ATARI, INC. v. JS & A GROUP

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

MEMORANDUM OPINION AND ORDER

This is a suit for declaratory and injunctive relief and for damages for contributory copyright infringement, patent infringement, unfair competition, and various state law torts. The plaintiff, Atari, Inc. ("Atari"), brought this suit because the defendant, JS&A, Inc., ("JS&A") sells and advertises a device called the "PROM BLASTER". The case is before the court on plaintiff's motion for a preliminary injunction on the copyright infringement claim.

Factual Background

Atari manufactures and sells a home computer video game system, the "2600" and game cartridges such as "CENTIPEDE" and "PAC-MAN" for use in the 2600. In order to play the games at home, the consumer connects the Atari computer to a television set and plugs his controls, or "joysticks", into the computer. A game cartridge, which is usually purchased separately, is then inserted into the computer. The computer program in the cartridge causes the audiovisual aspects of the game to emanate from the television. The 2600 has been a resounding commercial success.

The various game cartridges consist of a heavy plastic housing which contains an electronic circuit, or "chip", which in turn contains the game's computer program. The chips in Atari 2600 game cartridges are "Ready Only Memory", or "ROM", chips. The parties have stipulated that a ROM can neither be reprogrammed nor erased. The game cartridges sell for as much as $40 apiece.

Atari has copyrighted its video games as audiovisual works. In addition, it is seeking to register a copyright of the computer program for the CENTIPEDE game. Plaintiff's Exhibit D.

JS&A is a retailer of electronic products. It began this fall an effort to market its PROM BLASTER, a device for the duplication of those video games which are compatible with the Atari 2600 home computer. The machine has two slots, one for a 2600-compatible cartridge and one for a blank cartridge sold by JS&A for $10. In the words of JS&A's advertisements, "[y]ou simply plug in your Atari© or Activision©*fn1 cartridge in one slot and a blank cartridge in another, press a button and three minutes later you've created an exact duplicate." Plaintiff's Exhibit A. The PROM BLASTER sells for $119, and JS&A currently has $12,000 in inventory on hand. The defendant agreed not to fill any orders for the product pending the disposition of this motion.

JS&A markets the PROM BLASTER primarily as a means of making "back-up" copies of 2600-compatible games. The advertisements urge the consumer to protect his investment in video game cartridges which "can easily be ruined." Plaintiff's Exhibit A. The advertisements assure the public that this copying does not violate the copyright laws because "[i]n 1980, Congress passed an amendment to the copyright act that clearly permitted consumers to duplicate their cartridges" but warn that "[y]ou can't sell, lease or give away a duplicate cartridge produced from a copyrighted original that you own." Id. A related selling point for the PROM BLASTER is that the buyer "can make copies for [his] friends who wish to own archival copies of their favorite games and charge them for the service." Id.

JS&A also sells nine 2600-compatible video games of its own. JS&A grants the purchaser of a PROM BLASTER the right to copy the games, and even to sell the copies, without any limitation.

Atari alleges that any copying of its video games infringes its copyrights, even if the consumer does it for "archival purposes." Atari also contends that "[t]he purpose and effect of JS&A's acts are actively to induce, cause, and materially contribute to the making of infringing copies of ATARI's copyrighted home video games." Complaint at ¶ 5. Atari seeks a preliminary injunction against JS&A to prevent the use, advertising, offering for sale, and the sale of the PROM BLASTER and the blank cartridges.

Discussion

To establish its right to a preliminary injunction, Atari must show that it is likely to prevail on the merits, that it will suffer irreparable harm if the injunction does not issue, that the balance of hardships is in its favor, and that granting the injunction is in the public interest. Midway Mfg. Co. v. Artic Intern. Co., 547 F. Supp. 999, 1005 (N.D.111. 1982), aff'd 704 F.2d 1009 (7th Cir.), cert. denied, ___ U.S. ___, 104 S.Ct. 90, 78 L.Ed.2d 98 (1983).

1. Likelihood of Success on the Merits

Atari's copyright claim against JS&A is for contributory infringement. "[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a `contributory' infringer." Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971) (footnote omitted). JS&A raises no issue as to its knowledge or encouragement of the use of the PROM BLASTER to copy copyrighted Atari and other 2600-compatible video games. The defendant argues instead that the ...