Pong was the first video game to enter the consumer market -- and once it was popular, companies were falling over themselves to make Pong machines. The Magnavox Odyssey was released in North America in September 1972 -- and it was developed by a small team called Sanders Associates, which was led by Ralph Baer.
Little did they know that they were soon going to find themselves in the middle of a lawsuit. Their product had been on display at the LA Airport Marina – which Baer believed happened on May 26, 1972, according to an interview with GamerDad. Allegedly attending the display was rival developer Nolan Bushnell (though this was later denied). He had previously created Computer Space -- but unlike Pong, this game didn’t take off. Bushnell had recently started his own company, Atari, and Pong would be its first game.
The Atari version of Pong was a commercial success, and coincidentally helped sales of the Magnavox Odyssey. In 1974, Baer had enough and decided to raise a lawsuit against Bushnell for copying the design of the Magnavox Odyssey. The judge decided that Atari did copy the Magnavox Odyssey’s design, and the case was settled out of court in 1976.
As the games industry was fairly new, the judge’s ruling was interesting. Essentially it hinged on patent drawings, which show a machine similar to the final Magnavox Odyssey connected to the TV. This meant that in essence, this case was no different to a patent case for any tangible product.