MICRO STAR,
Plaintiff-Appellant,

v.
No. 96-56426
FORMGEN INC., a corporation; GT
D.C. No.
INTERACTIVE SOFTWARE CORP.; 3D
CV-96-03435-MLH
REALMS ENTERTAINMENT, aka 3D
Realms Entertainment; DOES, 1
through 100, inclusive.,
Defendants-Appellees.

MICRO STAR,
Plaintiff-Appellant/
Cross-Appellee,

v.
No. 96-56433

FORMGEN INC., a corporation; GT
D.C. No.
INTERACTIVE SOFTWARE CORP.; 3D
CV-96-03435-MLH
REALMS ENTERTAINMENT, aka 3D
OPINION
Realms Entertainment; DOES, 1
through 100, inclusive.,
Defendants-Appellees/
Cross-Appellants.

Appeal from the United States District Court
for the Southern District of California
Marilyn L. Huff, District Judge, Presiding

Argued and Submitted
November 4, 1997--Pasadena, California

Filed Sepetember 11, 1998
Before: Alex Kozinski, David R. Thompson* and
Stephen S. Trott, Circuit Judges.

Opinion by Judge Kozinski

_________________________________________________________________


_________________________________________________________________

COUNSEL

Philip H. Stillman, Flynn, Sheridan, Tabb & Stillman, San
Diego, California, for the plaintiff-appellant/cross-appellee.

Michael S. Oberman, Kramer, Levin, Naftalis & Frankel,
New York, New York, for the defendants-appellees/cross-
appellants.

_________________________________________________________________

OPINION

KOZINSKI, Circuit Judge.

Duke Nukem routinely vanquishes Octabrain and the Pro-
tozoid Slimer. But what about the dreaded Micro Star?

I

FormGen Inc., GT Interactive Software Corp. and Apogee
Software, Ltd. (collectively FormGen) made, distributed and
own the rights to Duke Nukem 3D (D/N-3D), an immensely
popular (and very cool) computer game. D/N-3D is played
from the first-person perspective; the player assumes the per-
sonality and point of view of the title character, who is seen
on the screen only as a pair of hands and an occasional boot,
much as one might see oneself in real life without the aid of
a mirror.1 Players explore a futuristic city infested with evil
aliens and other hazards. The goal is to zap them before they
zap you, while searching for the hidden passage to the next
level. The basic game comes with twenty-nine levels, each
with a different combination of scenery, aliens, and other
challenges. The game also includes a "Build Editor," a utility
that enables players to create their own levels. With Form-
Gen's encouragement, players frequently post levels they
have created on the Internet where others can download them.
Micro Star, a computer software distributor, did just that: It
downloaded 300 user-created levels and stamped them onto a
CD, which it then sold commercially as Nuke It (N/I). N/I is
packaged in a box decorated with numerous "screen shots,"
pictures of what the new levels look like when played.

Micro Star filed suit in district court, seeking a declaratory
judgment that N/I did not infringe on any of FormGen's copy-
rights. FormGen counterclaimed, seeking a preliminary
injunction barring further production and distribution of N/I.
Relying on Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc.,
964 F.2d 965 (9th Cir. 1992), the district court held that N/I
was not a derivative work and therefore did not infringe
FormGen's copyright. The district court did, however, grant
a preliminary injunction as to the screen shots, finding that
N/I's packaging violated FormGen's copyright by reproduc-
ing pictures of D/N-3D characters without a license. The court
rejected Micro Star's fair use claims. Both sides appeal their
losses.

II

[1] A party seeking a preliminary injunction must show
"either a likelihood of success on the merits and the possibil-
ity of irreparable injury, or that serious questions going to the
merits were raised and the balance of hardships tips sharply
in its favor." Johnson Controls, Inc. v. Phoenix Control Sys-
tems, Inc., 886 F.2d 1173, 1174 (9th Cir. 1989). Because "in
a copyright infringement claim, a showing of a reasonable
likelihood of success on the merits raises a presumption of
irreparable harm," id., FormGen need only show a likelihood
of success on the merits to get the preliminary injunction it
seeks (barring the manufacture and distribution of N/I) and to
preserve the preliminary injunction it already won (barring the
screen shots on N/I's packaging).

III

[2] To succeed on the merits of its claim that N/I infringes
FormGen's copyright, FormGen must show (1) ownership of
the copyright to D/N-3D, and (2) copying of protected expres-
sion by Micro Star. See Triad Systems Corp. v. Southeastern
Express Co., 64 F.3d 1330, 1335 (9th Cir. 1995). FormGen's
copyright registration creates a presumption of ownership, see
id., and we are satisfied that FormGen has established its
ownership of the copyright. We therefore focus on the latter
issue.

FormGen alleges that its copyright is infringed by Micro
Star's unauthorized commercial exploitation of user-created
game levels. In order to understand FormGen's claims, one
must first understand the way D/N-3D works. The game con-
sists of three separate components: the game engine, the
source art library and the MAP files.2  The game engine is the
heart of the computer program; in some sense, it is the pro-
gram. It tells the computer when to read data, save and load
games, play sounds and project images onto the screen. In
order to create the audiovisual display for a particular level,
the game engine invokes the MAP file that corresponds to that
level. Each MAP file contains a series of instructions that tell
the game engine (and, through it, the computer) what to put
where. For instance, the MAP file might say scuba gear goes
at the bottom of the screen. The game engine then goes to the
source art library, finds the image of the scuba gear, and puts
it in just the right place on the screen.3  The MAP file
describes the level in painstaking detail, but it does not actu-
ally contain any of the copyrighted art itself; everything that
appears on the screen actually comes from the art library.
Think of the game's audiovisual display as a paint-by-
numbers kit. The MAP file might tell you to put blue paint in
section number 565, but it doesn't contain any blue paint
itself; the blue paint comes from your palette, which is the
low-tech analog of the art library, while you play the role of
the game engine. When the player selects one of the N/I
levels, the game engine references the N/I MAP files, but still
uses the D/N-3D art library to generate the images that make
up that level.

FormGen points out that a copyright holder enjoys the
exclusive right to prepare derivative works based on D/N-3D.
See 17 U.S.C. S 106(2) (1994). According to FormGen, the
audiovisual displays generated when D/N-3D is run in con-
junction with the N/I CD MAP files are derivative works that
infringe this exclusivity. Is FormGen right? The answer is not
obvious.

[3] The Copyright Act defines a derivative work as

       a work based upon one or more preexisting works,
       such as a translation, musical arrangement, dramati-
       zation, fictionalization, motion picture version,
       sound recording, art reproduction, abridgment, con-
       densation, or any other form in which a work may be
       recast, transformed, or adapted. A work consisting of
       editorial revisions, annotations, elaborations, or other
       modifications which, as a whole, represent an origi-
       nal work of authorship, is a "derivative work."

Id. S 101. The statutory language is hopelessly overbroad,
however, for "[e]very book in literature, science and art, bor-
rows and must necessarily borrow, and use much which was
well known and used before." Emerson v. Davies, 8 F. Cas.
615, 619 (C.C.D. Mass. 1845) (No. 4436), quoted in 1
Nimmer on Copyright, S 3.01, at 3-2 (1997). To narrow the
statute to a manageable level, we have developed certain
criteria a work must satisfy in order to qualify as a derivative
work. One of these is that a derivative work must exist in a
"concrete or permanent form," Galoob, 964 F.2d at 967
(internal quotation marks omitted), and must substantially
incorporate protected material from the preexisting work, see
Litchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir. 1984).
Micro Star argues that N/I is not a derivative work because
the audiovisual displays generated when D/N-3D is run with
N/I's MAP files are not incorporated in any concrete or per-
manent form, and the MAP files do not copy any of D/N-3D's
protected expression. It is mistaken on both counts.

The requirement that a derivative work must assume a con-
crete or permanent form was recognized without much discus-
sion in Galoob. There, we noted that all the Copyright Act's
examples of derivative works took some definite, physical
form and concluded that this was a requirement of the Act.
See Galoob, 964 F.2d at 967-68; see also Edward G. Black &
Michael H. Page, Add-On Infringements, 15 Hastings
Comm/Ent. L.J. 615, 625 (1993) (noting that in Galoob the
Ninth Circuit "re-examined the statutory definition of deriva-
tive works offered in section 101 and found an independent
fixation requirement of sorts built into the statutory definition
of derivative works"). Obviously, N/I's MAP files themselves
exist in a concrete or permanent form; they are burned onto
a CD-ROM. See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447,
1453 (7th Cir. 1996) (computer files on a CD are fixed in a
tangible medium of expression). But what about the audiovi-
sual displays generated when D/N-3D runs the N/I MAP files
--i.e., the actual game level as displayed on the screen?
Micro Star argues that, because the audiovisual displays in
Galoob didn't meet the "concrete or permanent form" require-
ment, neither do N/I's.

In Galoob, we considered audiovisual displays created
using a device called the Game Genie, which was sold for use
with the Nintendo Entertainment System. The Game Genie
allowed players to alter individual features of a game, such as
a character's strength or speed, by selectively "blocking the
value for a single data byte sent by the game cartridge to the
[Nintendo console] and replacing it with a new value."
Galoob, 964 F.2d at 967. Players chose which data value to
replace by entering a code; over a billion different codes were
possible. The Game Genie was dumb; it functioned only as a
window into the computer program, allowing players to tem-
porarily modify individual aspects of the game. See Lewis
Galoob Toys, Inc. v. Nintendo of Am., Inc., 780 F. Supp.
1283, 1289 (N.D. Cal. 1991).

Nintendo sued, claiming that when the Game Genie modi-
fied the game system's audiovisual display, it created an
infringing derivative work. We rejected this claim because
"[a] derivative work must incorporate a protected work in
some concrete or permanent form." Galoob, 964 F.2d at 967
(internal quotation marks omitted). The audiovisual displays
generated by combining the Nintendo System with the Game
Genie were not incorporated in any permanent form; when the
game was over, they were gone. Of course, they could be
reconstructed, but only if the next player chose to reenter the
same codes.4
[4] Micro Star argues that the MAP files on N/I are a more
advanced version of the Game Genie, replacing old values
(the MAP files in the original game) with new values (N/I's
MAP files). But, whereas the audiovisual displays created by
Game Genie were never recorded in any permanent form, the
audiovisual displays generated by D/N-3D from the N/I MAP
files are--in the MAP files themselves. In Galoob, the audio-
visual display was defined by the original game cartridge, not
by the Game Genie; no one could possibly say that the data
values inserted by the Game Genie described the audiovisual
display. In the present case the audiovisual display that
appears on the computer monitor when a N/I level is played
is described--in exact detail--by a N/I MAP file.

[5] This raises the interesting question whether an exact,
down to the last detail, description of an audiovisual display
(and--by definition--we know that MAP files do describe
audiovisual displays down to the last detail) counts as a per-
manent or concrete form for purposes of Galoob . We see no
reason it shouldn't. What, after all, does sheet music do but
describe in precise detail the way a copyrighted melody
sounds? See 1 William F. Patry, Copyright Law and Practice
168 (1994) ("[A] musical composition may be embodied in
sheet music . . . ."). To be copyrighted, pantomimes and
dances may be "described in sufficient detail to enable the
work to be performed from that description." Id. at 243 (citing
Compendium II of Copyright Office Practices S 463); see also
Horgan v. MacMillan, Inc., 789 F.2d 157, 160 (2d Cir. 1986).
Similarly, the N/I MAP files describe the audiovisual display
that is to be generated when the player chooses to play
D/N-3D using the N/I levels. Because the audiovisual dis-
plays assume a concrete or permanent form in the MAP files,
Galoob stands as no bar to finding that they are derivative
works.

[6] In addition, "[a] work will be considered a derivative
work only if it would be considered an infringing work if the
material which it has derived from a preexisting work had
been taken without the consent of a copyright proprietor of
such preexisting work." Mirage Editions v. Albuquerque
A.R.T. Co., 856 F.2d 1341, 1343 (quoting 1 Nimmer on Copy-
right S 3.01 (1986)) (internal quotation marks omitted). "To
prove infringement, [FormGen] must show that[D/N-3D's
and N/I's audiovisual displays] are substantially similar in
both ideas and expression." Litchfield v. Spielberg, 736 F.2d
1352, 1356 (9th Cir. 1984) (emphasis omitted). Similarity of
ideas may be shown by comparing the objective details of the
works: plot, theme, dialogue, mood, setting, characters, etc.
See id. Similarity of expression focuses on the response of the
ordinary reasonable person, and considers the total concept
and feel of the works. See id. at 1356-57. FormGen will
doubtless succeed in making these showings since the audio-
visual displays generated when the player chooses the N/I
levels come entirely out of D/N-3D's source art library. Cf.
Atari, Inc. v. North Am. Philips Consumer Elec. Co., 672 F.2d
607, 620 (7th Cir. 1982) (finding two video games substan-
tially similar because they shared the same "total concept and
feel").

[7] Micro Star further argues that the MAP files are not
derivative works because they do not, in fact, incorporate any
of D/N-3D's protected expression. In particular, Micro Star
makes much of the fact that the N/I MAP files reference the
source art library, but do not actually contain any art files
themselves. Therefore, it claims, nothing of D/N-3D's is
reproduced in the MAP files. In making this argument, Micro
Star misconstrues the protected work. The work that Micro
Star infringes is the D/N-3D story itself--a beefy commando
type named Duke who wanders around post-Apocalypse Los
Angeles, shooting Pig Cops with a gun, lobbing hand gre-
nades, searching for medkits and steroids, using a jetpack to
leap over obstacles, blowing up gas tanks, avoiding radioac-
tive slime. A copyright owner holds the right to create
sequels, see Trust Co. Bank v. MGM/UA Entertainment Co.,
772 F.2d 740 (11th Cir. 1985), and the stories told in the N/I
MAP files are surely sequels, telling new (though somewhat
repetitive) tales of Duke's fabulous adventures. A book about
Duke Nukem would infringe for the same reason, even if it
contained no pictures.5

[8] Micro Star nonetheless claims that its use of D/N-3D's
protected expression falls within the doctrine of fair use,
which permits unauthorized use of copyrighted works "for
purposes such as criticism, comment, news reporting, teach-
ing (including multiple copies for classroom use), scholarship,
or research." 17 U.S.C. S 107; see Narell v. Freeman, 872
F.2d 907, 913 (9th Cir. 1989). Section 107 instructs courts
"determining whether the use made of a work in any particu-
lar case is a fair use" to consider four factors: (1) the purpose
and character of the use, including whether it is commercial
in nature; (2) the nature of the copyrighted work; (3) the
amount and substantiality of the copied material in relation to
the copyrighted work as a whole; and (4) the effect of the use
on the potential market for the copyrighted work. 17 U.S.C.
S 107.

As a preliminary matter, Micro Star asks us to focus on the
player's use of the N/I CD in evaluating the fair use claim,
because--according to Micro Star--the player actually
creates the derivative work. In Galoob, after we assumed for
purposes of argument that the Game Genie did create deriva-
tive works, we went on to consider the fair use defense from
the player's point of view. See Galoob, 964 F.2d at 970. But
the fair use analysis in Galoob was not necessary and there-
fore is clearly dicta. More significantly, Nintendo alleged only
contributory infringement--that Galoob was helping consum-
ers create derivative works; FormGen here alleges direct
infringement by Micro Star, because the MAP files encom-
pass new Duke stories, which are themselves derivative
works.

[9] Our examination of the section 107 factors yields
straightforward results. Micro Star's use of FormGen's pro-
tected expression was made purely for financial gain. While
that does not end our inquiry, see Campbell v. Acuff-Rose
Music, Inc., 
510 U.S. 569, 584
  (1994), "every commercial use
of copyrighted material is presumptively an unfair exploita-
tion of the monopoly privilege that belongs to the owner of
the copyright." Sony Corp. of Am. v. Universal City Studios,
Inc., 
464 U.S. 417, 451
  (1984).6 The Supreme Court has
explained that the second factor, the nature of the copyrighted
work, is particularly significant because "some works are
closer to the core of intended copyright protection than others,
with the consequence that fair use is more difficult to estab-
lish when the former works are copied." Campbell, 510 U.S.
at 586. The fair use defense will be much less likely to suc-
ceed when it is applied to fiction or fantasy creations, as
opposed to factual works such as telephone listings. See
United Tel. Co. v Johnson Publ'g Co., 855 F.2d 604, 609 (8th
Cir. 1988); see also Stewart v. Abend, 
495 U.S. 207
, 237
(1990). Duke Nukem's world is made up of aliens, radioac-
tive slime and freezer weapons--clearly fantasies, even by
Los Angeles standards. N/I MAP files "expressly use[ ] the
[D/N-3D] story's unique setting, characters,[and] plot,"
Stewart, 
495 U.S. at 238
; both the quantity and importance of
the material Micro Star used are substantial. Finally, by sell-
ing N/I, Micro Star "impinged on [FormGen's ] ability to mar-
ket new versions of the [D/N-3D] story." Stewart, 495 U.S. at
238; see also Twin Peaks Productions, Inc. v. Publications
Int'l, Ltd., 996 F.2d 1366, 1377 (2d Cir. 1993). Only Form-
Gen has the right to enter that market; whether it chooses to
do so is entirely its business. "[N/I] neither falls into any of
the categories enumerated in section 107 nor meets the four
criteria set forth in section 107." Stewart, 
495 U.S. at 237
. It
is not protected by fair use.

[10] Micro Star also argues that it is the beneficiary of the
implicit license FormGen gave to its customers by authorizing
them to create new levels. Section 204 of the Copyright Act
requires the transfer of the exclusive rights granted to copy-
right owners (including the right to prepare derivative works)
to be in writing. See 17 U.S.C. S 204(a); Effects Assocs., Inc.
v. Cohen, 908 F.2d 555, 556 (9th Cir. 1990). A nonexclusive
license may, however, be granted orally or implied by con-
duct. See Effects, 908 F.2d at 558. Nothing indicates that
FormGen granted Micro Star any written license at all; nor is
there evidence of a nonexclusive oral license. The only writ-
ten license FormGen conceivably granted was to players who
designed their own new levels, but that license contains a sig-
nificant limitation: Any new levels the players create "must
be offered [to others] solely for free." The parties dispute
whether the license is binding, but it doesn't matter. If the
license is valid, it clearly prohibits commercial distribution of
levels; if it doesn't, FormGen hasn't granted any written
licenses at all.7
[11] In case FormGen didn't license away its rights, Micro
Star argues that, by providing the Build Editor and encourag-
ing players to create their own levels, FormGen abandoned all
rights to its protected expression. It is well settled that rights
gained under the Copyright Act may be abandoned. But aban-
donment of a right must be manifested by some overt act indi-
cating an intention to abandon that right. See Hampton v.
Paramount Pictures Corp., 279 F.2d 100, 104 (9th Cir. 1960).
Given that it overtly encouraged players to make and freely
distribute new levels, FormGen may indeed have abandoned
its exclusive right to do the same. But abandoning some rights
is not the same as abandoning all rights, and FormGen never
overtly abandoned its rights to profit commercially from new
levels. Indeed, FormGen warned players not to distribute the
levels commercially and has actively enforced that limitation
by bringing suits such as this one.

IV

Because FormGen will likely succeed at trial in proving
that Micro Star has infringed its copyright, we reverse the dis-
trict court's order denying a preliminary injunction and
remand for entry of such an injunction. Of course, we affirm
the grant of the preliminary injunction barring Micro Star
from selling N/I in boxes covered with screen shots of the game.8

AFFIRMED in part, REVERSED in part, and
REMANDED. Micro Star to bear costs of both appeals. 
_______________________________________________________________

FOOTNOTES

1 This form of play was pioneered by a company called id Software with
its classic Wolfenstein 3D character.
2 So-called because the files all end with the extension ".MAP". Also,
no doubt, because they contain the layout for the various levels.
3 Actually, this is all a bit metaphorical. Computer programs don't actu-
ally go anywhere or fetch anything. Rather, the game engine receives the
player's instruction as to which game level to select and instructs the pro-
cessor to access the MAP file corresponding to that level. The MAP file,
in turn, consists of a series of instructions indicating which art images go
where. When the MAP file calls for a particular art image, the game
engine tells the processor to access the art library for instructions on how
each pixel on the screen must be colored in order to paint that image.
4 A low-tech example might aid understanding. Imagine a product called
the Pink Screener, which consists of a big piece of pink cellophane
stretched over a frame. When put in front of a television, it makes every-
thing on the screen look pinker. Someone who manages to record the pro-grams with this pink cast (maybe by filming the screen) would have
created an infringing derivative work. But the audiovisual display
observed by a person watching television through the Pink Screener is not
a derivative work because it does not incorporate the modified image in
any permanent or concrete form. The Game Genie might be described as
a fancy Pink Screener for video games, changing a value of the game as
perceived by the current player, but never incorporating the new audiovi-
sual display into a permanent or concrete form.
5 We note that the N/I MAP files can only be used with D/N-3D. If
another game could use the MAP files to tell the story of a mousy fellow
who travels through a beige maze, killing vicious saltshakers with paper-
clips, then the MAP files would not incorporate the protected expression
of D/N-3D because they would not be telling a D/N-3D story.
6 Of course, transformative works have greater recourse to the fair use
defense as they "lie at the heart of the fair use doctrine's guarantee of
breathing space within the confines of copyright . .. and the more transfor-
mative the new work, the less will be the significance of other factors, like
commercialism, that may weigh against a finding of fair use." Campbell,
510 U.S. at 579
 (citations omitted). N/I can hardly be described as trans-
formative; anything but.
7 We would have no reason to sever the limitation from the license; the
limitation is plainly stated in the User License, unambiguous, and not the
least bit unreasonable. Indeed, it is precisely the sort of term we would
expect to see in such a license.
8 Micro Star raises various other claims alleging copyright misuse and
abuse of the discovery process. However, nothing indicates that FormGen
abused its copyright. See Triad Systems Corp. v. Southeastern Express
Co., 64 F.3d 1330, 1337 (9th Cir. 1995). And we are at a loss to under-
stand why Micro Star complains about the discovery process; certainly the
district court did not abuse its discretion. See Sopcak v. Northern Moun-
tain Helicopter Serv., 52 F.3d 817, 819 (9th Cir. 1995). the end