JOSHO vs ENIX
Translated by Takeo Hayakawa
1998 (wa) No. 22568 Action for declaration denying the right to enjoin a copyright infringement (oral argument closed on March 16, 1999)


D E C I S I O N
FORMAL JUDGMENT
Part1 Claims
Part2 Outlines of the case
*I.Premised facts (facts undisputed between the parties and facts found from the gist of the whole arguments)
***1/2(1)(2)(3)/3/4/5
*II.Issues*1/2
*III.Parties' arguments on the issues
***1.On issue l*(1)(i)abc(ii)*(2)(i)(ii)*(3)(i)(ii)
***2.On issue 2*(1)(i)(ii)(iii)(iv)*(2)(i)(ii)(iii)(iv)
Part3 Parties' arguments on the issues
*I.On issue l
***1(i)(ii)(iii)(iv)*2.(i)(ii)(iii)(iv)
*II.Conclusion

D E C I S I O N
(stamped: decision delivered on May 27, 1999, original received the same day by court clerk)
Plaintiff Kabushiki Kaisha  JOSHO
446-l Taimen, Suetakenaka, Kudamatsu City,Yamaguchi Prefecture
represented by Yukin KANEOKA, President
Counsel for Plaintiff Keiji SUGIYAMA, Attorney at Law
Akira IWASAKI, Attorney at Law
Yasuyuki FUJITA, Attorney at Law
Toru NISHIKI, Attorney at Law
Norihisa OGAWA, Attorney at Law
Michiyo OIKAWA, Attorney at Law
Masao YOSHIDA, Attorney at Law
Eisuke FUJIMOTO, Attorney at Law
Michiaki NAKANO, Attorney at Law
Hideo OGURA, Attorney at Law
Yukihiko SUGIURA, Attorney at Law
Hisamichi OKAMURA, Attorney at Law
Hiroaki KITAOKA, Attorney at Law
Keijiro KIMURA, Attorney at Law
Masamitsu KOZU, Attorney at Law
Arata SHIMURA, Attorney at Law
Hiromichi HAMADA, Attorney at Law
Makoto SUZUKI, Attorney at Law
Hiroshi OTSUCHI, Attorney at Law
Tatsumitsu GONDO, Attorney at Law
Defendant Kabushiki Kaisha ENIX
31-8 4-chome, Yoyogi, Shibuya-ku, Tokyo
Yasuhiro FUKUSHIMA, President
Counsel for Defendant Toshiaki MAKINO, Attorney at Law
Hideo MAKINO, Attorney at Law 
Ryuichi YAMAZAKI, Attorney at Law
Makoto  ITO, Attorney at Law
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FORMAL JUDGMENT

1  With regard to the sale by plaintiff of used copies of the game softs as per the accompanying list of game softs, we declare that defendant has no right to enjoin the said sale on the basis of its copyright to the game softs as per the list.

Costs of litigation shall be borne by defendant.


Pt 1  Claims
      To the same effect as the formal judgment.

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Pt 2  Outlines of the case
    Plaintiff is selling used copies of the game softs as per the accompanying list (hereinafter game soft 1 on the list referred to as "the instant game soft 1,"  game soft 2 on the list as "the instant game soft 2," and both of them together as "the instant game softs.") Defendant, claiming that the instant game softs come under the category of "film (cinematographic) works" and as such are subject to its right of distribution, sought an injunction against plaintiff's sale of used copies of the instant game softs. Thereupon plaintiff brought this action against defendant for the declaration that defendant has no right to enjoin its sale of used copies of the  instant game softs on the basis of its copyright to them.
 

I.  Premised facts (facts undisputed between the parties and facts found from the gist of the whole arguments)
  

1  Plaintiff is a joint stock company that makes it its business to sell toys such as game softs, while defendant is a joint stock company that makes it its business to design, develop or manufacture computer software.
 
2(1) The instant game softs are both of them software for use in the" Play Station," the home TV game machine, and are each stored in a CD-ROM.

(2) A Play Station consists of a main body and a controller connected with it. At the time of its use, the main body, which houses a CD-ROM storing a game soft, is connected with a TV receiver by means of an AV cable. The player manipulates buttons and others on the controller, then image data and sound data begin to be outputted out of the program stored in the CD-ROM, and images appear on the screen (CRT display) of the TV receiver, synchronized with sounds that stream from the speaker. Thus the contents of images and sounds are determined by the way he manipulates the controller. As a result one and the same game soft will produce different concrete contents of images on the screen and sounds from the speaker each time, according as  the player actually manipulates the controller.

(3)The instant game soft l comes under the category of so-called role playing games.

The story of the game is developed as the hero, according as the player manipulates, travels through different imaginary localities, encounters and fights with enemies in different places, or makes friends with people he meets on the way.

 The instant game soft 2 is a TV game of a contest type in which the player by manipulating the controller to the rhythm of music makes characters dance and compete with each other in the grace of movement.
 

3  Defendant is the owner of a copyright to the instant game softs.
 
4  Defendant as the sole wholesaler is lawfully selling copies of the instant game softs through retailers to users, while plaintiff is buying such copies from users and selling them as used game softs.
 
5  Defendant claims that the instant game softs are film works and that it has the right of distributing them, and defendant, on the basis of its alleged right of distribution, demands that plaintiff cease to sell such used game softs.
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II. Issues
  
1 Whether the instant game softs come under the Copyright Act's definition of "film(cinematographic) works,"  which are subject to the right of distribution under Article26 (1).
 
2 Suppose the above question is answered in the affirmative, whether the right of distribution is exhausted, once copies of the instant game softs are lawfully transferred by the copyright owner, with the result that the right does not extend to any further transfer or other act.

III. Parties' arguments on the issues

1. On issue l 
(1) Argument of defendant
(i) The instant game softs are film works within the meaning of Copyright Act.Article 2 (3) as stated blow:

   a  Both of the instant game softs have contents as described in I 2 (3). The dynamic images which the process of such games produces, and the synchronized sounds it reproduces make the games fit for visual appreciation, so that it may safely be said that they are expressed by a process producing audiovisual effects analogous to those of a film.

    b  The instant game softs are both stored in physical objects in the form of CD-ROMs. Images and sounds are reproduced by a technical device. The program stored in a CD-ROM causes image data and sound data to be drawn from the same CD-ROM in which they are also stored, so that the images are successively projected on the screen (CRT display) of the TV receiver and sound effects simultaneously reproduced. The audiovisual expression of the instant game softs is retrievably fixed in physical objects in the form of CD-ROMs.

    c  The instant game softs are the end products of intellectual activities of individualistic minds that contributed each in his own way toward the ultimate achievement of audiovisual expressions. Thus they are synthetic accumulations of those individuals' thoughts and sentiments.

    d  The instant game softs, therefore, are "works expressed by a process producing visual or audiovisual effects analogous to those of a film(motion picture), and fixed in some material."  Thus they are film works within the meaning of Copyright Act, Article 2 (3).

(ii) Copyright Act,Article26 (1) provides for the right to distribute film works in general terms without any specific limitation.  Seeing that the instant game softs are film works as defined in Article2 (3) of the Act, the right of distribution under Article26 (1) applies.
 

(2) Argument of plaintiff
(i) In order for a work to qualify as a "film work" within the meaning of Copyright Act, Article2 (3), it is required that there be an expression of thoughts and sentiments in a creative way by a process producing visual or audiovisual effects analogous to those of a film, and that the expression be fixed in some material.  To qualify as such an expression, it must be an end product of an editorial act, the most important and essential act of creation in a film work. It must be a specific selection of series of images out of numerous short series of images for projection in a specific combination and in a specific order.

   As a matter of fact, in the case of the instant game softs,  the series of images projected, the combination, and the order vary each time, accrding to the way the player manipulates. He cannot reproduce a specific series of images in a specific combination and in a specific order every time. Then there cannot be no specific series of images as an expression of the game author's thoughts and sentiments.

    As seen above, therefore, the instant game softs have in them no texpression of thoughts and sentiments in a creative way by a process producing visual or audiovisual effects analogous to those of a film, or no such expression fixed in any material. Thus the instant game softs are not "film works" within the meaning of Copyright Act, Article2 (3).

(ii) The Copyright Act provides with respect to works in general that the act of knowingly distributing unauthorized copies is the only thing that constitutes a copyright infringement (Article113 (1) -2), but so far as film works are concerned, it has some provisions that read as if the right of distribution were without any restriction(Article26,Article2 (1) -19). This may be accounted for by special circumstances attending film works, especially the need to protect the film work distribution system and the duty to observe the Berne Convention (for the Protection of Literary and Artistic Works). Film producers, in order to stragetically choose movie houses to maximize prospective box-office profits, will not go beyond just lending printed films to film exhibitors, who, as soon as the show period ends, are directed to return them to the film producers or to pass them to the next film exhibitors and so on. Because this mode of film distribution has become an established practice in the trade as the right of film distribution, and because the movie house film is of such economic value that one copy can fetch vast profits, the right of film distribution is accepted as the right to designate its destination. When it became a duty under the Berne Convention to make statutory law on this problem, the customary right of movie house film distribution was written into the Act as Article 26 as the provision intended to implement the Berne Convention, without carefully examining its requirements.
 In the light of the circumstances that have caused the right of distribution to be limited to film works, a realistic consideration will not support the idea of extending the right of distribution to those works which, unlike movie house films, are not expected to fetch box-office profits from projection, copies of which are made and sold in large quantities, and which are expected to be directly transferred to the consuming public. The reason is that the right is so powerful as to make it possible to control trade in works and thereby to control the market, with the result that game softs will get too much protection as compared with other works.

 Therefore, the right of distribution under Copyright Act, Article26 (1) does not apply to the instant game softs.
 

(3) Rebutting argument of defendant
(i) Admitting that series of images vary with the way the player manipulates the controller(interractiveness), the instant game softs none the less fulfill the requirements that there be an expression within the meaning of Copyright Act, Article2 (3), and that it be fixed in some material.  Despite the variability of images with the player's manipulation, all those varying ways of manipulation and varying images are anticipated and determined by the program stored in a CD-ROM, so that the expression meets the requirement of fixedness in some material just the same. Fixedness in some material within the meaning of Copyright Act, ArticleQiRjis in the last analysis a filmlike expression being fixed and preserved in a medium capable of reproducing it when needed, and not the fixedness of contents of expression in the sense that images are reproducible in the same combination and in the same order.

(ii) In the current Copyright Act enacted in 1970, the legislative intent in introducing the right of distribution of film works may indeed be correctly stated by plaintiff, but at that time "film works" were defined inArticleQiRjwith the intent to include film works to be transferred from hand to hand, and the right of film distribution is granted by Article 26 (1) without any exclusionary provision about film works of this type. Therefore, plaintiff's interpretation limiting the applicability of the right of distribution is untenable.

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Q. On issue 2 
(1) Argument of plaintiff
      Admitting for argument's sake that the instant game softs are "film works" to which the right of distribution under Copyright Act, Article 26 (1) applies, circumstances as stated below lead to the conclusion that, once lawfully made copies are lawfully transferred, the right of distribution should be interpreted to be exhausted so far as those copies are concerned, and extend to no further transfer or other act.

(i)  The right of film distribution under the Berne Convention on which Copyright Act, Article26 (1) was based extends only to the first distribution, and, once exercised, extends to no further distribution.

(ii)  The general right of distribution under the WIPO Copyright Treaty concluded in December l996 is premised on the assumption that it is exhausted with the first distribution within the boundaries of the country concerned and the EU Community.

(iii)  Foreign legislation shows that those countries which recognize the right of distribution narrowly define the term "right of distribution," or else adopt the legal doctrine that the right of distribution is exhausted with the first distribution.

(iv) In patents and other industrial property, once a patented product, for instance, is lawfully put into a flow of trade, the patent right, seen as having carried out its purpose, is exhausted and exercises no effect on any subsequent use, transfer or other act.  This principle of exhaustion of rights holds good in copyright as well.
 

(2) Argument of defendant
 There are other circumstances as stated below which justify the conclusion that the right of film distribution under Copyright Act, Article26 (1)should be interpreted as not exhausted with the first distribution, but as capable of exercising an effect on further distribution.

(i)  Those foreign countries which deny its effect on second and further distribution have an express provision to that effect.  But Copyright Act, Article26 (1) has no such provision.

(ii) In the deliberations on amending the current Copyright Act consequent on the formation of the WIPO Copyright Treaty, the introduction of the right of distribution for works in general and the adoption of the principle of exhaustion of the right of distribution have been on the table for examination.  During such examination, the legislating authorities have expressed a negative opinion about the exhaustion of the right of distribution under Copyright Act, Article26 (1).

(iii)  In Copyright Act, Article2 (1) -19 "distribution" includes "lending." As the act of lending generally follows the first transfer of copies, the right of lending can be interpreted as not exhausted with the first transfer. Since the right of distribution includes the right of lending immune from exhaustion, a consistent interpretation of the two rights compels an equal treatment of both rights as immune from exhaustion.

(iv)  The Berne Convention does not make it clear whether the right of film distribution is exhausted with the first distribution.

     The WIPO Copyright Treaty does indeed require providing for the right of distribution for works in general, but leaves it to municipal law whether the right is exhausted with the first distribution.

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Pt 3  Opinion of this court

I.  On issue l 

1   The meaning of "film (cinematographic) work" in the Copyright Act
(i) The Copyright Act does not give a clear and precise definition to "film work"(Article10 (1) -7). It reads in Article2 (3): "As used in this Act, a "film work" includes a work expressed by a process producing visual or audio-visual effects analogous to those of a film, and fixed in some material." Here "film(motion picture)" is a given concept, and "work" is not concretely defined, either. What we are supposed to understand by "film work," therefore, can be determined only by considering all the relevant provisions of the Act together.
 With regard to film works, the Copyright Act provides for the coverage of authors (Article16), the ownership of copyright(Article29), and the period of protection(Article54), and, as rights of utilization, the rights of presentation and distribution(Article26).

 Thus film works are protected by the rights of presentation and distribution, rights peculiar to them, in addition to the rights of reproduction(Article21),  public transmission(Article22), translation and adaptation(Article27), and original author's exploitation of a derivative work(Article28). The right of presentation is the right to utilize a film work by presenting it to the public. It corresponds to the right of performance as the right of utilitization of formless works.

(ii)  The right of distribution is recognized for film works only as the right to transfer@or lend copies of such works. Such act includes not only transfer or lending to the public, but also transfer or lending for the purpose of presentation (projection) to the public (Article21 (1) -19).

 The reason why the Copyright Act provided for the right of distribution as stated above for film works only is that it was in observance of a duty under the Berne Convention because its Brussels amendments provided for the right of distribution of film works. But the fact of the matter is that it was in fact because of special circumstances attending film works as stated below (A 6, 9-14, 21, 47, B 24 etc.)

     Movie house films are utilized by projecting printed films (copies of the original film) in movie houses so that a large audience may enjoy the audiovisual expressions of those films at one time. Each individual copy has a great economic value in the sense that its projection can  fetch vast profits (box-office receipts), and, unlike other works, copies of which are sold directly to the consuming public in large quantities, a small number of copies of movie house films are traded in solely between film production-distribution companies and movie house proprietors.  As a matter of fact, film production needs an investment of vast funds, so that film producers-distributors have to recover the investment by stragetically determining the area and period for show and rotation of films in anticipation of box-office profits, availing themselves of the so-called distribution system(as described below) as a means of controlling the distribution of printed films. They do not go beyond lending their printed films to the film exhibitors and, as soon as the show period ends, have the latter return them to themselves or pass them to the next exhibitors, and this mode of distribution has become an established practice in the trade. The fact that the Copyright Act has in view nothing but film works in its provision for the right of distribution may be attributed to the legislative policy consideration that in view of the film producers' mode of utilization of movie house films, and the economic value of a single copy, the peculiar mode of distribution of copies, it is proper to protect their interest in recovering their investment in producing them by guaranteeing their control over the whole distribution of their copies of movie house films, and that such guarantee should take the form of an exclusive copyright capable of being set against a third person like a property right, because contractual relations between film producers-distributors alone are not adequate for the purpose, and because such copyright would not unreasonably obstruct the flow of goods in general. This is the only justification for restricting the right of distribution to film works.

 The right of film distribution as a right to designate the destnation of printed films has thus been brought into being by the system of movie house film distribution as an established practice in the trade and the economic value of printed films.  The other provisions of the Copyright Act relating to film works, i. e., those on the coverage of authors(Article16), the ownership of copyright (Article29) and the period of protection(Article54), may also be attributed to the legislative intent to concentrate the copyright and define the period of protection, thereby achieving the sole purpose of facilitating the movie producers' exercise of the right to utilize their movie house films in the said system of film distribution.

(iii) In order for a work to qualify as a "film work," it must satisfy the fundamental requirements for a work prescribed by the Copyright Act, that it be "a production in which thoughts and sentiments are expressed in a creative way and which falls within the literary, scientific and musical domain"(Article2 (1) -1).
@
 Through intellectual activities comprising devices in camera work, techniques of montaging, cutting or the like, film editing etc., images are made by a device creative in composition etc.  Images selected from among those images, through the process of putting them together in a definite order and synchronizing them with sound effects, come out as a movie house film. When projected, it will reproduce a continuous succession of images synchronized with sound effects as an expression of thoughts and sentiments. Thus a movie house film satisfies the requirements for a work.

 Because projecting a printed film, or a copy of a movie house film, will reproduce the same pictures in the same order as in the original film, projecting many printed films in many movie houses makes it possible for different audiences in the respective movie houses to enjoy, unrestricted by time or space, the same audiovisual effects as an expression of the same thoughts and sentiments.

(iv) As seen above, a movie house film is a creative expression of thoughts and sentiments is a product of editorial efforts such as selecting images bearing certain contents and putting them together in a certain order. A copy of such a film (printed film) through its projection can always reproduce a continuous succession of images bearing the same contents, so that through its projection in many movie houses in a vast area it can convey an expression of the same thoughts and sentiments to a vast number of spectators. The system of movie house film distribution is thus premised on the printed films' capability of always reproducing a continuous succession of images bearing the same contents. Suppose we take here into consideration the fact that the Copyright Act's provisions relating to "film works" are intended to solely facilitate the film producers' exercise of the right to utilize their movie house films in the said system of distribution. It would appear proper to conclude that the Act has in view as a "film work" a work characterized by the special quality of a movie house film in that it is capable of giving the same audiovisual effects as an expression of thoughts and sentiments to an immense number of spectators through its projection in a large number of movie houses.

 In the last analysis, in order to qualify as a "film work" within the purview of the Copyright Act, a work must meet the requirements: (1) that it express thoughts and sentiments by putting togetherr selected images bearing certain contents in a certain order, and (2) that by the use of the original film or copies the same continuous succession of images be always reproducible (images bearing the same contents be always reproducible in the same order).
 

Q Are the instant game softs "film works"?
(i) The instant game softs are game softs for use in the "Play Station," the home TV game machine, and are stored each in a CD-ROM housed in the main body of the Play Station. When a player starts a game by manipulating buttons and others on the controller, image data and sound data are outputted by the program stored in the CD-ROM, and images appear on the screen (CRT display) of  the TV receiver connected with the main body of the game machine by means of an AV cable, while sounds stream from the speaker.  Since the contents and order of the images are determined by the player's manipulation of the controller, the contents and order of images on the screen vary each time, so that a continuous succession of images on the screen produced by the player's manipulation is not an expression of thoughts and sentiments, and moreover the contents and order of actual images on the screen are not fixed as something invariable. In these points the instant game softs fail to satisfy the requirements for "film works." We cannot find the author's thoughts and sentiments expressed by a process producing visual or audiovisual effects analogous to those of a film, nor can we find them fixed in some material.  Thus they do not fall within the definition of a film work under Copyright Act, Article2 (3). This conclusion can be supported by the considerations stated in (ii) and (iii) below.

(ii) The instant game softs as stored in CD-ROMs have within them not a continuous succession of images prearranged in a certain order and vested with certain contents, but a collection of various images as a material, out of which a concrete succession of images on the screen is made, but not until images are selected and ordering is determined by the player's manipulation. The possibility of the player's selecting and ordering images is not infinite, but
is limited by the quantity of images stored in the CD-ROMs, and consequently the extent of the player's freedom of varying the images on the screen as he pleases by manipulating the game machine is also limited (the extent of such freedom varies with game softs. Generally speaking, it is broad in go, chess, mahjong and like board game or simulation games, while it is narrow in action games, shooting games and the like). In any case, a succession of images in a game as a whole is not determined until the player's manipulation, and it is not preceded by the game author's act of editing or similar act of selecting and ordering through which unambiguouly and finally determined a continuous succession of images as an expression of thoughts and sentiments. Indeed it may sometimes happen that a fragmentary image as a material amounts to a work as is the case with a still picture of a single scene in a movie house film. Such still pictures must be qualitatively distinguished from a whole movie house film from the title to the end mark in that the latter presents a whole continuous succession of images as an expression of certain thoughts and sentiments.

(iii) Game softs in general, including the instant game softs, are essentially characteristic of the active player who through his game machine manipulation can vary a succession of images and sound effects by selecting and ordering images on the screen as he pleases, as against the passive spectators of movie house films who only one-sidedly receive a predetermined succession of images bearing certain contents, along with sound effects. Consequently each player by manipulating his game machine makes a succession of images all his own on the screen. This mode of using a game soft is widely different from that of using a movie house film which is displayed for simultaneous enjoyment of a large audience. In the case of a game softs, copies are directly sold to the consuming public in large quantities, and game soft makers recover their investment from consideration for transfer of such copies. Their way of doing business is a far cry from the peculiar behavior of movie house film producers who recover their investment from box-office profits earned by showing their products to a large audience at one time.

(iv) As stated above, the instant game softs, none of which is a continuous succession of
images projected on the screen with predetermined contents and in a predetermined order, does not fall within the definition of a film work: "a work expressed by a process producing visual or audiovisual effects analogous to those of a film." (Copyright Act, Article2 (3)). Since the instant game softs are not "film works" within the meaning of the Copyright Act, defendant's claim to the right of distribution on the basis of the supposition that the instant game softs are film works is unfounded.

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II  Conclusion
 From the foregoing it is evident that as the instant game softs are not "film works" as defined in the Copyright Act, defendant has no right of distribution.  Thus without going so far as to decide the other issues, plaintiff's claim for the declaration that defendant has no right of injunction is well grounded.

 Accordingly, this court decides as in the Formal Judgment.

   Tokyo District Court, Civil Division 46
 

                               Presiding Judge   Judge Ryoichi MIMURA

                                             Judge Koji HASEGAWA

                                             Judge Katsushige ONISHI


 
 

 List of Game Softs
1 Title
Article No.
Sole Wholesaler
STAR OCEAN SECOND STORY
SLPM 86105-7
defendant
2 Title
Article No.
Sole Wholesaler 
BUST A MOVE
SLPS 01237
defendant

I certify that the above is the original judgment.

    May 27, 1999

              Tokyo District Court, Civil Division 46

                                     Court Clerk   Toshiyuki NAKAMURA

*Attorney at law, Professor Emeritus, Kobe University
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