Nintendo Wins Court Order Halting Rivals
A federal judge has ordered Atari Games Corp. and its Tengen affiliate to stop selling Nintendo-compatible computer games and recall all games that have been shipped to retailers, giving Nintendo a major victory in its effort to maintain control over the game cartridges produced for its popular game-playing system.
In a ruling handed down Wednesday, U.S. District Judge Fern M. Smith said it was highly likely that Nintendo would prevail in its copyright infringement lawsuit against Atari Games and Tengen. She thus granted a preliminary injunction against further sale of Tengen’s Nintendo games.
Atari Games, which is not related to computer and hand-held game vendor Atari Corp., said it will appeal the ruling.
Nintendo, which holds an estimated 80% of the $5-billion U.S. video game business, maintains a strict licensing policy to control the production of game cartridges that can be used with its machine. That practice has come under sharp attack from competitors and prompted an investigation by the Federal Trade Commission.
Atari Games and American Video Entertainment, another vendor of non-licensed Nintendo games, have filed antitrust suits alleging that Nintendo is illegally monopolizing the video game business.
Nintendo maintains that is necessary to control the quality and quantity of Nintendo games. It enforces its policy through the use of a device known as a “lock-out chip.” A game cartridge must have the lock-out chip to work properly on the Nintendo machine, and Nintendo has patented the chip and gained copyright protection for the software in the chip.
Tengen had been a Nintendo licensee but abandoned that agreement and began producing non-authorized games when Nintendo would not give it permission to increase volume and manufacture its own games.
In early 1989, after Tengen filed its antitrust suit and began selling non-licensed games, Nintendo sued for infringement of intellectual property rights.