Royalties went unpaid for two years; No settlement reached as lawyer seeks full figure
Publishing giant Activision has paid a portion of its employees $42 million in long-delayed royalty payments for Modern Warfare 2, as part of a wider lawsuit between the company and development staff.
The lost bonuses were initially due after the release of Call of Duty Modern Warfare 2, which broke sales records when it launched in November 2009.
In 2010, as many as 38 development staff – known collectively as the Infinity Ward Employee Group – went on to sue Activision for unpaid royalty payments.
At the same time, and in a separate case, two of the studio’s directors – Vince Zampella and Jason West – launched a lawsuit against Activision, seeking various damages after the pair was dismissed for “insubordination”.
That lawsuit, which also incorporates EA, is still going ahead.
Activision’s legal team yesterday reviewed matters in the Zampella and West pre-trial and, according to games site Polygon, declared that certain legal matters do not knot up with the Infinity Ward Employee Group’s case.
The publisher’s legal team now believes paying the Employee Group will not have a prejudicial effect on the outcome of the Zampella and West trial.
It is not clear why the legal team had not made such an observation back in 2010, when the money was first owed.
Bruce Isaacs, attorney for the Infinity Ward Employee Group, said that the pay-out was a "cynical attempt to look good before the [Zampella/West] jury trial."
“Although it is a meaningful payment it is only a small portion of what we are seeking in litigation,” he said.
“It is outrageous that they made us wait, they obviously knew they owed the money and this just shows that they breached the contract."
The 38 Infinity Ward developers are still pursuing the lawsuit for further unpaid royalties.
In 2010 the group’s attorney claimed that as much as $125 million was owed.
Activision’s $42 million pay-out includes 10 per cent interest, and is added to the original $22 million already issued to staff.
Next month the two biggest games publishing empires – Activision and Electronic Arts – will collide in a Los Angeles court over the Zampella and West lawsuit.
Company CEOs Bobby Kotick and John Riccitiello could both be summoned, sworn to oath, and answer questions on company practices.
Developers may be required to bare all on working conditions.
Ex directors, such as EA’s John Schappert, could be asked to defend a company he no longer works with.
What’s at stake is extraordinary, says a prominent games lawyer.
“Large amounts of money, the parties' reputations and - above all - the control and future of the Modern Warfare franchise are all being fought for here,” says Jas Purewal, of Osborne Clarke and writer at Gamer/Law.
West and Zampella are suing Activision for some $36 million in damages for alleged unfair dismissal and the unpaid royalties associated, Purewal explains.
“The crux of this battle is the Call of Duty and Modern Warfare IP, over which West and Zampella have argued they have effective control,” Purewal says.
Activision denies liability and has counterclaimed against West and Zampella over the circumstances in which the pair had left Infinity Ward, claiming they were in contact with EA during their employment with a view to jump ship.
Activision's $400m EA lawsuit
Months into the West Zampella vs Activision lawsuit, the Call of Duty publisher threw EA into the mix.
Activision alleges that EA improperly encouraged and assisted West and Zampella to leave Infinity Ward and join their company instead.
Purewal says EA has been accused of illicitly signing an employment contract with both Zampella and West, meaning in turn the pair have bought confidential information and personnel from their old employer to their new one.
Activision is claiming damages of up to $400 million; a “very substantial amount even for Activision and EA”, says Purewal.
Shortly after being dismissed, Zampella and West launched an independently owned studio, called Respawn.
The group has hired a number of developers who were employed at Infinity Ward when under the command of West and Zampella. EA does not own the studio, but has signed a long-term publishing agreement with the group.
[Timeline - THE INFINITY WARD ROW]
[Activision/EA lawsuit: THE KEY COURTROOM BATTLES]