The Nintendo Entertainment System home video-game console was wildly popular in the mid-to-late 1980s. The games for the system were carried on cartridges, which were plugged into the console. With hits such as Super Mario Bros., kids around the world wore out their fingers getting their on-screen character to dodge hazards, jump chasms, and collect magical powers. By keeping their character alive, gamers could advance to ever higher levels of the game, discovering new worlds for their character to inhabit.

If you ran out of lives, and it was game over. There was no picking up where you’d left off. Gamers had to go back to the beginning of the game and start anew. There was no way to cheat, at least not until spunky toy maker Galoob debuted the Game Genie.

Instead of plugging cartridges directly into their Nintendo, Game Genie owners would plug their game cartridge into the Game Genie, and then plug the Game Genie into their Nintendo. Once plugged in, the Game Genie was able to grant players’ wishes by increasing the number of lives they had, increasing the speed at which they could travel, and giving them unearned magical powers, such as allowing them to float above obstacles that would otherwise doom them.

By literally getting between the computer chip in the game cartridge and the computer chip in the console, the Game Genie was able to selectively block and replace data from the cartridge. For instance, when the cartridge might signal “this player has no lives left,” the Game Genie would dump that signal and replace it with the message, “this player has five lives left.”

Nintendo was not amused. The company sued Galoob for copyright infringement. The federal district court sided with Galoob, and the Ninth Circuit affirmed.

Nintendo argued that Galoob infringed its copyrights by creating “derivative works” based on its copyrighted games. The Ninth Circuit excused Galoob with a somewhat technical analysis. A derivative work, the court explained, must incorporate the original work in some “concrete or permanent ‘form.’” The court said the Game Genie does not contain, produce, or duplicate the original game in any lasting form. The court also made arguments about the importance of allowing freedom to innovate, comparing the Game Genie to the important innovation of spell-checkers that enhanced existing word processor programs. A finding of copyright infringement in this case, the court warned, might chill innovation and fail to protect society’s interest in the free flow of ideas, information, and commerce.

In an independent stream of analysis, the court also held that Galoob's device constituted "fair use" under copyright law.