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MIDWAY MFG. CO. v. ARTIC INTERN.

March 10, 1982

MIDWAY MFG. CO., PLAINTIFF,
v.
ARTIC INTERNATIONAL, INC., DEFENDANT.



The opinion of the court was delivered by: Decker, District Judge.

  MEMORANDUM OPINION AND ORDER

Plaintiff, Midway Manufacturing, Inc. ("Midway"), brought this action against defendant, Artic International, Inc. ("Artic"), raising claims based on copyright infringement, trademark infringement, unfair competition at common law, violation of Section 43(a) of the Lanham Act of 1946, 15 U.S.C. § 1125(a), violation of the Illinois Deceptive Trade Practices Act, Ill.Rev.Stat.ch. 121 1/2, § 312, and misappropriation at common law. Pending are plaintiff's motion for preliminary injunction and defendant's motion for summary judgment on copyright issues. On September 28 and 29, 1981, the court held a hearing and took testimony concerning Midway's motion for preliminary injunction. All post-hearing briefs requested by the parties have now been filed, and, after consideration of them and the transcript of the hearing, the court hereby enters the following opinion and order.

Facts

The bulk of Midway's business consists of manufacturing and selling video games. Two of those games are the subjects of this lawsuit, Galaxian and Pac-Man. Allegedly, Artic is selling electronic devices that are intended to simulate Midway's Galaxian and Pac-Man games as well as devices that are designed to be inserted into Midway's Galaxian game to speed up and otherwise alter the play of the game (hereinafter "speed-up kits"). Those devices form the basis of this suit.

Both of Midway's games consist of an upright cabinet equipped with controls manipulated by the player while playing the game. The cabinet contains electronic circuitry in the form of a printed circuit board, which is electrically connected to a television picture tube. The tube serves as a screen on which the visual images of the game are displayed. Before the player begins a game by inserting a coin, Midway's Galaxian and Pac-Man games operate in an "attract" mode, which is stored in the electronic components of the game. The attract mode is fairly short and repeats itself constantly until the game is played. Its purpose is to summarize the game for the prospective player and to encourage him to play the game. When a coin is deposited and the start button depressed, the games shift into the "play" mode. In that mode, some of the symbols of the game appear to respond to the operation of the controls by the player.

A printed circuit board used in Midway's Galaxian was shown to the court at the hearing. The board is two-tiered, consisting of a relatively large "mother board" which served as the base, and a smaller "piggyback memory board" mounted on the top of the mother board. The mother board contained a microprocessor and two "character ROMs," in which the computer programs necessary to create the shapes seen on the screen are stored. The Galaxian piggyback board is made up of five ROMs on its top side and two sets of twenty-four pins descending out from its bottom. The pins fit into sockets on the mother board and connect the ROMs on the piggyback board to the microprocessor on the mother board. The ROMs on the piggyback board (hereinafter "program ROMs") contain permanently imprinted computer programs which direct the microprocessor to cause the images created by the character ROMs to appear in certain locations on the television screen.

When the Galaxian game is in the attract mode, the repeating sequence of images summarizing the game for the player is generated by instructions from the program ROMs. After a coin is inserted and the game goes into the play mode, the images generated by the character ROMs move on the screen in a finite but enormous number of sequences. The sequences are determined by the program ROMs. In other words, when a player moves the controls on the cabinet, an electric signal is sent to the microprocessor, which scans the program ROMs for the predetermined sequence in which the images are to move on the screen. If a player were to move the controls of either a Pac-Man or Galaxian video game in exactly the same way in two different plays of the game, the images on the screen would all move in exactly the same way.

Midway's Pac-Man video game is made up of essentially identical electronic equipment. The principles of operation for the Pac-Man game are the same as those discussed above for the Galaxian game. Of course, the programs contained in the ROMs are considerably different.

The court observed both the Galaxian and Pac-Man games at the hearing. The elements of the Galaxian game appear on a background star pattern consisting of twinkling colored lights that roll from the top of the screen to the bottom. The game involves a missile-firing ship operated by the player, plus a formation of enemy alien ships. The player's ship moves horizontally along the bottom of the screen, in response to the manipulation of the controls by the player. The aliens are arranged in a convoy of five horizontal rows at the top of the screen. There are four denominations or ranks of aliens, with the highest ranking farthest from the player's ship. Each rank has a distinguishing color. The highest ranking alien is shaped like a rocket ship, but the other ranks are birdlike with flapping wings. During play, individual aliens unpredictably invert and swoop down to bomb the player's ship. Sometimes the alien attack involves miniformations of up to three aliens, including one of the highest ranking alien ships plus one or two alien escort ships. The object of the game is to destroy as many of the alien ships as possible while avoiding the destruction of your missile ship by the alien bombers. Whenever a ship is destroyed, a bright explosion appears on the screen, with appropriate sound effects. The player's score is measured by the number and rank of aliens destroyed.

Both the games in this suit were created by Namco Limited, a Japanese company. Galaxian was created in 1979, and was first published in Japan by Namco on September 15, 1979. Pac-Man was created in 1980 and was first published in Japan under the name "Puckman" on May 27, 1980. Midway became aware of the two games and concluded that both could be profitably marketed in the United States. On November 13, 1979, Midway and Namco entered into a know-how license agreement in which Namco granted Midway an exclusive license to make and sell the Galaxian game in the United States. On February 2, 1980, Namco assigned to Midway, effective as of the date of the license agreement, "the entire right, title and interest in common law and statutory copyright" in the Galaxian game. The Galaxian agreements have been amended a number of times, but they still remain in effect. As of August 16, 1980, Namco assigned the U.S. copyright rights in the "Pac-Man or Puckman" game to Midway. On November 4, 1980, Midway and Namco entered into a formal know-how license agreement in which Midway received the exclusive rights to market the Pac-Man game in the United States under that name. The Pac-Man agreements are likewise still in effect. Midway has made substantial royalty payments to Namco under both agreements.

Both the Pac-Man and Galaxian video games have been extremely successful products for Midway. Since February 1980, Midway has sold in excess of 40,000 Galaxian games, and since October 1980, over 80,000 Pac-Man games. Prior to 1978, the average production run on a video game was from 1500 to 2000 units.

Recognizing the value of these two games, Midway sought to register its copyright in the audiovisual portion of the games. Midway initially attempted to register the copyright in the Galaxian game in early March 1980. At that time, a Midway attorney met with examiners in the Copyright Office visual arts and performing arts groups to determine what would be the proper form of deposit to register the visual images of the game. After some discussion, the performing arts division examiner agreed that a performing arts application should be filed and that an acceptable deposit would consist of a video tape of a performance of the game and a written "Synopsis of Deposit."

On March 6, 1980, Midway's attorney filed a performing arts application to register the Galaxian game and deposited a video tape, a brochure for the game, and other materials including a written "Synopsis of Deposit." The video tape was recorded at Midway's plant in Franklin Park, Illinois. It presents a performance of the play mode of the Galaxian game, and there is a close-up of the game screen to show the copyright notices. At the end of the tape is a view of the entire game showing the full cabinet bearing Midway's name.

The Copyright Office granted the application and issued Certificate of Copyright Registration No. PA 59-977, effective as of March 6, 1980. The certificate states that the work for which the copyright is registered is entitled "Galaxian" or "Midway's Galaxian", that the work is an audiovisual work, that Namco is the author of the work, that the work was created in 1979, and that it was first published in Japan on September 15, 1979.

Midway also obtained a Certificate of Copyright Registration No. PA 68-323 specifically for the Galaxian attract mode which was not included in the videotape deposit for PA 59-977, and Certificate of Copyright Registration PA 83-768 for the entirety of the Pac-Man game. For each certificate, Midway submitted a video tape and a written synopsis of the deposit with the application.

In a July 14, 1981, letter, Ms. Marybeth Peters, Chief of the Examining Division of the Copyright Office, confirmed that, on an ongoing basis, the deposit requirements for copyright protection of video games would consist of a video tape of the attract and play modes of the games, a synopsis of the work, and at least one piece of identifying material showing the position of the copyright notice. The rationale for allowing such a deposit was given as follows:

    "The Copyright Office certainly does not want
  the actual video games deposited for
  registration. Unfortunately, under the present
  regulations, there is no specific provision for
  the deposit of audiovisual works embodied in
  video games. I am, therefore, granting your
  request for special relief on an ongoing basis."

Every Galaxian and Pac-Man game sold by Midway contains a number of copyright notices. One copyright notice appears on the glass cover over the video screen of the Galaxian game and is in the form of a clear decal. Also, the notice appears on the Galaxian printed circuit board. In the Pac-Man game, one copyright notice is displayed electronically on the screen immediately after a coin is deposited, and a notice is attached to the Pac-Man circuit board and to each of its ROMs.

The evidence presented at the hearing showed that defendant Artic sells two devices which Midway contends violate its rights in the Galaxian and Pac-Man games. The first of those items is a speed-up kit, which, when attached to the Galaxian game, modifies the way the images move on the screen. Essentially, the effect of the speed-up kit is to cause the aliens to move faster and to increase to six the number of aliens that attack the player's ship in formation. In addition, the aliens in the sped-up version drop more bombs on the player's ship. The obvious result of attaching the speed-up kit to a Galaxian game is to make the game more difficult to play, dramatically shortening the time that it takes for a player to lose his rocket ships and be forced to insert an additional coin to continue play. Artic itself recognized that that was the purpose of the speed-up kit in its earliest advertisements directed to video arcade owners. The advertisements read in part:

  "TRY OUR MEMORY BOARDS TO DOUBLE YOUR GALAXIAN
  INCOME."

Artic has sold at least 436 speed-up kits.

The Artic speed-up kit is made up of a relatively small printed circuit board with five devices called "EPROMs" (apparently similar to ROMs in function) on the top and two sets of pin connectors on the bottom. The two sets of connectors are spaced in such a way as to permit them to be plugged into the sockets in the Galaxian mother board into which the Galaxian piggyback memory board is normally plugged. The EPROMs on the speed-up kit contain a complete set of instructions necessary to cause the characters of the Galaxian game to move in a faster sequence.

Both the computer instructions in the ROMs on the Galaxian piggyback board and the instructions in the speed-up kit's EPROMs can be printed out on paper by a standard industry procedure using a machine known as a "development machine." That machine was used to print out the instructions in the Midway's ROMs and Artic's EPROMs. Dr. Thomas DeFanti, a professor of computer science at the University of Illinois, compared the two printed versions of the instructions. He found that out of about 10,000 "bytes" or computer words of source code in the two sets of programs, there were only about 488 differences. Dr. DeFanti's conclusion was, "[I]t is a clear case of copying here."

The use of the speed-up kit is substantially limited to attaching it to Galaxian games. In order for the kit to work on other games, Artic's printed circuit board would have to be able to plug into the mother board of those games. In other words, the sockets on the mother board would have to be spaced in a manner to correspond to the connector pins on the speed-up kit. Also, the sockets would have to be properly connected electrically to the microprocessor. Finally, the programming language used in the EPROMs of the Artic kit would have to be compatible with the language read by the microprocessor on the mother board.

At the hearing, Artic demonstrated that the speed-up kit could be attached to two video games called "Uniwars" and "Moon Cresta." However, attaching the speed-up kit to those games substantially changed them. The kit caused the phrase "WE ARE THE GALAXIANS" to appear on the screen of both games in the attract mode. With the kit attached, the character images of the games assembled in a formation identical to the formation of the aliens in the Galaxian game and moved in exactly the same way as in the sped up version of the Galaxian game. When the games were played normally, without the speed-up kit attached, the images did not appear in such a formation, nor did they move in a manner similar to the Galaxian aliens. Midway presented evidence at the hearing showing that it was physically impossible to fit the speed-up kit into the mother boards of several other video games.

The second item sold by Artic that is of interest in this litigation is a printed circuit board that is used to create a "Puckman" video game. Artic first sold a Puckman circuit board on November 25, 1980, after it became aware of the existence of Namco's Puckman game. In sum, Artic has sold between 500 and 1600 Puckman printed circuit boards in the United States.

The court viewed the Puckman game generated by Artic's printed circuit board. The only differences between Artic's Puckman game and Midway's Pac-Man game are (1) the names of the ghost characters in Artic's game are different from the names of Midway's characters, (2) the Midway copyright notice does not appear on Artic's game, and (3) the name of the game is different. Other than those trivial differences, the Artic game is absolutely identical to Midway's Pac-Man video game described above. In fact, it was demonstrated at an earlier hearing before the United States International Trade Commission that Artic's Puckman printed circuit board contains an error common to Midway's Pac-Man game.

Prior to the inception of this litigation, when Artic first began to sell its speed-up kits and Puckman circuit boards, it listed the names of its products on its invoices. Sometime in early 1981, after this suit was instituted, Artic began referring to its products by code designations. For example, the code "A 07" was used to refer to Puckman circuit boards. Then, in April 1981, Artic ceased referring to particular circuit boards entirely on its invoices, and began writing the term "P.C. Board" or its equivalent on invoices for the sale of Puckman circuit boards.

Discussion

The following four factors are to be considered in determining whether plaintiff is entitled to the entry of a preliminary injunction in its favor: (1) likelihood of success on the merits; (2) irreparable harm if the injunction is not issued; (3) that the balance of hardships tips toward the plaintiff; and (4) whether or not granting the injunction is in the public interest. See The Machlett Laboratories, Inc. v. Techny Industries, Inc., 665 F.2d 795 (7th Cir. 1981); Helene Curtis Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325, 1330 (7th Cir. 1977), cert. denied, 434 U.S. 1070, 98 S.Ct. 1252, 55 L.Ed.2d 772 (1978); Banks v. Trainor, 525 F.2d 837, 841 (7th Cir. 1975), cert. denied, 424 U.S. 978, 96 S.Ct. 1484, 47 L.Ed.2d 748 (1976).

I. Likelihood of Success — Copyright Claim

Defendant Artic has launched a massive scattershot of arguments against the validity and application of Midway's copyrights in the games involved in this case. The court will attempt to deal with each of defendant's arguments in an organized fashion below.

A. Scope of Copyright Protection

In registering its copyrights with the U.S. Copyright Office, Midway chose to register the sights and sounds of the Galaxian and Pac-Man games as audiovisual works. See 17 U.S.C. § 102(a)(6). "Audiovisual works" are defined in the Copyright Act 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. § 101. At this point, it is useful to delineate exactly what plaintiff contends its copyrights cover. Plaintiff claims copyright protection only in the series of images and sounds appearing on the screen on the Galaxian and the Pac-Man games. Specifically, the protection extends to the fanciful design of the characters used to play the games, the distinctive manner in which the characters move, and the sounds associated with that movement. Several courts have recently concluded that those aspects of plaintiff's video games are the proper subjects of copyright protection. See Atari, Inc. v. North American Phillips Consumer Electronics Corp., 672 F.2d 607 at 616-20 (7th Cir. 1982); Stern Electronics, Inc. v. Kaufman, 669 F.2d 852 (2d Cir. 1982); Midway Manufacturing Co. v. Drikschneider, 543 F. Supp. 466 (D.Neb. 1981); Williams Electronics, Inc. v. Artic International, Inc., Civ. No. 81-1852 (D.N.J. June 24, 1981).

Throughout this litigation, Artic has contended that the plaintiff's copyright protection extends only to the particular videotapes submitted to the Copyright Office for registration. Artic's argument rests largely upon the general deposit requirements of 17 U.S.C. § 408, which state:

    "(b) Deposit for Copyright Registration.
  — Except as provided by subsection (c), the
  material deposited for registration shall include
  —
    "(3) in the case of a work first published
  outside the United States, one complete copy or
  phono-record as so published[.]"

Artic claims that since the videotapes were submitted as "copies" of the works, the works that Midway sought to copyright were only those tapes, not the games themselves.

Midway sharply disagrees with the argument made by Artic. Midway argues that the videotapes were not "copies" of the works but rather were identifying material submitted in lieu of actual copies of the works, pursuant to Copyright Office regulations authorized by 17 U.S.C. § 408(c). While Midway does recognize that there are no regulations specifically covering video games, there are regulations for "[w]orks reproduced in or on three-dimensional objects." 37 C.F.R. § 202.20(c)(2)(ix). The deposit requirement for such works may be met by submitting "identifying material," Id., which is defined as:

  "photographic prints, transparencies, photostats,
  drawings, or similar two-dimensional
  reproductions or renderings of the work, in a
  form visually perceivable without the aid of a
  machine or device."

37 C.F.R. § 202.21. The brochures submitted along with the videotapes would best satisfy that definition, with the result that the games themselves, not just the videotapes, are the subjects of the copyrights.

While there is substantial force to Midway's arguments, the court finds that it does not need to rely on the technicalities of the Copyright Office's regulations to find that Midway's copyrights cover the video games themselves, and not just the videotapes. Artic's argument to the contrary fails, because it relies on a far narrower definition of the word "copy" than that used in the Copyright Act. In the Act, the term "copies" is defined as follows:

    "`Copies' are material objects, other than
  phonorecords, in which a work is fixed by any
  method now known or later developed, and from
  which the work can be perceived, reproduced, or
  otherwise

  communicated, either directly or with the aid of
  a machine or device."

17 U.S.C. § 101. That definition makes clear that a copy may be made in any medium whatsoever, so long as the work can be perceived from it. The videotape submitted to the Copyright Office is no less a copy of Midway's audiovisual work, than the game machine itself is. As this court said in an earlier opinion in this case,

  "It should be emphasized that merely because the
  work is fixed in the tapes submitted to the
  Copyright Office, it does not necessarily follow
  that the tapes are the works themselves. The
  original work of authorship should not be
  confused with the material objects in which the
  work must be fixed. See, 1 Nimmer on Copyrights
  § 2.03."

Midway Manufacturing Co. v. Artic International, Inc., No. 80 C 5863, slip op. at 16 (N.D.Ill. June 2, 1981) (order denying defendant's motion for summary judgment). Here, the videotapes were merely copies of the work. The work, for which copyright protection was ...


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