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Valve Sues Activision In Royalty Battle, Activision Threatens Countersuit
Valve Sues Activision In Royalty Battle, Activision Threatens Countersuit
May 1, 2009 | By Chris Remo

May 1, 2009 | By Chris Remo
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More: Console/PC



Developer Valve Corporation has filed suit against publisher Activision Blizzard, claiming the latter company recently underpaid royalties to Valve by nearly half a million dollars -- after Activision threatened it would countersue if the Bellevue, Washington-based studio attempted to secure those funds.

The dispute dates back to a 2002 copyright infringement claim by the Half-Life series creator against then-publisher Sierra Entertainment, whose assets and contractual obligations now belong to Activision, which resulted in the 2005 termination of the publishing agreement between the two companies.

At the time of the 2005 settlement, Sierra had agreed to stop generating cyber cafe licenses to players of Valve games, including Counter-Strike.

In addition, the publisher ceased manufacturing and distributing physical retail versions of Valve games, including Half-Life, Half-Life 2, Counter-Strike, Counter-Strike: Condition Zero, and Counter-Strike: Source.

As detailed in a report filed by Valve this week and revealed by GamePolitics, Valve and Sierra agreed in 2005 that an audit arbitrator would determine the amount of royalties owed Valve, and that the two companies would abide by that arbitrator's final decision.

As it turns out, that judgment was not made until this month. On April 6, the arbitrator declared Activision (formerly Sierra) to owe Valve a total sum, including interest, of $2,391,932.

On April 7, referring to a claim first made March 3, Activision declared Valve to have been previously overpaid $424,136 in royalties, and said it would subtract that amount from its ordered payment. Thus, Activision cut a check for $1,967,796 -- the court-ordered amount minus the alleged overpayment.

But Valve says Activision never raised its overpayment allegation with the arbitrator, and the two companies already had a longstanding agreement to recognize the arbitrator's judgment. Furthermore, Activision has already threatened to sue Valve to recover that $424,136 if Valve seeks to confirm the $2,391,932 order.

As it turns out, Valve is doing just that. The company is seeking confirmation by a Washington court of the April 6 judgment, and is requesting compensation from Activision for its additional resultant legal fees -- not to mention "such other and further relief as the Court deems just and equitable."

Gamasutra has contacted Activision for comment as to whether it indeed plans on countersuing, and as to the nature of the alleged overpayment.


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Comments


Peter Park
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I don't know, but I'm firmly behind Valve. ...I guess it's because Activision changed its hat to a more business, in-for-money publisher with the late CEO. So, I hope Valve recovers the money it deserves.

Ryan Filsinger
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Activision's lawyers sure are busy these days.

Travis Shrodes
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It's unfortunate that Activision gets the bill on this one, but they bought Vivendi and that includes the problems it never resolved, I guess. Sucks for Acti, but Valve are definitely in their rights.

Dustin Mellen
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It's rather immature for Activision to renege on a legally binding agreement they made four years ago. They made their bed, now they should lay in it.

Matt Patterson
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Travis, I think you have the story flipped around. The French conglomerate, Vivendi SA, purchased Activision, then merged Vivendi Games (Sierra, Blizzard, etc.) with Activision to form Activision Blizzard. IMO it's Activisions bad for not sticking to what the arbitrator laid out and failing to treat the past overpayment as a separate issue.

Travis Shrodes
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Matt, if I understand it correctly, the board members of Vivendi's parent company purchased Acti after the merge (52% stake of ActiBlizz). But my intention was to point out the original party involved was Sierra, then Vivendi, and it feels that the problems stemming from the 2002 argument comes out to be bad press for Activision's name now rather than the blame laying with the original party involved.



And yes, I agree it's bad taste for Acti to leave Valve to look like the badguy in having them go one step further to claim money they've been legally awarded already (if we go by the decision reached April 6th).

Paul Shirley
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In 1986 only threatening to discuss the matter LOUDLY in public with journalists in front of Rod Cousins at a trade show got Spindizzy royalties actually paid. Contract canceled when they did it again next quarter.



Early 90's, only a lawsuit got me even a Spindizzy Worlds royalty statement, a high court order the actual cash after years waiting for me to run out of money for legal fees.



Roll on another decade, changes or ownership and bankruptcy and they're still being sued over missing royalties.



Activision never change do they, paying royalties just one option among many.

Steve Watkins
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Ah, 1986 ... Spindizzy (excellent game, BTW) ... then you're refering to the Mediagenic version of Activision, run (into the ground - my personal opinion having been with a Mediagenic co for 3+ years) by Davis. Not surprising what happened, given all the BS going on during those years.



Note to Kotick: Pay Valve. There's no sequel/franchise revenue there, Bobby. So cut it loose as you have with Ghostbusters, etc. :)

John McMahon
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I'm deeply confused by the recent contorted history feud between Valve and Activision. Mainly what's going on with the 2 mill owed.



I re-iterated someone else's comment, Activision's lawyers are rolling in the money right now with all the suits

steve roger
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It's simple. Valve had an agreement with Viendi/Sierra to have it's games published. Valve quit that agreement and V/S was pissed. So they had a lawsuit and both sides decided to use arbitration to come up with an amount that would settle this pisser. The arbitrator said that V/S would have to pay Valve 2.1 million to Valve plain and simple. In the meantime V/S was turned into Activision by a merger so Activision inherented this mess. Activision decided to do a bit of poking around the books and found that there was a monumental screw up by V/S accountants in an amount nearing a half million. So Activision decided that it would preempt the settlement amount and pay only about 1.9 mill in hopes to avoid the recovery of the full 2.1 mill because if they paid the full 2.1 mill they would be out about a million for a while. Whch why they are balking at the 2.1 figure (consider the fact that they would be already in the red for the overpayment they made to Valve that they found, and they would be paying another half million more than they should if paid the full 2.1 million.) A million dollars is not chump change.



Everyone should know that Valve is not saying that the overpayment of the half million isn't accurate. Rather, they are just trying to stick it to Activision because they can.



Anyway, it always comesd down to money. I am sure that it is much more costly to Activision to honor the arbitration agreement than it is to fight and recover their half million.



There is going to be more said soon once Activision files it's complaint regarding the half million. Don't be surprised to hear that Valve knew about the overpayment.


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