The following feature is an excerpt from Ken Horowitz's excellent Beyond Donkey Kong: A History of Nintendo Arcade Games and has been reproduced here with the kind permission of both Horowitz and the publisher.
1981's arcade smash-hit Donkey Kong created a surge in revenue that lifted Nintendo’s prospects for its North American office and reaffirmed Hiroshi Yamauchi’s confidence in Shigeru Miyamoto’s talent. Mario’s quest to save Pauline was a sensation, one that exceeded NOA’s loftiest expectations, but there was still a lot left to be done, including combating counterfeiters.
Bootleg variations of Donkey Kong called Crazy Kong had popped up across the U.S., and they were eating into Nintendo’s profits. Crazy Kong was manufactured by a Japanese company called Falcon Industries and was an odd take on Nintendo’s own game. Falcon’s version went by several titles, including Congorilla and Big Kong, and played the same as Donkey Kong but had altered graphics and different colours. It also didn’t look or sound as good as the original, with less animation and cruder audio. To former Nintendo staffer Howard "Game Master" Phillips, the difference between the two was night and day. “It was such a clear rip-off, so I was always surprised when I came across one, usually in a ‘shady’ location,” he says.
It was such a clear rip-off, so I was always surprised when I came across one, usually in a ‘shady’ location
Ironically, the subject of Nintendo’s first major action against counterfeiting came against Falcon, a company that was under a Nintendo license. Falcon had paid Nintendo $100,000 for a license to produce its model, and the deal stipulated that stickers be placed on the PCB board of each Crazy Kong cabinet to show that it was authorized by Nintendo. Falcon also had to pay Nintendo a royalty of 10,000 Yen for each cabinet it manufactured. Most importantly, the agreement, which ended in January 1982, allowed Falcon to only sell or use Crazy Kong in Japan and prohibited it from importing or exporting the game. Despite these stipulations, thousands of Crazy Kong cabinets were now seemingly everywhere.
The confusion among manufacturers, distributors, and operators stemmed mostly from the stickers Nintendo had required Falcon to affix to each Crazy Kong PCB. Though the cabinets were for sale in Japan, the seal, which read “licensed by Nintendo” in English was official, so units were bought and sold in North America without a second thought. Sales were widespread, with some distributors selling hundreds of units before they realized Crazy Kong wasn’t legal in the U.S. One Dallas distributor even offered to buy 300 Donkey Kong cabs directly from Nintendo to compensate for having bought the same number of imitations. The illegality occurred because Nintendo of America Inc. was a separate corporation from Nintendo Ltd. and owned the Donkey Kong copyright in the U.S. Any licensing deal made with Nintendo in Japan didn’t apply in the U.S. for this reason.
It wasn’t that operators were buying Crazy Kong to deliberately hurt Nintendo. Out of necessity, they were settling for something that could get them as close to the Donkey Kong craze as possible. NOA was shipping the machines as fast as it could make them, and units typically went to the larger operators first. A pizza parlour owner, for instance, had little chance of getting a cabinet compared to larger locations like Chuck E. Cheese’s or Malibu Grand Prix. Orders were often backed up for weeks, an eternity for small operators.
Most video games had a short lifespan, and hits like Donkey Kong were opportunities that simply could not be missed. Bootleg games were often cheaper, and not just because they were knock-offs. Joe Kaminkow, the owner of one of Baltimore’s largest arcades and son of former Centuri President, Arnold Kaminkow, explained how rising prices were affecting operators. “The manufacturers are commanding exorbitant prices for these games. They find out they have a winner and knock the price up $300 a game. That can't continue unless they want to be manufacturers doing all the operating.”
It wasn’t that operators were buying Crazy Kong to deliberately hurt Nintendo. Out of necessity, they were settling for something that could get them as close to the Donkey Kong craze as possible
Nintendo of America president Minoru Arakawa and the company's attorney Howard Lincoln (who would later rise to the position of NOA chairman) acted quickly, cracking down on U.S. versions of Crazy Kong as early as Christmas Eve 1981, when they sued a company called Direct Connections for its manufacturing and selling of the game. A federal district judge sided with Nintendo then, dismissing the defendant’s claims that it had authorization to sell Crazy Kong because Nintendo had granted a license to Falcon, which in turn sold the game to Direct Connections. The court maintained that it was Nintendo’s U.S. subsidiary that owned the Donkey Kong copyright in the U.S.; NOA had no contract with Direct Connections and had not authorized the importation of Crazy Kong. The mere act of importing the game to North America was a violation of copyright. The accused’s claim that its game was substantially different from Nintendo’s was also dismissed.
Even with the victory against Direct Connections, catching the imitators was a difficult task because of how quickly they appeared. “We just can’t get to the manufacturer. We close somebody down, and a week later they reopen in someone’s garage,” said an exasperated Jim Donahue, a copyright lawyer for Nintendo. It was like sticking fingers in a leaking dam. As soon as Arakawa and Lincoln took down one counterfeiter, another sprung up in its place.
Things escalated quickly. In February 1982, NOA obtained a preliminary injunction in the Los Angeles Federal District Court to seize and impound more than two dozen games and components in the city. A month later, a similar injunction was brought against operators in Orlando, Florida. The end of July saw federal marshals seizing Crazy Kong cabinets from dozens of locations like Washington state, Nebraska, Michigan, and Missouri.
According to one of the accused distributors, Mike Stone of Signatron U.S.A., Nintendo was acting to stifle competition, since Crazy Kong was supposedly outselling Donkey Kong in Japan by almost three-to-one. Stone was incensed that Nintendo had taken no action against Falcon and instead centred its ire on American companies that had bought the game from it. When Stone met with the head of Falcon he was stunned at what he heard. “He assured me that Nintendo had not even written him a letter telling him to stop shipping the boards to the United States,” Stone alleged.
Along with the larger arcade operators, the defendants included smaller ones like pizzerias, drug stores, and even a bookstore
Things reached critical mass in August 1982 when Nintendo brought injunctions against 100 different defendants in one of the largest antipiracy lawsuits in the history of video gaming up to that point. Nintendo had threatened multiple locations with injunctions, but many had yet to relent. Along with the larger arcade operators, the defendants included smaller ones like pizzerias, drug stores, and even a bookstore.
Nintendo also published full-page announcements about its legal actions in trade journals like RePlay and Play Meter as a warning to other infringers. Over 41,000 Donkey Kong units had been sold in the U.S. by Nintendo as of May 1982, and the factory had poured over a million dollars in advertising, so there was a considerable investment to protect. That was only part of the equation, though. Arakawa and Lincoln knew that if they allowed the infringement to continue unchecked, everything they had achieved with Donkey Kong would quickly be undone. NOA would be back at square one.
Mike McEntee, a lawyer for the defendants, argued that although Falcon’s deal with Nintendo forbade it from manufacturing or selling Crazy Kong in the U.S., there was nothing preventing Falcon’s customers from doing so. McEntee contended that Nintendo was attempting to defraud its U.S. customers by profiting from Donkey Kong’s initial sales and then again by enforcing U.S. copyright laws. Falcon, Stone, and some of the other defendants demanded a jury trial to resolve the issue. Their claims didn’t convince the judge, and Nintendo won its injunction.
In time, Falcon itself would finally have its time in court. After seizing more than 1000 machines, Nintendo of Japan won an injunction in July 1982 against its former partner, claiming that Falcon had gone beyond the scope of its licensing agreement and illegally exported great numbers of PCBs to North America. Falcon was subsequently barred from further manufacturing, operating, or selling of Crazy Kong. The company countersued but lost, giving Nintendo a major victory at a critical time in its fight against bootlegging.
From Beyond Donkey Kong: A History of Nintendo Arcade Games © 2020 Ken Horowitz by permission of McFarland & Company, Inc., Box 611, Jefferson NC 28640.
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