Its very rare for everyone's favourite, forum resident, lawyer-like bear to encounter any reported legal case which has a positive game creating slant. But in today's case reports I came across this Lawtel summary. Its very interesting. It looks like Atari has been failing to pay sufficient royalties to Chris Sawyer for his excellent Rollercoaster games ... more worrying is that Atari appears to have tried to stop Sawyer from finding that out (by refusing his right to audit their records).
[2006] All ER (D) 278 (Oct)
Sawyer v Atari Interactive Inc
Chancery Division
Cooke J
19 October 2006
Practice – Striking out – Counterclaim – Parties entering licence agreements for publishing of certain computer games – Claimant alleging breaches of agreements – Defendant relying on counterclaim – Whether counterclaim having reasonable prospect of success.
The claimant was a writer and developer of computer games and the defendant company was in the business of publishing and distributing computer games. Between 1998 and 2002, the claimant entered into four licence agreements with the defendant. By those agreements, the claimant licensed the defendant, in exchange for royalties, to publish the first two ‘Roller Coaster Tycoon’ (RCT) games, (RCT1 and RCT2), which were part of a series of computer games, and two ‘add-ons’ to RCT1. The defendant was the accounting party under all the licence agreements. In May 2003, the claimant gave the defendant notice of his intention to conduct an audit for the period 1 January 1999 to 31 March 2003, as provided for under the licence agreements. However, the defendant refused to permit an audit in respect of the period preceding 26 July 2001. A preliminary report produced by forensic accountants and a further supplementary report revealed numerous accounting errors with regard to the royalties in respect of RCT products. The claimant issued proceedings against the defendant alleging: (i) breaches of the licence agreements by refusing the audit to take place, and (ii) breaches consisting of under-accounting, totalling $US 4,823,038.00. The defendant served a defence and counterclaim. The defence disputed the alleged under-accounting and the counterclaim pleaded, inter alia: (i) a claim for repayment of loyalties in the sum of $US 1,646,000.00, on the basis that the defendant was entitled to deduct more trade and volume discounts than it actually had, and (ii) a claim that in respect of a new game, RCT3, due to be released by a developer, F Ltd, and published in part by the defendant, the claimant had breached its obligations of exclusivity in an ancillary rights agreement entered into between the parties. The claimant applied to strike out the defendant’s counterclaim and for consequential partial summary judgment.
The court ruled: On the facts and the evidence, there was no basis for the allegations raised in the counterclaims. It followed that there was no reasonable prospect of them succeeding at trial. Accordingly, they would be struck out.
Summary judgment would be granted in respect of four specific sums due under certain of the under-accounting heads.
Andrew Hunter (instructed by Eversheds) for the claimant.
Paul Lowenstein (instructed by Harbottle & Lewis LLP) for the defendant.
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