Nintendo Charges Samsung With Counterfeiting : Electronics: Korean firm denies it helped produce illegal copies of video game Donkey Kong Country.
Levying an unusual accusation of criminal conduct against a major consumer electronics manufacturer, Nintendo of America Inc. charged in a lawsuit Wednesday that Samsung Electronics has helped produce hundreds of thousands of counterfeit copies of the hit video game Donkey Kong Country.
Video game makers have long waged war against the rampant illegal copying of their software, which they say costs them billions of dollars annually in lost sales. But the suit is the first to be filed against a company with the stature of Korea-based Samsung, a $10-billion firm best known for its branded consumer electronics items such as televisions, VCRs and computer monitors.
Samsung is also one of the world’s leading manufacturers of “mask ROM” chips, which are used to store the computer code in a video game cartridge. Indeed, Samsung is a longtime supplier to Nintendo and one of just two suppliers of the proprietary chips used in the Donkey Kong Country game--making the copyright infringement suit all the more pointed.
“The left hand is dealing with Nintendo as a supplier while the right hand is dealing with Nintendo as a primary source of counterfeit computer chips,” Nintendo Chairman Howard Lincoln said.
“In the past, we have been suing counterfeiters, companies from China or Taiwan, and that’s their only business. This is the first time we’ve had evidence that a so-called legitimate multinational company has been involved with the counterfeiting business.”
But Samsung denied the allegations, saying it merely supplied ROM chips to third parties and could not be held responsible for the content of the chips or how they were used. Officials at Samsung’s U.S. subsidiary said the company “stands steadfastly against piracy of any kind” and has not knowingly contributed to illegal activity related to its products.
The company also said it severed its relationship with the customer it suspected of engaging in “illegitimate business practices” after being alerted to the situation by Nintendo late last year.
“Samsung has no practical way of analyzing the customer’s proprietary software, nor does it have the right to do so,” the company said in a statement. “Nintendo’s action is the equivalent of suing a diskette or computer vendor because you found pirated software on one of their disks.”
Analysts said another wrinkle in the case may be the history of animosity between the two Asian nations and their respective electronics industries. “Counterfeiting is a serious threat, especially to a control-freak company like Nintendo,” said Bishop Cheen, multimedia analyst for Paul Kagan & Co. “But it’s not just business. Age-old ethnic rivalries seem to be involved here too. It’s Japan-based Nintendo versus Korea-based Samsung.”
Nintendo said it has suspected for more than a year that Samsung was supplying the chips for pirated game cartridges. But the first concrete evidence surfaced two weeks ago, Lincoln said, when the company took copies of the counterfeit games to a testing lab, where layers of black epoxy were stripped off the chips, revealing the Samsung name and logo.
According to the lawsuit, filed in U.S. District Court in Seattle, the counterfeit Donkey Kong Country games have been discovered in 16 countries, including the United States, Russia, China, Japan and United Arab Emirates. The lawsuit seeks immediate termination of illegal production, seizure of inventories and unspecified monetary damages.