Appeal from the United States District Courtfor the Southern District of CaliforniaMarilyn L. Huff, District Judge, PresidingArgued and SubmittedNovember 4, 1997--Pasadena, CaliforniaFiled Sepetember 11, 1998Before: Alex Kozinski, David R. Thompson* andStephen S. Trott, Circuit Judges.Opinion by Judge Kozinski
______________________COUNSEL Philip H. Stillman, Flynn, Sheridan, Tabb & Stillman, SanDiego, 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?IFormGen Inc., GT Interactive Software Corp. and ApogeeSoftware, Ltd. (collectively FormGen) made, distributed andown the rights to Duke Nukem 3D (D/N-3D), an immenselypopular (and very cool) computer game. D/N-3D is playedfrom the first-person perspective; the player assumes the per-sonality and point of view of the title character, who is seenon the screen only as a pair of hands and an occasional boot,much as one might see oneself in real life without the aid ofa mirror.1 Players explore a futuristic city infested with evilaliens and other hazards. The goal is to zap them before theyzap you, while searching for the hidden passage to the nextlevel. The basic game comes with twenty-nine levels, eachwith a different combination of scenery, aliens, and otherchallenges. The game also includes a "Build Editor," a utilitythat enables players to create their own levels. With Form-Gen's encouragement, players frequently post levels theyhave created on the Internet where others can download them.Micro Star, a computer software distributor, did just that: Itdownloaded 300 user-created levels and stamped them onto aCD, which it then sold commercially as Nuke It (N/I). N/I ispackaged 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 declaratoryjudgment that N/I did not infringe on any of FormGen's copy-rights. FormGen counterclaimed, seeking a preliminaryinjunction 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/Iwas not a derivative work and therefore did not infringeFormGen's copyright. The district court did, however, granta preliminary injunction as to the screen shots, finding thatN/I's packaging violated FormGen's copyright by reproduc-ing pictures of D/N-3D characters without a license. The courtrejected Micro Star's fair use claims. Both sides appeal theirlosses.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 themerits were raised and the balance of hardships tips sharplyin its favor." Johnson Controls, Inc. v. Phoenix Control Sys-tems, Inc., 886 F.2d 1173, 1174 (9th Cir. 1989). Because "ina copyright infringement claim, a showing of a reasonablelikelihood of success on the merits raises a presumption ofirreparable harm," id., FormGen need only show a likelihoodof success on the merits to get the preliminary injunction itseeks (barring the manufacture and distribution of N/I) and topreserve the preliminary injunction it already won (barring thescreen shots on N/I's packaging).III[2] To succeed on the merits of its claim that N/I infringesFormGen's copyright, FormGen must show (1) ownership ofthe copyright to D/N-3D, and (2) copying of protected expres-sion by Micro Star. See Triad Systems Corp. v. SoutheasternExpress Co., 64 F.3d 1330, 1335 (9th Cir. 1995). FormGen'scopyright registration creates a presumption of ownership, seeid., and we are satisfied that FormGen has established itsownership of the copyright. We therefore focus on the latterissue.FormGen alleges that its copyright is infringed by MicroStar's unauthorized commercial exploitation of user-createdgame levels. In order to understand FormGen's claims, onemust first understand the way D/N-3D works. The game con-sists of three separate components: the game engine, thesource art library and the MAP files.2 The game engine is theheart of the computer program; in some sense, it is the pro-gram. It tells the computer when to read data, save and loadgames, play sounds and project images onto the screen. Inorder to create the audiovisual display for a particular level,the game engine invokes the MAP file that corresponds to thatlevel. Each MAP file contains a series of instructions that tellthe game engine (and, through it, the computer) what to putwhere. For instance, the MAP file might say scuba gear goesat the bottom of the screen. The game engine then goes to thesource art library, finds the image of the scuba gear, and putsit in just the right place on the screen.3 The MAP filedescribes the level in painstaking detail, but it does not actu-ally contain any of the copyrighted art itself; everything thatappears 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 insection number 565, but it doesn't contain any blue paintitself; the blue paint comes from your palette, which is thelow-tech analog of the art library, while you play the role ofthe game engine. When the player selects one of the N/Ilevels, the game engine references the N/I MAP files, but stilluses the D/N-3D art library to generate the images that makeup that level.FormGen points out that a copyright holder enjoys theexclusive right to prepare derivative works based on D/N-3D.See 17 U.S.C. S 106(2) (1994). According to FormGen, theaudiovisual displays generated when D/N-3D is run in con-junction with the N/I CD MAP files are derivative works thatinfringe this exclusivity. Is FormGen right? The answer is notobvious.[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 waswell known and used before." Emerson v. Davies, 8 F. Cas.615, 619 (C.C.D. Mass. 1845) (No. 4436), quoted in 1Nimmer on Copyright, S 3.01, at 3-2 (1997). To narrow thestatute to a manageable level, we have developed certaincriteria a work must satisfy in order to qualify as a derivativework. 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 substantiallyincorporate protected material from the preexisting work, seeLitchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir. 1984).Micro Star argues that N/I is not a derivative work becausethe audiovisual displays generated when D/N-3D is run withN/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'sprotected 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'sexamples of derivative works took some definite, physicalform 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 HastingsComm/Ent. L.J. 615, 625 (1993) (noting that in Galoob theNinth Circuit "re-examined the statutory definition of deriva-tive works offered in section 101 and found an independentfixation requirement of sorts built into the statutory definitionof derivative works"). Obviously, N/I's MAP files themselvesexist in a concrete or permanent form; they are burned ontoa CD-ROM. See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447,1453 (7th Cir. 1996) (computer files on a CD are fixed in atangible 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 inGaloob didn't meet the "concrete or permanent form" require-ment, neither do N/I's.In Galoob, we considered audiovisual displays createdusing a device called the Game Genie, which was sold for usewith the Nintendo Entertainment System. The Game Genieallowed players to alter individual features of a game, such asa character's strength or speed, by selectively "blocking thevalue 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 toreplace by entering a code; over a billion different codes werepossible. The Game Genie was dumb; it functioned only as awindow into the computer program, allowing players to tem-porarily modify individual aspects of the game. See LewisGaloob 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 aninfringing derivative work. We rejected this claim because"[a] derivative work must incorporate a protected work insome concrete or permanent form." Galoob, 964 F.2d at 967(internal quotation marks omitted). The audiovisual displaysgenerated by combining the Nintendo System with the GameGenie were not incorporated in any permanent form; when thegame was over, they were gone. Of course, they could bereconstructed, but only if the next player chose to reenter thesame codes.4[4] Micro Star argues that the MAP files on N/I are a moreadvanced version of the Game Genie, replacing old values(the MAP files in the original game) with new values (N/I'sMAP files). But, whereas the audiovisual displays created byGame Genie were never recorded in any permanent form, theaudiovisual displays generated by D/N-3D from the N/I MAPfiles are--in the MAP files themselves. In Galoob, the audio-visual display was defined by the original game cartridge, notby the Game Genie; no one could possibly say that the datavalues inserted by the Game Genie described the audiovisualdisplay. In the present case the audiovisual display thatappears on the computer monitor when a N/I level is playedis 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 describeaudiovisual displays down to the last detail) counts as a per-manent or concrete form for purposes of Galoob . We see noreason it shouldn't. What, after all, does sheet music do butdescribe in precise detail the way a copyrighted melodysounds? See 1 William F. Patry, Copyright Law and Practice168 (1994) ("[A] musical composition may be embodied insheet music . . . ."). To be copyrighted, pantomimes anddances may be "described in sufficient detail to enable thework to be performed from that description." Id. at 243 (citingCompendium II of Copyright Office Practices S 463); see alsoHorgan v. MacMillan, Inc., 789 F.2d 157, 160 (2d Cir. 1986).Similarly, the N/I MAP files describe the audiovisual displaythat is to be generated when the player chooses to playD/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 derivativeworks.[6] In addition, "[a] work will be considered a derivativework only if it would be considered an infringing work if thematerial which it has derived from a preexisting work hadbeen taken without the consent of a copyright proprietor ofsuch preexisting work." Mirage Editions v. AlbuquerqueA.R.T. Co., 856 F.2d 1341, 1343 (quoting 1 Nimmer on Copy-right S 3.01 (1986)) (internal quotation marks omitted). "Toprove infringement, [FormGen] must show that[D/N-3D'sand N/I's audiovisual displays] are substantially similar inboth ideas and expression." Litchfield v. Spielberg, 736 F.2d1352, 1356 (9th Cir. 1984) (emphasis omitted). Similarity ofideas may be shown by comparing the objective details of theworks: plot, theme, dialogue, mood, setting, characters, etc.See id. Similarity of expression focuses on the response of theordinary reasonable person, and considers the total conceptand feel of the works. See id. at 1356-57. FormGen willdoubtless succeed in making these showings since the audio-visual displays generated when the player chooses the N/Ilevels come entirely out of D/N-3D's source art library. Cf.Atari, Inc. v. North Am. Philips Consumer Elec. Co., 672 F.2d607, 620 (7th Cir. 1982) (finding two video games substan-tially similar because they shared the same "total concept andfeel").[7] Micro Star further argues that the MAP files are notderivative works because they do not, in fact, incorporate anyof D/N-3D's protected expression. In particular, Micro Starmakes much of the fact that the N/I MAP files reference thesource art library, but do not actually contain any art filesthemselves. Therefore, it claims, nothing of D/N-3D's isreproduced in the MAP files. In making this argument, MicroStar misconstrues the protected work. The work that MicroStar infringes is the D/N-3D story itself--a beefy commandotype named Duke who wanders around post-Apocalypse LosAngeles, shooting Pig Cops with a gun, lobbing hand gre-nades, searching for medkits and steroids, using a jetpack toleap over obstacles, blowing up gas tanks, avoiding radioac-tive slime. A copyright owner holds the right to createsequels, see Trust Co. Bank v. MGM/UA Entertainment Co.,772 F.2d 740 (11th Cir. 1985), and the stories told in the N/IMAP files are surely sequels, telling new (though somewhatrepetitive) tales of Duke's fabulous adventures. A book aboutDuke Nukem would infringe for the same reason, even if itcontained no pictures.5[8] Micro Star nonetheless claims that its use of D/N-3D'sprotected expression falls within the doctrine of fair use,which permits unauthorized use of copyrighted works "forpurposes 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, 872F.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 purposeand character of the use, including whether it is commercialin nature; (2) the nature of the copyrighted work; (3) theamount and substantiality of the copied material in relation tothe copyrighted work as a whole; and (4) the effect of the useon the potential market for the copyrighted work. 17 U.S.C.S 107.As a preliminary matter, Micro Star asks us to focus on theplayer's use of the N/I CD in evaluating the fair use claim,because--according to Micro Star--the player actuallycreates the derivative work. In Galoob, after we assumed forpurposes of argument that the Game Genie did create deriva-tive works, we went on to consider the fair use defense fromthe player's point of view. See Galoob, 964 F.2d at 970. Butthe fair use analysis in Galoob was not necessary and there-fore is clearly dicta. More significantly, Nintendo alleged onlycontributory infringement--that Galoob was helping consum-ers create derivative works; FormGen here alleges directinfringement by Micro Star, because the MAP files encom-pass new Duke stories, which are themselves derivativeworks.[9] Our examination of the section 107 factors yieldsstraightforward results. Micro Star's use of FormGen's pro-tected expression was made purely for financial gain. Whilethat does not end our inquiry, see Campbell v. Acuff-RoseMusic, Inc.,
510 U.S. 569, 584
(1994), "every commercial useof copyrighted material is presumptively an unfair exploita-tion of the monopoly privilege that belongs to the owner ofthe copyright." Sony Corp. of Am. v. Universal City Studios,Inc.,
464 U.S. 417, 451
(1984).6 The Supreme Court hasexplained that the second factor, the nature of the copyrightedwork, is particularly significant because "some works arecloser 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, asopposed to factual works such as telephone listings. SeeUnited Tel. Co. v Johnson Publ'g Co., 855 F.2d 604, 609 (8thCir. 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 byLos 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 ofthe 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. at238; see also Twin Peaks Productions, Inc. v. PublicationsInt'l, Ltd., 996 F.2d 1366, 1377 (2d Cir. 1993). Only Form-Gen has the right to enter that market; whether it chooses todo so is entirely its business. "[N/I] neither falls into any ofthe categories enumerated in section 107 nor meets the fourcriteria set forth in section 107." Stewart,
495 U.S. at 237
. Itis not protected by fair use.[10] Micro Star also argues that it is the beneficiary of theimplicit license FormGen gave to its customers by authorizingthem to create new levels. Section 204 of the Copyright Actrequires 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 nonexclusivelicense may, however, be granted orally or implied by con-duct. See Effects, 908 F.2d at 558. Nothing indicates thatFormGen granted Micro Star any written license at all; nor isthere evidence of a nonexclusive oral license. The only writ-ten license FormGen conceivably granted was to players whodesigned their own new levels, but that license contains a sig-nificant limitation: Any new levels the players create "mustbe offered [to others] solely for free." The parties disputewhether the license is binding, but it doesn't matter. If thelicense is valid, it clearly prohibits commercial distribution oflevels; if it doesn't, FormGen hasn't granted any writtenlicenses at all.7[11] In case FormGen didn't license away its rights, MicroStar argues that, by providing the Build Editor and encourag-ing players to create their own levels, FormGen abandoned allrights to its protected expression. It is well settled that rightsgained 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 freelydistribute new levels, FormGen may indeed have abandonedits exclusive right to do the same. But abandoning some rightsis not the same as abandoning all rights, and FormGen neverovertly abandoned its rights to profit commercially from newlevels. Indeed, FormGen warned players not to distribute thelevels commercially and has actively enforced that limitationby bringing suits such as this one.IVBecause FormGen will likely succeed at trial in provingthat Micro Star has infringed its copyright, we reverse the dis-trict court's order denying a preliminary injunction andremand for entry of such an injunction. Of course, we affirmthe grant of the preliminary injunction barring Micro Starfrom selling N/I in boxes covered with screen shots of the game.8AFFIRMED in part, REVERSED in part, andREMANDED. Micro Star to bear costs of both appeals.
___________________________FOOTNOTES 1 This form of play was pioneered by a company called id Software withits 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 theplayer'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 gowhere. When the MAP file calls for a particular art image, the gameengine tells the processor to access the art library for instructions on howeach pixel on the screen must be colored in order to paint that image.4 A low-tech example might aid understanding. Imagine a product calledthe Pink Screener, which consists of a big piece of pink cellophanestretched 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 havecreated an infringing derivative work. But the audiovisual displayobserved by a person watching television through the Pink Screener is nota derivative work because it does not incorporate the modified image inany permanent or concrete form. The Game Genie might be described asa fancy Pink Screener for video games, changing a value of the game asperceived 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. Ifanother game could use the MAP files to tell the story of a mousy fellowwho travels through a beige maze, killing vicious saltshakers with paper-clips, then the MAP files would not incorporate the protected expressionof 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 usedefense as they "lie at the heart of the fair use doctrine's guarantee ofbreathing space within the confines of copyright . .. and the more transfor-mative the new work, the less will be the significance of other factors, likecommercialism, 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; thelimitation is plainly stated in the User License, unambiguous, and not theleast bit unreasonable. Indeed, it is precisely the sort of term we wouldexpect to see in such a license.8 Micro Star raises various other claims alleging copyright misuse andabuse of the discovery process. However, nothing indicates that FormGenabused its copyright. See Triad Systems Corp. v. Southeastern ExpressCo., 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 thedistrict court did not abuse its discretion. See Sopcak v. Northern Moun-tain Helicopter Serv., 52 F.3d 817, 819 (9th Cir. 1995). the end