Samuelson - Fair Use for Computer Programs and Other Copyrightable Works in Digital Form: The Implications of Sony, Galoob and Sega

Fair use has historically served as a flexible and adaptable mechanism for balancing the interests of copyright owners, their competitors or potential competitors, and the public to fulfill the larger purposes of copyright law which have traditionally been understood to be promoting the production and dissemination of knowledge.^[1] Given this history, it is perhaps surprising how little use has been made, until very recently, of fair use as a defense to software copyright infringement claims, especially considering the high volume of such litigations in the past dozen years.^[2]

The most plausible explanation for the dearth of software related fair-use cases is that the first decade of software litigation concentrated on more fundamental questions, such as whether copyright protection could be had for all manner of programs ^[3] and what scope of protection was available to programs from copyright law.^[4] Although the latter set of issues is still in the process of refinement, there is now more clarity on what aspects of software can be protected by copyright law and what test should be used to judge infringement than was true a few years ago.^[5]

This Article aims to explore the potential new terrain for fair-use defenses in software copyright cases that has opened up in the aftermath of two Ninth Circuit Court of Appeals decisions, Lewis Galoob Toys v. Nintendo of America ^[6] and Sega Enterprises, Ltd. v. Accolade, Inc.^[7] Because of the importance of Sony Corp. of America v. Universal City Studios ^[8] as a precedent not only for the Ninth Circuit's Galoob and Sega decisions, but also because of its implications for other potential software copyright disputes, Section I of this Article will focus on the United States Supreme Court decision in Sony. In Sony, a majority of the Court ruled that Sony's sale of videotape recording machines did not constitute contributory copyright infringement because of substantial noninfringing uses that consumers could make of the machines, including use of them to record programs for viewing at a later time.

At the heart of the contest between the parties in Sony was a very fundamental difference in conception about the nature of copyright law. Universal viewed copyright primarily as a property-rights regime. Sony viewed copyright more as a regulatory regime in which interests of copyright owners were to be balanced against the interests of other commercial participants in the marketplace and of the public at large so as to achieve the larger purposes of copyright law.^[9]

Universal would have had the Court strictly adhere to the text of the copyright statute and enforce its property rights under that statute. Those who used Betamax machines to copy Universal's movies from broadcast television had violated the exclusive right granted to copyright owners by the statute to control the reproduction of their works. Because Congress had not adopted a general private-use exception to this exclusive-rights provision and because the prior fair-use case law did not support Sony's fair-use claim, Universal argued that its property rights had to be enforced.^[10]

Sony, and ultimately a majority of the Supreme Court, conceived of the dispute very differently. Sony asserted that Congress had not expressed an intention to give copyright owners exclusive rights to control the sale of uncopyrightable works, such as its Betamax machines. This argument drew upon traditional principles of copyright law harkening back to Baker v. Selden, which caution courts to be vigilant to ensure that copyright claimants do not use their copyrights to gain de facto monopolies greater than those intended by Congress.^[11] When, as in Sony, new technology presented an issue that could not be readily answered from the copyright statute, the regulatory view of copyright would have courts go back to first principles to determine which result would best achieve the societal purposes of copyright law.^[12] Sony is an important decision because of its endorsement of the regulatory conception of copyright.^[13]

Section II will discuss the implications of Sony for a number of situations in which private noncommercial copies might be made of computer programs. There is a very considerable gap between the view widely held among the consuming public that private noncommercial copying of any copyrighted work (including software) is acceptable behavior ^[14] and that held by software industry associations such as the Software Publishers Association (SPA), which seem to regard any unauthorized copying of software as piracy.^[15] As long as the Sony decision remains good law, there will be room for some fair-use copying of software by consumers, although less perhaps than some of them might wish.^[16]

Section III will review the Sega and Galoob rulings.^[17] In Galoob the court ruled that Galoob's product for altering certain aspects of the play of Nintendo videogames made only fair and noninfringing uses of Nintendo's works. In Sega, the court ruled that Accolade's disassembly of Sega programs to determine how to make videogames that would be compatible with the Sega videogame console made fair use of Sega's copyrighted games. This section will show the influence of Sony on both the Galoob and Sega rulings. Like Sony before them, they reflect a view of copyright as a regulatory legal regime.

Section IV will discuss the implications of the Sega decision for a number of potential disputes between software developers and their competitors or would-be competitors who seek to gain access to or make use of functional aspects of programs. Although the Ninth Circuit in Sega indicated that decompilation or disassembly of computer programs is not per se lawful,^[18] it is nonetheless consistent with Sega to say that fair use may be available when decompilation or disassembly is done for other legitimate purposes apart from obtaining access to interface information. Because Sega also involved a claim of fair use concerning the reproduction of a segment of program code necessary to achieve interoperability, it may open up opportunities for other fair-use defenses when competitors borrow functional elements of existing programs. This is not, of course, to say that Sega can be construed as making all competitive borrowing legal. But fair-use balancing is needed in the mediation of many kinds of software copyright disputes, and Sega provides a framework for doing such balancing.

Section V will explore the implications of the Ninth Circuit's Galoob decision for a number of situations in which users of digital versions of copyrighted works might raise fair-use defenses if charged with infringement because they took advantage of the opportunities that the digital medium and the electronic information tools ^[19] now afford them to use those works in ways that have been unimaginable for works embodied in traditional media such as print. When enacting the Copyright Act of 1976, Congress expected that the fair-use defense would evolve over time in response to challenges posed by new technologies.^[20] Galoob has aided this evolution in a manner that balances the legitimate interests of copyright owners in obtaining a fair return for their contributions to the culture and the public interest in having access to and the ability to make reasonable use of electronic information tools.

II. SONY AS A FAIR-USE CASE

Sony is an important precedent for many situations in which fair-use defenses might be asserted in software copyright cases. Private noncommercial copiers of computer programs would obviously rely on it. Because of its direction, that when new technologies present questions for which copyright law has no certain answers the law should be construed in light of its fundamental purposes, Sony has significance for many situations in which competitors are seeking access to functional elements of software or in which users may make use of digital tools to perform certain kinds of operations on the contents of copyrighted works.^[21]

A. SOME BACKGROUND ON FAIR USE AND THE SONY CASE

Fair use has never been popular with publishers of copyrighted works.^[22] This is chiefly because it is often used to limit the scope of exclusive rights publishers would enjoy if fair use did not exist.^[23] Courts have often relied upon fair use to resolve disputes when recognition of broad rights in publishers or authors would have frustrated achievement of the societal purposes of copyright law.^[24] In the American tradition, the ultimate purpose of copyright is not the maximization of financial rewards to copyright owners (which is what publishers would generally like it to be), but fostering the creation and dissemination of literary and artistic works in order to enhance the public's access to knowledge.^[25] The grant of exclusive rights to authors enabling them to reap a portion of the value derived from their creative contributions is a means to this larger end.

The copyright statute directs consideration of four factors when fair use is asserted as a defense to a claim of copyright infringement.^[26] Although courts often consider only these four factors in ruling on fair-use defenses, the text of section 107 indicates an openness to consideration of other factors,^[27] which would seem to include the fairness of the defendant's conduct.^[28]

The first statutory fair-use factor is the purpose and character of the copier's use of the copyrighted work. The preamble to the fair-use provision gives examples of kinds of uses that are contemplated as potentially fair. These include "criticism, comment, news reporting, teaching, scholarship or research."^[29] The text of the first factor provision also makes clear that "whether [the] use is of a commercial nature or is for nonprofit educational purposes" is also important.^[30]

The second fair-use factor focuses on the nature of the copyrighted work. It is somewhat difficult to state concisely the principle underlying this factor. One can, however, say that, in general, the scope of fair use tends to be somewhat broader if the work is of a factual or functional nature than if it is artistic or fanciful.^[31] Whether the work is published or unpublished, or in or out of print, is also typically considered in the analysis of the nature-of-the-work factor.^[32] Although this factor is often ignored or underemphasized in fair-use cases,^[33] in some cases it plays a crucial role.^[34]

The third fair-use factor considers the amount and substantiality of the portion used in relation to the work as a whole. Substantiality is judged not only quantitatively but qualitatively as well. A quantitatively small amount of copying may be qualitatively substantial.^[35] Even so, it is generally true that the more a second comer takes, the less likely fair use is to be found.

The fourth factor considers the effect of the use upon the potential market for or the value of the copyrighted work. Although from reading the text of the fair-use provision, one might get the impression that the purpose of the use was the most important of the fair-use factors, the courts often seem to regard the "harm" factor as the most outcome-determinative.^[36]

The principal charge against Sony in the lawsuit brought by Universal City Studios and Walt Disney Productions was that of contributory copyright infringement.^[37] Universal claimed that Sony had sold Betamax machines knowing that its customers would use the machines to make unauthorized copies of copyrighted television programs,^[38] including those of Universal and Disney movies and other programs produced by these firms.^[39] This copying, Universal asserted, infringed its copyrights. Some of Sony's ads for the Betamax machine exhorted prospective customers to buy a Betamax machine to copy their favorite programs.^[40] Only when customers got home and opened the box to take out their new purchase would they find a cautionary note about possible copyright infringements.^[41]

Because there must be an underlying infringement before someone can be found liable for contributory infringement, Universal identified consumers who used the Betamax machine to copy programs off-the-air as the underlying infringers. To aid in the assessment of this claim, a representative owner of a Betamax machine who used his machine for time-shifting and for librarying purposes was added as a defendant in the lawsuit.^[42] It was in this odd way that the issue of whether private noncommercial copying of copyrighted works infringed copyrights in these works was first brought to the United States Supreme Court.

Ordinarily, private noncommercial copiers are virtually immune from copyright infringement suits. This is partly because private copying is generally difficult for copyright owners to detect. Even when private-use copying can be detected, copyright owners are likely to decide that it is not worth the expense of litigation or potential bad publicity to reach individual private copiers. Nevertheless, publishers have long regarded private-use copying as infringement, notwithstanding their awareness that the public tends to regard noncommercial copying as noninfringing. Consequently, Sony was widely regarded as an important test case on this issue.^[43]

Sony's main defense to the contributory infringement claim relied on the fact that there were many noninfringing uses of its Betamax machines, the most substantial of which was to make copies of programs for time-shifting purposes, a use which Sony argued was fair and noninfringing. Sony argued that the Court should borrow the "staple item of commerce" doctrine from patent law ^[44] and relieve Sony of the contributory infringement charges because of the substantial noninfringing uses of the Betamax machine.^[45]

Because Universal's arguments for infringement in the Sony case parallel the kinds of arguments that software publishers would likely make in any case involving private-use copying of computer programs, a brief review of those arguments is in order.

B. UNIVERSAL'S ARGUMENTS AGAINST FAIR USE

Universal asserted that the those who copied its programs off-the-air with a Betamax machine were making intrinsic rather than productive uses of the copyrighted works.^[46] Productive uses bring a new work, such as a critical review that quotes from a copyrighted novel, into the world, thereby adding to the corpus of knowledge, which furthers the ultimate purpose of copyright law. An intrinsic use merely consumes the work in the same way as if a copy had been purchased. Universal pointed to the preamble of the fair-use provision of the copyright statute which gives many examples of productive uses as favored uses, by which Congress had expressed its intention that productive uses, not intrinsic or consumptive ones, should qualify as fair use.^[47]

Universal argued that the second fair-use factor also weighed heavily against a finding of fair use. The works about which Universal and Disney were concerned were fanciful entertainments. Many copyright cases have regarded works of entertainment as having a narrow scope of fair use,^[48] and if this principle had been applied in Sony, it would have certainly weighed against a finding of fair use.

The factor that seemed most likely to doom Sony's fair-use defense was the third fair-use factor, which concerns the substantiality of the taking. Those who used Betamax machines to copy television broadcasts tended to copy the whole work. Universal made much of the fact that fair use had never previously been found when the whole of a copyrighted work had been copied.^[49] This certainly had to count against a finding of fair use.

Although conceding that it had as yet suffered no identifiable harm to the market for its movies from this copying,^[50] Universal noted that harm to the market is often difficult to show in copyright cases. Universal offered both evidence and theories as to a number of potential harms to its future markets from Betamax copying.^[51] Universal noted that courts have often presumed harm from the mere fact of copying, in order to be solicitous of copyright owners' need to maintain exclusivity to protect potential markets from future harms.^[52]

Universal reasoned that copyright owners had been given the exclusive right to reproduce their works in copies, that users of the Betamax machine were making unauthorized copies of copyrighted movies, and that neither the fair-use defense nor any of the other special privilege provisions of the copyright law immunized private- use copying. Had Congress meant to privilege private-use copying, Universal argued, it would have explicitly said so.^[53]

C. THE SUPREME COURT'S FAIR-USE ANALYSIS IN SONY

In an opinion atypical of the copyright case law on fair use, a majority of the Supreme Court rejected nearly every argument made by Universal in the Sony case. Although this opinion has been much criticized by copyright scholars,^[54] I regard it as containing considerable wisdom about the role of copyright as a regulator of the competing interests of copyright owners, other commercial providers, and the general public. Taking a regulatory approach to resolving a hotly contested case involving a new technology issue is particularly appropriate when copyright claimants make unprecedented claims about the reach of their rights, as they did in Sony. The majority opinion in Sony is a critically important precedent for what I regard as the correct decisions in two other new technology cases, namely the Sega and Galoob decisions discussed in Section III.^[55]

Sony was atypical of fair-use case law in part because the Court viewed the dispute in a broader context than the statutory fair-use factors would have dictated.^[56] The Court observed, for example, that to grant relief to Universal would interfere not only with Sony's ability to sell Betamax machines, but also with the public's ability to have access to this desirable new technology as well as with the interests of the many copyright owners who either welcomed or did not mind the copying of their programs off-the-air by owners of Betamax machines.^[57] It would be equivalent to interpreting the statute as giving Universal the exclusive right to control the sale of Betamax machines.^[58] The Court decided this went further than the statute provided or than Congress had intended.^[59]

The Court was impressed by the many noninfringing uses that could be made of Betamax machines.^[60] Betamax machines could be used for such things as showing homemade movies. They could also be used to copy programs from broadcast television that were uncopyrighted. In addition, they could be used to copy programs whose copyright owners did not object to off-the-air copying by owners of Betamax machines. The most substantial use of the Betamax machine, however, was to copy programs for later viewing when owners were unable to watch a program at the time it was scheduled for broadcast.^[61] This practice was known as time-shifting. Sony argued that this practice was also noninfringing under the fair-use doctrine.

In analyzing whether home copying of programs off-the-air for time-shifting purposes was fair or unfair, the Court began with the observation that the purpose of a Betamax owner's copying of programs off-the-air was private and noncommercial.^[62] The Court decided that courts should presume private noncommercial copying to be fair.^[63] Only if there was some demonstrable likelihood of harm to the market for the copyrighted work from private noncommercial copying should the presumption of fairness be overcome.^[64]

Concerning the second fair-use factor, the Court seemed to think it too did not disfavor fair use because Universal had chosen to have its copyrighted movies shown on broadcast television.^[65] Universal had, of course, been handsomely compensated for doing so and had known that viewers would get to see the programs "for free." The fees which Universal could command for television broadcasts of its movies depended on having large audiences. Time-shifting simply allowed those who wanted to view a movie broadcast between nine and eleven p.m. to see it at another time when circumstances conspired to make contemporaneous viewing impossible.^[66]

Time-shifters typically copied the whole of a broadcasted movie, and ordinarily this would strongly disfavor a finding of fair use.^[67] But the time-shifted copy itself was ephemeral.^[68] Once the time-shifted program had been viewed, owners of Betamax machines typically taped over the program the next time they wanted to make a time-shifted copy of another program.

Concerning the harm factor, the Court observed that Universal and Disney admitted that no harm to the market had yet occurred.^[69] Although they offered evidence about the potential for future harms to their markets,^[70] the Court accepted the District Court's characterization of this evidence as quite speculative.^[71] Speculation of this sort was not enough, the Court decided, to overcome the presumption of fairness that arose from the private noncommercial purpose of the copying.

The Court saw nothing in the Copyright Act to indicate "that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible."^[72] Perhaps Congress would "take a fresh look at this new technology" and decide to regulate it, but seeing no sign that Congress had chosen to regulate it yet, and given the substantial noninfringing uses of the Betamax machine, the Court concluded that Sony should not be held liable for contributory infringement.^[73]

III. THE IMPLICATIONS OF SONY FOR PRIVATE NONCOMMERCIAL COPYING OF COMPUTER PROGRAMS

While it is easy to question the estimates made by industry associations as to the extent of unauthorized copying of software or of revenues lost thereby,^[74] no one doubts that a considerable amount of unauthorized copying exists. The SPA seems to regard every unauthorized copy of a computer program as an infringing copy.^[75] Members of the general public disagree and act as though fair use broadly privileges private and noncommercial copying of programs.^[76] Considered below are some examples of situations as to which many consumers would argue that fair use should be found.

A. A COPY AT THE OFFICE, A COPY AT HOME

It is a common practice for people to purchase one copy of a program, such as a word-processing package, and load it onto a computer at home as well as onto an office computer. One can hardly blame software publishers for preferring that their customers buy two copies of the software instead of just one, but that does not necessarily mean the second copy is an infringing copy.

The arguments that the SPA would make, if litigating a case of this sort, would parallel the argument that Universal made in Sony. The first factor would disfavor a finding of fair use, in their view, because it would be a nonproductive, intrinsically consumptive use. The SPA would also argue that the nature-of-the- work factor would disfavor fair use. Software, they would argue, is an unpublished work by virtue of "shrink-wrap license agreements," which typically contain many restrictions on uses that may be made of programs and which assert that consumers are not owners of copies of the programs contained on the purchased disk.^[77] The amount copied would be the whole work, which always cuts against a finding of fair use. The copy would also displace a second sale of the software, in the SPA's view. Furthermore, "shrink-wrap agreements" routinely inform consumers that they are only entitled to load the software onto one computer.

A consumer-oriented analysis might begin with a characterization of the copying as a private noncommercial act which under Sony is presumptively fair.^[78] The nature of the work could also be argued to favor fair use, because software is an odd sort of product.^[79] Unlike a book which one can readily carry back and forth between one's office and home so that one need not buy two copies to have one at each place, it is simply infeasible to expect someone to transport software in a similar way. As a practical matter, it makes no sense to load the software onto one's office computer hard disk in the morning, erase it before going home that night in order to take a copy of it home so that one can load it onto the home computer that evening, and delete it from the home computer the next morning so that it can be taken back to the office computer. Yet these acts would be equivalent to taking a book back and forth from home to office. As for the shrink-wrap license restrictions, they are often unavailable to be read until after the software is purchased and are of questionable enforceability. Moreover, courts have recently rejected arguments that mass- marketed software is an unpublished work.^[80]

It would, of course, cut against a finding of fair use that one would be copying the whole of the copyrighted program, but the Sony case shows that this is not necessarily dispositive. Concerning the harm factor, one might argue that this kind of copying is expected by many software developers and is largely unobjectionable (although developers might not necessarily want to admit this in public), especially if no more than one copy of the software is being used at any one time.^[81] Furthermore, it is not necessarily true that if unable to make a second copy of the program for one's second computer, one would buy a second copy of the program. Given the high costs of many software packages, consumers might be more likely to work longer hours at the office and use the home computer for games or otherwise avoid a second purchase. One might also argue that the home copy can be regarded as a backup copy of the program while one is at the office, which can be justified either under the fair-use doctrine or under the special software backup provision of the copyright law.^[82]

B. MAKING A COPY TO TEST THE FUNCTIONALITY OF A PROGRAM

An even stronger argument for fair use could be made if one made a copy of a program to test its functionality, that is, to see if it will really do what one needs it to do. Someone may borrow a copy of a program from a friend to test it for a couple of hours and may be so happy with it that he buys a copy of the program the next morning (or deletes the copy after the test reveals that the hype on the package was just that).^[83]

The SPA can be expected to view this unauthorized copying as infringing. It too involves making a copy of the whole of the program for an intrinsic purpose in violation of the shrink-wrap restriction. The SPA might liken a defense of such copying to the strained argument that might be made by someone who stole a candy bar that his taking of it was not theft because he later left money on the counter of the store from which it was taken.^[84] The harm comes from the unauthorized appropriation, in the SPA's view.

One might counter that software is the kind of product that one cannot really inspect before one buys it in the way one can, for example, browse a book before purchasing it. The copy made to test the program's functionality would be as ephemeral as the time-shifted copy in Sony. Further, by either purchasing a copy of the program thereafter or destroying the test copy, one would not be harming the market or potential market for the copyrighted work.^[85]

C. LENDING A COPY TO A FRIEND

Another common kind of private noncommercial copying of software arises from lending a disk to a friend who thereafter makes a copy from the disk. The SPA could be expected to argue that not only is the friend who makes a copy from the lent disk an infringer of the software copyright, but the one who did the lending can be reached as a contributory infringer, for he or she must have known of the significant likelihood that the friend would make a copy of the program. Some copyright scholars, most notably Professor Patterson, might argue that no infringement should be found in this kind of case, a result consistent with the views of the general public.

Before discussing how this kind of copying might be treated under the Sony decision, it is worth pointing out that a number of countries have explicit private-use privileges in their copyright laws.^[86]

United States copyright law has no general private-use privilege, although as Sony indicates, private-use copying can be dealt with under the fair-use doctrine. Professor Patterson has pointed out that American copyright law has principally been concerned with controlling the behavior of commercial competitors who would, in the absence of copyright, make and distribute multiple copies of the whole or substantial portions of a first author's work.^[87] Because commercial competitors of this sort make unfair use of the copyright in the first work, they routinely are and should be found liable for copyright infringement.

Patterson points out that the fair-use doctrine arose from, and is principally invoked in, cases in which a second author incorporates a portion of the first work into a subsequent work.^[88] Even though the publisher of the second work may make some use of the first work's copyright by its commercial reproduction of portions of the first work in its multiple copies of the second work, the second publisher's use of the first author's copyright may nonetheless be a noninfringing fair use.^[89] Patterson distinguishes this kind of fair use of a first author's copyright interests from the kinds of private and noncommercial uses that a consumer might make of his copy of the work. Even if a consumer's ordinary use of his or her copy of a work involves copying it for personal use,^[90] Patterson regards such copying as noninfringing because it does not involve use of the author's copyright, but only use of the consumer's own copy of the work.^[91]

While Patterson makes a forceful historical argument for the proposition that private noncommercial copying should be regarded as noninfringing as an ordinary use of a consumer's copy of the work,^[92] it is fair to say that the Sony majority opinion did not go that far. The Court in Sony did, of course, create a presumption in favor of fair use when the copying was for private noncommercial purposes, but it did not rule that all private noncommercial copying should be regarded as a fair use.

Had the Court gone on to rule that copying movies off-the-air for librarying purposes was noninfringing, one could have made a reasonably persuasive argument that, under Sony, making a private noncommercial copy of a piece of software from a friend's copy should also be regarded as fair use.^[93] But given that the Court was deeply split over fair use even as to copying for time-shifting purpos- es-only five members favored finding fair use in the case and four opposed it- there is reason to doubt that the Court would have regarded copying for librarying purposes as a fair use.

Librarying would certainly have changed the fair-use calculus as to the third and fourth factors. A reason that the Court seems to have decided that home copying of a movie off-the-air with a Betamax machine was fair use was that the copy was ephemeral. A libraried copy of a movie would have a more permanent character, as would the copy of software made from a friend's disk. Although at the time Sony was decided there was not a substantial market in videocassettes, such a market exists today.^[94] A libraried copy of a movie made off-the-air today might displace the sale of a videocassette. However, one can still argue, with respect to a VCR copy of a movie and with respect to a copy of software made by a friend, that one should not blindly assume that every private-use copy displaces a sale or harms the market for the copyrighted work.^[95] However, the Sony majority conceived of the possibility that private noncommercial copying could have a demonstrable effect on the market for a copyrighted work. When it did, the Court seemed inclined to regard the presumption of fairness arising from the private noncommercial purpose as likely to be overcome.^[96]

IV. THE EMERGENCE OF FAIR USE IN THE SOFTWARE COPYRIGHT CASE LAW: GALOOB V. NINTENDO AND SEGA V. ACCOLADE

Two recent software copyright cases have given serious and favorable attention to fair-use defenses.^[97] They are Lewis Galoob Toys v. Nintendo of America ^[98] and Sega Enterprises, Ltd. v. Accolade Software, Inc.^[99] Both were decided by the Ninth Circuit Court of Appeals. Both rely heavily, although by no means exclusively, on the Sony decision, and both reflect a more regulatory than proprietary approach to copyright. Sega, in particular, exhibits concerns, as did Sony, about interpretations of copyright that would extend the copyright monopoly beyond the bounds intended by Congress.

A. GALOOB V. NINTENDO

Nintendo charged Lewis Galoob Toys with contributory copyright infringement because Galoob's Game Genie was designed to alter certain aspects of the play of Nintendo videogames.^[100] When attached to cartridges in a Nintendo Entertainment System, the Game Genie could be programmed to do such things as increase the number of lives of a particular videogame character.^[101] The Game Genie accomplished these changes by intercepting certain signals from the Nintendo program and substituting other signals in the place of the Nintendo signals.^[102] Nintendo's theory was that Galoob provided consumers with a device knowing that the consumers would use it to alter the audiovisual sequences of the Nintendo games, thereby creating unauthorized derivative works.^[103]

Both the District Court and the Ninth Circuit had substantial doubts about Nintendo's derivative work theory. The District Court pointed out the ephemeral nature of the changed play of the Nintendo games ^[104] and the fact that only a small number of changes could be made to the play of a game at any one time.^[105] The trial court also likened the modifications made through use of the Game Genie to children altering the play of a copyrighted board game, a use which Nintendo conceded would not infringe any copyright.^[106] The District Court pointed out that

[b]ecause of the technology involved, owners of videogames are less able to experiment with or change the method of play, absent an electronic accessory such as the Game Genie. This should not mean that holders of copyrighted video games are entitled to broader protections or monopoly rights than holders of other types of copyrighted games. . . . Having paid Nintendo a fair return, the consumer may experiment with the product and create new variations of play, for personal enjoyment, without creating a derivative work.^[107]

The Ninth Circuit, on the other hand, quoted from legislative history and the statutory definition of derivative work as indicating that Congress had meant for the derivative work right to be invoked only when a second work incorporated expres- sion from the first work, as when a screenplay implements the plot of a novel.^[108]

However, even assuming the Game Genie did bring about an unauthorized derivative work, neither court thought infringement should be found because they were persuaded by Galoob's fair-use defense.^[109]

Under Sony, the Ninth Circuit was required to ignore Galoob's obvious commercial purpose in marketing the Game Genie.^[110] The alleged underlying infringers in Galoob were consumers who used the Game Genie to alter the play of Nintendo games in the privacy of their homes. The court, therefore, invoked the Sony presumption of fairness because consumers were making private and noncommercial uses of the allegedly contributorily infringing device.^[111]

The court rejected Nintendo's argument that fair use should not be found because of the unpublished nature of the works.^[112] Insofar as Nintendo's claim was that it had not published derivatives of the sort the Game Genie produced,^[113] its argument was misplaced. The question was whether the games that Nintendo had distributed were published or unpublished. The answer to that question was clear: Nintendo had published millions of copies of its games to anyone willing to pay the purchase price. The court also observed that the logic of Nintendo's argument would virtually eliminate fair-use defenses for subsequently created works.^[114]

Finding the substantiality of the alterations to Nintendo's games through use of the Game Genie to be lesser in quantity and quality than the copying in Sony,^[115] the court in Galoob regarded this factor as disfavoring Nintendo's fair-use defense as well.^[116]

In reliance on Sony, the court thrust the burden onto Nintendo to demonstrate some meaningful likelihood of harm arising from use of the Game Genie.^[117] One of Nintendo's harm arguments focused on the Game Genie's interference with Nintendo's game quality control system which Nintendo asserted it had to maintain in order to prevent a collapse of the videogame market.^[118] Nintendo's other principal harm argument was that the Game Genie interfered with Nintendo's opportunities for marketing altered games. The court was not persuaded by either argument, pointing out that Nintendo had no plans to market versions of its games containing alterations of the sort that the Game Genie produced.^[119] The factor that may have most swayed the court on the harm issue, however, was that consumers could only use the Genie if they had already bought Nintendo games, which meant that the Game Genie did not displace sales of the Nintendo programs.^[120]

B. SEGA V. ACCOLADE

Sega sued Accolade for copyright infringement because Accolade made copies of Sega programs in the course of trying to develop games that would operate in Sega's Genesis machines.^[121] Accolade admitted "disassem- bling" Sega programs (an act which necessarily involves copying) in order to gain access to information about how to construct games that would be compatible with Genesis machines.^[122] This was information that Sega made available to other game developers only under restrictive licensing agreements and for which licensees had to pay.

Sega was not claiming that any of Accolade's games contained expression from Sega programs,^[123] except as to one short sequence of initialization code.^[124]

Rather, the claim was that the intermediate copying of the program to determine how to construct a program that would work in the Genesis machine was itself infringing.^[125] Sega sought to stop distribution of Accolade games on the ground that as the final result of an unlawful disassembly process, it was an infringing derivative work; the fruit, so to speak, of the poisonous tree of disassembly.^[126] Accolade's principal defense ^[127] was that this intermediate copying of Sega's code was a fair use.^[128]

Sega sought to invoke the Sony presumption against fair use by characterizing the purpose of Accolade's use as commercial.^[129] The appellate court, however, perceived Accolade as having made copies of the Sega program in order to study it and discern how to make compatible but otherwise quite different and original programs to run on Sega machines. Accolade's development of new noninfringing programs contributed to achievement of the main goals of the copyright system of encouraging the "growth of creative expression" and introducing new independently created works into the market.^[130] These legitimate purposes overcame the Sony presumption of unfairness.^[131]

The appellate court regarded the nature-of-the-work factor as favoring a finding of fair use as well. With a brief citation to Galoob,^[132] the Ninth Circuit dispensed with Sega's argument that the unpublished nature of the work disfavored a finding of fair use.^[133] The court focused instead on the nature of computer programs as utilitarian works.^[134] Such works, the court observed, contain many functional elements that are not protectable by copyright law.^[135] Some of these unprotectable elements cannot be discerned by the user when running the program.^[136] The court recognized that it is sometimes necessary to make intermediate copies of a program in order to get access to unprotected elements of programs, such as information necessary to make a compatible program.

The court was disturbed by the implications of Sega's argument, observing that "[i]f disassembly of copyrighted object code is per se an unfair use, the owner of the copyright gains a de facto monopoly over the functional aspects of his work-aspects that were expressly denied copyright protection by Congress."^[137] To enjoy a lawful monopoly over the idea or functional principle underlying a work, said the court, "the creator of the work must satisfy the more stringent standards imposed by the patent laws."^[138]

Although Accolade had copied the whole of the Sega program, the Ninth Circuit thought it had done so only as an intermediate step in the process of developing a noninfringing program. The court cited Sony for the proposition that even copying the whole work did not preclude a finding of fair use.^[139] Accolade's use of the intermediate copy was so limited that this factor was "of very little weight."^[140]

Sega's effort to place the burden on Accolade to show lack of harm to Sega's market or potential markets was unavailing.^[141] Nor was the court persuaded by Sega's assertions that harm to its market flowed from the fact that Accolade's games directly competed with Sega-produced and Sega-licensed games.^[142] Noninfringing works often compete in the marketplace to appeal to consumer choices. If consumers preferred Accolade's games to those produced by Sega or its licensees, that might hurt Sega's market. As long as Accolade produced its own creative programs, however, Accolade should be regarded as engaging in the kind of competition that copyright law is supposed to encourage.^[143]

C. THE IMPORTANCE OF SONY FOR THE GALOOB AND SEGA DECISIONS

Sony had a profound influence on both the Sega and Galoob decisions. Indeed, it is difficult to imagine either case having been decided in the same way had the dispute in Sony been decided in Universal's favor. All three decisions reflect a perception of copyright as a regulatory regime in which the public interest must be taken into account in the balancing of interests among participants in commercial markets.

The influence of Sony on the Ninth Circuit's Galoob decision is easily discerned. The invocation of the dual presumptions of fairness and of lack of harm arising from the private noncommercial nature of the alleged infringing conduct is the most obvious respect in which Sony was an important precedent in Galoob. But this was by no means all the Galoob court derived from Sony. The Ninth Circuit also noted that

Sony recognizes that a party who distributes a copyrighted work cannot dictate how that work is to be enjoyed. Consumers may use a Betamax to view copyrighted works at a more convenient time. They similarly may use a Game Genie to enhance a Nintendo Game cartridge's audiovisual play in such a way as to make the experience more enjoyable.^[144]

Thus, Galoob, like Sony, gives substantial weight to the interests of consumers in having access to and the ability to use new electronic information tools that enhance their enjoyment of copyrighted works.^[145] Harkening back to Professor Patterson's terminology, one might characterize the Game Genie as extending the ordinary uses consumers could make of their copies of copyrighted works.^[146] Because consumers were not using the copyright or engaging in competitive activity, no infringement was or should have been found. The implications of Galoob for other electronic information tools for extending ordinary uses consumers can make of their copies of copyrighted works will be explored in Section V.

The Sony opinion was also an important precedent for the ruling in Sega, although in different ways than Sega had hoped. Notwithstanding Sony's dual presumptions of unfairness if the user's purpose was commercial and of harm from a commercial use, the Ninth Circuit relied upon other facts about Accolade's purposes and the potential market effects of Accolade's actions in deciding that the first and fourth fair-use factors actually favored Accolade, not Sega.^[147] Only the third factor was said to weigh in Sega's favor, and it did so only weakly.^[148] Sony was obviously a crucial precedent for Accolade's argument that fair use could be found even when the whole of a work was copied.^[149]

Less obvious, perhaps, was the importance of Sony as a precedent cautioning that courts should be circumspect when construing the reach of copyright to deal with new technology issues that the courts had not addressed before.^[150] The court cited Sony for the proposition that when a new technology presented an issue that rendered application of copyright law uncertain or ambiguous, courts should construe that law in light of its basic purposes.^[151] Thus, the Sega decision, like Sony, reflects the view that courts should consider the impact its ruling would have on fulfillment of the ultimate societal and constitutional purposes of copyright as an important component in judging whether a particular use is fair.^[152] In addition, much the same concern is exhibited in Sega, as in Sony, that courts should be vigilant to ensure that copyright owners not obtain an undue extension of their statutory monopoly beyond that which Congress had intended.^[153]

V. THE IMPLICATIONS OF SEGA FOR OTHER SOFTWARE COPYRIGHT DISPUTES

Although the Sega decision is so recent that its influence on other decisions has been minimal,^[154] it is readily apparent that this decision may have broad implications for other copyright decisions involving computer programs. Sega will certainly be an important precedent for future cases in which competitors or consumers claim fair use for their decompilation or disassembly of software for purposes other than obtaining compatibility information. The decision may have more indirect but nonetheless important implications for other situations in which second comers may wish to make use of certain functional elements of software or otherwise to make unauthorized uses of software which they have acquired in the marketplace.

A. THE IMPLICATIONS OF SEGA FOR OTHER DECOMPILATIONS OR DISASSEM BLIES OF COMPUTER PROGRAMS

Sega makes clear that when decompilation or disassembly of a mass- marketed program is a necessary step in the development of a compatible computer program, such intermediate copying will be privileged under the fair-use doctrine. Whether decompilation or disassembly undertaken to gain access to other unprotectable elements of programs should be regarded as fair use is a question the court did not address directly.

Those who urged the Ninth Circuit to rule in Sega's favor can be expected to give the decision the narrowest of constructions.^[155] They will likely view Sega as no broader-and potentially narrower-than the European Community's Directive on Copyright Protection for Computer Programs, which treats decompilation of a computer program as copyright infringement except to the extent necessary to obtain information needed to construct an interoperable program.^[156] The poten- tial for Sega to be narrower than the EC Directive arises from the fact that the EC Directive does not permit enforcement of contractual restrictions on decompilation for purposes of achieving interoperability.^[157] Because there is no comparable limitation in the United States copyright law and because of the Ninth Circuit's deference to licensing restrictions in another recent software copyright decision,^[158] those who oppose decompilation and disassembly will likely look to licensing restrictions as a way to stop decompilation for all purposes, including that of gaining access to interface information.^[159]

Leaving aside for the moment the question of whether licensing can effectively reverse the results of Sega,^[160] it is worth considering how broad or narrow the ruling may be when the product being decompiled or disassembled is mass-marketed software for which licensing restrictions are, as a practical matter, infeasible.

The Ninth Circuit emphasized in Sega that someone who raises a fair- use defense for decompiling or disassembling another firm's program must have a legitimate purpose for this activity and that no other means of access to the information must be available.^[161] However, the court did not explicitly limit the scope of permissible decompilation to those situations in which decompilation is needed to obtain access to information necessary to permit development of an interoperable program. It simply gave the search for interface information as an example of a legitimate purpose. Although the Ninth Circuit rejected Accolade's argument that decompilation should always be regarded as noninfringing conduct,^[162] it is possible to envision a number of situations in which fair-use defenses might still have reasonable prospects for success consistent with the Sega ruling.^[163]

If, for example, decompilation was the only way to obtain information needed to correct an error in the program or was otherwise necessary to permit the owner of a copy of a computer program to make adaptations to make the software usable for its intended purposes, this should be permissible under the fair-use doctrine.^[164] The copyright statute explicitly gives owners of copies of programs the right to make adaptations to their copy of the software.^[165] Unless one has access to the source code of the software or other extensive documentation about the internals of the software,^[166] decompilation may be the only way to get access to the text of the program to obtain information necessary to fix an error in the software that has caused it to malfunction.

Congress would surely not have given owners of programs the right to make adaptations to software, while at the same time denying users access to the information that would make it possible to perform those adaptations.^[167] Pro- consumer principles from the Sony case, as well as pro-competition policies from the Ninth Circuit ruling in Sega, would support finding fair use when decompilation was necessary to permit an error to be corrected or to make other reasonable adaptations.^[168]

Decompilation might also be a fair use under Sega if necessary to enable a firm to determine whether a competitor's product infringed the copyright in its product such as copying of nonliteral elements of the program's internal structure.^[169] Decompilation would not be necessary if infringement was apparent from the copying of user interface elements, but it may sometimes be necessary to detect nonliteral infringement. It is very likely that the Ninth Circuit would regard good faith efforts to detect infringement as legitimate purposes under Sega.^[170]

Even those who have been most adamant that commercial decompilers such as Accolade should be regarded as infringers have often been willing to admit that decompilation of program code should sometimes be permissible under copyright law's fair-use doctrine.^[171] The example generally cited is that of a computer scientist who decompiles a program in order to discover an innovative technique embodied in the program that has not been publicly disclosed.^[172] The purpose of the copying would be for noncommercial research purposes. As in Sega, the key factor concerning the nature of the protected work would be that it was distributed in object code, a form of the program in which the contents are inaccessible except through decompilation or disassembly. The whole of the work would likely be copied, but as in Sega, the copy would be intermediate in nature and no harm to market interests of copyright concern would occur.^[173]

A seemingly harder fair-use question is posed if a commercial developer of software decompiles a program to get access to an unpatented algorithm embodied in it and then uses this algorithm when developing a competing program.

Some may argue that such a commercial developer should be treated as an infringer on the ground that an algorithm is part of a program's "structure, sequence, and organization" that should be protectable by copyright law.^[174] Unless no other algorithm could be used for a particular function, the reproduction of the algorithm would be claimed as an appropriation of expression.^[175] Under this theory, two claims of copyright infringement would arise. One would arise from the appropriation of an expressive algorithm. A second would arise because the decompilation itself would not be fair since a decompilation to get access to expression would not seem to be a legitimate purpose under Sega.

Even if a court regarded the algorithm as an unprotectable element of a program, those who disfavor decompilation would likely argue that competitive decompilation to get access to an algorithm is unfair. They would tend to emphasize two things: the commercial nature of the developer's purpose and the harm that would arise from letting a competitor take a free ride on an innovator's work.

A developer who decompiled a competitor's program to get access to an algorithm would certainly have a strong commercial motive for its decompilation. The Ninth Circuit said it employed the Harper & Row presumption of unfairness when the defendant had a commercial purpose in Sega.^[176] However, the court in that case treated the presumption as a relatively weak one that was easily overcome by a disassembler's research purposes. Other courts have treated the Sony presumption of unfairness for commercial purposes as a very strong one,^[177] and perhaps the Ninth Circuit would do so in a different case. If the second developer uses the algorithm in a subsequently developed competing program, the second developer may have taken a partial free ride on innovation from the first firm's work, which courts generally disfavor.^[178] If the decompiler's software is a competitive substitute for the first firm's software, some would argue this gives rise to a stronger potential for harm to the first firm's market than was true in Sega.^[179]

Such arguments, however, are not sound as a matter of copyright law. That is, algorithms are not expressive elements of copyrighted works, and under Sega, it should be as fair for a competing developer to decompile a program to get access to an unpatented algorithm as it now is to decompile to get access to information needed to develop a compatible program.

An algorithm is a finite method or procedure for performing a task.^[180] The text of section 102(b) states: "In no event does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle or discovery."^[181] A plain reading of this provision would indicate that an algorithm embodied in a computer program is unprotectable by copyright law because it is, by definition, a procedure or method embodied in the text of a program.

Further evidence that algorithms are beyond the scope of copyright comes from the legislative history of section 102(b), for both the House and Senate Reports indicate that this provision was added to the statute in response to concerns expressed in congressional hearings that without a provision of this sort, some software developers might try to claim copyright protection for methods and procedures embodied in programs.^[182] Section 102(b), say these reports, was "intended to make clear that the expression adopted by the programmer is the copyrightable element in a computer program, and that the actual processes or methods embodied in the program are not within the scope of copyright."^[183]

In addition, it appears that the "procedure, process, system, [and] method of operation" language of section 102(b) derives from the landmark Baker v. Selden case and its progeny.^[184] Because the organization of the headings and columns in Selden's ledger sheets were constituent elements of the accounting system, Baker did not infringe Selden's copyright when he reproduced this arrangement in the ledger sheets in his book on the same accounting system.^[185] Copyright protected only Selden's explanation of the system.

To get exclusive rights for a system, process, or method of operation described in a book, the Court stated that one would have to go to the Patent Office.^[186] "To give the author of a book an exclusive property in the art described therein, when no examination of its novelty has ever been officially made, would be a surprise and a fraud upon the public. That is the province of letters patent, not of copyright."^[187] Thus, an additional reason why computer program algorithms should not be regarded as expressive elements of programs, notwithstanding the contribution they may make to the structure or organization of the program, is that patents are issuing with frequency now for innovative program algorithms.^[188] It would upset the economic balance Congress meant to establish for the patent and copyright systems to allow software developers to use copyright to protect utilitarian elements of programs that are "better left to the more exacting standards of patent . . . law,"^[189] such as algorithms.

If algorithms are among the "procedures" and "methods" that Congress intended to exclude from copyright protection by enactment of section 102(b), the Sega decision can fairly be read to mean that disassembling or decompiling a program in order to get access to an unpatented algorithm should be regarded as a fair use as well.^[190] The Ninth Circuit used functional requirements for achieving compatibility as an example of the kinds of unprotectable elements in programs that one might need to disassemble object code in order to discern.^[191] The Ninth Circuit looked to Baker v. Selden, among other cases,^[192] for propositions such as that copyright protection did not extend to functional aspects of protected works and that the scope of copyright for functional writings was relatively thin because most of the contents of such works are functional.^[193] The court's concern that Sega's copyright not be interpreted as giving it a de facto monopoly on the functional concepts embodied in the program ^[194] also harkens back to themes first developed in Baker v. Selden and elucidated further in the Sony decision concerning the potential for overbroad interpretations of copyright law that would confer patent-like protection.^[195]

If a competing developer claimed fair use for decompiling a program to get access to an innovative unpatented algorithm, the purpose of the use would be identical to that in Sega: to understand a functional aspect of the program that was unprotectable by copyright law in order to make a new noninfringing program.^[196] The nature of the work would be the same as in Sega, for the work would be an object-code form of a program containing functional elements that were unavailable except through decompilation. The whole program would be copied, but as in Sega, the copy would be intermediate in nature. The only potential for harm to the market would be that which flows from the development of a new nonin- fringing work, a kind of harm that Sega says does not injure copyright interests.

The real concern of those who oppose decompilation of computer programs-a concern which the Ninth Circuit detected only obliquely, if at all, in the Sega case-is that much of the value in a computer program lies in the applied know-how embodied in it.^[197] Much of this know-how cannot be discerned by watching the executable version of the program in operation.^[198] As long as the program is not decompiled, the applied know-how embodied in it can successfully be claimed as a trade secret. If someone can get access to the know- how through decompilation, the know-how can no longer be claimed as a trade secret for the obvious reason that it will no longer be a secret (at least as to that person). Nor can it be regarded as expression for copyright purposes ^[199] nor as an invention under patent law.^[200] The goal of those who have opposed decompilation has been a prophylactic one, to use copyright to stop intermediate copying that threatens to destroy the trade secret status of applied know-how embodied in programs.^[201]

The Ninth Circuit's decision in Sega was correct as a matter of copyright law, for it is no more appropriate for copyright law to be used to protect against acquisition of information embodied in mass-marketed copies of copyrighted works than the Ninth Circuit in Sega thought it was to use copyright as a way to get patent-like protection for the functional requirements for making a program compatible with the Sega machine.^[202] The court's response to the argument that strong protection against decompilation was needed because of the high cost of software development was that it was not consistent with the Feist decision in which the Court rejected the "sweat-of-the-brow" theory of originality.^[203] Sega quoted from Feist for the proposition that copying facts and other unprotectable elements from copyrighted works is neither unfair nor unfortunate, but rather is the very means by which the purposes of copyright are advanced.^[204] Sega, in other words, is well-grounded in copyright law and tradition, and its critics are simply wrong about how copyright law should be applied to computer programs.

B. FAIR USE IN OTHER SOFTWARE CASES

The revival of Baker v. Selden as a precedent with implications for fair- use defenses when a second comer reproduces functional elements of copyrightable works may be among the most important aspects of Sega. All too often Baker v. Selden is cited as though it had held only that abstract ideas are unprotectable by copyright law or that when only a small number of ways exist to express a particular idea, idea and expression will be considered to have "merged" and, so as not to give protection to the idea, the constrained expression will either not be protected at all or will be protected only against exact duplication.^[205] Now that the Ninth Circuit in Sega has recognized that Baker v. Selden is a case with important implications for the scope of fair use in cases involving functional writings, it is possible that fair use will come to be used in other kinds of software cases as well.

Consistent with the Sony and Sega decisions, a court might also regard error correction or other reasonable adaptations of software as noninfringing fair uses of copyrighted software even if the firm that fixed the software was a licensee of the software rather than an owner of a copy of the program.^[206] Although the special software provision of the copyright statute confers the right to make adaptations to software on owners of copies of the software,^[207] the fair- use defense is not so limited.^[208] Fair use is an "equitable rule of reason" of general application for mediating between the interests of consumers and of copyright owners as to uses that can be made of the protected work.^[209] Courts would undoubtedly take into account, as part of the fair-use calculus,^[210] that the software was licensed, especially if the license contained a term limiting the user's right to modify the software. If, however, the licensor was unwilling or unable to provide prompt service for fixing errors, fair use might well shield the user whose business depended on use of certain software if that user went ahead and corrected the bug himself.^[211]

Fair use can also be argued as a basis upon which to shield those who copy interface specifications from another program to achieve compatibility.^[212] In Sega, fair use was used not only to excuse disassembly copying by Accolade, but also to excuse Accolade's reproduction of a small segment of code necessary for the interoperation of its game cartridge in the Sega console.^[213]

Relying on Sega and Galoob, Borland International recently argued that the "key reader" feature of its spreadsheet program made only a fair use of functional elements of the Lotus 1-2-3 user interface.^[214] Borland and Lotus have been in litigation for some years now, principally over Borland's decision to build an "emula- tion interface" for its competitive spreadsheet program to enable those users who had built up a library of macros developed with Lotus 1-2-3 to continue to make use of their investment in these macros while at the same time switching to the Borland product. In order to permit users to make use of their macro libraries, it was necessary for the Borland emulation interface to reproduce the Lotus 1-2-3 command hierarchy (which was, however, presented in a different manner than Lotus' program). Borland argued this reproduction was excusable principally because the command hierarchy is a fundamental part of the functionality of Lotus' macro system.^[215] Since the copyright statute states that "systems" are not protectable by copyright law, Borland argued that it had not infringed Lotus' copyright.

After the trial court ruled that the reproduction of the command hierarchy was an infringement,^[216] Borland began marketing a version of its spreadsheet program that no longer made any visual presentation of the Lotus commands. But Borland's "key reader" feature accepted the same keystrokes to perform the same functions as Lotus 1-2- 3, which effectively allowed users to continue to execute macro sequences constructed in accordance with the Lotus command hierarchy. Borland's fair-use argument posited that its purpose in developing the key reader feature was to permit users to have access to the functionality of Lotus' macro system.^[217] Borland argued that the nature-of-the-work factor favored its fair-use defense, for the Lotus program was a factual or functional work. Both factual and functional works are classes of copyrighted works for which the scope of fair use is generally broader than for artistic works. Borland argued that it had reproduced only as much of the Lotus program as was necessary to allow users to have access to the macro facility. And by developing a new improved spreadsheet program and wholly original code, Borland had contributed to the achievement of the underlying purposes of copyright law in the same manner as Accolade had.

Given Judge Keeton's prior rulings in litigation involving Lotus 1-2-3,^[218] it was not particularly surprising that he ruled against Borland's fair-use defense to Lotus' claim of infringement relating to the key reader feature. The court decided that the purpose of Borland's use was commercial, which under Sony gave rise to a presumption of unfairness.^[219] The court seems to have regarded Lotus' command hierarchy as quite expressive because of the many different ways in which a spreadsheet command hierarchy might be constructed.^[220] It characterized what had been copied as a substantial part of the Lotus program.^[221] The court also stated there was clear competitive harm to Lotus' market.^[222]

The First Circuit Court of Appeals may find fault with Judge Keeton's analysis of Borland's fair-use defense for its characterization of Borland's purpose as entirely commercial, for its characterization of the nature of the work as quite expressive, and for its unwillingness to consider user interests in the balancing process, which is difficult to reconcile with many aspects of the Sega and Galoob decisions. But the First Circuit may also recognize a significant inconsistency in the trial court's opinion. Although rejecting Borland's necessity argument in the fair-use portion of the opinion, Judge Keeton elsewhere indicated once again how critically important an aspect of the functionality of the macro system the command hierarchy is. "To interpret a macro," said the court, "the program must use the Lotus 1-2-3 menu structure. If a program did not have a representation of the 1-2-3 menu hierarchy somewhere within the program code (or in a file used by the code), then there is no way that the program could understand that `rfc' refers to a path through the menu tree to the specific executable operation that changes a cell or cells' appearance to monetary units . . . ."^[223] The First Circuit may be more receptive to applying the principles of Baker v. Selden to judging Borland's use of the Lotus command hierarchy. It may also be more willing to give consideration to user interests in macro compatibility than Judge Keeton has been.^[224]

VI. IMPLICATIONS OF GALOOB FOR USES OF ELECTRONIC INFORMATION TOOLS ON COPYRIGHTED WORKS

Galoob's Game Genie is just one example of the extraordinary array of electronic information tools now available in the commercial market that permit users to experiment with the plastic nature of works in digital form.^[225] By plasticity, I mean the ease with which such works can be manipulated, transformed, and/or inserted into other works.^[226] Although many authors might prefer for their works to remain as fixed as they have traditionally been in printed form, the genie of plasticity cannot be pushed back into the bottle. Digital manipulation is here to stay, for the manipulability of digital data is one of the key advantages of the digital medium.^[227]

There will unquestionably be many digital manipulations of copyrighted works that cannot be justified as fair use because commercial appropriations of their work will pose too severe a threat to the ability of copyright owners to obtain a fair return.^[228] If left unchecked, such appropriations could result in market failure in the production of creative works, the very market failure that the copyright system aims to avoid.^[229] But there will just as surely be some uses of these tools that can be justified as fair use under the Sony and Galoob decisions, as this section will endeavor to demonstrate. When developers of electronic information tools expect the tools to be copied, it should be unnecessary to call upon fair use to shelter some digital reproductions or manipulations of copyrighted works.^[230]

As the reader will see, in a time of rapid technological change, countries such as the United States with fair-use or fair-dealing provisions in their copyright laws may find it easier to adapt to the challenges that electronic information tools present for regulation of uses that can be made of copyrighted materials. It will often be in the public interest for electronic information tools to be available in the marketplace and to be used in ways that do not undermine incentives to engage in creative activity.

A. TOOLS FOR EXPANDING ORDINARY USES OF COPYRIGHTED WORKS

"Clip art" and "clip sound" programs are one class of electronic information tools widely available on the market today that explicitly envision the copying of their components as an ordinary use by consumers.^[231] Developers of copyrighted clip- art programs know that consumers expect to use the programs to make copies of the images or sounds contained in the program's compilation. It is, in fact, to fill consumer demand for such a product that they were developed in the first place. A student might, for instance, clip an image of the Liberty Bell from the program for use in a school report. An adult might clip a picture of someone blowing a trumpet to make an announcement for a slide presentation to clients of her employer.

Consumers who make ordinary use of such programs for their intended purposes would not, in my judgment, even have to look to fair use to justify clipping out a reasonable number of images or sounds for their own purposes.^[232] But fair use would surely shield such uses if the issue was ever litigated. What clip-art program developers are concerned about is someone reproducing its clip-art images and putting them into a competing clip-art program.^[233]

Somewhat more troublesome from a copyright standpoint, however, is the wide array of software tools that can be used by consumers to do such things as "morph" images from one shape to another,^[234] change the texture of an image (making it plaid instead of plain white or making a photograph look like a painting by Van Gogh),^[235] or digitally excise the head from a person in a photograph and move it onto the head of another figure in the same or a different photograph.^[236] All of these "tools" can, of course, be used to infringe copyrights.

Had Universal won its lawsuit against Sony, an argument could have been made that sale of these digital manipulation tools should be enjoined on the theory that the tools' developer should be assumed to have constructive notice that some consumers would use the tools to infringe copyrights.^[237] Because these tools are capable of substantial noninfringing uses, the Sony decision would seem to shield their developers from any concern that contributory infringement charges may be brought against them merely because some people may use them to infringe copyrights.

It is, of course, a separate question whether consumers who use these tools to morph images scanned in from a magazine are infringers of a copyright in the photograph. Sony and Galoob would seem to affirm that private noncommercial uses of this sort should be presumed to be noninfringing under the fair-use doctrine. As long as the consumer confined his or her use of the morphed image to private noncommercial uses, the potential for harm to the market would not be sufficiently strong to overcome this presumption. One might also look to Patterson's framework for regulating uses of copyrighted works and conceive of these tools as expanding the range of ordinary uses consumers can make of their copies of copyrighted works. As long as consumers do not start making use of the copyright, setting themselves up as alternative publishers of the work, copyright interests should not be implicated.

Another class of software tools that are expected to have a commercially significant future are those that permit a user to "filter" information of interest (or not of interest) to him or her.^[238] One use of these systems would be to permit individual customizations of digital information services or products. Through use of a filtering system which the user had "trained" to understand his or her interests, one might, for example, produce a customized version of an electronic newspaper that would weed out sports coverage for those who, for instance, are not interested in sports.^[239]

An individual consumer who used such tools to tailor an electronic information product or service for his or her own uses would not need fair use, in Patterson's view, to shield him or her from an infringement claim by the publisher of an electronic information product who wanted to offer its own customization tools to its customers because the tool would merely extend ordinary uses that could be made of a copy of the work by a purchaser of it.^[240]

Although electronic filtering may present a closer question than some of the other examples presented above, the Sony approach would at least permit a balancing of interests. Under Galoob, a court might decide not to intervene as long as the user was still paying the standard subscription fee to the publisher of the newspaper.^[241] This would undercut the argument that there would be any demonstrable harm to the market for the copyrighted work being filtered. Harm to the market for the publisher's own filtering software would be akin to arguing that sale of the Game Genie was unfair because it had harmed Nintendo's opportunity to market a Game Genie-like product. This was a potential market that the Ninth Circuit seemed to be unwilling to reserve exclusively for Nintendo. The focus of the fair-use inquiry should be on the harm to the market for the copyrighted work, not on its potential impact on the sale of peripheral devices or software capable of interacting with the copyrighted work.

Among the other extensions of ordinary uses of copies of copyrighted works that can be expected to arise from digital technology are these: scanning correspondence, reports, and other documents received by a firm or a person into an electronic repository for storage and/or distribution to appropriate personnel,^[242] reformat- ting electronic documents so that they can be read on a different computer or by different software than that on which they were created,^[243] electronic tagging of components of documents so that they can be retrieved in an electronic database based on other attributes than the presence of particular words in the text,^[244] and automatic translations of documents when the technology evolves to permit this.^[245]

Although the likelihood of litigation over these kinds of ordinary uses of texts is low, it is important for copyright lawyers to be aware that digital technologies provide opportunities for new kinds of uses to be made of works of authorship to which copyright automatically attaches. The Galoob and Sony decisions support the view that neither the tools that extend the uses consumers can make of their copies of works of authorship nor private uses that may be made of them with these tools ought generally to be regarded as raising serious copyright concerns. Copyright law will have ample work to do in regulating efforts to engage in competitive publication activities.^[246]

B. TOOLS FOR AIDING THE INTERPRETATION OF OTHER WORKS

Other kinds of software tools permit users to transform digital data from one class of work to another.^[247] Because the electronic signals constituting a work in digital form do not know (until the computer and software processing them interprets them) whether they are parts of a song, a picture, a text, a program, or a motion picture, they can, in fact, be more than one kind of work.^[248] Some transformations of digital data made with the aid of such tools are useful for aiding interpretation of the data.^[249]

Some examples will illustrate this unique characteristic of the digital medium and how tools can exploit this unique characteristic. At a conference on computer- human interaction a few years ago, I saw a demonstration of a software tool that permitted users to process digital signals representing visual materials to produce sounds that would aid in the interpretation of the visual materials.^[250] The first of the two demonstrations given of this tool involved a digitized image of a photograph of a tissue sample which was to be examined in order to detect the presence of cancerous cells. With the aid of the software tool, someone seeking to interpret this image could pass the cursor over different parts of the sample. This caused the tool to process the visual data as sounds. Muscle tissue not only looked different from nerve tissue; it "sounded" different as well. Because it was difficult to detect cancerous cells relying solely on visual cues, it helped to have a second source of information (i.e., the sounds) with which to try to distinguish the "good cells" from the "bad ones."

A second demonstration of this tool aided the interpretation of a digitized image of a chart. The chart depicted the distribution of men and women in the sciences in terms of their professional rank and salaries. By assigning a deep bass sound to the visual symbol representing males and a high piccolo sound to the visual symbol representing females and then running the cursor over different parts of a digitized image of the chart, one could "hear" (as well as see) how few women had either high ranks or high salaries in the field of science.

Perhaps no one would think to claim copyright in a digitized image of a tissue sample, but someone might very well claim a copyright in the chart. Under Patterson's approach, one could regard use of this tool to interpret the data as an ordinary use of a copy of the work by a consumer. But even if a copyright claimant of either work expressed an objection to use of the tool, either as the creation of an unauthorized derivative work or as the reproduction of portions of the work in a different medium, I would argue that no infringement of copyright could be found. Under the regulatory framework of the Sony and Galoob decisions, use of the interpretation tool would be a noninfringing fair use, for it would involve a noncommercial research purpose, the nature of the work would be factual, which generally favors fair use, and little or no harm to the market for the work would be likely to arise from the use.

Among the other software tools now available to aid in the interpretation of data are those that allow users to "visualize" scientific data.^[251] Scientific data are typically collected and represented in textual form, often as a set of numbers corresponding to various data types being collected. One of the most difficult tasks of scientific work tends to lie in conceptualizing a way to represent the data to make it more comprehensible. Scientific visualization tools allow researchers to assign certain shapes and/or colors to certain classes of data. The data are then processed with the aid of the tool to produce visual representations with the assigned attributes. Often, such tools will be used by the person who collected the data and who may claim a copyright in the scientific data compilation by virtue of his or her exercise of judgment in the selection or arrangement of data in the compilation, and of course, no copyright concerns are likely to arise from this use.

Scientific visualization tools can, however, be used by someone other than the original data gatherer. They may also be used to create an alternative visualization, including one that might challenge the interpretation given to them by the data gatherer. As with the previous example, I believe that someone who used such a software tool to make a scientific visualization of the data to aid his or her own interpretation would be making noninfringing uses of the data compilation.^[252] Principles of fair use could, if necessary, also be used to justify the publication of an article with the challenger's visualization of the data ^[253] even if the gatherer of the data or a publisher of the data compilation or an article containing a different visualization might object.^[254]

C. WORKS THAT INTERACT WITH PREEXISTING WORKS

Galoob involved an electronic information tool capable of interacting with other copyrighted works without appropriating any expression from them. The Ninth Circuit's willingness to regard Galoob's product as noninfringing notwithstanding its dependence on another developer's copyrighted works may have important implications for the legality of a wide range of "add-on" software products, as well as for those who prepare navigational paths through labyrinths of digital texts.

Imagine for a moment that West Publishing Company began commercially distributing a CDROM disk containing all (or virtually all) of the federal copyright decisions from its printed volumes.^[255] Imagine that West also offered for sale on a separate disk an electronic casebook, which consisted largely of a set of links to portions of the CDROM, as well as some additional commentary, that had been prepared by a copyright professor under contract to West. Now suppose that another copyright professor wanted to prepare an electronic casebook that would interoperate with the West CDROM case compilation. Galoob may help to answer the question whether the second casebook author would have to get West's permission to prepare a competing casebook.

This hypothetical is a specific example of a more generic question from the field of hypertext.^[256] When texts are in digital form, it becomes possible, with the aid of hypertext system software, for users of the texts to create links between one portion of a text and another, between one document and another, or among many documents and portions thereof.^[257] A set of links made by a user of digital texts can exist as a separate document in a hypertext publishing system. The link document (often described as a web) will consist of a compilation of data identifying the starting and ending points or regions of the material being linked to.^[258]

Depending on how the hypertext system is designed, it may be possible for other people besides the link author to follow the link path set forth in the link document.^[259] When the link document is processed by the hypertext system program, a user who follows the links created by someone else will see the portions of the docu- ments which the link author has designated.

Hypertext linking poses very similar intellectual property rights questions to the ones presented in Galoob. Does the author of a link document infringe copyrights in the works to which links have been created in violation of exclusive rights that copyright law gives to authors to prepare derivative works?^[260] Does a user of someone else's links infringe any copyright interest of the link author?^[261] Authors of hypertext links would, of course, like to be free from claims of infringement for linking portions of other authors' documents yet be able to assert copyright control over traversals of their links by other users.

As was true with Galoob's Game Genie, the link document would contain no expression taken from the texts of the authors being linked to. Because of this, a court deciding whether a link author had infringed the derivative work rights of authors of the documents to which he had linked would likely doubt that a derivative work had been created under the rationale given by the Ninth Circuit in Galoob.^[262]

As in Galoob, the court might go on to analyze whether, even assuming a derivative work was created, a fair use might have been made of the copyright in the underlying documents. Often the link author will have an educational or research purpose in constructing links among documents. Works being linked to would often be factual in nature, and little from the pre-existing works would have been appropriated.^[263] An important factor in a fair-use assessment would likely be that little, if any, harm could be expected to the market for the works being linked to since the link document would only be usable if the user has access to the underlying documents, access for which the user is likely to have already paid. The Ninth Circuit favored fair use in Galoob in part because the Game Genie could be used only in conjunction with Nintendo games for which consumers had already paid.^[264]

The user of the link document might be regarded as making an ordinary use of the link document by following its trail from one document to another. Faced with a demand of a link author who wanted compensation for use of his links, the link user might analogize her navigation of the links to the print reader's following of a bibliographic path set forth in a copyrighted article which would, of course, not be infringing, for it would involve use of the knowledge in the article, not a reproduction of it.

Within the regulatory framework of fair use, the link user might argue that her use was private and noncommercial, and may even have been for a research purpose. The link document would be a factual compilation which generally enjoys a narrow scope of copyright protection. However, the whole of the link document would have been copied, for it must be copied in order to be used. The link author would also argue that harm to his market would be evident, for if there is any market for link documents, it will be that provided by users who can be charged for the value to them of saving time by following someone else's path rather than going to the trouble of independently constructing their own link path through digital texts. Fair use, in this example, as in others discussed in this section, at least provides a framework for balancing the interests of authors and users of digital information tools.

VII. CONCLUSION

When enacting the Copyright Act of 1976, Congress expressed an expectation that the fair-use doctrine would-and should-evolve to deal with challenging questions concerning the application of copyright law posed by new technologies.^[265] This expectation has been borne out on numerous occasions in the past decade, includ- ing, notably, Sony. The strict property-rights view of copyright for which Universal argued in Sony was rejected by the Court, which instead seemed to view copyright law as more of a regulatory regime aimed at achieving a balance among the interests of copyright owners, the consuming public and other commercial participants in the marketplace, such that the rights granted to authors under the statute should be construed as reaching no further than Congress has intended to achieve this balance. Importantly, the Supreme Court in Sony saw the case as one in which application of copyright law had been rendered uncertain because of a new technology. In such situations, the Court thought the dispute should be resolved by considering, among other things, what result will best promote fulfillment of the ultimate purposes of copyright law. By presuming that private noncommercial uses of copyrighted works are fair uses and requiring evidence of some meaningful likelihood of harm to overcome this presumption, Sony set an important precedent that has implications for many uses of software and digital texts.

The Ninth Circuit's Galoob and Sega decisions follow in Sony's footsteps. In Galoob, users' interests in having access to and the ability to use a device that enhanced their enjoyment of videogames were given substantial weight. Because users of Galoob's device had already paid Nintendo for the games with which the device could be used, and because the device could only be used in connection with Nintendo games, there was insufficient counterbalancing evidence of a potential for harm to Nintendo's market so as to overcome Sony's presumption that private noncommercial uses of the device were fair and noninfringing. In Sega, a competitor's need to make intermediate copies of Sega programs in order to gain access to unprotectable information so it could develop its own original noninfringing games for use in Sega's machines was recognized as an important factor favoring fair use. Even though the intermediate copier's programs competed with Sega's in the marketplace, the court perceived no harm of concern to copyright law arising from that use.

Sega would seem to have important implications for many situations in which competitors in the software industry might find it necessary to make intermediate copies of another firm's software in order to gain access to other kinds of unprotected functional elements of the program. As long as these competitors, like Accolade, construct their own independently developed, new noninfringing programs, their uses should also be privileged under Sega. But Sega would seem to have implications for other kinds of uses of computer programs, and even for the appropriation of valuable functional elements of programs.

Galoob would seem to have implications for judging the fairness of many kinds of private noncommercial uses of programs and digital texts. This Article has presented numerous examples of electronic information tools that enhance or extend the ordinary uses consumers can make of their copies of copyrighted works. As long as such ordinary uses do not undermine the ability of copyright owners to obtain a fair return for their works, they should generally not trigger copyright liability. In these and other circumstances, the fair-use defense provides a flexible and adaptable mechanism with which to balance the interests of copyright owners, their competitors or would-be competitors, and the public when conflicts among their interests arise. As Professor Chafee said some years ago:

The protection given the copyright owner should not stifle independent creation by others. Nobody else should be able to market the work, but we refuse to say nobody else should use it. The world goes ahead because each of us builds on the work of our predecessors. . . . Progress would be stifled if the author had a complete monopoly of everything in his book for. . . [a] long period. Some use of its contents must be permitted in connection with the independent creation of other authors. The very policy which leads the law to encourage his creativeness also justifies it in facilitating the creativeness of others.^[266]

Copyright law will have ample work to do in an age of advanced technologies in regulating the kinds of commercial iterative copying with which it is familiar.

1 See, e.g., L. Ray Patterson, Free Speech, Copyright and Fair Use, 40 VAND. L. REV. 1 (1987) [hereinafter Patterson, Free Speech] (discussing fair use as a balancing mechanism for mediating among the interests of authors, publishers, and the public in order to fulfill the underlying purposes of copyright law). Back to Text.

2 There were a few cases in the first decade of software copyright litigations in which fair- use defenses were raised, although they were not given much attention. See, e.g., Allen-Myland, Inc. v. International Business Machs., 746 F. Supp. 520 (E.D. Pa. 1990) (holding that database of IBM-authored software kept on behalf of IBM customers to whom AMI provided modification services was not fair use), recons. denied, 770 F. Supp. 1004 (E.D. Pa. 1991). It may also be that, with the presumption against fair use when defendants have commercial purposes that the Supreme Court established in Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984), software copyright defendants have, until recently, been reluctant to raise fair- use defenses since most of the litigated cases have involved commercial competitors. See infra note (concerning the Sony presumption of unfairness when defendants have commercial purposes). There has also been remarkably little discussion of fair use in the ample law review literature on copyright protection for computer programs. Two notable exceptions are Leo J. Raskind, The Uncertain Case For Special Legislation Protecting Computer Software, 47 U. PITT. L. REV. 1131 (1986) (noting absence of fair-use analysis in computer software copyright cases) and Stephen K. Tapp & Daniel E. Wanat, Computer Software Copyright Issues: Section 117 and Fair Use, 22 MEM. ST. U. L. REV. 197 (1992) (taking narrow view of usefulness of fair use in computer software cases). See also Pamela Samuelson, Modifying Copyrighted Software: Adjusting Copyright Doctrine to Accommodate a Technology, 28 JURIMETRICS J. 179 (1988) [hereinafter Samuelson, Modifying Software] (analyzing adequacy of current defenses, including fair use, to copyright infringement action); Pamela Samuelson, Computer Programs and Copyright's Fair Use Doctrine, 36 COMMS. OF THE A.C.M. 19 (Sept. 1993) (evaluating fair use and how the courts have dealt with it in recent decisions). Back to Text.