Reverse Engineering and the Rise of Electronic Vigilantism: Intellectual Property Implications of "Lock-Out" Programs

Julie E. Cohen*

68 S. Cal. L. Rev. 1091 (1995)

Copyright 1995 - HTML Version Prepared by the LII with Permission


Sections: Introduction | I | II | III | IV | V | VI


I. THE SEGA AND ATARI CASES

Both Sega and Atari involved attempts to gain access to, and to create interoperability with, video game consoles developed by industry giants. Sega Enterprises Ltd. manufactures the Sega Genesis, a video entertainment console system that accepts video game cartridges. n23 Nintendo of America, Inc. distributes the Nintendo Entertainment System ("NES"), a similar device. n24 Both companies are leaders in the home video entertainment market. n25 Both license the rights to create games compatible with their consoles to independent developers of video game programs, but only under agreements that withhold from the licensees the actual information needed to achieve interoperability. Instead, the agreements require that the licensor (Sega or Nintendo) be the exclusive manufacturer of the games developed by the licensee. The licensor supplies the missing information during the manufacturing process, and then resells the completed games to the licensee for commercial distribution. n26 Neither Sega nor Nintendo holds a U.S. patent on its console. n27

A. Sega v. Accolade

Both factually and legally, Sega is the simpler case. Accolade, an independent developer of home computer game software for a variety of computer systems, wanted to expand its product line to include games compatible with the Genesis console, but was unwilling to cede control over manufacturing the games to Sega. n28 To discover the requirements for interoperability with the Genesis console, Accolade's engineers "reverse engineered" the microcode contained in several Sega video game cartridges by using a process known as "decompilation" to translate the binary object code into human-readable form. n29 [p*1099] Ultimately, the engineers successfully identified the interface specifications for the Genesis console and released Accolade's first Genesis-compatible game. n30 In the process, however, they had made numerous copies of Sega's copyrighted microcode.

While Accolade's reverse engineering efforts were in progress, Sega began manufacturing its consoles to include a trademark security system ("TMSS"), n31 a lock-out device that operated by searching each game cartridge inserted into the console for four bytes of data present at a particular location in all Sega-produced game programs. n32 If the console did not find the "TMSS initialization code" at the necessary location in the game program, it would not allow the game to operate. n33 When Sega introduced the Genesis III console, the first to include the TMSS, at a consumer electronics show, Accolade observed that its reverse engineered games would not operate on the Genesis III. n34 Further study of the decompiled Sega programs revealed a small segment of code, containing approximately twenty-five bytes of data, which Accolade's engineers had determined to be unnecessary for interoperability with the original Genesis console, and so had omitted from their summary of specifications for a Genesis-compatible game. After studying the segment, which contained the TMSS initialization code, Accolade "added the code to its development manual in the form of a standard header file to be used in all games." n35 Shortly thereafter, Accolade released several games for use with the Genesis III.

Sega filed suit for copyright infringement against Accolade in the Northern District of California. n36 The district court granted Sega's [p*1100] motion for a preliminary injunction. It found that Accolade had infringed Sega's copyrights in its video game programs by making unauthorized copies and translations of Sega's microcode during the reverse engineering process. n37 The court further ruled that Accolade's conduct could not be considered a fair use, because its motive in reverse engineering Sega's games was commercial and had resulted in the creation of a competing product. n38 Accordingly, the court barred Accolade from further disassembly or use of Sega's video game programs and from selling its reverse engineered games. n39

The Ninth Circuit reversed. n40 The court agreed with the district court that Accolade's creation of copies and translations during the reverse engineering process constituted infringement under the literal terms of the Copyright Act. n41 However, it held that decompilation of computer object code is a fair use privileged by the Act when there is no other way to gain access to the functional requirements for interoperability, which are not protected by copyright. n42 Writing for the court, Judge Reinhardt emphasized the uniquely opaque nature of computer programs that are distributed for public use in object code form, readable only by machine. n43 The court concluded that to deem Accolade's decompilation unfair would be to grant Sega a de facto monopoly over access to the Genesis III, although it held no patent on the console. n44

[p*1101]

B. Atari v. Nintendo

The basic fact pattern in Atari was similar to that in Sega. To ensure that only video games developed by Nintendo or its authorized licensees would operate on the NES, Nintendo developed a "security system" for the NES. n45 The system consists of two microprocessors: a "master" chip in the console and a "slave" chip in the video game cartridge, each containing Nintendo's copyrighted 10NES program. n46 When the cartridge is inserted into the console, the two 10NES programs generate and exchange a series of values based on an initial, randomly selected number. The master program then compares the results. If the final digits of the two series are equal, the console is unlocked and the operator may proceed to play the game. n47 If they are not equal, the console remains in a reset mode and the game will not operate. n48

In its efforts to reverse engineer the NES security system, Atari analyzed the output of the 10NES program and also chemically "peeled" the security system chip to examine the 10NES microcode embedded in it. n49 When these initial efforts failed, Atari decided to become a Nintendo licensee. n50 Unhappy with Nintendo's restrictive license terms, however, Atari continued its reverse engineering efforts. Ultimately, Atari's engineers produced the Rabbit program, a program that was "functionally indistinguishable" from the 10NES program. n51 Atari then began marketing its own games for the NES.

Atari differed from Sega in two crucial respects. First, Nintendo had applied for and received a U.S. patent on the NES security system. n52 Atari's reverse engineering, therefore, raised questions of patent infringement as well as copyright infringement. Second, as part of its reverse engineering process, Atari committed fraud on the Copyright Office. Although Atari's engineers were able to decipher much [p*1102] of the code embedded in the NES "slave" microprocessor, they failed to produce a complete translation of the program. n53 Atari's attorneys then applied to the Copyright Office for a copy of the 10NES program, stating that they needed the code because Atari was a defendant in infringement litigation involving the program. n54 Since no lawsuit had yet been filed, that was an outright misrepresentation. n55

When Atari began producing unauthorized NES-compatible games, Nintendo filed suit for copyright and patent infringement. n56 In support of its motion for a preliminary injunction, it argued that both Atari's final product and its intermediate copying of the 10NES program during the reverse engineering process infringed the 10NES copyright. n57 In response, Atari argued that it had copied, and taken, only functional elements unprotected by copyright. n58 The district court sided with Nintendo. It ruled that even if the doctrine of merger excused some similarities between the Rabbit and 10NES programs, Atari had taken more than necessary to achieve interoperability. n59 The court also found that Nintendo was likely to succeed on its intermediate copying argument. n60

The Court of Appeals for the Federal Circuit affirmed the preliminary injunction. n61 Regarding intermediate copying, it held that Atari's procurement of an unauthorized copy of the 10NES program [p*1103] from the Copyright Office constituted infringement. n62 It further held that Atari's misconduct in obtaining the copy precluded any attempt by Atari to invoke the fair use defense to shield its other reverse engineering efforts. n63 Regarding Atari's final product, the Federal Circuit agreed with the district court that Nintendo had made a sufficient preliminary showing of substantial similarity between the Rabbit and the 10NES by establishing that Atari's Rabbit program "incorporated elements of the 10NES program unnecessary for the chip's performance." n64

On remand, the district court granted summary judgment for Nintendo on its copyright infringement claims. Examination of the 10NES and Rabbit programs revealed, and Atari did not dispute, that Atari had duplicated some 10NES functions that were unnecessary to achieve interoperability with the version of the NES then on the market. n65 Atari argued that it needed to create a program "functionally indistinguishable" from the 10NES to preclude any attempt by Nintendo to lock Atari's game cartridges out of future versions of the NES. n66 The district court declined to extend the Sega rule to cover copying intended to achieve future interoperability "absent further guidance from the Ninth Circuit or Congress." n67 The court ruled, in essence, that those functional attributes of the 10NES unnecessary for current interoperability were expressive elements of the program's structure, and so entitled to copyright protection. n68

The court also granted Nintendo partial summary judgment on its patent infringement claims. Although Atari had written a different program to generate the results required by the 10NES, the court ruled that Atari's Rabbit program infringed the 10NES patent under [p*1104] the doctrine of equivalents. n69 However, Atari had raised several challenges to the validity of Nintendo's patent. Among other things, Atari argued that the use of a lock-out system in conjunction with a reset pin for disabling the console was obvious (or anticipated) in light of a previously issued patent for an electronic security system, not cited to or discovered by the examiner who approved the 10NES patent, and a home computer system designed by the inventor of that patent that included a reset pin and that was on the market when the 10NES system was developed. n70 The district court found Atari's arguments sufficient to defeat summary judgment for Nintendo on the obviousness issues. n71 In July 1993, however, an eight-member jury rejected Atari's position. n72

Success on its copyright and patent infringement claims would not necessarily have guaranteed Nintendo victory in the litigation because Atari's misuse defenses and antitrust counterclaims still remained to be tried. n73 Had Atari prevailed at the second trial, Nintendo would have been barred from enforcing its infringement judgment. n74 Eight months after the conclusion of the infringement trial, however, Atari and Nintendo settled the case. n75 How the district court would have resolved the misuse and antitrust issues thus remains a matter for speculation.