Nintendo v. Elcon Industries

Citation
Nintendo of America, Inc. v. Elcon Industries, Inc. 564 F. Supp. 937 (E.D. Mich. 1982) (full-text).

Factual Background
Plaintiff, Nintendo of America, Inc. (Nintendo), is engaged in the business of marketing, distributing and selling coin-operating electronic audio-video games. Defendant, Elcon Industries, Inc. (Elcon), is engaged in the assembly and sale of coin-operating electronic video games and video components. Prior to July 1981, Nintendo created and began manufacturing an audio-video game called Donkey Kong and first published the game in Japan on July 9, 1981. Soon after the development of Donkey Kong, a large number of counterfeit copies appeared on a nationwide scale. The counterfeits came about because it is extremely costly and painstaking to develop a printed circuit board for an audio-video game but such boards can be copied by others with relative ease and at a minimal expense.

The Crazy Kong game, including the units distributed, offered for sale and sold by Elcon Industries, Inc. and Andre Dubel, embodies audio-video material that is virtually identical with the audio-video material embodied in Nintendo’s copyrighted Donkey Kong video game. Beginning in November 1981 and continuing at least into March 1982, Elcon Industries, Inc. purchased from Arctic International Co. printed circuit boards which, with the requisite hardware, would create the audio-video game Crazy Kong. The printed circuit boards used by Elcon Industries which appear to have been manufactured by Falcon, Inc. displayed a sticker in the English language indicating that the board was licensed by Nintendo. They did not display a copyright notice. Elcon Industries, Inc. purchased the Crazy Kong circuit boards with the intention of assembling them into complete audio-video games and reselling the games for profit. It has distributed, offered for sale and sold numerous units of these games to various customers in the State of Michigan and elsewhere, at least as late as April 1982. Defendant Elcon Industries, Inc. claims to have stopped sales in April 1982. Most of these customers have further distributed or sold the games. Defendants Elcon Industries, Inc. and Andre Dubel received specific information that the Crazy Kong games were unauthorized at least as early as March 1982.

Trial Court Proceedings
Nintendo filed a motion for a preliminary injunction on its copyright infringement and unfair competition claims. The trial court held that Nintendo’s copyright was valid, and owner of copyright in video game “Donkey Kong,” which showed that Elcon distributed, offered for sale and sold for profit audio-video games which embodied audio-visual material that was virtually identical to the audio-visual material embodied in Nintendo’s copyrighted game. The appellate court also held that Nintendo had showed a substantial likelihood of success on merits of its copyright infringement and unfair competition claims in violation of Michigan law. Thus, Nintendo, which was without an adequate remedy at law, was entitled to preliminary injunctive relief against the alleged infringement of the game where the balance of equities and hardships strongly favored issuance of injunctive relief in Nintendo's favor and where there was a strong public policy in favor of protecting Nintendo’s rights and interest of nonparties would not be adversely affected by granting the injunctive relief sought.