2012 Video Game Industry Litigation Review
By: Tanner Robinson
and
Max Metzler
As far as significant gaming law developments are concerned, 2011 was a tough
act to follow. Last year saw a new paradigm emerge with the Hart test being applied to
lawsuits involving celebrities’ publicity rights in video games1, and the Supreme Court,
in Brown, validating a new art form.2 There seems to be an important trend that, while
not new to 2012, certainly continued in a big way: the video game industry is becoming
more mainstream. As video games continue to cross demographic lines and become
more ubiquitous, the producing companies start to look more and more like the
companies of other industries. Because of the industries’ growth, 2012 saw many of last
year's contentious lawsuits settle as a result of risk-focused business decisions.
As the scope of a business expands, the variety of its contracts tends to expand as
well. Video game companies faced everything from old-fashioned employment disputes,
to licensing deals with A-list celebrities gone awry.
While numbers continued to fall and the market continued to expand, companies
were plagued by intellectual property (IP) litigation from competitors and non-practicing
entities (NPE) alike. The well-known threat of intellectual property infringement claims
not only affected the largest players, but even the smallest mobile app start-ups were
1
See Hart v. Elec. Arts, Inc., 808 F. Supp. 2d 757 (D.N.J. 2011).
2
See Brown v. Entm't Merchants Ass'n, 131 S. Ct. 2729, 2731 (2011).
subject to troll-like claims. Plaintiffs discovered new IP mediums to litigate over; some
even taking pages out of old IP portfolios in order to find new defendants.
Almost every company is hurting from the slow growth in the economy, and the
shift to the less profitable world of mobile gaming. This trend could explain why some
companies are beginning to litigate against competitors in more ways, and on a greater
scale, than we have ever seen before. And the evolution of the industry to one more
populated with businesspeople and investors could explain why more of these suits are
settling out of court.
I. Patent Infringement
In 2012, the video game industry seemed to avoid the mass patent troll attacks
that characterized 2011, but NPEs are still pressuring some major players. Also, several
cases between practicing entities threatened some of the very foundations of the industry.
Indie developers and start-ups usually avoid the major patent traps, but giants like
Nintendo and Microsoft are consistently dragged into the courtroom over their console
technologies; sometimes at the mercy of smaller technology companies. As we’ve seen,
wise counsel must clear new technologies early or risk ending up in court years down the
line.
Microsoft Corp. v. Motorola, Inc.
2012 gave us a collection of suits that threatened the Xbox, iPhone and every
gadget in between. Back in 2010, after Google acquired Motorola, they flexed some
muscle and sued Microsoft and Apple over their H.264 video compression and wireless
patents.3 After making initial headway with the ITC, the FTC began an anti-trust
investigation of Google’s conduct, and Federal district judges denied Google’s
injunctions against the Xbox and other products.4 Now, the Xbox’s fate seems somewhat
secure as, recently, Google dropped the video-encoding patents from the investigation.5
This comes on the heels of the settlement resulting from the FTC’s antitrust investigation
that ruled Google must cease seeking injunctions against competitors using standardessential patents (such as the H.264 patent) and, instead, continue third-party
negotiation.6 There are several patent related district court cases still going on, however,
and experts say that although negotiations have been spurred on, a conclusion is not close
at-hand.7
Worlds, Inc. v. Activision Blizzard, Inc. et al
On March 30th, 2012, Worlds Inc., a non-practicing entity, was at it again, suing
3
Steven Musil, ITC Judge Recommends Banning Xbox Imports, CNET NEWS (May. 22,
2012), http://news.cnet.com/8301-1023_3-57439737-93/itc-judge-recommends-banningxbox-imports/.
4
Karen Gulo, Motorola Mobility Loses Appeal in Microsoft Xbox Lawsuit, BLOOMBERG
(Sept. 28, 2012), http://www.bloomberg.com/news/2012-09-28/motorola-mobility-losesappeal-in-microsoft-xbox-lawsuit.html.
5
Steven Musil, Google withdraws ITC patent claims against Microsoft, CNET NEWS (Jan.
7, 2013) http://news.cnet.com/8301-1023_3-57562922-93/google-withdraws-itc-patentclaims-against-microsoft/.
6
The Federal Trade Commission Closes Its Antitrust Review, GOOGLE BLOG (Jan. 03,
2013), http://googleblog.blogspot.com/2013/01/the-federal-trade-commission-closesits.html.
7
Susan Decker, Google Patent Offers Probably Won’t End Microsoft Suit, BLOOMBERG
(Jan. 7, 2013), http://www.bloomberg.com/news/2013-01-07/google-patent-offersprobably-won-t-end-microsoft-apple-suits.html.
World of Warcraft and Call of Duty masterminds Activision Blizzard.8 The patents
allegedly infringed are U.S. patents nos. 8,082,501, 7,493,558, 7,945,856 and 7,181,690;
titled "System and Method for Enabling Users to Interact in a Virtual Space." 9 These
patents arguably give Worlds a monopoly on the technology at the core of most
MMO's.10 The patent claim construction hearing, also called a Markman hearing, is set
for June 27, 2013.11 If this hearing construes the patent as broad as its title suggests,
hundreds of other games and their creators could be liable. It is probable that this lawsuit
will settle with a licensing deal, however, and Worlds could continue to sue other MMOs
that use similar technology.
Tomita Technologies USA, LLC et al v. Nintendo Co., Ltd.
2012 gave us our first in-depth look at an augmented reality patent infringement
case when Seijiro Tomita, the founder of Tomita Technologies and holder of a glasses-
8
John Gaudiosi, Worlds Inc. Explains Why Its Suing Acitivision Blizzard Over World of
Warcraft and Call of Duty, FORBES (Apr. 13, 2012),
http://www.forbes.com/sites/johngaudiosi/2012/04/13/worlds-inc-explains-why-its-suingactivision-blizzard-over-world-of-warcraft-and-call-of-duty/.
9
Steve Peterson, Patent Suit Against Activision Proceeds, GAMEINDUSTRY (Sept. 17,
2012), http://www.gamesindustry.biz/articles/2012-09-17-patent-suit-against-activisionproceeds.
10
Markman Hearing Date Set in Wolds Inc. vs. Activision Blizzard, Inc., Blizzard
Entertainment, Inc. and Activision Publishing, Inc. Patent Infringement Lawsuit,
MARKETWIRE (Sept. 10, 2012), http://www.marketwire.com/press-release/markmanhearing-date-set-worlds-inc-vs-activision-blizzard-inc-blizzard-entertainment-otcbbwddd-1699189.htm.
11
Worlds Inc. vs. Activision Blizzard Markman Hearing Date Set in Patent Suit, YAHOO
FINANCE (Sept. 10, 2012), http://finance.yahoo.com/news/worlds-inc-vs-activisionblizzard-122824136.html.
free 3D patent, sued Nintendo.12 The Nintendo 3DS’ 3D imaging and augmented reality
capabilities seems to be similar enough to patent no. 7,417,664, titled “Stereoscopic
Image Picking Up and Display System Based Upon Optical Axes Cross-Point
Information”, for the Federal District Court of the Southern District of New York to deny
Nintendo summary judgment.13 Nintendo seems to be hit at least twice a year with patent
infringement cases, especially centered on the Wii and its peripherals; this will, however,
be the first time its 3D applications have been targeted.14
Uniloc v. Everyone
At least one patent troll plagued the game industry this year, as Uniloc USA filed
no less than 50 lawsuits in the Eastern District of Texas in 2012 alone.15 Among the
defendants were every kind of tech company, including several game developers:
Mojang, Minecraft creator; Halfbrick, the makers of Fruit Ninja; Gameloft, mobile game
mogul; Madfinger, maker of mobile FPS like Shadowgun; and even Square Enix and
12
Owen Good, Retired Sony Engineer says 3Ds Copied His Patent, KOTAKU (Jul. 11,
2011), http://kotaku.com/5819199/retired-sony-engineer-says-3ds-copied-his-patent.
13
Brian Wassom, Tomita v. Nintendo: The First Augmented Reality Patent Infringement
Case, WASSOM.COM (Jul. 12, 2012), http://www.wassom.com/tomita-v-nintendo-thefirst-augmented-reality-patent-infringement-case.html.
14
Nintendo Faces Suit Over 3Ds, PATENT ARCADE (Jul. 5, 2011),
http://www.patentarcade.com/2011/07/nintendo-faces-suit-over-3ds.html.
15
Uniloc – Lawsuit History, RFC EXPRESS,
https://www.rfcexpress.com/search.asp?page=6&partyName=uniloc&caseTypes='P',%20
'C',%20'T'.
Electronic Arts.16 Uniloc owns US patent no. 6,857,067, titled “System and method for
preventing unauthorized access to electronic data”, and asserts that mobile games, like
Minecraft - Pocket Edition, use their patented process for server authorization (which
includes “a portable licensing medium configured to communicate with the electronic
device and to store license data”).17 As of Dec 27th, 2012, Uniloc has also filed suit
against Take-Two Interactive and 2K Games over U.S. Patent No. 5,490,216, “System
for Software Registration”, mentioning Borderlands as a culprit.18 The litigation is still
ongoing, but Minecraft creator, Markus "Notch" Persson, has vowed he “will throw piles
of money at making sure they don't get a cent.”19 If Notch keeps his word (admittedly this
is a quote from Twitter, of all places) then we could possibly see a patent infringement
ruling, a key to future patent defense.
Wildcat Intellectual Property Holdings LLC v. Wizards of the Coast LLC
A different patent troll has filed an infringement case against a game over 10
years old, this time in the Northern District of Texas.20 Wildcat Intellectual Property
16
Owen Good, Some Patent Troll is Suing Minecraft and an Ensemble Cast of Big
Names, KOTAKU (Jul. 21, 2012), http://kotaku.com/5927978/some-patent-troll-is-suingminecraft-and-an-ensemble-cast-of-big-names.
17
Emily Gera, Minecraft Developer Sued Over Android Patent Infringment, POLYGON
(Jul. 23, 2012), http://www.polygon.com/gaming/2012/7/23/3177205/minecraftdeveloper-sued-over-android-patent-infringement.
18
Complaint at 14, Uniloc, USA v. Take-Two Interactive Software, No. 6:2012cv01013
(E.D. Tex filed Dec. 27th, 2012).
19
Adam Rosenberg, Mojang Facing Patent Infringment Lawsuit for ‘Mindcraft’, G4TV
(Jul. 23, 2012), http://www.g4tv.com/thefeed/blog/post/726206/mojang-facing-patentinfringement-lawsuit-for-mindcraft/.
20
Complaint, Wildcat Intellectual Property Holdings vs Wizards of the Coast, LLC, No.
3:12-cv-04412-K (N.D. Tex Filed Nov. 1st, 2012).
Holdings of Dallas sued Wizards of the Coast, LLC on November 1st, 2012 for Magic the
Gathering: Online, which they claim infringes on U.S. Patent no. 6,200,216, “Electronic
trading cards”.21 Interestingly enough, this is a suit that Wildcat brought back in 2011,
then against numerous defendants who have all but one been dismissed without
prejudice.22 Wildcat is asking the judge for an injunction to immediately take down the
site, which is a cash cow for Wizards of the Coast.23 The details of the settlement from
the last case have not been released, but it seems Wildcat did not get dealt the hand they
actually wanted.
Walker Digital and Lodsys v. Everyone
Last year, GBL’s 2011 Year in Review reported on pending patent litigation in
hopes of educating the conference on the trends in patent law.24 Somewhat expectedly,
most of the suits are still being fought and few actual court opinions have been handed
down. However, we have learned that Non-Practicing Entities, such as Walker Digital,
LLC and Lodsys, LLC, are vicious and a constant threat to video game developers, large
and small. Walker Digital’s infamous 2011 deluge of 15 patent infringement cases
21
David Lee, Patent Fight Over Trading Cards, COURTHOUSE NEWS SERVICE (Nov. 2,
2012), http://www.courthousenews.com/2012/11/02/51931.htm.
22
Complaint at 18, Wildcat Intellectual Property Holdings, LLC v. 4Kids Entertainment,
Inc. et al, No. 2:11CV00305 (E.D. Tex July 1, 2011).
23
Owen Good, Texas Patent Firm Asks Judge to Shut Down Magic the Gathering Online,
KOTAKU (Nov. 3, 2012), http://kotaku.com/5957317/texas-patent-firm-asks-judge-toshut-down-magic-the-gathering-online.
24
Kent Jordan & Robert Wilkinson, Comment, A Review of 2011 Video Game Litigation
and Selected Cases. 15 SMU SCI. & TECH. L. REV. 271 (2012).
against over 100 defendants included almost every major player in the video game
industry25, while Lodsys’ near 40 suits attacked iOS developers. 26 This type of behavior
by patent trolls has apparently prompted some indie developers to move to Europe.27 This
is a shift to be watching as video game copyright law is constantly changing in the EU.28
But more often, developers simply pay up to avoid the costs of the long, drawn-out
litigation that we have seen here.29
Impulse Tech. v. Microsoft/ ThinkOptics Inc. v. Nintendo of America
However, patent litigation not involving NPEs was more focused and seemed to
resolve more quickly. Some closure was had in 2012 from litigation when console
25
Walker Digital Sues the Internet (almost), PATENT ARCADE (June 23, 2011),
http://www.patentarcade.com/2011/06/walker-digital-sues-internet-almost.html.
26
Erik S. Syverson, Lodsys Sues Angry Birds Game Manufacturer for Patent
Infringement (Aug. 1, 2011), http://www.syversonlaw.com/blog/2011/08/lodsys-suesangry-birds-game-manufacturer-for-patent-infringement.shtml.
27
Lodsys Claims Momentum in Patent Fight as Some Indie Devs Leave US, ARS
TECHNICA (October. 9, 2012), http://arstechnica.com/apple/2012/10/lodsys-claimsmomentum-in-patent-fight-as-some-indie-devs-leave-us/.
28 See German group sues Valve, GAMESPOT (Feb 1, 2013), http://www.gamespot.com/news/german-­‐group-­‐sues-­‐valve-­‐
6403307?utm_medium=referral&utm_source=pulsenews; See also Secondhand Sale of Software Protected, rules European court , GAMESPOT (July
3, 2012),
http://www.gamespot.com/news/secondhand-­‐sale-­‐of-­‐software-­‐protected-­‐rules-­‐european-­‐court-­‐
6385463 29
Licensing Momentum, LODSYS BLOG (October. 8, 2012),
http://www.lodsys.com/1/post/2012/10/-licensing-momentum.html.
makers, Microsoft and Nintendo, and even their developers and retailers, were sued over
motion-tracking peripherals such as the Wii Remote and the newly introduced Xbox
Kinect.30 The suit, brought by Impulse Technology in the Northern District of Ohio, was
voluntarily dismissed after the Court’s Markman hearing constructed the claim in favor
of the defendant.31 A plaintiff victory was had, however, when another company,
ThinkOptics, Inc., sued Nintendo because of the Wii remote in 2011.32 One must wonder
why it took these companies 5 years to attack the Wii, but in the end, motion-controlled
virtual bowling lives on. Nintendo settled with ThinkOptics and is now licensing their
patent in order to continue to sell Wiis.33
II. Copyright and Trademark Infringement
Copyright and trademark law in the video game industry has always been
interesting and often entertaining; this year was no exception. It seems that as the
industry grows, the subject matter being litigated grows wider and more diverse as virtual
30
Complaint at 4-5, Impulse Tech. v. Microsoft, No. 1:11-cv-00586 (Del. filed July 1,
2011); See also New Case: Microsoft Sued Over Kinect and Motion Tracking Patent,
PATENT ARCADE (July 22, 2011), http://www.patentarcade.com/2011/07/new-casemicrosoft-sued-over-kinect-and.html.
31
Impulse Tech. V. Microsoft, 2012 WL 4794635 (Slip Copy).
32
Wavit Remote Maker Sues Nintendo Over Wii Remote, GAME POLITICS (Sept. 8, 2011),
http://gamepolitics.com/2011/09/08/wavit-remote-maker-sues-nintendo-over-wii-remote.
33
Recent News, THINKOPTICS BLOG (Nov.-Dec., 2012), http://thinkoptics.com/recentnews/.
tattoos, video game plot lines, depicted helicopters, and more are accused of
infringement.
Tetris Holding, LLC v. Xio Interactive, Inc
The most important development in video game copyright law in 2012 was
perhaps the victory Tetris had against Xio, makers of a Tetris clone for the iPhone. In
response to the Tertris’ complaint, Xio admitted that they were copying but claimed “the
only similarities between the games are elements not protected by copyright law.”1 While
code and graphical elements of a game are copyrightable, the rules and mechanics are
not. As the Court stated, the “doctrine is simple to state—copyright will not protect an
idea, only its expression—but difficult to apply.”2 The Court proffered what might come
to be known as the “the Squint Test” when it declared “[i]f one has to squint to find
distinctions only at a granular level, then the works are likely to be substantially
similar.”3 In applying the Squint Test, the Court found “the overall look and feel of the
two games is identical” and thus Xio had almost per se copied the “visual expression” of
Tetris, infringing its copyright.4 With copying in the industry being as commonplace as it
is, this opinion will surely cause companies to rethink their strategies of avoiding suit.
Ubisoft Entertainment, S.A. et al v. John L. Beiswenger
In April, many industry professionals and gamers alike were troubled to hear that
the popular Assassin’s Creed series may have lifted its entire premise from the pages of a
self-published novel called “Link”, written by John L. Beiswenger in 2003.34 The novel,
which predated the first game by five years, included familiar touchstones such as a
machine that allowed characters to re-live their ancestors’ memories and analogous
spiritual and Biblical overtones.35 Beiswenger sued Ubisoft, the makers of Assassin’s
Creed, for copyright infringement but dropped the suit without prejudice only a month
later.36 This prompted Ubisoft to immediately counter-sue for a declaratory judgment to
end the dispute.37 The ruling of this case would have interested other developers that
would possibly “borrow” a few ideas from a favorite sci-fi novel, but the case settled
fairly quickly in August, this time with prejudice.38
34
Matthew Hawkins, Author Suing Ubisoft Based on Claims that ‘Assassin’s Creed’ was
His Idea, http://www.nbcnews.com/technology/ingame/author-suing-ubisoft-basedclaims-assassins-creed-was-his-idea-722586
35
Kyle Orland, Sci-fi Author Sues Ubisoft Over Assassin’s Creed Copyright
Infringement, (Apr. 18, 2012, 6:08 PM), http://arstechnica.com/gaming/2012/04/sci-fiauthor-sues-ubisoft-over-assassins-creed-copyright-infringement/
36
Ross Dannenberg, Case Update: Beiswenger v. Ubisoft (Assassin’s Creed), (June 26
2012 7:00 AM), http://www.patentarcade.com/2012/04/new-case-beiswenger-v-ubisoftassassins.html
37
Patent Arcade Staff, Ubisoft Sues Beiswenger for Declaration of Rights, (Aug. 21,
2012, 12:00 PM), http://www.patentarcade.com/2012/06/ubisoft-sues-beiswenger-fordeclaration.html
38
Id.
Electronic Arts Inc. v. Zynga Inc.
Copying between competing developers in the social game sphere has gone from
a game’s basic concepts to blatant copy-pasting of code, but how much is too much is
still a legal grey area. In June, Zynga revealed one of its most ambitious projects yet, The
Ville, only to be hit with a lawsuit a month later from EA for infringing on Sims Social.39
Zynga, geared up for what could be the biggest infringement lawsuit yet between the
companies, counter-sued in three parts.40 The most important claim asserted that EA
originally stole Sims Social from their own CityVille, a game they released a year and a
half before. 41 However, Professor Eric Goldman is of the belief that this is a lawsuit that
“EA [cannot] afford to win.” 42 The legal precedent in copyright law allows copying of
39
Owen Thomas, The Game that Got Zynga Sued by EA is Headed for the Dumpster,
BUS. INSIDER SAI, Oct. 23, 2012, http://www.businessinsider.com/zynga-is-sunsettingthe-ville-2012-10
40
Alex Pham, Zynga Calls EA Lawsuit ‘Baseless’ Countersues, L.A. TIMES, Sep. 14,
2012,http://articles.latimes.com/2012/sep/14/entertainment/la-et-ct-zynga-calls-ealawsuit-absurd-20120914
41
Emily Price, Zynga Fights Back, Says EX Copied Games, (Sep. 14, 2012),
http://mashable.com/2012/09/14/ea-zynga-lawsuit/
42
Eric Goldman, EA’s Copyright Infringement Lawsuit Against Zynga is Dangerious –
For EA, FORBES, Aug. 6, 2012,
the basic game concept and even the general appearance of the game.43 EA needs to push
the boundaries of what is considered infringement, if EA does not want to start
completely from scratch on its next social game, it will be much easier for copyright
owners to win on these types of claims.44 Further complicating the suit, Zynga is sun
setting the Ville.45 What this means for the pending litigation remains to be seen, but we
can only guess that a settlement is just around the corner.
Electronic Arts, Inc. v. Textron, inc.
In what seems to be déjà vu, Textron, the maker of Bell helicopters, again
claimed trademark infringement against EA games in January over the helicopters
depicted in the Battlefield series. 46 Back in 2006, the same suit settled with a licensing
agreement, but surprisingly the negotiations for licensing the Bell trademark for
http://www.forbes.com/sites/ericgoldman/2012/08/06/eas-copyright-infringementlawsuit-against-zynga-is-dangerous-for-ea/
43
Id.
44
Id.
45
Owen Thomas, The Game that Got Zynga Sued by EA is Headed for the Dumpster,
BUS. INSIDER SAI, Oct. 23, 2012, http://www.businessinsider.com/zynga-is-sunsettingthe-ville-2012-10
46
Alison Frankel, The Battle Over Brand-Name Helicopters in ‘Battlefield’, (July 26,
2012),
http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=53123
Battlefield 3 seems to have gone awry.47 EA’s Motion to Dismiss claimed First
Amendment protections like those given to video games in the Supreme Court’s Brown v.
Entertainment Merchants Ass’n decision but was disappointed to see it denied in July. 48
This litigation is ongoing and could provide a first look at how courts will handle the
Brown decision. However, chances are that EA will steer clear of that minefield and end
up settling with new licensing terms.
Tattoo Cases
Infringing tattoos seems to be one of the next trends of copyright law as two
tattoo suits have cropped just in the last few months. There is little precedent in this area,
but legal scholars suggest that tattoos meet the definition of a work of art fixed in a
47
Brian Scanlon, EA’s Video Game “Battlefield 3” Turning into “Battlefield
Trademark” as Video Games Manufacturer Sues to Adjudicate Non-Infringement of
Military Helicopters, (Jan. 25, 2012, 11:02 PM),
http://www.lexisnexis.com/community/copyrighttrademarklaw/blogs/copyrightandtrademarklawblog/archive/2012/01/25/ea-s-videogame-quot-battlefield-3-quot-turning-into-quot-battlefield-trademark-sues-to-adjudicatenon-infringement-of-helicopters.aspx
48
EA Motion to Dismiss Counter-Claims in Battlefield Helicopter Lawsuit Denied, (July
31, 2012), http://www.gamepolitics.com/2012/07/31/ea-motion-dismiss-counter-claimsbattlefield-helicopter-lawsuit-denied; Brown v. Entm’t Merchs. Ass’n, 131 S. Ct. 2729
(2011).
tangible medium, subject to copyright protection, even if that medium is someone else’s
body.
a. Chris Escobedo v. THQ, inc.
When THQ recreated UFC fighters for UFC: Undisputed 3, probably the last
thing they thought of was licensing the copyrighted tattoos on each fighter from each of
their respective tattooists. But perhaps it should have because Chris Escobedo, a tattoo
artist whose work was recreated on fighter Carlos Condit in the game, sued THQ.49 This
may sound similar to Mike Tyson's infamous face tattoo, created by artist Victor
Whitmill, who sued Warner Brothers over their recreation of his design in The Hangover
II.50 The suit predictably settled, giving little precedent to stand on, but legal experts
believe that tattoos are copyrightable.51
b. Stephen Allen v. Electronic Arts
49
Eriq Gardner, Tattoo Artist Sues Over Copycat in ‘UFC Undisputed’ Video Game,
THE HOLLYWOOD REPORTER, Nov. 22, 2012,
http://www.hollywoodreporter.com/thr-esq/ufc-undisputed-video-game-at-393653
50
Dan Seitz, UFC Fiqgther’s Tatoo Artist Sues THQ for Copyright Infringement, (Nov.
27, 2012, 10:28 PM), http://www.gametrailers.com/side-mission/40377/carlos-conditstattoo-artist-sues-thq-for-copyright-infringement
51
Id.
Just days ago, Stephen Allen sued EA because Ricky William, a former NFL
runningback, and his tattoos appeared on the cover of NFL Street, a game from 2004.52
Allen, a tattoo artist from Louisiana, carved on Williams, so the tattoos are technically
his, not Ricky’s. It remains to be seen if this lawsuit will spark more claims from tattoo
artists from all over the country whose works are prominently displayed in sports games.
At any rate, general counsel for developers need to start to recommend licensing deals
with tattoo artists or significant changes to tattoos recreation in-game.
EMI April Music, Inc. v. 4MM Games,
Musical video games created an exciting collision of two of the edgiest sectors of
the entertainment industry, however, this intersection could bring about trouble when it
comes to copyright infringement. EMI filed a suit against 4MM Games, the maker of the
Def Jam Rapstar music video game, an alleged copyright infringement.53 The complaint
claimed that the developer used certain songs in which EMI had an interest without
obtaining the proper permissions.54 EMI only owned portions of some of the songs it
52
Luke Plunkett, EA is Being Sued Over A … Tattoo from 2004, (Jan. 9, 2013, 10:00
PM), http://kotaku.com/5974683/ea-is-being-sued-over-atattoo-from-2004
53
EMI April Music, Inc. v. 4MM Games, LLC, No. 12 CV 2080 (S.D.N.Y.) (Filed March
12, 2012).
54
Eriq Gardner, EMI Sues Over Def Jam Rapstar Video Game, THE HOLLYWOOD
REPORTER, March 29, 2012, http://www.hollywoodreporter.com/thr-esq/emi-def-jamrapstar-video-game-lawsuit-305434
claimed infringement upon, including the game's use of Kanye West's Stronger, which
samples the EMI-owned Better, Faster, Stronger by Daft Punk.55 EMI claimed statutory
damages of $150,000.00 per violation, as well as net profits of the game, and also asked
for an injunction.56
Games like Rock Band and Guitar Hero have left a well-blazed trail in the world
of music licensing for video games, but some commentators believe that because rap
songs generally have a more complicated ownership portfolio, with their often multiple
contributors and sampled tracks, the legal legwork that is needed is much more
complex.57 Obviously, EMI's claim was that the necessary work was not done, which
resulted in infringement. The industry needs to watch this case, and consider the added
costs of this part of the market before attempting to expand music-based video games
there.
SocialApps LLC v. Zynga Inc
Throughout 2011, patent trolls and a recently public Zynga were ever-present in
the courtroom. On both sides of cease and desist letters, Zynga is still in the midst of
numerous lawsuits. One such suit involved SocialApps, LLC, creator of a game called
myFarm on the Facebook API, where players send their friends gifts of farm animals and
plants to raise and grow on their virtual farms. Zynga began negotiations to buy or
license myFarm from SocialApps but after they shared their source code in accordance
55
Id.
56
Id.
57
Id.
with due diligence, Zynga created Farmville.58 The suit quickly followed, and as of 2012
SocialApps overcame Zynga’s Motion to Dismiss claims of breach of implied contract,
confidence, and implied covenant.59 The damages demanded were $100,000 of punitive
damages, a permanent injunction and, Zynga's FarmVille profits (estimated at over
$500,000).60 If most of the complaint is true, SocialApps has a strong case. Zynga may
have a hard time not getting slapped with willful copyright infringement unless they
settle, which usually happens in copyright litigation.
The Learning Company v. Zynga Inc.
Case in point, one of Zynga’s lawsuits was settled December 18, 2012. In May
2011, Zynga was also accused of infringing on the trademark of a game that introduced
many children to PC gaming, the Oregon Trail.61 Their Frontierville expansion called
58
Zynga Wins, Loses in Latest Round of SocialApps Lawsuit, (Feb. 17, 2012),
http://www.gamepolitics.com/2012/02/17/zynga-wins-loses-latest-round-socialappslawsuit
59
Joe Osborne, FarmVille Could Owe a lot (of cash) to myFarm for its Success in
Lawsuit, (Feb. 17, 2012, 12:30 PM), http://blog.games.com/2012/02/17/farmvillemyfarm-zynga-socialapps-lawsuit/
60
Nathan Brown, How Zynga cloned its way to success, (Jan. 25, 2012, 4:47 PM),
http://www.edge-online.com/features/how-zynga-cloned-its-way-success/
61
Compl. at 15, The Learning Co. v. Zynga Inc., No. : 1:11-cv-10894 (D. Mass. Filed
May 18, 2011).
Oregon Trail was the last straw for The Learning Company, which sued them for
trademark infringement.62 This suit recently settled on December 18, 2012, just in time
for Christmas.63 However, the details of the settlement have yet to be divulged. During
the suit, Zynga voluntarily removed Oregon Trail from any products, and the Court
ordered this to remain the status quo throughout the litigation, so it is likely that Zynga
will not use this bit of history in any future game development.64
Augusta National, Inc. v. CustomPlay Games Ltd. / Atari Interactive, Inc. v. Wan
GBL reported on two other cases from 2011 that were rare among the ubiquitous
pack of social game infringement suits; a trade dress case about a virtual rendition of a
golf course and a copyright infringement case that involved knock-off Ataris.65, 66 First,
62
Id.
63
Voluntary Dismissal With Prejudice, The Learning Co. v. Zynga Inc., No. : 1:11-cv-
10894-MLW (D. Mass. Filed Dec. 18, 2012).
64
Order, The Learning Co. v. Zynga Inc., No. : 1:11-cv-10894-MLW (D. Mass. Filed
June 15, 2011).
65
Claim at 2, Augusta National, Inc. v. CustomPlay Games Ltd., No. 1:11-cv-00119
(S.D. Ga. Filed Aug. 5, 2011).
66
Compl. at 6, Atari Interactive, Inc. v. Wan, 2:11-cv-05224 (C.D. Cal. Filed June 22,
2011); see also Frank Cifaldi, Bootleg Consoles Attract Lawsuit From Atari, (July 6,
2011),
Augusta National Inc. sued CustomPlay Games after a cease and desist letter did not
yield removal of their golf course’s map and notable locations in their game, CPG Golf.
67
However, that same year, CustomPlay Games folded and a settlement was drawn up
with the other defendants.68 Sadly, no legal merits have been authored of this trade dress
claim in the 11th circuit, but it is known that other defendants resolved to settle with
Augusta in some fashion. Secondly, in the Atari case, defendants John Wan and Tommi,
Inc. ended litigation in 2012 and resulted in the licensing of copyrights and trademarks
from Atari.69 The evidence suggested that the defendants were clearly in the wrong in this
suit and were wise to settle as soon as possible.
III. Right of Publicity
Unlike 2011, which saw massive changes in the right of publicity landscape with
the landmark Hart case and its "transformative test," 2012 was fairly quiet in comparison.
No Doubt v. Activision
http://www.gamasutra.com/view/news/35697/Bootleg_Consoles_Attract_Lawsuit_From_
Atari.php
67
Claim at 2, Augusta Nat’l, Inc. v. CustomPlay Games Ltd., No. 1:11-cv-00119 (S.D.
Ga. Filed Aug. 5, 2011).
68
Notice of Settlement and Status, Augusta National, Inc. v. CustomPlay Games Ltd.,
No. 1:11-cv-00119 (S.D. Ga. Filed Sept. 27, 2011).
69
Stipulation of Dismissal with Prejudice at 8, Atari Interactive, Inc. v. Wan, No. 2:11-
cv-05224 (C.D. Cal. Filed Jan. 6, 2012).
No Doubt’s long-running dispute with Activision came to an end this year, settling on
undisclosed terms.70 The suit was over No Doubt's licensing of their images and selected
songs to Activision for the game Band Hero.71 No Doubt claimed that Activision
improperly used their likenesses and exceeded the terms of the licensing agreement by
allowing players to “unlock” the band’s virtual avatars to play any song in the game
(including songs the band says they would never perform), allowing players to make the
lead singer, Gwen Stefani, sing in a male voice, and by allowing players to make the
band members perform individually by splitting them up.72
A California appeals court had already ruled that there could be no First Amendment
protections for Activision under the Hart "transformative" test because the band
members' avatars could not be edited or transformed in the game.73 Because the case was
settled, any further legal impact the case would have had is, of course, unknown.74
IV. Contract Disputes
Silicon Knights, Inc. v. Epic Games Inc.,
70
Billy Kidd, No Doubt Settle ‘Band Hero’ Video Game Lawsuit, Rolling Stone Music
(Oct. 4, 2012, 9:40 AM), http://www.rollingstone.com/music/news/no-doubt-settle-bandhero-video-game-lawsuit-20121004.
71
No Doubt v. Activision Publ'g, Inc., 122 Cal. Rptr. 3d 397, 402-03 (Cal. Ct. App.
2011), review denied (June 8, 2011).
72
73
74
Id.
Id. at 410-11.
Kidd, supra note 69.
2012 saw the apparent conclusion of the five-year-long lawsuit between Silicon
Knights, Inc. and Unreal Engine, the creator of Epic Games.75 This litigation was
actually started by Silicon Knights, but Epic Games ended up with a large judgment in its
favor based on several different claims.76
Silicon Knights, a licensee of the Unreal Engine 3, sued maker Epic in 2007 for
fraudulent misrepresentation, claiming that the UE3 engine contained so many flaws that
it was unusable for its game, Too Human.77 Silicon Knights went on to claim that it was
forced to create a proprietary engine of its own for the game in order to meet its planned
timelines.78 But Silicon Knights, which originally claimed upwards of $63 million in
damages, now must pay Epic Games nearly $10 million.79
75
Adam Rosenberg, Silicon Knights Ordered to Destroy Code, G4TV (Nov. 9, 2012),
http://www.g4tv.com/thefeed/blog/post/729401/silicon-knights-ordered-to-destroygames-code-in-epic-lawsuit/.
76
Wesley Yin-Poole, Silicon Knights Ordered to Recall and Destroy, Eurogamer.net
(Nov. 9, 2012), (http://www.eurogamer.net/articles/2012-11-09-silicon-knights-has-amonth-to-recall-and-destroy-all-unsold-copies-of-too-human-x-men-destiny-more.
77
Complaint at 1, Silicon Knights, Inc. v. Epic Games, Inc., No. 5:07-CV-275
(W.D.N.C. filed July 8, 2007); See Order on Motion for Miscellaneous Relief, Silicon
Knights, Inc., No. 5:07-CV-275-D (W.D.N.C. Dec. 22, 2011).
78
Id.
79
Order on Motion for Miscellaneous Relief at 2, Silicon Knights, Inc., No. 5:07-CV-
275-D.
In response to Silicon Knights's claims, Epic counterclaimed under theories of
breach of contract (The UE3 Licensing Agreement), copyright infringement, and trade
secret misappropriation, claiming that Silicon Knight's new engine, SKE, used portions
of UE3's code and thus violated Epic's copyrights, trade secrets, and the licensing
agreement.80
Once the time came to compare the SKE code to the UE3's, clear evidence of
copying came to light.81 The court was aided in its decisions by a showing at trial that
Silicon Knights not only copied Epic's functional code but also some of its nonfunctioning programmer comments, which even contained the typographical errors left
intact by Silicon Knights.82
On May 30, 2012, the jury returned a verdict for Epic Games in the amount of
$2.65 million for its breach of contract counterclaim and $1.8 million for its copyright
infringement and trade secret misappropriation counterclaims.83 The court entered a
judgment reflecting this verdict the same day.84 Per federal and local court rules and state
and federal laws, the court also awarded Epic costs ($277,852.13), attorney's fees for the
copyright infringement and trade secret counterclaims (but not for BOC counterclaim)
80
Order on Post-Trial Motions at 1, Silicon Knights, Inc., No. 5:07-CV-275-D
(W.D.N.C. Nov. 7, 2012).
81
Id. at 18.
82
Id.
83
Id.
84
Id.
($2,091,722.83), prejudgment interest ($2,302,147.96), and all but denied expert witness
fees ($650). (In total, a pittance of $680 was awarded out of over $1,000,000.00
claimed).85 Silicon Knight was also required to wipe all Unreal code from its engine and
to recall and destroy any existing copies of games in which Unreal Engine code could be
found, including Too Human, The Box/Ritualist, The Sandman, X-Men:Destiny, and Siren
in the Maelstrom.86
This case shows that even "borrowing" portions of code or ideas from copyrighted
software can be a very expensive proposition.
Gate Five, LLC v. Beyoncé Knowles-Carter
In 2011, Gate Five filed suit against singer Beyoncé for allegedly breaching a
contract related to the in-development game Superstar: Beyoncé.87 The conflict arose
when Beyoncé terminated the contract she had negotiated to license her image and songs
for Gate Five's game, Superstar: Beyoncé—a move that cost Gate Five $6.7 million in
previous investment and 70 jobs.88 Beyoncè claims that she merely exercised a financing
contingency in the contract, which required Gate Five to raise a certain amount of capital
for the game by a deadline; if Gate Five did not raise the capital in time, Beyoncè could
85
Id at 47.
86
Order on Post-Trial Motions at 40-41, Silicon Knights, Inc., No. 5:07-CV-275-D.
87
Dan Rogers, Part 2: The Five Most Influential Video Game Lawsuits of 2012,
Gamasutra (Dec. 12, 20012, 7:50 PM),http://www.gamasutra.com/blogs/DanRogers/201
21231/184221/Part_2_The_Five_Most_Influential_Video_Game_Lawsuits_of_2012.php.
88
Id.
back out of the deal.89 Gate Five did not, in fact, meet the deadline but countered with an
estoppel argument, saying essentially that Beyoncè waived her right to financing
contingency based on representations she and her representatives made, namely that the
financing arrangements, though late, were acceptable to them.90
It now seems that this case may proceed to trial, as Beyoncé's motion for
summary judgment was denied by the New York court hearing the case, and the denial
has been confirmed by the appellate division.91 Gate Five is seeking to recover the lost
investment and lost profits (which it estimates at $100 million) and to enjoin Beyoncé
from working on any competing video game.92 As one commentator noted, this case
could be significant in showing the disconnects that can occur between the talent and
89
Eriq Gardner, Judge: Beyonce Video Game Lawsuit Can Move Forward, The
Hollywood Reporter (Dec. 8, 2011, 1:44 PM), http://www.hollywoodreporter.com/thresq/beyonce-video-game-lawsuit-gate-five-271442.
90
91
Gate Five, LLC v Knowles-Carter, 953 N.Y.S. 193, 193-94 (N.Y. App. Div. 2012).
Ron Dicker, Beyoncé Lawsuit: $100 Million Claim Against Singer Over Dance Video
Game Gets Go-Ahead, HUFFINGTONPOST.COM (Updated: 11/20/2012 3:36 PM),
http://www.huffingtonpost.com/2012/11/19/beyoncé-lawsuit-100-milli_n_2158954.html;
See id.
92
Complaint, Gate Five, LLC v. Beyoncé Knowles-Carter, No. 0651094-2011 (N.Y. Sup.
filed May 9, 2011).
video game industries and could indicate that an especially high level of communication
is needed for joint ventures, such as the game at the center of this case.93
Zynga v. KIXEYE
A war of words that began with a KIXEYE recruiting video lobbing thinly-veiled
criticisms at Zynga has culminated in an equally-vitriolic lawsuit between the two. The
legal dispute centers on Dan Patmore, a former programmer on Zynga's popular CityVille
free-to-play who was hired by KIXEYE.94 In Zynga’s complaint, which claims breach
of contract and misappropriation of trade secrets, the social games giant accuses Patmore
of violating his employment agreement and engaging in "wholesale theft" of Zynga
documents and secrets.95 Zynga originally just sued Patmore; but, it has since amended
its complaint, naming KIXEYE as a co-defendant.96
This lawsuit is still in the early stages, but could be the bellwether of things to
come. The demand for talent in the industry, especially for social-games programming
93
Dan Lee Rogers, Countdown: The 5 Most Influential Video Game Lawsuits of 2012:
Number 4 Gate Five LLC v. Beyoncé Knowles-Carter, Law Office of Dan Lee Rogers
(Dec. 31, 2012), http://dlr-law.com/3/post/2012/12/countdown-the-5-most-influentialvideo-game-lawsuits-of-2012-2-of-5.html.
94
Kim-Mai Cutler, The Legal Tussle Between Zynga and the Cityville GMA, Techcruch
(Oct. 16, 2012), http://techcrunch.com/2012/10/16/kixeye-harbin-suit-zynga.
95
Id.
96
Id.
talent, is well-publicized.97 If the known-to-be-litigious Zynga continues to lose talent to
competitors, lawsuits such as this one could become the story of the next year.
Bethesda v. Interplay
Bethesda and Interplay settled their long-running dispute at the turn of the New
Year.98 Bethesda had sued Interplay for breach of contract and trademark infringement
stemming from Interplay's use of Bethesda's Fallout brand.99 Interplay—which created
the Fallout series and sold it to Bethesda in 2007— retained the rights to sell preexisting
Fallout games and also licensed back the series so that it could develop a Fallout
MMORPG.100 Bethesda claimed that Interplay had failed to seek its approval on
marketing materials for the preexisting titles and that Interplay entered into licensing
agreements for those titles with distribution channels, such as Steam; both actions could
97
Dean Takahashi, Kixeye Steal General Manager from Zynga, Venturebeat (Aug. 23,
2012, 6:00 AM), http://venturebeat.com/2012/08/23/kixeye-steals-a-general-managerfrom-zynga/.
98
Mike Rose, Bethesda, Interplay Reach Settlement in Fallout Dispute, Gamasutra (Jan.
3, 2012), http://www.gamasutra.com/view/news/39441/Report_Bethesda_Interplay_
reach_settlement_in_Fallout_dispute.php#.UO2W5m_hrhe.
99
Kris Graft, Bethesda Sues Interplay Over Use of Fallout License, Gamasutra (Sept.
11, 2009), http://www.gamasutra.com/php-bin/news_index.php?story=25226#.UO2XlG_
hrhd.
100
Id.
have been in violation of the licensing agreement between Bethesda and Interplay.101 In
a somewhat unusual development, settlement details are expected to be (at least partially)
announced later this year.102
Antonick v. Electronic Arts, Inc.
EA is locked in a legal battle with Robin Antonick, a longtime employee and creator
of the software that allowed the football teams in EA's Madden series to use eleven-man
teams rather than five; this feature of course plays a huge part in Madden's realism, and
thus arguably its popularity. 103 Antonick ultimately signed a few employment contracts,
including one in 1986 that guaranteed him royalties “on not only the versions of the
Madden game developed by him but also any derivative works and any works ‘derived’
from derivative works.”104 Antonick claims this contract was modified over subsequent
years, though never voided or expired.105 The case centers on whether the more recent
Madden games are derivative works of the ones Antonik worked on and whether EA
deceived Antonick in any way about this aspect of them.106
101
Id.
102
Id.
103
Complaint for Breach of Contract and Fraud at 1, 4-5, Antonick v. Electronic Arts,
Inc., No. 3:11-cv-01543 (N.D. Cal. filed March 30, 2011).
104
Id. at 1.
105
Id. at 8, 19.
106
Id. at 1, 19-20.
The case also mentions several other EA sports titles which may contain vestiges of
Antonick's engine.107 Antonick alleges that EA told him that the new games were based
on new code, which did not include any of his work; he further claims that he remained
unaware until 2009—a fact that is critically important to the case because of statute of
limitations considerations.108 In fact, EA did file a motion to dismiss on statute of
limitations grounds, but the court found that the statute of limitations did not begin to run
until Antonick's discovery in 2009.109 In theory, this should be a relatively simple case,
comparing Antonick's code to that of the EA games alleged to be using it,. However,the
financial consequences for EA could be dire, as the Madden series of games has made
about $4 billion for EA, and Antonick could have a claim to royalties from his contract
based on that figure.110 2012 saw the case tangled in continuance motions and delayed
hearings. Currently, EA's motion for Summary Judgment will be heard in late January.111
West v. Activision Publishing, Inc.
107
Id. at 23.
108
Id. at 1-2, 21-22.
109
Order Denying Motion to Dimiss at 1, 9-10, Antonick v. Electronic Arts, Inc., No.
3:11-cv-01543 (N.D. Cal. Filed March 30, 2011).
110
Id.
111
Order and Stipulation at 2, Antonick v. Electronic Arts, Inc., No. 3:11-cv-01543 (N.D.
Cal. Filed March 30, 2011), available at: http://docs.justia.com/cases/federal/districtcourts/california/candce/3:2011cv01543/238889/259/.
This highly contentious case settled—somewhat surprising—on the eve of trial
this year.112 The terms are undisclosed, but EA (opposite Activision in the suit) described
the settlement as "a vindication of Vince [Zampella] and Jason [West], and the right of
creative artists to collect the rewards due for their hard work."113 This description would
seem to imply the settlement, at least in EA's opinion, was more favorable to West and
Zampella.114
In 2002, Activision acquired Infinity Ward Studios, which was founded by West
and Zampella and had been responsible for the popular Modern Warfare and Call of Duty
titles.115 The two signed employment agreements that let them retain creative control
over Infinity Ward and that laid out compensation terms, including royalty payments for
Modern Warfare 2.116 However, Activision terminated West and Zampella for
insubordination on March 1, 2010, which was just weeks before the royalty payments for
112
Michael McWhertor, Settlement Reached in Call of Duty’s Billion Dollar West v.
Activision Lawsuit, Polygon (May 31, 2012, 4:26 PM), http://www.polygon.com/gaming
/2012/5/31/3049988/activision-call-of-duty-trial-placeholder.
113
114
115
Id.
Id.
Complaint for Breach of Contract, Breach of the Implied Covenant of Good Faith and
Fair Dealing, Wrongful Termination in Violation of Public Policy, and Declaratory Relief
at 5-6, West v. Activision Publ’g, Inc., No. SC107041 (Cal. Super. Ct. L.A. Cnty. Mar.
3, 2010).
116
Id. at 5, 7-8.
Modern Warfare 2 were set to begin.117 West and Zampella sued, alleging that the
termination was pre-textual and meant to help Activision avoid making those royalty
payments.118 Activision countersued West and Zampella and later added EA based on
interference grounds.119 This was precisely the type of high-stakes, very personal case
that many assumed would go through to trial; but ultimately, a settlement was able to be
reached.
Financial Review of 2012
As more gamers moved to mobile and social gaming, retail sales continued to slip
in 2012 as they have been since 2008.120 Console gamers are now outnumbered
117
Id. at 8, 10.
118
Id. at 9-10.
119
Ben Gilbert, Activision Blasts West and Zampella in Countersuit, JOYSTIQ (Apr. 9,
2010), http://www.joystiq.com/2010/04/09/activision-blasts-west-and-zampella-incountersuit; Edvard Petterson, Electronic Arts Must Defend $400 Million Activision Suit,
Judge Says, BLOOMBERG (Dec. 21, 2011, 11:01 PM),
http://www.bloomberg.com/news/2011-12-21/electronic-arts-asks-judge-to-dismiss-400million-activision-claims.html.
120
Lance Whitney, Xbox 360 Shines Bright in Otherwise Dismal Damge Market, CNET
(Nov. 9, 2012, 8:57 AM), http://news.cnet.com/8301-10805_3-57547692-75/xbox-360shines-bright-in-otherwise-dismal-game-market/.
considerable but spend an average of 35 percent more than the mobile gamer.121 The
decline leveled off in the fourth quarter as Halo 4, Assassin’s Creed III, and Call of Duty:
Black Ops 2 were released for the holiday season.122 These games actually sold better
than games in the top five last year.123 The problem was the titles outside of the top five
did not show quite as well.124 Overall, 2012 was the continuance of a trend that includes
a wider, more diverse market but perhaps a less profitable one.
Unfortunately, a bleak 2012 saw a few game companies fold, most notably THQ
and 38 Studios.125 The 38 Studios collapse actually became quite a mainstream story,
due in part to the fact that the company was owned by sports legend Kurt Schilling. Also
tied up in this bankruptcy was the issue of state support for video game development.
Schilling,who played perhaps his most storied seasons for the Boston Red Sox, was lured
121
Mike Snider, NPD: Video Game Sales Slide Continues, Game Hunters (Sept. 6,
2012, 8:25 PM), http://content.usatoday.com/communities/gamehunters/post/2012/09/
npd-video-game-sales-slide-continues/1.
122
Juan Rodriguez, Black Ops 2, Halo 4 and Assassin’s Creed 3 Top Game Charts for
November, GAMENGUIDE (Dec. 7, 2012, 2:15 PM), http://www.gamenguide.com/
articles/4431/20121207/black-ops-2-halo-4-assassins-creed-3-sales-charts-november.htm.
123
Id.
124
Id.
125
Core Licht, Videogame Maker THQ Files for Bankruptcy, Atlanta Bankruptcy News
(Dec. 12, 2012, 3:12 PM), http://atlantabankruptcynews.com/2012/12/videogame-makerthq-files-for-bankruptcy-sells-its-studios.html.
out of Massachusetts to Rhode Island by millions of dollars in preferential loans issued
by the Rhode Island government.126 38 Studios defaulted on the very first payment of
these loans, and subsequently, laid off all of its workforce, some 400 employees.127 It
was said that 38 Studios would have needed to sell two million copies of its game,
Kingdoms of Amalur: Reckoning, in order to stay solvent; but ultimately, it only shipped
between 1.3 and 1.4 million.128 When paired with the chilling of the MMO market—
which negatively affected investment prospects of 38 Studios’ main in-development title,
Copernicus— this lackluster performance doomed 38 Studios, which ultimately filed for
chapter 7 bankruptcy. 129 Precisely what affect this debacle will have on government
involvement in video game funding remains to be seen, but it certainly stands as an
example of how things can go very wrong.130
126
Connor Sheridan, 38 Studios Spent $133 million Before Bankruptcy, GAMESPOT
(July 26, 2012), http://www.gamespot.com/news/38-studios-spent-133-million-beforebankruptcy-6388664.
127
Id.
128
Andrew Goldfarb, 38 Studios Executives Testify in Bankruptcy Hearing, IGN (July
13, 2012), http://www.ign.com/articles/2012/07/13/38-studios-executives-testify-inbankruptcy-hearing.
129
Id.
130
Jason Hidalgo, Fallen Kingdom, Engadget (Sept. 7, 2012),
http://www.engadget.com/2012/09/07/38-studios-collapse-and-risk-of-public-private-
THQ, which had been in financial trouble for most of the year, filed for
bankruptcy protection on Dec. 19, 2012.131 Originally set to be quickly sold in its
entirety to investor Clearlake Capital for around $60 million, Bankruptcy Judge Mary
Walrath declared earlier this year that she was "not convinced that we are under the gun"
to have a quick sale, and ultimately postponed the sale.132 Now, THQ's various studios
and titles will be bid upon separately on January 22, 2013, and will be sold separately if
the net bids of the individual assets generate more than the $60 million that Clearlake bid
for the whole package.133 Perhaps the most interesting aspect of this case will be seeing
where beloved THQ franchises, such as Saints Row, Red Faction, and Darksiders, will
end up as well as whether any investor will pick up and carry on any of THQ's indevelopment projects, which include South Park: The Stick of Truth, Company of Heroes
2, and Metro: Last Light.134
partnerships/ (for viewing an in-depth discussion of state-sponsored programs for tech
and video game development).
131
132
Licht, supra note 124.
Michael Bathon, THQ Denied Approval of Bankruptcy Sale Process and Loan,
Bloomberg (Jan. 4, 2013, 11:01 PM), http://www.bloomberg.com/news/2013-01-05/thqdenied-approval-of-bankruptcy-sale-process-and-loan-1-.html.
133
Alexander Sliwinski, THQ Will Seel Whole Unless Exceeded by Individual Asset
Bids, Joystick (Jan. 8, 2012, 8:30 AM), http://www.joystiq.com/2013/01/08/thq-auctiondetails/.
134
See Bathon, supra note 131.
1
Def. Motion at 2, Tetris Holding, LLC v. Xio Interactive, LLC. No. 09-6115 (D. New
Jersey)
2
Tetris Holding, LLC v. Xio Interactive, LLC, 863 F.Supp.2d 394, 400. (D. New Jersey
2012)
3
Id. at 410.
4
Id. at 410.