Opposition Brief — Nintendo of America, Inc. v. Lewis Galoob Toys, Inc.

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No. 92-1224

—<$<$—-—--

In the Supreme Court

OF THE

United States

OCTOBER TERM 1992

NINTENDO OF AMERICA, INC.,

Petitioner,

VS.

LEWIS GALOOB TOYS, INC..,

Respondent.

Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

RESPONDENT'S BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

JEROME B. FALK JR.*

MARTIN R. GLICK

BERNARD A. BURK

HOWARD, RICE, NEMEROVSKI, CANADY

ROBERTSON & FALK

A Professional Corporation

Three Embarcadero Center, 7th Floor

San Francisco, California 94111

Telephone: 415/434-1600

Attorneys for Respondent

Lewis Galoob Toys, Inc.

*Counsel ot Record

—

QUESTIONS PRESENTED

1. Did the Court of Appeals err in concluding that a

consumer using the Game Genie together with a Nintendo

Entertainment System ("NES") and compatible video game

for private, in-home entertainment does not create

infringing derivative works (and thus that Respondent

Lewis Galoob Toys, Inc. ("Galoob")' is not a contributory

infringer) in light of the District Court’s factual findings

after trial that the Game Genie (1) does not alter or permit

the user to aiter the contents of any “game cartridge”

embodying a Nintendo video game; (2) does not

temporarily or permanently copy any of Nintendo’s

computer programs or images; (3) does not store or

generate any images of its own; and (4) must be used with

Nintendo’s system and a game compatible with it, and

cannot substitute for any work copyrighted by Nintendo?

2. Did the Court of Appeals err in affirming the

District Court’s finding that the altered video game play the

Game Genie permits game owners to enjoy is a “fair use”

in light of the District Court’s factual findings after trial that

(1) the Game Genie is used privately, at home, for non-

profit personal entertainment purposes; (2) Nintendo has

voluntarily and profitably published its works to the public;

(3) purchasers of Nintendo’s video games are entitled to

display the games’ sounds and images in their entirety; and

(4) there is no actual or reasonably foreseeable market for

altered versions of Nintendo games, but only for a separate

hardware device that operates in conjunction with

Nintendo’s system and is beyond the scope of Nintendo’s

‘All parties who appeared below are listed in the above caption.

Pursuant to Rule 29.1, Respondent represents that it has no parent

company. Respondent owns a one-third interest in Galoob Toys Canada,

Inc., an Ontario corporation, and has no other affiliates or subsidiaries

that are not wholly-owned.

*In addition to the two grounds on which the District Court resolved

this case and the Court of Appeals affirmed it, Respondent presented

four other grounds in the District Court and the Court of Appeals, each

independently sufficient to ground the judgment now standing in its

favor. If this Court decided to review the judgment herein and did not

affirm on either ground set out in the text, it would be necessary for it to

remand to the lower courts for their determination of those issues. See,

e.g., United States v. Ballard, 322 U.S. 78, 88 (1944). The issues are:

1. Section 117 of the Copyright Act, amended by Congress in

1980, allows the rightful owners of computer software (such as

consumers who buy video games) to make “adaptations” of that software

for their own use. This legislation authorizes software owners to add to

or alter the software they have bought to enhance its utility to them.

Galoob showed at trial that this is precisely what the Game Genie does:

Without copying or appropriating in any way any portion of Nintendo’s

computer programs or the images they generate, the Game Genie

interacts with the Nintendo computer and temporarily adapts the

execution of the video game program for players’ personal enjoyment.

See Gal. Ct. App. Br. at 39-48.

2. This Court held in Sony Corp. v. Unwersal City Studios, Inc.,

464 U.S. 417 (1984), that the seller of a device marketed to the public is

liable for contributory copyright infringement only upon proof that the

device has no “substantial non-infringing uses.” See id. at 442. Galoob

showed at trial, and the District Court expressly found, that “[t]he vast

majority of the Game Genie codes alter the rules . . . or method of play”

of Nintendo’s video games. Pet. App. B-11. Under long-established

principles, these rules or methods of game play are merely “ideas” that

are not protectible by copyright. Because the consumers who have

bought and paid for their Nintendo games have every right to exhibit the

sounds and images they contain, the alterations to unprotected rules and

methods of play that the Game Genie allows them temporarily to effect

during play infringe no right of Nintendo. See Gal. Ct. App. Br. at

17-23. These are substantial non-infringing uses of the Game Genie that,

in and of themselves, defeat Nintendo’s infringement claim. See id. at

37-38.

3. | Galoob also showed that other occasional Game Genie effects,

such as “freeze-ups,” color changes, screen scrambles and the like, lack

the originality constitutionally and statutorily necessary to make altered

game play a “derivative work.” These effects also are substantial non-

infringing uses that independently preclude Nintendo’s claims under

Sony. See Gal. Ct. App. Br. at 23-26, 37-38.

(continued...)

*(...continued)

4. Sony also holds that when a mass-marketed device might be

used to irifringe works whose copyrights are held by third parties, no

single copyright holder may maintain an action for contributory

infringement against the device’s manufacturer “unless the relief that he

seeks affects only his programs, or unless he speaks for virtually all

(emphasis added). The District Court found that hundreds of games that

can be used on the Nintendo Entertainment System have been produced

by 71 third parties. Pet. App. B-4. Those third parties hold the

copyrights in those games, and they were not before the District Court.

Although the Game Genie can function in combination with any of these

third-party games, Nintendo showed that only seven of the 71 third-party

producers joined it in objecting to the use of the Game Genie with their

games. See id. at B-8; Gal. Ct. App. Br. at 38-39. This fact is

independently fatal to Nintendo’s infringement claims as well.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED i

STATEMENT OF THE CASE 1

REASONS FOR DENYING THE WRIT 6

I THE NINTH CIRCUIT’S LIMITED

DETERMINATION THAT A PLAYER DOES NOT

CREATE A “DERIVATIVE WORK” WHEN

PLAYING A NINTENDO GAME WITH THE

GAME GENIE IS CORRECT, AND IN ANY

EVENT PRESENTS NO ISSUE MERITING

REVIEW. 8

A. The Court Of Appeals’ Analysis And

Conclusions Are Consistent With Both

The Copyright Act And Common Sense. 9

B. The Court Of Appeals’ Decision Does Not )

Conflict With The Settled Law Of Any

Other Circuit, Or Otherwise Merit This

Court’s Review. 17

Il. THE COURT OF APPEALS’ ALTERNATIVE

HOLDING THAT A PLAYER’S PRIVATE HOME

USE OF THE GAME GENIE IS A “FAIR USE” IS

CORRECT AND DOES NOT MERIT REVIEW. 18

A. The First Factor: A Consumer’s “Non-

Commercial” Home Use Of Its Video

Games Creates A Presumption Of Fair

Use. 20

a Te

Vv Page

B. The Second Factor: The Published

“Nature” Of The Video Games Supports

The Fairness Of A Consumer’s Transitory

Enhancements Of Play In The Player’s

Home. 21

C. The Third Factor: Because Consumers

Have The Right To Use The Games They

Purchase, Their Use Of The Entire Game

Does Not Weigh Against Fair Use. 22

D. The Fourth Factor: Nintendo Did Not

Carry Its Burden Of Proving Harm To The

Market For The Copyrighted Work. 24

CONCLUSION 28

TABLE OF AUTHORITIES

Page

Cases

Berenyi v. District Director, INS, 385

U.S. 630 (1967) 27

Goodman v. Lukens Steel Co., 482 U.S.

656 (1987) 27

Graver Tank & Manufacturing Co. v. Linde

Air Products Co., 336 U.S. 271 (1949) 27

Harper & Row Publishers, Inc. v.

Nation Enterprises, 471 U.S. 539 (1985) 19, 21, 24

Irvine v. California, 347 U.S. 128 (1954) 7

Midway Manufacturing Co. v. Artic Int’l, Inc.,

547 F. Supp. 999 (N.D. Ill. 1982) 17

Midway Manufacturing Co. v. Artic Int’l, Inc.,

704 F.2d 1009 (7th Cir.), cert. denied, 464

U.S. 823 (1983) 17

Rogers v. Lodge, 458 U.S. 613 (1982) 27

Sony Corp. v. Universal City Studios, Inc.,

464 U.S. 417 (1984) ii, iii, 6, 7, 18

Stewart v. Abend, 495 U.S. 207 (1990) 23

Twentieth Century Music Corp. v. Aiken,

422 U.S. 151 (1975) 15

United States v. Ballard, 322 U.S.

78 (1944) ii

ach ipinssiste Rede? tee aa eA ee

vii Page

Vault Corp. v. Quaid Software Ltd.,

847 F.2d 255 (5th Cir. 1988) 25

White-Smith Music Publishing Co. v.

Apollo Co., 209 U.S. 1 (1908) 10

Statutes and Regulations

SUPREME COURT RULES

14.1(a) 7

29.1 i

§101 Q

§106(4) 16

§106(5) 16

§107 18, 19, 22

§107(1) 20

§107(2) 21

§107(3) 22

§107(4) 24

§117 ii

Other Authorities

1 M. NIMMER & D. NIMMER, NIMMER ON

2 M. NIMMER & D. NIMMER, NIMMER ON COPYRIGHT

(1992)

§8.02[B][2] Q

§8.09[A] 16

H.R. REP. No. 1476, 94th Cong., 2d

Sess. (1976), reprinted in 1976

U.S.C.C.A.N 5659 9, 16, 19

R. STERN, E. GRESSMAN &

S. SHAPIRO, SUPREME COURT PRACTICE

(6th ed. 1986) 27

No. 92-1224

Suisanenbeneee

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In the Supreme Court

OF THE

United States

OCTOBER TERM 1992

NINTENDO OF AMERICA, INC.,

Petitioner,

VS.

LEWIS GALOOB Toys, INC.,

Respondent.

Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

RESPONDENT'S BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

————————

—————_ ——_ —

STATEMENT OF THE CASE

In this case, Petitioner claims that when owners of a

Nintendo Entertainment System and copyrighted video

games designed for use on that system play their games in

the privacy of their homes in conjunction with Respon-

dent’s “Game Genie,” they infringe Nintendo’s copyright

in the game. Petitioner thus asserts that by manufacturing

and selling the Game Genie, Respondent is guilty of

contributory infringement. After trial, the District Court

rejected Petitioner’s claim on the facts and the law (Pet.

App. B), and the Court of Appeals affirmed. Pet. App. A.”

Galoob’s Game Genie is a hardware device designed

for private family use in the home in conjunction with the

NES. The Game Genie has no utility without an NES and

a game that can be played on that system: A player must

have an NES and a compatible game cartridge in order to

play with the Game Genie, and the Game Genie cannot be

used unless it is at all times physically attached to a game

cartridge and inserted into the NES “control deck.”

CR 192 419; 4/30 RT 60 (Jodel); Ex. G-408 410 (Small). It is

undisputed that the Game Genie itself neither contains nor

generates any computer code, visual images or other

material copyrighted by Nintendo. See, e.g., Ex. G-412 442

(Beck); 4/29 RT 6-7, 69-70 (Small); Ex. G-411 44101-1008

(Nichols).

The Gaine Genie is a plastic housing slightly larger

than an audio cassette tape with a connector pin array at

one end and a socket at the other. It contains an integrated

circuit and a small read-only memory ("ROM").* One end

of the device connects to the video game cartridge, and the

other plugs into the slot in the NES “control deck” that

ordinarily receives the game cartridge.

‘In its haste to characterize the lower courts’ decisions in this case as

“novel,” “unprecedented” and a “blanket immunization” of innumerable

forms of infringing behavior, Petitioner has omitted from its Statement

a great deal of the unique and technologically complex factual detail

pertinent to the lower courts’ analysis and conclusions. The following

discussion, as explained and expanded in argument, remedies that

omission.

*“Read-only memory” is so denominated because the computer can

only “read” the data or instructions imprinted on it. Like a phonograph

record, the information imprinted on a ROM can be “read” (as the record

can be played), but it cannot be altered. Ex. G-411 496 (Nichols); 4/29 RT

6-7 (Small); 4/29 RT 136-37, 153 (Nichols).

The Game Genie operates in two “modes:” “set-up

mode” and “play mode.” When a game cartridge with the

Game Genie attached is inserted into the control deck and

the power is turned on, a small computer program in the

Game Genie’s ROM causes the player’s television set to

display the Game Genie’s “set-up mode.” CR 192 421.

In “set-up mode,” the television prominently displays

the name “GAME GENIE” at the top of the screen, beneath

which appear two rows of letters. By manipulating the

buttons on the NES “controller,” players can select up to

three sequences of either six or eight letters each. These

letter sequences are called “codes.” When players have

selected the codes they wish, they press the “start” button

on the NES controller to start the game. CR 192 422;

Exs. J-201 at 7-10, G-476; Ex. G-408 411 (Small).

Starting the game initiates the Game Genie’s “play

mode.” During “play mode,” the player plays the game for

the most part exactly as it would be played without the

Game Genie, but game play may be enhanced in up to

three respects corresponding to the “codes” the player has

selected. If the player has chosen not to select any codes

during “set-up mode,” the game plays precisely as it would

if the Game Genie were not attached to the game cartridge

at all. CR 192 422; Ex. G-408 411 (Small). If the game

cartridge is detached from the Game Genie at any time

during its operation, all game play sounds and images from

the television cease instantly. CR 192 420. At no time

during game play with the Game Genie are the contents of

the game cartridge altered in any respect. Ex. G-412 442

(Beck); 4/29 RT 69-70 (Small); Ex. G-411 ¢4101-108 (Nichols).

The Game Genie comes with a printed “Programming

Manual and Codebook” (the “Codebook”), which at the

time of trial described Game Genie codes that could be used

to enhance game play in 179 video games, including 25 to

which Nintendo held the copyrights. CR 192 4412, 17;

Ex. J-201 (Game Index). Of the roughly 1650 codes the

Codebook listed, about 235 operated on games to which

Nintendo held copyrights. Pet. App. B-11; Ex. J-201; CR

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192 412. The majority of listed Game Genie codes allow

increases or decreases in the amount of time, “lives,” or

other chances to play; increases or decreases in the amount

or potency of a character’s weapons or powers; or changes

in the point at which the player begins the game. Pet.

App. B-11; Ex. G-412 4436, 39-40 (Beck); Ex. G-415 424

(Nauert); 4/30 RT 113-14 (Beck); Exs. G-484, G-492.

Each of the codes the player enters is interpreted by the

Game Genie to refer to a particular “address” in that

portion of the video game cartridge’s read-only memory

that holds the computer program that generates the game

(the “Program ROM”). These addresses contain data for

use by the NES control deck’s computer, or central process-

ing unit (“CPU”), during game play. Physically and

electronically, the Game Genie stands between the CPU

and the Program ROM. As the game begins and is played,

the CPU’s inquiries directed to the Program ROM pass

through the Game Genie, and the Game Genie “reads”

them as they go by. If an inquiry is directed to an

“address” that matches one of the three or fewer codes the

player entered during “set-up mode,” the Game Genie

intercepts that inquiry and responds with the data that the

relevant code dictates for that address in the Program ROM.

If an inquiry is directed to an address that does not match

one of those codes, the Game Genie does nothing. Ex. G-

411 4103-104, 108, 110 (Nichols); 4/29 RT 145-47, 152, 154

(Nichols); Ex. G-475.°

‘For example, at the beginning of the game “Gumshoe,” Nintendo’s

CPU asks the Program ROM (among a great many other things) how

many “lives” the private eye, Stevenson, starts with by asking the

Program ROM for the number it has stored at the address corresponding

to initial number of lives. Without the Game Genie, the Program ROM

would allot three lives to Stevenson by responding that it found the

number “three” at the relevant address. If the player used the Game

Genie and entered a code designed to start Stevenson with six lives,

when the CPU asked the Program ROM for the number at the address

corresponding to Stevenson’s initial number of lives, the Game Genie

would catch the inquiry to an address it was looking for, and respond to

(continued...)

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As noted above, the Game Genie accepts a maximum

of three codes per play, allowing it to modify no more than

three out of the hundreds of thousands or millions of

parameters affecting game play in any one play of the entire

game. Thus, as the District Court expressly found, out of

the million or so inquiries per second that the CPU is

directing to the Program ROM in the Nintendo game

cartridge, the Game Genie responds to only very few. Pet.

App. B-10 n.2.

Because Nintendo’s computer programs, sounds and

graphic images are stored in the game cartridge in “read-

only” memories, the Game Genie does not alter or permit

the user to alter the contents of the game cartridge. The

Game Genie also does not temporarily or permanently copy

any of Nintendo’s computer programs or images. Nor does

the Game Genie itself store or generate any images of its

own. Ex. G-412 442 (Beck); 4/29 RT 6-7, 69-70 (Small);

Ex. G-411 ¢4101-108 (Nichols).

On the basis of the evidence at trial, the District Court

found that the “Game Genie codes cannot change the plot,

theme, or characters of any game.” Pet. App. B-11. The

Game Genie cannot create or permit the user to create a

new “level” or “world” in the game. It cannot change the

object of the game. Nor can it create or permit the user to

create a new game character, adversary, weapon, obstacle,

*(...continued)

the CPU’s inquiry with “six” instead of “three.” The CPU would then

understand that Stevenson started with six lives (rather than three), and

control game play accordingly.

This response would not change the number of bullets that

Stevenson begins with, the number of points Stevenson gets for

overcoming a particular enemy, or the place in the world of the game

that play begins, each of which corresponds to one or more values stored

at other addresses in the Program ROM. An appropriate Game Genie

code might direct the Game Genie to catch inquiries to those addresses

and respond with some value other than the one that is found in the

Program ROM, giving the player more bullets, fewer points, or an

advanced start as the code allowed.

scene or landscape.* Shirk Dep. 82:18 to 83:15, 89:12 to

90:5; Ex. G-411 4114 (Nichols); 4/29 RT 147-48 (Nichols);

Ex. G-412 439-41 (Beck); 4/29 RT 6-7 (Small).

Finally, as already noted, the Game Genie cannot be

used to play anything unless a game cartridge is also used;

it is no substitute for purchasing a Nintendo game. Unless

a game cartridge is inserted in the control deck during the

entire time the game is being played, no images will appear

on the television screen. If the game cartridge is discon-

nected from the Game Genie at any time during play, all

game play sounds and images cease instantly. CR 192 4419-

20; 4/30 RT 60 (Jodel); Ex. G-408 410 (Small).

On these facts and others discussed below, the District

Court found that a family’s private home use of the Game

Genie does not create “derivative works” under the Copy-

right Act; and that even if it did, that use would be a “fair

use” and therefore noninfringing. Accordingly, the court

found, Galoob committed no contributory infringement in

marketing the device. Pet. App. B. The United States

Court of Appeals for the Ninth Circuit affirmed on both of

these alternative grounds. Pet. App. A.

REASONS FOR DENYING THE WRIT

Several introductory points are critical to an evaluation

of Nintendo’s Petition:

First, Nintendo’s claim is for contributory infringement.

This means that under Sony Corp. v. Universal City

Studios, Inc., 464 U.S. 417 (1984), Nintendc must show that

when a purchaser of an NES and game cartridge play a

"For example, the game “Kid Icarus” has an action figure named “Pit”

that is controlled by the player, and 45 adversaries and obstacles that try

to defeat him. The Game Genie may allow a player to alter the number

of chances to win before the game ends, the level of weapons or power,

the starting position of play, or the rate of advancement through the

game, but cannot create a companion for Pit, or any other action figure,

friend or foe. Nor can it create new weapons for Pit to use, new worlds

for Pit to explore, or new quests for Pit to undertake.

é , ii

game using the Game Genie, that purchaser infringes

Nintendo’s game copyright. Jd. at 449. In short, under

Sony it is the purchaser’s use of the Nintendo game

cartridge together with the Game Genie that must be

evaluated to determine whether Galoob is a contributory

infringer.’

Second, it has never been disputed that the owner of a

Nintendo game cartridge has the right to use it by playing

the game on an NES and displaying its images on a home

television screen. As the District Court observed, “[t]he

alleged infringer . . . is not a commercial licensee, but rather

a consumer utilizing the Game Genie for noncommercial,

private enjoyment.” Pet. App. B-15. Nintendo’s unappe-

tizing theory of infringement is that by playing the game in

any way differently from the way Nintendo dictates—such

as by endowing a game’s action character with an addi-

tional “life,” or starting at the fourth “level” of a game

instead of at its beginning—its customer becomes a copy-

right infringer. ry

Third, as noted, the Game Genie cannot be used as an

alternative to the purchase of a Nintendo game cartridge.

To play “Super Mario Brothers” with or without the

additional features and flexibility the Game Genie permits,

a player must possess the game cartridge and an NES to

play it on.

‘The Petition makes a few scattered references to the statutory right

to “authorize” the creation of derivative works, but nowhere asserts that

this right is at issue in this case. In fact, it is not: Though Petitioner did

attempt to raise such a theory at the eleventh hour, the District Court

excluded it. The Court of Appeals agreed that the “authorization” issue

was not before it, observing that “Nintendo's complaint does not allege

direct infringement [by ‘authorization’] nor did it try the case on that

theory.” Pet. App. A-11. Petitioner’s wise decision to exclude this

precluded theory from its Questions Presented and argument in its

Petition forecloses any further discussion of the issue in this Court. See

Sup. CT. R. 14.1(a); Irvine v. California, 347 U.S. 128, 129-30 (1954).

Respondent accordingly refrains from addressing it.

Fourth, also as noted above, the Game Genie does not

ever contain or copy any part of Nintendo’s copyrighted

computer programs. Nor does it ever store, even tempo-

rarily, the sounds or visual images produced by a copy-

righted game, or for that matter by the interaction between

the Game Genie and a game. What a player produces

using the Game Genie flashes momentarily across the

television screen and is gone. It is not recorded or copied

anywhere. As the District Court found, “[s]uch use neither

generates a fixed transferable copy of the work, nor exhibits

or performs the work for commercial gain.” Id. at B-15.

_ THE NINTH CIRCUIT’S LIMITED DETERMINATION

THAT A PLAYER DOES NOT CREATE

A “DERIVATIVE WORK” WHEN PLAYING

A NINTENDO GAME WITH THE GAME GENIE

IS CORRECT, AND IN ANY EVENT

PRESENTS NO ISSUE MERITING REVIEW.

The Ninth Circuit’s holding is narrow: “A derivative

work must incorporate a protected work in some concrete or

permanent ‘form.’” Pet. App. A-4 (emphasis added). It

explained:

“The Game Genie merely enhances the audiovisual

displays (or underlying data bytes) that originate in

Nintendo game cartridges. The altered displays do

not incorporate a portion of a copyrighted work in

some concrete or permanent form. Nintendo

argues that the Game Genie’s displays are as fixed

in the hardware and software used to create them

as Nintendo’s original displays. Nintendo’s argu-

ment ignores the fact that the Game Genie cannot

produce an audiovisual display; the underlying

display must be produced by a Nintendo

Entertainment System and game cartridge. ...

[Game play resulting from use of the Game Genie

together with an NES and a Nintendo ge:

— iii,

cartridge] cannot be a derivative work.” (Pet. App.

A-6-7 (emphasis in original))

A. The Court Of Appeals’ Analysis And Conclusions

Are Consistent With Both The Copyright Act And

Common Sense.

To begin with, the Ninth Circuit’s approach is not

“contrary to the express provisions of the Copyright Act” as

Nintendo asserts. Pet. at9. Contrary to Nintendo, the

Ninth Circuit’s opinion does not specify or restrict the

“form” in which the alleged derivative work must be

embodied; it merely requires that it be in “some” form. Pet.

App. A-4 (emphasis added). This is fully consistent with

the Copyright Act, which states that an alteration of a

copyrighted work may be a “derivative work” regardless of

the “form in which a work may be recast, transformed or

adapted,” and with the statutory definition of “audiovisual

works” on which Nintendo relies, which also contemplates

that such works will be “embodied” in “material objects”

“regardless of the[ir] nature... .” 17 U.S.C. §101.°

) Yet Nintendo repeatedly claims that the Court of

Appeals “immunize[d] certain derivative works from

infringement liability solely because of the manner of their

embodiment.” E.g., Pet. at 14 (emphasis added). That

simply is not what the Ninth Circuit did. The focus of the

Ninth Circuit’s conclusions is not on the “manner” in which

*The evanescent images that flash by on the television screen as a

computer game is played—which are not stored or embodied either in

computer memory, on a videotape, or in any other place—obviously do

not qualify as a “form” in which the altered game play could be

“embodied” within the statute’s terms. As Congress noted, “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.” H.R. REP.

No. 1476, 94th Cong., 2d Sess. 53 (1976), reprinted in 1976 U.S.C.C.A.N

5659, 5666; see also 1 M. NIMMER & D. NIMMER, NIMMER ON COPYRIGHT

§2.03[B][2], at 2-30 (1992); 2 NIMMER §8.02[B][2], at 8-28 to 8-28.1.

a purported derivative work is “embodi{ed],” but whether

the purported derivative work is separately “embodi[ed]” at

all.

As the above-quoted passage shows, the Ninth Circuit

applied the simple rule that devices that allow enhanced or

altered viewing of copyrighted images do not create

infringing derivative works unless they “physically incorpo-

rate” the original work (see Pet. App. A-5, 7), or copy it in

a separately embodied physical form. Applying that rule in

this case, the Court of Appeals’ decision focused explicitly

on the record facts and findings as to what the Game Genie

does and how it does it to conclude, correctly, that the

Game Genie simply effects temporary enhancements in the

transitory images Nintendo’s hardware and software

produce, without creating any separate audiovisual work

that is ever embodied in any physical form.’

Nintendo makes the same mistake in its repeated claim

that the Ninth Circuit’s decision has “created a judicial

exception to [the derivative works] right with respect to

computer media.” E.g., Pet. at 8; see also id. at ii, 14.

Again, that is neither what the opinion says nor what it

does. The Court of Appeals went to considerable lengths

to explain its analysis in terms of simple, commonplace,

non-digital mechanisms that show the result in this case to

be both obviously correct and entirely independent of the

technology at issue.

The Court of Appeals tendered the specific examples of

“lenses that merely enable[ ] users to view several [copy-

righted] artworks simultaneously” and “kaleidoscopes .. .

*Nintendo’s argument that the Ninth Circuit has “resurrected” the

“long-discredited rule” of White-Smith Music Publishing Co. v. Apollo

Co., 209 U.S. 1 (1908) (see Pet. at 13 n.11) flogs the same straw man.

Nintendo notwithstanding, the Court of Appeals did not require

embodiment in a “particular physical form” (id.)}—such as sheet music as

opposed to piano rolls (the distinction held material in the case Nintendo

criticizes)—but only that the derivative work must be embodied in “some

concrete or permanent ‘form.” Pet. App. A-6 (emphasis added).

pointed at protected artwork.” Although such devices

create a transitory image based on but different from the

original copyrighted image, they neither physically appro-

priate nor copy the images that they alter or enhance. Thus

a person who uses them does not infringe, and a person

who sells them is not a contributory infringer. See Pet.

App. A-7-8.

As the Court of Appeals observed, the Game Genie is

precisely analogous: Just as the Court of Appeals’ “lenses”

neither alter the protected “artworks” viewed through them

nor physically embody the altered image, it was established

at trial (and is undisputed) that the Game Genie does not

and cannot change the game cartridge or its copyrighted

contents, nor can it store or create any independently

embodied version of a game. This is the defect in

Nintendo’s argument that a game cartridge and a Game

Genie together illegally embody an infringing derivative

work: A game cartridge plus a Game Genie no more

“embodies” a “derivative work” in “some concrete or

permanent form” than does a kaleidoscope plus a painting.

In short, both lower courts correctly limited infringement

liability to situations where something protectible is actually

taken or copied, and equally correctly concluded that this is

not such a case.

A moment’s reflection discloses the tremendous

mischief any different rule would entail. The Ninth Circuit

properly recognized that the Game Genie is simply a

hardware tool that, like innumerable others commonly

enjoyed in households throughout the United States, may

be used together with copyrighted works to alter the sounds

and images those works can generate in endless ways that

no one could seriously contend violate federal copyright

law. These devices use electronic technology (analogous to

the optical technology of the Court of Appeals’ “lenses” and

“kaleidoscopes”) to alter the audio or visual performance or

display of copyrighted materials without ever appropriating

or copying the copyrighted work.

For example, nearly all videocassette and video laser

disc players have fast-forward, slow-motion and freeze-

frame features that are hard-wired into the device. Among

other things, a viewer can skip, repeat or rearrange scenes;

freeze the picture; or play the action at fast speed or in slow

motion. Examples can be multiplied, from the volume, tone

and color controls on an ordinary television receiver to the

compact disc player and the myriad of home audio sound

processing units.”

All of these hardware devices use electronic technology

to alter the audio output, or the visual output, or the order

of performance, of copyrighted materials—often in very

significant ways that can altogether “transform” or “recast”

the work being performed or displayed in the consumer’s

home. Nintendo cannot distinguish these devices from the

Game Genie: If the altered audiovisual display generated

by use of the Game Genie is a derivative work, then so are

all of the altered audiovisual outputs of all of these widely-

used hardware devices. Nintendo’s unprecedented theory

would make infringers of nearly every consumer in

America, and contributory infringers of the devices’ manu-

facturers and distributors.

Fortunately, as the Court of Appeals recognized,

Nintendo is wrong. The reason is simple: None of these

widespread hardware devices creates infringing “derivative

Users can “program” most compact disc players to omit particular

“tracks,” and to rearrange the order in which the tracks are played.

Many machines hold several compact discs and allow the user to select

tracks from different discs as well as the order in which the various

selections are played. Even more dramatic are sound processing devices

readily available for home use. Equalizers, for example, are sophisticated

versions of “tone controls” that allow a listener to increase or decrease

the volume in discrete frequency ranges. Other devices allow a user to

create the electronic illusion that the listener’s living room is a symphony

hall, a rock auditorium or a cathedral. Use of these devices materially

alters the performance of the original copyrighted recording, though not

the recording itself. Under Nintendo’s analysis here, all of these would

produce infringing derivative works, even though none ever copies or

appropriates the protected works on which they act.

cee ae ee

works” because, just like the “lenses” and “kaleidoscopes”

to which the Court of Appeals referred, the audiovisual

effects they produce are merely transitory enhancements or

alterations that neither physically appropriate nor copy the

original sounds and images in any separately “embodied”

“form.” Just as a kaleidoscope needs an extraneous image,

and does not store or generate one of its own; just as a VCR

needs a videocassette, and neither stores nor generates any

image without one; so too the Game Genie must interact

with a Nintendo game system.

As the Ninth Circuit explicitly recognized, the Game

Genie alone neither stores nor generates any sound or

image, though it can cause transitory alterations of some

aspects of the images that a game cartridge contains and

generates itself. See, e.g., Pet. App. A-6-7. The Game

Genie no more creates infringing derivative works than do

the innocuous electronic and physical devices to which the

Ninth Circuit correctly analogized it." The Court of

“Of equal concern, hundreds of thousands of computer users would

violate the Copyright Act every day by continuing to use the hundreds

if not thousands of popular software products that adapt and alter the

copyrighted visual displays of other computer programs to enhance their

usefulness. Examples include word processing aids (such as spelling,

grammar and citation checkers, dictionaries, and thesauruses); document

controls (to keep track of and quickly access files and information); and

any number of other “user interfaces” that are designed to be used

together with other copyrighted computer software, and thus raise the

same issue Nintendo does here. As the testimony below revealed, one

of the most significant trends in the computer industry has been the

increasing ability of desktop machines to operate several complicated

applications software programs simultaneously (“multi-tasking”), and for

such software to work cooperatively to gather and analyze data, share the

interim results of such analysis with one another, and communicate the

results with the user. Ex. G-412 4443-44 (Beck); 4/30 RT 128-38 (Beck).

However, if Nintendo’s view were to prevail, the vast potential of such

cooperative and useful software would be effectively stymied. The Ninth

Circuit fully appreciated the asphyxiating effect on innovation and

development that Nintendo’s unprecedented approach would impose:

(continued...)

Appeals thus correctly applied the governing law and the

facts as found by the District Court in rejecting Nintendo’s

theory.

Indeed, the examples Nintendo tenders in its Petition

confirm the wisdom of the Court of Appeals’ analysis. For

example, Nintendo compares the Game Genie to the

recently released recording of Natalie Cole singing a “duet”

with her late father, Nat King Cole. Nintendo states,

correctly, that when she

“overdubbed her voice onto her father’s version [of

the song “Unforgettable’], she created a derivative

work that changed the form of the original work,

regardless of the physical objects in which that

new work might be embodied.” (Pet. at 12-13)

But Ms. Cole’s new “duet” was embodied in “some

form”—namely, the tape recordings and compact disks

marketed to the public. The analogy to use of the Game

Genie utterly fails because, as the District Court found, and

the Court of Appeals affirmed, the altered game play that

the Game Genie allows game owners to enjoy does not

incorporate the protected work in any “concrete or perma-

nent ‘form.”” Pet. App. A-4; see also id. at A-6.”

". continued)

“In holding that the audiovisual displays created by the

Game Genie are not derivative works, we recognize that

technology often advances by improvement rather than

replacement. Some time ago, for example, computer com-

panies began marketing spell-checkers that operate within

existing word processors by signalling the writer when a word

is misspelled. These applications, as well as countless others,

could not be produced and marketed if courts were to con-

clude that the word processor and spell-checker combination

is a derivative work based on the word processor alone.” (Pet.

App. A-9 (citation omitted))

“Likewise, the example given by Nintendo (Pet. at 14) of the creation

of a new computer program incorporating elements of the original

Nintendo work together with the Game Genie’s alterations “and

(continued...)

The distinction is fundamental: Suppose that Natalie

Cole had put a recording of her father singing

“Unforgettable” on her home phonograph and, in the

privacy of her living room, had merely sung along with the

record, creating the identical “duet” that she commercially

recorded. The result would not differ, of course, if

Ms. Cole sang into a microphone attached to her home

stereo, so that her voice and her father’s both emanated

from the system’s speakers. Nintendo’s argument notwith-

standing, in both examples Ms. Cole’s private performance

would not be an infringing derivative work, and the

microphone manufacturer would not be a contributory

infringer, even though the musical performance that

resulted would have differed substantially from Mr. Cole’s

original recording.

“No license is required by the Copyright Act... to

sing a copyrighted lyric in the shower.” Twentieth Century

Music Corp. v. Aiken, 422 U.S. 151, 155 (1975). Presumably

even Nintendo would agree that a private performance in

the shower stall does not infringe as long as the copyrighted

song is sung without alteration. But under Nintendo’s

unprecedented view of the derivative works right, a shower

singer’s creative or inadvertent departures from the original

tune or lyrics would create an infringing “derivative work”

even though the revised song is sung only in the privacy of

the singer’s homie, and no recording is made for later sale

or exhibition. Similarly, a parent who reads a copyrighted

bedtime story to a child, and deletes a scary passage or

2 .continued)

embodying this program in a single game cartridge” undoubtedly would

be a derivative work because, by the very terms of the hypothetical, the

altered work would be embodied in “some concrete or permanent

form”—namely, the new game cartridge. Such a cartridge could be

produced and sold to customers in lieu of the existing Nintendo game

cartridge embodying the copyrighted work, as also would be the case if,

for example, a player made a videotape recording of game play altered

by the Game Genie, which could be sold or distributed to others. But

neither of those is this case, in which no such separate concrete

embodiment of the offending game play is ever created.

————eeeEEEeEeEeEeEeEeEeEeeeeeEeEeeEeeeeeeeeeeaE

embellishes the tale, would also infringe the copyright, even

though no lasting copy of the altered reading was created,

sold, or publicly exhibited, and even though a private

reading of the work without any deletions or changes

plainly would not infringe under the statute’s plain terms.

No court has ever found such innocent private activities to

be acts of infringement, and no court should, so long as the

song or story—whether revised or unaltered—remains

private and is not recorded or otherwise “embodied” in

“some concrete or permanent form.””

In short, the District Court correctly recognized that

“(t]he Game Genie is a tool by which the consumer

may temporarily modify the way in which to play

a video game, legally obtained at market price.

Any modification is for the consumer’s own enjoy-

ment in the privacy of the home. Such a process

is analogous in purpose, if not in technology, to

skipping portions of a book, learning to speed

read, fast-forwarding a video tape one has pur-

chased in order to skip portions one chooses not to

see, or using slow motion for the opposite reasons.

None of these practices permanently modifies or

alters the original work, none produces a separate

work which can then be transferred in any way,

none replaces the original work, and none deprives

“The public display of images produced by the Game Genie would

be a different case, which the District Court expressly found was not

presented here. Pet. App. B-15 n.4. A modification of an existing

copyrighted work that is publicly exhibited may well infringe the public

performance or display rights of 17 U.S.C. Sections 106(4) and (5) even

though no “fixed” copy is created. “Thus ‘a ballet, pantomime, or

improvised performance(] may be an infringement even though nothing

is ever fixed in tangible form.”” 2 NIMMER §8.09/A], at 8-114 n.4 (quoting

H.R. REP. No. 1476, supra, at 62). On these principles, a child’s

improvised emulation of a copyrighted ballet danced in the privacy of her

bedroom is not an act of infringement, though it would be were the

dance performed publicly.

ee See nee

the copyright holder of current or expected reve-

nue.” (Pet. App. B-16)

B. The Court Of Appeals’ Decision Does Not

Conflict With The Settled Law Of Any Other

Circuit, Or Otherwise Merit This Court’s Review.

Nintendo is unable to suggest any plausible reason why

the Ninth Circuit’s narrow holding merits review here.

Although Nintendo sweepingly asserts that it “undermines

the rights of a broad class of copyright owners extending far

beyond the video game industry” (Pet. at 14), it provides no

example of an application of the Ninth Circuit’s analysis

that should give any pause; indeed, as explained above, it

is a rule contrary to the one the Ninth Circuit adopted here

that would have far-reaching and deeply dangerous

consequences.

Nor does the decision below conflict with a decision of

any other Court of Appeals as Nintendo claims. Midway

Mfg. Co. v. Artic Int'l, Inc., 704 F.2d 1009 (7th Cir.), cert.

denied, 464 U.S. 823 (1983), holds that a copyrighted video

game that is altered can be a derivative work—a proposi-

tion that the Ninth Circuit’s decision in no way disputes.

But the Midway decision does not even address the issue of

whether, as the Ninth Circuit concluded, that altered work

must “incorporate a protected work in some concrete or

permanent ‘form’ in order to infringe. Pet. App. A-4.

The Seventh Circuit had no occasion to consider that

issue in Midway. In Midway, the defendant marketed a

computer chip that could be inserted into plaintiff's copy-

righted video game machine to speed up the rate of play.

But, as the Ninth Circuit explained, the defendant’s “chip

substantially copied and replaced the chip that was ori-

ginally distributed by” the plaintiff. Pet. App. A-8 (empha-

sis in original); see also Midway Mfg. Co. v. Artic Int’l, Inc.,

547 F. Supp. 999, 1004 (N.D. Ill. 1982) (district court opinion

finding that this was a “clear case of copying” Midway's

software). By contrast, the Game Genie contains no

copyrighted Nintendo software. See Pet. App. B-11.

i ee

In short, the Ninth Circuit reached the correct result

with a decision that neither conflicts with any decision of

any Court of Appeals nor presents an issue of overriding

concern meriting review here.

Il.

THE COURT OF APPEALS’ ALTERNATIVE HOLDING

THAT A PLAYER’S PRIVATE HOME USE

OF THE GAME GENIE IS A “FAIR USE”

IS CORRECT AND DOES NOT MERIT REVIEW.

Both the District Court and the Court of Appeals also

held that even if private home use of the Game Genie

produced a derivative work, it would be a “fair use.” That

determination was correct, does not conflict with any

decision of this Court or another Court of Appeals, and

does not merit review here.

Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417

(1984)—the only pronouncement by this Court on fair use

in the contributory infringement context—involved facts

analogous to those here. In Sony, holders of copyrights in

certain television programs sued the manufacturer of the

Betamax video tape recorder for contributory infringement.

Those copyright holders sought to enjoin Sony from

manufacturing and selling that electronic device, claiming

that its purchasers were using it to infringe their copyrights.

One use of the device was recording unauthorized copies of

copyrighted television programs to “time-shift” on-the-air

broadcasts into hours better suiting the viewer’s conve-

nience. The Court found that consumers’ use of Sony’s

product for time-shifting purposes to be a “fair use” of the

copyrighted programs.

Under Sony, the fair use issue in a contributory

infringement case turns exclusively on whether the con-

sumer’s use of the copyrighted material constitutes a fair

use. 464 U.S. at 449. Fair use is a privilege against a direct

infringement claim (17 U.S.C. §107), and thus is a privilege

held in the first instance by the alleged direct infringers—in

this case, by consumers playing their video games at home.

Just as application of the fair use doctrine in Sony resulted

in substantial economic gain for Sony as well as other VCR

manufacturers, the fair use doctrine here will ultimately

redound to Galoob’s commercial benefit as well. But Sony

makes clear that it is the fairness of the consumer’s use of

its video game, not some evaluation of the commercial

“fairness” of Galoob’s product, that governs the analysis.

In examining the fairness of the consumer’s use, the

Court will be guided by Section 107 of the Copyright Act

(17 U.S.C. §107), through which Congress codified the

common law doctrine of fair use in 1976. Section 107

enumerates four non-exclusive factors to be considered in

assessing fair use.’ H.R. REP. NO. 1476, supra, at 66. We

consider each of these factors in turn.

Contrary to Nintendo, both the District Court and the

Court of Appeals applied the standing decisions of this

Court impeccably to each of the four statutory factors,

which Nintendo neglects to discuss in any organized

fashion in its Petition. Nintendo’s blanket assertion that the

Court of Appeals failed to consider the purportedly unique

aspect of the derivative works right at issue in this case is

belied by that court’s explicit reasoning. It is the Petition

that fails to address something critical—the factual findings

the District Court made after trial that render Nintendo’s

position untenable.”

“As Sony makes clear (464 U.S. at 448 & n.31), Section 107 was

merely “intended to restate the present judicial doctrine of fair use, not

to change, narrow, or enlarge it in any way.” H.R. REP. No. 1476,

supra, at 66. Congress had “no disposition to freeze the doctrine in the

statute, especially during a period of rapid technological change.” Jd.

As Nintendo obliquely concedes, the fairness of a use is an

intensively fact-bound question; the appellate court applies the legal

standard after “the district court has found facts sufficient to evaluate

each of the statutory factors... .” Pet. at 17 n.12 (quoting Harper &

Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560 (1985)).

A. The First Factor: A Consumer’s “Non-

Commercial” Home Use Of Its Video Games

Creates A Presumption Of Fair Use.

The first factor in evaluating fair use is “the purpose

and character of the use, including whether such use is of

a commercial nature or is for nonprofit educational pur-

poses.” 17 U.S.C. §107(1). If the consumer undertook a

commercial or profit-making use of the copyrighted work,

that use would be presumptively unfair. Sony, 464 U.S.

at 449. “The contrary presumption [was] appropriate” in

Sony, however, because “time-shifting for private home use

must be characterized as a noncommercial, nonprofit

activity.” Id. Likewise, a consumer’s use of a Game Genie

for private home enjoyment is a non-commercial, nonprofit

activity. Game owners are simply playing the games they

have purchased for their own private enjoyment, not

exploiting the games in some commercial venture. Accord-

ingly, the courts below properly held that the “first factor

therefore establishes a presumption of fair use, which could

be overcome only by Nintendo’s direct proof of injury.”

Pet. App. B-20; see Pet. App. A-12.

Nintendo responds that private home use is “commer-

cial” because Game Genie users are varying the play of

Nintendo games without paying any compensation to

Nintendo. Pet. at 20, 22-23. This ergument disregards this

Court’s express holding in Sony: “private home use must be

characterized as a noncomiercial, nonprofit activity.” 464

U.S. at 449."° Moreover, Nintendo’s argument is a tauto-

logical word game, assuming the answer to the question

before the Court: Js the consumer taking something from

"Nintendo asserts that it was not the private or in-home character of

the consumers’ copying that made it a “nonprofit” use in Sony, but

rather that it “enable{d] a viewer to see . . . a work which he had been

invited to witness in its entirety free of charge.” Pet. at 20 (quoting

Sony, 464 U.S. at 449). That misstates the Sony opinion. The quoted

language refers specifically to the third statutory factor (the “amount and

substantiality” of the use), not to the “nonprofit” determination at issue

here. 464 U.S. at 449-50.

Nintendo for which it should otherwise have to pay? If

Nintendo’s view were the law, then no use could ever be a

fair use; after all, every user of a copyrighted work who

claims the use is fair would be obligated to pay the copy-

right holder if the use were found not to be a fair use.’

B. The Second Factor: The Published “Nature” Of

The Video Games Supports The Fairness Of A

Consumer’s Transitory Enhancements Of Play In

The Player’s Home.

The District Court correctly analyzed this issue:

“The second factor considers ‘the nature of the

copyrighted work.’ 17 U.S.C. §107(2). The courts

have traditionally inquired whether the work is

published, with unpublished works gaining more

protection. 3 NIMMER §13.05[A][2], at 13-75 to

13-79 .... By contrast, Nintendo has already

published millions of copies of its games to anyone

willing to pay the purchase price. Only after

acquiring a published copy of the game may its

owner use it in combination with the Game Genie.

The works’ published nature supports the fairness

of the use.” (Pet. App. B-21-22)

The Court of Appeals correctly upheld this finding (Pet.

App. A-13), and Nintendo’s Petition identifies no flaw in its

analysis.”

"As the Court of Appeals pointed out, Nintendo’s reliance on

Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539 (1985) is

badly misplaced. In Harper & Row, The Nation magazine published

and sold to the public, for profit, copies of Gerald Ford’s copyrighted

memoirs without the right to do so. 471 U.S. at 561-62. Obviously that

use was commercial. Here, consumers that play with the Game Genie

do it privately, at home, for fun; they do not sell the resulting game play

to the public for commercial gain.

"Nintendo argued below, and hints in its Petition (at 21), that this

factor weighs against fair use because Nintendo has not published the

(continued...)

C. The Third Factor: Because Consumers Have The

Right To Use The Games They Purchase, Their

Use Of The Entire Game Does Not Weigh Against

Fair Use.

The third factor in the fair use analysis is the “amount

and substantiality of the portion used in relation to the

copyrighted work as a whole.” 17 U.S.C. §107(3). Again,

the District Court’s analysis of this factor was plainly

correct, and again the Court of Appeals properly affirmed

it:

“Consumers are not invited to witness Nintendo’s

audiovisual displays free of charge, but, once they

have paid to do so, the fact that the derivative

works [it is assumed arguendo are] created by the

Game Genie are comprised almost entirely of

Nintendo’s copyrighted displays does not militate

against a finding of fair use.

“Nintendo would distinguish Sony because it

involved copying copyrighted works rather than

creating derivative works based on _ those

works. . . . It is difficult to imagine that the Court

would have reached a different conclusion if

'*(_ continued)

purported “derivative works” at issue, even though it has broadly

published the original games. The Court of Appeals expressly con-

sidered and properly rejected this contention, pointing out that “[t)his

argument ignores the plain language of section 107” because the statute

specifically requires a focus on “the nature of the copyrighted work,” not

potential derivative works. Pet. App. A-13 (emphasis in original). As

the Court of Appeals observed:

“The argument also would make the fair use defense unavail-

able in all cases of derivative works, including ‘criticism,

comment, news reporting, teaching..., scholarship, or

research.’ 17 U.S.C. §107. A commentary that incorporated

large portions of For Whom the Bell Tolls for example, would

be undeserving of fair use protection because the incorporated

portions would constitute an unpublished derivative work.

This cannot be the law.” (Jd.}

Betamax purchasers were skipping portions of

copyrighted works or viewing denouements before

climaxes. Sony recognizes that a party who distri-

butes a copyrighted work cannot dictate how that

work is to be enjoyed. Consumers may use a

Betamax to view copyrighted works at a more

convenient time. They similarly may use a Game

Genie to enhance a Nintendo game cartridge’s

audiovisual display in such a way as to make the

experience more enjoyable.”” (Pet. App. A-13-14)

Nintendo claims that this reasoning is somehow

undermined by Stewart v. Abend, 495 U.S. 207 (1990), but

Stewart never addresses the question the lower courts

considered here. Nintendo sweepingly characterizes the

case as having rejected the fair use defense for a “substan-

tial taking of a creative work” (Pet. at 23), but this proves

far too much: Stewart was a case in which the defendant

had no more right to use the original work than to alter it.

See 495 U.S. at 235-36. Here, by contrast, the purchaser of

a Nintendo game has every right to display the images

produced by the copyrighted game. The fact that the

consumer does so when playing with a Game Genie as

'*The District Court had reasoned:

“Again, the Sony decision is dispositive. Sony recognized that

the reproduction of an entire work ordinarily weighs against

the claim of fair use. 464 U.S. at 450. In Sony, however,

because the VCR owner “had been invited to witness [the

television program] in its entirety free of charge, the fact that

the entire work is reproduced does not have its ordinary effect

of militating against a finding of fair use.” Id. at 449.

Likewise, in this action a game owner who has fairly acquired

a Nintendo game has a right to use the entire work. The

game owner’s rights are equal to, if not greater than, those of

the user in Sony, who did not pay for the product being used.

Because the game owner is entitled to use the entire work, no

matter what the ‘amount and substantiality’ of his use, the

third factor cannot assist Nintendo in overcoming the pre-

sumption of fair use.” (Pet. App. B-22)

much as when playing without one does not make the use

unfair.

D. The Fourth Factor: Nintendo Did Not Carry Its

Burden Of Proving Harm To The Market For The

Copyrighted Work.

The last and “undoubtedly the single most important”

factor (Harper & Row Publishers, Inc. v. Nation Enters.,

471 U.S. 539, 566 (1985)) is the “effect of the use upon the

potential market for or value of the copyrighted work.” 17

U.S.C. §107(4). To defeat fair use under this factor

“requires proof either that the particular use is harmful, or

that if it should become widespread, it would adversely

affect the potential market for the copyrighted work.”

Sony, 464 U.S. at 451. As the Court of Appeals correctly

held (Pet. App. A-15), because consumers use the Game

Genie for a non-commercial purpose, Nintendo had the

burden of proving “that some meaningful likelihood of

future harm exists.” Sony, 464 U.S. at 451 (emphasis in

original). The District Court and the Court of Appeals both

held that Nintendo failed to meet that burden on the facts

presented at trial.

In this Court, Nintendo claims that the Game Genie

impairs the potential market for derivative versions of its

games that would be comparable to those “that are created

by the Game Genie itself.” Pet. at 19. The Court of

Appeals accepted Nintendo’s legal position that “the test

for market harm encompasses the potential market for

“At trial, Nintendo focused on an entirely different injury, claiming

that the Game Genie would diminish the demand for its existing

copyrighted works. The District Court carefully analyzed Nintendo’s

claim based on the evidence presented at trial, and found that it “had

failed to prove an adverse effect on the relevant market for the copy-

righted works at issue.” Pet. App. B-25; see id. at B-25-29. Nintendo did

not challenge that finding in the Court of Appeals, nor has it done so in

its Petition here.

derivative works.” Pet. App. A-14-15. It found,

“Nintendo insists on focusing on the market for the Game Genie,

rather than the market for new versions of existing games as the law

requires. The difference is critical. Nintendo relies on the bald assump-

tion that, because consumers want to buy the Game Genie, the Game

Genie must interfere with a market over which Nintendo has a right of

monopoly control. In addition to assuming its conclusion once again,

Nintendo has simply ignored what market is at issue. While Nintendo

may wish to argue (incorrectly, for the reasons discussed above) that each

enhanced play of its games achieved with the Game Genie is a separate

“derivative work,” the Game Genie itself is not a derivative work of

anything. It neither incorporates nor copies any Nintendo software,

images or sounds whatsoever; nor can the Game Genie itself possibly be

characterized as a new or altered version of any Nintendo game.

The Game Genie is nothing more than a hardware tool that

consumers may use with their games to create the transitory effects of

which Nintendo complains. It is no more “derivative” of the games with

which it works than a VCR with slow-motion is “derivative” of the film

whose display a viewer uses that VCR to alter. See Vault Corp. v. Quaid

Software Ltd., 847 F.2d 255, 267-68 (Sth Cir. 1988) (computer program

that did not contain substantial amounts of plaintiffs copyrighted

expression, but worked together with plaintiff's copyrighted software to

achieve a result to which plaintiff objected, did not infringe plaintiff's

work). And the fact that there is a market for a separate tool like the

Game Genie that works independently with all games certainly does not

prove that there is a “different market” for a different version of one

game with a few of the changes the Game Genie permits in that one

game, any more than the fact that there is a market for VCRs with a

slow-motion feature proves that there is a market for a different version

of an existing film that exhibits all or part of that film in slow motion.

The Court of Appeals understood and articulated this point vividly:

“(T]he existence of a market does not, and cannot, determine

conclusively whether a work is an infringing derivative work.

For example, although there is a market for kaleidoscopes, it

does not necessarily follow that kaleidoscopes create unlawful

derivative works when pointed at protected artwork. The

same can be said of countless other products that enhance, but

do not replace, copyrighted works.” (Pet. App. A-7-8)

For these reasons, Nintendo’s statement (unaccompanied by any citation

to the record) that “[t]he harm caused by the [Game Genie’s] supplanta-

tion of this derivative works market (which Galoob itself estimates to

have a value of $150 million in 1990 and 1991 alone) is beyond dispute”

(continued...)

however, that

“Nintendo’s argument is undermined by the facts.

The district court considered the potential market

for derivative works based on Nintendo game

cartridges and found that (1) ‘Nintendo has not, to

date, issued or considered issuing altered versions

of existing games’ and (2) Nintendo ‘has failed to

show the reasonable likelihood of such a market.’

The record supports the court’s findings.” (Pet.

App. A-15-16 (emphasis added; citations omitted))”

2 ..continued)

(Pet. at 19-20) is not only false but preposterous. The Game Genie does

not “supplant[]” any “derivative works market”; the lower courts

expressly found otherwise on the facts presented at trial. The fact that

consumers want to buy the Game Genie (which is not “derivative” of any

work copyrighted by Nintendo) does not automatically entitle Nintendo

to the proceeds.

“The District Court’s factual findings on this issue, based on

substantial documentary evidence and expert testimony, are as follows:

“Nintendo also seeks relief for harm that may occur in

the future, on the grounds that the Game Genie may decrease

demand for sequels or slightly altered versions of Nintendo

games. Nintendo has not, to date, issued or considered

issuing altered versions of existing games. Nintendo argues,

however, that should such a market develop within the

appropriate and to reap the resulting revenues. In theory,

Nintendo is correct; however, it has failed to show the reason-

able likelihood of such a market. Nintendo’s video games are

expensive toys; each retails in the $40 to $50 range. There is

neither evidence nor reason to believe that a consumer who

owns the original game would invest a similar amount in a

slight variation thereof.

“In addition, Nintendo’s assertion that it may wish to

re-release altered versions of the games in suit 10, 20 or 30

years from now (much as Parker Brothers recently did with

“Monopoly”) is at odds with the position taken by Nintendo

in various other lawsuits pending before this Court. In those

actions, Nintendo opposes antitrust claims by using the

vagaries of the video game industry to rebut the impact and

(continued...)

EE e—_— _

What Nintendo seeks here is review of the concurrent

findings of both the District Court and the Court of Appeals

on that factual question. But this Court, as a “court of

law, . . . rather than a court for correction of errors in fact

finding, cannot undertake to review concurrent findings of

fact by two courts below in the absence of a very obvious

and exceptional showing of error.” Graver Tank & Mfg.

Co. v. Linde Air Prods. Co., 336 U.S. 271, 275 (1949) and

cases cited; accord, Goodman v. Lukens Steel Co., 482 U.S.

656, 665 (1987); Rogers v. Lodge, 458 U.S. 613, 623 (1982);

Berenyi v. District Director, INS, 385 U.S. 630, 635 (1967);

R. STERN, E. GRESSMAN & S. SHAPIRO, SUPREME COURT

PRACTICE 218 (6th ed. 1986). The Court of Appeals’ affir-

mance of the District Court’s finding on this fourth fair use

factor raises no issue appropriate for review here.

2(...continued)

permanence of its market control, if any. Having indoctri-

nated this Court as to the fast pace and instability of the video

game industry, Nintendo may not now, without any data,

redefine that market in its request for the extraordinary

remedy sought herein. Nintendo has failed to show any harm

to the present market for its copyrighted games and has failed

to establish the reasonable likelihood of a potential market for

slightly altered versions of the games at suit. While good

board games may never die, good video games are mortal.”

(Pet. App. B-26 (emphasis added))

CONCLUSION

For each of these reasons, as well as the reasons not

reached by the lower courts set out in footnote 2 above, the

Petition For Certiorari should be denied.

DATED: February 26, 1993.

Respectfully,

JEROME B. FALK, JR.*

MARTIN R. GLICK

BERNARD A. BURK

HOWARD, RICE, NEMEROVSKI, CANADY,

ROBERTSON & FALK

A PROFESSIONAL CORPORATION

Attorneys for Respondent Lewis Gaioob

Toys, Inc.

*Counsel of Record

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.