Atari Games Corp. v. Nintendo of America Inc. — BrandWiki

Atari Games Corp. v. Nintendo of America Inc.

litigants	Atari Games Corp. v. Nintendo of America Inc.
court	United States Court of Appeals for the Federal Circuit
decidedate	September 10,
decideyear	1992
fullname	ATARI GAMES CORP. and Tengen, Inc., Plaintiffs-Appellants, v. NINTENDO OF AMERICA INC. and Nintendo Co., Ltd., Defendants-Appellees.
citations	975 F.2d 832
holding	Atari was held liable for copyright infringement, affirming the district court's decision.
judges	Raymond C. Clevenger, Edward Samuel Smith, Randall Ray Rader
majority	Randall Ray Rader

Atari Games Corp. v. Nintendo of America Inc., 975 F.2d 832 (Fed. Cir. 1992), was a U.S. legal case in which Atari Games engaged in copyright infringement by copying Nintendo's lock-out system, the 10NES. The 10NES was designed to prevent Nintendo's video game console, the Nintendo Entertainment System (NES), from playing unauthorized game cartridges. Atari, after unsuccessful attempts to reverse engineer the lock-out system, obtained an unauthorized copy of the source code from the United States Copyright Office and used it to create its 10NES replica, the Rabbit. Atari then sued Nintendo for unfair competition and copyright misuse, and Nintendo responded that Atari had engaged in unfair competition, copyright infringement, and patent infringement.

The United States District Court for the Northern District of California granted a preliminary injunction against Atari, and this was affirmed by the court of appeals. However, the United States Court of Appeals for the Federal Circuit differed from the district court on whether reverse engineering could hypothetically be allowed, declaring that "reverse engineering, untainted by the purloined copy of the 10NES program and necessary to understand 10NES, is a fair use." Thus, Atari was denied the fair use exception to copyright infringement, due to the illicit way they obtained Nintendo's source code.

One month after the decision, a similar ruling in Sega v. Accolade determined that reverse engineering was fair use. Several legal scholars have concluded that the main difference between the cases was that Atari had lied to obtain an unauthorized copy of Nintendo's code.

Ruling

District court

The two cases were consolidated by The District Court for the Northern District of California.[23] The court heard both parties' motions for preliminary injunctions, and Nintendo prevailed in both instances. Nintendo argued that Atari infringed their copyright by copying their code from the Copyright Office, making an intermediate copy of their code during the reverse engineering process, and creating a program substantially similar to their code.[12] The court found that Atari had acquired the 10NES source code from the Copyright Office under false pretenses, and concluded that Nintendo was likely to succeed in their claim for copyright infringement, should the case proceed to trial.[12] Thus, Atari was enjoined from selling any unauthorized games until said trial.[23] Atari initially appealed both decisions, but decided to dismiss their own motion for a preliminary injunction.

Appeal

The appeal was heard by United States Court of Appeals for the Federal Circuit, which affirmed the lower court's injunction against Atari.[12] The appellate court found that the 10NES contained protected expression,[23] applying the precedent from Computer Associates International v. Altai to establish that the 10NES code was expressed in a unique way that is not inherent to the idea. The court also ruled that Nintendo had proven a likelihood of success in their copyright claim, because Atari made unauthorized copies of the 10NES code from the Copyright Office, and that Atari's Rabbit program was also substantially similar to Nintendo's 10NES.[23]

However, the appeals court differed from the lower court's reasoning on the question of reverse engineering and fair use.[12] Determining that intermediate copying is not actionable in of itself, the appeals court stated that "reverse engineering, untainted by the purloined copy of the 10NES program and necessary to understand 10NES, is a fair use". However, fair use in intermediate copying does not extend to commercial exploitation of protected expression.[23] Moreover, Atari could not invoke fair use because they used an unauthorized copy of the code, obtained from the Copyright Office under false pretenses.[12] Lastly, the court rejected Atari's defense that Nintendo was misusing its copyright, because Atari had "unclean hands" after lying to the Copyright Office.[23]

Legacy

The case was decided one month before Sega v. Accolade, another video game case about reverse engineering.[30] The Hastings Communications and Entertainment Law Journal compared the Sega and Nintendo cases, as both courts acknowledged that reverse engineering qualified as fair use, but Atari had infringed copyright by using a "purloined" copy of Nintendo's source code.[12] Ernie Smith at Vice Magazine asserted that the courts could have decided Atari v. Nintendo the same way as Sega v. Accolade, and "would have favored Atari Games had the company not, you know, committed fraud."[30] Other legal scholars have highlighted this as the main distinction between the Sega and Nintendo cases.[27]

Writing for the Duke Law Journal, Maureen A. O'Rourke analyzed both reverse engineering cases, arguing that companies may respond by using shrinkwrap agreements to prohibit reverse engineering.[34] Allan M. Soobert of the UIC Law Review reacted by calling for balanced legislation, to protect copyrighted software from piracy and unauthorized copying, while also protecting the right to reverse engineering.[35]

David L. Hayes of the UIC John Marshall Journal of Information Technology & Privacy also reacted that if disassembly was interpreted as copyright infringement, then "copyright law would, in effect, provide the equivalent of a patent monopoly."[36] Intellectual property lawyer S. Gregory Boyd notes that copyright has a longer duration than patent protection, limiting all rivals who might copy their technology for the next century.[24] Susan Dallas of the Denver Law Review argued that patent protection would be too expensive for most software developers, and that the Atari case narrowed copyright protection by saying that reverse engineering could hypothetically be fair use, in obiter dicta.[23] Meanwhile, Mark L. Gordon of the Journal of Computer and Information Law reacted that the narrowing copyright protection would "lessen the tension between copyright exclusivity and antitrust policy", and "promote growth in the computer technology field".[37]

Multiple legal scholars have criticized the 2000 Digital Millennium Copyright Act (DMCA) for upsetting the balance struck in the Atari and Accolade cases.[38] In the Journal on Telecommunications and High Technology Law, Joe Linhoff criticized the DMCA for including anti-circumvention rules that make it impossible for competitors to create alternative compatible platforms.[39] Craig Zieminski of the Journal of Technology Law & Policy also criticized the DMCA, arguing that "the unprecedented shifts in copyright doctrine – idea protection, ancillary market protection, and contract law's usurpation of copyright law – are warning signs" that the right to reverse engineering is being curtailed.[38]