Do Not Pass Go
As Originally Published in Inc. Magazine
Do Not Pass Go
Dual deck VCR manufacturer sues Japan Inc. for blocking access to parts.
From: Inc., Nov 1988 | By: Hal Plotkin
The case of Go Video versus Japan Inc. and the Hollywood moguls probably won’t go to trial until spring, but already the small Scottsdale, Ariz., company is pushing forward with plans to manufacture its patented dual-deck videocassette recorder in the United States. “We could be the last hope for the domestic consumer electronics industry,” says founder and CEO R. Terren Dunlap rather grandly. Then again, he may just be right.
It’s a story that seems made for TV — or at least for home video. Founded in 1983, Go Video Inc. had been repeatedly thwarted in its attempts to get parts for its product. Dunlap believed he was the victim of a conspiracy aimed at preventing anyone from making a videocassette recorder capable of duplicating videotapes. This was not mere paranoia. In a press release, the Electronic Industry Association of Japan had stated quite clearly that its members would neither build nor supply parts for dual-deck VCRs. The association’s purpose at the time was to mute the American entertainment industry’s opposition to VCRs. What everyone overlooked was the dubious legality of such an agreement under U.S. law.
With this evidence in hand, Go Video brought an antitrust suit against 25 top Japanese VCR makers and American entertainment companies in June 1987. By late last summer, five of the defendants — including Mitsubishi, Akai, and Toshiba — had settled, agreeing to provide Go Video with unrestricted access to at least some suppliers of the needed parts.
So now Dunlap is exploring production options. Zenith turned down a proposal to manufacture the machines domestically. He says one executive asked him, “What price heroism?” Another possibility: a joint venture with Mitsubishi, to which Go Video granted limited first rights of manufacturing refusal in exchange for the lifting of the parts embargo.