Class 16: The Adaptation Right

Introduction

In Class 15, we began our discussion of the six exclusive rights of copyright owners, which enable copyright owners to prevent certain unauthorized uses of their works. We learned about the doctrine of divisibility, which provides that the exclusive rights of copyright owners can be transferred individually, in whole or in part. We learned about compulsory licenses, which enable people to use certain categories of copyrighted works in certain ways, without the permission of the copyright owner. And we learned about the nature and scope of the reproduction right.

In this class, we will learn about the adaptation right, which gives copyright owners the exclusive right to create derivative works based on their copyrighted work.

The Adaptation Right

Originally, the Copyright Act only gave copyright owners the reproduction right, but eventually, it was amended to give copyright owners the adaptation right. The adaptation right gives copyright owners the exclusive right "to prepare derivative works based upon the copyrighted work." 17 U.S.C. § 106(2). Section 101 of the Copyright Act provides:

A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work”.

17 U.S.C. § 101.

So, the adaptation right gives copyright owners the right to control the use of the original elements of their copyrighted works in any medium. For example, if a person is the copyright owner of a literary work, the adaption right gives that person the exclusive right to create a motion picture based on that literary work.

Some scholars believe that the adaption right is too broad, because it enables copyright owners to prohibit the creation of original works of authorship. The reproduction right only allows copyright owners to prohibit the creation of copies of their copyrighted works in the same medium. By contrast, the adaptation right enables copyright owners to prohibit the use of original elements of their copyrighted works in any medium.

In other words, the reproduction right applies to works that lack an original element, but the adaptation right applies to works that have an original element. So, the adaptation right enables copyright owners to prohibit the creation of original works of authorship.

There are two theories of the justification of the adaptation right:

1. The author of the original work created the possibility of the derivative work, so the author of the original work is entitled to some part of the economic value of the derivative work; and 
2. The author of the original work is harmed when people create derivative works without consent.

Questions:

1. What is a derivative work? How is it different from a reproduction?
2. Is the adaptation right justified? What would happen if the Copyright Act did not grant the adaptation right?
3. How much of the original work does the new work need to incorporate in order to be a derivative work?
4. Is a dramatic work based on a novel a derivative work? What about a photograph of a ballet?
5. Does a derivative work need to incorporate an element of the original work? What counts as an element of the original work?
6. Do you find either of the theoretical justifications of the adaptation right convincing? Which theories of the justification of copyright do they reflect?

Mirage Editions Inc. v. Albuquerque Art Co., 856 F. 2d 1341 (9th Cir. 1988)

BRUNETTI, Circuit Judge: 

Albuquerque A.R.T. (appellant or A.R.T.) appeals the district court's granting of summary judgment in favor of appellees Mirage, Dumas, and Van Der Marck (Mirage). The district court, in granting summary judgment, found that appellant had infringed Mirage's copyright and issued an order enjoining appellant from further infringing Mirage's copyright. 

Patrick Nagel was an artist whose works appeared in many media including lithographs, posters, serigraphs, and as graphic art in many magazines, most notably Playboy. Nagel died in 1984. His widow Jennifer Dumas owns the copyrights to the Nagel art works which Nagel owned at the time of his death. Mirage is the exclusive publisher of Nagel's works and also owns the copyrights to many of those works. Dumas and Mirage own all of the copyrights to Nagel's works. No one else holds a copyright in any Nagel work. 

Appellee Alfred Van Der Marck Editions, Inc. is the licensee of Dumas and Mirage and the publisher of the commemorative book entitled NAGEL: The Art of Patrick Nagel ("the book"), which is a compilation of selected copyrighted individual art works and personal commentaries. 

Since 1984, the primary business of appellant has consisted of: 1) purchasing artwork prints or books including good quality artwork page prints therein; 2) gluing each individual print or page print onto a rectangular sheet of black plastic material exposing a narrow black margin around the print; 3) gluing the black sheet with print onto a major surface of a rectangular white ceramic tile; 4) applying a transparent plastic film over the print, black sheet and ceramic tile surface; and 5) offering the tile with artwork mounted thereon for sale in the retail market. 

It is undisputed, in this action, that appellant did the above process with the Nagel book. The appellant removed selected pages from the book, mounted them individually onto ceramic tiles and sold the tiles at retail. 

Mirage, Dumas and Van Der Marck brought an action alleging infringement of registered copyrights in the artwork of Nagel and in the book. Mirage also alleged trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. Sec. 1051 et seq. and the state law of unfair competition, Cal.Bus. & Prof.Code Secs. 17200 et seq. 

Appellant moved for summary judgment on the Lanham Act and Copyright Act causes of action. The district court granted summary judgment as to the Lanham Act cause of action but denied summary judgment on the copyright cause of action. Mirage then moved for summary judgment on the copyright claim which was granted. The court also enjoined appellants from removing individual art images from the book, mounting each individual image onto a separate tile and advertising for sale and/or selling the tiles with the images mounted thereon. 

The Copyright Act of 1976, 17 U.S.C. Sec. 101 et seq., confers upon the copyright holder exclusive rights to make several uses of his copyright. Among those rights are: (1) the right to reproduce the copyrighted work in copies, 17 U.S.C. Sec. 106(1); (2) the right to prepare derivative works based upon the copyrighted work, 17 U.S.C. Sec. 106(2); (3) the right to distribute copies of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending, 17 U.S.C. Sec. 106(3); and (4) in the case of literary, pictorial, graphic and sculptural works, including individual images, the right to display the copyrighted work publicly. 

The district court concluded appellant infringed the copyrights in the individual images through its tile-preparing process and also concluded that the resulting products comprised derivative works. 

Appellant contends that there has been no copyright infringement because (1) its tiles are not derivative works, and (2) the "first sale" doctrine precludes a finding of infringement. 

The Copyright Act of 1976, 17 U.S.C. Sec. 101 defines a derivative work as: 

[A] work based upon one or more preexisting works such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship is a "derivative work." 

(Emphasis added). 

The protection of derivative rights extends beyond mere protection against unauthorized copying to include the right to make other versions of, perform, or exhibit the work. Lone Ranger Television v. Program Radio Corp., 740 F.2d 718, 722 (9th Cir.1984); Russell v. Price, 612 F.2d 1123, 1128 n. 16 (9th Cir.1979). 

Melvin Nimmer in his treatise on copyright law wrote: 

[A] work will be considered a derivative work only if it would be considered an infringing work if the material which it has derived from a preexisting work had been taken without the consent of a copyright proprietor of such preexisting work. 

1 Nimmer on Copyright Sec. 3.01 (1986) cited in Litchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir.1984), cert. denied, 470 U.S. 1052, 105 S.Ct. 1753, 84 L.Ed.2d 817 (1985); United States v. Taxe, 540 F.2d 961, 965 n. 2 (9th Cir.1976), cert. denied, 429 U.S. 1040, 97 S.Ct. 737, 50 L.Ed.2d 751 (1977). 

What appellant has clearly done here is to make another version of Nagel's art works, Lone Ranger, supra, and that amounts to preparation of a derivative work. By borrowing and mounting the preexisting, copyrighted individual art images without the consent of the copyright proprietors--Mirage and Dumas as to the art works and Van Der Marck as to the book--appellant has prepared a derivative work and infringed the subject copyrights. Nimmer, supra. 

Appellant's contention that since it has not engaged in "art reproduction" and therefore its tiles are not derivative works is not fully dispositive of this issue. Appellant has ignored the disjunctive phrase "or any other form in which a work may be recast, transformed or adapted." The legislative history of the Copyright Act of 1976 indicates that Congress intended that for a violation of the right to prepare derivative works to occur "the infringing work must incorporate a portion of the copyrighted work in some form." 1976 U.S.Code Cong. & Admin. News 5659, 5675. (emphasis added). The language "recast, transformed or adapted" seems to encompass other alternatives besides simple art reproduction. By removing the individual images from the book and placing them on the tiles, perhaps the appellant has not accomplished reproduction. We conclude, though, that appellant has certainly recast or transformed the individual images by incorporating them into its tile-preparing process. 

The "first sale" doctrine, which appellant also relies on in its contention that no copyright infringement has occurred, appears at 17 U.S.C. Sec. 109(a). That section provides: 

Notwithstanding the provisions of Section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord. 

In United States v. Wise, 550 F.2d 1180 (9th Cir.1977), which concerned a criminal prosecution under the pre-1976 Copyright Act, this court held that: 

[T]he "first sale" doctrine provides that where a copyright owner parts with title to a particular copy of his copyrighted work, he divests himself of his exclusive right to vend that particular copy. While the proprietor's other copyright rights (reprinting, copying, etc.) remain unimpaired, the exclusive right to vend the transferred copy rests with the vendee, who is not restricted by statute from further transfers of that copy. 

550 F.2d at 1187. 

We recognize that, under the "first sale" doctrine as enunciated at 17 U.S.C. Sec. 109(a) and as discussed in Wise, appellant can purchase a copy of the Nagel book and subsequently alienate its ownership in that book. However, the right to transfer applies only to the particular copy of the book which appellant has purchased and nothing else. The mere sale of the book to the appellant without a specific transfer by the copyright holder of its exclusive right to prepare derivative works, does not transfer that right to appellant. The derivative works right, remains unimpaired and with the copyright proprietors--Mirage, Dumas and Van Der Marck. As we have previously concluded that appellant's tile-preparing process results in derivative works and as the exclusive right to prepare derivative works belongs to the copyright holder, the "first sale" doctrine does not bar the appellees' copyright infringement claims. 

We AFFIRM.

Nagel print mounted on tile

Lee v. A.R.T. Co., 125 F.3d 580 (7th Cir. 1997)

Easterbrook, Circuit Judge. 

Annie Lee creates works of art, which she sells through her firm Annie Lee & Friends. Deck the Walls, a chain of outlets for modestly priced art, is among the buyers of her works, which have been registered with the Register of Copyrights. One Deck the Walls store sold some of Lee's notecards and small lithographs to A.R.T. Company, which mounted the works on ceramic tiles (covering the art with transparent epoxy resin in the process) and resold the tiles. Lee contends that these tiles are derivative works, which under 17 U.S.C. § 106(2) may not be prepared without the permission of the copyright proprietor. She seeks both monetary and injunctive relief. Her position has the support of two cases holding that A.R.T.'s business violates the copyright laws. Muoz v. Albuquerque A.R.T. Co., 38 F.3d 1218 (9th Cir. 1994), affirming without published opinion 829 F. Supp. 309 (D. Alaska 1993); Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F.2d 1341 (9th Cir. 1988). Mirage Editions, the only full appellate discussion, dealt with pages cut from books and mounted on tiles; the court of appeals' brief order in Muoz concludes that the reasoning of Mirage Editions is equally applicable to works of art that were sold loose. Our district court disagreed with these decisions and entered summary judgment for the defendant. 925 F. Supp. 576 (N.D. Ill. 1996). 

Now one might suppose that this is an open and shut case under the doctrine of first sale, codified at 17 U.S.C. § 109(a). A.R.T. bought the work legitimately, mounted it on a tile, and resold what it had purchased. Because the artist could capture the value of her art's contribution to the finished product as part of the price for the original transaction, the economic rationale for protecting an adaptation as "derivative" is absent. See William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 17 J. Legal Studies 325, 353-57 (1989). An alteration that includes (or consumes) a complete copy of the original lacks economic significance. One work changes hands multiple times, exactly what § 109(a) permits, so it may lack legal significance too. But § 106(2) creates a separate exclusive right, to "prepare derivative works", and Lee believes that affixing the art to the tile is "preparation," so that A.R.T. would have violated § 106(2) even if it had dumped the finished tiles into the Marianas Trench. For the sake of argument we assume that this is so and ask whether card-on-a-tile is a "derivative work" in the first place. 

"Derivative work" is a defined term: 

A "derivative work" is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work". 

17 U.S.C. § 101. The district court concluded that A.R.T.'s mounting of Lee's works on tile is not an "original work of authorship" because it is no different in form or function from displaying a painting in a frame or placing a medallion in a velvet case. No one believes that a museum violates § 106(2) every time it changes the frame of a painting that is still under copyright, although the choice of frame or glazing affects the impression the art conveys, and many artists specify frames (or pedestals for sculptures) in detail. Muoz and Mirage Editions acknowledge that framing and other traditional means of mounting and displaying art do not infringe authors' exclusive right to make derivative works. 

Nonetheless, the ninth circuit held, what A.R.T. does creates a derivative work because the epoxy resin bonds the art to the tile. Our district judge thought this a distinction without a difference, and we agree. If changing the way in which a work of art will be displayed creates a derivative work, and if Lee is right about what "prepared" means, then the derivative work is "prepared" when the art is mounted; what happens later is not relevant, because the violation of the § 106(2) right has already occurred. If the framing process does not create a derivative work, then mounting art on a tile, which serves as a flush frame, does not create a derivative work. What is more, the ninth circuit erred in assuming that normal means of mounting and displaying art are easily reversible. A painting is placed in a wooden "stretcher" as part of the framing process; this leads to some punctures (commonly tacks or staples), may entail trimming the edges of the canvas, and may affect the surface of the painting as well. Works by Jackson Pollock are notoriously hard to mount without damage, given the thickness of their paint. As a prelude to framing, photographs, prints, and posters may be mounted on stiff boards using wax sheets, but sometimes glue or another more durable substance is employed to create the bond. 

Lee wages a vigorous attack on the district court's conclusion that A.R.T.'s mounting process cannot create a derivative work because the change to the work "as a whole" is not sufficiently original to support a copyright. Cases such as Gracen v. The Bradford Exchange, Inc., 698 F.2d 300 (7th Cir. 1983), show that neither A.R.T. nor Lee herself could have obtained a copyright in the card-on-a-tile, thereby not only extending the period of protection for the images but also eliminating competition in one medium of display. 

After the ninth circuit held that its mounting process created derivative works, A.R.T. tried to obtain a copyright in one of its products; the Register of Copyrights sensibly informed A.R.T. that the card-on-a-tile could not be copyrighted independently of the note card itself. But Lee says that this is irrelevant - that a change in a work's appearance may infringe the exclusive right under § 106(2) even if the alteration is too trivial to support an independent copyright. Pointing to the word "original" in the second sentence of the statutory definition, the district judge held that "originality" is essential to a derivative work. This understanding has the support of both cases and respected commentators. E.g., L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d Cir. 1976); Melville B. Nimmer & David Nimmer, 1 Nimmer on Copyrights § 3.03 (1997). Pointing to the fact that the first sentence in the statutory definition omits any reference to originality, Lee insists that a work may be derivative despite the mechanical nature of the transformation. This view, too, has the support of both cases and respected commentators. E.g., Lone Ranger Television, Inc. v. Program Radio Corp., 740 F.2d 718, 722 (9th Cir. 1984); Paul Goldstein, Copyright: Principles, Law and Practice § 5.3.1 (2d ed. 1996) (suggesting that a transformation is covered by § 106(2) whenever it creates a "new work for a different market"). 

Fortunately, it is not necessary for us to choose sides. Assume for the moment that the first sentence recognizes a set of non-original derivative works. To prevail, then, Lee must show that A.R.T. altered her works in one of the ways mentioned in the first sentence. The tile is not an "art reproduction"; A.R.T. purchased and mounted Lee's original works. That leaves the residual clause: "any other form in which a work may be recast, transformed, or adapted." None of these words fits what A.R.T. did. Lee's works were not "recast" or "adapted". "Transformed" comes closer and gives the ninth circuit some purchase for its view that the permanence of the bond between art and base matters. Yet the copyrighted note cards and lithographs were not "transformed" in the slightest. The art was bonded to a slab of ceramic, but it was not changed in the process. It still depicts exactly what it depicted when it left Lee's studio. See William F. Patry, Copyright Law and Practice 823-24 (1994) (disapproving Mirage Editions on this ground). If mounting works a "transformation," then changing a painting's frame or a photograph's mat equally produces a derivative work. Indeed, if Lee is right about the meaning of the definition's first sentence, then any alteration of a work, however slight, requires the author's permission. We asked at oral argument what would happen if a purchaser jotted a note on one of the note cards, or used it as a coaster for a drink, or cut it in half, or if a collector applied his seal (as is common in Japan); Lee's counsel replied that such changes prepare derivative works, but that as a practical matter artists would not file suit. A definition of derivative work that makes criminals out of art collectors and tourists is jarring despite Lee's gracious offer not to commence civil litigation. 

If Lee (and the ninth circuit) are right about what counts as a derivative work, then the United States has established through the back door an extraordinarily broad version of authors' moral rights, under which artists may block any modification of their works of which they disapprove. No European version of droit moral goes this far. Until recently it was accepted wisdom that the United States did not enforce any claim of moral rights; even bowdlerization of a work was permitted unless the modifications produced a new work so different that it infringed the exclusive right under § 106(2). Compare WGN Continental Broadcasting Co. v. United Video, Inc., 693 F.2d 622 (7th Cir. 1982), with Gilliam v. American Broadcasting Companies, Inc., 538 F.2d 14, 24 (2d Cir. 1976). The Visual Artists Rights Act of 1990, Pub. L. 101-650, 104 Stat. 5089, 5123-33, moves federal law in the direction of moral rights, but the cornerstone of the new statute, 17 U.S.C. § 106A, does not assist Lee. Section 106A(a)(3)(A) gives an artist the right to "prevent any intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation". At oral argument Lee's lawyer disclaimed any contention that the sale of her works on tile has damaged her honor or reputation. What is more, § 106A applies only to a "work of visual art", a new term defined in § 101 to mean either a unique work or part of a limited edition (200 copies or fewer) that has been "signed and consecutively numbered by the author". Lee's note cards and lithographs are not works of visual art under this definition, so she could not invoke § 106A even if A.R.T.'s use of her works to produce kitsch had damaged her reputation. It would not be sound to use § 106(2) to provide artists with exclusive rights deliberately omitted from the Visual Artists Rights Act. We therefore decline to follow Muoz and Mirage Editions. 

Affirmed

Annie Lee, Blue Monday

Questions:

1. Why do Nagel and Lee object to the creation of art tiles?
2. In Mirage Editions, the Ninth Circuit held that mounting a copyrighted image on a tile infringes the adaptation right by creating a derivative work, and in Lee, the Seventh Circuit held that it does not. Which opinion do you find more convincing?
3. Under Mirage Editions, if Mirage Editions created art tiles using Nagel images, would they be derivative works with an original element protected by copyright? If I bought a Nagel poster and framed it, would I have infringed the adaptation right?
4. Under Lee, if A.R.T. created copies of Annie Lee images and used them to create art tiles, would the outcome be different? Does the outcome of Lee depend on the scope of the adaptation right, or the first sale doctrine?
5. In Lee, the court states: "We asked at oral argument what would happen if a purchaser jotted a note on one of the note cards, or used it as a coaster for a drink, or cut it in half, or if a collector applied his seal (as is common in Japan); Lee's counsel replied that such changes prepare derivative works, but that as a practical matter artists would not file suit. A definition of derivative work that makes criminals out of art collectors and tourists is jarring despite Lee's gracious offer not to commence civil litigation." Did Lee's counsel accurately describe the scope of the adaptation right?

Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc., 964 F.2d 965 (9th Cir. 1992)

FARRIS, Circuit Judge: 

Nintendo of America appeals the district court’s judgment following a bench trial (1) declaring that Lewis Galoob Toys’ Game Genie does not violate any Nintendo copyrights and dissolving a temporary injunction and (2) denying Nintendo’s request for a permanent injunction enjoining Galoob from marketing the Game Genie. Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 780 F. Supp. 1283, 20 U.S.P.Q.2D (BNA) 1662 (N.D. Cal. 1991). We have appellate jurisdiction pursuant to 15 U.S.C. § 1121 and 28 U.S.C. §§ 1291 and 1292(a)(1). We affirm. 

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. By pressing buttons and manipulating a control pad, the player controls one of the game’s characters and progresses through the game. The games are protected as audiovisual works under 17 U.S.C. § 102(a)(6). 

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. The player also can experiment with variations of these codes. 

The Game Genie functions by blocking the value for a single data byte sent by the game cartridge to the central processing unit in the Nintendo Entertainment System and replacing it with a new value. If that value controls the character’s strength, for example, then the character can be made invincible by increasing the value sufficiently. The Game Genie is inserted between a game cartridge and the Nintendo Entertainment System. The Game Genie does not alter the data that is stored in the game cartridge. Its effects are temporary. 

Discussion

1. Derivative work

The Copyright Act of 1976 confers upon copyright holders the exclusive right to prepare and authorize others to prepare derivative works based on their copyrighted works. See 17 U.S.C. § 106(2). Nintendo argues that the district court erred in concluding that the audiovisual displays created by the Game Genie are not derivative works. The court’s conclusions of law are reviewed de novo. See Rozay’s Transfer v. Local Freight Drivers, Local 208, 850 F.2d 1321, 1326 (9th Cir. 1988), cert. denied, 490 U.S. 1030, 104 L. Ed. 2d 203, 109 S. Ct. 1768 (1989). Its findings of fact are reviewed for clear error. See id.
A derivative work must have “form” or permanence. The Copyright Act defines a derivative work as follows: 

A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work." 

17 U.S.C. § 101 (emphasis added). The examples of derivative works provided by the Act all physically incorporate the underlying work or works. The Act’s legislative history similarly indicates that “the infringing work must incorporate a portion of the copyrighted work in some form.” 1976 U.S. Code Cong. & Admin. News 5659, 5675. See also Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F.2d 1341, 1343-44, 8 U.S.P.Q.2D (BNA) 1171 (9th Cir. 1988) (discussing same), cert. denied, 489 U.S. 1018, 103 L. Ed. 2d 196, 109 S. Ct. 1135 (1989). 

Our analysis is not controlled by the Copyright Act’s definition of “fixed.” The Act defines copies as “material objects, other than phonorecords, in which a work is fixed by any method.” 17 U.S.C. § 101 (emphasis added). The Act’s definition of “derivative work,” in contrast, lacks any such reference to fixation. See id. Further, we have held in a copyright infringement action that “it makes no difference that the derivation may not satisfy certain requirements for statutory copyright registration itself.” Lone Ranger Television v. Program Radio Corp., 740 F.2d 718, 722, 223 U.S.P.Q. (BNA) 112 (9th Cir. 1984). See also Paul Goldstein, Derivative Rights and Derivative Works in Copyright, 30 J. Copyright Soc’y U.S.A. 209, 231 n.75 (1983) (“the Act does not require that the derivative work be protectable for its preparation to infringe”). Cf. Kalem Co. v. Harper Bros., 222 U.S. 55, 61, 56 L. Ed. 92, 32 S. Ct. 20 (1911) (finding the movie “Ben Hur” infringed copyright in the book Ben Hur even though Copyright Act did not yet include movies as protectable works). A derivative work must be fixed to be protected under the Act, see 17 U.S.C. § 102(a), but not to infringe. 

The argument that a derivative work must be fixed because “[a] ‘derivative work’ is a work,” 17 U.S.C. § 101, and “[a] work is ‘created’ when it is fixed in a copy or phonorecord for the first time,” id., relies on a misapplication of the Act’s definition of “created”: 

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. 

Id. The definition clarifies the time at which a work is created. If the provision was a definition of “work,” it would not use that term in such a casual manner. The Act does not contain a definition of “work.” Rather, it contains specific definitions: “audiovisual works,” “literary works,” and “pictorial, graphic and sculptural works,” for example. The definition of “derivative work” does not require fixation. 

The district court’s finding that no independent work is created, see Galoob, 780 F. Supp. at 1291, is supported by the record. The Game Genie merely enhances the audiovisual displays (or underlying data bytes) that originate in Nintendo game cartridges. The altered displays do not incorporate a portion of a copyrighted work in some form. Nintendo argues that the Game Genie’s displays are as fixed in the hardware and software used to create them as Nintendo’s original displays. Nintendo’s argument ignores the fact that the Game Genie cannot produce an audiovisual display; the underlying display must be produced by a Nintendo Entertainment System and game cartridge. The Game Genie’s display has no form. Even if we were to rely on the Copyright Act’s definition of “fixed,” we would similarly conclude that the resulting display is not “embodied,” see 17 U.S.C. § 101, in the Game Genie. It cannot be a derivative work. 

Mirage Editions is illustrative. Albuquerque A.R.T. transferred artworks from a commemorative book to individual ceramic tiles. See Mirage Editions, 856 F.2d at 1342. We held that “by borrowing and mounting the preexisting, copyrighted individual art images without the consent of the copyright proprietors … [Albuquerque A.R.T.] has prepared a derivative work and infringed the subject copyrights.” Id. at 1343. The ceramic tiles physically incorporated the copyrighted works in a form that could be sold. Perhaps more importantly, sales of the tiles supplanted purchasers’ demand for the underlying works. Our holding in Mirage Editions would have been much different if Albuquerque A.R.T. had distributed lenses that merely enabled users to view several artworks simultaneously. 

Nintendo asserted at oral argument that the existence of a $150 million market for the Game Genie indicates that its audiovisual display must be fixed. We understand Nintendo’s argument; consumers clearly would not purchase the Game Genie if its display was not “sufficiently permanent or stable to permit it to be perceived … for a period of more than transitory duration.” 17 U.S.C. § 101. But, Nintendo’s reliance on the Act’s definition of “fixed” is misplaced. Nintendo’s argument also proves too much; the existence of a market does not, and cannot, determine conclusively whether a work is an infringing derivative work. For example, although there is a market for kaleidoscopes, it does not necessarily follow that kaleidoscopes create unlawful derivative works when pointed at protected artwork. 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. at 1013-14. Artic’s chip substantially copied and replaced the chip that was originally distributed by Midway. Purchasers of Artic’s chip also benefited economically by offering the altered game for use by the general public. The court acknowledged that the Copyright Act’s definition of “derivative work” “must be stretched to accommodate speeded-up video games.” Id. at 1014. Stretching that definition further would chill innovation and fail to protect “society’s competing interest in the free flow of ideas, information, and commerce.” Sony Corp. of America v. Universal Studios, Inc., 464 U.S. 417, 429, 78 L. Ed. 2d 574, 104 S. Ct. 774, 220 U.S.P.Q. (BNA) 665 (1984). 

In holding that the audiovisual displays created by the Game Genie are not derivative works, we recognize that technology often advances by improvement rather than replacement. See Christian H. Nadan, Note, A Proposal to Recognize Component Works: How a Teddy Bears on the Competing Ends of Copyright Law, 78 Cal. 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. These applications, as well as countless others, could not be produced and marketed if courts were to conclude that the audiovisual display of a word processor and spell-checker combination is a derivative work based on the display of the word processor alone. The Game Genie is useless by itself; it can only enhance, and cannot duplicate, a Nintendo game’s output. Such innovations rarely will constitute derivative works under the Copyright Act. See generally Nadan, supra, at 1667-72.

* * * 

3. Temporary and permanent injunction 

Galoob has not violated the Copyright Act. Nintendo therefore is not entitled to a temporary or permanent injunction. 

AFFIRMED.

Questions:

1. In Class 7, we read Stern Electronics Inc. v. Kaufman, 669 F.2d 852 (2d Cir. 1982) and Williams Electronics Inc v. Artic International Inc., 685 F. 2d 870 (3d Cir. 1982), which held that the audiovisual element of a video game could be an original work fixed in a tangible medium. Is Galoob consistent with those cases?
2. The Galoob court held, "The definition of “derivative work” does not require fixation." Do you agree?