Nowadays, it seems like consoles are being hacked almost as soon as they’re launched. Only a bit more than a year removed from the debut of the Xbox 360, and people are already flashing the system’s BIOS in order to play burned DVDs. The Wii, only about ninety days old, is already close to getting a mod chip. Yes, for all the work and research hardware manufacturers invest into a platform, it’s almost like they’re fighting a lost cause.
The ironic thing is that this is not a new battle. While reverse engineering has long been a common practice on computers, console makers since the mid ’80s have always sought to keep their platforms closed in order to protect their licensing profits. Even so, consoles have been the subject of hacking and reverse engineering for decades, and what we’re seeing today is just the latest in the long war to keep game systems closed to inquisitive — and sometimes unscrupulous — minds. Everything that has happened in this regard for the past fifteen years has its origin in a single court case, one that set a precedent for all future litigation. In turn, this famous legal action was grounded in a long history of attempts by developers to explore and manipulate closed hardware.
According to intellectual property law, reverse engineering is described thusly:
Reverse engineering software is the act of decompiling the executable code of a program in order to understand how it works.
Essentially, it means that a person or company has the legal right to analyze another someone else’s electronic work in order to see what makes it tick, without the their consent or knowledge. It appears to be very cut and dry at first glance, but you have to remember that during the early 1990s, there was no solid legal ground regarding reverse engineering in the gaming industry. Developers climbed a slippery slope every time they tinkered inside a machine without consent, and it would take several high profile incidents to finally define what was accepted and what was not.
Video game companies have been doing this for some time in order to get around the hardware locks placed there by console makers. Applied to video games, it allows a game publisher to release titles for a specific platform, without the need to get an official license from whoever owns the hardware. This might not seem like such a big deal in today’s market of small companies releasing games for the PC and other formats, but twenty years ago, it was not an accepted practice by the major hardware companies.
An Earlier Case Sets the Stage
In order to appreciate the full magnitude of the fallout from Sega’s case, we must look back a bit further, to a case involving the other big console makers of the ’80s: Atari and Nintendo. The former had been the biggest name in gaming during the late ’70s, and the latter was the new kid that had succeeded the throne and revived a console industry that was in tatters. Unlike its predecessor, Nintendo had no intention of following in Atari’s footsteps about how to handle developers. NOA president Monoru Arakawa summed it up thusly:
We were very concerned about the quality of the games. If we didn’t come up with good quality from our associates, we thought that we might go like Atari. So we really had to be strict with our quality screening system.
After the crash of 1983, the video game market had yet to proven itself as a viable long-term industry. At its commercial height, it had been rife with software that was horrible, since there were no parameters established to gauge the quality of what was being produced. To maintain a certain standard among publishers, Nintendo enacted specific criteria that had to be met in order for games to be released on its popular NES. Nintendo was eager to avoid having its popular new console suffer the same fate as the Atari VCS (or 2600), and it required all prospective publishers to sign a licensing agreement. To call this compact strict would be a massive understatement. Each licensee had to agree to several terms that basically gave a de facto monopoly to Nintendo. Some of the more brutal terms were:
- Nintendo had final approval over a publisher’s games, packaging, artwork, and commercials. Simply put, Nintendo had the last word over every aspect of the game creation process, and controlled everything from what a game’s box looked like to how it was advertised.
- Nintendo made a profit from the sale of every 3rd party game. Approximately $5 of the sale price from every title released made its way to Nintendo’s coffers.
- Nintendo had the right to reject a game or part of it. Even if the overall title was accepted, Nintendo could step in and censor it or order a particular part of it eliminated entirely.
- Licensees had to order at least ten thousand cartridges. Since Nintendo controlled the manufacturer of actual game carts, it had the right to determine how many each publisher got. With a minimum order of 10k, at a cost of between $9 and $14 per cartridge, Nintendo was guaranteed to make a killing on each third party game, even if it was a failure.
- Nintendo reserved the right to sell as many cartridges to publishers as it chose. Say your company was working on what was to be a sure hit. You’d want to up the minimum order of ten thousand cartridges, right? You could, if Nintendo allowed you to. It regularly played favorites among licensees (as evidenced by Namco’s first sweetheart contract) and could snub those publishers it didn’t favor by denying them the requested allotment of cartridges.
- Licensees could only release up to five games per year. If a publisher wanted to release more, it had to negotiate for a separate contract through a subsidiary (like Konami’s Ultra line and Acclaim’s LJN brand).
- All releases came with two-year NES exclusivity. This effectively meant that all games appearing on the NES could not be released anywhere else. Moreover, they couldn’t be released outside of the U.S. and Canada.
By 1986, Nintendo was feeling pretty confident about its ability to keep publishers in check, and it assured gamers and the press that no unauthorized games would make their way to the NES. So confident was it that former NOA Director of Sales Bruce Donaldson told the Financial News Network that his company’s security system would ensure Nintendo’s success would last longer than Atari’s had.
Very important to the Nintendo Entertainment System, at this point in time [is that] it cannot be what we refer to as “reverse engineered.” Nobody can buy a unit, from an engineering standpoint, take it into [his] factory, and figure out how to make software. There are security codes built into our entire system.
Unfortunately for Nintendo, Donaldson was quite wrong. British software house Rare had had successfully reverse engineered the Japanese version of the NES, the Famicom, back in 1984, and another developer, Sculptured Software, had also done so, enabling it to create and sell its own type of game authoring equipment. Ironically though, the company that would cause the most trouble for the House that Mario Built bore the name of the one that had preceded it. Atari was about to come back for another round.
Namesake aside, this wasn’t the same Atari by any means. After Nolan Bushnell had sold the company to Warner Communications, it had been divided, and parts were sold off to Namco and Commodore head Jack Tramiel. Namco resold its portion to a former employee, Hideyuki Nakajima, who was backed by other employees and Time Warner. This repackaged Atari created a subsidiary called Tengen for its NES work (a term from the Japanese game “Go”) and had the rights to the brand’s entire catalogue of arcade hits. Nakajima insisted that Nintendo grant his company special privileges, namely the waiving of the five games per year and exclusivity clauses. Nintendo refused, and Tengen reluctantly became an official licensee in December of 1987.
Unbeknownst to Nintendo, however, Atari had been secretly tinkering with the NES hardware to find a way around its security system for almost an entire year before it signed on as an official licensee. It illegally obtained through the Copyright Office a reproduction of the NES security system protocol, called “10NES programming,” which detected unlicensed software and locked it out. Atari’s lawyers signed a false affidavit that said the protocol was needed for an infringement suit that Nintendo had allegedly filed against them. The claim was false, and it would come back to bite Atari later on.
Supposedly, Nakajima’s engineers had been very close to cracking the 10NES code on their own, and the whole process was now adversely affected by the introduction of the illegal code. When Atari later sued Nintendo for monopolistic practices, it found itself counter sued for several things, among them patent infringement and breach of contract. Nintendo also sent letters to retailers telling them not to sell Tengen games.
During the court battle, both companies fired off at each other, with Atari arguing that the data stream created by the authentication chips in the NES were not protected by copyright. It also claimed that the use of the security chips themselves were an unfair practice that gave Nintendo an advantage in the market no other publisher had. If Atari didn’t work around the chips, it couldn’t compete.
Nintendo, on the other hand, shot back by saying that there was more than one way around the 10NES programming protocol, which meant that Atari’s illegal action had not been necessary. It also revealed that the code used in Atari’s reverse engineering wasn’t essential to making the games actually work on the NES. In other words, Atari had copied code that wasn’t needed to make its games run. By making this case, Nintendo was essentially admitting that it was possible to circumvent its own security chips and make unlicensed games work on the NES. Other companies, like Color Dreams, would benefit from the information obtained in the Atari case, and then take this practice to the Genesis later on.
Reverse Engineering the Genesis
By the end of the first year of the Genesis’ life span, it had already been reverse engineered by two companies, Electronic Arts and Accolade, the former believing that Sega’s new console would be an ideal platform for its games, since the 16-bit 68000 processor contained within was the same as its programmers had used on several home computers. This meant that it would be a simple task for Electronic Arts to port its PC games, and original titles would face faster development time due to familiarity with the hardware. Company president Trip Hawkins was well aware of the security chip issues that had brought so much controversy to the NES, and he decided to wait and see if the lockout-free Mega Drive architecture would undergo any revisions when brought to the U.S. When the Genesis was released in 1989 virtually identical to its Japanese counterpart, Hawkins saw his opportunity to develop for it.
Electronic Arts set out to reverse engineer the Genesis by starting a “clean-room project.” In this environment, software engineers avoid directly examining the software that is emulated, through the use of test programs and published specifications. Though this method, the engineers are prevented from using any part of the emulated code in the software they are creating. Electronic Arts’ use of the clean room method was a direct contrast to what Atari had done to Nintendo (known as “dirty-room engineering”).
Two teams were set up. One examined the actual hardware by taking it apart, while the other documented what was done by writing manuals and creating development tools for use. Neither team had contact with the other, and all communication was done through lawyers, to ensure that no protected information was exchanged. The result was the successful ports of Budokan: the Martial Spirit and Populous.
Before releasing the unlicensed pair, Hawkins felt he should at least give Sega a chance to offer him a license. If he didn’t like the terms, he could always release his games independently. He approached them in June of 1990 and laid out his plan: offer Electronic Arts a fair licensing deal or it would go ahead and release its games anyway. Sega management was initially enraged that Hawkins had reverse engineered the Genesis, and threatened to sue, but eventually it backed off, figuring that it would be better to have Electronic Arts as an ally rather than an enemy. This was a smart move, as third part support would be crucial to the long-term success of the Genesis. Sega offered Hawkins a sweet deal: Electronic Arts could release as many titles as it wanted and approve them itself, and it had control over manufacturing. Additionally, the licensing rates were lower than what Nintendo was offering. Hawkins explains what happened:
They huffed and puffed and said they would blow my house down. When intimidation did not work, we got down to brass tacks and they accepted that I was committed to going to market with or without a license. They became much more reasonable after that because they were afraid I would hurt their third party program by licensing my information to competitors.
Budokan and Populous were released that month, and Zany Golf followed in the fall. Since Electronic Arts had approached Sega before any of the major publishers, it was able to secure a very fair licensing deal. It would be years before the other major players signed on, giving the company a 16-bit market that only had to be shared with Sega itself. Electronic Arts eventually went on to become one of the biggest publishers of the era, in great part due to this head start.
Sega vs. Accolade
As a direct result of Electronic Arts having reverse engineered the Genesis hardware, Sega revised the console in 1991 and implemented a lock out chip of its own. The new Trademark Security System (TMSS) was essentially a simplified version of Nintendo’s 10NES programming protocol, as Sega felt that there was no need to come up with a new code from scratch. The TMSS was basically a code burned into the Genesis boot ROM that looked for a header code found in every game. The code would look for certain characteristics that would identify the game as legitimately licensed. Failure to find the header code would result in a failure to boot up the game, but a successful boot would produce the message “PRODUCED BY OR UNDER LICENSE FROM SEGA ENTERPRISES LTD.” for the first few seconds before the game began.
Both the TMSS and the header code were copyrighted by Sega, and the TMSS generated a trademark display every time the console was activated (the Sega name seen every time a game is booted). For that reason, any publisher that produced an unlicensed game that activated the TMSS was in violation of both trademark and copyright law. If the game managed to boot without activating it, then no violation had occurred. Some early Electronic Arts titles (specifically those produced between 1989 and 1990) don’t work with later Genesis models due to TMSS implementation. Newer versions of those games that sold well were issued, but there are still a few less popular ones that will not work with a console variant released after 1991.
At the same time that Electronic Arts was reverse engineering the Genesis, another company was hard at work doing the same thing. Accolade, a company founded in 1984 by developers who had fled Atari to found Activision, was also making games for personal computers. It knew that it would be simple to port its Commodore Amiga titles to the Genesis, due to the similar hardware. Accolade approached Sega for a licensing contract but found the terms too strict for its liking. Instead, a team of engineers led by Mark Lorenzen purchased a Genesis and three licensed games, then dumped their codes for analysis. They connected the Genesis to a decompiler and made printouts of the source code. Then, they looked for similarities in the codes for all three games and documented their findings in a sort of “development manual.” According to Lorenzen and company, the manual contained only functional descriptions of the interface requirements without including any of Sega’s original code.
A subsidiary, Ballistix, was then created to market the new games.
Sega had no intention of once again being put in the same awkward position Electronic Arts had placed it, and it took steps to keep Accolade from making its games compatible with the Genesis. The TMSS was introduced at the 1991 Consumer Electronics Show and caught Accolade completely off guard. Sega brazenly demonstrated the effectiveness of the lock out by using a copy of Accolade’s own Ishido: Way of the Stone, right in front of its representatives. Having no other alternative (five games were already in development), Accolade procured a revised Genesis and more games and set about analyzing how the TMSS worked. All of the five games functioned except for Onslaught (Sega itself tested them), but Accolade had made one glaring mistake: all of its functioning games activated the TMSS on boot up.
On October 31, 1991, Sega took Accolade to court for trademark infringement and unfair competition. A month later it added one count of copyright violation. Sega contended that although its code was not present in Accolade’s games, the code had to have been copied to be documented, and this constituted an infringement of copyright. Moreover, it argued that the appearance of its logo at boot up could confuse consumers into believing that the game was an official product. Accolade counter sued, stating that its actions were protected under the terms of fair use. Sega won on all counts, forcing Accolade to cease production of any unreleased games and recall those in stores within ten days. The decision was appealed, and Accolade was allowed to at least keep its finished and released games on store shelves. Moreover, the 9th Circuit Court of Appeals found that Accolade’s reverse engineering efforts were indeed valid, since none of the original code used by Sega was found in the unlicensed games, and that copying the code was the only way to understand its functions. According to Judge
Stephen Reinhardt, Accolade was forced to disassemble the code in order to discover how it worked. Furthermore, as the console and games used in the process had been purchased legitimately, no law was broken. Even worse for Sega, the court ruled that since it had been Sega who had created the TMSS and was responsible for the fact that there was no way to boot a game without triggering the logo screen, Accolade had no liability for any violation of trademark.
The resulting decision set a precedent for reverse engineering that sent waves throughout the game industry. It established the right of software developer’s to make as many copies for reverse engineering of a program that was legitimately obtained, so long as none of the original code was present in the final product. In the end, Accolade settled and was accepted a licensing agreement that forced it to produce five Genesis games for every one produced on another platform. This would ensure that the company would cease in its unlicensed efforts, and that Sega would profit from the sales of Accolade’s licensed titles. Unfortunately for Sega, most of the games released by Accolade after the license was granted weren’t particularly good, and most gave the impression that the publisher was merely trying to meet its contractual obligations rather than produce a quality product.
No Longer A Shady Practice
While Accolade was not the first company to reverse engineer the Genesis, and the suit against it was not the first case to go to court over unlicensed games, the result of this particular litigation set a standard that is still used today. As with just about everything dealing with the “unofficial” side of video games, people are found both for and against whether or not a person or company has the right to profit in some form from a game console without being in the good graces of the company that manufactures it.
Other companies have benefited from the process of reverse engineering, and a few have even made it their standard business practice. Wisdom Tree (Color Dreams on the NES) is one such company. When the Genesis reached a user base of around fifteen million units, Wisdom Tree began to reverse engineer the console. The large amount of systems available reduced the risk of a particular game failing and spared the cost of a licensing agreement. Such measures contributed to the company surviving the transition to 3D by switching to computer games in an era when other larger companies failed. Sega most likely never went after Wisdom Tree due to possible negative publicity of attacking a religious-based group that sought to educate gamers about the Bible and Christianity, and after releasing over forty different titles on several consoles (its Genesis offerings were just ports of the NES releases), Brenda Huff’s outfit is still going strong.
The practice of reverse engineering in not as highly publicized as it used to be, which is strange considering how difficult it is for smaller companies to stay afloat in the industry today. Perhaps it has something to do with the increasing availability of platforms that seem tailor-made for such businesses, like mobile phones and services like Xbox Live Arcade, as well as the warmer reception among platform makers towards publishers. Regardless, it’s unlikely that reverse engineering will ever disappear, so long as there are closed platforms to be tinkered with and manufacturers require a license for games to be released on them. After so many years, it’s interesting to note that the Genesis was the console that made it big news and set a legal precedent for companies to follow.
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