Page:Data East USA v. Epyx.pdf/2

 H. Michael Brucker, Oakland, Cal., Steven M. Kipperman, San Francisco, Cal., for defendant-appellant.

Sheldon R. Meyer, Karen S. Smith, Fliesler, Dubb, Meyer & Lovejoy, San Francisco, Cal., William McLean, Thoits, Love, Hershberger & McLean, Palo Alto, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before BROWNING, HUG and TROTT, Circuit Judges.

TROTT, Circuit Judge:

Plaintiff-appellee Data East USA, Inc., brought this action against defendant-appellant Epyx, Inc. for copyright, trademark, and trade dress infringement. The district court found a copyright infringement and issued a permanent injunction and impoundment. Epyx appeals the grant of the permanent injunction.

Epyx contends (1) the district court erred in granting the injunction because Epyx never had access to Data East’s copyrighted work, (2) the district court erred in finding substantial similarity, and (3) the district court’s injunction was impermissibly vague and overbroad. We reverse.

I. FACTS

Data East is a California corporation engaged in the design, manufacture, and sale of audio-visual works embodied in video games for coin-operated and home computer use. In July 1984, Data East commenced distribution in Japan of an arcade game entitled “Karate Champ” (“Arcade # 1”). In September 1984, Data East commenced distribution in Japan and later in the United States and Europe of an updated version of “Karate Champ” (“Arcade # 2” or more generally as “arcade game”). Finally, on October 12, 1985, Data East commenced distribution in the United States of a home computer game version of “Karate Champ” (“home game”). Data East applied for and received audio-visual copyright certificates for each game.

In November of 1985, System III Software, Ltd., an English company, commenced distribution in England of a home computer game entitled “International Karate.” Epyx, a California corporation engaged in the development and distribution of audio-visual works for use on home computers, obtained a license agreement with System III and commenced distribution in the United States on April 30, 1986 of a Commodore-compatible version of “International Karate” under the name “World Karate Championship.”

Each competing product, “Karate Champ” and “World Karate Championship,” consists of the audio-visual depiction of a karate match or matches conducted by two combatants, one clad in a typical white outfit and the other in red. Successive phases of combat are conducted against varying stationary background images depicting localities or geographic scenes. The match is supervised by a referee who directs the beginning and end of each phase of combat and announces the winning combatant of each phase by means of a cartoon-style speech balloon. Each game has a bonus round where the karate combatant breaks bricks and dodges objects. Similarities also exist in the moves used by the combatants and the scoring method.

Data East alleged that the overall appearance, compilation, and sequence of the