Video game giant Nintendo of America won an important legal victory on Friday when a jury in San Francisco ruled that the company had not attempted to monopolize the game market and that its controversial licensing policies had not damaged rival Atari Corp.
The verdict removes a potential obstacle to Nintendo’s highly successful business strategy since the mid-1980s--a strategy that the company claims has reinvigorated the video game market by assuring quality products.
Many competitors and consumer groups have alleged unfair business practices by Nintendo. Several lawsuits--as well as a Federal Trade Commission investigation that is believed to be continuing--are still exploring the legality of various Nintendo practices.
But Nintendo attorney John Kirby said the case decided Friday was “the biggest.”
Some of the concerns about how Nintendo operates have eased over the last year as Sega of America has made a significant dent in Nintendo’s share of the $3-billion video game market. Nintendo once controlled about 90% of the market, but analysts believe that its share of the newer, more advanced game machines has fallen below 50%.
Atari, which once dominated the video game business, had alleged in a $160-million antitrust lawsuit that a Nintendo policy prohibiting independent game vendors from producing versions of Nintendo games for other companies’ game-playing machines was a violation of antitrust laws.
The U.S. District Court jury failed to reach a verdict on the specific issue of whether the Nintendo policy was an unfair restraint of trade, and was also split on whether Nintendo had illegally acquired monopoly power in the video game business.
But the jury exonerated Nintendo of seeking to monopolize the game business, and said Atari Corp. had not been damaged by Nintendo’s business practices.
Atari attorney William Jaeger said he was disappointed with the verdict, but he noted that no decision had been reached on two of the counts. He also pointed out that on one of those counts, the jury did find that Nintendo exercised monopoly power in the game market--it simply couldn’t determine whether that power was illegally acquired.
Jaeger said the decision would “seriously weaken” antitrust law. He added that no decision had yet been reached on whether to seek a retrial on the two counts, or whether to appeal the jury verdict.
Nintendo attorney Kirby said the jury had effectively settled all the issues by finding that Nintendo had not damaged Atari. If Atari had prevailed, it stood to win nearly $500 million under the treble-damages provisions of the antitrust laws.
Friday’s verdict dealt primarily with the exclusive licensing policy--since abandoned by Nintendo--that requires third-party game makers with licenses from Nintendo to refrain for two years from making versions of its games for other game systems.
The other lawsuits outstanding against Nintendo allege that some of its policies toward retailers are unfair. In addition, Nintendo’s use of a special chip to prevent non-licensed games from being used on the Nintendo game-playing system is also being challenged.