## Facts

- Midway Manufacturing Co. owned copyrights in the audiovisual displays of the arcade video games “Pac-Man” and “Galaxian.”
- Midway’s games operated through printed circuit boards (PCBs) that stored the images and sounds the machine could generate during play.
- Artic International, Inc. sold PCBs designed to be installed in arcade cabinets used for Midway’s games.
- One Artic board altered “Galaxian” by speeding up the rate at which its images and sounds changed during gameplay.
- Another Artic board stored images and sounds nearly identical to “Pac-Man,” producing a game that looked and sounded virtually the same as Midway’s.
- Midway sued in federal district court for copyright infringement and sought a preliminary injunction.
- The district court granted a preliminary injunction barring Artic from manufacturing or distributing boards usable to play video games substantially similar to Midway’s copyrighted games, and it denied Artic’s summary judgment motion.
- Artic appealed the preliminary injunction.

## Issues

1. Whether the audiovisual displays generated by arcade video games are copyrightable “audiovisual works” under the 1976 Copyright Act.
2. Whether selling a “speed-up” PCB that alters gameplay tempo, or a PCB that replicates a game’s audiovisual output, infringes the copyright owner’s exclusive rights, including by creating an unauthorized derivative work or enabling unauthorized public performances.
3. Whether Artic could be liable for contributory infringement based on arcade operators’ installation and public offering of the games.
4. Whether defenses such as the first sale doctrine or the idea–expression distinction barred relief.
5. Whether the district court abused its discretion in issuing a preliminary injunction.

## Decision

- The Seventh Circuit affirmed the preliminary injunction.
- The court held that Midway’s video-game audiovisual displays were copyrightable works.
- The court concluded that Artic’s PCBs likely infringed because they enabled games that were substantially similar to or unauthorized altered versions of Midway’s copyrighted audiovisual works.
- The court accepted contributory infringement as a basis for liability where Artic supplied specialized boards intended to facilitate infringing public operation by others.
- The court rejected reliance on first sale to justify creating or exploiting altered/duplicate audiovisual outputs, and found no legal error warranting reversal of the injunction.

## Legal Principles

- Video-game audiovisual displays qualify as copyrightable “audiovisual works” even when the precise sequence varies with player input, so long as the set of images and sounds is fixed in the game’s circuitry.
- A modification that preserves protected expressive content but changes a substantial aspect of the audiovisual presentation (such as tempo) can constitute an unauthorized derivative work under 17 U.S.C. § 106(2).
- Supplying hardware designed to enable infringing public operation can support contributory infringement where the supplier materially contributes to and induces infringement.
- The first sale doctrine limits control over redistribution of a particular lawful copy; it does not authorize preparation of derivative works or unauthorized public performances of modified or copied audiovisual works.
- On preliminary injunction review, an appellate court sustains relief absent abuse of discretion or legal error, particularly where likelihood of success and irreparable harm from copyright infringement are shown.

## Conclusion

The Seventh Circuit treated arcade video-game displays as protected audiovisual works and upheld an injunction against a PCB seller whose products enabled copied or altered versions of copyrighted games, rejecting first-sale-based arguments and recognizing contributory infringement for specialized hardware that facilitates unauthorized exploitation.


Midway Mfg. Co. v. Artic Int’l, Inc., 704 F.2d 1009 (7th Cir. 1983)