Play Meter

Issue: 1986 March 01 - Vol 12 Num 3

GUEST COMMENTARY
COMMENT ARY
GUEST
Opinions
di
ff
er
fer
dif
ns
nio
Opi
Video-game manufacturers
manufacturers have
have begun
begun working
working to
to reduce
reduce the
the flow
flow into
into the
the U.S.
U.S. of
of
Video-game
parallel imports-not
imports-not counterfeits,
counterfeits, but
but games
games legally
legally manufactured
manufactured and
and sold
sold abroad
abroad and
and then
then
parallel
resold to
to U.S.
U.S. importers
importers other
other than
than the
the companies
companies assigned
assigned U.S.
U.S. distribution
distribution rights
rights by
by the
the
resold
manufacturer.
manufacturer.
Like counterfeit
counterfeit games,
games, parallel
parallel imports
imports lessen
lessen the
the value
value of
of the
the U.S.
U.S. manufacturers'
manufacturers'
Like
games, especially
especially when
when those
those games
games are
are dedicated
dedicated and
and the
the parallel
parallel imports
imports are
are sold
sold as
as kits.
kits.
games,
Manufacturers see
see the
the same
same threat
threat whether
whether from
from a a counterfeit
counterfeit or
or a a parallel
parallel import.
import.
Manufacturers
American Amusement
Amusement Machine
Machine Association
Association (AAMA),
( AAMA), which
which represents
represents U.S.
U.S.
The American
The
manufacturers
and
distributors,
recently
issued
a
position
paper
on
parallel
imports
in
which
it
manufacturers and distributors, recently issued a position paper on parallel imports in which it
states that
that parallel
parallel importers-and
importers-and their
their customers-infringe
customers-infringe on
on copyrights,
copyrights, and
and in
in doing
doing so
so
states
incur civil
civil and
and criminal
criminal liability.
liability.
incur
A
Washington
,
0.
C.,
attorney who
who has
has advised
advised parallel
parallel importers,
importers, Richard
Richard H.
H. Stern,
Stern, has
has
A Washington, D.C., attorney
written
a
reply
to
the
AAMA
statement
in
which
he
asserts
that
the
legal
issues
of
parallel
written a reply to the AAMA statement in which he asserts that the legal issues of parallel
imports remain
remain unresolved
unresolved and
and the
the AAMA
AAMA statement
statement should
should be
be considered
considered only
only the
the advocacy
advocacy
imports
of an
an opponent
opponent of
of parallel
parallel imports.
imports.
of
The AAMA
AAMA statement
statement and
and Stern's
Stern's reply
reply follow
follow in
in their
their entirety.
entirety.
The
Parallel importers
importers face
face penalties
penalties
Parallel
While the
the amusement-game
amusement-game industry
industry in
in general
general
While
and video-game
video-game manufacturers
manufacturers and
and distributors
distributors in
in
and
particular
have
long
been
plagued
by
pirating
particular have long been plagued by pirating
activities of
of illegal
illegal manufacturers,
manufacturers, a a more
more recent
recent
activities
problem involves
involves the
the unlawful
unlawful importation
importation and
and
problem
distribution of
of video
video games
games (audio-visual
(audio-visual works)
works)
distribution
legally manufactured
manufactured but
but shipped
shipped into
into the
the United
United
legally
States in
in violation
violation of
of exclusive
exclusive distribution
distribution agree-
agree-
States
ments and
and copyrights
copyrights held
held by
by the
the legitimate
legitimate United
United
ments
States importers
importers of
of these
these games.
games . The
The purpose
purpose of
of
States
this
article
is
to
explain
the
legal
remedies
available
this article is to explain the legal remedies available
under present
present copyright
copyright laws
laws which
which would
would subject
subject
under
those trading
trading in
in "parallel
"parallel imports"
imports" to
to substantial
substantial
those
civil and
and criminal
criminal penalties.
penalties.
civil
often happens
happens in
in the
the industry
industry that
that a a company
company
It It often
in the
the United
United States
States obtains
obtains exclusive
exclusive rights
rights from
from a
a
in
foreign manufacturer
manufacturer to
to distribute
distribute a a particular
particular video
video
foreign
game or
or components
components for
for the
the games.
games . As
As well
well as
as the
the
game
exclusive
contractual
rights,
the
foreign
manufac-
exclusive contractual rights, the foreign manufac-
turer also
also often
often grants
grants to
to the
the state-side
state-side company
company the
the
turer
exclusive protective
protective rights
rights as
as the
the sole
sole claimant
claimant
exclusive
under the
the U.S.
U.S. Copyright
Copyright Act.
Act. Is
Is the
the United
United States
States
under
copyright holder
holder protected
protected by
by copyright
copyright laws
laws when
when
copyright
the legitimate
legitimate foreign
foreign manufacturer
manufacturer sells
sells its
its goods
goods
the
to an
an unauthorized
unauthorized third
third party
party who
who imports
imports these
these
to
goods into
into the
the United
United States?
States? If If there
there is
is an
an infringe-
infringe-
goods
ment, are
are the
the unauthorized
unauthorized importer
importer and
and others
others in
in
ment,
the chain
chain of
of distribution
distribution (such
(such as
as distributors
distributors and
and
the
operators) subject
subject to
to the
the criminal
criminal penalties
penalties of
of the
the
operators)
Copyright
Act?
The
answer
to
both
these
questions
Copyright Act? The answer to both these questions
is clearly
clearly yes.
yes .
is
78
78
History of
of copyright
copyright protection
protection of
of video
video games
games
History
Copyright protection
protection is
is granted
granted to
to original
original
Copyright
works
under
the
Copyright
Act
of
1976,
Title
17 of
of
works under the Copyright Act of 1976, Title 17
the United
United States
States Code
Code as
as amended.
amended . Section
Section 102
102 of
of
the
the Copyright
Copyright Act
Act states
states that
that copyright
copyright protection
protection is
is
the
to "motion
"motion pictures
pictures and
and other
other audiovisual
audiovisual
given to
given
works ." After
After video
video games
games first
first began
began to
to appear
appear
works."
on
the
market
in
the
mid
'70s
,
many
felt
that
copy-
on the market in the mid '70s, many felt that copy-
right protection
protection could
could not
not be
be obtained
obtained to
to prevent
prevent
right
unauthorized reproduction
reproduction of
of the
the games.
games. Although
Although
unauthorized
video
games
per
se
are
not
listed
in
the
seven
cate-
video games per se are not listed in the seven cate-
gories under
under section
section 102,
102, as
as stated
stated in
in the
the General
General
gories
Guide to
to the
the Copyright
Copyright Act
Act of
of 1976
1976 (published
(published by
by
Guide
the
Copyright
Office
in
1977),
these
seven
cate-
the Copyright Office in 1977), these seven cate-
gories are
are "illustrative
"illustrative and
and are
are not
not meant
meant to
to be
be
gories
!imitative." Case
Case law
law has
has established
established that
that video
video
limitative."
games qualify
qualify as
as "other
"other audiovisual
audiovisual works,"
works ," and
and
games
therefore
clearly
are
within
the
ambit
of
the
Copy-
therefore clearly are within the ambit of the Copy-
right Act.
Act.
right
Under Section
Section 502
502 of
of the
the Copyright
Copyright Act,
Act , one
one
Under
whose goods
goods are
are infringed
infringed may
may seek
seek several
several forms
forms
whose
of relief:
relief: the
the copyright
copyright owner
owner may
may obtain
obtain a a court
court
of
order enjoining
enjoining the
the infringer
infringer from
from copying
copying or
or
order
importing goods
goods in
in this
this country;
country; the
the court
court may
may
importing
impound and
and destroy
destroy infringing
infringing articles;
articles; and
and the
the
impound
infringer
may
be
held
liable
for
damages
and
lost
infringer may be held liable for damages and lost
profits (including
(including attorney's
attorney's fees)
fees) to
to the
the wronged
wronged
profits
party . In
In addition
addition to
to these
these remedies,
remedies , the
the copyright
copyright
party.
law (Section
(Section 506)
506) provides
provides for
for criminal
criminal penalties
penalties of
of
law
fines and
and imprisonment.
imprisonment. A
A 1982
1982 amendment
amendment to
to the
the
fines
act increased
increased the
the maximum
maximum fine
fine to
to $250,000
$250 ,000 and
and the
the
act
PLAY METER,
METER, March
March 1,
1, 1986
1986
PLAY
imports
parallel imports
on parallel
maximum prison
prison sentence
sentence to
to 5
5 years
years (17
maximum
(17 USC
USC 506
506
(a)
,
18
USC
2319)
.
(a), 18 USC 2319).
Civil penalties,
penalties, although
although attractive
attractive in
in theory,
theory, as
as
Civil
the AAMA
AAMA have
have been
been successful
successful in
in putting
putting con-
con -
the
victed
pirates
in
jail.
To
date,
the
FBI
has
success-
victed pirates in jail. To date, the FBI has success-
pirates. First
First of
of all,
all, it
it is
is very
very difficult
difficult for
for a
a legitimate
legitimate
pirates.
importantly, arrested
arrested importers
importers and
and distributors,
distributors,
importantly,
practical matter
matter provide
provide little
little deterrence
deterrence to
to
a a practical
distributor or
locate and
and bring
the
distributor
or manufacturer
manufacturer to
to locate
bring the
pirate
to
trial
,
and
even
when
this
can
be
done,
pirate to trial, and even when this can be done,
pirates have
have been
been successful
successful in
in concealing
concealing their
the ir
pirates
While the
the copyright
copyright owner
owner might
might get
get a
a
assets. While
assets.
judgment,
it
may
be
an
empty
one
.
Without
crimi-
judgment, it may be an empty one. Without crimi-
nal penalties,
penalties, illegal
illegal manufacturers
manufacturers and
and distributors
distributors
nal
thus have
have little
little incentive
incentive to
to stop
stop their
their infringing
infring ing
thus
activities
.
For
these
reasons
,
the
AAMA
has
activities. For these reasons, the AAMA has
vigorously
pursued
enforcement
of
criminal
vigorously pursued enforcement of criminal
sanctions against
against convicted
convicted pirates.
pirates.
sanctions
The efforts
efforts of
of law-enforcement
law-enforcement authorities
authorities and
and
The
fully conducted
conducted three
three sting
sting operations,
operations, confiscated
confiscated
fully
over $3
$3 million
million in
in counterfeit
counterfe it games,
games, and,
and , most
most
over
some of
of whom
whom have
have been
been convicted
convicted and
and sentenced
sentenced
some
to prison.
prison . In
In September,
Septembe r, 1984,
1984, the
the FBI
FBI confiscated
con fi scated
to
approximately $1
$1 million
million in
in counterfeit
counterfeit games
games and
and
approximately
arrested
five
individuals
in
the
Wash
ington
,
D.C
arrested five individuals in the Washington, D.C., .,
area. In
In April,
April, 1985,
1985, an
an Atlanta
At lanta sting
sting operation
operation con-
con-
area.
ducted by
by the
t he FBI
FBI netted
netted five
f ive arrests;
arrests; the
t he FBI
FBI con-
con-
ducted
fiscated 167
167 illegal
illegal machines
machines worth
worth an
an estimated
estimated $2
$2
fiscated
million. One
One of
of those
those arrested,
arrested , Tim
Tim O'Reilly,
O'Rei lly, a a 23-
23-
million.
year-old Canadian
Canadian citizen
cit izen and
and a a first-year
f irst-year law
law
year-old
student, was
of copyright
infringement
student,
was convicted
convicted of
copyright infringement
(co n tin ued on
on page
page 80)
80)
(continued
AAMA statement only advocacy
AAMA
I think
th i nk the
Statement by
the " "Statement
by the
the American
American
Amusement Manufacturers
Manufacturers Association
Amusement
Association (AAMA)
(AAMA)
Regarding Parallel
Parallel Imports"
Imports" is
is intended
intended to
to be
be a
a
Regarding
helpful comment
on the
the present
present uncertain
uncertain state
state of
of
helpful
comment on
the law
law in
in this
this field,
field, and
and therefore
therefore it it should
should be
be
the
appreciated by
by those
those in
in the
the video-game
video-game business.
business.
appreciated
Unfortunately, despite
despite its
its good
good intentions,
intentions, it
it is
is not
not
Unfortunately,
wholly dispositive
disposit i ve of
of the
the issues,
issues , and
and some
some
wholly
additional
comment
is
therefore
appropriate.
additional comment is therefore appropriate.
of all,
all , the
the AAMA
AAMA statement
statement is
is quite
quite correct
correct
First of
First
in pointing
pointing out
out that
that the
the federal
federal courts
courts now
now uniformly
uniformly
in
accept
the
principle
that
v
ideo
games
accept the principle that video games are
are
protectable under
under the
the copyright
copyr i ght laws.
laws . The
The
protectable
uncertainty over
over the
the copyrightability
copyrightab ility of
video games
uncertainty
of video
games
that existed
existed several
several years
years ago
ago has
has now
now been
been
that
dispelled
by
many
decisions
of
federal
courts.
dispelled by many decisions of federal courts.
Therefore, the
the intentional
intentional sale
sale or
or use
use of
of counterfeit
counterfei t
Therefore,
or "copy"
"copy" games
games is
is copyright
copyright infringement,
infringement, and
and it
it
or
may be
be punished
punished by
by fine
fine or
or imprisonment.
imprisonment. No
No
may
sensible video-game
video-game operator
operator will
w ill want
want to
to deal
deal in
in
sensible
copy games,
games, and
and operators
operators will
w ill want
want to
to assure
assure
copy
themselves that
that their
their suppliers
are not
not furnishing
furnishing
themselves
suppliers are
them
with
copy
games
to
avoid
unnecessary
and
them with copy games to avoid unnecessary and
possibly
very
harmful
problems.
possibly very harmful problems.
The situation
s ituation as
as to
to parallel
parallel importation,
importation ,
The
however, is
is less
less clear
clear than
than the
the AAMA
AAMA statement
statement
however,
makes
it
appear.
There
exist
only
three
reported
makes it appear. There exist only three reported
qecisions; their
is inconclusive;
inconclusive; and
do
decisions;
their analysis
analysis is
and they
they do
not address
address all
all of
of the
the important
important issues.
issues. It
It may
may be
be that
that
not
the position
position forcefully
forcefully advocated
advocated in
in the
the AAMA
AAMA
the
statement
will
eventually
prevail
in
the
federal
statement will eventually prevail in the federal
PLAY METER,
METER, March
Morch 1,
1, 1986
1986
PLAY
courts, but
but in
in February
is still
still too
too early
early to
to tell,
tell,
courts,
February 1986
1986 it it is
and the
the AAMA
AAMA statement
statement must
m ust therefore
therefore still
still be
be
and
regarded as
as only
only a a piece
p iece of
of advocacy
advocacy for
for one
one
regarded
viewpoint, that
that of
of the
the major
major video-game
video-game manufac-
manufac-
viewpoint,
turers who
who oppose
oppose parallel
parallel importation.
im portation.
turers
The CBS
CBS decision
decision (569
(569 F.
F. Supp.
Supp. 47
47 [E.D.
[ E.D. Pa.
Pa.
The
1983)) discussed
discussed in
in the
the AAMA
AAMA statement
statement involved
involved a
a
1983])
license from
from CBS
CBS to
to a
a foreign
fo reign manufacturer
manufacturer to
to
license
manufacture
and
sell
CBS
records
in
a
foreign
manufacture and sell CBS records in a foreign
country. The
The clear
clear intent
intent was
was not
not to
to grant
grant any
any
country.
license in
in the
the copyrighted
copyrighted music
music in
in the
the United
U ni ted
license
States. A
A third
third party
party then
then bought
bought up
up records
records at
at
States.
distress
prices
after
the
licensee's
business
failed
distress prices after the licensee's business failed, ,
and tried
tried to
to circumvent
circumvent the
the original
license by
and
original license
by
shipping the
the records
records into
in to the
t he United
United States,
States, a
a
shipping
market out
out of
of which
which they
they
market
kept
.
Accordingly
,
the
kept. Accordingly, the
copyright infringement.
infringement.
copyright
had been
been intended
intended to
to be
be
had
federal
co
u
rt
fo
un
d
a
federal court found a
In a a second
second case,
case, familiar
fa miliar perhaps
perhaps to
to many
many
In
readers
of
Play
Meter,
N
intendo/
America
sued
readers of Play Meter, Nintendo/America sued
Elcon , a a firm
firm in
in Detroit
Detroit (564
(564 F.
F. Supp.
Supp. 937
937 [E.D.
[ E.D. Mich.
M ich .
Elcon,
1982)). Nintendo
Nintendo had
owned the
1982]).
had owned
the United
United States
States
copyright in
in Donkey
Donkey Kong
Kong and
and had
had indirectly
ind irectly
copyright
licensed Falcon
Falcon to
to make
make and
and sell
sell the
the video
video game
ga me in
in
licensed
Japan ; Falcon
Falcon was
was not
not supposed
su pposed to
to export
export the
the
Japan;
games to
to the
the United
United States
States market.
market. However,
However,
games
Falcon
sold
printed
circuit
boards
for
the
game to
to
Falcon sold printed circuit boards for the game
International, which
which shipped
shipped them
them to
to the
the United
Un ited
International,
States and
appeared to
to the
the court
hat
States
and Elcon
Elcon. . It
It appeared
court t that
Nintendo had
to anyone
Nintendo
had never
never granted
granted any
any license
license to
anyone
(co ntinued on
on page
page 82)
82)
(continued
79
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