Nintendo sued Lewis Galoob Toys, Inc with the belief that its Game Genie device infringes on Nintendo's copyrighted games, by creating derivative works each time it is used in conjunction with both the Nintendo console and corresponding games. The District Court however, did not agree with Nintendo on this matter. Upon examination of the way in which the Game Genie interacts with both the Nintendo games and the Nintendo system, it was found that the device only serves to temporarily "enhance" said games, and therefore does not infringe upon Nintendo's existing copyrighted material. Not only was there no permanence, but the Game Genie was found to merely interfere with the signal between the Nintendo system and the game itself, which would not allow it to alter the source code of the game being played.
Nintendo appealed with the argument that the Court should focus on the visual elements produced, which they claimed to be derivative works. The court discusses the fact that improvement is laudable, while replacement is not. The spell checker for a word processing program is used as an example of a positive improvement/enhancement. And with that, the subject of fair use was taken into account, and the functions of the Game Genie were scrutinized in relation to the four factors that allow for fair use to be claimed. If in fact the Game Genie was determined to create derivative works, then the question was, would they be allowed under the factors of fair use?
The out come was a positive one for Galoob. The Game Genie's temporary derivative works were determined to be non-commercial, and they were not found to cost Nintendo any loss of profit. Therefore, no injunction was granted to Nintendo.
This case is an interesting one because of the fact that the Court discussed the coding of the games, which proves that there is a growing understanding of such technology among court officials. In addition, it shows a progression of Copyright law which allows it to accommodate new technologies.