied

in an object, be it a ROM, a tape or a disc, that work is

copyrightable, regardless of whether machines, with or

without the aid of computer programs, are necessary for

the work to be visually perceived. As stated by Nimmer,

‘a work is no less a motion picture (or other audio-visual

work) because the images are embodied in a video tape,

video disc, or any other tangible form.’ 1 Nimmer

§ 2.09(D]. . . . The General Counsel agrees with this posi-

tion.”

OF ae” Pn ss" | ene eer, OF ner er Eee oe Sa Pr ey eer sen

Menara ndum from the General ( ounsel oy tine invernmanownma

Trade Commission to The Commission, at 7 (June &, 1981).

34a

Artic also suggests that its copies of the Pac-Man printed

circuit boards do not constitute infringement of Midway's

and are used to repair defective or broken video games. This

argument is easily disposed of. Whether or not Artic’s state-

ment of the relevant law is correct, no evidence was presented

at the hearing which tended to show that Artic’s Puckman

circuit boards were used for innocent purposes. To the contra-

ry, there was substantial evidence presented which showed

that even Artic recognized that its boards were being used in

contravention of the law. As soon as this suit was filed, Artic

began taking every effort to disguise the fact that it was selling

Puckman circuit boards.

The question of whether Artic’s speed-up kits, used in Mid-

way’s Galaxian game, violate any of Midway’s exclusive rights

is more difficult. Fortunately, many of those difficulties were

dealt with in this court’s June 2, 1981, ruling in this case

denying Artic’s motion for summary judgment.

Midway again claims that Artic’s speed-up kits violate the

second of its five exclusive rights provided by the Copyright

Act, specifically, the right “to prepare derivative works based

* &

upon the copyrighted work.” 17 U.S.C. § 106. In its earlier

opinion, the court stated:

“The court believes that the success of this theory de-

pends on the resolution of two key factual questions. The

first factual question concerns the scope of the copyright.

It is, of course, impossible to tell whether defendant has

induced others to prepare a derivative work, when the

court is uncertain as to what original work was copy-

righted. As noted, the scope of the copyright is in dispute

between the parties. Second, there is also the factual

question of whether the speed up kits are designed and

used solely to modify the visual images of plaintiff's copy-

righted game or whether the device can be used in a

variety of electronic games.”

Midway, supra, slip op. at 18. The evidence presented at the

hearing allows the court to now address those factual concerns.

35a

As this court discussed at length above, the copyrighted

work at issue in this case is the audiovisual display that appears

on the video game’s screen. The speed-up kit sold by Artic

clearly changes that display during the play mode of the game.

The characters in the game move at a faster speed, and the

number of alien characters that attack the character controlled

by the player is increased. Such modifications of plaintiff's

copyrighted display fit well within the definition of derivative

works.

Also, the facts presented at the hearing clearly show that the

speed-up kit was designed solely to modify Midway's Galaxian

game. In no way can it be described as a technological break-

through benefitting the entire electronic games industry. The

evidence showed that the speed-up kit is physically compatible

with very few games other than Galaxian. To the extent that

the kit did work in other games, it changed them in ways which

further showed that it was meant to be used only in the Gala-

xian game. For example, it caused the words “WE ARE THE

GALAXIANS” to appear on the screens of the other games,

and caused the characters of those games to move in a way

extremely similar to the way the characters in the Galaxian

game moved. Also, the earliest advertising used by Artic to

promote its speed-up kits referred only to speeding up Gala-

xian games. No other use of the kit was mentioned. In view of

the above factual showings, the court concludes that Artic’s

speed-up kits are infringing “derivative works” of Midway’s

Galaxian video game.

Insummary, the court is convinced that Midway has shown a

likelihood of success on its copyright claims, despite the

plethora of arguments to the contrary raised by Artic. Midway

has shown that it is the owner of valid copyrights covering the

audiovisual features of both its Galaxian and Pac-Man video

games. Midway has also shown that those copyrights are in-

fringed by the actions of the defendant, Artic. Because the

court believes Midway will prevail on its copyright claims, it is

not necessary for the court to consider Midway’s claims based

36a

on its trademarks, the Lanham Act, and various provisions of

state and common law.

II. Irreparable Harm

Ina copyright infringement case, the burden on the plaintiff

to show irreparable harm necessary to support a preliminary

injunction is very light. In fact, if the plaintiff can show prob-

able success on the merits, the requisite irreparable injury is

normally presumed. Wainwright Securities Inc. v. Wall Street

Transcript Corp., 558 F.2d 91 (2d Cir. 1977), cert. denied, 434

U.S. 1014 (1978); Novelty Textile Mills, Inc. v. Joan Fabrics

Corp., 558 F.2d 1090 (2d Cir. 1977).

Defendant attempts to rebut this assumption of irreparable

harm, at least so far as the Galaxian game is concerned, by

noting that Midway no longer sells that game. Consequently,

Midway could not possibly lose any sales as a result of defend-

ant’s infringement. Particularly in the case of the speed-up kit,

however, that showing is not enough to rebut the presumption

of irreparable harm. Plaintiff's reputation for high quality and

distinctive video games is entitled to protection from copyright

infringers, just as its potential sales are. See Dallas Cowboys

Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200 (2d

Cir. 1979). Artic’s speed-up kit modifies Midway’s Galaxian

game in such a way as to make it considerably more difficult,

for the unskilled player in particular. It is very possible, if not

likely, that that will discourage those individuals from playing

Midway’s video games, and so reduce the overall demand for

plaintiff's games as a whole. Such damages would be impossi-

ble to measure in monetary terms.

III. Balance Of Hardships

If this preliminary injunction does not issue, Midway's sub-

stantial investment in Galaxian and Pac-Man, two extremely

rqnular wider games. will he ieqnandized On the nther. hand

Artic’s president has testified that Artic has a substantial

business in the sale of integrated circuits, that the speed-up kit

is not a substantial part of Artic’s business, and that Artic sells

ofa

printed circuit boards for about thirty different games. In view

of that, the court finds that the balance of hardships clearly

favors issuing an injunction. See Vidway Manufacturing Co.

v. Drikschneider, supra, slip op. at 20.

IV. The Public Interest

The Copyright Act evidences a public interest in creativity

by demonstrating an intent to provide an economic reward for

creative expression. By granting an injunction here, the court

would be furthering that interest by rewarding plaintiffs de-

velopment and dissemination of new video games. The court

can conceive of no public interest that is furthered by allowing

defendant to continue to distribute and sell its infringing mate-

rial.

V. Conclusion

For the reasons stated above, the court finds that plaintiff

has successfully demonstrated that all elements necessary for

issuing a preliminary injunction are present in this case.

Therefore, plaintiff's motion for preliminary injunction is

granted, and defendant’s motion for summary judgment on

servants are hereby preliminarily enjoined from selling,

marketing, distributing, or otherwise disposing of the items

found in this opinion to infringe plaintiff Midway’s copyrights

in the Galaxian and Pac-Man video games, and defendant is

preliminarily enjoined from inducing others to infringe those

copyrights. Plaintiff will prepare an appropriate order to sub-

mit to the court, and at that time, bond will be fixed.

ENTER:

s/ Bernard M. Decker

BERNARD M. DECKER

United States District Judge

DATED: March 10, 1922.

38a

APPENDIX C

DISTRICT COURT, N.D. ILLINOIS

No. 80 C 5863

Decided June 2, 1981

Mipway Mrs. Co.

v. ARTIC INTERNATIONAL, INC.

Decker, District Judge.

Plaintiff Midway Mfg. Co. sells certain electronic games

including Galaxian and Pac-Man. Defendant Artic Internation-

al, Inc., sells and manufactures electronic components.

Allegedly, Artic has recently begun to sell electronic devices

that are intended to simulate Midway’s Galaxian and Pac-Man

games as well as devices that are designed to be inserted into

Midway’s Galaxian game to speed up and otherwise alter the

play of the game (hereinafter speed-up kits).

Plaintiff filed this suit against Artic for copyright infringe-

ment, trademark infringement, violations of the Lanham Act

and for various unfair competition violations under I]linois law.

Defendant has counterclaimed, alleging, inter alia, violations

of the antitrust laws. Currently pending are the following

motions:

(1) Defendant’s motion—

for partial summary judgment, to dismiss the com-

plaint,

to strike plaintiffs amended motion for a preliminary

injunction,

to strike superfluous material from the amended

complaint, and

two motions for sanctions.

39a

(2) Plaintiffs motions—

for leave to file a second amended and supplemental

complaint, and

to compel discovery under Rule 37.

Plaintiff asserts that the Galaxian game is housed in a

cabinet containing electronic circuitry. The circuitry in turn

produces the visual images of the game on a television picture

tube. The visual images that are presented on the screen

appear in two modes. The first mode is the “attract” mode. It

appears prior to the commencement of the game and visually

summarizes the game. This mode consists of a fixed sequence

of images that play in a “loop” of approximately one minute’s

duration.

The second mode is the “play” mode, which begins when a

coin is deposited in the machine and the start button is pushed.

During this mode, the images on the screen respond in some

degree to the player’s movement of the hand controls on the

cabinet.

The object of the Galaxian game is to “destroy” a convoy of

“aliens” which continually shifts from side to side on the

screen. The aliens in the convoy are of a variety of ranks and

colors. Throughout the game, aliens break off from the convoy

and swoop down to “bomb” a “flagship” that is controlled by the

player. The player's score is measured by the number and rank

of aliens destroyed.

Allegedly, Midway has recently acquired rights to a game

entitled Pac-Man. This is a maze game wherein a cartoon-like

figure controlled by the player attempts to devour adversaries

moving through the maze before the player controlled figure is

destroyed by its opponents. Like Galaxian, Pac-Man has both

an attract and play mode.

Plaintiff's Motion for Leave to File a Second Amended and

Supplemental Complaint and Related Motions.

On October 31, 1980, plaintiff filed its complaint alleging that

defendant had infringed the copyrights in the Galaxian game.

40a

On December 10, 1980, plaintiff, with leave of court,’ filed an

amended and supplemental complaint. This filing generated

two motions on the part of the defendant (defendant's motion

to strike plaintiffs motion for preliminary injunction (1/5/81);

and defendant’s motion to strike superfluous material from

amended * * * complaint (4/7/81).

The amended and supplemental complaint contained allega-

tions concerning defendant's alleged infringement of the Pac-

Man game. The original complaint did not contain such allega-

tions. Defendant answered the allegations of the amended

complaint, including those relating to Pac-Man on December

30, 1980. Defendant never objected to the filing of the amended

and supplemental complaint. Defendant now objects to the

filing of the second amended complaint on several grounds.

In Forman v. Davis, 371 U.S. 178 (1962), the Supreme Court

reiterated the philosophy of Rule 15 that amendments of the

pleadings are to be freely granted, even after the original

complaint has been dismissed. If the underlying facts relied

upon by a plaintiff may be the proper subject of relief, he ought

to be afforded an opportunity to test his claim on the merits.

‘Defendant contends that the amended and supplemental com-

plaint was filed without leave of the court. Such an assertion is simply

untrue. On December 9, 1980, at motion call before this court with

both plaintiff's and defendant's attorneys present, plaintiff's counsel

informed the court that he intended to file an amended complaint on

December 10, 1980. This court inquired how the amended complaint

changed the cause of action. Plaintiffs counsel replied in part: “It

*** adds a count of copyright infringement of another copyright

which has issued since the original complaint was filed * * *” The

court replied: “It is a supplement to that extent, I guess?” Plaintiff's

counsel stated, “Yes, it is, your Honor.” The court then ordered

defendant twenty days from the 10th of December to file an answer to

the amended and supplemental complaint. During that time, and

indeed up to the present motion, defendant never once asserted that

plaintiff failed to receive leave of court to file the amended and

supplemental complaint.

dla

With these liberal principles in mind, the court must attempt to

sort out the confused state of the pleadings.

There can be little doubt that plaintiff is entitled to file his

second amended complaint. The only objection defendant has

to the second amended complaint is that in the prayer for relief

for Count I, it adds a specific reference to Pac-Man. The

amended and supplemental complaint, paragraphs 12-23,

made specific allegations, which defendant answered, concern-

ing Pac-Man. Thus, instead of relying on a general prayer for

relief, plaintiffs now ask for specific relief concerning Pac-Man.

The first amended and supplemental complaint gave defendant

adequate notice that defendant's alleged infringement of the

Pac-Man copyright is at issue in that case. Defendant still

objects to the filing of this second amended and supplemental

complaint on a number of grounds.

Defendant argues that plaintiff cannot amend his complaint

because Rule 15(d) only allows the presentation of subsequent

matter relating to the claim presented in the original pleading.

3 Moore’s Federal Practice € 15.16[{1]. Defendant argues that

since the original complaint and the amended complaint did not

refer to Pac-Man, plaintiff cannot now amend his complaint to

refer to Pac-Man.°

First, the court notes that defendant never attacked the

adequacy of the first amended and supplemental complaint on

this ground. Thus, the question is not the adequacy of the first

amended and supplemental complaint, but rather whether

plaintiff should be given leave to amend the amended and

supplemental complaint.

? Moreover, even if defendant had made this objection to the first

amended and supplemental complaint, it is doubtful that it would

have succeeded. Most of the cases cited by defendant were overruled

by the 1963 amendment to F. R. Civ.P. 15(d). See, 3 Moore’s Federal

Practice € 15.16(2) and (3).

42a

Rule 15(d) only applies when a complaint seeks to add events

which “happened since the date of the pleadings sought to be

supplemented.” F.R.Civ.P. 15(d). The pleading sought to be

supplemented in this action was filed on December 10, 1980.

None of the events alleged in the second amended and sup-

plemental complaint occurred after December 10, 1980. Thus.

Rule 15(a) and not 15(d) governs disposition of the question

here.

Defendant argues that plaintiff has waited four months to

seek leave to file this complaint and that the doctrine of laches

prevents him from filing it now. Specifically, defendant claims

that he thought this litigation was limited to Galaxian and to its

prejudice only took discovery on the Galaxian issue.

Defendant’s argument overlooks the fact that the first

amended and supplemental complaint gave defendant notice of

the Pac-Man claim. Defendant claims that it did not, since it

omitted specific reference to Pac-Man in its prayer for relief. It

is settled law in this Circuit, however, that if“the appellant has

stated a cause of action for any relief, it is immaterial what he

designates it or what he asked for in his prayer; the court will

grant him the relief to which he is entitled under the facts

pleaded.” Kansas City, St. L. & C.R. Co. v. Alton R. Co., 124

F.2d 780, 783 (7th Cir. 1941). And as one court in this district

has stated, “A court of equity is not limited by the precise

demands of the pleadings, especially where the pleadings con-

tain prayers for such other relief as this Court may deem just

and appropriate.” Chicago & Eastern Illinois Railroad Co. v.

Illinois Central Railroad Co., 261 F.Supp. 289, 307 (N.D.III.

1966). Defendant should have been aware since December 10,

1980, that Pac-Man was at issue in this case. Consequently, it

can claim no prejudice or lack of diligence on the part of plain-

tiffs counsel. Consequently, plaintiffs motion for leave to file a

second amended and supplemental complaint is granted.

This decision largely resolves three other motions. First,

defendant moved to strike all reference in the amended and

supplemental complaint to Pac-Man because the complaint

43a

made no reference to Pac-Man in the prayer for relief. Because

the court has granted plaintiff leave to amend that complaint,

that motion is now moot.

Additionally, defendant's motion to strike the plaintiffs

second motion for a preliminary injunction must be denied. On

December 8, 1980, plaintiff served and noticed up a motion fora

preliminary injunction. On December 9, 1980, the court set a

briefing schedule on that motion. On December 10, 1980, de-

fendant was served with an amended and supplemental com-

plaint. The court and defendant had notice that an amended

complaint was going to be filed. On December 23, without

noticing up the motion, plaintiff filed an amended motion for

preliminary injunction for the purpose of conforming the relief

sought in the preliminary injunction to the facts pleaded in the

amended complaint. Along with the amended motion for pre-

liminary injunction, plaintiff filed a memorandum in support of

his motion and several documents in accordance with the brief-

ing schedule.’

Defendant contends that because the amended motion for

preliminary injunction was not noticed up, it should be strick-

en. This argument brings new meaning to the word technical-

ity. While it may be true that it would have been the safer

course of action to present the amended motion in court with

proper notice, there was no reason, other than avoiding the

present dispute for doing so. The court had given plaintiffleave

to file a memorandum in support of its motion for preliminary

injunction to be due on December 23. Since the amended mo-

tion was being filed pursuant to the briefing schedule and was

not presented in open court, there was no reason to notice up

the motion. Moreover, the amended motion only differs from

the original motion in that it seeks broader relief. No purpose

would be served, under these circumstances, in striking this

‘While some of these documents were evidently incomplete, plain-

tiff later furnished defendant with a complete set of the documents.

dda

motion only to have plaintiff re-present in open court

tomorrow.

Defendant's second argument for striking the second motion

for a preliminary injunction is that it seeks broader relief than

the amended and supplemental complaint. While this argu-

ment lacks merit in light of the principles stated in Kansas

City, supra, and Chicago & Eastern Illinois Railroad, supra,

the filing of the second amended and supplemental complaint

now moots the argument. The prayers for relief in the com-

plaint and the preliminary injunction are now identical. Con-

sequently, defendant’s motion to strike plaintiff's amended

motion for a preliminary injunction is denied. Defendant is

ordered to respond to plaintiff's motion for a preliminary in-

junction in seven days, plaintiff is given seven days thereafter

to reply.

Allowing plaintiff to file a second amended and supplemental

complaint also resolves many of the discovery disputes in this

case. Plaintiff has moved to compel discovery pursuant to Rule

37. Defendant objected to discovery of documents related to

Pac-Man on the grounds that they are not relevant. In light of

the second amended and supplemental complaint, this objec-

tion must be overruled. Documents relating to Pac-Man are

indeed relevant to this litigation and must be produced.

Unfortunately, other discovery disputes still remain. Plain-

tiff has made the following discovery requests:

13. All communications with customers or prospective

customers —— to the sale or offering for sale of (a)

memory boards which are offered for sale for the purpose

of oe up a Galaxian video game, (b) printed circuit

boards, otherwise known as “mother s” which may

be used to construct either a GALAXIAN or PAC-MAN

video game.

17. Copies of all sales invoices or other records of the

sales of (a) memory boards which are advertised to speed

up a GALAXIAN video game, or (b) printed circuit

boards, otherwise known as “mother boards,” construct

GALAXIAN or PAC-MAN video game, the sales invoices

45a

or other records including but not limited to the sales

made at the AMOA Show in Chicago, Illinois on October

31, November 1, and November 2, 1980.

There can be no doubt that these documents are relevant.

Aside from being relevant to the question of damages, the

records will aid in identifying which of defendant's customers

would be likely to have knowledge of the representations

which defendant allegedly made in the sales of its products.

These representations are relevant to plaintiff's claims that

defendant has induced others to infringe plaintiff's rights in

Galaxian and Pac-Man video games. Consequently, defendant

is ordered to produce these documents.

There remains one final discovery dispute. Plaintiff has

moved to compel the defendant to produce previously marked

physical deposition exhibits at the depositions of defendant and

its employees which were scheduled for May 12, 1981. These

deposition exhibits were marked for identification in a deposi-

tion taken on December 18 and 19, 1981. The exhibits are

located in defendant’s counsel's office in Chicago. The deposi-

tion is to take place in New Jersey. Plaintiff has offered and

continues to offer to pay for the transportation of these ex-

hibits to and from the depositions. Defendant has offered to

allow plaintiff to photograph the exhibits, but plaintiff con-

tends that such photographs would be insufficient for use at the

depositions.

Defendant opposes the transportation of goods on two

grounds. First, defendant argues that it has already produced

the exhibits once and that Rule 34 does not require it to

produce the same exhibit twice. Defendant cites no authority

for such an interpretation of the Rule. These exhibits will be

necessary for use in the depositions. Pictures of complicated

electronic equipment will not suffice for explanatory purposes.

That the same exhibits are required at several depositions does

not alter this result.

Defendant also argues that the goods are very fragile and

that shipment may cause damage to them. The goods are worth

46a

approximately $3,000-3$4,000. This problem is easily solved if

plaintiff agrees to insure the goods for their worth. If plaintiff

agrees to insure the goods for their transportation to and from

the depositions, defendant must produce them. If plaintiff

refuses to insure the goods or promise to pay for any damage

caused by their transportation, there is no obligation to pro-

duce the exhibits. As well, plaintiff will bear the cost of trans-

portation.

Defendant's Motion for Partial Summary Judgment

This motion has generated a total of five lengthy briefs. The

theory of this motion appears to shift every time defendant

files another brief. When the court must apply legal principles

to new areas of technology, it always appreciates briefs which

clarify the issues in dispute. Unfortunately, these briefs only

obscure the issues in this case. Nevertheless, the court will

attempt to deal with the arguments presented in this motion.

Defendant has asked this court to find that “the manufac-

ture, sale and distribution of its speed up kit * * * is not an

infringement of any valid copyright of the plaintiff and is not an

infringement of either Copyright Registration Numbers PA

59-977 or PA 68-323.” Thus, the motion seeks, in the context of

this case, very limited relief.

Plaintiffs copyright registrations are directed to the “play

mode” and “attract mode” of the audio visual performance of

plaintiffs “Galaxian Game.” Under 17 U.S.C. § 401(c), the

certificate of a registration constitutes prima facie evidence of

the validity of the copyright and of the facts stated in the

certificate.

Plaintiff asserts that the sale by defendant of its speed up

kits violates two of its exclusive rights under 17 U.S.C.

§ 106(2) and (4). Specifically, § 106(2) and (4) give the owner of

a copyright the exclusive right “to prepare derivative works

based upon the copyrighted work;” and “in the case of * * *

audiovisual works, to perform the copyrighted work publicly.”

A derivative work is defined under § 101 as “a work based upon

47a

one or more pre-existing works, such as * * * any * * * formin

which a work may be recast, transformed or adapted. A work

consisting of * * * elaborations, or other modifications, which,

as a whole, represent an original work of authorship, is a

derivative work.”

Plaintiff's theory of infringement is apparently as follows:

Plaintiff has designated a certain game which consists of cer-

tain audio visual images. Plaintiff has copyrighted these audio

visual images. Defendant sells a speed up kit which, when

attached to plaintiff's machine by a third party, modifies those

audio visual images. The new audio visual images, however,

are similar to and incorporate the pre-existing copyrighted

audio visual work. Thus, plaintiff claims that by marketing the

speed up kit, defendant has induced others to prepare deriva-

tive works of plaintiff's copyrighted work by using speed up

kits, and has also induced others to perform distortions of

plaintiff's Galaxian game by using the speed up kits. Several

courts have held, contrary to defendant's assertions, that

there does exist a cause of action for contributory infringe-

ment. See, Gershwin Publishing Corp. v. Columbia Artists

Management, Inc., 443 F.2d 1159, 1162, 170 USPQ 182, 184-

185 (2d Cir. 1971); Universal Studios, Inc. v. Sony Corp., 480

F. Supp. 429, 203 USPQ 656 (C.D.Cal. 1979).

Defendant's arguments for partial summary judgment can

be grouped into three major categories. First, defendant notes

that when plaintiff applied for its copyrights, it submitted two

video tapes of Galaxian being played. Defendant contends that

plaintiff's copyright should be limited in scope to those two

videotapes, and that, whatever else it may have done, defend-

ant has not copied or induced others to copy these tapes.

Defendant’s second argument is that persons who use the

disputed device are not “copying” Galaxian, and, as a result, it

cannot be a “contributory” infringer. Finally defendant argues

that the defense of unclean hands bars plaintiff from recover-

ing on its copyright claims. Each argument is considered in

turn.

48a

1. Scope Of The Copyright.

There is a great deal of debate in the briefs as to what the

submitted two video tapes of the game Galaxian being played.

As previously noted, defendant contends that plaintiff's copy-

right is limited to these movies. Plaintiff has suggested that

the copyright extends to the game itself. Finally, it has been

urged, as a fallback position by both parties, that the copyright

extends only to the audio visual images that appear when

playing the game. The question of what the copyright covers

turns on disputed questions of material fact that must be

resolved at trial. For instance, the parties hotly dispute the

significance of the video tapes submitted to the Copyright

Office. While defendant contends that a video tape was sub-

mitted as a copy of the work, plaintiff contends that the video

tapes were only “identifying materials” and not a copy. See, 37

C.F.R. §§ 202.19(c)(6), 202.20(¢)(2)(ix) and 202.21(b). More-

over, the court does not presently have before it the video tape

and the game. Hence, differences between the two are im-

possible to comprehend on the present record.

Defendant asseris, however, that plaintiff is trying to use

the copyright to cover the game itself and that as a matter of

law, the copyright cannot cover the game. This contention

must be rejected. Professor Nimmer has noted:

“It is true that no copyright may be obtained in the system

or manner of playing a _ or in engaging g in any other

sporting or like activity. However, some limited copyright

protection is nevertheless av ailable in connection with

games. It would seem that a relatively minimal artistic

expression, if original, would render copyrightable labels

for games, as well as s the pattern or design en boards

x * *”

1 Nimmer on Copyrights § 2.18{H)[3]. Here, plaintiff may well

have copyrighted something akin to a “game board.” That this

“game board” is manifested on a television screen instead of

cardboard is of no consequence. Put another way, plaintiff has

apparently attempted to copyright the audio and visual ex-

49a

pressions of its game. Thus, for example, it may have copy-

righted the shape of the aliens, what they look like and how

they move. Certain other aspects of the game, of course,

cannot be copyrighted. For instance, plaintiff cannot copyright

the idea of setting aliens in outerspace and having them swoop

down on a flagship. Before ruling on the scope of the copyright,

however, the court must more fully understand, inter alia, the

events that transpired in the Copyright Office.

While defendant’s next argument regarding the scope of the

ment of § 102(a) that in order for copyright protection to exist,

the “original works of authorship [must be] fixed in any tangi-

ble medium of expression * * *"* Apparently, defendant

argues that “Galaxian” cannot be fixed because the movements

of the images on the screen are responsive to the movements of

the player. Thus, defendant argues that the only time the work

was fixed was when plaintiff submitted the two video tapes of

the game being played to the Copyright Office. Since plaintiff

admits that defendant never copied these movies, the argu-

ment goes, defendant cannot be guilty of copyright infringe-

ment.

The fixation requirement will be satisfied if the work can be

perceived “either directly or with the aid of a machine or other

device.” See, 1 Nimmer on Copyrights. § 2.03[B]. As the

House Report states:

“(I]t makes no difference what the form, manner, or

medium of fixation may be—whether it is in words, num-

bers, notes, sounds, pictures, or any other graphic or

symbolic indicia, whether embodied in a physical object in

written, printed, photographic, sculptural, punched,

‘7 U.S.C. § 101 provides: “A work is ‘fixed’ in a tangible medium of

expression when its embodiment in a copy * * * by or under 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.”

50a

magnetic, or any other stable form, and whether it is

capable of perception directly or by means of any machine

or device ‘now known or later developed’ * * * On the

other hand, the definition of ‘fixation’ would exclude from

the concept purely evanescent or transient reproductions

such as those projected briefly on a screen, shown

electronically on a television or other cathode ray tube, or

captured momentarily in the memory of a computer.”

The House Report on the Copyright Act of 1976, 94th Cong.,

2d Sess. p. 52-53.

Application of this definition to the present facts is depen-

dent upon the particular technology involved in producing the

“Galaxian” images. The court has insufficient competent evi-

dence of the technology involved to make the necessary

determination. One commentator has suggested that fixation

can occur in a television. 1 Nimmer on Copyrights, § 2.03 fn.

30. This would lend support to plaintiff's contention that the

work was fixed in the game itself the first time the game

produced the copyrighted audio-visual work. Conversely, if

the technology of the game is such that it merely produces

“transient reproductions” shown electronically on a cathode

ray tube, no fixation could occur. The question of whether

fixation occurred and in what tangible medium of expression, if

any, the work was fixed is a question of material fact that

cannot be resolved in this motion for summary judgment.

It should be noted, that the work was, at a minimum fixed in

the tapes submitted to the Copyright Office. If defendant is

inducing third parties to create a derivative work from the

copyrighted work in these tapes, a cause of action may be

stated.

Defendant’s further argument—that it did not copy these

tapes and consequently cannot be an infringer—cannot be

sustained on this record. First, as noted, fixation may have

occurred the first time the game was played; that is previous to

and independent of the deposit of the video tapes. Second, even

if fixation occurred with the deposit, defendant may have

viewed “copies” of the tapes of Galaxian, and induced others to

dla

prepare derivative works from those copies. Plaintiff does not

necessarily have to show that defendant viewed the particular

tapes submitted to the Copyright Office in order to state a

cause of action. It is the work that cannot be copied or incorpo-

rated and not the specific tangible expression on file in the

scope of the copyright present questions of material fact, and

summary judgment on this theory would be inappropriate.

2. Lack Of Copying Or Inducement

Defendant argues that it has not copied plaintiffs work or

induced others to copy that work. Rather, defendant contends

that it produces a device which consumers desire and whether

the consumers put that device to a lawful or unlawful use is not

defendant’s concern. Plaintiff counters that an infringement

arises regardless of whether defendant itself has copied the

protected work. That is, it argues that the sale of the speed up

kits enables others to make and perform unauthorized altera-

tions of plaintiff's copyrighted material.

The court realizes that it is not dealing with an ordinary

advanced electronic games. Nevertheless, the Act reflects

certain policies and principles which control the question at

hand. The Supreme Court summarized the governing princi-

ples of the Act as follows:

“The copyright law, like the patent statutes, makes re-

ward to the owner a secondary consideration * * * How-

ever, it is intended definitely to grant valuable, enforce-

able

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