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Nintendo Awarded $24 Million In Suit Over Pirated Video Games

May 24, 1993

TUCSON, Ariz. (AP) _ Two Taiwanese companies have been ordered to pay more than $24 million in damages in a civil suit over the sale of counterfeit Nintendo video game cartridges.

U.S. District Judge James F. Battin of Billings, Mont., who heard the case in Tucson, signed an order on May 17 also prohibiting the defendants from distributing counterfeit Nintendo video games anywhere in the world.

Battin found that the two companies, their U.S. subsidiary and four Taiwanese citizens wrongfully infringed at least 28 Nintendo U.S. copyright registrations and numerous U.S. trademarks, including those for such popular games as Donkey Kong and Super Mario Brothers.

Lynn E. Hvalsoe, Nintendo’s general counsel, said from the company’s headquarters in Redmond, Wash. Monday that the size of the award and the worldwide injunction ″reflect the global threat from video game piracy.″ She described Taiwan as the center for video game piracy.

″This is a significant victory in Nintendo’s war against pirate video game products, which cost Nintendo and other U.S. companies over $2 billion a year in losses,″ Hvalsoe said.

Hvalsoe acknowledged that it will be difficult to collect on the judgment, given that company officials have returned to Taiwan.

″There are procedures established through various treaties to allow us to collect and we will pursue these,″ Hvalsoe said.

The civil lawsuit by Nintendo followed an undercover criminal investigation by the U.S. Customs which led to arrests in Chicago in June 1991 of two officials of the Taiwanese companies and criminal charges against the officials and their companies.

Nintendo discovered the defendants’ operations during investigations of video game piracy in Taiwan and other countries. The defendants called themselves ″Nintendo Electronic Company″ and ″NTDEC.″

According to the ruling, the Taiwanese defendants said their factories could produce 1.2 million pirate Nintendo video games annually. They also acknowledged extensive worldwide sales of pirate video games, including more than $2 million to one customer in Mexico alone.

In his ruling, Judge Battin found that the defendants ″knowingly and intentionally advertised (and) solicited sales and sold infringing Nintendo video game cartridges to its customers worldwide.″

The U.S. subsidiary, Megasoft, which operated out of Los Angeles, has since closed.

Suit was filed in mid-1991 in federal court in Tucson because the U.S. Customs office there handled the investigation and because undercover investigators received counterfeit goods there.

The Taiwanese companies on Dec. 23, 1991 pleaded guilty to trafficking in counterfeit goods. As a result, the companies were fined $50,000 and paid $2,442 in restitution to Nintendo, and the individuals arrested were not prosecuted, Battin’s ruling said.

Hvalsoe described the Taiwanese companies as ″major players″ in the video game pirating business. They sold several hundred thousand counterfeit games to distributors and retailers throughout the United States and had the capacity to produce ″well in excess″ of that amount, she said.

The defendant companies were not represented in court during the civil case, and U.S. District Judge William Browning of Tucson entered a default judgment in favor of Nintendo. Battin then handled the damages portion of the civil case.

Individuals who were defendants in the civil case included Jimmy Yao, Wang Wen Fu, Wang Su-Tang and Chen Mei-Lin, all Taiwanese nationals.

Update hourly