Commentators and industry historians generally agree that the multi-billion dollar video game industry began forty years ago in November 1972 with Atari's release of Pong. Pong is among the simplest of video games: a version of ping pong or tennis requiring little more to play than a ball, two paddles, a scoring indicator, and a couple of memorable sounds. While it was not the first video game, Pong was the first video game hit. With unauthorized copying of a successful product occurring, it is not surprising that a lawsuit resulted in the fall of 1973, one that predates the more well-known litigation over the so-called “Pong Patent,” U.S. Reissue Patent No. 28,507 (the '507 patent).
The 1973 suit, likely the video game industry's first lawsuit of any type, was between two of Atari's competitors, Allied Leisure Industries, Inc. and Midway Manufacturing, Inc. The dispute involved Allied Leisure's mechanical drawing of a printed circuit board, meaning the drawing or “artwork” depicting the layout of one of the typically green boards found in many electronic devices. Specifically, Allied Leisure claimed Midway had infringed its copyright in a drawing of a printed circuit board for its four-player tennis game, basically a four-player version of Atari's Pong. Allied Leisure also included a related claim against Midway for unfair competition. The case settled in April 1974 before a decision on the merits could be rendered.
The Allied Leisure lawsuit is missing from the existing literature, both popular and academic, on the video game industry. This Article provides an account of the case. Why focus on a forgotten and unknown case that quickly settled? Even with Atari on the sidelines of the case, the story of Allied Leisure is a significant part of the story of Pong, the game that started the video game industry. The case is interwoven with the major events of the industry's birth. Allied Leisure should be of interest to industry historians for this reason, but the case should pique the interest of scholars concerned with the legal history of the video game industry. An analysis of Allied Leisure shows the very limited scope of intellectual property protection available to game manufacturers at the industry's origin. In particular, it demonstrates the limits on the protection available both under the law of copyright and the law of unfair competition.
This Article is organized as follows: Part II provides the historical background of the Allied Leisure case, including the origin of Pong and the subsequent development of the games by Allied Leisure and Midway that were at issue in the lawsuit. This section also describes the competitive environment of the early video game industry, an environment in which copying was common.
Part III describes this lawsuit and provides some context for the settlement, but it is primarily a doctrinal analysis of Allied Leisure's copyright and unfair competition claims. On the merits, this Article argues that Midway had the clear edge over Allied Leisure, despite Midway's copying of Allied Leisure's design. Setting aside the patent issues, copying these early games was legal, given the state of the law in the early 1970s.
Part IV concludes. While the limited intellectual property protection initially available may not have been harmful to the industry's early development, the conclusion briefly explains why additional protection was needed and how it resulted primarily through changes in the copyright laws.