Page:Sega Enterprises v. Accolade.pdf/7

, the Accolade engineer with primary responsibility for reverse engineering the interface procedures for the Genesis console, sent a memo regarding the code segment to Alan Miller, his supervisor and the current president of Accolade, in which he noted that “it is possible that some future Sega peripheral device might require it for proper initialization.”

In the second round of reverse engineering, Accolade engineers focused on the code segment identified by Lorenzen. After further study, Accolade added the code to its development manual in the form of a standard header file to be used in all games. The file contains approximately twenty to twenty-five bytes of data. Each of Acccolade’s games contains a total of 500,000 to 1,500,000 bytes. According to Accolade employees, the header file is the only portion of Sega’s code that Accolade copied into its own game programs.

In 1991, Accolade released five more games for use with the Genesis III, “Star Control”, “Hardball”, “Onslaught”, “Turrican”, and “Mike Ditka Power Football.” With the exception of “Mike Ditka Power Football”, all of those games, like “Ishido”, had originally been developed and marketed for use with other hardware systems. All contained the standard header file that included the TMSS initialization code. According to Accolade, it did not learn until after the Genesis III was released on the market in September, 1991, that in addition to enabling its software to operate on the Genesis III, the header file caused the display of the Sega Message. All of the games except “Onslaught” operate on the Genesis III console; apparently, the programmer who translated “Onslaught” for use with the Genesis system did not place the TMSS initialization code at the correct location in the program.

All of Accolade’s Genesis-compatible games are packaged in a similar fashion. The front of the box displays Accolade’s “Ballistic” trademark and states “for use with Sega Genesis and Mega Drive Systems.” The back of the box contains the following statement: “Sega and Genesis are registered trademarks of Sega Enterprises, Ltd. Game 1991. Accolade, Inc. All rights reserved. Ballistic is a trademark of Accolade, Inc. Accolade, Inc. is not associated with Sega Enterprises, Ltd. All product and corporate names are trademarks and registered trademarks of their respective owners.”

Sega filed suit against Accolade on October 31, 1991, alleging trademark infringement and false designation of origin in violation of sections 32(1) and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114(1)(a), 1128(a). On November 29, 1991, Sega amended its complaint to include a claim for copyright infringement. Accolade filed a counterclaim against Sega for false designation of origin under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). The parties filed cross-motions for preliminary injunctions on their respective claims.

After expedited discovery and a hearing, the district court granted Sega’s motion. Prior to the hearing, Sega introduced the declaration of Takeshi Nagashima, an employee of Sega. Nagashima stated that it was possible either to create a game program which did not contain the TMSS code but would still operate on the Genesis III, or to modify a game program so that the Sega Message would not appear when the game cartridge was inserted. Nagashima stated that he had been able to make both modifications using standard components, at a total extra cost of approximately fifty cents. At the hearing, counsel for Sega produced two game cartridges which, he represented, contained the modifications made by Nagashima, and demonstrated to the district judge that the Sega Message