Universal City Studios, Inc. V. Nintendo Co., Ltd.
Nintendo's success with Donkey Kong was not without obstacles. In April 1982, Sid Sheinberg, a seasoned lawyer and president of MCA and Universal City Studios, learned of the game's success and suspected it might be a trademark infringement of Universal's own King Kong. On April 27, 1982, he met with Arnold Greenberg of Coleco and threatened to sue over Coleco's home version of Donkey Kong. Coleco agreed on May 3, 1982 to pay royalties to Universal of 3% of their Donkey Kong's net sale price, worth about $4.6 million. Meanwhile, Sheinberg revoked Tiger's license to make its King Kong game, but O. R. Rissman refused to acknowledge Universal's claim to the trademark. When Universal threatened Nintendo, Howard Lincoln and Nintendo refused to cave. In preparation for the court battle ahead, Universal agreed to allow Tiger to continue producing its King Kong game as long as they distinguished it from Donkey Kong.
Universal sued Nintendo on June 29, 1982 and announced its license with Coleco. The company sent cease and desist letters to Nintendo's licensees, all of which agreed to pay royalties to Universal except Milton Bradley and Ralston Purina. Universal City Studios, Inc. v. Nintendo, Co., Ltd. was heard in the United States District Court for the Southern District of New York by Judge Robert W. Sweet. Over seven days, Universal's counsel, the New York firm Townley & Updike, argued that the names King Kong and Donkey Kong were easily confused and that the plot of the game was an infringement on that of the films. Nintendo's counsel, John Kirby, countered that Universal had themselves argued in a previous case that King Kong's scenario and characters were in the public domain. Judge Sweet ruled in Nintendo's favor, awarding the company Universal's profits from Tiger's game ($56,689.41), damages and attorney's fees.
Universal appealed, trying to prove consumer confusion by presenting the results of a telephone survey and examples from print media where people had allegedly assumed a connection between the two Kongs. On October 4, 1984, however, the court upheld the previous verdict.
Nintendo and its licensees filed counterclaims against Universal. On May 20, 1985, Judge Sweet awarded Nintendo $1.8 million for legal fees, lost revenues, and other expenses. However, he denied Nintendo's claim of damages from those licensees who had paid royalties to both Nintendo and Universal. Both parties appealed this judgment, but the verdict was upheld on July 15, 1986.
Nintendo thanked John Kirby with a $30,000 sailboat named Donkey Kong and "exclusive worldwide rights to use the name for sailboats". The court battle also taught Nintendo they could compete with larger entertainment industry companies.
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