Editing Magnavox Odyssey (section)

===Lawsuits===
[[File:Magnavox Odyssey patent.svg|thumb|right|upright=0.85|[[Patent drawing]] for the Magnavox Odyssey<ref name="Patent1" />]]
In May 1972, [[Nutting Associates]] chief engineer [[Nolan Bushnell]], designer of the first commercial [[arcade game|arcade video game]], ''[[Computer Space]]'', saw a demonstration of the Odyssey.<ref name="Replay70s"/> Inspired, when he and [[Ted Dabney]] quit Nutting to found [[Atari, Inc.|Atari]], he assigned [[Allan Alcorn]] to create a cheap ping-pong arcade game as a training exercise, though he did not tell Alcorn that it was for training nor that the idea was based on the Odyssey ''Table Tennis'' game. Alcorn soon developed ''[[Pong]]'' (1972), which Bushnell recognized as a potential hit, and it became the company's first game. ''Pong'' was very successful, and in turn helped drive sales of the Odyssey; Baer noted that customers bought the console because of ''Table Tennis'', in turn because of ''Pong'', and joked that they may as well have stopped designing games after that game card. In April 1974, however, Magnavox sued Atari along with several competitors, including Allied Leisure, [[Midway Games|Bally Midway]], and arcade distributor Empire, for infringing on its patents for video games played on a television screen.<ref name="Replay70s"/><ref name="TCW327329"/> Two more lawsuits joined it by 1975, against [[Sears]], Nutting, [[WMS Industries|Williams Electronics]], and others.<ref name="TCW327329"/> Baer later stated that the lawsuits were not filed right away because Magnavox and Sanders needed to wait until they could expect to be awarded more money than it would cost to pursue the suits.<ref name="DHGF"/> The root of the conflict was a set of patents by Baer and the development team—particularly a pair which described how the Odyssey showed player-controlled objects, or dots, on a video monitor and described a number of games that could be played with the system, with one patent by Baer and one by Rusch.<ref name="Patent1"/><ref name="Patent2"/>

The judge, John Grady, ruled in early 1977 that Baer's patent for the Odyssey constituted "the pioneering patent of the video game art", held the defendants' games as infringing, and set a precedent that any video game where a machine-controlled visual element hit and bounced off a player-controlled element violated Rusch's patent. At the time of judgement, only [[Seeburg Corporation]] and Chicago Dynamic Industries—though bankrupt—remained out of the defendants of the initial three lawsuits, with all other companies having settled out of court.<ref name="TCW327329"/> Atari's settlement, made in June 1976, granted it a license in exchange for {{USD|1.5}}&nbsp;million  (equivalent to ${{Inflation|US|1.5|1973|r=1}}&nbsp;million) and access granted to Magnavox to all technology produced by Atari from June 1976 to June 1977; other defendants paid higher penalties.<ref name="Replay70s"/><ref name="Baerinvasion"/><ref name="AtariInc204"/> Over the next twenty years, Sanders and Magnavox sued several other companies over the issue, focusing on "[[paddle (game controller)|paddle-and-ball]]" type games like ''Pong'' and ''Table Tennis'' that more clearly violated the patent; the final lawsuits ended in the mid-1990s.<ref name="BaerHow"/><ref name="DHGF"/> Defendants included Coleco, [[Mattel]], [[Seeburg Corporation|Seeburg]], and [[Activision]]; Sanders and Magnavox won or settled every lawsuit.<ref name="BaerHow"/><ref name="NYT1"/><ref name="NYT2"/> Many of the defendants unsuccessfully attempted to claim that the patents only applied to the specific hardware implementations that Baer had used, or that they were invalidated by prior computer or electronic games.<ref name="BTC234237"/> In 1985, [[Nintendo]] sued in an effort to invalidate the patents, claiming as prior art the 1958 ''[[Tennis for Two]]'' game built by [[William Higinbotham]]. The court, however, ruled that the [[oscilloscope]]-based game did not use video signals and therefore did not qualify as a video game, and ruled again in favor of Magnavox and Sanders.<ref name="DS"/> Magnavox won more than {{USD|100}}&nbsp;million in the various lawsuits and settlements involving the Odyssey related patents before they expired in the early 1990s.<ref name="NPR"/>