Capcom U.S.A. Inc. v. Data East Corp.

Capcom U.S.A. Inc. v. Data East Corp. is a court case between two video game developers, where Capcom alleged that Data East's game "Fighter's History" infringed the copyright of Capcom's game "Street Fighter II."
Background.
Facts.
In 1991, Game developer Capcom released "Street Fighter II". Its popularity led to an explosion of interest in the fighting game genre. Other companies rushed to capitalize, and Data East released their own one-on-one fighting game called "Fighter's History" in 1994. Even compared to other fighting games, there were many similarities between "Fighter's History" and "Street Fighter II", with both games having similar character designs and artwork, as well as similar special moves and controls. As it was later revealed, Data East created design documents that referred to "Street Fighter II" several times. Several people noticed the similarities and raised the issue with Capcom, reaching the president, Kenzo Tsujimoto. Capcom soon sued Data East for copyright infringements, in both America and Japan. Capcom also sought a preliminary injunction to stop Data East from distributing "Fighter's History".
Law.
This dispute would depend on whether the copied elements of "Street Fighter II" was actually protected by copyright. Data East called on expert witness Bill Kunkel, a game journalist who testified in previous video game cases that not all copying is infringing, such as the similarity between "K.C. Munchkin!" and "Pac-Man". The court still ruled that "K.C. Munchkin!" did infringe the copyright of "Pac-Man," as the games had substantial similarities. However, courts began to rule differently on later cases, deciding that many elements of creativity are not protectable, such as functional rules, generic concepts, and scènes à faire. One of these rulings was the 1980s case "Data East USA, Inc. v. Epyx, Inc.", where courts ruled that Epyx's game "World Karate Championship" did not infringe Data East's game "Karate Champ," because none of the similarities were protectable under copyright. Now years later, Data East began to argue that their 1984 arcade game "Karate Champ" was the true originator of the competitive fighting game genre, preceding the "Street Fighter" series by several years.
Ruling.
The trial took place on October 31, 1994. Judge Orrick stated that there was strong evidence that Data East set out to imitate the success of "Street Fighter II", noting similarities such as a "Chun-Li clone" (referring to Feilin) and several comparable special moves. The court noted that "of the eight pairs of characters and twenty-seven special moves at issue, three characters and five special moves in Fighter’s History are similar to protectable characters and special moves in Street Fighter II". Even noting the similarities between several moves, the court also noted that "Street Fighter II has a total universe of twelve characters and six hundred and fifty moves. Capcom concedes, as it must, that the vast majority of the moves are unprotectable because they are commonplace kicks and punches." Capcom U.S.A. lost the case on grounds that the copied elements were excluded from copyright protection, as generic scènes à faire. 
Judge Orrick applied a legal principle known as the merger doctrine, where courts will not extend copyright protection if it effectively gives someone a monopoly over an idea. The court affirmed that "copyright protection does not encompass games as such, since they consist of abstract rules and play ideas. It follows, therefore, that audiovisual works like the two presently before the Court are largely unprotectable games."
Legacy.
The case affirms a skeptical view towards copyright protection for video games, though later cases such as "Tetris Holding, LLC v. Xio Interactive" would find copyright violations under more specific forms of copying. John Quagliariello argues that this was one of several cases that made it near impossible for a video game copyright holder to win a lawsuit against a potential infringer, especially considering the cost of a lawsuit versus the risk of an unfavorable ruling. Chris Kohler of Kotaku argues that this ruling prevented a chilling effect on game creation, allowing imitation and iteration for video game genres to develop.