In a recent decision, the Federal Court ruled that video games may no longer be imported into Australia without the permission of the owner of the copyright in the computer programs contained in the games.

In Sega Enterprises and Avel Pty Limited v. Gottlieb Electronics Pty Limited and Sega Enterprises and Avel Pty Limited v. Galaxy Electronics Pty Limited, which were heard together, the judge had to decide whether the VIRTUACOP and DAYTONA TWIN USA video games were computer programs or cinematography films, within the meaning of the Australian Copyright Act 1968.

The Copyright Act prohibits the importation into Australia and subsequent sale or lease of copyrighted works, including films, without the permission of the copyright owner. However, an exception is provided under the Circuit Layouts Act for non-infringing integrated circuits, which contain an authorized copy of a computer program, and video games have been held to fall within this exception. The Copyright Act defines a cinematography film as "an aggregate of visual images embodied in an article" which can be used to show a moving picture.

The respondents argued that video games were not cinematography films, within the meaning of the Copyright Act, in that they do not contain fixed images, for example, in celluloid frames, which are the same each time the film is shown. Rather, a video game utilizes an integrated circuit containing a computer program that produces an image in reaction to a player's input, thereby displaying different images each time the game is played. The judge rejected this argument on the ground that the definition of what is a cinematography film does not hinge upon the technology used to produce an image, or whether a series of images is the same whenever it is shown, but on the fact that a viewer who plays a video game sees a moving picture. The judge also reasoned that, although the moving picture will change, depending on how the viewer plays the game, the game nevertheless draws upon a fixed number of pre-programmed images embodied therein, so that it would be possible for a player who masters the game to generate the same sequence of images each time.

The respondents also argued that a video game is clearly a computer program and, as such, cannot also be construed as being a cinematography film, but the judge did not address this argument.

The judge ruled in favor of the petitioners, and the respondents appealed to the full Federal Court which, according to our sources, has upheld the earlier decision in an as yet unreported decision.

This decision has given certain owners of copyrights in computer programs contained on integrated circuits a film copyright in their works, in addition to a computer software copyright. Consequently, a seemingly anomalous result has been produced: while copyright owners cannot rely on software copyright in their works to prevent the parallel imports of video games, they may now rely on the film copyright in the same works to do so.