Midway, Stern winners
in copyright cases
In two separate landmark deci-
sions, Midway Manufacturing and
Stern Electronics have won battles
against infringers of their copy-
righted games.
Midway's victory came January
18, when the International Trade
Commission served interlocutory
orders against eighteen companies
to cease and desist the importation
and/ or sale of copies of Poe-Man
video games or components of the
games, including the printed circuit
boards and semiconductor chips.
The eighteen companies were
among the original respondents
against whom the investigation was
initiated on July 1, 1981. (See related
article on copyright, this issue.)
The decision in favor of Stern was
rendered by the U .S. Court of
Appeals for the Second Circuit
sitting in New York, and affirmed an
earlier district court decision in
which Stern was awarded a prelimi-
nary injunction and impounding
order against several defendants.
The two decisions serve to estab-
lish that copyright protection is avail-
able for the visual images displayed
by video games.
In the Midway action, a large num-
ber of additional companies were
charged with infringing the com-
pany's rights in Poe-Man after the
initial investigation had already
begun. Those companies have been
added as respondents in the lTC pro-
ceedings and Midway will be seeking
permanent orders to cease and
desist against all of the respondents,
which now exceed fifty in number.
The eighteen respondents subject
to the present orders in the Midway
decision are: Artie International ,
Inc.; Omni Video Games, Inc.; Stan
Rousso, Inc.; Ferncrest Distributors,
Inc.; K & K Industrial Services;
Morrison Enterprises Corp.; Carlin
Tiger Shokie, Ltd.; Formosa Pro-
ducts Industrial Corp.; Friend Spring
Industrial Co., Ltd.; International
Scientific Co., Ltd.; Jay's Industries;
Kyugo Co., Ltd.; Loson Electrical
Co.; Nippon Semicon, Inc .; Seagull
Industries Co., Ltd.; Sepac Co.,
Ltd.; Shoei Co., Ltd.; and SP-World
Amusement Co., Ltd.
In the Stern case, the order was
levied against Bay Coin Distributors;
Omni Video Games, Inc.; and Fern-
crest Distributors, Inc. and princi-
pals of that company Frank Gaglione
and Kevin Mcintyre.
The Stern case involved Scramble,
which has been the subject of a
number of other copyright lawsuits
brought by the company in which
injunctions, seizure, and impound-
ment orders have been issued by
various federal courts.
The U.S. Court of Appeals is the
highest court that has ruled in favor
of copyright protection for the sights
and sounds of video games. Federal
district courts throughout the
United States have consistently
ruled in favor of such copyright pro-
tection, but the industry has awaited
a ruling from the Court of Appeals.
George H . Gerstman, Stern's
copyright attorney, pointed out that
the Court of Appeals faced the
issues squarely. The court clearly
held that the audiovisual work is
"fixed" in the memory devices of the
game, stating:
"The audiovisual work is
permanently embodied in a material
object, the memory devices, from
which it can be perceived with the aid
of the other components of the
game."
The Court of Appeals agreed with
Stern and the District Court in ruling
that "the player's participation does
not withdraw the audiovisual work
from copyright eligibilitv."
The C ourt of Appeals also held
that the visual display is copyright-
able separate from the underlying
computer program "which has an
independent existence and is itself
eligible for copyright."
The case also involved trademark
infringement charges, and the Court
affirmed the District Court's prelimi-
nary injunction against the use of the
mark S cramble by Omni. The Court
of Appeals held that Omni's early use
of the trademark was in bad faith and
that "the equities abundantly justi-
fied issuance of an injunction against
Omni's use of the mark."
Stern's Gerstman stated: "This
decision should help the industry in
combating bootleg video games, and
the issuance of injunctions, seizure
orders, and significant penalties
against infringers should now be
even more easily obtained than
before."
Midway's attorneys in Chicago
have stated that any person or com-
pany assembling, selling, or oper-
ating infringing copies of Poe-Man
games may be subject to civil action
under the federal copyright laws, and
may suffer liability for damages,
profits, and attorneys' fees.
Additionally, they warn that such
infringing games may be impounded
by the U.S. Marshal.
Oh io moves against five "blue sky" firms
Attorney Patricia Mel! of the Ohio
State Attorney General 's office
indicates that office is filing action
against five business opportunity
"blue sky" operators. The com-
panies are based in Ohio, but are
selling game and drink machine
franchises in and out of state.
"They are selling franchises
promising location finding, servicing,
bookkeeping assistance , and
PLAY METER, March 15 , 1982
management advising," Mel! says.
"They are offering the businesses as
a second income, an investment, and
even arranging the loans.
"The problem is the people never
get the games. The companies take
the money and fade into the wood -
work ," he said.
Because the actions have not yet
been filed, the names of the com-
panies against which the action is
being taken were not released, but
the Attorney General's office indi-
cated that these were just a few of
the "blue sky" salesmen that they
were closing in on. In a recent talk
delivered to the Ohio Music and
Amusement Association , Barbara
Roman, assistant chief on Consumer
Fraud for the state, detailed plans to
crack down on business opportunity
fraud.
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