Before the Crash: Early Video Game History

Appendix B: The Magnavox Co. v. Activision, Inc.: 1985 WL 9469 (N.D. Cal. 1985)

234 Appendix B Appendix B: The Magnavox Co. v. Activision, Inc. 1985 WL 9469 (N.D. Cal. 1985) 9 Ross A. Dannenberg 0 In a case of infringement involving one of the earliest video game patents, Magnavox asserted its exclusive licensing rights on television console “ball-and-paddle” games like the classic PONG. The patent-in-suit was U.S. Letters Patent Re. 28,507, a reissue patent originally issued on April 25, 1972. The ’507 reissue patent was one of several related patents obtained by Sanders Associates, another Plaintiff in this case. In 1967, Sanders became the first to combine toys, games, and television, defining the brand new art of television video games. Sanders’s subsequent patents claimed exclusive rights on a large variety of television games. Two of the asserted claims in the ’507 patent read as follows: 51. Apparatus for generating symbols upon the screen of a television receiver to be manipulated by at least one participant, comprising : means for generating a hitting symbol; and means for generating a hit symbol including means for ascertaining coincidence between said hitting symbol and said hit symbol and means for imparting a distinct motion to said hit symbol upon coincidence. 52. The combination of claim 51 wherein said means for generating a hitting symbol includes means for providing horizontal and vertical control signals for varying the horizontal and vertical positions of said hitting symbol. Deciphering the above legalese, the ’507 patent described a common gaming scenario: a player (the hitting symbol) moving around the screen and making contact with a ball (the hit symbol), sending the ball off in a different direction. Sanders, having become a TV console gaming pioneer, had now secured the rights to a set of actions that countless video game designers would want when creating sports games, combat games, and puzzle games, etc. Used with permission from Ross Dannenberg, an intellectual property attorney at Banner & Witcoff , Ltd. (www.BannerWitcoff.com) and editor of the Patent Arcade blog (www.PatentArcade. com). 02 BM.indd 234 3/20/12 1:10 PM 235 The Magnavox Co. v. Activision, Inc. In 1971, Sanders sold the exclusive licensing rights under the ’507 patent to Magnavox, who shortly thereafter introduced the first of the balland -paddle games, under the name “Odyssey.” It didn’t take long for other game designers to catch on. Atari released the television console classic PONG in 1975, after securing a license from Magnavox for the right to make and sell the ’507-type ball-and-paddle game. More game designers flocked to this new market, and Activision was among the youngest and most ambitious of them. Activision designed and manufactured television console games for the Atari 2600, the Commodore 64, and for IBM and Apple computers. It produced a Tennis, Hockey, and Grand Prix game, among others, which followed the general “ball-and-paddle” format covered by the ’507 patent. When Activision failed to obtain a license from Magnavox before developing these games, Magnavox and Sanders filed this infringement suit. Magnavox had much at stake in this case; they had already made approximately $40 million in licensing royalties based on the ’507 patent and had no desire to be cut out of the loop. The stakes were raised even higher when ActiviFig . A.1. Photo courtesy of David Winter, www.pong-story.com; (c) David Winter. 02 BM.indd 235 3/20/12 1:10 PM 236 Appendix B sion responded to the infringement action by promptly challenging the validity of the ’507 patent with 9 pieces of prior art brought before the court. If the court invalidated the ’507 patent, Magnavox risked losing its entire royalty stream, and being left completely behind by Atari and its television gaming competitors. Fortunately for Magnavox, the ’507 patent had previously endured and survived validity challenges in two previous cases. In The Magnavox Co. v. Chicago Dynamic Industries, 201 U.S.P.Q. 25 (N.D.Ill.1977) and The Magnavox Co. v. Mattel, Inc., 216 U.S.P.Q. 28 (N.D.Ill.1982), the ’507 patent had been challenged against many of the same pieces of prior art offered by Activision . However, since Activision was not a party to those cases, the judge in this case performed an exhaustive review of the technology and the cited prior art references before making an independent decision. In the end, as in the previous cases, the court found...