Sega manufactures the venerable Genesis Video Game System, as well as many of the video games played on the system. Accolade is a developer and distributor of video games, and they wanted to develop games for the Genesis system. However, Genesis is not an open system, and in order for a game to work on the system, the game has to know the proprietary interface component of Sega's Genesis system, particularly the password that needs to be incorporated on any video game cartridge played on the Genesis system.

GenisisThe only way that Accolade could determine the password was by de-compiling the object code of one of Sega video games to produce a translation of the source code. As a necessary step in this reverse engineering procedure, Accolade had to copy the Sega object code. Sega sued Accolade for copyright infringement based on the copying of the object code.

Accolade argued that its copying was a fair use as allowed by the Copyright Act. Section 107 allows copies of a copyrighted work to be made for purposes such as criticism, comment, or research.

Fair Use Test

To decide whether a use is fair, the Copyright Act requires a court to consider four factors:

1. The purpose and character of the use

2. The nature of the copyrighted work

3. The amount and substantiality of the portion copied

4. The effect of the use on the market.

Because Accolade needed to copy and disassemble Sega's copyrighted video game to obtain the necessary interface requirements, the court held that where reverse engineering copies a work as the only way to access the ideas and the functional elements of the work, such copying is a fair use if a legitimate reason for the use exists. The court thus held that a copyright in a work cannot protect un-copyrightable ideas and functional elements with that work.