Wednesday, October 31, 2007


The Wii Virtual Console is a brilliant invention. Leaving aside its immense appeal (and thus marketability) to old-school gamers, it works to make enforcement of copyright easier.

First, the legal framework. Section 106 of the Copyright Act delineates the exclusive rights of copyright owners:
Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
I'll bet the observant among you are wondering what's going on with that "Subject to sections 107 through 122" business. Well, as it happens, section 107 is the important exception to the exclusive rights discussion here:
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
What does this have to do with the Virtual Console? Plenty. The Virtual Console allows owners of the Wii to purchase, from an online shop, a copy of a game. That game is downloaded and available to play on the Wii. The Wii acts as an emulator and the downloads are the ROMs for this emulator. Thus, in effect, the Virtual Console is a licensing market for copies of certain old games, and for most of those old games, new physical copies are going to be extremely difficult, if not impossible, to find.

So the Virtual Console is an emulator. What does that have to do with copyright? Emulators have been around for a while, and video game publishers have never liked them. An emulator like, say, UberNES, can open and play certain files, called ROMs, that have the data contained on a video game cartridge, but in a format suitable for a personal computer. Combine emulator and ROM, and you can play a NES game on your computer. The problem (I hope you saw this coming) is that the companies who created the video games of which the ROMs are copies do not authorize this kind of use. The ROM infringes their copyright, to use the legal language. ROM users counter with some sort of “fair use” argument, and the key to that argument is the fourth fair use factor* - the effect of the use on the potential market for or value of the copyrighted work. Because the games of which ROMs were copies were so old, the video game companies weren’t releasing any new ones, and the effect of ROMs on the market was probably precisely nothing (with some exceptions, noted below). Even if the video game makers had gone after ROMs, they might not have had a case.

There are ways around this fair use exception, of course. For one, you could start selling new versions of the old games, as Nintendo did when it released its “Super Mario Advance” games for the Game Boy Advance. The games were, in most respects, just translations of old NES and SNES games into GBA cartridges, although some tweaks were made, some things added, some things unfortunately left out (like the “Fuzzy” graphics distortions in Yoshi’s Island, which were apparently impossible for the GBA to process). Now there’s a market for the old games, albeit in a slightly different form, but this substantially weakens the fair use rationale. In fact, it probably destroys it.

The Virtual Console is a systematic means of preserving copyright by undermining the fair use argument of ROM users. Because Nintendo has created a market for old games, even games that are twenty years old, fair use disappears. Because Nintendo was doing this even with the GBA games (and even earlier – anyone remember Super Mario All-Stars?), as I noted above, it’s just possible that this re-releasing of old games was part of a conscious effort not only to exploit the lucrative market of selling old games for nostalgia, but also to secure the copyright in those old games and prevent third parties from producing versions of the games themselves to distribute with no profit to Nintendo.

This dual benefit from the Virtual Console is ingenious. I can’t imagine the costs of maintaining the Virtual Console store are any more than, and are probably much less than, the costs of physically producing new NES systems and NES cartridges (and other systems and games), so it’s very cost-effective to boot.

I want to talk about one more thing – the license market created by the Virtual Console. There is a circularity here that infects fair use analysis generally. That is, if something is a fair use, then there is no need to pay a license fee to the copyright holder in order to continue such fair use. But if the copyright holder does create a license market, then that feeds into the fourth factor’s “effect on the market” and tilts that factor toward the copyright holder. But wait – if the use is fair, then it shouldn’t matter that the copyright holder is charging people a license fee for that fair use; the effect on the market is illusory, because the license market is illusory. People who pay the license fee are being cheated, because the use is fair in the first place; but then, that people are paying and that the holder is charging is evidence that the fee is necessary, and the people paying aren’t being cheated. What’s going on here?

Simple – the copyright holder, by creating a license market even for things that are arguably fair uses, gets a great deal of control over what counts as a fair use. It’s simple – offer to license all manner of uses, and argue that any use not licensed, even if normally a fair use, fails the fourth factor. It’s a glitch with copyright law, one that copyright holders can exploit.

I strongly suspect that Nintendo had copyright in mind when creating the Virtual Console. If so, bravo. If not, nice windfall anyway, guys.

*The fourth factor is the most important one. I didn’t say it, the statute doesn’t say it, but the Supreme Court said it (O’Connor for-the-lose), so that’s what it is. Sorry, I don’t make the law.


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