Atari Games v. Nintendo: Does a Closed System Violate the Antitrust Laws
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As I rushed through the malls this past Christmas, I noticed a new store, one that would not have been possible just a few years ago. It was a Nintendo boutique. I was permitted only to gaze longingly at the games and accessories on display before being pulled away to shop for the things I would actually buy, but I thought it would be fun to return someday and purchase the system and perhaps a few cartridges and accessones. So, I must admit that my perspective on the Atari v. Nintendo suits will not be that of an unaffected observer, but rather that of a potential consumer. Like millions of others, I am directly concerned with the price and quality of the cartridges that are available for play on the Nintendo system. As a consumer, what should I think of the allegations by Tengen and its parent, Atari Games, that Nintendo has been artificially restricting the supply of games through the use of a lock-out chip? Should I be convinced by Nintendo's response that the lock-out chip ensures that each game I buy will be of the highest quality? As a lawyer, I should also find the answers to these two questions important. Courts have noted that the antitrust laws are designed to protect competition and the consumer. Therefore, the answers to the consumer's questions should largely answer the question of whether the lock-out chip and Nintendo's ancillary licensing practices violate the antitrust laws. To analyze these issues, I will discuss the background facts and the nature of Nintendo's patent and its licensing practices in Section I. In Section II, I will discuss the economic effects of the patent and licensing system and how they might or might not enhance societal wealth. In Section III, I will discuss the results of Section II in terms of the legal analysis that the courts have employed in considering alleged antitrust violations. Finally, in Section IV, I will conclude with some thoughts on how a consumer might view these practices.
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