Midway Mfg. Co. v. Artic Int'l, Inc. - 704 F.2d 1009 (7th Cir. 1983)

Rule:

Among a copyright owner's exclusive rights is the right to prepare derivative works based upon the copyrighted work. 17 U.S.C.S. § 106(2). The speeded-up video game that a licensee creates with a circuit board supplied by the defendant is a derivative work, therefore a licensee who lacks the plaintiff's authorization to create a derivative work is a direct infringement and the defendant is a contributory infringer through its sale of the speeded-up circuit board.

Facts:

Defendant, Artic International, Inc., sold circuit boards that copied and speeded up the rate of plaintiff Midway Manufacturing, Co.’s copyrighted video games. Plaintiff sued defendant, alleging that defendant’s sale of the two circuit boards infringed its copyrights in its video games. The district court enjoined defendant from manufacturing or distributing circuit boards that can be used to play video games substantially similar to those protected by plaintiff's copyrights. Defendant appealed, arguing that plaintiff has not shown a likelihood of succeeding on the merits of its claim of copyright infringement.

Issue:

Under the circumstances, was it proper to enjoin the defendant from manufacturing or distributing circuit boards that can be used to play video games substantially similar to those protected by plaintiff's copyrights? 

Answer:

Yes.

Conclusion:

The court upheld the injunction, holding that video games were copyrightable as audiovisual works under the 1976 Copyright Act. 17 U.S.C.S. § 117 was intended only to leave unaltered the existing law governing the exclusive rights of owners of copyrights in computer programs. Since the creator of the speeded up game was a direct infringer as a licensee who lacked plaintiff's authorization to create a derivative, the defendant was a contributory infringer through its sale of the speeded-up circuit board.