Three cases this past year have dealt with the concept of "intermediate copying" in the computer context, grappling with the question of how and when an author's work may be digitally duplicated as part of the process of creating a non-infringing end product. Even though all three cases were decided by the courts of the Ninth Circuit, the results were anything but uniform. This column will describe the three cases, and identify the different ways in which they approach the basic problem of re-using existing works as stepping stones to the development of new ones. As artists increasingly turn to image scanning and sound sampling as a routine part of their creative process, and as programmers and database purveyors find new ways to modify and exploit the work of their competitors, the issue of intermediate copying may take on new importance in the years ahead. One of the decisions below may point the way toward a future consensus in this as-yet unsettled body of law, but until the dust settles it is probably too soon to know which one.1

Sony v. Connectix

Every so often, the courts revisit the issue of reverse engineering of computer software, and this year the Ninth Circuit expanded upon its own landmark 1992 decision in Sega Enterprises v. Accolade, Inc.2 to hold that reverse engineering can be a fair use, even when it involves extensive intermediate copying that is not technically necessary to gain access to the underlying ideas of the plaintiff's program. The case was Sony Computer Entertainment v. Connectix Corp.3 and the plaintiff's work was the software which runs the popular Playstation® video game platform. Defendant in Sony created a "virtual game system" (VGS) which emulated the operation of the Playstation, allowing users to play Playstation games on their own personal computers, instead of using the Playstation console.

In developing the VGS, defendant repeatedly copied substantial portions of the computer code embodied in the Playstation, but the final VGS product contained no infringing code. Nonetheless, the Central District of California preliminarily enjoined the sale of the (non-infringing) VGS because it was the product of illicit intermediate copying. Applying Sega v. Accolade the court concluded that "in a copyright infringement claim based on intermediate infringement, the composition of the end product is not the sole test. The infringing conduct is based on how the end product was developed." The district court found that the defendant here, unlike in Sega, copied the Sony code far more than was necessary to "study" the underlying ideas in the Sony work, and in fact "used" the Sony code repeatedly to expedite the creation of its competing program. Thus the reverse engineering was not shielded under the fair use doctrine.

On appeal, the Ninth Circuit disagreed, reversing the injunction and ordering judgment for the defendant on the basis of fair use. Like the district court, the Ninth Circuit applied Sega v. Accolade but read it much more expansively, permitting extensive intermediate copying in the reverse engineering context even where other, more limited methods exist for gaining access to plaintiff's unprotectable ideas. The court acknowledged that some of the copying done by Connectix was not actually necessary. The court noted that other methods of obtaining the same result would have been more cumbersome, however, and purported to draw from Feist4 the dubious proposition that the Copyright Act discourages "duplication of effort." (You may recall that in Dr. Seuss5 the Ninth Circuit said fair use should not shield a defendant who merely wished to "avoid the drudgery of working up something fresh," but apparently some types of drudgery are more legitimately avoided than others.)

In any case, the court held that once the necessity of the defendant's method was established, the number of times that method was applied was not relevant. That is, because defendant necessarily had to make one copy of the Sony code in order to study it, it was permitted to make and use hundreds of subsequent copies in order to make the disassembly process more expedient. The Ninth Circuit also faulted the district court for distinguishing between legitimate "studying" and illicit "use" of plaintiff's program, saying that both were permitted under Sega.

The Ninth Circuit further held that the new game platform was transformative, or at least "modestly transformative," because the defendant created its own new expression rather than just repackaging plaintiff's code. So the court distinguished the Second Circuit's Infinity Broadcast6 on this basis, but its reasoning seems in conflict with the Ninth Circuit's own ruling in Dr. Seuss, where the so-called parodist also created its own new expression, but the result was still deemed non-transformative.

Under the fourth factor, the court held that the VGS did not merely supplant the PlayStation console, but was a "legitimate competitor" in Sony's market. The end result in Connectix was that the defendant's extensive, admittedly unnecessary intermediate copying was excused as a fair use. A petition for rehearing was denied, and a petition for certiorari has been filed.

Tiffany v. Reno-Tahoe Specialty

At the other end of the spectrum, the Nevada District court in Tiffany Design, Inc. v. Reno-Tahoe Specialty, Inc.7 found, unlike the Ninth Circuit in Sony v. Connectix, that intermediate copying was infringement per se, without even inquiring whether the end product was also substantially similar. Plaintiff in Tiffany makes videos, calendars, postcards, and so on, one of which features an original aerial photograph of the Las Vegas strip at night. Defendant bought plaintiff's postcard, scanned the Las Vegas image into a digital photo-editing program, and electronically copied several of the buildings from that image to paste into its own Las Vegas postcard. Plaintiff moved for summary judgment of liability as to both the intermediate scanning of the image and the final end product.

Without much analysis, the court concluded that the scanning-in of the photograph was infringement as a matter of law and granted summary judgment for plaintiff, but refused to grant summary judgment as to the defendant's finished postcard because there was a genuine issue of fact as to whether it was substantially similar to plaintiff's original card.

The clear import of the decision is that a non-infringing ultimate use does not necessarily excuse intermediate copying. Rather, a court may break down the defendant's activity and look to each step in isolation. This has long been the practice of the courts in cases where various steps of an infringement are carried out by different parties, such as the course-pack photocopying cases or the recent MP3.com action, 8 but Tiffany shows that the same approach can apply when the defendant itself performs both infringing and non-infringing acts as part of the same overall commercial activity, here, making and selling a postcard. With the prevalence of digital scanning, sampling, and the like in many creative fields, this case could, if followed, prove significant far beyond its own facts.

Ticketmaster, Inc. v. Tickets.com

The third case in which the "intermediate copying" issue arose was Ticketmaster Corp. v. Tickets.com, Inc.9 There, defendant operated a website for selling entertainment and sports tickets. Defendant's site had a separate web page for each event, listing date, time, ticket price, and other factual information. If a user of defendant's site wished to purchase tickets for an event to which defendant was not authorized to sell tickets, the site instructed the user to "buy this ticket from another on-line ticketing company" and provided a hypertext link to the website of the authorized broker for that event, namely plaintiff Ticketmaster. Upon clicking the link, the user was transferred directly to an internal "event" page of the Ticketmaster website, thus bypassing Ticketmaster's home page. Ticketmaster sued under various theories including copyright infringement, and the court identified three ways in which the defendant ostensibly copied original Ticketmaster works: (1) by electronically copying entire Ticketmaster event pages as the initial step in extracting the factual data about particular events, (2) by reprinting that factual data on the defendant's own event pages, and (3) by providing hyperlinks to Ticketmaster's event pages.

Defendant moved to dismiss the copyright claim, but the court denied the motion. The second and third types of copying were not infringing, the court held, because the factual data copied from Ticketmaster was not copyrightable and mere hyperlinking did not result in a reproduction of Ticketmaster's pages. On this latter point, in a sentence sure to gladden the hearts of the internet community, the court declared that "Hyperlinking itself does not involve a violation of the Copyright Act." In fact, Ticketmaster's complaint did not allege that the defendant's hyperlinking was a copyright infringement, but the court's ringing rejection of the idea suggests that Ticketmaster was wise not to pursue the claim on this basis.

Ticketmaster's copyright claim was allowed to proceed, however, despite the court's forgiveness of hyperlinking, because of the allegation that defendant copied Ticketmaster's event pages into defendant's own computers "to facilitate extraction of the facts." "Where [defendant] is alleged to have copied is in the making of thousands of copies taken from Ticketmaster's internal web pages for the purpose of extracting factual data carried thereon." In other words, it was the intermediate copying of Ticketmaster web pages which survived the motion to dismiss, even as the hyperlinking claim was thrown out.

Conclusion

Between the Sony, Tiffany and Ticketmaster cases, the courts have thus covered most of the bases with respect to intermediate copying: it can be a fair use as in Sony, a per se infringement as in Tiffany, or a sustainable allegation of infringement for purposes of a 12(b)(6) motion. Because all these cases arose in the Ninth Circuit, perhaps that court will take the lead in harmonizing an increasingly chaotic, and increasingly important, body of caselaw. Or, if the Supreme Court grants certiorari in the Sony case, the harmonization may come from a higher authority.

This article was previously published in the New York Law Journal.

Footnotes

1 In the interest of full disclosure, the authors note that their firm has been among the outside counsel working with Sony in the appeal, and pending petition for certiorari, in Sony v. Connectix.

2 977 F.2d 1510 (9th Cir. 1992).

3 203 F.3d 596 (9th Cir. 2000).

4 Feist v. Rural Tel. Serv. Co., 499 U.S. 340 (1991).

5 Dr. Seuss Enterprises v. Penguin Books USA, Inc., 109 F.3d 1394, 1401 (9th Cir. 1997), quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 580 (1994).

6 Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104 (2d Cir. 1998).

7 55 F. Supp. 2d 1113 (D. Nev. 1999).

8 UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y. 2000); see Bernstein & Clarida, "New Rulings Protect Music on the Web," N.Y.L.J. May 19, 2000.

9 54 U.S.P.Q. 2d 1344 (C.D. Cal. 2000).

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