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CREATED XXX.XX.1997
UPDATED MAR.16.2006
ATARI GAMES CORP. VS. NINTENDO OF AMERICA (1991)
10NES LOCKOUT AND A RABBIT
One of the companies we all know for releasing NES games without a license actually started out on the right side of the wall, Tengen released PAC-Man, R.B.I. Baseball and Gauntlet before changing for a direction Nintendo sure wasn't happy about. To avoid illegal and low quality software, and not least secure Nintendos share of software sales they incorporated a circuit in the NES deck and official games called 10NES, better known as the Lockout System.

Back in the days there was a chip shortage in Asia, though Nintendo would only allow for chips from Asian manufacturers to be used, causing severe delays for third party publishers who could be waiting for months and months for their games to be released even though Nintendo had already given the green light to go into production.

The decision not to use American chip suppliers as well as Nintendo's huge royalties pissed off companies such as Atari Games' (Tengen) and Atari therefore decided that they wanted to determine how the 10NES system worked and how they could duplicate it to allow their own manufactured games on run on the Nintendo Entertainment System, meaning no months of waiting or giving Nintendo a their part of the profit.

To prevent Tengen's unlicensed games from working on the Nintendo Entertainment System, they continually changed the 10NES software and Atari therefore decided to drag Nintendo to court. The following is an article found on the Internet ages ago, unfortunately the source is no longer known.

Atari Games Corp. v. Nintendo of America, Inc., 18 U.S.P.Q.2d 1935, [1991] Copyright L. Dec. (CCH) 26,703 (N.D. Cal. 1991) (amended order granting preliminary injunction against Atari's manufacture, sale, etc. of its "Rabbit" program contained in its Nintendo-compatible home videogame cartridges).

The Nintendo Entertainment System ("NES") uses a "security system," which prevents non-Nintendo cartridges from being played on the Nintendo game console. The "10NES" program (or a successor program) on the security system chip enables the NES console and the Nintendo or Nintendo- compatible cartridge to communicate with one another. 18 U.S.P.Q.2d at 1936.

By a false declaration to the Copyright Office that Atari needed a copy of Nintendo's program to be used only in connection with a specified litigation, Atari obtained from the Copyright Office a copy of materials deposited there for Nintendo's 10NES program. Although its earlier efforts to "deprocess" the NES chips had been unsuccessful, Atari was now able to "correct" and "verify" its earlier analysis by comparing information from the Copyright Office with copies of the binary code read through microscopic examination of "peeled" chips. Id.

Atari maintained that its copying was justified by the "merger" doctrine. It argued that the "idea" of the 10NES is "authenticating games for play on the Nintendo machine"; that this idea "encompasses playing on the NES for all time, or at least until Nintendo is willing to lock its own games out of the system, along with Atari's"; and that the similar features between the 10NES and Rabbit programs are "absolutely necessary" to the Rabbit's intended purpose of rendering the programs "functionally indistinguishable." Id. at 1938.

The court rejected these arguments. Citing Apple v. Franklin to the effect that a "competitor's goal of total compatibility . . . does not affect the question of merger," the court said that "the `purpose of being indistinguishable from a copyrighted item is not one recognized in law." Id. The court rejected Atari's characterization of the "idea" of the 10NES and found that merger was "not likely" in the case. Id. at 1939. It said:

"Atari's conception of the `idea' of the 10NES program would eviscerate copyright protection for computer programs. This perspective would turn both equity and copyright law upside-down. In essence, Atari would have the Court give the would-be infringer the right to determine what is important in a copyrighted work, and thereby bestow the right to copy whatever the infringer thinks is worth having." Id.

The court went on:

"Atari is free to develop a lockout program for its own video game machines. Nintendo cannot copyright that idea. By contrast, Atari is not free to appropriate Nintendo's specific technique for `locking' its own game console. More important, Atari cannot identify changes that it fears Nintendo could make to its copyrighted program; then redefine those features as functional and unprotected. Things that are admittedly non-functional at the time of copying are not made functional by the infringer's efforts to preempt reactions to its infringement." Id.

The court rejected Atari's argument that "intermediate copying" was justified as long as the copier's final program was not substantially similar to the copied program. Id.

AMERICAN VIDEO ENTERTAINMENT. VS. NINTENDO OF AMERICA (1991)
NINTENDO HIT WITH ANTITRUST SUIT
At the same time as Atari, American Video Entertainment, a subsidiary of Macronix the American IC chip manufacturer, also file a lawsuit against Nintendo over the exact same thing. American Video Entertainment also had problems with their games not working on newer NES consoles as Nintendo had updated their lockout chip system.

SAN FRANCISCO (AP) - In a new legal challenge to Japanense video game giant Nintendo, a U.S. company filed an antitrust suit on Jan. 7 seeking $105 million in damages. The U.S. District Court suit filed by American Video Entertainment Inc. alleges that Nintendo of America Inc. and its parent company, Nintendo of Japan, violated U.S. antitrust laws by using a secret lock- out system in its game consoles.

American Video manufactured cartridges compatible with Nintendo game consoles, but the lock-out system in the Nintendo machines caused the cartridges to be rejected, the San Jose company's complaint said. American Video, a subsidiary of Macronix Inc., says Nintendo controls 80 percent of the home video entertainment market and alleges that it is using its monopoly power to ruin the San Jose company.

American Video also alleges that Nintendo failed to inform buyers that only Nintendo cartridges would play in their machines. American Video maintains that Nintendo had represented to courts that cartridges made by other companies could be used in Nintendo consoles.

Nintendo spokesman Tom Sarris said the company hadn't been formally served with the suit. But in a statement, Howard Lincoln, a senior vice president at Nintendo, said, "Based on the news we've read, the charges are baseless, and Nintendo will vigorously defend itself."

Another antitrust suit against Nintendo, filed by game maker Atari, is pending in the same court.

Source: Newsday Online News Summary: Jan 16, 1991