A federal judge in Alexandria yesterday denied a preliminary injunction sought by Parker Brothers, a games manufacturer, against Atari in a battle over exclusive distributorships in the volatile computer games software industry.
District Judge Albert V. Bryan Jr. also dissolved a temporary restraining order won on Monday by Parker Brothers, a subsidiary of General Mills Inc., which claimed it has suffered $15 million in lost orders as a result of Atari's efforts to reorganize its nationwide distribution system.
"A market freeze would not foster competition, which is the goal of the antitrust statutes," Bryan said.
The judge's decision left Atari, a giant of the computer games software industry and a subsidiary of Warner Communications Inc., free for now to pursue attempts to sign exclusive contracts with some 40 games wholesalers across the country--a move Parker Brothers said would cause irreparable harm to its own marketing efforts.
Lawyers for Atari, the Sunnyvale, Calif., firm that created the game software industry about six years ago, argued yesterday that the reorganization was essential to protect its own declining market position, brought on by the success of such Parker Brothers hits as Star Wars and Frogger.
In court papers filed Thursday, Atari said Parker Brothers, which entered the field only last March, immediately won a 4 to 5 percent market share. At the same time, Atari said its position shrank from 65 percent to less than 40 percent.
"It is not harm in any meaningful sense to require a competitor to go to work," argued Atari lawyer M. Laurence Popofsky. "That's the sort of harm that is the definition of competition. If that is harm, I say 'good.' "
"I don't know if your honor's seen Frogger," Popofsky added with a side glance at Parker Brothers attorney Ralph J. Savarese. "It's not as much fun as Monopoly," the longtime game staple manufactured by Parker.
"I think I probably have," Bryan said drily as courtroom spectators laughed.
Popofsky argued that there are hundreds of distributors Parker Brothers still can go to "if they want to take the time and the money." But, he said, "They can no longer hitch their wagon to the Atari star."
In its court papers, Parker Brothers contended that Atari offered exclusive contracts to 26 of Parker Brothers' largest wholesale distributors on condition that they stop selling any other game software product line.