Nintendo wasn’t born with a silver joystick in its mouth. It fought, clawed and clamored its way into a world that didn’t want it, and despite making mistakes over the years (there is yet to be a success within the industry who hasn’t), the Japanese pioneer deserves recognition for forging a path of its own design; a company built on the passion of people who knew they had something unique to give the customers they just couldn’t reach. A driving vision, steely determination and a refusal to be intimidated ultimately led to Nintendo being established as the world videogame power it is today – an inspiring lesson to us all. No matter how powerful your rivals may appear to be, the future is shaped solely by your own desire to achieve, and can only be subverted if your resolve allows it to be.
Even during the golden age of gaming, Nintendo was not a young name. Reaching back as far as the late 1800s, it began life producing Japanese playing cards made from bark known as hanafuda. For almost a century thereafter, Nintendo kept itself happily ticking along by dabbling in any number of niche markets, one of which was the blossoming American videogame trend. As with all its endeavors, this product line was approached with Nintendo’s trademark innovation, and as the Japanese public’s interest increased, so did the company’s investment. Despite making an early start on the gaming scene, Nintendo’s domination of the industry was a long way down the line, and would actually be kick started by the recklessness of its competition.
Not that the Western industry actively blocked any Japanese attempts to find a finger hold in the Trans-Pacific market, but gaming trends across the basin were so radically different that finding a title with universal appeal was an immensely difficult task. It’s not at all unlikely that attempts at transcending the ostensibly impenetrable cultural barrier, in either direction, would have been viewed as impossible if not for the few anomalies that had produced the same impact on both shores, such as Pac Man, Space Invaders and Gun Fight. But no matter how much the gameplay of these success stories was dissected, analyzed and put back together, recreating their quintessential, global appeal was becoming the Holy Grail of videogame development.
While most coin-op manufacturers of the late ’70s and early ’80s concentrated on the more attainable goal of localized success, Nintendo set itself the prodigious task of breaching that trade barrier once and for all. To this end, the Japanese management decided a radical approach to game development was required, and sought an alternative path to designing the Eastern title that would enthrall the Western arcade. A greenhorn artist and designer from Nintendo’s toy manufacturing division was drafted in and given the ambiguous assignment of realizing this much coveted, and previously unattainable, goal. Young Shigeru Miyamoto was a complete newcomer to videogames, but together with veteran engineer Gunpei Yokoi, the dynamic duo soon created a game that would open the door to the American dream. Unable to speak English, Miyamoto-san took up a translation dictionary to fathom the title “Stubborn Gorilla,” and mistakenly christened his magnificent machine as “Donkey Kong.”
The game quickly established Shigeru Miyamoto as the right dude for the gig when Donkey Kong single-handedly rescued the failing Nintendo of America, which had already defaulted on its warehouse payments and whose three employees were preparing to file for bankruptcy. In apology, president of Nintendo of America, Minoru Arakawa, renamed the hero of Donkey Kong (known simply as “Jumpman”) after Mario Segale, the landlord of the warehouse he had previously been unable to pay.
It was 1981. Times were looking good, and Nintendo had finally found its way to the Promised Land.
Ever since Atari first had the notion of licensing arcade games for conversion to home systems (with Space Invaders), the arcades had become vast, neon-coated advertisements and intense, expensive testing grounds for the real profit behind the industry, the home games market. It was clear that Donkey Kong was just such a license waiting to explode in a ball of green flame. Nintendo was unprepared for the rigors of the home console wars, and, although every major player on the scene wanted the rights to the monkey, it was eventually bagged by Coleco, who had previously known some success with a home system (a dedicated Pong clone known as the Telstar), though ultimately won the contract via its intention to take Nintendo’s obstinate anthropoid to multiple formats, initially accompanying their new console, the ColecoVision, as its flagship title. Third-party ports were to follow for other home machines, as well as the handheld games market in which the Connecticut Leather Company was already immersed. Taking Nintendo from strength to strength, Donkey Kong licensing went into full throttle.
It was 1982, and Coleco was celebrating its 50th anniversary. The launch of the ColecoVision was to be a precision operation. The home videogame market was already well established (and practically owned) by the two major players who already had a substantial back catalogue of games before Coleco’s contender was even released: the Atari VCS and the Mattel Intellivision. The new deal with Nintendo to deliver the hottest game of the year into people’s houses was more than just a potential goldmine, it was the title that could make or break the ColecoVision. In order to capitalize on their investment, Coleco wanted to approach the deal with Nintendo as cautiously as the tight time scale would allow, but were unprepared for dealing with the no nonsense Japanese.
Nintendo of America was a very small operation, and made regular use of a lawyer it had established a good working relationship with, Howard Lincoln. Lincoln, like Shigeru Miyamoto before him, was a complete novice to the videogame industry (as well as much of the manufacturing know how required for videogames), which ultimately granted him a fresh perspective on how proceedings would best be handled. In general, licensing contracts were written so the licensor remained responsible for any legal action arising from licensed products. Seeing no benefit in this for Nintendo should any difficulties crop up, Lincoln wrote a clause into the agreement absolving Nintendo of any responsibilities from legal difficulties brought on by Coleco’s license. Naturally, had Coleco’s attorneys been given the opportunity to see this clause, they would undoubtedly have disputed, but when suddenly faced with a “sign now or lose the license” order from high within the Nintendo ranks, Coleco was over a barrel and would have signed anything to get the deal. It would prove to be astute foresight on Lincoln’s part.
When Randy Rissman, President of Tiger Electronics (manufacturers of dedicated handheld games), saw Donkey Kong, he immediately realized the potential this game had for one of his company’s handheld systems. What he did next set a chain of events in motion that would ultimately establish Nintendo as a major player in the videogame ranks, though not before potentially casting it adrift.
Rissman mistakenly assumed the game to be based on the movie King Kong, and rather than approach Nintendo to arrange a license for Donkey Kong, he went to Universal Studios and asked for the rights to develop a game of the movie! Universal’s trademark search revealed no reason why such a license could not be granted, and in 1981, sold Tiger the rights it had requested quite out of the blue.
Six months later, the president of Universal Studios, Sid Sheinberg, heard about Donkey Kong and was advised by one of the Studio’s lawyers there were strong similarities between the game and King Kong, the movie. Sheinberg arranged a meeting with Arnold Greenberg, CEO of Coleco, insinuating that Universal was interested in investing in his company.
At the meeting, instead of discussing the joint venture he thought he was there to negotiate, Greenberg was threatened with immediate legal action if he didn’t pay royalties on the King Kong likeness. Panicked that a massive corporation like Universal Studios, with unlimited legal resources, was bearing down on him just as the Coleco was about to launch, packaged with the Donkey Kong game that was the key to establishing their machine, Greenberg rashly agreed to Sheinberg’s demands. It was an unusual agreement that wasn’t so much a copyright license as a “covenant not to sue.” So long as Coleco paid Universal some Donkey Kong royalties, Universal would refrain from suing them! Once again, Coleco was backed into a corner by hastily signing paperwork.
Now that Donkey Kong was on their radar, Universal traced the game all the way back to Nintendo. The same demands made to Coleco were issued to the Japanese company. They were ordered to cease all marketing of Donkey Kong products, destroy all Donkey Kong inventory and produce a full statement of profits made from the franchise within 48 hours. Nintendo were as baffled as they were irate.
Another meeting was arranged, and this time Nintendo were also invited. Still incredibly anxious about the impending launch of their new console, Coleco played Devil’s advocate to Universal Studios, pushing their licensor to sign an agreement promising royalties to the movie makers. Present for Nintendo were Minoru Arakawa (president of Nintendo of America) and his outside legal council, Howard Lincoln. Lincoln did not feel quite so threatened, mainly due to the clause he had shrewdly written into the agreement with Coleco, but also because his own copyright searches had not thrown up any evidence that Donkey Kong actually did breach any Universal owned rights, despite the people at the table insisting they did.
Lincoln asked Universal for a legal document called a “chain of title,” used to demonstrate the legal avenue by which Universal could prove their ownership of the name, story and character of King Kong. When the document failed to appear, Howard Lincoln advised Nintendo to challenge Universal in court; a difficult battle, but one which Lincoln felt was within Nintendo’s scope to win. Being a quietly analytical man, Lincoln’s own research suggested that Universal’s claim was so tenuous, no amount of lawyers could sway a courtroom into agreeing with the unfair demands, and the legal skirmish would merely be a formality.
In a similar move to Sheinberg’s meeting with Arnold Greenberg, Nintendo of America arranged to meet with the Universal president, insinuating they were ready to make a deal. When Arakawa and Lincoln came face to face with Sheinberg and told him they were not prepared to pay Universal a penny, his temper apparently got the better of him. He warned them to start saving for their lawyer’s fees, as his legal department “even turned a profit!” There was no turning back now. The bridges were burned and a court case was inevitable.
Tensions within Nintendo began to rise, as any rocking of their newly acquired American boat by the massive legal weight of a powerful company like Universal Studios could easily wind up sinking it. Arakawa was warned and kept under close scrutiny by his Japanese superiors during this tenuous time, understanding it was his head on the block if matters took a turn for the worse. Despite this, Arakawa stuck with Lincoln, and refused to bow to the Studios.
On June 29, 1982, Universal prosecuted Nintendo for copyright infringement of their rights to King Kong, by virtue of agreement with RKO Pictures (who made the original film).On top of this, Universal Studios’ legal department approached the dozens of licensees of the Donkey Kong franchise (from toys to chocolate bars and cartoons), threatening them with similar action if they did not immediately desist from using the Donkey Kong image. While some of them were reassured by Nintendo’s refusal to kowtow, most backed down, cautious of the legal powers at Universal’s disposal.
Before the court battle got going, Universal also went back to Tiger Electronics, who they had first granted the King Kong game license to, and told them to change certain details of their game to ensure it was sufficiently different from Donkey Kong. This involved altering the platform environment, changing the barrels to bombs and crowning the hero with a fireman’s hat.
The case was heard at the United States District Court for the Southern State of New York before Judge Robert Sweet, lasting for seven days. By this time, Arakawa had made Lincoln the Senior Vice President of Nintendo of America for his sterling work as its outside legal council; a position he held until 1994, when he succeeded Minoru Arakawa as President of Nintendo of America.
Lincoln hired John Kirby to represent Nintendo during the court case. Kirby proved himself to be equally adept, and once Universal Studios had presented their claims, he stunned the room with a fatal blow to Universal’s already weakening case.
In 1975, Universal Studios had successfully taken RKO Pictures to court in order to prove the image and story of King Kong were over 40 years old and therefore in the public domain, clearing the path for Dino De Laurentiis to remake the movie in 1976 without paying any expensive royalties. Coupled with Universal being unable to convince the court there would be any confusion between Donkey Kong and King Kong, Sheinberg’s reiterated comments about his legal department being able to turn a profit (which did not impress the Judge one bit) and the subsequent scare tactics used against Nintendo’s licensees, Judge Sweet ruled in favor of the Japanese.
Although Nintendo also had the opportunity to claim damages from Tiger Electronics for their infringement of the Donkey Kong image (as Judge Sweet determined the alterations were not sufficient to differentiate it from Nintendo’s game), Arakawa and Lincoln instead decided to let Tiger off the hook and reclaim the profits Universal had made from the original King Kong license; publicly embarrassing the Studios.
In good Nintendo fashion, the company once again issued an immortalizing thanks to someone who had served the company well. This time, John Kirby had a popular videogame character named after him: The amorphous Kirby character from their hugely popular (and ongoing) series, so people would always remember the service he had done them in winning that monumental court battle. They also bought him a $30,000 boat christened the Donkey Kong, but that’s nowhere near as prestigious as having a videogame character named after you, I’m sure you’ll agree.
It wasn’t until 1985 that Nintendo filed a counterclaim against Universal Studios, who Judge Sweet subsequently ordered to pay $1.8 million in expenses to the videogame developer. Both appealed the counterclaim a year later, but the previous decision was upheld, most likely to put a lid on the massive, ongoing case once and for all.
Naturally, many of the other companies who had been muscled out of their lucrative Donkey Kong licenses and had their valuable relationship with Nintendo severely shaken (including – and especially – Coleco) followed the David and Goliath example and filed suit against Universal. In Coleco’s case, Universal went right back to the original notion it had used to bring Arnold Greenberg to the table with Sid Sheinberg and purchased a large amount of stock in recompense.
Nintendo was finally recognized as a major player in the industry, and one not to be trifled with. They had shown a passionate dedication to deliver innovative new products to the hungry consumer, but had made it quite clear that any business would be done on their terms. Unfortunately for the new power on the block, and despite the felling of a mighty adversary, timing was ultimately against them, and before the legendary court battle of Universal City Studios, Inc. vs. Nintendo Co., Ltd. had even finished, the entire industry had collapsed into a black hole of avarice.
But Nintendo had already proven its mettle in overcoming seemingly hopeless odds, and was not about to let the industry it had strived to conquer disappear on account of the public’s refusal to buy games. Digging its heels in and marching headlong into an arctic blizzard of consumer apathy, Nintendo of America set its iron resolve to rebuilding the industry it loved after the fatal market crash of 1984. There are few people capable of facing such overwhelming odds for a third time, but this was a company built on a fearless and unswerving belief in its products, and though rough times were ahead, there was no better collective of dedicated individuals to accept the challenge than those at Nintendo of America.
Spanner has written articles for several publications, including Retro Gamer. He is a self-proclaimed horror junkie, with a deep appreciation for all things Romero.
