Justia Federal District Court Opinions

Nintendo Company, Ltd. and Nintendo of America, Inc. (collectively Nintendo) appeal the January 6, 1995, judgment of the United States District Court for the Southern District of New York, Alpex Computer Corp. v. Nintendo Co., 34 USPQ2d 1167 (S.D.N.Y.1994), holding U.S. Patent No. 4,026,555 (the '555 patent), owned by Alpex Computer Corporation (Alpex), not invalid, willfully infringed, and awarding $253,641,445 in damages and interest. We affirm the judgment as to validity and reverse the judgment of infringement.

This case deals with an invention within the art of video games. The video game industry began in the early 1970s and includes two branches, arcade video games and home video games. Arcade video games are large, expensive, coin-operated machines that are placed in high traffic areas such as amusement arcades. These machines are generally referred to as "dedicated" because they can play only one game. Home video games, in contrast, are small, relatively inexpensive devices that are easily connected to the antennae terminals of a standard television. The Magnavox Odyssey was the first home video game. It too was a dedicated system playing only one game which was referred to as the "ball and paddle" because a dot of light bounced between two player-controlled vertical lines.

In early 1974, the inventors of the patent in suit conceived of a new microprocessor-based home video game system that used modular plug-in units--replaceable, read-only memory, or ROM, cartridges--to permit home video systems to play multiple games, including games with rotating images. The '555 patent on this invention issued to Alpex on May 31, 1977. The patented invention was commercialized in systems by Atari, Mattel, and Coleco.

In the early 1980s, Nintendo entered the home video game market with the Nintendo Entertainment System (NES). After the NES was featured at the 1985 Consumer Electronics Show, Alpex notified Nintendo of possible infringement of the '555 patent. Soon thereafter, in February 1986, Alpex filed suit against Nintendo for patent infringement. Over the next several years, Alpex and Nintendo conducted various pre-trial proceedings. During these proceedings, Nintendo requested certification of certain issues to this court for interlocutory appeal, which the district court granted. However, this court denied leave to appeal. Alpex Computer Corp. v. Nintendo of America Inc., Misc. No. 320 (Fed.Cir. Sept. 2, 1992).

In order to resolve the outstanding questions of claim construction prior to trial, the district court held an evidentiary hearing with the assistance of a special master. The special master issued an initial report making specific recommendations on claim construction, which the district court adopted in part for purposes of instructing the jury. Following a four-week liability trial, the jury returned a verdict for Alpex. After this liability verdict, Nintendo filed a motion for judgment as a matter of law (JMOL) as to infringement and validity or, in the alternative, for a new trial. The damages trial followed before the same jury. The jury awarded Alpex a royalty of 6% which, when computed on the stipulated $3.4 billion of allegedly infringing products sold by Nintendo, resulted in a damage award of $253,641,445. Nintendo again filed motions for JMOL or a new trial and for a remittitur on damages. Alpex moved for entry of judgment and an award of prejudgment interest. The district court denied all of Nintendo's post-trial motions and entered judgment for Alpex with prejudgment interest.

Nintendo now appeals the judgment as to validity, infringement, and damages, and Alpex cross-appeals the amount of damages.

The '555 patent claims a keyboard-controlled apparatus for producing video signals by means of random access memory (RAM) with storage positions corresponding to each discrete position of the raster for a standard television receiver. Figure 2 of the '555 patent depicts the structure of the invention, as follows:NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE