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Valve Sues Activision In Royalty Battle, Activision Threatens Countersuit
by Chris Remo
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May 1, 2009
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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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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).
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.
Note to Kotick: Pay Valve. There's no sequel/franchise revenue there, Bobby. So cut it loose as you have with Ghostbusters, etc. :)
I re-iterated someone else's comment, Activision's lawyers are rolling in the money right now with all the suits
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.