The Case of the Video Game Lawsuit Racket

How a patent infringement lawsuit between Atari and Magnavox (over Pong) led to the era of patent trolls

In August 1972, visitors to Andy Capp’s Tavern in Sunnyvale, Calif., saw something new. Next to the jukebox and the pinball machines stood a 4-foot-tall wooden cabinet with a black-and-white television set inside, and the word “PONG” printed across the front.

For a single quarter, players could play a virtual match of table tennis. Two slim white lines slid up and down adjacent to a dotted line that served as the “net,” and players manipulated those lines to volley a “ball” back and forth across the screen. Pong quickly became a sensation, and Atari, the startup that manufactured it, seemed poised to capture much of this new market for video games.

Then came the patent infringement lawsuit. And decades of ramifications.