Sega v. Accolade

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SEGA v. Accolade is the name of a court case between Sega Enterprises Ltd. and Accolade, Inc., which took place in the early 1990s.

Sega sued Accolade after Accolade had started to produce software for the Sega Mega Drive indepentandly without a license (copying a small amount of Sega's code in order to do so). Sega lost the court case, and the verdict set a precedent that copyrights do not extend to non-expressive content in software that is required by another system to be present in order for that system to run the software.

History

The case in question stems from the nature of the console video game market. Hardware companies often sell their systems at a loss, and rely on other revenue streams such as in this case, game licensing. Sega was attempting to "lock out" game companies from making Mega Drive games unless they paid Sega a fee (ostensibly to maintain a consistent level of quality of games for their system) by using the TradeMark Security System.

This strategy was originally invented by Nintendo when they launched the Nintendo Entertainment System in North America. It was one of several precautions Nintendo took to ensure the video game crash of 1983 would not re-occur. In previous generations, this restriction was not put in place, and so companies could develop and publish software for any system on the market without permission.

This led to a market which was oversaturated with titles, with expensive blockbuster games being masked by hoards of poorly programmed ones. Rival companies were able to release flawed software on their competitors' systems, giving the impression that one console was "worse" than another. It also meant there was a distinct lack of quality control, with riskier games, violent or sexual in nature potentially being available to children.

Nintendo created the "Nintendo Seal of Quality", to assure consumers that software was above a certain quality standard. Sega would copy this, with the Sega Seal of Quality. Their strategy, like Nintendo's, was to make the hardware reject any cartridge that did not include a Sega trademark. If an unlicensed company included this trademark in their game, Sega could sue the company for trademark infringement.

Results

Sega won an initial injunction, forcing Accolade to remove all Mega Drive products from store shelves. However this was short lived, as Accolade won on appeal. The two companies reached an out of court settlement which allowed Accolade to continue building their own Mega Drive cartridges but as an official licensee.

Though Sega lost this lawsuit, all later Sega systems seemed to incorporate a similar hardware requirement, as have Nintendo's, Sony's and Microsoft's.