Copyrights in Digital Information. Sega Enterprises, Ltd., develops and markets video entertainment systems, including the "Genesis" console and video game cartridges. Accolade, Inc, is an independent developer, manufacturer, and marketer of computer

Question

entertainment soft-ware, including game cartridges that are compatible with Genesis and other computer systems. Sega licenses its copyrighted computer code and its trademark to developers of Genesis-compatible games in competition with Sega. Accolade chose not to purchase a license from Sega, however, but to reverse engineer Sega's games to discover the requirements of the code that would make Accolade's games compatible with Genesis. As part of the reverse engineer-ing, Accolade transformed the machine-readable object code contained in Sega's game car-tridges into human-readable source code using a process called "disassembly." At the end of the process, Accolade created a manual that incorporated the information it had discovered about the requirements for a Genesis-compatible game. The manual did not include any of Sega's code. With the manual, Accolade created a new computer code; with this code, Acco-lade developed Genesis-compatible games. Sega sued Accolade, claiming, among other things, that Accolade's disassembly of its computer program constituted copyright infringement. Accolade contended that its disassembly of the code was a fair use. How should the court rule? Discuss fully.

Answer 1

Copyrights in digital information
The court concluded that Accolade had a legitimate interest in learning how to make Genesis-compatible game cartridges and ruled that its disassembly of the Sega program was a fair use. The court reasoned that if the only method of gaining access to the unprotected aspects of a computer program is to disassemble the code, and the user has a legitimate interest in gaining access, it is a fair use to do so. The court considered the four factors set out in the Copyright Act to determine whether disassembly is a fair use. As to the first factor—the purpose and character of the use—the court recognized that Accolade's use was for a commercial purpose but pointed out that its actual use was only intermediate; the ultimate use was derivative. As to the second factor—the nature of the copyrighted work—the court concluded that Sega's code was essentially functional. The court reasoned that Accolade disassembled Sega's code to discover the underlying ideas—its functional requirements—not to copy the expression of those ideas. As to the third factor—the amount of the work used in relation to the whole—the court acknowledged that Accolade copied the entirety of the code but noted that Accolade's use is limited. As to the fourth factor—the effect of the use on the market—the court concluded that Accolade was legitimately competing in the market for Genesis-compatible games; Sega, with its action against Accolade, was attempting to foreclose competition.