Lewis Galoob Toys, Inc. v. Nintendo of America, Inc.

could be attached to a Nintendo game cartridge to intercept and transform its data. The Family Computer (Famicom) is a Nintendo game console first released in Japan in 1983, followed by its North American debut as the Nintendo Entertainment System (NES) in 1985. By the early 1990s, the console had become so popular that the market for Nintendo cartridges was larger than that for all home computer software. Each cartridge was manufactured with read-only memory hardware, In the late 1980s, a UK developer called Codemasters became interested in producing games for the NES. These discoveries led them to develop the Game Genie, a device that attached to NES game cartridges to modify each game. The device functioned by intercepting data from a Nintendo game cartridge, and replacing it with new data based on player input, before projecting the final result onto a TV screen. In most cases, players could use the device to make an NES game easier to win. For example, a player could give themself unlimited lives, or make themselves invincible, or start at a later level, but the device also allowed more creative modifications, such as changing the player character into another sprite, or even accessing unused or unfinished parts of the game. After securing distribution in Canada through Camerica, Codemasters also presented the Game Genie to Galoob, an American toy manufacturer. When Lewis Galoob's son first encountered the device, he became fascinated by the Game Genie's ability to make Mario jump higher. Galoob agreed to distribute the Game Genie in North America, and Codemasters acquired every NES game available, so that they could discover and document the various "codes" that would alter the game's output. The Game Genie was announced in May 1990, and was set to launch in July. == Legal dispute ==

Knowing that Nintendo would be unhappy with the Game Genie, Codemasters and Galoob initiated a lawsuit on May 17, 1990, against Nintendo in the United States District Court for the Northern District of California, seeking a declaratory judgment that the Game Genie did not violate Nintendo's copyrights. Galoob also asked the court for an injunction to stop Nintendo from interfering with the Game Genie's sales. By contrast, although the Game Genie altered the game's output and player experience, it did not alter the original cartridge in any way. Galoob appealed the injunction, but the Ninth Circuit Court of Appeals affirmed the lower court's decision on February 7, 1991, The court's Appeal Division upheld the decision on May 24, 1991. On July 12, 1991, District Judge Fern M. Smith ruled that Galoob had not violated Nintendo's copyrights. The appeals court ruled that the changes created by the Game Genie were not "fixed" in any permanent way, and thus no derivative work was created. A derivative work must incorporate a protected work in some concrete or permanent form, which is not the case for the audiovisual images produced by the Game Genie. The court also considered the doctrine of fair use, emphasizing the fourth factor of the fair use test where the court analyzes the effect of the alleged infringement on the value of the original work. The court stated that even if the Game Genie did allow players to create a derivative work, those players were doing this as a nonprofit activity, and Nintendo failed to show any economic harm from use of the Game Genie. The Game Genie did not supplant demand for Nintendo's games, as consumers would need to purchase the original game in order to use the add-on. The court concluded that Galoob had not directly infringed Nintendo's copyright, nor contributed to any infringing activity from Game Genie users. After the verdict, Nintendo tried to appeal the $15 million award in damages, but on February 17, 1994, the Ninth Circuit affirmed the district court's decision once again. == Impact and legacy ==

, after threatening Sega with a lawsuit. After the dispute was resolved in favor of Codemasters, it cleared the way for third party accessories that enabled cheating and modification, including a Game Genie model for the Nintendo Game Boy. Codemasters became confident of the legality of the Game Genie, as well as its commercial potential. In the Handbook of Intellectual Property Claims and Remedies, the author Patrick J. Flinn argued that Nintendo failed to take into account a fair use analysis, and that there was no real evidence that the Game Genie hurt their business. Galoob v Nintendo signaled a change in the legality of third party game products of all kinds. In the same year, the case was cited in Sega v. Accolade (1992), which held that there was no copyright infringement when Accolade reverse engineered the Sega Genesis to publish third party games without Sega's authorization. The Hastings Communication and Entertainment Law Journal reacted to both cases, comparing the court's interpretations of both derivative works and fair use, and concluded that courts were shifting to allow more interoperability between technologies. The Journal of Intellectual Property Law compared both the Sega and Galoob cases to the earlier fair use case in Sony Corp. of America v. Universal City Studios (1984), concluding that a new technology shouldn't trigger copyright liability as long as it doesn't undermine a copyright owner's ability to earn a fair return for their works. The Golden Gate University Law Review praised the Galoob court for following fair use doctrine and refining the definition of a derivative work, allowing new innovations without jeopardizing the incentive to innovate. The Galoob decision continues to influence legal discussions of fair use of copyrighted video game content, such as how to apply the principle of permanency to a live stream or Let's Play. By deterring companies from being overly litigious, the case was essential to the future of video game modding in the United States and globally. As third parties began to sell compilations of user-created levels, Micro Star created Nuke-It, a compilation of 300 custom made levels for Duke Nukem 3D, provoking a copyright dispute with the game's developers. because the Nuke-It compilation was a permanent derivative work, and it was misappropriating profits from a potential Duke Nukem sequel. The Santa Clara High Technology Law Journal compared the Micro Star and Galoob cases, arguing that it is not inherently copyright infringement to modify a game, unless that modification is saved as a copy and distributed to the public. However, SONICblue filed for bankruptcy, and its new ownership agreed to remove the commercial-skipping feature before courts could decide how Galoob applied. The copyright cases of Midway, Galoob, and Micro Star continue to guide the law around game modifications, that a permanent modification is likely copyright infringement, where an impermanent modification is not. The Galoob precedent has led courts to permit the use of third-party software to manipulate and cheat at other games. This was later addressed in the Digital Millennium Copyright Act (1998), which limited people from creating technology that is "primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access" to a protected work. == References ==