Sony Computer Entertainment, Inc. v. Connectix Corp.

Majority - Canby, Circuit Judge

Yes, the intermediate copying and use of copyrighted computer software during a reverse engineering process constitutes fair use under 17 U.S.C. § 107 when the purpose is to gain access to unprotected functional elements to create a new, transformative, and non-infringing product. The Ninth Circuit reversed the district court's preliminary injunction, holding that Connectix's intermediate copying of the Sony BIOS during reverse engineering was protected as fair use. The court applied the four statutory fair use factors from 17 U.S.C. § 107, guided by its precedent in Sega Enterprises Ltd. v. Accolade, Inc., which recognized that disassembly is fair use when it is the only way to access functional elements of a copyrighted program for a legitimate reason. First, regarding the nature of the copyrighted work, the Sony BIOS was deemed to be 'at a distance from the core' of copyright protection because it contained unprotected functional elements that could not be accessed without copying. This factor strongly favored Connectix, as the copying was 'necessary' to gain access to these elements, and the court rejected an artificial distinction between 'studying' and 'use' of the code. Second, concerning the amount and substantiality of the portion used, while Connectix copied the entire BIOS multiple times and disassembled parts, this factor was given 'very little weight' in cases of intermediate infringement where the final product itself is non-infringing, citing Sega and Sony Corp. of Am. v. Universal City Studios, Inc. Third, for the purpose and character of the use, the Virtual Game Station was found to be 'modestly transformative' because it created a new platform (personal computer) for playing PlayStation games, making it a wholly new product. The court clarified, citing Campbell v. Acuff-Rose Music, Inc., that Connectix's commercial purpose was merely one factor against fair use, not a presumption of unfairness, and its intermediate use for compatibility was legitimate. Finally, regarding the effect of the use upon the potential market, the court found that this factor favored Connectix. Although Sony might lose console sales, the Virtual Game Station was a legitimate competitor in the market for game-playing platforms because of its transformative nature. Copyright law does not grant a monopoly over such a market, and the court emphasized that preventing competition in this way runs counter to the statutory purpose of promoting creative expression. The court also reversed the district court's finding of trademark tarnishment due to insufficient evidence.