Stern Electronics, Inc. v. Kaufman

Stern Electronics, Inc. v Kaufman
Court	United States Court of Appeals for the Second Circuit
Full case name	STERN ELECTRONICS, INC v. Harold KAUFMAN d/b/a Bay Coin, et al; Omni Video Games, Inc., et al.
Argued	July 15 1981
Decided	January 20 1982
Citation(s)	669 F.2d 852 (1982)
Case history
Procedural history	Preliminary injunction issued against defendants, 523 F. Supp. 635 (E.D.N.Y. 1981)
Holding
An electronics company can copyright the sounds and images in a video game, not just the source code.
Court membership
Judge(s) sitting	Circuit Judges Jon O. Newman, Ellsworth Van Graafeiland District Judge Edward Dumbauld
Case opinions
Majority	Newman
Laws applied
Copyright Act of 1976

Stern Electronics Inc. v. Kaufman, 669 F.2d 852 (2d Cir. 1982),^[1] is a legal case in which the United States Court of Appeals Second Circuit held that Omni Video Games violated the copyright and trademark of Scramble, an arcade game marketed by Stern Electronics. The lawsuit was due to a trend of "knock-off" video games in the early 1980s, leading to one of the earliest findings of copyright infringement for a video game, and the first federal appellate court to recognize a video game as a copyrighted audiovisual work.

Scramble was created by Japanese video game developer Konami in 1981, and marketed in the Americas by Stern Electronics. The game was first sold in the United States in March 1981, and became a breakthrough hit for Konami, reaching the top of the sales charts in June 1981, and becoming the first side-scrolling shooter game. A month after the debut of Konami's Scramble, Omni began marketing a nearly identical game with the same name on their arcade cabinets, leading Stern to sue Omni for copyright and trademark infringement. Omni counter-sued for trademark infringement, showing that they had ordered arcade nameplates for their version of Scramble in December 1980. Omni argued that they did not copy Konami's underlying code. Despite similarities in the audiovisual display, Omni also argued that Konami could not register any copyright in their game as an audiovisual work, as the display for a video game varies each time that it is played, and is not fixed.

The court rejected Omni's argument, saying that Scramble's audiovisual display was sufficiently fixed due to the repeated use of certain images and sounds. The court found that the games were nearly identical in their audiovisual display, and granted an injunction against Omni's game. This also led the court to reject Omni's trademark argument, since any use of the "Scramble" mark was made in bad faith, in anticipation of creating a knock-off game under the same name. The principle that a video game is copyrightable as an audiovisual work was affirmed in Atari v. Amusement World and Midway Manufacturing Co. v. Artic International, Inc., and followed parallel developments for computer software in Apple Computer, Inc. v. Franklin Computer Corp.