Data East USA v. EPYX

Citation: Data East USA, Inc. v. EPYX, 862 F.2d 204, 9 U.S.P.Q.2d (BNA) 1322 (9th Cir. 1988).

Factual Background
Data East is a California corporation that designs and manufactures video games for coin-operated and home computer use. In July of 1984 Data East began distributing "Karate Champ" as an arcade game in Japan and later in the United States and Europe, and a home computer game version in the United States in October of 1985.

In November of 1985 Systems III Software, Ltd., an English company, began distributing a home computer game called "International Karate" in England and licensed the work to Epyx (a California corporation) for distribution in the United States under the name "World Karate Championship" beginning in April of 1986.

Both games consist of "the audio-visual depiction of a karate match or matches conducted by two combatants, one clad in a typical white outfit and the other in red. Successive phases of combat are conducted against varying stationary background images depicting localities or geographic scenes. The match is supervised by a referee who directs the beginning and end of each phase of combat and announces the winning combatant of each phase by means of a cartoon-style speech balloon. Each game has a bonus round where the karate combatant breaks bricks and dodges objects. Similarities also exist in the moves used by the combatants and the scoring method."

Data East brought this suit against Epyx for copyright, trademark, and trade dress infringement.

Appellate Court Decision
The District Court found a copyright infringement and issued a permanent injunction; the Appellate Court reversed and remanded to the district court to lift the injunction.

Because no evidence was presented to establish copying, the district court admitted circumstantial evidence of the defendant's access to the copyrighted work and the substantial similarity between the two works. Epyx argued that use of the home version of the game was irrelevant for a showing of substantial similarity because there was no finding of access to this version. The district court, however, found that the home version was an adaptation of the arcade game and that a finding of substantial similarity with the arcade game would support a finding of similarity with the home game and this court agreed. Epyx also argued against the use of photographs from the games instead of the games themselves but since they never objected to the use of the photographs this court decided the issue entirely on the matter of substantial similarity.

"To show that two works are substantially similar, plaintiff must demonstrate that the works are substantially similar in both ideas and expression." The Ninth Circuit uses a two-step test for determining substantial similarity; an extrinsic test to determine whether two ideas are substantially similar, and an intrinsic test used to compare the forms of expression. While the district court found both works to be extrinsically identical, "no substantial similarity of expression will be found when 'th idea and its expression are . . . inseparable" and this court found the similar elements to be those that would naturally flow from the idea of a karate game and therefore unprotected.

The appellate court reversed and remanded due to the lower courts error in not "limiting the scope of Data East's copyright protection to the author's contribution."