“This is a dispute over two gorillas.” That is how Judge Robert W. Sweet opened his judgment in Universal City Studios v. Nintendo in December 1983. In 1982 Universal, the film studio owned by MCA, claimed that Nintendo’s arcade hit Donkey Kong infringed its rights in King Kong. Nintendo’s licensees, Coleco and Atari among them, paid Universal royalties rather than fight. Nintendo refused. It won the case, won the appeal, and then showed at trial that Universal had known from the start that it did not own the rights it was suing over. Universal ended up paying Nintendo’s legal bills.
Fast facts
- Case: Universal City Studios, Inc. v. Nintendo Co., Ltd., US District Court for the Southern District of New York, Judge Robert W. Sweet.
- Filed: 29 June 1982, two months after Universal’s telex to Nintendo.
- Universal’s complaint dismissed: 22 December 1983 (578 F. Supp. 911); affirmed on appeal, 4 October 1984 (746 F.2d 112).
- Nintendo’s counterclaims: decided for Nintendo on 29 July 1985 (615 F. Supp. 838); affirmed on appeal, 15 July 1986 (797 F.2d 70). The Supreme Court declined to hear Universal’s appeal on 1 December 1986.
- Nintendo’s lawyers: John Kirby of the New York firm Mudge, Rose, Guthrie, Alexander & Ferdon, working with Nintendo of America’s lawyer Howard Lincoln.
- Award: Nintendo’s legal fees as punitive damages, lost royalties and costs; David Sheff puts the total at $1.8 million.
A telex from Universal City
Universal’s claim to King Kong came out of an earlier fight. In 1975 RKO, which had made the original King Kong in 1933, licensed Dino De Laurentiis to remake it. Universal wanted to make its own version, so it went to federal court in California and asked for a declaration that the King Kong story was in the public domain. Its lawyer argued that “King Kong” could not be a trademark because it had no secondary meaning (the public did not link it with any one maker) and was part of ordinary English. On 24 November 1976 the court agreed: “The name ‘King Kong’ has become part of the ordinary English language.” Universal then paid $200,000 for the rights of Richard Cooper, son of King Kong’s creator Merian C. Cooper, and later settled with RKO.
Universal did little with King Kong at first. Its first licence, for Halloween costumes in December 1980, earned about $3,300. Another was for a video game. Sweet found that the president of Tiger Electronic Toys had seen Donkey Kong in Tokyo in the summer of 1981, decided Tiger should make something similar, and asked Universal for a King Kong licence, which it granted in September. Electronic Games carried Tiger’s advertisements, with the line “King Kong Trademark of Universal Studios Inc.”
In April 1982 Universal’s president, Sidney Sheinberg, asked his staff to look into Donkey Kong. On 27 April he met Coleco’s president, Arnold Greenberg, to discuss investing in Coleco. Greenberg described Coleco’s coming ColecoVision console and its biggest attraction, a home version of Donkey Kong. Sheinberg told him that Universal “owned King Kong”. The next day, 28 April, Universal sent telexes to Nintendo and Coleco claiming to be the “sole and exclusive owner of all rights (except book publishing rights) in and to the name, title, character, and story ‘King Kong’”. According to Sheff, the telex to Kyoto gave Nintendo’s president Hiroshi Yamauchi 48 hours to hand over his Donkey Kong profits and destroy unsold games. Nintendo of America’s president, Minoru Arakawa, called Lincoln at home that night.
Everyone else settled
Coleco settled within days. By 5 May it had agreed to pay Universal a royalty in return for a promise not to sue. On 6 May Arakawa and Lincoln met Universal’s lawyers at Universal City with Coleco’s lawyers in the room, and nobody told them about Coleco’s deal. Sheff has Coleco’s team urging Nintendo to give in: “The gorillas look the same, the name is almost the same.” Lincoln asked Universal to prove that it owned King Kong. Universal’s outside lawyer said the question was “open and shut” and promised a chain of title.
Two weeks later, on 21 May, Sheinberg met Arakawa and Lincoln for lunch. The court found that he offered future business if Nintendo paid a royalty, said that Universal was very litigious and that its “litigation department even turned a profit”, and reminded them of the Betamax case, which Universal had brought against Sony. Lincoln replied that Nintendo had investigated and did not believe Universal’s claim had any merit. As they left, Sheinberg said Nintendo had better start “saving money to pay its attorney’s fees.” Sheff, who places the lunch in June and tells it from Lincoln’s side, gives Sheinberg’s parting line as “I view litigation as a profit center” and Lincoln’s as “Have a nice day.”
Universal filed suit on 29 June 1982. Coleco paid a 3 per cent royalty on more than six million Donkey Kong cartridges. Atari, which held Nintendo’s home computer licence, signed the same deal, and Ruby-Spears, which was making a Donkey Kong cartoon series, paid royalties too. Together they paid Universal $4,765,371.48. Sheff reports that Ralston Purina, which made a Donkey Kong breakfast cereal, and Milton Bradley, which had a board game, refused.
Two gorillas
Nintendo moved to have the case dismissed without a trial. At a hearing on 8 August 1983, Sweet wrote, “Donkey Kong” was demonstrated by a game master and pertinent parts of the 1933 movie and the 1976 remake were reviewed, “an altogether satisfying court day enhanced by the argument of highly skilled and forceful counsel and marred only by the submission of affidavits, depositions and briefs.” According to Sheff, the game master was Howard Phillips, a Nintendo of America warehouse manager, and Kirby wanted him to show that the game had nothing to do with the film.
The judgment records how Donkey Kong began. Nintendo’s first idea was a port scene with Popeye, Bluto and Olive Oyl; when that could not be done, the characters became “Mario the Carpenter” and a comical gorilla on a building site. “Kong” was chosen because it was thought to be readily understood as meaning a gorilla, and “donkey” came from a Japanese–English dictionary as a translation of a word meaning stupid or “goofy”. The designer, Shigeru Miyamoto, said in his deposition that he had seen the King Kong films and had called his gorilla “King Kong” while he worked. Sheff adds his explanation: in Japanese, “King Kong” was a general term for any menacing ape.
Nintendo also argued that Universal’s 1976 victory stopped it from claiming a King Kong trademark now. Sweet rejected that argument, because the 1976 judgment had been set aside when Universal and RKO settled. He found for Nintendo on three other grounds, any one of them enough:
- Universal did not own a trademark in King Kong. The court order that gave Cooper RKO’s King Kong rights could not pass on a trademark on its own, separated from the business that used it, so Cooper had no trademark to sell to Universal.
- King Kong had no secondary meaning. So many companies had used the name and the image that it no longer pointed to one source.
- Nobody would confuse the two. The comic Donkey Kong, with its “silly obstacles of pies, cement tubs, birthday cakes and umbrellas, its prim captive girl with her hair in pigtails, and its pleasant colors and humorous sounds, create a totally different concept and feel from the drama of King Kong. At best, Donkey Kong is a parody of King Kong, but a parody of this sort is not an infringement.”
Sweet added that Universal’s own deals counted against it: “Universal, now suing to prevent Nintendo from marketing its Donkey Kong arcade game, has permitted millions of other Donkey Kong products to be sold to consumers.” Electronic Games reported the result in July 1984, quoting the judge’s “no reasonable jury could find likelihood of confusion” and the parody line. In October 1984 the Court of Appeals upheld the dismissal on the confusion ground alone and did not need to decide the others.
Universal pays
Sweet then tried Nintendo’s counterclaims, and this time Universal’s own files were the evidence. In 1982, while Universal was telling Coleco and Nintendo that it owned King Kong, its most experienced lawyer on the subject had advised Sheinberg in writing that “RKO owns … the visual representation of the King Kong ape”, and staff had concluded that Universal should stop licensing King Kong. In his judgment of 29 July 1985 Sweet wrote that “there is direct evidence that Universal knew it did not have the rights it asserted in its complaint.”
The Tiger game made matters worse. When Universal looked at it in May 1982, its vice-president Robert Hadl thought the Tiger game and Donkey Kong “substantially similar”. Tiger gave its hero a fireman’s hat, swapped the barrels for bombs and levelled the girders, and Universal granted it a revised, non-exclusive licence. Sweet found that the Tiger game had been “created by watching the Donkey Kong game” and infringed Nintendo’s copyright, and that Universal was liable for it.
Nintendo received $94,219.41 for guaranteed royalties it lost through Universal’s interference with its licensees, and, as punitive damages, a sum equal to what it had spent defending the case: $1,142,545.70 in legal fees plus costs. It also recovered its fees for the copyright claim. Sweet refused its claim to the $4.76 million the licensees had paid Universal. When Sheinberg gave evidence, Sheff writes, Kirby asked him how much of MCA’s income came from its “litigation profit center”. The Court of Appeals upheld the judgment in July 1986, and the Supreme Court declined to hear the case that December.
Sheff describes what followed. Coleco sued Universal to get its royalties back, and Universal settled; Atari and the other licensees were repaid too. Arakawa and Lincoln thanked Kirby with a framed photograph of a 27-foot sailboat, christened Donkey Kong, which came with “exclusive worldwide rights to use the name for sailboats.”
What Nintendo took from it
The case brought Howard Lincoln into Nintendo. While it was being prepared, Arakawa asked the Seattle lawyer to join the company, and Lincoln became Nintendo of America’s senior vice-president, second only to Arakawa. Kirby went on to represent Nintendo in its later fights over licensing and Tetris. Lincoln summed up the lesson for Sheff: “We learned that we could handle ourselves in the big leagues. And we learned that the kind of arrogance we saw at MCA is lethal.”
Sources
- Universal City Studios, Inc. v. Nintendo Co., Ltd., 578 F. Supp. 911 (S.D.N.Y., 22 December 1983), Judge Robert W. Sweet: “a dispute over two gorillas”; the 1975–81 California litigation and the 1976 findings; Universal’s first King Kong licence and Tiger’s; the Coleco, Atari and Ruby-Spears settlements and the 3 per cent royalty; the hearing of 8 August 1983 and the game master; Donkey Kong’s Popeye origins, the name and Miyamoto’s deposition; the rejection of estoppel; the three grounds; “a totally different concept and feel”; the parody passage; “permitted millions of other Donkey Kong products”. Text via the Caselaw Access Project (web): https://static.case.law/f-supp/578/cases/0911-01.json
- Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112 (2d Cir., 4 October 1984): the dismissal affirmed on likelihood of confusion alone; counsel for the parties. https://static.case.law/f2d/746/cases/0112-01.json
- Universal City Studios, Inc. v. Nintendo Co., Ltd., 615 F. Supp. 838 (S.D.N.Y., 29 July 1985): Tiger’s licence and its game; Sheinberg’s meeting with Greenberg on 27 April 1982; the telexes of 28 April; Coleco’s settlement by 5 May; the meetings of 6 and 21 May; “litigation department even turned a profit” and “saving money to pay its attorney’s fees”; filing on 29 June 1982; Universal’s internal advice; “direct evidence that Universal knew”; Tiger’s changes and the copyright finding; the $4,765,371.48 in royalties, the $94,219.41 and the $1,142,545.70; the unjust enrichment claim refused. https://static.case.law/f-supp/615/cases/0838-01.json
- Universal City Studios, Inc. v. Nintendo Co., Ltd., 797 F.2d 70 (2d Cir., 15 July 1986): the counterclaim judgment affirmed; the argument of Universal’s counsel in the California case that King Kong had no secondary meaning. https://static.case.law/f2d/797/cases/0070-01.json
- Universal City Studios, Inc. v. Nintendo Co., 479 U.S. 987 (1 December 1986): certiorari denied. Via CourtListener (web): https://www.courtlistener.com/opinion/9065307/universal-city-studios-inc-v-nintendo-co/
- David Sheff, Game Over (1993; GamePress edition, 1999), chapter 6, “For a Fistful of Quarters”: the telex and its 48-hour demand; the meetings at Universal City from Lincoln’s side, “The gorillas look the same”; Sheinberg’s “I view litigation as a profit center” and Lincoln’s “Have a nice day”; Ralston Purina and Milton Bradley; Kirby and his firm; Howard Phillips in court; Miyamoto on “King Kong” in Japanese; Kirby’s cross-examination; the $1.8 million; Coleco’s recovery of its royalties; the sailboat; Lincoln joining Nintendo; “the big leagues”.
- Electronic Games volume 1 issue 11, January 1983: Tiger Electronics’ King Kong advertisement.
- Electronic Games volume 2 issue 13, July 1984, p. 10: report of the decision, quoting Judge Sweet.