Like the copyright laws of almost all countries, the U.S. Copyright Law provides for exceptions that permit certain acts that would otherwise be actionable as copyright infringements. These provisions, known as the “fair use” provisions apply to all copyright works and provide exceptions from copyright protection for “purposes such as criticism, comment, news, reporting, teaching (including multiple copies for classroom use) scholarship or research”. In deciding whether a use is fair, courts must consider:

On October 25, 1992, the Fair Use Provision was amended to make it clear that “the fact a work is not published shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.” [69]

Certain additional specific provisions are made for fair use in various fields. For example, it is not a copyright infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

The first two cases in which the application of the Fair Use Provisions to computer software were considered by appellate courts both related to the programs used in game consoles where competitors had carried out reverse engineering to try to determine what programming needed to be included in a game cartridge to enable it to be used in the game console in question. In the case of Sega Enterprises v. Accolade Inc. [71] the court carried out an analysis of the above listed factors emphasizing in particular the question of the effect of the competitors on the value of the copyrighted work (a factor on which the Supreme court had focused in the case of Harper & Row v. Nation [72]) and noted that the purpose of the copyright statute was to promote the useful arts rather than necessarily give an inviolable monopoly to the original producer of a copyright work. In the present case the court felt that permitting a wider range of games to be played on the consoles in question was unlikely to reduce sales of such consoles and thus held that such reverse engineering so as to make a separate program operable with the console in question was a fair use. A similar conclusion was reached by the Federal Circuit court of Appeals in Atari Games corp. v. Nintendo.[73]

Later the Ninth Circuit in Sony Computer Entertainment v. Connectrix,[74] was faced with a case in which the defendants analyzed the basic input-output system (BIOS) of Sony’s Play Station so as to produce a program that would enable a regular computer to emulate a Play Station. None of Sony’s code ended up by being included in the emulation software. The analysis had involved making copies of Sony’s BIOS. It was admitted that this was an act of copyright infringement unless it was excused under the fair use doctrine. The court analyzed the four factors set out above and concluded that the use was fair in the present case.

On the first factor (purpose and character of the use), the court focused on the Supreme Court’s decision in Campbell v. Acuff-Rose Music Inc.,[75] where it had been held that a key question in fair use analysis was the extent to which the new work “adds something new, with a further purpose or different character, altering the first with new expression, meaning or message, in other words, whether and to what extent the new work is transformative.” The Ninth Circuit found that in the present case, the defendant’s product was “modestly transformative.”

On the second factor (the nature of the work), the Ninth Circuit concluded that Sony’s BIOS “lies at a distance from the core” of Sony’s protection since “it contains unprotected aspects [of the program] that cannot be examined without copying.” It was therefore entitled to a “lower degree of protection than traditional literary works.” Moreover, the copying was necessary for the defendants to determine the functional elements of Sony’s BIOS.

On the third factor (the amount and substantiality of the portion taken), the court found for Sony since the entire BIOS had been copied. However, it held that “in a case of intermediate copying when the final product does not itself contain infringing material, this factor is of very little weight.”

On the fourth factor (effect of the use on the potential market) the Ninth Circuit again relied on Campbell v. Acuff-Rose, noting that the mere fact that the copying was done for a commercial purpose is not dispositive and that the harm to the copyright holder is less likely when the infringement is a transformative work than when it supplants or supersedes the original work. Unlike the Sega case, in the present situation there would be some economic loss to the copyright owner. However, the court held that the competition that would arise to Play Stations by sale of the defendant’s emulation software “does not compel a finding of no fair use”. With virtually no reasoning or analysis to support its view, the court held that “because [the defendant’s emulation software] is transformative, and does not merely supplant the PlayStation console, [it] is a legitimate competitor in the market for platforms on which Sony and Sony-licensed games can be played.”

The court therefore found that three of the factors that needed consideration favored the defendants and so the use in question qualified as fair use.

One should not read too much into these decisions. In both cases, the reverse engineering (which involved dismantling chips incorporated in the games console to determine the nature of the program used) was done as part of a research program to enable the production of an article that was not itself a copyright infringement. As was pointed out in the Atari case, reverse engineering to discern a program’s unprotectable ideas constitutes fair use but any reproductions of the program must not exceed what is necessary to understand its unprotected elements. Furthermore, the fair use claim was only open to those who possessed an authorized copy of the program in question.

A case where the fair use provisions legitimized intermediate copying to study a computer program to disassemble it to discover its unprotectable elements is DSC Communications Corp. v. DGI Technologies Inc.[76] The defendant purchased microprocessor cards embodying firmware that was the subject of the plaintiff’s copyright claim. They had the cards disassembled to reveal the plaintiff’s source code and then produced their own flow diagrams to design a card that was compatible with but “not substantially similar” to that of the plaintiffs.

The fact that the defendant’s copying was done for a commercial purpose did not destroy a fair use defense since the “hybrid nature of computer software in possessing both creative and functional aspects meant that it was entitled to a lower degree of protection than more traditional literary or musical works.” However, in the same case the defense of fair use failed in respect of other software where the defendants possession was unauthorized (it had been downloaded from another party that had use of it subject to certain contract terms that did not permit such down loading).

The defense of fair use also failed in the case of Triad Systems Corp. v. Southeastern Express Co. [77] Triad makes and services computers, some of which are leased subject to a license barring third parties from using the operating software incorporated into the computers. Southeastern also services Triad computers, which involves the step of causing Triad’s copyright operating software to be copied into the computer’s random access memory. This act constituted copyright infringement and the court went on to consider a fair use defense. In balancing the fair use factors, the court noted that the situation was very dissimilar from that in Sega v. Accolade because, in this case, there was no independent creation as the result and the activities of the defendant had a direct adverse effect on the plaintiff’s market. Thus, no public benefit arose from the defendant’s activities and they could not be permitted under the fair use doctrine.

The issue of fair use came up in a totally different context in Kelly v. Arriba Soft Corp.[78] In this case the act of infringement was the display of “thumbnail” pictures of the plaintiff’s work as part of a listing of works produced by use of a “visual search engine” which was used for searching the Internet. The site that was alleged to infringe produced a list of sites where pictorial works meeting the criteria of the search could be found together with a small image of the work that could be found at such a site. The search engine operated against a database containing approximately two million thumbnail pictures. The owner of the copyright in some of the original works referenced in the data base alleged copyright infringement and claimed that it was damaged in that the search engine when giving a site address for the original work took the searcher directly to the image in question and so by-passed other material that browsers approaching the image in other ways would have to view before reaching the images in question. This deprived the owner of the copyright in the original work of advertising opportunities. Relying heavily on the Supreme Court’s decision in Campbell v. Acuff-Rose referred to above, the court held that in the present case the most important of the four factors that need to be considered in a fair use analysis was the first. Since the product in this case was a significantly transformative one, and there was no evidence to support a claim of possible harm to the copyright owner, the factors in favor of a finding of fair use outweighed the facts that the entire work had been copied and that this therefore included the core of what was protected by copyright.