Ruling Could Boost Copying of Computer Products

A U.S. appeals court ruling Thursday against Sony Corp. potentially will make it easier for high-tech companies to copy other firms’ technologies and develop competing products.

In a defeat for the $7-billion video game industry, the court, meeting in San Francisco, ruled that a Silicon Valley company could sell software that emulates Sony’s PlayStation video game player without violating federal copyright laws.

Lawyers for Sony--and other makers of video game players--say the ruling by the U.S. 9th Circuit Court of Appeals could have far-reaching implications for the software and computer industries. The ruling also means that privately held Connectix Corp. of San Mateo will now be allowed to sell its Virtual Game Station, software that allows computer users who don’t own Sony’s game player to play PlayStation games on personal computers.

Roy McDonald, chief executive of Connectix, said the company would immediately resume shipping its program, for which the company has received 75,000 orders since it was introduced last year. He added that the ruling will benefit consumers by giving them greater choice.

“If this decision had gone the other way, any time someone came along with something new, they could have frozen out competitors,” McDonald said.

The PlayStation, a small computer with hand controls that connects to a television, is a big money earner for Tokyo-based Sony. Last year the company sold 7 million of them in the U.S. alone.

Sony lawyers had successfully argued before the lower court that Connectix’s emulating software would cause Sony to lose sales and profit. When Connectix appealed to the 9th Circuit, Sony received support from its major competitors, Nintendo of America and Sega of America, whose lawyers filed friends-of-the-court briefs.

Connectix received similar support from intellectual-law professors, engineers and software developers, who said a victory for Sony would stifle innovation and restrict competition.

Making emulators is not illegal, and reverse-engineering--the process of examining a company’s product with intent to create a competing version--has a long tradition in the high-tech industry dating back to Compaq Computer Corp.’s first clone of the IBM PC.

But this latest case centered on the process by which Connectix reverse-engineered the PlayStation. Sony alleged that Connectix illegally made copies of Sony’s core technology to produce its own product.

But, siding with Connectix, the appeals court held that Connectix’s actions are protected as “fair use” under copyright law.

“The software product creates a new platform, the personal computer, on which consumers can play games designed for the Sony PlayStation,” U.S. Circuit Judge William C. Canby wrote for a unanimous three-judge panel. “More important, the Virtual Game Station itself is a wholly new product, notwithstanding the similarity of uses and functions between the Sony PlayStation and the Virtual Game Station.”

Sony’s lead attorney in the case, James G. Gilliland, said he was “very disappointed” with the ruling, adding that the company will have to decide whether they will appeal.

The appeals court ruling effectively resolves the key claims against Connectix. The panel, however, ordered the case sent back to the lower court, which is scheduled to hold a trial in June on Sony’s claim that Connectix’s software program doesn’t work as well as the game player and, therefore, “tarnishes” Sony’s product.