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Stern Electronics Inc. v. Kaufman, 669 F.2d 852 (2d Cir. 1982 ), was a judgment by the U.S. Court of Appeals for the Second Circuit that a video game manufacturer, Stern Electronics, could copyright the images and sounds in a game, not just the underlying source code that produced them. The decision was one of the first to rule on the copyrightability of video games as an artistic work and one of a series of lawsuits in the early 1908s brought forth by video game manufacturers like Stern aimed at combatting the increasing number of knock-off video games on the market.

Background
In 1981, Stern Electronics, an arcade video game manufacturer, obtained an exclusive license from Konami Industry Co., a Japanese game developer, to distribute Konami’s game “Scramble” in North and South America. The game is a side-scrolling shooter in which the player controls a “Jet” aircraft and fires weapons at enemies, attempting to destroy as many as possible before running out of fuel or crashing into an obstacle (see Scramble (video game)). The game quickly gained popularity, selling 10,000 units in its first two months on the market.

In April 1981, the defendant, Omni Video Games, Inc., began selling a knock-off game called “Scramble 2” that bore substantial similarities to Konami’s “Scramble” game.



Previous History
The case was initially brought to trial in the United States District Court for the Eastern District of New York (Stern Electronics, Inc. v. Kaufman 523 F.Supp. 635 (1981)). The plaintiff, Stern, succeeded in showing probable success on the merits of its claim of copyright infringement and the court ruled they were entitled to injunctive relief. Both parties claimed common law trademark rights to the “Scramble” mark and moved to enjoin the other from using it. Omni ordered and sold a small number of headboards (to be placed above the arcade game unit) bearing the mark in the months prior to Stern’s release of the game. The court found that the defendants’ first use of the mark was not in good faith and solely in anticipation of later imitating the audiovisual display of Stern’s game, once Omni had developed their own “Scramble 2”, and enjoined them from use of the mark.

Copyright Issue
Anticipating that a unique code could be easily reverse-engineered to create a “knock-off” game that imitated the sounds and images of their game, Konami did not register a copyright of the underlying code of the game, but instead registered the game as an audiovisual work by submitting a video of the game to the U.S. Copyright Office.

In its appeal, Omni argued that Stern was entitled only to copyright protection of the underlying computer code of the game as a literary work and that the certificate of registration granted to Scramble as an audiovisual work by the U.S Copyright office was invalid. Valid copyright protection exists only in, “original works of authorship fixed in any tangible medium of expression.”  Omni argued that the work was neither original nor fixed. They argued that the sequence of images displayed were completely dependent upon the underlying computer program and were not the original work of the copyright holder. Further, because the sequence of images varies based on the actions of the player, each play of the game produced a new, original audiovisual work, not a fixed copy of the registered work. The court rejected these arguments, stating that sufficient elements of the appearance of the game remain fixed regardless of the individual player’s actions. The court also found that a moment of originality did occur in the creation of the various images (spaceships, the look of the terrain) and sounds present in the game and that the originality of these images was not completely dependent upon the underlying program, as many different underlying programs could be produced to replicate those images.

Trademark Issue
Omni appealed the trademark ruling by arguing that they did indeed have superior common law rights to the mark due to their first use of the mark. The appellate court agreed with the lower court’s decision that the defendants’ first use of the trademark was not in good faith. The preliminary injunction was affirmed.

Other Important Cases in Early Video Game Copyright Law
Stern Electronics, Inc v. Kaufman was one in a series of lawsuits that resulted from the increase in "knock-off" video games in the early 1980s. Other manufacturers that brought forth lawsuits included Atari, Williams Electronics, Midway Manufacturing, and later, Capcom.


 * Atari, Inc. v. North American Philips Consumer Electronics Corp. (Munchkin (video game)): 7th Circuit reached the same decision
 * Williams Electronics, Inc. v. Artic International, Inc. (Defender (video game)): 3rd Circuit reached the same decision regarding sufficient "fixation" in video games, ruling that there are sufficient repeated sounds and images to constitute an audiovisual work, regardless of the player's actions.
 * Midway Manufacturing Co. v. Artic International, Inc. (704 F.2d 1009 (1983)): 7th Circuit reached the same decision regarding "fixation" of images and sounds in video games.
 * Capcom U.S.A., Inc. v. Data East Corp (Fighter's History): scenery and characters deemed commonplace or standard are not copyrightable under the doctrine of scenes-à-faire.