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MICRO STAR v. FORMGEN

September 27, 1996

MICROSTAR, Plaintiff,
v.
FORMGEN, INC., a corporation; GT INTERACTIVE SOFTWARE CORP., a corporation; 3D REALMS ENTERTAINMENT, and DOES 1 through 100, inclusive, Defendant.



The opinion of the court was delivered by: HUFF

 Defendants/counterclaim plaintiffs Formgen, Inc. and Apogee Software, Ltd. d/b/a 3D Realms Entertainment (together, "Movants") on August 9, 1996 filed an application for a Preliminary Injunction pursuant to Federal Rule of Civil Procedure 65. Movants, the manufacturers and distributors of the video CD-ROM game "Duke Nukem 3D" (hereinafter Duke 3D) allege that the video CD-ROM game "Nuke It," manufactured and distributed by plaintiff Microstar, infringes upon the creative works protected by Duke 3D's copyright and trademark registrations. Movants seek an order to enjoin any further distribution and production of Nuke It, and to compel Microstar to recall all existing copies of Nuke It.

 After reviewing the papers and the law, and hearing oral argument on September 23, 24, and 26, 1996, the court finds that good cause exists to partially grant movants' request for a preliminary injunction. Specifically, the court finds that Nuke It's depiction of scenes from Duke 3D on its packaging, as well as its offering of screen savers from Duke 3D, is an infringing use of movants' copyrighted creative works. As to the actual CD-ROM itself, and as to the trademark claims brought under the Lanham Act, the court denies movants' request for injunctive relief. Consequently, the court has issued a preliminary injunction, dated September 26, 1996, which orders Microstar to: (1) immediately cease from using screen scenes on Nuke It's packaging which infringe upon Duke 3D's copyrighted material; (2) recall all existing Nuke It packages which depict copyrighted Duke 3D screen scenes; (3) immediately cease from including any DN3D screen savers in its Nuke It products; and (4) make its best efforts to remove or cover over any Nuke It packaging on the market which makes reference to Duke 3D screen savers.

 BACKGROUND

 Movants are the makers and distributors of the computer game "Duke Nukem 3D". As to their copyright, movants registered "Duke Nukem 3D, Shareware Version" with the Copyright Office on August 8, 1996, six days after Microstar filed a claim for declaratory judgment that it was not infringing on movant's copyrights or trademarks.

 As purchased in stores, the Duke Nukem 3D ("Duke 3D") game has 29 levels through which players advance, killing monsters and other evil creatures. In order to continue to generate interest in the game, the movants included in the software the option and ability for players to create "new" levels themselves, which is done through an editor called BUILD.EXE. Through this editor and other tools provided, users can create files with the extension .MAP, which they can play in addition to, or instead of, the levels that come with the game. However, to play any of the new .MAP levels, users must own a registered copy of Duke 3D. Whenever a player exits the Duke 3D game, a message appears on his screen which tells him about tools which are included and can be used to build new levels. This same message additionally informs the user that once he creates his own new level, "you can then pass to your friends, or upload to other Dukers on-line."

 One of the main issues before this court is the fact that the packaging for Nuke It contains 30 scenes from the Duke 3D game, depicting such original art work as the Cycloid, Emperor, Battlelord, Assault Trooper, Ripper Chaingun, Octabrain, and Enforcer. In addition, a version of Nuke It released in July of 1996 contained 25 screen savers, described as "wallpaper," that depicted scenes and audiovisual elements from the Duke 3D game. Finally, an earlier version of Nuke It also contained at least two levels that were identical to those found on Duke 3D, the zoo.map and the E1L1Weap.map; these levels have been voluntarily removed by Microstar. Accordingly, this court must determine if whether by granting permission for authorized users of the product to pass on or trade their new levels, movants have waived any or all rights to copyright protection for commercial exploitation of their creative expression.

 Duke 3D contains a copyright notice on both its packaging and on its screen. The opening screen for the build editor indicates that the build editor and associated tools may not be re-packaged and sold, and finishes by stating "Please refer to LICENSE.DOC for further information on levels created with BUILD.EXE." This LICENSE.DOC file contains several restrictions, including that there can be no commercial sales of any new levels created and that all rights are granted back to movants.

 Microstar downloaded 300 of these new user created levels that were available on the Internet, and packaged them as "Nuke It." As these are just new "levels," Nuke It can only be utilized by users who already own a registered copy of Duke 3D. The "Nuke It" cover states "Over 300 New Levels for Duke Nukem 3D(TM)," and in small print in the corner of the cover contains a disclaimer that states "Requires registered version of Duke Nukem 3D(TM) - Duke Nukem 3D(TM) is a registered trademark of 3D Realms Entertainment. This product is not associated with nor will it be supported by 3D Realms Entertainment." After movants first complained to Microstar that Nuke It was infringing upon their trademark and copyright marks, Microstar requested a license, which was denied. Thereafter, Microstar added a red sticker ("red sticker disclaimer") to the cover of Nuke It which states "These levels were independently created by 3rd parties not affiliated with 3D Realms, creator of Duke Nukem 3D(TM)."

 There is some dispute over whether these stickers have been placed on all copies of Nuke It being offered for sale, as movants offer a declaration which says that as of August 3 and August 7, 1996, at three different stores in the New York area there were Nuke It packages without the red sticker disclaimer. Additionally, on September 25, 1996 movants offered another declaration which stated that as of that date several stores in the Dallas area were also selling Nuke It packages that did not contain the red sticker disclaimer. However, as it was not until the end of July that Microstar agreed to put the red sticker disclaimers on Nuke It, it is possible that there are still some packages in stores which have not yet been stickered. Microstar informed the court that as of this date, over 61,000 copies of Nuke It have been sold.

 DISCUSSION

 Preliminary injunctive relief is available if the party meets one of two tests: "(1) a combination of probable success and the possibility of irreparable harm, or (2) serious questions are raised and the balance of hardship tips in its favor." Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935, 937 (9th Cir. 1987). "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Id. Under both formulations, however, the party must demonstrate a "fair chance of success on the merits" and a "significant threat of irreparable injury." Id.

 On a claim for copyright or trademark infringement, the test for whether preliminary injunctive relief is warranted is the same: (1) a combination of probable successes on the merits and the possibility of irreparable injury or (2) serious questions going to the merits and a balance of hardships tipping sharply in movants favor. See Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330, 1334 (9th Cir. 1995) cert. denied, 134 L. Ed. 2d 96, 116 S. Ct. 1015 (1996).

 Likelihood of success on the merits is by far the most important factor in intellectual property cases. "In a property infringement claim, a showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm." Johnson Controls, Inc. v. Phoenix Control Systems, 886 F.2d 1173, 1174 (9th Cir. 1989).

 A. Copyright Claims

 Movants claim that they have a valid copyright in the Duke 3D game and its elements that extends to derivative works created by others. Microstar responds that there has been no infringement of any rights granted by the copyright act, that Nuke It is permissible under the "fair use" doctrine, and that even if these two arguments fail, movants have waived or abandoned their rights to limit the creation and ...


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