Sega takes software battle to court

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The Independent Online
SEGA Enterprises, the Japanese corporation responsible for Sonic II, this Christmas's best-selling video game, has resorted to the courts in an attempt to keep control of the lucrative software market for its computers.

It has brought an action for breach of copyright against Codemasters Software, a UK publisher that had been planning to release games which could be played on Sega computers without first obtaining the Japanese company's permission.

The move is likely to anger critics of Sega and Nintendo, its Japanese rival, who argue their business practices lead to unjustifiably high prices for video games.

It is also likely to lead to additional pressure on the Office of Fair Trading, which is looking at whether it should recommend a full-scale investigation of the computer game industry by the Monopolies and Mergers Commission. Recently, the OFT had privately been making it clear it considered the subject had a low priority.

Sega and Nintendo, which together have 97 per cent of the fast-growing market for dedicated computer playing machines or 'consoles' - which will account for almost half this year's pounds 1.2bn toy sales - insist publishers who want to sell games for their computers must be licensed by them.

The publishers have to pay a hefty licencing fee for every game cartridge they sell and are subject to stringent conditions as to when and what they can produce. Game cartridges are nearly always manufactured by Sega in Japan.

Codemasters, which is not an authorised publisher, had been due to release its first game for the Sega Mega Drive console in January. It had planned to manufacture its game cartridges in the UK. It is now virtually blocked from doing so until the matter comes before the High Court in February.

Nick Alexander, managing director of Sega Europe, said that the company's Japanese parent had 'strong reason to believe that Codemasters had infringed its copyright in the operating system of its Mega Drive console and games'.

But Richard Eddy, Codemasters marketing manager, said the company was confident it had found a way to avoid breaching Sega's copyright. He attacked the way in which Sega used copyright law to prevent publishers independently producing games for its computers, which, he argued, led to higher prices and a smaller choice of products for the consumer.

Sega admits the machines themselves are sold at little or no profit and that the profits lie in manufacturing and selling the software, but says its licensing system is essential to protect quality.

Accolade, an American owned company, and the only other firm in the UK currently producing unlicensed games for Sega computers, is the subject of a separate legal action brought by Sega in the US.

(Photograph omitted)

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