Meanwhile, Hadl learned that Tiger Electronics had licensed King Kong for a handheld game. A week later, he signed an agreement that stated that Universal would not sue Coleco as long as Coleco paid royalties. On May 5, Greenberg agreed to pay Universal royalties of 3% of Donkey Kong 's net sale price, amounting to six million units and worth about $4.6 million.
The next day, Universal telexed Coleco and Nintendo giving them 48 hours to cease marketing Donkey Kong, to dispose of all Donkey Kong inventory, and to hand over all records of profits made from the game. Instead, Universal admonished Greenberg for copyright infringement and threatened to sue if the ColecoVision shipped with Donkey Kong as planned. Sheinberg scheduled a meeting with Coleco president Arnold Greenberg on April 27, 1982, ostensibly to discuss possible investment in Coleco. Sheinberg also learned of a licensing agreement between Nintendo and Coleco, a producer of home video game consoles. Hadl's analysis was that Donkey Kong 's storyline was based on that of King Kong and was thus an infringement of Universal's rights to that film's characters and scenario. In April, he learned of the success of Nintendo's Donkey Kong video game and sent Robert Hadl, vice president of legislative matters, to investigate. In 1982, Sid Sheinberg, the president of MCA and Universal City Studios and a seasoned attorney, was trying to find a way to get his company into the booming video game market. The case established Nintendo as a major player in the industry and arguably gave the company the confidence that it could compete with the giants of American media. The case was a major victory for Nintendo, which was still a newcomer to the U.S. Universal appealed the case, but the verdict was upheld.
He further held that there was no possibility for consumers to confuse Nintendo's game and characters with the King Kong films and their characters. Sweet ruled that Universal had acted in bad faith by threatening Nintendo's licensees and that it had no right over the name King Kong or the characters and story. Nintendo argued that Universal had themselves proven that King Kong 's plot and characters were in the public domain in Universal City Studios, Inc. In their complaint, Universal Studios alleged that Nintendo's video game Donkey Kong was a trademark infringement of King Kong, the plot and characters of which Universal claimed as their own. was a 1984 legal case heard by the United States District Court for the Southern District of New York by Judge Robert W. United States District Court for the Southern District of New York