When the NES was released in the US, Nintendo did not want a repeat of the Famicom or Atari 2600. The flood of usually low quality 3rd party games really put a crimp in their style. It pretty much destroyed the Atari 2600 market in a couple years. Their solution was the infamous "Lockout" or "Key" chip. This little 16 pin chip was their hot solution.
For the most part, it DID keep 3rd party carts at bay. Tengen decided to try and reverse engineer the chip, but they failed. Instead, they decided to illegal grab the documents from the US Copyright Office! With these documents, they completed their reverse engineering efforts and produced the "Rabbit" chip. Nintendo sued them for copyright infringement and won. After that, I don't know if Tengen just fell over and died, or if they continued to release games.
Later on still, the second 3rd party maker to get some games released was Color Dreams. I don't know if they came up with the idea first, but the essential idea is you can "stun" the lockout chip in the console with a negative voltage spike, and it will crash it, and result in it being effectively disabled.
Color Dreams (and later Wisdom Tree, etc) revised the circuit 3 times. It is truly rube goldberg in the extreme. Camerica then came up with a similar lockout defeater that is based on a small 2 transistor voltage inverter which was quite elegant.
Finally though, Nintendo thwarted their efforts on the console by adding some 1K resistors in series with the 2 lines used for the "Zapping", and stuck diodes on them to power and ground which prevent the negative voltage from affecting it. This results in a "stun proof" console. AVE was handing out instructions with their games on how to disable the lockout chip in the console. They suggested opening it up and cutting pin #4 (master/slave). This is quite effective.
Eventually, I would like to have more info on how the chip itself works. I remember reading a document on the internet about someone's reverse engineering efforts with a logic analyzer. I searched but could not find it. Anyone have a copy?
NOTE: I DO NOT RECOMMEND that anyone use these lockout defeater circuits. They do not work on all consoles. If you're going to make carts of a homebrew game, it is best to simply use the chips inside of existing carts. You'll need cart cases to put your boards in, so why not just remove the lockout chips from the old carts and throw 'em onto your new board? You're guaranteed a unit that will work on any console in your country. Nintendo ended up changing the circuitry on the console to prevent these defeaters working. If you're concerned about desoldering, just use a blowtorch (outside!) to heat the bottom of the pins up, then pull the chip off using pliers. as a bonus, mappers can be removed easily by heating the bottom of the board and then using a knife to lift the (surface mount) mapper chips off carefully. This will not damage the chips so long as the heat is not left on too long.
Here's what I got:
Colordreams Attempt #1
Colordreams Attempt #2
Colordreams Attempt #3
Colordreams Attempt #4
AVE Attempt #1
AVE Attempt #2
AVE Attempt #3