Nintendo Wins Tetris Fight vs. Atari Games

The San Jose Mercury News

June 22, 1989

SAN FRANCISCO — A federal judge awarded Nintentdo Co., Ltd. a potentially lucrative victory over video rival Atari Games Corp. of Milpitas on Wednesday, ruling that Nintendo could market a home video version of the Soviet-designed video game Tetris.

U.S. District Judge Fern Smith issued a preliminary injunction prohibiting Tengen Inc., an Atari Games subsidiary, from continuing to sell a home video version of Tetris that it started marketing last month. She denied Tengen's request for a similar injunction against Nintendo, whose own version of the game is due out in August.

The dispute is an offshoot of a $100 million suit filed last December by Atari Games against Nintendo, a Kyoto, Japan-based firm with a U.S. subsidiary that controls 80 percent of the U.S. market for home video game machines.

Atari Games contends Nintendo is violating antitrust laws by limiting the number of games it makes under licensing agreements with software developers and preventing them from making games independently by using a "lockout" computer chip.

Nintendo says Atari Games is violating its patent by making games that can be played on Nintendo machines. Atari Games is unrelated to computer maker Atari Inc.

Smith said Wednesday she would issue an opinion later explaining her reasoning. A lawyer for Nintendo said the judge was given written statements from the two Soviet scientists who developed Tetris and from the British companies that acquired certain licensing rights to the game from the Soviet Union.

"We are very pleased that the judge...concluded that the Soviets were correctly describing their position that they had not granted the rights indirectly to Tengen and that they were very angry that Tengen was purporting to exercise those rights," said Nintendo's lawyer, John Kirby of New York.

David Ellis, a spokesman for Tengen, said the company "in good faith understood it had the rights for Tetris under the Nintendo video game format." He declined comment on a possible appeal.

Players in Tetris manipulate geometric shapes to form prescribed patterns. Ellis said the game has been popular in arcades, where Atari Games has been marketing it since February.

In producing the game for home video systems, Nintendo cited a license agreement with British-based Mirrorsoft, a subsidiary of Maxwell Communications. But Nintendo argued that the British license, which originated with the Soviet export agency Elorg, was intended to apply only to personal computers and not to home video games.

Nintendo learned by accident this February that "the Soviets had no idea that this game had been sublicensed to Tengen for production in video game systems," said Kirby. "The Russians were astounded and very angry. They made it clear to Nintendo that the game was available for license."

The Nintendo lawyer said the company will market the game for both home video and hand-held video machines. Kirby said Nintendo also wants damages for profits Tengen has made from its home video sales.