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Category — Misc. Contract Cases

Activision Settles with Two Former Guitar Hero Executives

Categories: Controller CasesCopyright CasesEmployment Law CasesInjunctionsMisc. Contract CasesNon-Compete CasesSettlementsTrade Secret CasesTrademark CasesUnfair Business Practice Casses

In February, Activision launched a new lawsuit against The Ant Commandos (TAC), Reverb Communications and three former Red Octane executives/employees: former executive producer John Tam, brand manager [name removed on request] and hardware group member Jamie Yang. These former executives founded a new company with TAC – Loadstone Entertainment.

Activision has settled with John Tam and [name removed on request]. The two have consented to a permanent injunction restraining the two from:

  • distributing a demo created by TAM incorporating elements of Guitar Hero II;
  • using or disclosing any Activision trade secrets;
  • taking steps to develop drum, guitar or synthesizer-based games for the next year;
  • “working on” a guitar controller for the XBox 360 version of Guitar Hero II for six months after release; and
  • competing against an undisclosed list of peripheral devices for six months after Activision commercially releases them.

The two were also ordered to return all materials relating to Activision’s proprietary information.

As far as I’m aware, no settlement has thus far been reached with Jamie Yang, Reverb or TAC.

Dale’s Comment [written April 26, 2007]: On a personal note, I was one of the lucky one’s to pick up Guitar Hero II for the Xbox 360 on launch day. The local Best Buy had about 100 of them on the morning of the launch. As I understand it, they sold out within hours and, to the date of this writing (owing partially to extreme demand and problems with some versions of the initially released guitar peripheral), I still can’t find them for sale anywhere in Toronto. I would like to purchase a second guitar peripheral. I’m having a blast with this game. As one of the commentators in a recent Joystiq Podcast pointed out, my fingers ache and want to stop playing long before the rest of me does! :)

Sources: GameSpot | Gamasutra | GameIndustry.biz | 1Up.com | CVG | Kotaku

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Activision Sues Ant Commandos and Former Guitar Hero Executives

Categories: Controller CasesCopyright CasesEmployment Law CasesMisc. Contract CasesNon-Compete CasesTrade Secret CasesTrademark CasesUnfair Business Practice Casses

In a new Guitar Hero related dispute, Activision (Guitar Hero publisher RedOctane’s parent company), has filed a fresh lawsuit against guitar peripheral maker The Ant Commando (TAC), Red Octane’s PR firm Reverb Communications and three former Red Octane executives/employees: former executive producer John Tam, brand manager [name removed on request] and hardware group member Jamie Yang. The former executives founded a new company with TAC – Loadstone Entertainment.

The complaint alleges:

“copyright infringement, trademark infringement, misappropriating trade secrets and confidential information, breach of contract, interference with contractual relations, and more. “

GameSpot is reporting that Activision has already obtained a temporary restraining order against the defendants restraining them from:

  • distributing a demo created by TAM incorporating elements of Guitar Hero II;
  • using or disclosing any Activision trade secrets, including: music licensing contract terms, in-game advertising, sales figures, marketing plans, product designs, and possible future songs and artists to be featured;
  • developing a guitar controller for the XBox 360 version of Guitar Hero II for three months after release;
  • soliciting Activision employees, partners or Asia-based manufacturing partners; and
  • taking any steps to develop, market, manufacture, sell, or distribute any guitar or drum based video games.

As recently as December 27, 2006, Activision and Red Octane had settled a different dispute with TAC concerning the sale of unlicensed guitar peripherals. See here for details.

Sources: Gamasutra | GameSpot | Kotaku

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In-Fusio Sues Microsoft Over Mobile Halo Development Rights

Categories: Misc. Contract CasesPublisher/Developer Cases

Text of Complaint (December 18, 2006)
Memorandum in Support of TRO (December 19, 2006)

French Mobile Game Developer, In-Fusio has filed suit in the District Court of Seattle for breach of contract and breach of good faith and fair dealing. It seeks an injunction prohibiting Microsoft from terminating a development and distribution agreement.

In September of 2005 Microsoft entered into an exclusive Development and Distribution Agreement with In-Fusio to develop versions of the popular Halo video game for certain mobile platforms. Under the deal In-Fusio was to make scheduled minimum royalty payments totaling $2M between Jan 1, 2006 and Jan 1, 2008.

After making its first $500,000 payment, and submitting several design concepts that were not acceptable to Microsoft, the parties were at an impasse. According to In-Fusio’s Memo, Microsoft both: (i) couldn’t decide, internally, what it wanted the mobile version of Halo to be; and (ii) wanted In-Fusio to develop more of a “dumbed down” version of the Halo game for mobile platforms than what In-Fusio thought it had bargained for.

Nonetheless, according to In-Fusio’s claim, Microsoft insisted on receiving the next scheduled royalty payment of $500,000 in October of 2006 after Microsoft allegedly agreed to “postpone” such payment obligations while the parties resolved their design differences.


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Mark Bragg File’s Virtual Property Complaint Against Linden Labs

Categories: CheatingHackingMisc. Contract CasesModding CasesPlayer BansUnfair Business Practice CassesVirtual Property Cases

Text of Bragg v. Linden Labs Complaint (Oct 4, 2006)[.zip format]
Jurisdiction and other Interim Court Filings
While I was converting this blog to WordPress over the last 8 weeks, Mark Bragg sent me his updated complaint against Linden Research Inc. ("Linden") that was filed on October 4 in the Chester County (Pennsylvania) Court of Common Pleas.  Mr. Bragg is seeking a jury trial. On November 7, Linden petitioned the US District Court for the Eastern District of Pennsylvania to take jurisdiction of the case. 

I'm just now getting the time to review the claim and post this blog entry about it. 

The complaint contains a terrific history (frankly, the best I've read) of Linden, its MMORPG Second Life and describes how Linden differentiated Second Life from its competitors by granting "ownership rights" to in-game property (most MMORPG publishers claim/retain ownership in all related virtual property). It also contains a history/description of virtual property generally in the context of the growing MMORPG phenomena.

The 239 paragraph complaint alleges violation of Californian and Pennsylvanian unfair practices and consumer protection laws, fraud, violation of California's Civil Code concerning auctions, conversion (theft), interference with contractual relations, breach of contract, unjust enrichment and tortuous breach of the covenant of good faith and fair dealing. He discounts many of the provisions of the Linden Labs Terms of Service ("TOS") as being unenforceable due to unconscionably. Suffice it to say, when this case is over, I suspect Linden will be updating its TOS! Laughing

This Law.com article provides a good summary of the facts. The complaint, itself, is worth reading if only for its best-in-class description of the MMORPG industry and related virtual property issues. Excellent job Mark!

Dale's Comment: Given that many courts in many countries have upheld the validity of extremely one-sided Internet-service click-wrap/shrink-wrap agreements, I think Mark will have a tough time overcoming the clear provisions contained in the TOS. But he makes many compelling arguments pertaining to the contradicting public statements of Linden representatives, rights in and to virtual property purchased from other Second Life users, and the right to recoup the real $U.S. dollars he paid into the Second Life economy and not returned when Linden booted him from the game.

Bragg is claiming ownership to his in-game property. I am quite sympathetic to his arguments and have advocated, here, for the the recognition, at law, of rights in and to virtual property. But, if analogies to real-world and intangible property are taken to their logical extreme, Second Life players could argue that Linden would never have the right to shutdown their MMORPG and deny virtual property owners of their "right" to access, use, sell and other wise deal with their virtual property when, as will inevitably be the case one day, Second Life ceases to be a profitable game for Linden. 

This could be a very important, precedent setting case if it goes to trial. It could set the ground rules for the application of laws to virtual property going forward. Needless to say, I'll be following this one closely.

[Dec 13, 2006 Update: Mark has sent me this link where the most recent court filings in the case can be found. At the moment the parties are fighting over the most appropriate jurisdiction for further proceedings.] 

Sources: *Law.com | Blogger News Network | MMORPG BLog | Pilly.com

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Massive Black Sues Ex-Employees for Pilfering Development Business, Fraud, Etc.

Categories: "Inside Baseball"Criminal ProsecutionsEmployment Law CasesMisc. Contract CasesNon-Compete CasesUnfair Business Practice Casses

Massive Black is suing its former employees James Xi Zhang and Jenny Chen for interference with contractual relations, fraud, unlawful access to computer network, trespass, breach of contract and interference with prospective business advantage. Massive, a game-art and design subcontractor for games such as Killzone 2, Helgate: Longdon and Battlefield 2142, alleges, among other things, that Zhang and Chen, while still employed by Massive Black, competitively bid on projects from Massive’s customer, without Massive’s knowledge, won the contract and used Massive’s resources (equipment and development personnel – while still on Massive’s payroll) to work on the pilfered projects. Massive also alleges that up to $150,000 was siphoned out of the company using inflated expense reporting.
Sources: 1Up.com  |  Discussed in the April 14, 2006 “1Up Yours” Podcast (Time Index 48:15-52:15)  |  Gamasutra

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THQ Settles Tetris Rights Dispute

Categories: Misc. Contract CasesPublisher/Developer CasesSettlements

In 2005, THQ sued The Tetris Company, alleging breach of contract, claiming it it had met all the requirements of its deal to have their license agreement renewed until 2007. THQ was previously prevented from releasing a Nintendo DS version of Tetris when Nintendo published the title itself last April. Under the settlement THQ will publish a version of Tetris for the Xbox 360 in Europe and North America. Presumably THQ has no rights to publish Tetris in Japan or for the DS. Tetris was published last year by AQ Interactive on the Xbox 360′s launch date in Japan.

Sources: Gamasutra | GameSpot | EuroGamer | Ferrago | GameIndustry.biz

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Atari Sued over RollerCoaster Tycoon Royalty Dispute

Categories: Misc. Contract CasesPublisher/Developer CasesRoyalty Disputes

Atari is being sued by RollerCoaster Tycoon developer Chris Sawyer for between $4.8 & $5.2 M U.S. (depending on the report) plus interest in alleged unpaid royalties. Sawyer alleges Atari breached its contract by failing to to give his auditors access to Atari’s accounts between 1999-2001.

Sources: CNet | GameIndustry.biz | The Inquirer

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Activision Countersues Spark

Categories: Misc. Contract CasesPublisher/Developer CasesTrade Secret CasesUnfair Business Practice Casses

Activision countersues Spark Unlimited alleging fraud, breach of contract, trade secret misappropriation, trademark infringement, false designation of origin, and false advertising.

Sources: Gamespot | GameIndustry.biz | Next Generation

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Gizmondo Settles Jordan Lawsuit, Raises New Capital

Categories: Misc. Contract CasesSettlementsStruggling Firms

Gizmondo has settled its sponsorship agreement lawsuit with Jordan Grand Prix in an out of court mediation by the payment of $1,500,000 in cash and the issuance of 30,000 shares of the Company’s restricted common stock. Gizmondo had contracted with Jordan to feature Gizmondo advertisements on the side of Formula 1 race cars.

Source: Gamasutra

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Independent Developer Spark Sues Activision

Categories: Misc. Contract CasesPublisher/Developer CasesUnfair Business Practice Casses

Call of Duty: Finest Hour developer, Sparq, files $10 million suit accusing publisher of fraud, breach of contract, and stealing employees and sequel ideas.

Sources: Gamespot | Gamasutra

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Handheld Games Sues Tiger Telemeatics, Makers of the Gizmondo Portable Gaming System

Categories: Misc. Contract CasesStruggling Firms

Handheld Games seeks $75,000 in damages saying that neither the promised Gizmondo development kits nor the final master license agreement ever arrived.

Source: Gamasutra | GameIndustry.biz | TVG | Ferrago

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