#10nes

In the mid to late 80s, Nintendo took the US by storm. The Nintendo Entertainment System (NES) became an incredibly popular system and brought back the home gaming market for good, despite the state of the industry after the early 80s. Unfortunately, their success led to jealousy by other companies and a number of lawsuits that created negative publicity for both sides.

Possibly the most important case that Nintendo faced was Atari Games Corporation v. Nintendo of America. The NES included a master security chip that was designed to communicate with a slave computer chip in game cartridges (this security system was called 10NES). This restricted what games could be played on the NES by requiring an initialization process that involved both chips. It prevented unlicensed companies from producing games that would run on the system. Atari coveted this technology and began trying to reverse engineer it at the end of 1986 (Kent, 2001, p. 372). Before Atari’s engineers could reverse engineer the system, one of Atari’s lawyers obtained an illegal reproduction of the 10NES program, which was then converted in to Atari’s “Rabbit” program, bypassing the NES’s security (Kent, 2001, p. 373). The illegal copying of the security system led to Atari’s downfall in court, where Nintendo was able to prove that Rabbit was a copy of 10NES. The case is a black mark on Atari’s history to this day.

Whenever a company is as successful as Nintendo, other companies are bound to covet and attempt to reproduce that success. Cases like this one gave companies like Atari bad names but also proved that the NES’s security could be broken. Concepts, ideas, and technology are frequently reverse engineered, modified, and remarketed as new products. While this keeps monopolies from controlling the market, it leads to legal issues and breaches of patents.

Even licenses don’t always guarantee legal success. Atari later obtained a license for Tetris around the same time Nintendo did. However, because Nintendo’s license turned out to be a valid one and obtained from the source (Electronorgtechnica [ELORG]), and Atari’s license was an illegal license sold to them by a third party that did not completely own the rights, Nintendo won the case before it even went to court (Kent, 2001, p. 377-378). This case unfortunately caused Tengen’s version of Tetris to be pulled off the market (and their version was widely considered superior to Nintendo’s).

The unfortunate truth is that frequently, when game companies compete, consumers lose. Companies that make great games can be demolished in court. If someone has a security feature that prevents independent development for their console, innovation is missed out on. Negative publicity is only a minor side-effect for big gaming companies.