Stern Electronics, Inc. v. Kaufman, 1674

• Decision Date: 20 January 1982
• Docket Number: D,No. 1674,1674
• Citation: 213 USPQ 443,669 F.2d 852
• Parties: , 1982 Copr.L.Dec. P 25,354 STERN ELECTRONICS, INC., Plaintiff-Appellee, v. Harold KAUFMAN d/b/a Bay Coin, et al., Defendants, and Omni Video Games, Inc., et al., Defendants-Appellants. ocket 81-7411.
• Court: U.S. Court of Appeals — Second Circuit

Page 852

669 F.2d 852

213 U.S.P.Q. 443, 1982 Copr.L.Dec. P 25,354

STERN ELECTRONICS, INC., Plaintiff-Appellee, v. Harold KAUFMAN d/b/a Bay Coin, et al., Defendants and Omni Video Games, Inc., et al., Defendants-Appellants.

No. 1674, Docket 81-7411.

United States Court of Appeals, Second Circuit.

Argued July 15, 1981.

Decided Jan. 20, 1982.

Robert Wieck, Providence, R.I. (Adler, Pollock & Sheehan, Inc., Providence, R.I., and Schulte, Roth & Zabel, New York City, on the brief), for defendants-appellants.

George H. Gerstman, Chicago, Ill. (Pigott, Gerstman & Ellis, Ltd., Chicago, Ill., Steven B. Pokotilow, Randy Lipsitz, and Blum, Kaplan, Friedman, Silberman & Beran, New York City, on the brief), for plaintiff-appellee.

Before VAN GRAAFEILAND and NEWMAN, Circuit Judges, and DUMBAULD, District Judge. ^*

NEWMAN, Circuit Judge:

This appeal from the grant of a preliminary injunction concerns primarily the availability of copyright protection for the visual images electronically displayed by a coin-operated video game of the sort currently enjoying widespread popularity throughout the country. Omni Video Games, Inc., its distributor, and two of its officers appeal from an order entered May 22, 1981 in the District Court for the Eastern District of New York (Eugene H. Nickerson, Judge), preliminarily enjoining them from infringing the copyright of Stern Electronics, Inc. in the audiovisual work entitled "Scramble" and from making further use of the trademark "SCRAMBLE" in connection with electronic video games. 523 F.Supp. 635. Appellants contend that the visual images and accompanying sounds of the video game fail to satisfy the fixation and originality requirements of the Copyright Act, 17 U.S.C.App. § 102(a) (1976), and that they, rather than appellees, have superior rights to the mark "SCRAMBLE". We reject these contentions and affirm the preliminary injunction.

Video games like "Scramble" can roughly be described as computers programmed to create on a television screen cartoons in which some of the action is controlled by the player. In Stern's "Scramble," for example, the video screen displays a spaceship moving horizontally through six different scenes in which obstacles are encountered. With each scene the player faces increasing difficulty in traversing the course and scoring points. The first scene depicts mountainous terrain, missile bases, and fuel depots. The player controls the altitude and speed of the spaceship, decides when to release the ship's supply of bombs, and fires lasers that can destroy attacking missiles and aircraft. He attempts to bomb the missile bases (scoring points for success), bomb the fuel depots (increasing his own diminishing fuel supply with each hit) avoid the missiles being fired from the ground, and avoid crashing his ship into the mountains. And that is only scene one. In subsequent scenes the hazards include missile-firing enemy aircraft and tunnel-like airspaces. The scenes are in color, and the action is accompanied by battlefield sounds.

The game is built into a cabinet containing a cathode ray tube, a number of electronic circuit boards, a loudspeaker, and hand controls for the player. The electronic circuitry includes memory storage devices called PROMs, an acronym for "programmable read only memory." ¹ The PROM stores the instructions and data from a computer program in such a way that when electric current passes through the circuitry, the interaction of the program stored in the PROM with the other components of the game produces the sights and sounds of the audiovisual display that the player sees and hears. The memory devices determine not only the appearance and movement of the images but also the variations in movement in response to the player's operation of the hand controls.

Stern manufactures amusement equipment, including video games, for distribution worldwide. In January 1981 at a London trade exhibit Stern became aware of "Scramble," an electronic video game developed in late 1980 by a Japanese corporation, Konami Industry Co., Ltd. The audiovisual display constituting what Stern alleges is the copyrightable work was first published in Japan on January 8, 1981. Stern secured an exclusive sub-license to distribute the "Scramble" game in North and South America from Konami's exclusive licensee, and began selling the game in the United States on March 17, 1981. Even in the fast-paced world of video games, "Scramble" quickly became a big success. Approximately 10,000 units were sold at about $2,000 each in the first two months for an initial sales volume of about $20 million.

On April 14, 1981, a Certificate of Copyright Registration for the audiovisual work "Scramble" was issued to Konami by the United States Copyright Office, and shortly thereafter documents were filed with the Copyright Office reflecting the license and sub-license to Stern. To satisfy the statutory requirement for deposit of copies of a work to be copyrighted, 17 U.S.C.App. § 408(b) (1976), Konami submitted video tape recordings of the "Scramble" game, both in its "attract mode" and in its "play mode." ²

Omni alleges that, concurrently with Stern's sales of the "Scramble" game and even earlier, it was endeavoring to sell a line of video game products so constructed that each unit could be equipped for playing different games by substituting a PROM containing the program for a particular game. Omni contends that it planned to market this line of interchangeable games with the label "Scramble" affixed to the headboard of each unit; the name of the particular game was also to be prominently displayed. On December 1, 1980, Omni's president ordered ten silk screen name plates bearing the name "Scramble." Between that date and March 17, 1981, the date of Stern's first sale of its "Scramble" game, Omni sold five units of video games bearing the name "Scramble" on the headboard. In April 1981 Omni began to sell a video game called "Scramble" that not only bears the same name as the "Scramble" game Stern was then marketing, but also is virtually identical in both sight and sound. It sold this copy of Stern's "Scramble" game, known in the trade as a "knock-off," for several hundred dollars less than Stern's game.

1. Copyright Issues

In challenging the preliminary injunction that bars distribution of its "Scramble" game, Omni does not dispute that Konami and its sub-licensee Stern are entitled to secure some copyright protection for their "Scramble" game. Omni contends that Konami was entitled to copyright only the written computer program that determines the sights and sounds of the game's audiovisual display. ³ While that approach would have afforded some degree of protection, it would not have prevented a determined competitor from manufacturing a "knock-off" of "Scramble" that replicates precisely the sights and sounds of the game's audiovisual display. This could be done by writing a new computer program that would interact with the hardware components of a video game to produce on the screen the same images seen in "Scramble," accompanied by the same sounds. Such replication is possible because many different computer programs can produce the same "results," whether those results are an analysis of financial records or a sequence of images and sounds. A program is simply "a set of statements (i.e., data) or instructions to be used directly or indirectly in a computer in order to bring about a certain result," Pub.L.No. 96-517, § 10(a), 94 Stat. 3015, 3028 (1980) (amending 17 U.S.C.App. § 101 (1976)). To take an elementary example, the result of displaying a "4" can be achieved by an instruction to add 2 and 2, subtract 3 from 7, or in a variety of other ways. Obviously, writing a new program to replicate the play of "Scramble" requires a sophisticated effort, but it is a manageable task.

To secure protection against the risk of a "knock-off" of "Scramble" based upon an original program, Konami eschewed registration of its program as a literary work and chose instead to register the sights and sounds of "Scramble" as an audiovisual work. See 17 U.S.C.App. § 102(a)(6) (1976). The Act defines "audiovisual works" as "works that consist of a series of related images which are intrinsically intended to be shown by the use of machines, or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any, regardless of the nature of the material objects, such as films or tapes, in which the works are embodied." 17 U.S.C.App. § 101 (1976). Omni contends that Konami is not entitled to secure a copyright in the sights and sounds of its "Scramble" game because the audiovisual work is neither "fixed in any tangible medium of expression" nor "original" within the meaning of § 102(a). Both contentions arise from the fact that the sequence of some of the images appearing on the screen during each play of the game will vary depending upon the actions taken by the player. For example, if he fails to avoid enemy fire, his spaceship will be destroyed; if he fails to destroy enough fuel depots, his own fuel supply will run out, and his spaceship will crash; if he succeeds in destroying missile sites and enemy planes, those images will disappear from the screen; and the precise course travelled by his spaceship will depend upon his adjustment of the craft's altitude and velocity.

If the content of the audiovisual display were not affected by the participation of the player, there would be no doubt...