Nintendo of America, Inc. v. Bung Enterprises, Ltd., 1999 WL 34975007 (C.D. Cal. Dec. 14, 1999).
Factual Background Edit
Nintendo, a wholly-owned subsidiary of Nintendo Company Ltd., engages in the marketing and distribution of videogames. Bung is a Hong Kong corporation that manufactures, markets and distributes electronic devices. Nintendo introduced several types of videogame systems with different sizes of microprocessors. These contain two important components: a hardware unit and videogame cartridges. These cartridges are created by NCL or other companies and Nintendo received assignments of the copyrighted work created by NCL. Its licensees display Nintendo's registered trademark notices.
Bung manufactures and distributes devices that are compatible with Nintendo's videogames. It allows the users of its devices to copy Nintendo games. Bung maintains copies of a program on the Internet that allows users to make unauthorized copies of the games. Customers within United States are shipped the devices necessary to copy the games. Customers may just buy the device to copy videogames and avoid buying the games.
Nintendo sells its videogames only in cartridge format. It does not place its software on the internet and it did not authorize Bung to do so. Bung never received authorization to use Nintendo's copyrights or trademarks.
Appellate Court Proceedings Edit
The Second Circuit granted the motion for default against Bung. The court held Bung infringed Nintendo's intellectual property rights. The damages to Nintendo and its licensees were substantial because the users could make unlimited copies of the videogames without Nintendo's authorization.
The court explained that loading data from a storage device or memory chip into another constitutes copying a violation of 17 U.S.C. §106(1). Moreover, changing the format of Nintendo's copyrighted work from its original cartridge to a hard drive electronic format violates Nintendo's exclusive rights under 17 U.S.C. §106(2). The court noted that Bung mislabeled the products when shipping them to United States in order to pass the U.S. Customs inspection. In addition, Bung solicited [customer]]s in the United States and the Western Hemisphere where Nintendo had the exclusive rights, under 17 U.S.C. §106(3), to distribute and sell its copyrighted and trademarked products.
The court also held that Nintendo's trademark was infringed when Bung used a mark owned by Nintendo, because every game begins with a screen showing Nintendo's registered trademarks; and Bung's use of thee Nintendo mark created customer confusion. Bung also engaged in unfair competition because of the likelihood that the [consumer]]s would be confused and misled by the final product, believing that the games were endorsed by Nintendo.
The court final point was the applicability of Digital Millennium Copyright Act. The Act prohibits the manufacture, distribution, or sale of any device with primary use circumventing the security measures adopted by the copyright owners to control access to their works and prevent unauthorized copying. Nintendo had such a security system, which was designed and patented to prevent unauthorized use of game cartridges that contained copied programs. The court held that Bung's product illegally circumvented that protection.