Sega v. Accolade
Sega v. Accolade | |
---|---|
William C. Canby, Jr., Edward Leavy | |
Case opinions | |
Majority | Stephen Reinhardt |
Laws applied | |
15 U.S.C. §§ 1114(1)(a), 1125(a) (Lanham Act); 17 U.S.C. §§ 101, 106, 107, 117 (Copyright Act of 1976)[1] |
Sega Enterprises Ltd. v. Accolade, Inc., 977
The case was filed in the U.S. District Court for the Northern District of California, which ruled in favor of Sega and issued an injunction against Accolade preventing them from publishing any more games for the Genesis and requiring them to recall all the existing Genesis games they had for sale. Accolade appealed the decision to the Ninth Circuit on the grounds that their reverse engineering of the Genesis was protected under fair use. The Ninth Circuit reversed the district court's order and ruled that Accolade's use of reverse engineering to publish Genesis titles was protected under fair use, and that its alleged violation of Sega trademarks was the fault of Sega. The case is frequently cited in matters involving reverse engineering and fair use under copyright law.
Background
In March 1984,
After the release of the Sega Genesis in 1988, video game publisher
As a result of the piracy and unlicensed development issues, Sega incorporated a technical protection mechanism into a new edition of the Genesis released in 1990, referred to as the Genesis III. This new variation of the Genesis included code known as the Trademark Security System (TMSS), which, when a game cartridge was inserted into the console, would check for the presence of the
Lawsuit
On October 31, 1991, Sega filed suit against Accolade in the United States District Court for the Northern District of California, on charges of trademark infringement and
Sega argued that Accolade had infringed upon its copyrights because Accolade's games contained Sega's material. Accolade insisted that their use of Sega's material constituted fair use. However, Judge Caulfield did not accept this explanation since Accolade was a game manufacturer, their works were for financial gain, and because their works competed directly with Sega's licensed games, likely resulting in a sales decrease for Sega's games.[3]: 384 [7] Accolade's case was further hurt by a presentation by a Sega engineer named Takeshi Nagashima, who showed two Sega game cartridges that were able to run on the Genesis III without the trademark-displaying TMSS, and offered them to Accolade's defense team but would not reveal how that was possible.[1][3]: 385 Ultimately, this would result in Accolade's defeat on April 3, 1992, when Judge Caulfield ruled in favor of Sega and issued an injunction prohibiting future sales by Accolade of Genesis-compatible games incorporating the Sega message or using the results of the reverse engineering. Almost a week later, Accolade was also required by the court to recall all of their Genesis-compatible games.[1][3]: 386
Appeal
The decision in the district court ruling had been very costly to Accolade. According to Accolade co-founder Alan Miller, "Just to fight the injunction, we had to pay at least half a million dollars in legal fees."[3]: 386 On April 14, 1992, Accolade asked the district court to stay the preliminary injunction pending appeal, but when the court did not rule by April 21, Accolade appealed the injunction to the Ninth Circuit of the U.S. Court of Appeals. A stay was granted on the mandate to recall all of Accolade's Genesis games, but the injunction preventing further reverse engineering and development of Genesis software was maintained until August 28, when the Ninth Circuit ordered it dissolved pending the appeal review.[1]
In support of the appeal, the
In reviewing the case, the court considered several factors in its own analysis, examining trademark and copyright issues separately. As in the district court proceedings, Nagashima showed the court a game cartridge that ran on the Genesis that did not display the trademark logo. However, the court was not moved by this, deciding that Nagashima's cartridges showed what one could do with knowledge of the TMSS, which Accolade did not possess.
To determine the status of Accolade's claim of fair use of Sega's copyrighted game code, the court reviewed four criteria of fair use: the nature of the copyrighted work, the amount of the copyrighted work used, the purpose of use, and the effects of use on the market for the work.[6] Of note to the judges in reviewing Sega's copyright claim was the difference in size between the TMSS file and the sizes of Accolade's games. As noted by Judge Reinhardt in writing the opinion of the court, the TMSS file "contains approximately twenty to twenty-five bytes of data. Each of Accolade's games contains a total of 500,000 to 1,500,000 bytes. According to Accolade employees, the header file is the only portion of Sega's code that Accolade copied into its own game programs."[1][10] This made the games overwhelmingly original content, and according to Judge Reinhardt, to the benefit of the public to be able to compete with Sega's licensed games, especially if the games were dissimilar as contended in the appeal.[1][3]: 387 [8] The court did not accept the argument that Accolade's games competed directly with Sega's, noting that there was no proof that any of Accolade's published games had diminished the market for any of Sega's games. Despite claims from Sega's attorneys that the company had invested much time and effort into developing the Genesis, and that Accolade was capitalizing on this time and energy, the court rejected these claims by noting that U.S. Supreme Court in Feist v. Rural Publications had unequivocally rejected the notion that copyright protection could be based on the "sweat of the brow," i.e., that a work was entitled to copyright because of the amount of effort it took to create it. The court also noted that the Sega code contained some functional elements that were not protected under the Copyright Act of 1976. On the matter of reverse engineering as a process, the court concluded that "where disassembly is the only way to gain access to the ideas and functional elements embodied in a copyrighted computer program and where there is a legitimate reason for seeking such access, disassembly is a fair use of the copyrighted work, as a matter of law."[1][6]
On August 28, 1992, the Ninth Circuit reversed the district court's preliminary injunction and ruled that Accolade's decompilation of the Sega software constituted fair use.[11] The court's written opinion followed on October 20 and noted that the use of the software was non-exploitative, despite being commercial,[1][12] and that the trademark infringement, being required by the TMSS for a Genesis game to run on the system, was inadvertently triggered by a fair use act and the fault of Sega for causing false labeling.[1][13] As a result of the verdict being overturned, the costs of the appeal were assessed to Sega. The injunction remained in force, however, because Sega petitioned the appeals court to rehear the case.[11][14]
Settlement
On January 8, 1993, with Sega's petition for a rehearing still pending, the court took the unusual step of amending its October 20, 1992 opinion and lifted the injunction preventing Accolade from developing or selling Genesis software.[14] This was followed by a formal denial of Sega's petition for a rehearing on January 26.[15] As Accolade's counterclaim for false labeling under the Lanham Act was declined by the Ninth Circuit, this essentially left "each party as free to act as it was before the issuance of preliminary injunctive relief" while the district court considered the counterclaim.[1] Sega and Accolade ultimately settled on April 30, 1993. As a part of this settlement, Accolade became an official licensee of Sega, and later developed and released Barkley Shut Up and Jam! while under license.[3]: 388 The terms of the licensing, including whether or not any special arrangements or discounts were made to Accolade, were not released to the public.[16] The financial terms of the settlement were also not disclosed, although both companies agreed to pay their own legal costs.[17]
In an official statement, Sega of America chairman David Rosen expressed satisfaction with the settlement. According to Rosen, "This settlement is a satisfactory ending to what was a very complex set of issues. Not only are we pleased to settle this case amicably, we've also turned a corner in our association with Accolade and now look forward to a healthy and mutually beneficial relationship in the future." Accolade's Alan Miller expressed more excitement with the settlement and the opportunities it presented for the company, saying in his statement, "We are very pleased with the settlement, and we're excited about the new markets it opens to Accolade. Accolade currently experiences strong demand for its Sega Genesis products in North America and Europe. We will now be able to publish our products on the Sega Genesis and Game Gear systems throughout the world."[16] Despite the settlement, however, Accolade had lost somewhere between $15 million and $25 million during the injunction period, according to Miller.[3]: 386
Impact
Sega v. Accolade has been an influential case in matters involving reverse engineering of software and copyright infringement, and has been cited in numerous cases since 1993.
Among the influences of the decision include Sega v. Accolade's effect on the criteria for fair use and the responsibilities of trademark holders in legal examinations. Although Accolade had copied entire Genesis games in order to identify the TMSS, the court gave little weight to the criterion on the amount of the copyrighted work being copied, in light of the fact that Accolade had done so in order to create their own compatible software. Likewise, the nature of the work was also given less weight, essentially establishing a two-factor approach to evaluating fair use in the purpose of use and impact on the market.[19] It was also the first time that the Lanham Act was interpreted to mean that confusion resulting from the placement of one's trademark on another work by means of a security program is the fault of the original registrant of the trademark.[13]
Sega v. Accolade also served to help establish that the functional principles of computer software cannot be protected by copyright law. Rather, the only legal protection to such principles can be through holding a patent or by trade secret.[20] This aspect of the decision has received criticism as well, citing that although the functional principles are not protectable under copyright law, the TMSS code was protectable and by allowing reverse engineering of the TMSS as fair use, the decision had encouraged the copying of legally protected programs.[7]
See also
References
- ^ a b c d e f g h i j k l m n o p q r s Sega Enterprises Ltd. v. Accolade, Inc. (977 F.2d 1510 (9th Cir. 1992)), Text, archived from the original on September 21, 2013.
- ISBN 0-7355-1312-0.
- ^ from the original on June 24, 2016.
- ^ ISBN 1-56720-178-4.
- ^ a b c Cohen, Julie E. (1995). "Reverse Engineering and the Rise of Electronic Vigilantism: Intellectual Property Implications of "Lock-Out" Programs". Southern California Law Review. 68: 1091–1202. Archived from the original on November 2, 2013.
- ^ from the original on March 4, 2018.
- ^ a b MacCullouch, David C. (1994). "Sega Enterprises LTD. vs Accolade, Inc.: What's so Fair about Reverse Engineering?". Loyola of Los Angeles Law Journal. 14: 465–485. Archived from the original on September 3, 2014.
- ^ a b Chapman, John H. (1992). "Brief Amicus Curiae of Computer & Communications Industry Association" (PDF). CCIA. United States Court of Appeals Ninth Circuit. Archived (PDF) from the original on December 4, 2014. Retrieved November 28, 2014.
- ^ Anti-Monopoly, Inc., v. General Mills Fun Group, et al (611 F.2d 296 (9th Cir. 1979)), Text, archived from the original on 2013-10-29.
- ^ ISBN 9781449391102. Archivedfrom the original on March 4, 2018.
- ^ a b "Court: Copying Sega's Code Ok an Appeals Court Ruling Protects The Practice of 'Reverse Engineering.'". San Jose Mercury News – via NewsBank (subscription required) . Associated Press. September 1, 1992.
- ^ ISBN 1-58852-074-9.
- ^ a b c Ely, Wayne A. (1993). "Copyright and Trademark Protection of Computer Software - Reverse Engineering of Competitor's Computer Game Software, Required to Comprehend Work, and Resulting in Display of False Trademark, Not Violative of Copyright Act or Lanham Act - Sega Enterprises, Ltd. v. Accolade, Inc., 1993 U.S. App. LEXIS 78 (9th Cir. Jan. 6, 1993)". Temple Environmental Law and Technology Journal. 31 (4): 137.
- ^ a b "Accolade Gets Boost In Case Against Sega". San Jose Mercury News – via NewsBank (subscription required) . January 8, 1993.
- ^ "Accolade Can Continue Making Genesis Games". San Jose Mercury News – via NewsBank (subscription required) . January 26, 1993. Retrieved June 20, 2013.
- ^ 1UP.com. Archived from the originalon June 15, 2013.
- ^ Langberg, Mike (May 1, 1993). "Accolade, Sega Settle 'Reverse Engineering' Case Out of Court". San Jose Mercury News – via NewsBank (subscription required) . Retrieved June 20, 2013.
- ^ Aguilar, Julie (1993). "Intellectual Property - Sega Enterprises Ltd. v. Accolade, Inc.: Setting the Standard on Software Copying in the Computer Software Industry". Golden Gate University Law Review. 23 (1): 269–278. Archived from the original on October 13, 2014.
- ^ Liu, Joseph P. (2008). "Two-Factor Fair Use?". Columbia Journal of Law & the Arts. 12: 571–585. Archived from the original on December 21, 2013.
- ^ Stefik, Mark & Silverman, Alex (1997). "The Bit and the Pendulum: Balancing the Interests of Stakeholders in Digital Publishing" (PDF). MarkStefik.com. Xerox Palo Alto Research Center. Archived (PDF) from the original on January 12, 2016.