Software Copyrights

Like the copyright laws of almost all countries, the U.S. Copyright Law provides for exceptions that permit certain acts which would otherwise be actionable as copyright infringements. These provisions, known as the "fair use" provisions apply to all copyright works and provide exceptions from copyright protection for "purposes such as criticism, comment, news, reporting, teaching (including multiple copies for classroom use) scholarship or research". In deciding whether a use is fair, courts must consider:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

On October 25, 1992 the Fair Use Provision was amended to make it clear that "The fact a work is not published shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

Certain additional specific provisions are made for fair use in various fields. For example, it is not a copyright infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

(1) that such new a copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or

(2) that such new copy or adaptation is for archival purposes only and that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful.

The first two cases in which the application of the Fair Use Provisions to computer software were considered by appellate courts both related to the programs used in game consoles where competitors had carried out reverse engineering to try to determine what programming needed to be included in a game cartridge to enable it to be used in the game console in question. In the case of Sega Enterprises v. Accolade Inc. the court carried out an analysis of the above listed factors emphasizing in particular the question of the effect of the competitors on the value of the copyrighted work (a factor on which the Supreme court had focused in the case of Harper & Row v. Nation) and noted that the purpose of the copyright statute was to promote the useful arts rather than necessarily to give an inviolable monopoly to the original producer of a copyright work. In the present case the court felt that permitting a wider range of games to be played on the consoles in question was unlikely to reduce sales of such consoles and thus held that such reverse engineering so as to make a separate program operable with the console in question was a fair use. A similar conclusion was reached by the Federal Circuit court of Appeals in Atari Games Corp. v. Nintendo.

Later the Ninth Circuit in Sony Computer Entertainment v. Connectrix, was faced with a case in which the defendants analyzed the basic input-output system (BIOS) of Sony's Play Station so as to produce a program that would enable a regular computer to emulate a Play Station. None of Sony's code ended up by being included in the emulation software. The analysis had involved making copies of Sony's BIOS. It was admitted that this was an act of copyright infringement unless it was excused under the fair use doctrine. The court analyzed the four factors set out above and concluded that the use was fair in the present case.

On the first factor (purpose and character of the use), the Court focused on the Supreme Court's decision in Campbell v. Acuff-Rose Music Inc., where it had been held that a key question in fair use analysis was the extent to which the new work "adds something new, with a further purpose or different character, altering the first with new expression, meaning or message, in other words, whether and to what extent the new work is transformative". The Ninth Circuit found that in the present case, the defendant's product was "modestly transformative".

On the second factor (the nature of the work), the Ninth Circuit concluded that Sony's BIOS "lies at a distance from the core" of Sony's protection since "it contains unprotected aspects [of the program] that cannot be examined without copying". It was therefore entitled to a "lower degree of protection than traditional literary works". Moreover, the copying was necessary for the defendants to determine the functional elements of Sony's BIOS.

On the third factor (the amount and substantiality of the portion taken), the court found for Sony since the entire BIOS had been copied. However, it held that "in a case of intermediate copying when the final product does not itself contain infringing material, this factor is of very little weight"

On the fourth factor (effect of the use on the potential market) the Ninth Circuit again relied on Campbell v. Acuff-Rose, noting that the mere fact that the copying was done for a commercial purpose is not dispositive and that the harm to the copyright holder is less likely when the infringement is a transformative work than when it supplants or supersedes the original work. Unlike the Sega case, in the present situation there would be some economic loss to the copyright owner. But the court held that the competition that would arise to Play Stations by sale of the defendant's emulation software "does not compel a finding of no fair use". With virtually no reasoning or analysis to support its view, the court held that "because [the defendant's emulation software] is transformative, and does not merely supplant the PlayStation console, [it] is a legitimate competitor in the market for platforms on which Sony and Sony-licensed games can be played."

The court therefore found that three of the factors that needed consideration favored the defendants and so the use in question qualified as fair use.

One should not, however, read too much into these decisions. In both cases the reverse engineering (which involved dismantling chips incorporated