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Factual Background Edit
Lewis Galoob Toys, the seller of a video game accessory known as the "Game Genie Video Game Enhancer" ("Game Genie"), filed an action seeking a declaratory judgment that it was not violating or contributing to the violation of the defendant's videogame copyrights.
The defendant, Nintendo of America ("Nintendo"), markets and sells a home videogame hardware system known as the Nintendo Entertainment System ("NES") and compatible videogame cartridges. The plaintiff markets and sells the Game Genie, which fits between the NES control deck and compatible videogame cartridges and allows players to temporarily alter certain attributes of the videogames, such as a character’s strength or speed, by selectively "blocking the value for a single data byte sent by the game cartridge to the [Nintendo console] and replacing it with a new value." Players chose which data value to replace by entering a code; over a billion different codes were possible. The Game Genie was dumb; it functioned only as a window into the computer program, allowing players to temporarily modify individual aspects of the game.
District Court Proceedings Edit
The district court rejected Nintendo's argument, finding that a consumer utilizing the Game Genie for noncommercial, private enjoyment "neither generates a fixed transferable copy of the work, nor exhibits or performs the work for commercial gain." The court explained:
[I]inherent in the concept of a "derivative work" is the ability for that work to exist on its own, fixed and transferable from the original work . . . [o]nce the Game Genie and its attached game cartridge are disconnected from the NES, or the power is turned off, those changes disappear and the video game reverts to its original form.
Appellate Court Proceedings Edit
The appellate court rejected Nintendo's claim because "[a] derivative work must incorporate a protected work in some concrete or permanent form." The audiovisual displays generated by combining the Nintendo System with the Game Genie were not incorporated in any permanent form; when the game was over, they were gone. Of course, they could be reconstructed, but only if the next player chose to reenter the same codes.