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''Universal City Studios, Inc. v. Nintendo Co., Ltd.'' was a 1983 legal case heard by the
United States District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of New York State. Two of these are in New York City: New ...
by Judge
Robert W. Sweet Robert Workman Sweet (October 15, 1922 – March 24, 2019) was an American jurist and United States district judge of the United States District Court for the Southern District of New York. Education and career Sweet was born on October 15, 1 ...
. In their complaint,
Universal Studios Universal Pictures (legally Universal City Studios LLC, also known as Universal Studios, or simply Universal; common metonym: Uni, and formerly named Universal Film Manufacturing Company and Universal-International Pictures Inc.) is an Americ ...
alleged that
Nintendo is a Japanese multinational video game company headquartered in Kyoto, Japan. It develops video games and video game consoles. Nintendo was founded in 1889 as by craftsman Fusajiro Yamauchi and originally produced handmade playing cards ...
's video game ''
Donkey Kong is a video game franchise created by Shigeru Miyamoto and owned by Nintendo. It follows the adventures of a gorilla named Donkey Kong (character), Donkey Kong and his clan of other Ape, apes and monkeys. The franchise primarily consists of plat ...
'' was a
trademark infringement Trademark infringement is a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees (provided that such authorization was within the scope of the licence). Infringement may ...
of ''
King Kong King Kong is a fictional giant monster resembling a gorilla, who has appeared in various media since 1933. He has been dubbed The Eighth Wonder of the World, a phrase commonly used within the franchise. His first appearance was in the novelizat ...
'', the plot and characters of which Universal claimed as their own. Nintendo argued that Universal had themselves proven that ''King Kong''s plot and characters were in the
public domain The public domain (PD) consists of all the creative work to which no exclusive intellectual property rights apply. Those rights may have expired, been forfeited, expressly waived, or may be inapplicable. Because those rights have expired ...
in '' Universal City Studios, Inc. v. RKO General, Inc.'' Sweet ruled that Universal had acted in
bad faith Bad faith (Latin: ''mala fides'') is a sustained form of deception which consists of entertaining or pretending to entertain one set of feelings while acting as if influenced by another."of two hearts ... a sustained form of deception which ...
by threatening Nintendo's licensees and that it had no right over the name ''King Kong'' or the characters and story. He further held that there was no possibility for consumers to confuse Nintendo's game and characters with the ''King Kong'' films and their characters. Universal
appeal In law, an appeal is the process in which cases are reviewed by a higher authority, where parties request a formal change to an official decision. Appeals function both as a process for error correction as well as a process of clarifying and ...
ed the case, but the verdict was upheld. The case was a major victory for Nintendo, which was still a newcomer to the U.S. market. The case established Nintendo as a major player in the industry and arguably gave the company the confidence that it could compete with the giants of American media.


Background

In 1982,
Sid Sheinberg Sidney Jay Sheinberg (January 14, 1935 – March 7, 2019) was an American lawyer and entertainment executive. He served as President and CEO of MCA Inc. and Universal Studios for over 20 years. Early life and education Sheinberg, the son of J ...
, the president of
MCA MCA may refer to: Astronomy * Mars-crossing asteroid, an asteroid whose orbit crosses that of Mars Aviation * Minimum crossing altitude, a minimum obstacle crossing altitude for fixes on published airways * Medium Combat Aircraft, a 5th gen ...
and Universal City Studios and a seasoned attorney, was trying to find a way to get his company into the booming video game market. In April, he learned of the success of Nintendo's ''Donkey Kong'' video game and sent Robert Hadl, vice president of legislative matters, to investigate. Hadl's analysis was that ''Donkey Kong''s storyline was based on that of ''King Kong'' and was thus an infringement of Universal's rights to that film's characters and scenario. Sheinberg also learned of a
licensing A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit). A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
agreement between
Nintendo is a Japanese multinational video game company headquartered in Kyoto, Japan. It develops video games and video game consoles. Nintendo was founded in 1889 as by craftsman Fusajiro Yamauchi and originally produced handmade playing cards ...
and
Coleco Coleco Industries, Inc. was an American company founded in 1932 by Maurice Greenberg as The Connecticut Leather Company. It was a successful toy company in the 1980s, mass-producing versions of Cabbage Patch Kids dolls and its video game consol ...
, a producer of
home video game consoles A home video game console is a video game console that is designed to be connected to a display device, such as a television, and an external power source as to play video games. Home consoles are generally less powerful and customizable than ...
. Sheinberg scheduled a meeting with Coleco president Arnold Greenberg on April 27, ostensibly to discuss possible investment in Coleco. Instead, Universal admonished Greenberg for
copyright infringement Copyright infringement (at times referred to as piracy) is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, ...
and threatened to sue if the
ColecoVision ColecoVision is a second-generation home video-game console developed by Coleco and launched in North America in August 1982. It was released a year later in Europe by CBS Electronics as the CBS ColecoVision. The console offered a closer exp ...
shipped with ''Donkey Kong'' as planned. The next day, Universal telexed Coleco and Nintendo giving them 48 hours to cease marketing ''Donkey Kong'', to dispose of all ''Donkey Kong'' inventory, and to hand over all records of profits made from the game.Kent 212. On May 5, Greenberg agreed to pay Universal
royalties A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset o ...
of 3% of ''Donkey Kong''s net sale price, amounting to six million units and worth about $4.6 million. A week later, he signed an agreement that stated that Universal would not sue Coleco as long as Coleco paid royalties. Meanwhile, Hadl learned that
Tiger Electronics Tiger Electronics Ltd. (also known as Tiger and Tiger Toys) was an independent American toy manufacturer best known for its handheld LCD games, the Furby, the Talkboy, Giga Pets, the 2-XL robot, and audio games such as ''Brain Warp'' and th ...
had licensed ''King Kong'' for a
handheld game A handheld game console, or simply handheld console, is a small, portable self-contained video game console with a built-in screen, game controls and speakers. Handheld game consoles are smaller than home video game consoles and contain the con ...
. He decided that Universal's earnings from it were too low and that the license's granting of exclusive rights to Tiger would impede the agreement with Coleco. On May 4, Sheinberg sent Tiger a mailgram demanding that they send their game in for further approval.Kent 213. Universal reviewed it and decided that ''King Kong'' was too similar to ''Donkey Kong''. On May 8, Sheinberg revoked Tiger's license, but Tiger president O. R. Rissman refused to give in and challenged Universal's claim that it owned the ''King Kong'' name.Kent 214. Nintendo's attorney (and future board member)
Howard Lincoln Howard Charles Lincoln (born February 14, 1940) is an American lawyer and businessman, known primarily for being the former Chairman of Nintendo of America and the former Chairman and Chief Executive Officer of the Seattle Mariners baseball team ...
was at first inclined to settle for $5–7 million. Eventually, however, he decided to fight, reassuring the head of the company's U.S. division,
Minoru Arakawa is a Japanese businessman best known as the founder and former president of Nintendo of America, and the co-founder of Tetris Online, Inc. Biography Minoru Arakawa was born on 3 September 1946 in Kyoto, Japan, the second son of Waichiro Arakaw ...
, that this was a sign that Nintendo had made it big. On May 6, Arakawa and Lincoln met with Coleco and Universal in Los Angeles. Hadl reiterated his stance that ''Donkey Kong'' infringed Universal's rights to ''King Kong''. Lincoln countered that Nintendo had discovered many unlicensed uses of ''King Kong''s name and characters and that Universal's trademark on these was less than 10 years old. In private, Greenberg tried to persuade Nintendo to sign a licensing agreement; he had not told them that he had already done so. By the end of the meeting, Hadl agreed to send a
chain of title A chain of title is the sequence of historical transfers of title to a property. It is a valuable tool to identify and document past owners of a property and serves as a property's historical ownership timeline. The "chain" runs from the present o ...
to Nintendo regarding Universal's ownership of the ''King Kong'' name. When this failed to materialize in the next few weeks, Lincoln prodded Universal again. They responded with more demands for
royalties A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset o ...
. Lincoln researched the merits of Universal's claims to ''King Kong'' and deemed them untenable.Kent 215. Nintendo called for another meeting, which was set up for May 21. Believing that Nintendo was finally caving, Sheinberg intimated that Nintendo might expect future business from Universal if they agreed to settle the matter. Lincoln only repeated Nintendo's position that Universal had no legal basis to make any threats. He recalled later:
Mr. Arakawa and I decided that we would go down and simply tell him heinbergthat we've come to tell you to your face that we would pay you if we thought we were liable, but we had done our homework and we were not prepared to pay anything because we hadn't done anything wrong. We just wanted to essentially look him in the face and tell him that. It seemed the honorable thing to do. As it turned out, maybe Hadl had led him to believe that we had come down to reach some sort of monetary settlement with him. And it was really funny because it was not what he was expecting and his reaction was shock.
Knowing that a court battle lay ahead, Hadl contacted Rissman, the errant Tiger licensee, to compromise on the handheld ''King Kong'' game. Hadl wanted to remove the exclusivity provision of the license and to distinguish the handheld game from ''Donkey Kong'' so as to weaken any potential counterclaims that one of Universal's licensees had violated Nintendo's
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
rights. Rissman complied, giving the hero a fireman hat, replacing barrel graphics with bombs, and making the game platforms straight instead of crooked. This design was approved in early June.


First District court decision

On June 29, 1982, Universal officially sued Nintendo. The company also announced that it had agreed to license the rights to ''King Kong'' to Coleco. On January 3, 1983, Universal then sent
cease-and-desist A cease and desist letter is a document sent to an individual or business to stop alleged illegal activity. The phrase "cease and desist" is a legal doublet, made up of two near-synonyms. The letter may warn that, if the recipient does not disc ...
letters to Nintendo's licensees offering three options: stop using ''Donkey Kong'' characters, obtain a license from Universal, or be sued. Six licensees caved, but
Milton Bradley Milton Bradley (November 8, 1836 – May 30, 1911) was an American business magnate, game pioneer and publisher, credited by many with launching the board game industry, with his eponymous enterprise, which was purchased by Hasbro in 1984, and ...
refused to do so. When
Ralston Purina Ralston Purina Company was a St. Louis, Missouri,–based American conglomerate with substantial holdings in animal feed, food, pet food, consumer products, and entertainment. On December 12, 2001, it merged with Swiss food-giant Nestlé's Fr ...
's offer of $5,000 for the use of ''Donkey Kong'' characters on breakfast cereal was turned down, they also refused to settle. Lincoln hired John Kirby to represent Nintendo in court. Kirby had won other big cases for the likes of
PepsiCo. PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo's business encompasses all aspects of the food and beverage market. It oversees the manuf ...
,
General Foods General Foods Corporation was a company whose direct predecessor was established in the United States by Charles William Post as the Postum Cereal Company in 1895. The company changed its name to "General Foods" in 1929, after several corporate ...
, and Warner-Lambert. Kirby researched the game's development, taking depositions from designer
Shigeru Miyamoto is a Japanese video game designer, producer and game director at Nintendo, where he serves as one of its representative directors. Widely regarded as one of the most accomplished and influential designers in the history of video games, he ...
and Nintendo president
Hiroshi Yamauchi was a Japanese businessman and the third president of Nintendo, joining the company in 1949 until stepping down on 24 May 2002, being subsequently succeeded by Satoru Iwata. During his 53-year tenure, Yamauchi transformed Nintendo from a hanafu ...
in Japan. Miyamoto claimed that he had in fact called his ape character King Kong at first, as that was a generic term in Japan for any large ape. ''Universal City Studios, Inc. v. Nintendo, Co., Ltd.'' was heard at the
United States District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of New York State. Two of these are in New York City: New ...
by Judge Robert W. Sweet. The trial lasted seven days, during which Universal, represented by the New York firm Townley & Updike, argued that the name ''Donkey Kong'' could be confused with ''King Kong'' and that the plot of the game was an infringement on that of the film. Kirby showed key differences between ''Donkey Kong'' and ''King Kong''. He also alleged that Universal had no rights to the ''King Kong'' characters and that they had in fact successfully sued
RKO Pictures RKO Radio Pictures Inc., commonly known as RKO Pictures or simply RKO, was an American film production and distribution company, one of the "Big Five" film studios of Hollywood's Golden Age. The business was formed after the Keith-Albee-Orph ...
in 1975 in '' Universal City Studios, Inc. v. RKO General, Inc.'', wherein they proved that the plot of ''King Kong'' was in the public domain and thus opened the way for
Dino De Laurentiis Agostino "Dino" De Laurentiis (; 8 August 1919 – 10 November 2010) was an Italian-American film producer. Along with Carlo Ponti, he was one of the producers who brought Italian cinema to the international scene at the end of World War II. He ...
'
remake A remake is a film, television series, video game, song or similar form of entertainment that is based upon and retells the story of an earlier production in the same medium—e.g., a "new version of an existing film". A remake tells the sam ...
.Kent 217. Sweet ruled that Universal did not have any trademark in ''King Kong'', because ''King Kong'' did not designate a single source, and even if ''King Kong'' was a Universal trademark, the possibility that anyone would confuse ''Donkey Kong'' and ''King Kong'' was unlikely. In his opinion, ''Donkey Kong'' was "comical" and the ape character "farcical, childlike and nonsexual". The King Kong character, on the other hand, was "a ferocious gorilla in quest of a beautiful woman". Sweet declared that "at best, Donkey Kong is a
parody A parody, also known as a spoof, a satire, a send-up, a take-off, a lampoon, a play on (something), or a caricature, is a creative work designed to imitate, comment on, and/or mock its subject by means of satiric or ironic imitation. Often its sub ...
of King Kong".


First appeal

Universal appealed the verdict to the
United States Court of Appeals for the Second Circuit The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory comprises the states of Connecticut, New York and Vermont. The court has appellate ju ...
. Nintendo and Universal argued the appeals case on May 23, 1984. As evidence of consumer confusion, Universal presented the results of a telephone survey of 150 managers and owners of arcades, bowling alleys, and pizza restaurants who owned or leased ''Donkey Kong'' machines. To the question "To the best of your knowledge, was the ''Donkey Kong'' game made with the approval or under the authority of the people who produce the ''King Kong'' movies?", 18% of those surveyed answered in the affirmative. However, to the question "As far as you know, who makes ''Donkey Kong''?", no one named Universal.Second Court of Appeals, 1984, 118. Universal argued that this was enough evidence to show that consumers were confused about the distinction between the two names. They also provided six examples from print media of more cases of confusion between ''Donkey Kong'' and ''King Kong''. The October 1982 issue of ''
Videogaming Illustrated ''Videogaming Illustrated'', also known as ''VGI'', was a video game magazine published in the United States and ran from August 1982 to March 1984. History VGI changed its title twice: in issue June 1983 to ''Videogaming and Computer Gaming Ill ...
'', for example, was shown to read "our Donkey Kong presentation continues as we look at other gorillas who have had a fondness for women. Prominent among them is King Kong, who has much in common with the video villain". Another example was Craig Kubey's 1982 ''The Winner's Book of Video Games'', which states that "Donkey Kong sa video version of the film classic King Kong". In its decision on October 4, the court upheld the previous verdict. They declared that "the two properties have nothing in common but a gorilla, a captive woman, a male rescuer, and a building scenario". Further, the court ruled that "the 'Kong' and 'King Kong' names are widely used by the general public and are associated with apes and other objects of enormous proportions". As for Universal's survey, the court found it unconvincing, as Universal did not own the "image . . . of King Kong climbing the
Empire State Building The Empire State Building is a 102-story Art Deco skyscraper in Midtown Manhattan, New York City. The building was designed by Shreve, Lamb & Harmon and built from 1930 to 1931. Its name is derived from " Empire State", the nickname of the ...
/ World Trade Center with
Fay Wray Vina Fay Wray (September 15, 1907 – August 8, 2004) was a Canadian/American actress best known for starring as Ann Darrow in the 1933 film ''King Kong''. Through an acting career that spanned nearly six decades, Wray attained international r ...
/
Jessica Lange Jessica Phyllis Lange (; born April 20, 1949) is an American actress. She is the 13th actress to achieve the Triple Crown of Acting, having won two Academy Awards, three Primetime Emmy Awards, and a Tony Award, along with a Screen Actors ...
in his paw" and that by only soliciting opinions from people who already had ''Donkey Kong'' games, the survey failed to establish confusion from ''potential'' customers. Finally, the survey asked "an obvious leading question in that it suggested its own answer". Regarding Universal's printed examples, the court found that:
The statements cited by Universal recognize that the Donkey Kong theme loosely evokes the King Kong films. However, none of the statements remotely suggests that the authors were under the impression that Donkey Kong was connected with the company holding the King Kong trademark.
The court agreed that some consumers were confused about the two marks: "However, the fact that there may be a few confused consumers does not create a sufficiently disputed issue of fact regarding the likelihood of confusion so as to make summary judgment improper".


Counterclaims and second appeal

Nintendo filed its
counterclaim In a court of law, a party's claim is a counterclaim if one party asserts claims in response to the claims of another. In other words, if a plaintiff initiates a lawsuit and a defendant responds to the lawsuit with claims of their own against th ...
s on May 20, 1985. Sweet ruled the
cease-and-desist letters A cease and desist letter is a document sent to an individual or business to stop alleged illegal activity. The phrase "cease and desist" is a legal doublet, made up of two near-synonyms. The letter may warn that, if the recipient does not disc ...
that Universal had sent to Nintendo's licensees gave the game company the right to seek damages, and so Universal would pay Nintendo $1.8 million for "legal fees, photocopying expenses, costs incurred creating graphs and charts, and lost revenues".. Sweet chastised Universal for bringing this bad faith lawsuit:
Throughout this litigation, Universal knew, as a result of the RKO litigation, that it had no rights to any visual image of King Kong from the classic movie or its remake. Nonetheless, Universal, when it seemed beneficial, made sweeping assertions of rights, attempting to extract license agreements from companies incapable of or unwilling to confront Universal's "profit center".
Nintendo was given the option to either take Universal's licensing profits for their game or accept
statutory damages Statutory damages are a damage award in civil law, in which the amount awarded is stipulated within the statute rather than being calculated based on the degree of harm to the plaintiff. Lawmakers will provide for statutory damages for acts in wh ...
. Nintendo opted for the former, receiving $56,689.41. Nintendo also received damages and attorney's fees. Sweet also ruled that Tiger's ''King Kong'' was an infringement of ''Donkey Kong'':
''Donkey Kong''s particular expression of a gorilla villain and a carpenter hero (with or without a fire hat) who must dodge various obstacles (whether bombs or fireballs) while climbing up ladders (whether complete or broken) and picking up prizes (umbrellas or purses) to rescue a fair-haired (whether knotted or pigtailed) hostage from the gorilla is protractible against Universal and its licensees.
He ruled against Nintendo's claims to damages from Universal establishing licenses with Nintendo's licensees in those cases where the licensees continued to pay Nintendo. Nintendo's licensees, Coleco among them, filed their own counterclaims. Universal paid Coleco by buying stock in the company. Universal and Nintendo both appealed the counterclaims suit. The case was argued on June 16, 1986. In the decision, rendered on July 15, the court upheld the previous verdicts, ruling that:
First, Universal knew that it did not have trademark rights to King Kong, yet it proceeded to broadly assert such rights anyway. This amounted to a wanton and reckless disregard of Nintendo's rights. Second, Universal did not stop after it asserted its rights to Nintendo. It embarked on a deliberate, systematic campaign to coerce all of Nintendo's third party licensees to either stop marketing Donkey Kong products or pay Universal royalties. Finally, Universal's conduct amounted to an abuse of judicial process, and in that sense caused a longer harm to the public as a whole. Depending on the commercial results, Universal alternatively argued to the courts, first, that King Kong was a part of the public domain, and then second, that King Kong was not part of the public domain, and that Universal possessed exclusive trademark rights in it. Universal's assertions in court were based not on any good faith belief in their truth, but on the mistaken belief that it could use the courts to turn a profit.
Nintendo thanked John Kirby with a $30,000 sailboat christened the ''Donkey Kong'' along with "exclusive worldwide rights to use the name for sailboats". The
character Character or Characters may refer to: Arts, entertainment, and media Literature * ''Character'' (novel), a 1936 Dutch novel by Ferdinand Bordewijk * ''Characters'' (Theophrastus), a classical Greek set of character sketches attributed to The ...
in Nintendo's '' Kirby'' series of video games was named after John Kirby, in honor of his services in the ''Donkey Kong'' case. It is rumored that a copy of the first game in the franchise, '' Kirby's Dream Land'', was eventually sent to John Kirby who was humored and flattered.


See also

*
Copyright protection for fictional characters Copyright protection is available to the creators of a range of works including literary, musical, dramatic and artistic works. Recognition of fictional characters as works eligible for copyright protection has come about with the understanding th ...
* ''
Lewis Galoob Toys, Inc. v. Nintendo of America, Inc. ''Lewis Galoob Toys, Inc. v. Nintendo of America, Inc.'' is a 1992 legal case where the United States Court of Appeals for the Ninth Circuit concluded that there was no copyright infringement made by the Game Genie, a video game accessory that ...
''


Notes


References

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External links


The King and the Donkey
{{DEFAULTSORT:Universal City Studios, Inc. V. Nintendo Co., Ltd. Video game copyright law Donkey Kong King Kong (franchise) Nintendo United States copyright case law United States Court of Appeals for the Second Circuit cases United States District Court for the Southern District of New York cases United States trademark case law Universal Pictures litigation 1982 in United States case law Media case law Copyright infringement of fictional characters Lawsuits