Nintendo of America, Electronic Arts and Sega of America filed a lawsuit in U.S. District Court for the Northern District of California, charging that Yahoo has permitted its users to sell illicit copies of video games and illegal devices used to copy video games. The video game companies offered the possibility that they would ask for an injunction on the sales and for damages of as much as $100,000 per infringement.
"At Yahoo Auctions and Yahoo Stores, sellers have been openly and notoriously trafficking in the sale of counterfeit and unpublished video games and illegal devices," the companies charged in their complaint. "Some of the video games and/or hardware listed for sale on Yahoo's sites are authentic, including--just as in any flea market--people selling used game consoles, controllers, and games. On any day, however, Yahoo's sites offer for sale scores of illegal products."
A Yahoo representative declined to comment on the lawsuit, saying Yahoo had not seen it yet.
The lawsuit comes as the traffic and sales of pirated software and music face increasing scrutiny.
In December, the Recording Industry Association of America sued Napster, charging the start-up company with copyright infringement because people using Napster have traded pirated copies of music through its network.
Last fall, eBay bowed to pressure from software manufacturers and banned the sale of software and music on recordable compact discs and backup software packages to stem illicit sales. The move followed a survey by the Software & Information Industry Association (SIIA) that indicated that 60 percent of the software titles on eBay, Excite Auctions and ZDNet auctions were pirated.
And last spring, Novell sued a Texas company for allegedly selling pirated copies of Novell's NetWare software on eBay. At about the same time, Microsoft began scanning online auction sites for pirated software.
The video game companies have alleged that Yahoo refused to take down the illegal auctions despite being notified of them and despite having technology that would have allowed it to police the auctions. Additionally, the companies charged that Yahoo profits from the sales both through selling ads on its auction pages and charging auction sellers to prominently display their auctions.
While Yahoo has yet to respond to the lawsuit, those points could be damaging to the company, said attorney Rich Gray of Outside General Counsel of Silicon Valley.
"The plaintiffs here generally have a strong case against Yahoo," Gray said.