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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1992%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1993
- **Citation:** 507 U.S. 985

## Text

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

—

i
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.

copyright monopoly?’

*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
copyright holders with an interest in the outcome.” 464 U.S. at 446
(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.

iv

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

vi

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

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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
COPYRIGHT ACT, 17 U.S.C.
§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
COPYRIGHT §2.03[B][2] (1992) 9
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

1

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

2

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).

3

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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5

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.

6

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.

8

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,

9

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.

10

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).

11

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.

12

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

13

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...)

14

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...)

15

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

16

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

17

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

18

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

19

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)).

20

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.

21

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...)

22

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.}

23

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)

24

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.

25

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...)

26

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
copyright period, it is entitled to decide if such games are
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—_— _

27

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))

28

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1992%3A2. Public record. Not legal advice.