In the case Huntsman v. Soderbergh, Civil Action No. 02-M-1662 (MJW) (D. Colo., filed Sept. 9, 2002), a group of motion picture studios ("the Studios") argue that the makers of filtering technology that enables viewers to alter the playback of commercial DVDs (the "Technology Companies") (1) should be held liable for direct copyright infringement for marketing and selling devices that permit consumers to skip over or mute parts of films they may wish to avoid (due to violence, adult content, and the like) while viewing lawfully acquired DVDs in their homes. This case presents a fundamental question about the degree to which the holders of copyright in protectable works of authorship can exercise control over how consumers may enjoy those works. It also brings into focus the balance that intellectual property rights and the legal theories used to enforce those rights must recognize in order to protect the rights of creators, on the one hand, and to permit consumers to use technology to enhance their enjoyment of copyrighted works, on the other hand.

Many digital entertainment products, including television programming, movies, music, electronic books, and games, contain data, often invisible to consumers, that allow consumer devices to navigate through content, much as page numbers allow a reader to conveniently access the contents of a book. Entertainment products often use a type of data called time codes. These codes are automatically inserted into DVD "masters" before copies are mass produced (2). In order to play back a DVD movie, a DVD player or drive uses these time codes to determine the order of playback.

The Technology Companies in Huntsman v. Soderbergh are in the business of creating and marketing hardware and software devices that are inserted between a consumer's DVD player or DVD-ROM drive and his or her monitor or TV set. These devices act to "mask" or "filter" selected portions of DVD movies during playback by instructing the user's DVD player or drive to modify the playback of certain DVDs so that the viewer does not see violence, hear profanity, etc. The software is DVD-specific; each software filter corresponds to a specific DVD. That filter instructs the player exactly which frames of a film to mute or skip over due to objectionable content. In essence, the technology permits a viewer to automatically censor out parts of a film he or she might not want the kids to see (or see themselves).

By way of example, one technology product at issue in the case is called "ClearPlay." The ClearPlay technology uses "ClearPlay Filters," which users download from the ClearPlay website onto their personal computers (3). Each ClearPlay Filter is associated with a different DVD movie. When a ClearPlay Filter is activated during the playback of the corresponding DVD movie, the filter instructs the user's DVD player or drive to skip over or mute frames of the movie that may have contributed to a movie's PG-13 or R rating. The filter is not a stand-alone product; it only works in conjunction with an underlying DVD, and it does not alter the content of the underlying DVD. A user can either watch the movie with the ClearPlay Filter activated, or can turn the ClearPlay Filter off and watch the movie in its original form.

The Studios in this case have asked the court to recognize a legal theory under which ClearPlay would be found directly liable for violating the Studios' exclusive right to create derivative works. The argument is based on the fact that ClearPlay provides devices that enable consumers to alter the playback of DVD movies; even though neither ClearPlay nor their customers physically alter the works being displayed.

Courts have not always been anxious to expand the limits of copyright protection where, as here, such expansion would condemn otherwise legitimate technological innovation(4). On the other side of the coin, however, are the rights of artists (in this case, the Studios) who may wish to control the integrity of how their works are seen. Can the Studios insist that their works be viewed uncut? Or can the public view a copy of a movie however it pleases, so long as the underlying version of the movie is preserved (5)?

The Studios claim that the technology devices in Huntsman v. Soderbergh create new versions of the Studios' movies by effectively "removing" selected content (6). More specifically, the Studios claim that the Technology Companies infringe the Studios' exclusive right to prepare derivative works of the Studios' films under the Copyright Act, 17 U.S.C. § 106(2) and their exclusive right to distribute copies, specifically, copies of derivative works of their films under the Copyright Act, 17 U.S.C. § 106(3) (7). The Studios identify two separate derivative works that are allegedly created by the Technology Companies: (1) the edited version (or versions) of the film that is displayed on the user's screen, and (2) the "products (e.g., software) based upon and derived from the Studios' copyrighted films and containing film-specific codes ... for the playback of unauthorized edited versions of the Studios' films (8)." Thus, the Studios allege that both the display that results from use of the plaintiffs' technology and the software filters themselves are derivative works of the Studios' films.

The Technology Companies make two principal arguments in defense. First, they argue that the altered displays that result from use of their filtering technology cannot be infringing derivative works because they are merely transitory. Second, they argue that the filtering software is not infringing because it only provides playback commands to a user's DVD player or drive based on time codes that are automatically inserted into DVDs. They argue the software filters at issue do not incorporate any copyrighted expression from the Studios' films; they merely "reference" the films' content using the films' time codes, which are unprotectable. Each of these arguments is discussed below.

Technology that creates a temporarily altered audiovisual display of a copyrighted work has generally not been found to infringe the owner's derivative work right when the display is not fixed in any concrete or permanent form. In the case most closely on point, Lewis Galoob Toys (9), game maker Nintendo argued that the altered audiovisual displays created by a player's use of a plug-in device called the "Game Genie" were derivative works of the original audiovisual displays of Nintendo's games. The Game Genie altered Nintendo's original displays by blocking an instruction sent by the Nintendo game cartridge to the Nintendo Entertainment System and replacing it with a new instruction. The Game Genie did not alter the data stored in the game cartridge; it only changed the game while it was being played. If a player chose not to use the Game Genie, the Nintendo Entertainment System would display Nintendo's original audiovisual display.

The United States Court of Appeals for the Ninth Circuit held that the altered audiovisual displays created by the Game Genie could not be derivative works because they did not exist in any concrete or permanent form:

The altered displays do not incorporate a portion of a copyrighted work in some concrete or permanent form. Nintendo argues that the Game Genie's displays are as fixed in the hardware and software used to create them as Nintendo's original displays. Nintendo's argument ignores the fact that the Game Genie cannot produce an audiovisual display; the underlying display must be produced by a Nintendo Entertainment System and game cartridge. Even if we were to rely on the Copyright Act's definition of "fixed," we would similarly conclude that the resulting display is not "embodied," see 17 U.S.C. § 101, in the Game Genie. It cannot be a derivative work. (10)

Some courts have gone further, requiring that a derivative work be "fixed" (as opposed to just having concrete or permanent form). The United States District Court for the Northern District of Illinois, for example, has held that fixation is required for a derivative work to be infringing (12). Similarly, the United States Court of Appeals for the Second Circuit has stated that "[i]n order for a work to qualify as a derivative work it must be independently copyrightable (13)." Though the Second Circuit did not squarely address whether there must be fixation for there to be a derivative work, if a derivative work must be "independently copyrightable," then logically it must meet the fixation requirement that is a prerequisite for copyright protection (14). Nimmer has also leaned towards the logic of a fixation requirement, noting that, "it is difficult to reconcile two different definitions of 'derivative works' [one for protection and one for infringement] with the plain language of the Act (15)."

Under either the Ninth Circuit's "concrete or permanent form" test or under the traditional fixation requirement, the altered versions of movies created by the filtering technology in Huntsman v. Soderbergh do not appear be infringing derivative works. The sequence of images exists only as it is being watched; the images do not reside on the underlying DVD, in the filtering software, or in any other fixed or permanent form. And when you think about it, this makes sense. Under copyright law, if you want to read the last chapter of a book first, you can. You can mute the audio when you're watching a basketball game, fast forward through the scary parts of a movie, or stand on your head to look at a painting without running afoul of anyone's copyright rights. The creator (or in this case, the Studios) may not like the way you choose to view his or her work, but if it doesn't change the underlying work or create a new work that is more than temporary in nature, copyright law is not offended.

In addition to arguing that the altered audiovisual displays viewed by consumers are derivative works, the Studios also argue that the software filters themselves are infringing derivative works of the Studios' films. The Technology Companies have responded by arguing that copyright law requires that a derivative work incorporate protectable elements of a copyrighted work to be infringing (16). The software filters don't "incorporate" any of the content of the Studios' films; they only "reference" discrete points in the chronological sequence of particular films. Referencing a copyrighted work, the Technology Companies argue, does not constitute infringement.

There is little case law regarding whether technology like the software filters at issue may constitute derivative works by "referencing" copyrighted films. Indeed, from a practical standpoint, it would be difficult, if not impossible, to make a principled distinction between acceptable "referencing" of a copyrighted work and "referencing" that crosses into infringement. Nearly all creative works are inspired by or built upon the knowledge or techniques of works created before them; do all such works infringe the derivative work right? Do some of them? Do none of them? How do you tell the difference? As the Ninth Circuit explained in Lewis Galoob:

In holding that the audiovisual displays created by the Game Genie are not derivative works, we recognize that technology often advances by improvement rather than replacement. Some time ago, for example, computer companies began marketing spell-checkers that operate within existing word processors by signaling the writer when a word is misspelled. These applications, as well as countless others, could not be produced and marketed if courts were to conclude that the word processor and spell-checker combination is a derivative work based on the word processor alone. The Game Genie is useless by itself. It can only enhance, and cannot duplicate or recast, a Nintendo game's output. It does not contain or produce a Nintendo game's output in some concrete or permanent form, nor does it supplant demand for Nintendo game cartridges. Such innovations rarely will constitute infringing derivative works under the Copyright Act. (17)

The Ninth Circuit tried to further draw this distinction in Micro Star v. FormGen, Inc. In that case, the court held that MAP software files that contained an "exact, down to the last detail, description of an audiovisual display" of an underlying computer game could constitute derivative works (18). The MAP files in Micro Star were written to add new levels of play to the underlying game. To function, these MAP files incorporated a detailed description of the audiovisual display of the game so that the new game level would operate under the same visual rules as the levels depicted in the original game. The court drew a legal distinction between MAP files, which incorporate copyrightable elements of an underlying game, and the non-infringing "Game Genie" in Lewis Galoob:

Micro Star argues that the MAP files on [Micro Star's product ("N/I")] are a more advanced version of the Game Genie, replacing old values (the MAP files in the original game) with new values (N/I's MAP files). But, whereas the audiovisual displays created by Game Genie were never recorded in any permanent form, the audiovisual displays generated by D/N-3D from the N/I MAP files are - in the MAP files themselves. In Galoob, the audiovisual display was defined by the original game cartridge, not by the Game Genie; no one could possibly say that the data values inserted by the Game Genie described the audiovisual display. In the present case the audiovisual display that appears on the computer monitor when a N/I level is played is described - in exact detail - by a N/I MAP file. (19)

The question is, are the software filters at issue in Huntsman v. Soderbergh more like a Game Genie or a MAP file? It seems evident that the filters at issue do not contain an "exact, down to the last detail" description of the audiovisual displays of the films to which they refer. Instead, the filter files contain a set of instructions, based on time codes, that tell the DVD player to mute or skip selected portions of playback. The audiovisual display is defined by the DVD, not by the software filters.

But what about the software filters derived from the time codes? Are these derivative works of the time codes inserted into the DVDs as part of the manufacturing process? It can be argued that time codes are not subject to copyright protection because they lack the minimal creative spark required for copyright protection (20). Moreover, facts, ideas, procedures, processes, systems and methods of operation are not protectable under copyright law, nor are "scenes a faire," which, in the context of computer programs, means those elements of a program or technology that "necessarily result from external factors inherent in the subject matter of the work (22)."

Here, the DVD authoring software mechanically inserts the time codes, which the filtering technology then uses to identify the chronological sequence of a film. No matter what flights of fantasy are included in a movie, time codes are not "chosen" by the creator; they simply designate the film's sequence so that the opening second does not occur three minutes into the film. It stretches logic to say that time codes result from any creative "spark" merely because they are associated with a creative product, i.e., a movie on DVD. In addition, the "scenes a faire" doctrine, which designates as unprotectable those elements of a software program that are dictated by outside factors, would seem to work by analogy to preclude time codes from protection. Even though DVDs are not "software" per se, their time codes are dictated by external, industry factors - the fact that a time code sequence necessarily starts at 00:00:00 with the movie's first frame.

It is the very digital technology that resulted in the creation of the DVD that allows technology companies to create innovative tools that contribute to consumers' enjoyment of the entertainment contained in this new medium. The results of the DVD part of the digital revolution have been quite successful for the studios. Hollywood has experienced record sales, with DVDs eclipsing VHS this year. Indeed, in the last quarter 0f 2003 the studios shipped some 215 million DVD titles, which is a 40 percent increase over last year (22). Thus, DVD has contributed to home video sales and rentals that have outperformed box office. The Hollywood inside joke is that the theatrical release of a movie is the trailer for the DVD.

In effect, the Judge in the Federal District Court in Denver Richard Matsch (of Oklahoma City bombing-trial fame) will have to decide whether, in exchange for the revenue bonanza, the Studios will have to cede some modicum of control to technology and permit consumers to shape their viewing experience.

Footnotes

(*) James M. Burger and Kathleen E. Fuller. Mr. Burger is a member of the law firm of Dow, Lohnes & Albertson; Ms. Fuller is an Associate. The views expressed herein are those of the authors and not necessarily those of their clients or the law firm. On behalf of Intel Corporation, Mr. Burger and Ms. Fuller recently filed an amicus brief in support of ClearPlay in Huntsman v. Soderbergh.

(1) The Technology Companies are also known in the case as the "Electronic Editing Parties" or the "Player Control Parties." In addition to these parties, the case also includes claims against a different group of parties, known in the case as the "Movie Editing Parties." The Movie Editing Parties create and market complete, edited versions of Hollywood movies on DVDs. Because these parties create and market already-edited DVDs, as opposed to just altering the playback of unaltered underlying DVDs, their copyright issues are different and are not addressed in this article.

(2) When creating the final version of the movie to be "burned" into the master disc (from which retail copies will be stamped), the authoring software automatically inserts time codes, starting at time 00:00:00.

(3) ClearPlay had been negotiating with DVD player manufacturers to incorporate circuitry in new players to allow the filters to work with their players.

(4) See, e.g., Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 431 (1984) (declining to extend theories of contributory and vicarious copyright infringement to render VCRs unlawful, the Court noted that, in the context of technological innovation, "[t]he judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme"); RIAA v. Diamond Multimedia, 180 F.3d 1072 (9th Cir. 1999) (declining to extend the Copyright Act, 17 U.S.C. § 1001 et seq. to render portable MP3 players unlawful). In this case, however, the Studios have not alleged that the Technology Companies are contributory infringers, possibly in an attempt to avoid the "substantial non-infringing uses" doctrine established in Sony.

(5) The Studios' copyright claims in this case avoid any explicit mention of "moral rights," that is, the right of an author to control the attribution or integrity of his or her work. In the United States, copyright law only recognizes limited moral rights in the context of "works of visual art." See Visual Artists Rights Act of 1990, codified at 17 U.S.C. § 106A. A group of Hollywood directors that are also party to the suit have alleged a form of moral right infringement as part of their Lanham Act claims; however, these arguments are limited to the directors' Lanham Act claims and do not explicitly apply to the Studios' copyright claims.

(6) See Studios' Counterclaim at ¶ 30, Huntsman v. Soderbergh, Civ. A. No. 02-M-1662 (filed Sept. 20, 2002).

(7) Motion Picture Studio Defendants' Statement Clarifying Claims at 4, Huntsman v. Soderbergh, Civ. A. No. 02-M-1662 (filed March 11, 2003).

(8) Statement Clarifying Claims at 5.

(9) Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 964 F.2d 965 (9th Cir. 1992), cert. denied, 507 U.S. 985.

(10) Id. at 968 (emphasis in original). The Ninth Circuit noted that its test for determining the existence, vel non, of a derivative work was not based on the Copyright Act's requirement that a derivative work be "fixed" in a tangible medium of expression. Id., 964 F.2d at 967-68. Rather, as the Court pointed out, the Act states that a derivative work "is a work based on one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed or adapted." Id. at 967 (emphasis in original), citing 17 U.S.C. § 101. Based on this language and on relevant portions of the Act's legislative history, the Ninth Circuit concluded that a derivative work must have "concrete or permanent form," even if it isn't "fixed."

(11) Micro Star v. FormGen, Inc., 154 F.3d 1107, 1111 (9th Cir. 1998).

(12) See Lee v. Deck the Walls, 925 F. Supp. 576, 580 (N.D. Ill. 1996).

(13) Woods v. Bourne Co., 60 F.3d 978, 990 (2d Cir. 1995).

(14) See 17 U.S.C. § 102(a); Lee, 925 F. Supp. at 580.

(15) Nimmer on Copyright, § 8.09[A] (2000).

(16) See Country Kids 'N City Slicks, Inc. v. Sheen, 77 F.3d 1280, 1284 (10th Cir. 1996) (plaintiff must show that defendants "copied" protectable elements of the copyrighted work), citing Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 831 (10th Cir. 1993) (there must be "copying by the defendant of protected components of the copyrighted material"). See also H.R. Conf. Rep. No. 94-1476, at 62, reprinted in 1976 U.S.C.C.A.N. 5659, 5675 ("the infringing [derivative] work must incorporate a portion of the copyrighted work in some form"); Madrid v. Chronicle Books, 209 F. Supp. 2d 1227, 1235, n.4 (D. Wyo. 2002), citing with approval Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 771, 787, n.55 ("infringing [derivative] work must incorporate a sufficient portion of the pre-existing work"); Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 267 (5th Cir. 1988) (infringing derivative work must incorporate portion of copyrighted work); Litchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir. 1984).

(17) Lewis Galoob, 964 F.2d at 969.

(18) See Micro Star v. FormGen, 154 F.3d at 1111.

(19) Id.

(20) See Feist Pubs., Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991) (holding that an alphabetical listing of entries in a telephone directory "does not possess the minimal creative spark required by the Copyright Act and the Constitution.")

(21) See Mitel, Inc. v. Iqtel, Inc., 124 F.3d 1366, 1375 (10th Cir. 1997). In Mitel, the Tenth Circuit affirmed the trial court's denial of a preliminary injunction based on defendant's copying of number values that were used in "command codes" for telecommunications equipment. The court held that, even if the number values expressed in the command codes were non-arbitrary original expression, they were unprotectable under the scenes a faire doctrine because "much of the expression in Mitel's command codes was dictated by the proclivities of technicians and limited by significant hardware, compatibility, and industry requirements." Mitel, Inc. v. Iqtel, Inc., 124 F.3d at 1375. See also Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 838 (10th Cir. 1993) ("the scenes a faire doctrine also excludes from protection those elements of a program that have been dictated by external factors").

(22) DVD Title, Hardware Shipments Seen as Robust in 3rd Quarter, Consumer Electronics Daily, October 22, 2003 at 2. "Hollywood's bonanza continued unabated through the 3rd quarter with 215 million DVD titles shipped, a 40% increase over the 2002 period, the Digital Entertainment Group (DEG) said Tues. At the same time, it said DVD hardware shipments rose 36.5% to 6.4 million players of various types."