How Video Games Invaded The Home TV Set – Chapter 31

1976 – The Lawsuits Start

Atari was joined in a suit vs Chicago Dynamics laid on them by Magnavox. In June of 1976 court proceedings started at Federal Court in Chicago, judge John Grady presiding. I had the dubious pleasure of being on the stand from 6/2 to 6/10, day after day, as a fact witness. Spread out before me were all of the game hardware units we had built at Sanders between 1966 and 1969 as well as a 5 foot stack of documents: Mostly Harrison’s, Rusch’s and my daily logs and assorted technical loose notes.

The judge was very interested in the subject. He was a big, youngish football player type who had just recently left private law practice. He was very sharp and amazed all of us with the amount technical detail he absorbed and digested during the trial. He was also very friendly and often turned to me from the bench while I was on the witness stand and asked for explanations of some technical detail that had escaped him. I was impressed. One day the opposition brought an arcade Pong type game into the court room. When the judge asked that the back be removed so that he could see what’s inside, there was a modified Admiral TV set (with its RF front end bypassed to make it effectively into a TV monitor, which I had described in my ‘480 patent). Judge Grady took one look at that and drew the proper conclusions … same thing our patents had disclosed years earlier.

After weeks of intensive proceedings in that Chicago court room, the trial ended with Judge Grady’s judgment in favor of Magnavox on all counts. The judge read his decision from the bench on January 10 of 1977. If we had written it ourselves, it could not have been more favorable … we had won in a big way!

Naturally, I was pleased to hear him state unequivocally that my ‘480 patent was the “pioneer patent” of the nascent video game industry. The written record of the decision also reiterates that statement. US patent 3,728,480 entitled “Television Gaming And Training Apparatus” is and remains the pioneering patent of the video game art.

Nolan Bushnell was having second thoughts at the beginning of this trial. On June first of ’76, he had a meeting with Tom Briody, Magnavox’ chief patent counsel who had come in from Fort Wayne, Indiana to attend the Chicago-Dynamics trial in which Atari was also joined. Tom was with Ted Anderson, Esq., a senior patent lawyer and partner at Neuman Williams, Anderson and Olson of Chicago, Magnavox’ outside lawyers handling all video game litigation. As told to me by Tom Briody a few days later:

* NB/Atari are “anxious” for settlement.
* NB now feels that Magnavox’ (licensing) umbrella could help keep out pirates
* NB is worried about standard Pong business being killed by too many competitive entries
* NB feels Coleco is in market this year only (Coleco’s Telstar game was “hot” that year – and they stayed
in the video game business for several more successful years – so NB got that wrong!)
* NB drew an extensive marketing picture for Tom Briody and Ted Anderson:
* Software and hardware programmable TV/video games
* Games that are add-ons (PC cards etc. with chips) to calculators, maybe other devices
* Sees all games becoming microprocessor controlled (he was right!) – Atari was already working on what
would eventually become the VCS 2600.

Bottom line: Nolan Bushnell/Atari settled with Magnavox. Atari got a low cost paid up license which also covered past infringement for US sold products, but no foreign rights. Those were negotiated five years later. That initial agreement was dated June 6, 1976. It was the first of two agreements. The second one was signed in 1981. It called for the exchange of technical data between Magnavox and Atari in the course of which Atari turned over some of the details on the VCS 2600 to Magnavox. Atari also paid royalties on coin-op games and cartridges which infringed our patents. By 1980, these royalties had exceeded three million dollars.

Taking that initial license in 1976 instantly made Nolan into a licensee … a client of sorts. One doesn’t go around knocking clients. So for years I kept my mouth shut while Nolan Bushnell was constantly getting his handsome face in front of the cameras and repeated the claim to the press, insisting that he be treated as the great “inventor” of video games. Maybe he was just doing his job … but, naturally, it kept bugging me.

The Chicago-Dynamics et al lawsuit was just the first one in a series of legal actions against infringers of our patents. That series ran longer than any Broadway play ever did. In fact, it wasn’t until 1998, long after all of the patents had expired, that the last of the lawsuits was settled for past infringement. This last action was directed against two arcade game manufacturers, Data East and Taito. I was deposed once again in August of 1997 with Ted Anderson also present. Some more money changed hands and went into the coffers of Sanders/Lockheed and Magnavox, of course – not mine, unfortunately. For me, that deposition was like old home week: Same questions, same hardware in evidence, same documents I had dealt with a decade earlier … piece of cake! – It all felt like déja vue.

Even after all those years, all I had to do was to flip on the Power switch and my gold old Brown Box worked like a champ. It does need an occasional new set of AA batteries, but that’s all that’s needed to make it work. The gun worked too, but it was rarely part of the lawsuits.

Talking about the Brown Box and the gun: In 1999 I was invited to be the keynote speaker at the Classic Gaming Expo in Las Vegas. I demonstrated the Brown Box there and it worked as advertised to the delight of the attendees. Members of the audience played ping-pong, handball and volleyball with me and fired the “gun” at the target spot. It was the hit of the show.

Back to the subject of lawsuits: Over a period of ten years starting with the Chicago-Dynamic lawsuit in 1976-77 I was frequently called on to support the lawyers in a succession of lawsuits laid on companies such as Mattel and Activision – and later, on Nintendo and Sega. The end of the trail was a suit vs a couple arcade game manufacturers, Data East and Taito, as I mentioned above. Frequently, the lawyers would commandeer me on short notice for a week or more and I didn’t get to see my home or my Sanders office for awhile. Throughout, our legal team was headed by Ted Anderson, Esq. of Neuman-William’s, then a large Chicago intellectual property law firm. Assisting him was Jim Williams, Esq. until the early Eighties, when he left the Neuman-Williams to join a big lawfirm in New York.

On the opposing side were a succession of sharp lawyers – some pleasant, some otherwise – all of whom tried give me and our other friendly witnesses a hard time. As a fact witness, I spent as much as a week on the stand, day after day, going through those mountainous Sanders’ documents, answering detailed questions about the various pieces of 1966-69 game hardware that we trucked with us all over the country and had spread out on tables in front of the judge’s bench. The Brown Box made dozens of court appearances. Occasionally, some wire or component would fall off during all this moving around. I would spend the next lunch break of the court rushing off to Radio Shack to buy soldering equipment and tools. Back in the courtroom, I would troubleshoot and fix my game unit, often just in time to beat the judge’s re-appearance after the break. That scenario was repeated several times in Chicago, then in San Francisco, Ottawa and New York, as best I remember … those were tense moments.

The bottom line is this: We won every one of those lawsuits. They all went to appeal, there we won again and the better part of a hundred million dollars changed hands over the years. That was split 50/50 between Magnavox (later Philips) and Sanders (later Sanders/Lockheed) after paying the lawfirm, first Neumann Williams and later, Leydic-Voight after Ted Anderson moved there from Neuman-Williams in the 1990s when Neuman-Williams closed down the company.

Once we won that first lawsuit – the ’76 suit which Nolan Bushnell decided to leave in favor of an Agreement – we had a formula that no adversary seemed to be able to break: If a game had “hit” and “hitting” symbols, it infringed. That meant that any game or cartridge in which a machine controlled screen symbol changed its direction or was otherwise affected by an intercept with a manually controlled symbol … it infringed! Period! We never lost a suit after that for the better part of twenty years.

Continue … The Coleco Story

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