Nintendo Blockbuster 1989

 Informational box at end of text. ALL EDITIONS

When a store rents out video games, chances are that a wide variety of fast- food drippings will find their way onto the instruction manual.

But if the video store replaces the soiled original with a fresh photocopied version, it isn't just replacing the manual.

According to Nintendo of America, it's stealing an idea.

That's the basis of Nintendo's lawsuit against Fort Lauderdale- based Blockbuster Entertainment Corp. The suit, filed on Aug. 4 in federal court in New Jersey, charges that at least one of Blockbuster's company-owned stores and three franchises in New Jersey violated copyright laws by photocopying Nintendo's materials.

Blockbuster said that Nintendo initiated the lawsuit out of frustration because it wants people to buy its games, not rent them. Blockbuster has complied with a temporary restraining order by telling its stores not to photocopy the instructions.

"If Blockbuster was indeed photocopying the manual, Nintendo has a good case," said Michael A. Epstein, a partner with Weil, Gotschal & Manges, a New York law firm, and author of the book Modern Intellectual Property.

But Nintendo said that what's really at stake is the ability of a company whose primary asset is information to protect itself against theft.

"In an industry like ours, if you don't have strong copyright laws, you don't have a company. You don't have an industry," said Richard Lindner, a spokesman for Nintendo, a company whose $2.3 billion sales in 1988 are expected to grow by $1 billion in 1989.

For years, computer software manufacturers have anguished about piracy. But when they finally pushed for protection in Congress earlier this summer, Nintendo was left out in the cold.

A subcommittee of the Senate Judiciary Commitee recently passed the Computer Software Rental Amendments Act, which would ban the rental of computer software unless the copyright owner gave permission.

But as the bill passed through committee, the Video Software Dealers' Association, the trade organization of the rental store industry, succeeded in knocking protection for Nintendo's video games off the bill. The association claims that game cartridges didn't merit the same protection as software. A similar version of the bill, also excluding game cartridges from protection, has been voted out of committee in the House of Representatives.

Law prohibits record rentals because they can easily be copied, but videotapes, which can also be copied, can be rented. Vans Stevenson, vice president for corporate affairs at Blockbuster, argues that the congressional act was designed to protect business software manufacturers, whose work costs hundreds of dollars at retail and can be easily copied.

"The real issue is, how copyable are they? How much interest will people have in copying games?" he said.

But Nintendo claims that it's only a matter of time before its cartridges can be duplicated as easily as computer discs. The technology exists in Taiwan, where it's legal to duplicate video games. Because the games are still in short supply -- there aren't enough copies to meet demand -- chances are some copied cartridges could make their way through to the public.

Blockbuster argued that its rentals are a marketing tool for those who want to examine Nintendo games before investing $45 or more to purchase. At the same time, Blockbuster has hinted that it could look elsewhere for instructions to video games. In a statement issued last week, Blockbuster said that two companies were selling their own versions of Nintendo software, "or if need be, we might even consider writing our own."

According to copyright lawyer Epstein, Blockbuster or anyone else could write their own instructions as long as they were truly original.

In copyright law, he said, "You're encouraged to make use of the idea. You're not allowed to make use of someone's expression of those ideas."

"I can't take the Nintendo manual, translate it into Spanish and say it's a different expression, but I can come up with a three-page version of my own," Epstein said.

With Blockbuster deriving less than 3 percent of its income from video game rentals, James K. Willcox, who covers the video game industry for Consumer Electronics, a New York trade publication, doesn't think it would be worthwhile for Blockbuster to develop its own materials.

"Are they going to commit their own resources to writing manuals for the 150 games out for the Nintendo system? I don't think it's worth the time and resources," Willcox said.

Meanwhile, Nintendo continues to diversify. Its U.S. operation will move into the information business with the development of its system as a home computer. The company estimates that one out of every four homes in the nation will have a Nintendo system by the end of the year -- a staggering penetration rate for any potential electronic media. Nintendo's own system will enable participants to play each other in video games, similar to the way electronic bulletin boards operate.

And as Nintendo leaps into telecommunication systems, other video game companies are chasing, some say improving on, Nintendo's technology. Sega of America claims its Genesis system, available this fall, will outdo Nintendo's capabilities, providing arcade- quality games in the home.

VIDEO WAR

--SUIT FILED: Aug. 4 by Nintendo.

--COURT: Federal District Court, New Jersey.

--NINTENDO: Objects to Blockbuster's practice of photocopying its video game instructions, claiming it violates copyright laws. The company says it will take any action necessary to protect its copyrighted materials.

--BLOCKBUSTER: Says it will no longer copy instructions and may seek other ways to replace Nintendo video booklets when they are lost. It may also seek "alternative" sources of instruction materials.

SOURCES: Lawsuit, company statements