Sega Enterprises Ltd. v. MAPHIA et al.
857 F. Supp. 679 (N.D. Cal. 1994)

The defendants in this copyright and trademark infringement case operated an electronic bulletin board service called “MAPHIA” which allowed for, and actively encouraged, the upload and download of unauthorized versions of copyrighted Sega video games. Sherman, the owner and main operator of MAPHIA, profited from those services by selling game copiers which allowed for game play. Moreover, the court found that many of the games were located in files on defendants' computer bearing the name Sega, and the SEGA trademark also appeared when a Sega game downloaded from the bulletin board was run. Sega brought this action against the defendants, charging them with federal copyright and trademark infringement, unfair competition, and false designation of origin, as well as the violation of a series of California statutes.

MAPHIA violated Sega’s copyrights when its users uploaded the games to its bulletin boards (BBs) and allowed the public to download them. However, Sherman, owner and operator of MAPHIA, could not be found directly liable for copyright infringement. The court relied on Religious Technology Ctr. v. Netcom On-Line Communication Serv., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), which “found that the Internet provider was not directly liable for copyright infringement of a copyrighted work posted and distributed through its system. Netcom, 907 F. Supp. at 1368-70.” The court found this to be the case even when the defendant had knowledge of potential copyright infringement by its subscribers. Id. at 1372-73. “While Sherman's actions in this case are more participatory than those of the defendants in Netcom, the Court finds Netcom persuasive.” Sega failed to show that Sherman himself “uploaded or downloaded the files, or directly caused such uploading or downloading to occur,” so Sherman could not be found directly liable.

The court found Sherman liable for contributory copyright infringement because Sega established “that the users of Sherman's MAPHIA BBs directly infringed Sega's copyright… [and] that (i) with knowledge of the users' infringing activity, (ii) Sherman induced, caused, or materially contributed to their infringing activity.”

As noted above, the uploading and downloading by MAPHIA BB users constituted illegal copying. Through evidence such as print-outs of upload/download statistics and Sherman’s admissions, it was clear that Sherman had knowledge of the copying that was occurring. Sherman contributed to the infringing activity by “provide[ing] the site and facilities for the known infringing conduct. He actively solicited users to upload unauthorized games, and provided a road map on his BBs for easy identification of Sega games available for downloading. Additionally, through the same MAPHIA BBs medium, he offered copiers for sale to facilitate playing the downloaded games

Sherman affirmatively asserted a fair use defense stating there was no evidence that subscribers were playing the games outside their own homes or further distributing the games, but the court rejected the defense. The four non-exclusive factors that the court considered in determining whether the use was fair were:

1. Purpose and Character of Use: The bulletin boards were intended to induce users to purchase defendants’ game copiers to play the games they downloaded from the boards, costing Sega customers who would otherwise have bought their game cartridges. This for-profit use at Sega’s expense weighed against accepting a fair use defense.

2. Nature of the Copyrighted Work: The Sega games are for entertainment use and are creative rather than informational works, which leans against a finding of fair use.

3. Amount and Substantiality of the Copyrighted Work Used: The court found that the users’ copying of entire copyrighted games without providing any public benefit weighed heavily against, but didn’t preclude, fair use.

4. Effect of the Use upon the Potential Market for the Copyrighted Work: The court weighed this factor most heavily. The court determined “whether unrestricted and widespread conduct of the sort engaged in by the defendant would result in a substantially adverse impact on the potential market for the copyrighted work.” Here the court found that even if users only played the games in their own homes and didn’t further distribute them, Sherman’s conduct of allowing users to avoid paying for games would, if widespread, adversely impact the market for Sega games.

The court found that these four factors weighed against the application of the fair use doctrine, so Sherman was liable for contributory copyright infringement.

Because Sherman intentionally contributed to the users' infringement of Sega's copyright (by uploading to BBs, encouraging downloads, selling copiers, using and allowing others to use Sega’s trademarks) with the intention to profit, the court found that he “willfully infringed upon their copyrights, which would entitle it to greater damages.”

Sega alleged that Sherman infringed on its trademark by knowingly using the Sega name & mark in connection with the unauthorized games. But Sherman argued that using the Sega name to identify file contents and the “SEGA” trademark incidentally showing on the screen when the games were played wasn’t a violation.

The court noted that a “prima facie case for trademark infringement under the Lanham Act is established by a showing that (1) the mark is owned by or associated with a particular plaintiff, and (2) the defendant's use of the mark is likely to cause confusion or mistake among the public as to the origin of the goods. New West Corp. v. NYM Co. of California, Inc., 595 F.2d 1194, 1201-02 (9th Cir. 1979); see also Jockey Club, Inc. v. Jockey Club of Las Vegas, 595 F.2d 1167 (9th Cir. 1979).”

1. Ownership: Sega owns and has exclusive rights to the registered SEGA trademark.

2. Likelihood of Confusion:

a. Proximity of Goods: The games downloaded from the BBs are “substantially identical” to Sega’s games.

b. Similarity of Marks: The marks in the counterfeit games are identical to Sega’s trademark.

c. Intention in Adopting the Mark: Sherman intended to use the SEGA mark to show that the game available for download was associated with Sega.

d. Actual Confusion: Sega didn’t show any actual confusion, but the court notes that this evidence isn’t absolutely necessary for proving likelihood of confusion.

Based on these factors, the court found “that there is a likelihood of consumer confusion regarding the sponsorship and origin of the game files available on the MAPHIA BBs.” The court thought it was likely that anybody logging onto the BBs or playing a game using a game copier would think the counterfeit games and the use of Sega's name and trademark on the BBs was affiliated with or supported by Sega.

Sherman knew about the SEGA mark in the counterfeit games and used the Sega name to identify the game files on the BBs.

The court found that Sherman’s willful use of the Sega name and trademark in the counterfeit games was likely to lead to “consumer confusion as to whether Sega endorsed or sponsored the games appearing on or downloaded from MAPHIA. Accordingly, Sega has established a prima facie case that Sherman's use of Sega's trademark on virtually identical Sega game programs constitutes counterfeiting.”

To prevail on this Lanham Act claim, Sega again needed to show that the public would likely be deceived or confused by the similarity of the marks. “For the same reasons set forth regarding Sega's trademark infringement claim, Sherman's use of the Sega trademark is likely to be confusing and to cause damage to Sega and, therefore, Sega is entitled to summary judgment regarding Sherman's liability under 15 U.S.C. § 1125(a).”

“Sega claims that Sherman is liable for California trade name infringement under Cal. Bus. & Prof. Code § 14401 et seq.” The court also found for Sega on this claim because, once again, Sega needed and was able to show “that a likelihood of confusion exists with the use of Sega's trade name on Sherman's BBs."

Lastly, the court granted Sega summary judgment on this California state claim of unfair competition for the same reasons stated above because “[u]nfair competition claims made pursuant to Cal. Bus. & Prof. Code § 17200 et seq. are substantially congruent to claims made under the Lanham Act.”

The court granted injunctive relief and awarded Sega $10,000 in damages plus attorney’s fees for the copyright infringement claim. For the other claims, the court said that Sega was entitled to treble damages or profits if it could prove either, but it hadn’t done so yet.

Read the full opinion here.

979 F.2d 242 (D.C. Cir. 1992)

I. Background

In 1989, Atari brought an action against Ralph Oman, the Register of Copyrights at the time, that challenged his decision not to grant Atari a copyright on its video game entitled BREAKOUT. The Register, in a letter, denied the copyright registration saying that the “wall, ball, and paddle were ‘simple geometric shapes and coloring’ which ‘per se are not copyrightable.’” Viewing BREAKOUT as a whole, the Register found “no original authorship in either the selection or arrangement of the images or their components.”

At the trial level, the United States District Court for the District of Colombia granted the Register’s motion for summary judgment and denied Atari’s motion for summary judgment. Atari appealed the district court’s decision, and the Court of Appeals reversed and remanded the case (Atari Games Corp. v. Oman, 888 F.2d 878 (D.C. Cir. 1989)(hereinafter “Atari I”)). On remand, the Register again refused registration and once again Atari filed suit in the District Court. The District Court again granted summary judgment in favor of the Register, and once more an appeal was taken to the Court of Appeals.

II. Analysis

To be copyrightable, a work must be “fixed, original (i.e. not copied), and a “’work of authorship’” 17 U.S.C. §102. The dispute before the D.C. Circuit was whether BREAKOUT qualified as a “work of authorship.”

BREAKOUT was presented to the court as an audiovisual work, defined as “consist(ing) 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 . . . .” 17 U.S.C. §101.

In Atari I, the court asked the Register whether a different level of creativity was required for video games than for other works of art. The Register responded that “[t]he Copyright Office [was] applying the same creativity standard to the videogame ‘BREAKOUT’ as it would to any type of work . . . .” The court, using previous case law, determined that the Register had failed to considered BREAKOUT’s artistic merits on the same level as it would other forms of art.

In an earlier Supreme Court case entitled Feist Pub’lns, Inc. v. Rural Tel. Serv. Co., Inc., the Court concluded that the requirement to fulfill the creativity standard is “extremely low; even a slight amount [of creativity] will suffice.” 499 U.S. 340 (1991). When using this standard, courts are required to look at the product “as a whole” and should not focus on individual elements.

In Atari I, The Court stressed that while individual graphical elements of each of BREAKOUT’s screens are not copyrightable, the images, when taken together as a whole, constitute a copyrightable work of art. The D.C. Circuit felt that the Copyright Office had failed to uphold its duty and “focus[ed] on the individual screens, rather than the flow of the game as a whole.”

The Register also suggested that BREAKOUT was too trivial for protection. Counsel for the Register, during oral arguments, argued that BREAKOUT’s resort to nonrepresentational images showed a lack of creativity, stating: “The idea . . . could have been expressed in expressive ways. They could have added graphics to it. They could have had a brick wall that looked like a brick wall. They could have added ivy that was expressive.”

Circuit Judge Ruth Bader Ginsburg, who would go on to become a Justice of the Supreme Court, rejected this assertion, stating that “the ball’s path in BREAKOUT varies depending on which of four sections of the paddle it hits. Its trajectory does not follow from the laws of physics.” Using the Feist standard, Ginsburg concluded that the choice of motion used in BREAKOUT could not be characterized as “mechanical,” “garden-variety,” “typical” or “obvious,” or as projecting “age-old practices, firmly rooted in tradition and so commonplace that the combination of elements has come to be expected as a matter of course,” or as “practically inevitable.” Thus, because of the complicated and variable trajectory the ball in BREAKOUT was designed to take depending on which part of the paddle it hit, the D.C. Circuit identified BREAKOUT as creative and remanded the case back to Register for renewed consideration consistent with the opinion.

III. Conclusion

While the D.C. Circuit’s opinion should not be taken as holding that all video games are per se copyrightable, it did reaffirm the holding in Feist that “the vast majority of works make the copyright grade quite easily.” In addition, the Copyright Office must use the Feist standard for any work of art whether it is video games or something else. All forms of art should receive the same creativity standard in the eyes of the Register. A final point of interest is that this case suggests that individual elements of any video game might not be copyrightable in and of themselves, though when taken together, the combination of elements may be copyrightable.

On July 15, 2011, Activision filed a complaint with the National Arbitration Forum in an attempt to get control of the domain name www.modernwarfare3.com. The website, which uses visuals from Activision’s Modern Warfare 3 game, and which at first glance appears to be related to Modern Warfare, actually directs to users to a site in support of Electronic Arts’ competing Battlefield 3 game. Of late the website has also hosted videos with titles like “Modern Warfare 3 is a Joke.”

The National Arbitration Forum administers the Uniform Domain Dispute Resolution Policy which was established in the late 1990s to protect trademark holders from third parties that registered a domain name that could be construed as being an official source of information. Here, the domain ModernWarfare3.com was registered by an unnamed person on March 26, 2009, via GoDaddy.com—long before Modern Warfare 3 was announced by Activision. In its complaint, Activision argues that the Modern Warfare brand was famous prior to the registration of the ModernWarfare3.com domain name, and at that time the brans was already a highly distinctive and famous trademark that symbolized substantial goodwill. As such, even though Modern Warfare 3 was not yet launched, the brand itself was famous enough to establish Activision’s trademark rights to related domain names.

Under the rules of the UDRP, Activision must establish that the ModernWarfare3.com domain is identical to a trademark it has the rights to, that the person who registered it has no rights to the domain name, and that the individual in fact is using it in bad faith. The first two factors appear to hold in Activision’s favor. As to the third factor of bad faith, Activision's complaint says that "it appears that the [site owner] supports the game Battlefield from the game developer Electronic Arts," citing that not only did the domain at one time redirect to the Battlefield website, it also urged visitors to "grow up and forget about Modern Warfare 3 (because it looks just like Modern Warfare 2) and buy Battlefield 3 instead," all while having the logos and appearance of a Modern Warfare 3 site that Activision says was confusing to consumers. In addition, Activision asserts that the site hosted advertisements, indicating that the unknown owner was profiting from their trademarked brand. Activision is asking that the National Arbitration Forum give it ownership of the domain name immediately. We note that, as of July 20, 2011, the modernwarfare3.com site is no longer loading.

U.S. District Court, District of Minnesota

Case No. 11-cv-01928, Filed July 15, 2011

Fantasy Flight Publishing, owner of the war strategy board game BattleLore, has filed suit against European company, Puffin Software, for copyright infringement and unfair competition. Puffin allegedly sells a computerized version of a game almost identical to BattleLore online, through Apple’s App Store and its own website. According to the complaint, BattleLore was created by famous board game designer, Richard Borg, and Fantasy Flight acquired all copyrights in the BattleLore game from him in September 2008. Fantasy Flight registered its copyright to the game with the Copyright Office on June 15, 2011, one month before filing this suit.

Both games are set during a European medieval period, but Puffin’s version limits troops to Vikings. In addition, both games have three sectors at the player’s left, center and right, and the abilities of the troops or Vikings are determined by a color-coding system: green for fast, blue for average and red for strong, according to the complaint. Fantasy claims that Paivinen first approached them with a prototype for a computerized version of BattleLore, but when they were slow to respond, he went ahead and created his own version, launching it on the App Store.

In addition to copyright infringement, the suit raises claims of unfair competition under the Lanham Act and deceptive trade practices and unjust enrichment under state law. Fantast Flight asserts that it asked Puffin to cease and desist from its infringing activities, without success. It claims the unlawful activities are putting its reputation at risk because it has no control over the nature, quality and direction of the computer adaption of the game and how the unauthorized work is developed or distributed. Fantasy is seeking a permanent injunction, damages, pre- and post-judgment interest, and attorneys’ fees and costs.

U.S. District Court, District of Delaware

Case No. 11-cv-00586, Filed July 1, 2011

Impulse Technology, an Ohio-based company, sued Microsoft Corp in Delaware yesterday, alleging that the Xbox Kinect game console infringed on seven of Impulse’s patents for technology that tracks users’ movements and lets them play video games without a controller. The patents in suit are U.S. Patent Nos. 6,308,565; 6,430,997; 6,765,726; 6,876,496; 7,359,121; and 7,791,808 describing a “System and method for tracking and assessing movement skills in multidimensional space,” and U.S. Patent No. 6,749,432 covering an “Education system challenging a subject’s physiologic and kinesthetic systems to synergistically enhance cognitive function."

In addition to Microsoft, a slew of other companies who make games for Xbox were named as defendants. Eight video game makers, including EA, Sega, and Konami, stand accused of making exercise games, sports games and other games designed for the Kinect system that violate Impulse’s technology. Impulse alleges that like Microsoft, these companies are guilty of making, selling and importing into the U.S., games that infringe several of their patents.
Impulse is seeking a permanent injunction, damages, treble damages, interest, attorneys’ fees and costs. According to Law360, a representative for Microsoft said the company is reviewing the complaint and had no comment.

United States Court of Appeals for the Second Circuit

Case No. 10-2690-cv, Filed February 20, 2009

As comics often serve as sources for developing video games, we note with some interest a ruling by the second circuit on Friday, June 24, 2011, concerning whether the 2008 film You Don’t Mess with the Zohan infringed a comic book creator’s copyright in his story. Robert Cabell filed suit in 2009 alleging that his comic character, Jayms Blonde, a gay ex-US Navy SEAL wielding an Uzi disguised as a hair dryer, was the unauthorized basis for the film’s Zohan character, a former Israeli counterterrorism agent who leaves the Mossad to become a hairdresser.

A district court in New York had granted summary judgment to the defendants on May 26, 2010. The court found that at the base of both works was the unprotectable idea of a crime fighting hairdresser, and any protectable expression of that idea was only superficially similar between the characters concerned in the suit. The district judge elaborated that the characters were easily distinguishable beneath the surface-level similarities. For example, while the Jayms Blonde comics were rife with humor “based on gay double-entendre,” Zohan “derives much of its humor by exaggerating Arab and Israeli stereotypes." Also, while both works were filled with sexual humor, in Zohan the character’s exploits with members of the opposite sex, and the “average lay observer would not mistake Zohan’s escapades with his elderly female clients for any of Blonde’s amorous activities.”

Campbell tried to prove that Adam Sandler, the film’s star and co-writer, had access to his work because they were MySpace friends. The judge found the submitted evidence, a screenshot of a MySpace page displaying an Adam Sandler profile picture, to be unconvincing as many MySpace users frequently put up publicly available images to impersonate celebrities. In addition, Sandler said in a sworn declaration that he never had a MySpace account. Judd Apatow, who wrote the screenplay, also swore that he finished the screenplay in July 2000, well before Cabell’s comic was published in 2002.

In a summary order on June 24, the 2nd Circuit affirmed the lower court’s order of summary judgment as “thorough and well-reasoned.” The 2nd Circuit opinion reiterated that “aside from the unprotectable ideas of brandishing a blow dryer as a weapon, and the characters’ fighting poses, there is no plausible basis for a reasonable jury to find that the parties’ respective expressions of the concept of a crime fighting hairdresser are substantially similar.”

Wildcat Intellectual Property Holdings, LLC v. 4Kids Entertainment, Inc. et al
U.S. District Court, Eastern District of Texas
Case No. 11-cv-305, Filed July 1, 2011

Wildcat’s complaint alleges that a number of video games and online trading card games infringe the ‘216 patent. These include EA’s Battleforge, Konami’s Marvel trading card game, Nintendo’s Pokemon trading card game, and Zynga’s Warstorm. The complaint alleges that the defendants not only directly infringe the patent, but that they knowingly induced infringement by making these games available to their customers online, and/or by importing these games to the United States and making them available here. Wildcat requests relief in the form of a permanent injunction, damages, costs, expenses, and attorney’s fees. We’ll keep an eye on this case and keep you updated.

SocialApps LLC v Zynga Inc. et al
U.S. District Court, Central District of California
Case No. 11-cv-00919, Filed June 17, 2011

GAMETECH INTERNATIONAL, INC., v. GRAND VISION GAMING, LLC, TIMOTHY CARSON, and MERLE FRANK, and JOHN DOES 1-10.

United States District Court for the District of Montana

Case No. 09-cv-00039

Case Update:

Achates Reference Publishing, Inc. v. Symantec Corporation et al.
U.S. District Court for the Eastern District of Texas
Case No. 11-cv-00294, Filed June 20, 2011

Especially relevant to video games are the claims that EA’s Sims games and Valve’s Left4Dead and HalfLife games infringe these patents. Achates alleges that “defendants have infringed the '889 patent and the '403 patent by making, using, selling, and offering for sale software that uses the product activation technology described and claimed in the '889 and '403 patents, without authority of Achates.”

This is the third time in four years that Achates has brought suit to defend these patents. The first suit, in November 2007, was brought against Microsoft, and was dismissed in December 2008, at request of the parties. The second suit was filed in November 2009 against nine software companies, including McAfee and Intuit. Those cases were all dismissed by August 2010, again by request of the parties, after they reached an undisclosed agreement.

In this latest suit, Achates is seeking a determination of infringement, treble (triple) damages for willful infringement, attorneys’ fees and a permanent injunction. This case isn't exactly focused on video games, so our updates may be minimal.

For more on this case, visit Law360.