$400m at stake as Activision takes EA to court

$400m at stake as Activision takes EA to court

By Rob Crossley

June 20th 2011 at 10:50AM

Reputations, the Modern Warfare IP and vast sums of cash on the line in 'landmark lawsuit'

A US supreme court judge has granted Activision and EA a courtroom to finally settle the Infinity Ward lawsuit, in a move that paves the way for what could be the most costly legal dispute in the industry’s thirty-year history.

The lawsuit could cost Activision as much as $125 million, according to court documents. And the firm’s well-known CEO, Bobby Kotick, could be summoned to court to face cross-examination from EA’s group of highly-paid attorneys.

In its countersuit, Activision seeks $400 million in damages from EA – a penalty that, if enforced by the courts, would have a transformative effect on the Battlefield publisher. Electronic Arts has been fighting a haemorrhaging cash flow for three years.

Jas Purewal, lawyer at Osborne Clarke and writer of Gamer/Law, said the case “has the potential to become one of the landmark lawsuits in the games industry”.

“Large amounts of money, the parties' reputations and - above all - the creative control and future of the Modern Warfare franchise are all at stake,” he told Develop.

The legal row, which will be heard by a jury, hinges on the performance of Vince Zampella and Jason West. The two were in command at Infinity Ward when, in March last year, Activision fired the pair for alleged “insubordination”.

The duo founded a new studio, Respawn Entertainment, and signed with EA. More than thirty Infinity Ward employees followed West and Zampella out the door.

Now Activision is facing allegations that he owes its departed developers around $125 million in unpaid royalty payments. West and Zampella also claim to own the Modern Warfare IP.

Earlier in the year, a separate superior court judge granted Activision the right to pursue its countersuit.

Activision is seeking $400 million, not from Zampella and West, but their new business partner EA.
Activision claims to have proof that EA is guilty of “tortuous interference, unfair competition, a breach of fiduciary duty” in poaching the duo.

Email evidence appears to allege that, since as early as July 2009, EA CEO John Riccitiello had been in discussion about Zampella and West’s employment.

The payoff sizes at stake for both parties makes this one of the most expensive lawsuits in the game industry’s history, Purewal said.

“The great majority of lawsuits settle before or in the closing stages of trial preparation, but a minority proceed all the way,” he added.

“It's possible therefore that this case may yet settle, but it's seldom a good idea to predict the outcome of a lawsuit - especially one as high-profile as this. 

“Depending on how the lawsuit progresses, we could potentially therefore see a trial later this year or early next year."