Magnavox Co. v. Activision, Inc.

Sanders & Associates owned the ’507 patent, a pioneer patent that described an apparatus that used analog circuitry to display player-controlled symbols on a television screen. The patent described a ball-and-paddle format in which players controlled objects on screen and used them to intercept and reverse a ball’s travel path. Magnavox Co. (plaintiff) was the exclusive licensee for the patent and developed the Odyssey console, a device that utilized analog circuitry to connect to a television and allow users to play a simple ball-and-paddle game. With the introduction of microprocessors and digital circuitry, game consoles were developed that could read software on individual game cartridges, allowing users to play a variety of games on their system. Activision, Inc. (defendant) created 11 sports-game cartridges for the Atari 2600 television game console, each of which generally followed the ball-and-paddle format. Magnavox filed suit against Activision for contributory patent infringement. Activision argued that the ’507 patent protected the specific analog circuitry utilized by the Odyssey console and that because the game cartridge utilized more advanced technology, there was no direct infringement of the ’507 patent. Activision also argued against the contributory-infringement assertion. Activision claimed that because game software was not a material part of the ’507 patent apparatus, a consumer’s use of Activision’s software on a licensed console did not constitute direct infringement, meaning that no direct infringement existed to which Activision could have contributed. The district court disagreed and found that the use of Activision’s sports-game cartridges with the Atari 2600 console directly infringed on Magnavox’s ’507 patent and that Activision contributed to the infringement by manufacturing and selling the ball-and-paddle-game cartridges. The court did not find that Activision willfully infringed on the patent and did not award Magnavox greater damages or attorney’s fees. Activision appealed the judgment regarding direct and contributory infringement, and Magnavox appealed the judgment regarding willful infringement and the reduced award.