Micro Star v. FormGen Inc.

Micro Star v. FormGen Inc.
United States Court of Appeals, Ninth Circuit
Argued November 4, 1997 Decided September 11, 1998
Full case name	'MICRO STAR v. FORMGEN INC., a corporation; GT Interactive Software Corp.; 3D Realms Entertainment, aka 3D Realms Entertainment.
Citations	154 F.3d 1107
Prior history	Micro Star v. FormGen Inc., No. CV 96-3435 H(CM) (C.D. Cal. Sept. 30, 1996)
Holding
Micro Star infringed FormGen's copyright by creating unauthorized derivative works which were not a fair use
Panel membership
Alex Kozinski, David R. Thompson, Stephen S. Trott
Case opinions
Majority by	Alex Kozinski
Laws applied
17 U.S.C. § 103,§ 106, § 107

The case Micro Star v. FormGen Inc. 154 F.3d 1107 (9th Cir. 1998) is a California court case in which United States Court of Appeals for the Ninth Circuit overruled the district court's decision in favor of the plaintiff, FormGen Inc. against the defendant, Micro Star on the issue of the fair use of the user-created levels for the video game Duke Nukem 3D, which is owned by FormGen Inc.. This case established that audiovisual display can be copyrightable in certain circumstances.^[1]

Background

FormGen Inc, GT Interactive Software Corp. and Apogee Software, Ltd. (collectively FormGen) made Duke Nukem 3D (D/N-3D), a 3D first-person perspective video game. A build editor was shipped along with the game, which enables players to design and build their own levels, and then share those levels with others through the Internet. FormGen encouraged people to make levels, and did not consider this user-created content to be a copyright infringement.^[1]

Micro Star collected 300 of these user-generated levels, packaged them onto a CD, and sold it commercially as Nuke It (N/I). N/I's packaging was decorated with numerous screen shots of the included user-created levels.^[1]

Micro Star went to court and asked for a declaratory judgment that what they were doing was not copyright infringement. FormGen Inc. countersued, claiming that the levels were derivative works, and as the copyright holder, only they had the right to license derivative works.^[1]

Procedural History

After Micro Star started to seek a declaratory judgment from the district court for free of copyright infringement from FormGen, FormGen countersued for a preliminary injunction to prevent further production and distribution of N/I. Building on the precedent established by Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 964 F.2d 965(9th Cir.1992), the district court ruled that N/I was not a derivative work, and hence the content itself did not violate FormGen's copyright. However, the district court found that N/I's packaging infringed FormGen's copyright on the D/N-3D characters, as it reproduced the art without licensing from FormGen. The court also turned down Micro Star's fair use claims. Both sides filed appealed with United States Court of Appeals for the Ninth Circuit which were granted.^[1]

Complaint

FormGen

FormGen alleged that Micro Star infringed its copyright through exploiting the unauthorized user-created content. FormGen also argued that the audiovisual displays from D/N-3D with the N/I MAP files were derivative works of its D/N-3D, while under 17 U.S.C. § 106(2)(1994), a copyright holder has the exclusive right to prepare derivative work based on D/N-3D.^[1]

Micro Star

MicroStar based its arguments on the Game Genie case, discussed in Galoob v. Nintendo, arguing that both of them replaced old values (in the case of N/I, the MAP files in the original game) with new values (N/I's MAP files). They noted that the audiovisual experience was described by the N/I MAP files. Micro Star claimed that N/I MAP files were not derivative works, as they only referred to, but did not contain any art files from D/N-3D, and that as a result, no reproduction of D/N-3D content took place. Micro Star also argued that any use of D/N-3D's protected expression constituted fair use. Micro Star suggested that the court evaluate the fair use claim from the player's perspective, as the player created the derivative work. Finally, Micro Star argued that FormGen had forfeited its rights on the user-created levels by authorizing users to create new levels.^[1]

Court's Finding

A party asking for a preliminary injunction must demonstrate

"either a likelihood of success on the merits and the possibility of irreparable injury, or that serious questions going to the merits were raised and the balance of hardships tips sharply in its favor."^[2]

In this case, Formgen only needed to demonstrate a likelihood of success on the merits to get the preliminary injunction to prevent N/I from manufacturing and distributing its product. Such an injunction would also preserve the preliminary injunction it already won on the barring the use of D/N-3D screenshots in the N/I package.

Derivative Work

The first issue the court needed to resolve was if N/I should be considered as a derivative work of D/N-3D. The Copyright Act defines a derivative work as

"a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a derivative work."^[3]

To narrow the analysis down to a manageable level, courts had previously developed criteria to decide if a work can be qualified as a derivative work. One of these was that a derivative work must exist in a "concrete or permanent form,"^[4] and must contain a substantial amount of protected material from the previous work.^[5] The court noted that all the Copyright Act's examples of derivative works "took some definite, physical form,"^[4] and therefore considered that taking such physical form was a requirement of the Act. N/I's MAP files are stored on a CD, which without any doubt was a concrete or permanent form. However the audiovisual displays generated during the gaming experience did not meet the "concrete or permanent form"^[1] requirement. To resolve this issue, the court referred back to with Galoob v. Nintendo. In Galoob v. Nintendo, the court rejected Nintendo's request of a preliminary injunction because "[a] derivative work must incorporate a protected work in some concrete or permanent form, and the audiovisual displays generated in the process were not contained in any permanent form".^[4] In this case, the audiovisual displays generated from D/N-3D with N/I MAP files were contained in the user-created MAP files. The court also pointed out that the description of an audiovisual display counts as a permanent or concrete form for purposes of Galoob.^[1] The court then went on to compare the case with the example of sheet music, noting that "[p]antomimes and dances may be described in sufficient detail to enable the work to be performed from the description"^[6] to be copyrighted. Similarly, the audiovisual displays associated with the N/I's MAP files assumed a "concrete or permanent form,"^[4] as they were stored on a CD. To prove copyright infringement, FormGen needed to demonstrate that there were significant similarities between D/N-3D's and N/I's audiovisual displays in both ideas and expressions.^[5] The court concluded that FormGen would certainly succeed because D/N-3D and N/I share the same art library. Even though N/I MAP files only refer to the source art library, and do not contain any part of it, nevertheless they do infringe the underlined story in D/N-3D, where "a masculine hero figure named Duke fights against alien predators on the a post-Apocalyptic Los-Angeles-like environment."^[1] While only a copyright holder is entitled to create sequels, the stories told in the N/I MAP files are "surely sequels, telling new tales of Duke's fabulous adventures."^[1]

Fair Use

Once the court established that N/I was indeed a derivate work based upon D/N-3D, it went on to examine Micro Star's fair use argument. The doctrine of fair use allows for unauthorized use of copyrighted works "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research."^[7] Section 107 provides instructions to the courts to evaluate for fair use under four factors:^[7]

1. the purpose and character of the use, including whether it is commercial in nature
2. the nature of the copyrighted work
3. the amount and substantiality of the copied material in relation to the copyrighted work as a whole
4. the effect of the use on the potential market for the copyrighted work

In the issue of fair use, the court refused to perform the analysis from the users' point of view. Moreover, after re-investigation on Galoob v. Nintendo, the court concluded that "the fair use analysis in Galoob was not necessary and therefore is clearly dicta."^[4] The court not only agreed that Micro Star generated financial gain through FormGen's protected work, but also noted that Micro Star made heavy use of FormGen's work from both the quantity and importance perspective, since the MAP files were all expression specific to the D/N-3D unique story setting and plot. Finally, the court held that N/I harmed the market for the sequels of D/N-3D, where only FormGen has the right to produce a sequel. In conclusion, the court found that "[N/I] neither falls into any of the categories enumerated in section 107 nor meets the four criteria set forth in section 107."^[1]

Regarding Micro Star's complaint on the implicit license FormGen passed onto its customers for the user-defined content, the court noted that the only written license FormGen provided players with had a significant limitation mandating that all user-created content must be free. The court also pointed out that the validity of the license was irrelevant. If it was valid, then it prevented all commercial distribution; if it was invalid, then FormGen had not licensed any of its rights under copyright law and as a result N/I was infringing material. The court went further in the latter case, explaining that FormGen could have abandoned its exclusive right on the user-created content, while not giving up its rights to profit commercially from new levels or sequels.^[1]

Therefore, the court found a high likelihood of FormGen succeeding on its claim of copyright infringement and so reversed the district court's order denying a preliminary injunction and remanded the case to the district court for entry of such an injunction. The court also affirmed the district court's preliminary injunction preventing Micro Star from selling N/I in the package with screen shots of the game.^[1]

Impacts

In this case, the Ninth Circuit narrowed the scope of Galoob v. Nintendo, concluding that the fair use analysis in Galoob was "not necessary and therefore ... clearly dicta."^[4] This case was later used as precedent in the high-profile case A&M Records, Inc. v. Napster, Inc. and Pickett v. Prince.^[8]

This case highlighted that separability plays an important role in the analysis for the derivative work. In determining derivative works from the original protected material, the Copyright Act stands behind this separability: when elements of the original work "pervade a derivative work and are inseparable", the derivative author can no longer claim copyright protection for his own effort.^[9] Furthermore, the court's decision suggested that audiovisual display could be "separately copyrightable as an audiovisual work," raising some doubts as to whether the audiovisual display should even be considered as original or fixed, because users have the capability to alter the display.^[10]

See also

• Galoob v. Nintendo (1992)
• A&M Records, Inc. v. Napster, Inc. (2001)

References

1. ^ ^{a b c d e f g h i j k l m n} Micro Star v. FormGen Inc., 154.F.3d 1107 (9th Cir. 1999) (opinion full text).
2. ^ Johnson Controls, Inc. v. Phoenix Control Systems, 886 F.2d 1173, 1174 (9th Cir. 1989).
3. ^ 17 U.S.C. § 103
4. ^ ^{a b c d e f} Galoob v. Nintendo", 964 F.2d 967 (9th Cir. 1984).
5. ^ ^{a b} Litchfield v. Spielber", 736 F.2d 1352, 1357 (9th Cir. 1984).
6. ^ Horgan v. Macmillan, Inc.", 789 F.2d 157,160 (2nd Cir. 1986).
7. ^ ^{a b} 17 U.S.C. § 107
8. ^ John W. Branch, John LaBarre, and Nicholas Szabo, Gaming the System: Intellectual Property Protection for the Video Game Industry, Intellectual Property Technology Journal, Vol. 18, Apr. 2006
9. ^ Mitchell L. Stoltz, The Penguin Paradox: How the Scope of Derivative Works in Copyright Affects the Effectiveness of the GNU GPL
10. ^ Susanna Fischer, Copyright Law 2008, Columbus School of Law The Catholic University of America