BY
MIKE
SHAW
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FBI EXPLODES PIRACY SCHEME • FEDERAL EXCISE TAX BEATEN • COURT UPHOLDS LOCATION CONTRACTS •
'TRON ' CONTROVERSY AIRED • DISTRIBS WON'T BUY BACK USED VIDEOS • MOM BATTLES ON • U.S. OPEN SET
FOR L.A. • CONNECTICUT MOVES TOWARD LICENSE FEE • PORT CHESTER CRUMBLES CHEESE'S PLAN • ON
BALLY ADVANCE • CLAMORING AGAINST THE CLAMOR • STATE ASSOCIATIONS DIVIDING • SHORT SUBJECTS
FBI EXPLODES
PIRACY
SCHEME
Behind the clout of the federal govern-
ment's tough new stance on dea:ing with
copyright criminals, the Federal Bureau of
Investigation has seized an estimated
$200,000 worth of pirated video games.
The games allegedly infringe on the
copyrights of Pac-Man (Midway Manu-
facturing) , Donkey Kong (Nintendo of
America) , and Frogger (Sega / Gremlin
Enterprises) .
A May 24, 1982, amendment signed into
federal law by President Reagan bolstered
the Criminal Copyright Infringement Pro-
visions of Federal Law by toughening
penalties for convicted infringers. The new
law provides sanctions of up to $250,000 in
fines , and even more dramatically , up to
five years imprisonment.
Sources at the FBI in New York told
Play Meier that federal agency sees the
increased severity in the penalty as a man-
date from the federal government for the
FBI to crack down on this type of crime .
Sources indicated that the industry's
reported earnings for 1981 - estimated
anywhere from $5 .5 billion to $8.5
billion-;-and its historically reputed con-
nections with organized crime have led to
the directive .
In the first action given impetus by the
new law, the FBI and its "strike force"
climaxed a year-long investigation of U.S.
Amusements and its affiliated company,
Bagatelle Amusements , with searches
under three warrants at the company's
warehouses in New York .and New Jersey.
There , 60 allegedly illegal games were
seized along with the books and records of
the firm.
U.S . Amusements has been named in
several suits brought against it this year by
major manufacturers of video games.
PLAY METER. September 1 5, 1982
Most recently on May 27, the compa ny
was enjoined from selli ng copies of Cine-
matronics's Naughly Boy. (See Play
Meier, July I, p. 18).
FBI sources said no arrests had been
made, but the company's records are now
with the federal grand j ury and employees
of U.S. Amusements, including its boss
Mryon Sugarman, are being subpoenaed .
The investigation followed the firm as it
altered its manner of conducting the
allegedly illegal part of its business over the
year. Initially , U.S. Amusements' sales-
men were openly offering the copies to
even the most casually interested potential
buyers, FBI sources said. Bu t, as manufac-
turers with copyrights to protect demon-
strated their eagerness to enforce their
rights, the modus operandi at U.S. Amuse-
ments changed.
Toward the end of the investigation,
sources said, U.S. Am usements had moved
its illegitimate games to the Bagatelle
location in Hillsdale, and buyers for those
games were carefully screened before they
were sent to the Hillsdale store.
In addition to criminal sanctions for
violating copyright laws, Sugarman and
his associates could face federal fraud
charges, interstate transfer charges, and
penalties applicable to individuals found
operating as part of a ring of organized
crime.
FBI sources said pirating videos is being
attributed to underworld figures and
organized crime, and that U.S. Amuse-
ments is just the first company to be cited
in the investigation that continues into
several other alleged violators.
FB I sources said the agency is taking the
lead in cracking down on video game copy-
right criminals, and during the Play Meier
interview, informally offered to consult
with industry associations that might be
interested in how the FBI is tackling the
piracy problem.
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