On behalf of retail purchasers in California, the plaintiffs alleged that Nintendo had violated California antitrust laws through its monopoly on video game cartridges created by the use of “lock-out" technology and marketing practices that increased the price and limited the number of video games available to consumers. Nintendo applied to have the matter removed from state court to federal court.
First, Nintendo argued that the doctrine of “artful pleading" should apply (drafting claims so as to qualify for state law rather than federal law). The court held that this doctrine should only be applied in exceptional circumstances and is only available where federal law completely pre-empts the state law claim, and the federal law provides the plaintiff a remedy. The court dismissed Nintendo's argument that a decision by the California court would affect interstate commerce, which is governed by the US Constitution and therefore should be decided under federal jurisdiction. The court held that the California courts are competent to determine the extent to which California antitrust laws may be enforced without violating the Commerce Clause of the US Constitution.
Second, Nintendo argued that the plaintiffs' allegations arose under federal patent and copyright laws, as Nintendo's copyright and patent of its lock-out system granted it the right to exclude others. The court dismissed this argument as well, stating that the plaintiffs were not alleging that Nintendo did not have valid copyright and patent rights over the technology, but rather, were challenging the anti-competitive manner in which Nintendo was using the technology.
Morse v. Nintendo of America, Inc.
1990, US Dist. Ct., ND Cal
1990 US Dist. LEXIS 5200
KEYWORDS: anti-trust - jurisdiction
SUMMARY BY: Chris Metcalfe