Galoob | Code Like It's 198x

Galoob was an American toy company that found itself on the winning side of a copyright case against Nintendo. Lewis Galoob Toys licensed the Game Genie, a cheat cartridge designed by the British company Code Masters, and planned to sell it to American Nintendo owners in 1990. Nintendo argued that changing its games infringed its copyrights, and won an injunction that kept the Genie out of American shops for a year. Then it lost, at trial in 1991 and on appeal in 1992, and the Genie became one of America’s best-selling toys of 1991.

Fast facts

Full name: Lewis Galoob Toys, Inc.; later Galoob Toys, Inc.
Founded: 1957, by Lewis and Barbara Galoob, as a small distributor of toys and stationery. Their son David Galoob took over the business in 1970, at 21.
Based: South San Francisco, California.
Best-known toys: Micro Machines, the miniature vehicles that later gave their name to Code Masters’ racing game.
In video games: the Game Genie in the United States, for the NES and later other consoles.
The court case: Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., decided for Galoob in July 1991 and upheld on appeal in May 1992.
Bought by: Hasbro, announced September 1998, for about $220 million.

Micro Machines and the Genie

Galoob’s biggest line in the late 1980s was Micro Machines, tiny model cars and playsets. It was a toy company, not a software house, and its route into video games came through Code Masters. The British budget publisher had built a device that sat between an NES and a game cartridge and changed bytes of the game as the console read them, so that a player could type in a code and start with infinite lives. Richard Darling told Edge that Code Masters showed it at the Consumer Electronics Show in Chicago, where a talent scout from Galoob “loved it”, and Galoob licensed it for the United States. David Sheff’s history of Nintendo describes Galoob as “a relatively small San Francisco-based toy company” making the Genie “under license from a British firm”.

The connection ran the other way too. Code Masters’ NES racing game Micro Machines, published in 1991, was built around Galoob’s toy line. “Their biggest line of toys was the Micro Machines range, and so it was an obvious match,” David Darling told Edge, and the cartridges carried the note that Micro Machines was a trademark of Lewis Galoob Toys, used under licence.

Nintendo v. Galoob

Nintendo did not want the Genie sold. Nintendo of America’s Howard Lincoln told Sheff that the device “creates derivative works”: “It not only alters Nintendo games, infringing on copyrights, but can make them less fun, too easy to play.” Nintendo said Galoob had approached it about a licence; Galoob denied that. When Galoob announced its plans in 1990, Nintendo went to court, and in the summer of 1990 it won a preliminary injunction that barred Galoob from making or selling the Genie until the case was tried. ACE reported in August 1990 that Nintendo of America had “cracked down” on the gadget, sold “by a company called Lewis Galoob Toys in the US” and designed by Code Masters. In Canada the Genie was made and sold by Camerica, which Nintendo failed to stop, and 100,000 were sold there that year.

The case was heard without a jury in April 1991 by Judge Fern Smith. Shigeru Miyamoto flew in from Kyoto and gave evidence for a full day. Galoob’s argument, in Sheff’s summary, was that the changes were temporary, that they did not create new versions of the games, and that consumers had the “freedom and right … to play their Nintendo games in ways they see fit”. In July 1991 Judge Smith ruled for Galoob: the Genie did not create derivative works, and even if it did, home players were making fair use of games they had bought. Galoob’s share price rose 20 per cent on the day, Sheff writes, and the San Francisco Chronicle called the ruling “the first crack in the fortress that Nintendo has established in the video-game market”.

The Ninth Circuit Court of Appeals upheld the decision unanimously in May 1992. Because the Genie’s changes were not fixed in any permanent form, it held, no derivative work had been made. Galoob, the courts agreed, had been wrongly kept off the market, and later in 1992 Judge Smith ordered Nintendo to pay it $15 million for the sales it had lost: the value of the bond Nintendo had posted when it won the injunction. Richard Darling told Edge in 1999 that the case ended only when the US Supreme Court refused to hear Nintendo’s final appeal.

Selling the Genie

The year-long injunction did not hurt sales for long. Galoob took orders for half a million units straight after the July 1991 ruling, before its Christmas advertising campaign began, and by the Toy Fair in February 1992 it had sold 800,000, Sheff writes, “all Galoob could make”. Mean Machines put American sales at more than a million that January, and the Genie was on Playthings magazine’s list of the top-selling toys of 1991. Versions for the Mega Drive, Game Boy and Super NES followed. In Britain the Genie was sold by Hornby rather than Galoob, and reached the shops in 1992.

After the Genie

Galoob went back to being a toy company. In September 1998 Hasbro agreed to buy Galoob Toys for about $220 million. Hasbro’s filing that autumn named its leading brands as “Micro Machines(R) miniature-scale boys’ toys, Star Wars(TM) small-scale figures and vehicles, Spice Girls(TM) fashion dolls, and Pound Puppies(R) mini-dolls”. Video games were not on the list. Two years later Classic Gamer Magazine could still remind its readers that Hasbro’s “Galoob subsidiary was responsible for bringing the Game Genie to America”.

Sources

ACE issue 35, August 1990: “Nintendo gets tough with cheat machine” (Lewis Galoob Toys in the US; Code Masters as designer).
Game Informer issue 1, Fall 1991: the District Court ruling, the injunction, Camerica and the Canadian sales.
Game Informer issue 2, November 1991: Micro Machines advertisement (“Micro Machines is a Trademark of Lewis Galoob Toys, Inc., under license”).
Mean Machines issue 16, January 1992: over a million Game Genies sold in America.
Game Informer issue 6, September 1992: “Nintendo vs. Game Genie: The Final Chapter?” (Judge Smith’s $15 million order), as cited in the Vault’s Game Genie entry.
Atari User issue 16, August 1992: news item on the $15 million judgment (“Galoob had been wrongfully enjoined”; the Court of Appeals’ “unanimous decision in May 1992”).
Edge issue 35, August 1996: “Company focus: CodeMasters” (CES and Galoob’s scout; the $15 million award).
Edge issue 75, September 1999, p. 84: interview with Richard Darling (“Nintendo sued our distributor Galoob”; the Supreme Court’s refusal).
Edge issue 136, May 2004: “The making of… Micro Machines” (David Darling on Galoob’s toys).
David Sheff, Game Over (1999 edition, with new chapters by Andy Eddy), pp. 287–288 (Nintendo’s case against Galoob; Howard Lincoln; the injunction; the trial and Miyamoto; Judge Smith’s ruling; the share price and the San Francisco Chronicle; orders and sales) and p. 401 (Playthings’ top-selling toys of 1991).
Classic Gamer Magazine vol. 1 no. 4, June 2000: Hasbro’s “Galoob subsidiary”.
Hasbro, Inc., prospectus supplement (Form 424B2), US Securities and Exchange Commission, 1998 (web): the agreement to acquire Galoob Toys, its brands and the price. https://www.sec.gov/Archives/edgar/data/0000046080/000095012398009370/0000950123-98-009370.txt
“Lewis Galoob Toys Inc.”, company history, Reference for Business (web, secondary): the founding by Lewis and Barbara Galoob in 1957; David Galoob taking over in 1970; South San Francisco. https://www.referenceforbusiness.com/history2/23/Lewis-Galoob-Toys-Inc.html
Todd Coopee, “Galoob”, ToyTales.ca, 15 November 2024 (web, secondary): the founding in 1957; the sons taking over in 1970; the Hasbro purchase. https://toytales.ca/galoob/
Wikipedia, “Lewis Galoob Toys, Inc. v. Nintendo of America, Inc.” (web, secondary): the appeal decision of 21 May 1992 and its fixation and fair-use holdings. https://en.wikipedia.org/wiki/Lewis_Galoob_Toys,_Inc._v._Nintendo_of_America,_Inc.