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FBI Cracks Down on Piracy of Obsolete Game

Alien54 wrote to mention a story detailing an FBI crackdown on pirated...NES games. From the article: "More than 60,000 pirated copies of Nintendo game consoles were seized Wednesday during raids in New York and New Jersey, prosecutors announced. Four people were arrested in the crackdown on the theft of popular games such as "Donkey Kong," "Mario Brothers," "Duck Hunt," "Baseball" and others, according to a release by federal authorities and papers filed in U.S. District Court in Manhattan. Nintendo told the FBI that individuals and companies copy the video games and sell the pirated versions throughout the world, costing the company millions of dollars in lost revenue annually, according to the complaint."

40 of 191 comments (clear)

  1. Do nentendo still sell the games? by richy486 · · Score: 3, Interesting

    Do nentendo still sell the old games?

  2. Really? by ReverendRyan · · Score: 5, Interesting
    copy the video games and sell the pirated versions throughout the world, costing the company millions of dollars in lost revenue annually
    Then I should be able to go buy an NES and Super Mario Brothers from Nintendo, no?
    1. Re:Really? by happymedium · · Score: 4, Insightful

      The so-called "millions of dollars in lost revenue" actually come from remakes and compilations of these old games for the GBA/SP/what-have-you.

    2. Re:Really? by MilenCent · · Score: 2, Informative

      Not an NES, or at least not easily... but you CAN get Super Mario Bros., in a version very close to the original, for the Gameboy Advance.

    3. Re:Really? by Apreche · · Score: 5, Interesting

      No, but you can buy a GBA, SP or DS and the re-released version of Super Mario Brothers. Duck Hunt however is another story.

      I always thought that Nintendo and other old game companies should just make an emulator, and give it away for free. Then sell ROM downloads for like 50 cents each. They would make a killing and their claims against pirates like these would actually have some more meaning. This is yet anothe reason we need IP reform. If you aren't currently making money from that IP you shouldn't be able to claim damages if someone else does. That will provide the most benefit to society by legally providing a supply of goods which are in demand. As it stands there is a demand for goods that IP holders refuse to produce, that is not good for people.

      --
      The GeekNights podcast is going strong. Listen!
    4. Re:Really? by Gothic_Walrus · · Score: 4, Insightful
      For the record, there's an even better version of Super Mario Brothers for the Game Boy Color. Screen ratio is a bit off, but it came loaded with extras, including The Lost Levels.

      Since everyone else has mentioned the GBA port, I just thought I'd point out that there's another way to get it too, even though it's not in production anymore.

      Come to think of it, there's Super Mario Brothers All-Stars for the SNES, and that includes SMB as well.

      And if I'm not mistaken, there's a version of it in Animal Crossing for the GameCube.

      The point that I wasn't planning on making when I started this post: Nintendo is still making money off of the game, by rereleasing it on occasion. If someone has a pirated copy and doesn't buy a rerelease because of that, Nintendo has lost revenue.

      --
      Goo goo g'joob.
    5. Re:Really? by BlueHands · · Score: 2, Insightful

      One could argue that the length of time could be based on what is given to the public. What public interest does is there in someone being a dick and withholding what he has prevously released? I realize that the creator might not like it the funny thing is that copyright is for the public not the creator.

      Or perhaps after a certain time frame there could be a very low cost compulury license so that the creators dont get a say it what happens after a certain point but still get money. There is alot that could be done other then just changing the length.

      none of it will happen any time soon but these are nice thoughts while we wait for the IP and Copyright to crumble away....

      --
      I mod everyone down who says "I'll get modded down for this." I hate to disappoint.
    6. Re:Really? by King+Fuckstain · · Score: 2, Interesting
      "the funny thing is that copyright is for the public not the creator."
      Huh? Copyright exists to protect the rights of the individual. Just because you state something does not make it true or even a valid argument.

      "What public interest does is there in someone being a dick and withholding what he has prevously released?"
      A person is a "dick" for retaining their property? There's an interesting thought. Seems like Lenin would be right behind you on that one. Honestly, Nintendo doesn't want their Mario property dilutted because they still make money off of it. They're not being "dicks", they're just making smart business moves. I think it is childish to label someone a "dick" because they are taking advantage of the laws that exist. Perhaps the laws need to change, perhaps not. But playing by the rules currently in place doesn't make someone a dick. Do you hold any copyrights? Perhaps if you did, you might realize that you're not exactly seeing this issue clearly.
      --
      Update For for the dupe. Not going well. Appreciate all the hate mail. Really encourages improvement.
    7. Re:Really? by Meagermanx · · Score: 4, Funny

      *Deletes NES rom collection*

    8. Re:Really? by Waffle+Iron · · Score: 5, Informative
      Copyright exists to protect the rights of the individual.

      False:

      The Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries
      The US Constitution specifically states that copyrights are to promote progress; it does not mention any protecting any rights of individuals. In fact, it is explaining why it is allowing congress to take away rights that individuals would otherwise have over their own physical property just because it happens to have information fixed on it that came from somewhere else.

      Any rights that copyright gives to the creator at the expense of others is a windfall side-effect for the creator. The primary goal as stated in the clause is basically economic stimulus. These rights are a means to an end, not an end in themselves.

      Just because you state something does not make it true or even a valid argument.

      True, as you've just demonstrated.

    9. Re:Really? by Facekhan · · Score: 3, Insightful

      If you are truly buying a licensed copy of a copyrighted work and not just the media itself then by all right the consumers should be able to force Nintendo and Music CD companies and software companies to provide replacement copies of works that were sent on defective/degraded/stolen media forever.

      When that happens I will no longer insist on my right to backup copies of media I buy and I will no longer download those albums that I have had stolen/lost/wrecked cd, old cartridge that won't work etc.

    10. Re:Really? by m50d · · Score: 3, Insightful

      You've fallen for the "intelletcual property is property" argument. No it's not. There is no entitlement to copyright on your work. The US grants you copyright, a government monopoly, but only for a limited time, and can take it back any time it wants. The federal government is only permitted to impose copyrights "to promote the progress of science and the useful arts". No protection of the individual there. If copyrights aren't doing that, they're unconstitutional.

      --
      I am trolling
    11. Re:Really? by m50d · · Score: 3, Insightful

      They should lose the rights if it's not available to buy. Copyright encourages people to produce things because they're guaranteed royalties on them. That's the idea, that's the entire purpose of copyright. If the copyrighted thing is "out of print", copyright isn't encouraging things to be produced. Copyright should lapse if the product is not available at a reasonable price for 5 years or so.

      --
      I am trolling
    12. Re:Really? by Alsee · · Score: 4, Informative

      Great post. I just wanted to help out with a couple of Supreme Court rulings on the subject:

      Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994)
      We have often recognized the monopoly privileges [of copyright] that Congress has authorized, while 'intended to motivate the creative activity of authors and inventors by the provision of a special reward,' are limited in nature and must ultimately serve the public good.

      Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)
      The limited scope of the copyright holder's statutory monopoly . . . reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an 'author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.

      Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991)
      The primary objective of copyright is not to reward the labor of authors, but '[t]o promote the Progress of Science and useful Arts.' To this end, copyright assures authors the right to their original expression, encourages others to build freely upon the ideas and information conveyed by a work.

      Fox Film Corp. v. Doyal, 286 U.S. 123, 127
      The sole interest of the United States and the primary object in conferring the monopoly,' this Court has said, `lie in the general benefits derived by the public from the labors of authors.'

      and I really like this item...
      H. R. Rep. No. 2222, 60th Cong., 2d Sess., 7 (1909)
      The enactment of copyright legislation by Congress under the terms of the Constitution is not based upon any natural right that the author has in his writings, . . . but upon the ground that the welfare of the public will be served and progress of science and useful arts will be promoted by securing to authors for limited periods the exclusive rights to their writings. . . .
      In enacting a copyright law Congress must consider . . . two questions: First, how much will the legislation stimulate the producer and so benefit the public; and, second, how much will the monopoly granted be detrimental to the public? The granting of such exclusive rights, under the proper terms and conditions, confers a benefit upon the public that outweighs the evils of the temporary monopoly.


      All putting copyright on a proper legal footing and thoroughly smashing the flawed 'natural property' model.

      -

      --
      - - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.
  3. How do they calculate? by jsimon12 · · Score: 4, Insightful

    How do they figure out how much selling games that aren't sold any more is costing companies? If Nintendo was still selling say "Solar Jetman" or "Duckhunt" for the NES then I would understand it could cut into their bottom line. But seeing as they don't how is this calculated?

    1. Re:How do they calculate? by NanoGator · · Score: 2, Insightful

      "But seeing as they don't how is this calculated?"

      $50 x Inflated estimate of the number of copies 'pirated'.

      --
      "Derp de derp."
  4. How ridiculous. by DeanMeister · · Score: 3, Funny

    Next we'll be arresting people for making flash animations of copywrited material with really bad translations. Psh. So how much does a NES game go for these days? Buck and a quarter? Buck Fifty? Thank god the man put these criminals at bay. All your base.

    --
    Society never gets more or less violent, the definition of violent just keeps changing.
  5. Crappy consoles. by Pentomino · · Score: 5, Interesting

    I think the biggest impact these consoles are having is not in revenue, but in brand damage, as is the case with most counterfeit products.

    The games are all there, but often the titles or copyright notices are removed, or the graphics are askew, the little built-in light gun doesn't work, or the sound is off for some reason. The controllers are badly designed, such that you don't know which button is Start, which is Jump, and what the deal is with the turbo buttons.

    I do think Nintendo is missing the opportunity to sell consoles like this themselves. But it seems they'd rather sell us old NES games for $20 each on the Game Boy Advance.

    1. Re:Crappy consoles. by aztektum · · Score: 2, Interesting

      They do sell a controller packed with games on a ROM chip, just not in the US. I think it's in China and Korea if I remember correctly. Google for Nintendo iQue. Last time I was at the site, Lik Sang carried them.

      --
      :: aztek ::
      No sig for you!!
  6. The tragedy of copyright by QuantumG · · Score: 4, Insightful

    If you had to pay a yearly fee to maintain your copyright this kind of crap wouldn't happen. As soon as a game/book/movie/whatever is no longer being sold it should pass into the public domain. Not that the public domain will exist in 5 years.

    --
    How we know is more important than what we know.
    1. Re:The tragedy of copyright by QuantumG · · Score: 4, Insightful

      Worse yet is the fact that there's no registration of copyright works, so if you find some old game that you think is great and would like to distribute it you have no idea who you have to contact to get permission. I recently ran into this problem with a game called Flashback. There's an interesting open source project which can read the original content of this game and present it on Windows/Linux/Mac etc instead of just DOS (and I think some old consoles too). This was a game I played when I was a kid and really enjoyed and I think the casual game players of today would like to play it too. Unfortunately the company that wrote the game is no longer around and I have no idea how to track down who actually owns the copyright. Of course, there is one way: I could just distribute the game and wait for them to sue me. But by then asking for permission would be a bit too late.

      --
      How we know is more important than what we know.
    2. Re:The tragedy of copyright by QuantumG · · Score: 3, Insightful

      No, what I'm saying is that if you want the protection of the US government and, as this story shows, the FBI, you should have to pay for it. It hardly makes sense that the majority of people, who don't make works for which they want copyright protection, should have to pay for the minority of people who do.

      --
      How we know is more important than what we know.
  7. Not obsolete... by nuxx · · Score: 5, Interesting

    They obviously aren't obsolete if they are still selling.

    And also, these are the crappy 1000-in-1 games-in-a-controller things for sale at malls. The problem isn't so much that they cause Nintendo to lose money, but instead diminish Nintendo's brand.

    See, many of the games in these systems are literally hacked ROMs with various sprites replaced, and often the ROMs don't work and simply crash. Since the consumer thinks "this Nintendo sucks", they are less likely to buy a Nintendo product down the line, thinking it'll be similarly crappy.

    Not to mention that the consumer got ripped off in the first place, as these systems tend to be sold for US$60 or so in mall kiosks and are of absolutely piss poor quality which would likely break under moderate use.

    1. Re:Not obsolete... by Geoffreyerffoeg · · Score: 2, Informative

      They obviously aren't obsolete if they are still selling.

      Right. I used to be in the abandonware-should-be-public-domain camp until I saw Nintendo rerelease old games, e.g., the SNES Zelda for Game Boy Advance, and many NES games for the E-Reader. Granted, we can talk about the incentive for innovation of a long copyright period, but these works are firmly within their copyright (they're only about 15 years old) and Nintendo has shown that they're definitely not abandoned.

      If anything, we should shorten copyright. Abandonware and other arguments don't apply here.

      Oh, and "lost revenue" can also mean "they misappropriated our IP, started a company, and consumers who would have bought our modern products bought their console running our games." That's as valid as "they didn't buy our games because someone was selling the exact same stuff". You can't legally compete with someone by pirating their software.

    2. Re:Not obsolete... by nuxx · · Score: 2, Interesting

      Well, also, this is completely different from someone like you or I downloading old ROMs to play them. This is some folks profiting off of such copies, and doing so in a manner which can demonstrably damage the reputation of Nintendo.

      I think NOA is completely in the right here... In fact, I've called NOA before to report such items for sale, and ended up in a conversation with one of the employees about how copying old games for personal use is not that bad, but this sort of thing just isn't right.

  8. With all the mighty powers, by RM6f9 · · Score: 3, Insightful

    all the mi-i-i-llions of taxpayer dollars, thousands of person-hours of deep investigative efforts using the latest in 1990s technological know-how and tools, our beloved Homeland Security leaders bring us ... NES pirates.
    Nice try, people, but there're things you're *not* telling us and cases you're *not* showing us that keep some of us fearful - not respectful, given the above, but fearful.
    Controlling the media to portray you, our beloved federales, as incompetent clowns is only halfway effective - which half varies depending, and I'm afraid of clowns.

    --
    Take the 90-Day Challenge! http://rwmurker.bodybyvi.com/
  9. Arrrr !! by AtariAmarok · · Score: 4, Funny
    "our beloved Homeland Security leaders bring us ... NES pirates."

    Arrrr! They be only 9 pixels wide, and be made of 3 colors, but arrr, these NES buccaneers have me shaking in me sea-boots!

    --
    Don't blame Durga. I voted for Centauri.
  10. A few points in Nintendos favor by LordZardoz · · Score: 4, Insightful

    1) Nintendo has on occasion re-released old NES games for new platforms, so they are still able to make money off of those titles.

    2) Many 8-bit games have new incarnations, and as far as I know, its a good idea to control the IP in all its incarnations if you dont wish to lose that control.

    3) This is about as blatant a case of piracy as one can name. It was both wholesale and flagrant. And Nintendo went after the source, not the customer.

    This is not anything like the RIAA / MPAA suing individual users.

    END COMMUNICATION

    1. Re:A few points in Nintendos favor by NanoGator · · Score: 3, Insightful

      "This is not anything like the RIAA / MPAA suing individual users."

      You're right. I would also add that Nintendo will definitely want to continue to own the copyright to these titles. If clones or rips are made and sold without permission, Nintendo's basically giving them the green light to keep going. They can't just wait until a big one comes along that uses one of their franchises that are still active.

      --
      "Derp de derp."
  11. Re:Lost Revenue on 20-yr Old Games by NanoGator · · Score: 2, Funny

    "Why would I buy newzeldatitle when I still haven't beat ZeldaII?"

    Maybeifyoupracticedusingthespacebaralittlemoreof te nyou'dbeabletomastertheAandBbuttonswellenoughtobea tthegame.

    --
    "Derp de derp."
  12. Re:Pirated...consoles? by screwballicus · · Score: 3, Interesting

    NES/FC and SNES/SFC clones have been a hot commodity for many years, especially in Asia and Brazil. For a selection of pirated systems, check out this page.

  13. Uhhh... The FBI? by OmgTEHMATRICKS · · Score: 3, Insightful

    Don't these guys have anything better to do? Like tracking down murderers and rapists, for instance?

    1. Re:Uhhh... The FBI? by cpt+kangarooski · · Score: 2, Informative

      It became a criminal matter in 1897. So I'm not sure what you mean by it not having been a criminal matter for very long.

      Still, it is stupid that it is, and I do support making it exclusively civil.

      --
      -- This and all my posts are in the public domain. I am a lawyer. I am not your lawyer, and this is not legal advice.
  14. Official theft vs copyright infringement thread by Anonymous Coward · · Score: 4, Informative

    Four people were arrested in the crackdown on the theft of popular games

    How many times does it have to be explained that copyright infringement is a different offence to theft?

    If somebody put a game up on the Internet where it was downloaded thousands of times, that can cause far more harm than if somebody went into a shop and stole something.

    If somebody copied games that you can no longer buy, it can cause less harm than if somebody went into a shop and stole something.

    Copyright infringement and theft are fundamentally different actions, with different consequences, governed by different laws. Even the Supreme Court has ruled that copyright infringement is not theft (Dowling vs US, 1985).

    There is a perfectly good term to use when somebody copies something illegally. It's "copyright infringement". People who insist upon misusing the term "theft" are only seeking to cause yet more pointless arguments. There is a word for these people too. It's "troll".

    1. Re:Official theft vs copyright infringement thread by Alsee · · Score: 2, Informative

      Even the Supreme Court has ruled that copyright infringement is not theft (Dowling vs US, 1985).

      In case anyone's interested here are the relevant paragraphs, Dowling v. United States, 473 U.S. 207 (1985):

      the Government's theory here would make theft, conversion, or fraud equivalent to wrongful appropriation of statutorily protected rights in copyright. The copyright owner, however, holds no ordinary chattel. A copyright, like other intellectual property, comprises a series of carefully defined and carefully delimited interests to which the law affords correspondingly exact protections. "Section 106 of the Copyright Act confers a bundle of exclusive rights [473 U.S. 207, 217] to the owner of the copyright," which include the rights "to publish, copy, and distribute the author's work." Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 546 -547 (1985). See 17 U.S.C. 106. However, "[t]his protection has never accorded the copyright owner complete control over all possible uses of his work." Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 432 (1984); id., at 462-463 (dissenting opinion). For example, 107 of the Copyright Act "codifies the traditional privilege of other authors to make `fair use' of an earlier writer's work." Harper & Row, supra, at 547. Likewise, 115 grants compulsory licenses in nondramatic musical works. Thus, the property rights of a copyright holder have a character distinct from the possessory interest of the owner of simple "goods, wares, [or] merchandise," for the copyright holder's dominion is subjected to precisely defined limits.

      It follows that interference with copyright does not easily equate with theft, conversion, or fraud. The Copyright Act even employs a separate term of art to define one who misappropriates a copyright: "`Anyone who violates any of the exclusive rights of the copyright owner,' that is, anyone who trespasses into his exclusive domain by using or authorizing the use of the copyrighted work in one of the five ways set forth in the statute, `is an infringer of the copyright.' [17 U.S.C.] 501(a)." Sony Corp., supra, at 433. There is no dispute in this case that Dowling's unauthorized inclusion on his bootleg albums of performances of copyrighted compositions constituted infringement of those copyrights. It is less clear, however, that the taking that occurs when an infringer arrogates the use of another's protected work comfortably fits the terms associated with physical removal employed by 2314. The infringer invades a statutorily defined province guaranteed to the copyright holder alone. But he does not assume physical control over the copyright; nor does he wholly deprive its owner of its use. While one may colloquially link infringement with some general notion of wrongful [473 U.S. 207, 218] appropriation, infringement plainly implicates a more complex set of property interests than does run-of-the-mill theft, conversion, or fraud.


      -

      --
      - - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.
  15. Hold the fucking phone... by PedanticSpellingTrol · · Score: 4, Interesting
    I'm a bit confused here.

    Back in november, when Nintendo asked for your help in tracking down these "N64 controllers" full of hacked roms, everyone thought it was great, lined up at their e-door to help

    Now when they've finally raided the warehouse and put a stop to it, there's nothing but "bitch bitch bitch copyright is teh suck".

    Fuck you guys, I'm going home.

  16. Analogy by Dizzle · · Score: 2, Insightful

    The way I view it it's similar to records -> tapes -> cd's -> ???? -> profit!!!

    Seriously though, Thriller first came out on vinyl. Everything was good. The tape offered portability. Everything was still good. The CD offered portability and sound quality. Still grand. You can buy these games for a song for the original NES, or you can pay 20$ for the portable version that has all the graphics of the original (sometimes improved) and maybe a few extras thrown in here and there. Sounds like a good deal to me.

    The issue is this: some, if not most, of these games are not available for sale any more. I can't go to a store and pick up Double Dragon, for any system. I need to hunt hunt hunt for it. Now Nintendo may want to rerelease these games, they may not, but they can't say that they're currently losing millions of dollars in revenue. These guys have been stopped, I guess sales of old NES carts should start bringing in the big bucks for them again.

    HOWEVER, that being said... these guys were profiting from counterfeit goods, and I'm sure no one can condone that.

    --
    -Dizzle
    "I most likely AM so interested in myself."
  17. Re:These guys wouldn't know theft if... by zappepcs · · Score: 2, Insightful

    Despite the lack of paragraphs, this guy has an extremely good point. Theft and violating copyright law are two different things. In many cases, if not all of them, here in the US, copyright litigation seems to be based on the principles of theft, where the plaintiff pleads that the copyright violation has 'stolen' their profits... or will steal their profits.

    This is nearly the same as say:
    If a drunk kills someone with a car, the family of that person sues the drunk driver not only for the wrongful death of one person, but the expected wages, family (sons and daughters) and other things that the family is now deprived of because of the death of one person in their family, even though there is no way to quantify or verify that these things were lost to the family, or that the family has been deprived of them.

    I think we can all agree that this is not quite the right way to think of things, but this is how copyright litigation works. Sharing out copyrighted information does not involve creating wealth for the violator in the case of sharing movies and music files. There is also no precedent that the people who download those copyrighted works would actually have paid money for them if they were not available for download. Nor is there any solid evidence that the sharing of music and video files has reduced the copyright owners profits in any significant way.
    (If anyone knows of such proof of loss, please tell me where it is)

    Additionally, because the value of the perceived theft is intangible, and can not be quantified, there is no basis for assigning punitive damages based on the number of files shared or any other such measure.

    Copyright litigation coming out of LA la land is monstrous, and a blight on both the legal profession and those instigating the litigation.

    People with morals would find a better way to ensure their profits than try to effect law to prevent anyone from sharing what they have paid for, or trying to prevent anyone from using technology that 'MIGHT' let them share those files with others.

    Sure, copyright violators are wrong, but the current fight against them is bogus, and dangerous in respect of how it bends the intent of both copyright and the law in general. Preventing people from profiting from your work is a good thing, a positive for all of us. Allowing anyone to run rampant and twist the law to punish people just because they might violate copyright law at some time in the future is insane.

    If you violate copyright law, and reap financial reward from the violation, then clearly, this is theft as well as copyright violation.

    The parent is right, its time that we start looking at this issue for what it is.

  18. Wtf? It's supposed to be legal... by Southpaw018 · · Score: 4, Interesting

    An anticircumvention ruling was issued by the Librarian of Congress on 10/28/2003. It protects - for the time being - sites such as ours at videogamemaps.net (my url). The pertinent clause:

    (3) Computer programs and video games distributed in formats that have become obsolete and which require the original media or hardware as a condition of access. A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace.

    Sounds like the FBI straight out fucked up to me.
    http://www.copyright.gov/1201/

    --
    ACs are modded -6. I don't read you, I don't mod you, I don't see you. Don't like it? Don't be a coward.
  19. That's 8*8px and 4 colors by PromANJ · · Score: 2, Informative

    Sorry for being a correction nazi, but the NES tiles are 8*8px and 4 colors. Below is a blurb if you're interested to know more. Else skip.

    I wrote a program that extracts the tile tables from NES roms and thus had to do a bit of reverse engeneering. It seems the tiles are 8*8px and 2 bitplans, which means 4 colors. One of the colors is transparent though, so 3 is sort of correct. A tile only requires 16 bytes of memory (8*8 bits * 2 bitplans).
    The tiles are arranged in 16*16 blocks or banks, and two of those can be kept in memory at the same time, which means that 256x2 tiles can be kept in memory at the same time.

    When you get to a new area, the game will swich banks, and you get new enemies or whatever. The game can also switch palettes so the enemies come in different colors. To further save memory, the tiles can be flipped and stuff, so less angles will have to be drawn. The octorocs on Zelda 1 are just two tiles that are mirrored to make a fully symetrical creature, then there's two different palettes (red & blue).

    This guy knows more than me: NES Architecture - by Marat Fayzullin