by the United States Court of Appeals for the Ninth Circuit

“ According to Stephen Beck, Galoob’s expert witness, junior or expert versions of existing Nintendo games would enjoy very little market interest because the original version of each game already has been designed to appeal to the largest number of consumers. Mr. Beck also testified that a new game must include new material or “the game player is going to feel very cheated and robbed, and [the] product will have a bad reputation and word of mouth will probably kill its sales.” ”

“ The Game Genie is a device manufactured by Galoob that allows the player to alter up to three features of a Nintendo game. For example, the Game Genie can increase the number of lives of the player’s character, increase the speed at which the character moves, and allow the character to float above obstacles. The player controls the changes made by the Game Genie by entering codes provided by the Game Genie Programming Manual and Code Book. ”

“ Facts The Nintendo Entertainment System is a home video game system marketed by Nintendo. To use the system, the player inserts a cartridge containing a video game that Nintendo produces or licenses others to produce. ”

“ Nintendo’s argument is supported by case law. Although the Copyright Act requires a court to consider “the effect of the use upon the potential market for or value of the copyrighted work,” 17 U.S.C. § 107 (4) (emphasis added) , we held in Abend that “although the motion picture will have no adverse effect on bookstore sales of the [underlying] novel—and may in fact have a beneficial effect—it is ‘clear that [the film’s producer] may not invoke the defense of fair use.’” 863 F.2d at 1482 (quoting 3 Nimmer on Copyright § 13.05 [B] , at 13-84) . ”

“ A work is ‘created’ when it is fixed in a copy or phonorecord for the first time; where a work is prepared over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time, and where the work has been prepared in different versions, each version constitutes a separate work. ”

“ L. Rev. 1633, 1635 (1990) . Some time ago, for example, computer companies began marketing spell-checkers that operate within existing word processors by signalling the writer when a word is misspelled. ”

“ The same can be said of countless other products that enhance, but do not replace, copyrighted works.
Nintendo relies heavily on Midway Mfg. Co. v. Artic Int'l, Inc., 704 F.2d 1009 (7th Cir.) , cert. denied, 464 U.S. 823 (1983) . Midway can be distinguished. The defendant in Midway, Artic International, marketed a computer chip that could be inserted in Galaxian video games to speed up the rate of play. The Seventh Circuit held that the speeded-up version of Galaxian was a derivative work. Id. ”