MOBSHOP SOUNDS TO GOOD OF PRICING BELOW WHOLESALE IF THEY GET 500 OR MORE
COULD THEY BE ILLEGAL GAMES?Interactive Entertainment Companies File Suit Against Yahoo! for Online Sale of Illegal and Counterfeit Videogame Products
SAN FRANCISCO--(BUSINESS WIRE)--March 28, 2000--
Nintendo of America, Electronic Arts, and Sega of America Join
Forces To Protect Products From Piracy On The Internet
In an unprecedented joint action, three leading videogame companies today filed a joint lawsuit in U.S. District Court for the Northern District of California against Yahoo! for the sale of illegal and counterfeit videogame products.
The suit seeks an injunction against Yahoo! to halt the auctions and sales of counterfeit computer and video games and illegal devices designed to circumvent copyright protection. The suit also seeks damages as compensation for the losses caused by the illegal sale of their products. This action represents the first time members of the interactive entertainment industry have filed suit against an online retailer.
The lawsuit alleges that Yahoo! directly profits from the sale of illegal goods on its site, is fully aware of the illegal activity, and has the resources and technological means to prevent it. Under applicable law, Yahoo! is legally liable for the infringing activity it is facilitating.
Specifically, the suit charges Yahoo! with copyright and trademark infringement, offering illegal devices for sale to the public, and unfair competition. The companies contend that Yahoo! is not a "passive" provider of services, has actual knowledge of illegal activity, and profits from revenue generated by its auction and retail activities.
"We have advised Yahoo! many times that easily identifiable counterfeit, unpublished and illegal goods are being sold on its site, and we have asked them to implement effective controls to prevent the posting of illegal goods," says Richard Flamm, General Counsel for Nintendo of America Inc. "Yet while they have the responsibility and capability, they have refused to do this. Regrettably, therefore, we feel that legal action is now our only remaining recourse."
"The action we're taking today is not only designed to clean up Yahoo!'s site, but to send a message to Internet software pirates that there are no safe havens for those who steal the industry's creative products," adds Flamm. "If the great potential of the Internet for our industry and our economy is to be fully realized, leading companies like Yahoo! must accept their responsibility to prevent illegal activity in cyberspace."
"Yahoo! is facilitating and directly profiting from the sale of illegal and counterfeit goods on its web site and is using the unique nature of the Internet as a rationale to conduct activity that would not be legal or tolerated in traditional markets," says Ruth Kennedy, Senior Vice President, General Counsel of Electronic Arts. "We strongly support the growth of e-commerce and the right of companies such as Yahoo! to conduct legitimate business on the Internet, but this part of their business model is neither acceptable nor legitimate."
"Yahoo! has created an international `cyber flea market' for counterfeit and illegal goods which hurts tens of thousands of creative and technical people," Kennedy adds.
American computer and video game publishers lost an estimated $3.2 billion worldwide in 1999 due to piracy of packaged game software alone, according to the Interactive Digital Software Association (IDSA), the interactive entertainment industry's trade group. Until recently, packaged goods piracy has been largely limited to overseas markets and has not proliferated in the U.S, because of strong legal protections.
"Yahoo! has developed on the Internet something that simply did not exist in the United States only a few years ago: an entirely new and growing marketplace or distribution channel for pirates," notes Leonard Slootmaker, senior vice president and general counsel for Sega of America. "This poses a whole new challenge to the industry."
Electronic Arts, headquartered in Redwood City, Calif., is the world's leading interactive entertainment software company. Founded in 1982, Electronic Arts posted revenues of $1.2 billion for fiscal 1999. The company develops, publishes and distributes software worldwide for personal computers and advanced entertainment systems. Electronic Arts markets its products under eight brand names; Electronic Arts, EA SPORTS(TM), Maxis(TM), ORIGIN(TM), Bullfrog(TM), Westwood(TM), Gonzo Games and Jane's(R) Combat Simulations. More information about EA's products and full text of press releases can be found on the company's Web site at www.ea.com.
Sega of America Dreamcast, Inc. is the arm of Tokyo, Japan-based Sega Enterprises, Ltd. responsible for the development, marketing and distribution of Sega videogame systems and videogames in the Americas. Sega Enterprises, Ltd. is a nearly $2.5 billion company recognized as the industry leader in interactive digital entertainment media, offering interactive entertainment experiences both inside and outside the home. Sega of America's World Wide Web site is located at www.sega.com.
Nintendo Co., Ltd., of Kyoto, Japan, is the acknowledged worldwide leader in the creation of interactive entertainment. To date, Nintendo has sold more than one billion video games worldwide, has created such industry icons as Mario(R) and Donkey Kong and launched franchises like The Legend of Zelda(R) and Pokemon(TM). Nintendo manufactures and markets hardware and software for its popular home video game systems, including the Nintendo 64 and Game Boy -- the world's best-selling video game system. As a wholly owned subsidiary, Nintendo of America Inc., based in Redmond, Wash., serves as headquarters for Nintendo's operations in North America.
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