This source, LEXMARK INTERNATIONAL, INC., Plaintiff-Appellee, v. STATIC CONTROL COMPONENTS, INC., Defendant-Appellant, is an appeals court decision issued by Judge Sutton on October 26, 2004 which reversed the decision of the District Court's injunction against Static Control Components, Inc.'s production of their "SMARTEK" chip which allegedly infringed upon Lexmark International's copyright of their Toner Loading Program. 

Lexmark International designed toner control and printer engine programs that were intended to work only with their remanufactured products, or products licensed by Lexmark.  The District Court found that the competitor's chip circumvented this protection, thus violating the copyright.  The three main errors that the Appeals Court found in the District Court's original ruling are: the toner program was entitled to protection even though it could be written in a number of different ways, determining that the first program was sufficiently original, and in assesssing whether it functioned as a lockout code.  The court pointed to the General Copyright Statue of 1790, 17 U.S.C Section 107 et seq. to reiterate the original purpose of granting copyright protection to "original works of authorship fixed in a tangible medium of expression, but does not "extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery."  With regards to the original decision, the District Court rejected SCC's defenses: Lexmark's software is a lockout code, thuse unprotectable, that they were operating under the pretext of the 'fair use doctrine', and that they reverse engineered Lexmark's software.

The main reason that Sutton decides to overturn the District Court's decision is the reverse engineering exception. He writes:

The statute also contains three "reverse engineering" defenses. A person may circumvent an access control measure "for the sole purpose of identifying and analyzing those elements of the program that are  [*546]  necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to [that person].  [**56]  " 17 U.S.C. § 1201(f)(1). A person "may develop and employ technological means" that are "necessary" to enable interoperability. Id. § 1201(f)(2).

Although this case does not deal directly with the consumption of information goods or DRMs, it provides a stark contrast to decisions relating to DRMs, without any underlying difference in theory or legal standing.  SSC fundamentally improved a technology, and their work benefited consumers with cheaper ink cartridge, and the progress of science by using multiple, innovative ways to reverse-engineer Lexmark's software.  I will use this case to set up a troubling dichotomy within the law regarding non-information goods and information goods, and show why it is legally unnecessary, and furthermore detrimental to the progress of science and the economy.

Blizzard Entertainment sued a group of volunteer gamers who created free, noncommercial, open-source software to allow Blizzard game owners to play the games over the Internet. Claiming that the gamers reverse engineered Blizzard’s own Battle.net server software to make their own BnetD server software, Blizzard cited anti-circumvention violations of the Digital Millennium Copyright Act. Both Battle.net servers and BnetD servers were available for free online to enable online game play. However, BnetD was created as an alternative to Battle.net to fix some connection difficulties that some users encountered while using Battle.net.

Blizzard attempted to stop distribution of BnetD, alleging that the software has been used to permit play of pirated Blizzard games. However, the volunteer developers did not design BnetD for this purpose, nor were they are using BnetD for this purpose. The free software was a legitimate use and could not be bluntly labeled as a piracy device. Blizzard argued that the developers reverse engineered sections of the game, thus violating Blizzard’s End User License Agreement (EULA). The Electronic Frontier Foundation (EFF) represented the programmers and declared that BnetD was a legal free product which worked with the original product in order to benefit game owners. The court ruled in favor of Blizzard, ultimately stating that reverse engineering and emulating of Blizzard software in this case were illegal.

The consequences of the ruling were detrimental to game upgrades and user enhancements. If this decision set the precedent, user-developed programs that work with original products would be banned. Furthermore, consumer choice would be limited by the available products. Since users would only be authorized to use a certain company’s products with that same company’s accessories together, this would have a profound impact on software and game products. In a similar analogy, imagine if Brand A’s eraser had to be used in conjunction with Brand A’s pencil. What would happen if computer users were forced to run only Microsoft products with Microsoft Windows? What if gamers could only play certain games with specific designated programs and accessories? Inevitably, such precedent would drastically reduce competition in the marketplace in addition to loss of both innovation and user-generated creativity.

FBI shut down the unauthorized computer game server L2Extreme, which hosted the NCSoft MMORPG Lineage II. Owners of L2Extreme provided its 50,000 active users with service and code for the online game for a fee. NCSoft claimed millions of dollars of annual loss due to this illegal service. L2Extreme operated pirated server software copied from the NCSoft server software. Users then registered with L2Extreme to play Lineage II instead of using NCSoft’s servers.

The financial effect is of course significant, but NCSoft also had to defend its intellectual property rights. The case, at first glance, is similar to the Blizzard v. BnetD case. However, BnetD reverse engineered the Blizzard server software without direct infringement on the original software. It was a fair use copy with no copyright violation involved. Contrarily, L2Extreme simply pirated the software from NCSoft. In addition, L2Extreme was a profitable business whereas BnetD was fueled by volunteer game enthusiasts. Otherwise, the details of both cases seem very similar.

Comparing the Blizzard v. BnetD case with this event, it becomes clear that seemingly minor details are in fact the deciding factors in many copyright decisions. In one, the FBI abruptly closed down operation without proper legal decision whereas in the other, the original game company could not persuade the court of any wrongdoing on the defendant’s part. Noticeably, intellectual property laws and their applications to the game industry remains a relatively new field. Hence, it is difficult to pinpoint what is right and what is wrong. Perhaps the single greatest law which many intellectual property and gaming related cases are based on is the Digital Millennium Copyright Act. However, there are many critics of the DMCA simply because of some of the consequences of invoking the Act. It remains to be seen how long the DMCA can last before undergoing major renovations. Much of that is derived from the evolutionary nature of gaming, where much change can occur in just a few years. Laws that are applicable in one year may become outdated the next year. This is the inevitable change of technology.

In the late 1990s, Connectix sold a product called the Virtual Game Station, an emulator program that could play Sony Playstation games, intended for play on the Playstation game console, on Apple Macintosh computers. Bleem, a vendor of Playstation emulator software for Windows computers, was also sued. Initially, Sony won a permanent injunction against the Connectix Virtual Game Station in 1999, but the decision was successfully appealed in 2000. Connectix and Bleem both won rulings that their reverse engineering of the Sony products constituted fair and non-infringing uses. However, their products were eventually taken off the market because they could not bear the high costs of litigation against Sony.

Emulators typically contained additional features not found on the real console and generally had completely different interfaces. To create the emulator, Connectix programmers had to first purchase a Sony Playstation and reverse engineer the source code. The court ruled that this and other intermediate copies made by Connectix were all legitimate fair uses. Regardless of Connectix and Bleem’s financial state, the landmark decision shocked the gaming industry. Emulators existed prior to the trial, but the question of their legality was always unknown.

Since personal computers are much more popular than game consoles due to their ability to run many types of applications, gamers have the option of purchasing emulators and emulator games instead of a separate game console. For Sony, one of their primary arguments was that this software would negatively impact the market for their consoles. Vendors of the system claimed that emulators would take away from their console and game revenue. However, emulations of games were never the same in quality and in experience as the real games. In the end, the Sony v. Connectix trial set a huge precedent for future emulator and associated game software. As long as the software did not infringe on original intellectual property rights, then emulators were deemed lawful. A system vendor cannot prohibit the distribution of non-infringing third-party emulators such as the Virtual Game Station. The result of this case has prompted questioning of the amount of control that companies should have over their intellectual property.