Tengen and its legal battles with Nintendo

Tengen was a video game publisher in the 1980s and 1990s. What platform you remember them for probably depends on which part of the world you grew up in. In the United States, we remember Tengen as a Nintendo NES publisher. Europeans may remember them as a Megadrive or Amiga publisher. Thickening the plot, they had a direct connection to another storied video game company. On September 10, 1992, Tengen lost one of its multiple lawsuits with Nintendo. It ended Tengen as an NES publisher, but not from the game industry entirely.

What Tengen is famous for

In the United States, Tengen is most famous for being the largest publisher of unauthorized NES cartridges. Tengen signed Nintendo’s standard agreement and became a licensee on January 18, 1986, but had a long list of grievances. They were frustrated with having to give Nintendo platform exclusivity for 2 years before they could release a title for other platforms. Nintendo’s limit of four titles per year was also something Tengen was unhappy about, given who they were. Tengen had a large enough back catalog of titles available to it to produce a lot more than four a year.

And finally, in 1988 and 1989, there was a pretty serious shortage of computer chips, similar to what we ran into around the 2020-2021 timeframe due to the global pandemic. Unprecedented demand meant the industry had a hard time keeping up.

Tengen wanted to arrange its own manufacturing, which Nintendo reluctantly agreed to, as long as whatever chips they intended to use passed Nintendo’s quality control. Nintendo failed the other suppliers, forcing Tengen to continue to use Nintendo’s manufacturing.

How Tengen went from licensed to unlicensed publisher for the NES

All of this led Tengen to take matters into their own hands. They produced their own version of the Nintendo lockout chip, designed their own cartridge shells that fit, but left no doubt it was a third party cartridge, and they even put their own seal of quality on the cartridges.

The games weren’t poor quality at all. The first round of Tengen games, which included Gauntlet, Pac-Man, and RBI Baseball, had passed all of Nintendo’s standards. Some of the later Tengen titles weren’t as good, but still were better than the typical unlicensed publisher. They even had rights to produce some Sega games, bringing those titles to the rival NES console.

All told, Tengen ended up publishing 20 titles for the NES console:

• Afterburner
• Alien Syndrome
• Fantasy Zone
• Gauntlet (licensed and unlicensed)
• Indiana Jones and the Temple of Doom
• Klax
• Ms Pac-Man
• Pac-Man (licensed and unlicensed)
• Pac Mania
• RBI Baseball (licensed and unlicensed)
• RBI Baseball 2
• RBI Baseball 3
• Road Runner
• Rolling Thunder
• Shinobi
• Skull & Crossbones
• Super Sprint
• Tetris
• Toobin
• Vindicator

Of course, Nintendo sued. So Tengen’s parent company, Atari Games, countersued, and that led to a third company suing Nintendo. A third company that sounded like it was completely related, even though they weren’t at that point. So let’s untangle this web.

Who was Tengen?

Tengen was a division of Atari Games. That begs the question of why the cartridges didn’t have the Atari name and logo on them, because Atari had all sorts of name recognition. Tengen sounded like an upstart. Why would Atari, Nintendo’s longtime frenemy, go incognito?

Atari Games, despite the name, wasn’t the company who made video game consoles. They were once related, but they split up in 1984.

The Atari most of us are familiar with sold out to Warner Bros. in the late 1970s. The home video game console wars were far from over at that point, but Atari wasn’t confident they could go into the second generation of game consoles on their own. They were up against Fairchild and Magnavox, both of whom were larger and more established companies, and Fairchild had vertical integration that Atari didn’t.

The Atari 2600 ended up being a raging success, but it’s fair to say that Atari’s suspicion was probably correct. The Atari 2600 didn’t have a great first year, and it wasn’t until 1980, when they licensed the game Space Invaders, that the console really took off. Crucially, after Atari realized they had a hit on their hands, they were able to go around and license anything else that looks like it would be a hit. One of those titles they licensed was Pac-Man.

Without the money from Warner Brothers, Atari may not have been able to make those early investments, and they might not have dominated the second generation of game consoles.

But with Warner’s backing, they were unstoppable for about three years, making hundreds of millions of dollars in profit. But in 1982, the wheels started coming off, and in 1983, Atari lost half a billion dollars. Warner wanted out.

The fastest exit strategy Warner could find was selling Atari in two parts. Jack Tramiel, the exiled founder of Commodore, was looking for a computer company to buy. But he didn’t want the arcade division. He purchased the consumer division in 1984, securing the rights to Atari home computers, the game consoles, and the software library for both. He also acquired the rights to use the Atari trademark on anything sold to consumers.

Midway ended up buying the parts of Atari that Jack Tramiel didn’t want, and operating it as a subsidiary. The deal included the rights to Atari arcade games, and the rights to continue using the name on arcade games, but they couldn’t use the trademark on anything sold to consumers. This entity became known as Atari Games.

Tengen was an offshoot of Atari Games. The other Atari, owned by Jack Tramiel, did end up producing game consoles that competed with Nintendo. But Tramiel’s Atari never produced game cartridges for Nintendo or Sega consoles.

Since Atari Games couldn’t use the Atari name, it had to come up with another name. The Tengen name, like the name Atari, was a term from the Japanese board game Go. Atari is the equivalent of the word “check” in the western game chess. In Go, Tengen is the center of the board, also known as the center of heaven.

The reason Tengen was so unhappy with the limit of four titles per year was the extensive back catalog of classic arcade games that Atari Games and Midway owned. In a perfect world, Tengen would have released more than the 20 titles they ended up releasing.

How Tengen produced its own lockout chip

Nintendo used an electronic lock and key measure to prevent unauthorized third-party games. There were two reasons for this. The first was to keep other companies from flooding the market with low quality games like what happened to Atari in 1982. The second reason was to allow Nintendo to collect a royalty on every game for its console.

The only source of the lockout chip was Nintendo itself. Tengen attempted to reverse engineer it, but found its key exchange mechanism too difficult to decode just by observing its behavior.

To solve the problem, they used a loophole in US intellectual property law to gain copies of Nintendo’s patent application. While they could read the document in person, they were not allowed to take notes or make copies. The device was too complex to reconstruct from memory after viewing the document in person. But the loophole was if you were involved in litigation, and the document was related to that litigation, you could request a copy.

Tengen lied to the US Patent and Trademark Office that they were involved in litigation with Nintendo, so the office provided a copy.

With the document in hand, Tengen was able to produce its own device that exactly mimicked the behavior in the document. And when they put their device, which they called the Rabbit, in a cartridge, it worked. The NES console couldn’t tell the difference between the original lockout chip and Tengen’s Rabbit knockoff.

The court cases

The problem for Tengen was they duplicated the device in Nintendo’s document exactly. They made no changes, which proved it wasn’t a clean room implementation. And it was easy to prove, because Tengen’s Rabbit chip included unused functionality that did not exist in the production revisions of Nintendo’s lockout chip. Had Atari Games used legal cleanroom reverse engineering, they would not have known about and implemented the unused functionality from the patent document.

Tengen lost the lawsuit on September 10, 1992. Arguably, by the time they ended up losing, the best days of the NES were behind it. Nintendo’s attempts to strong arm retailers into not selling Tengen cartridges probably did more damage to Tengen than the outcome of the lawsuit.

By some accounts, neither Nintendo nor Tengen lost the lockout chip case, but that’s from confusing the various lawsuits. There were a total of three lawsuits involving Nintendo and Tengen. There was also a fourth that looked like it might have involved Tengen, but didn’t.

Tengen countersued, saying that Nintendo was violating antitrust law with its tactics, preventing them from making games for other consoles. The two parties ended up settling this lawsuit. This was the lawsuit that had no winner.

This is where the other Atari came in. While Tengen and Nintendo battled in court, the other Atari, Tramiel’s Atari, piled on and also sued Nintendo for violating antitrust law, saying the exclusivity Nintendo demanded kept Atari from getting any good third party games for its consoles.

The other Atari lost its lawsuit.

The final legal disagreement between Nintendo and Tengen involved the game Tetris. In 1989, both Nintendo and Atari Games thought they had licensed the rights to produce Tetris on the NES console. Nintendo won this case as well, forcing Tengen to withdraw its Tetris game after four weeks. About 268,000 out of the 500,000 cartridges Tengen produced were recalled and destroyed.

If you’re keeping score, Nintendo won two of its lawsuits with Atari Games (Tengen) and settled a third. Nintendo also won the lawsuit with the other Atari.

Tengen after the NES

After losing its lawsuit with Nintendo in 1992, Tengen turned its attention to Sega. Sega also had restrictions on third-party publishing, but didn’t demand exclusivity the way Nintendo did. Tengen produced a number of titles for the Sega Genesis/Mega Drive console, but didn’t return to the realm of Nintendo licensees.

Who else was there to produce game titles for in 1992? Home computers.

Tengen also produced titles for home computers like the Commodore Amiga, which typically had no restrictions at all on third party developers. As a result, in the UK, Tengen may be remembered as an Amiga publisher, not a Nintendo publisher. In the United States, it’s a surprise that the publisher of RBI Baseball made anything for the Amiga.

Atari Games changed hands again in 1994, and the home video game titles were something of an afterthought to the new owner. So Tengen folded up shop in 1994.

In 2024, an independent developer discovered that the Tengen trademark was abandoned, so he re-registered it. So this means the Tengen brand name will live again in this century.

Dave Farquhar

David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.