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Duke Nukem deal goes sour, as 3D Realms sues Gearbox

 Duke Nukem  deal goes sour, as 3D Realms sues Gearbox
June 13, 2013 | By Kris Graft

A friendly transaction between two independent video game studios has gone sour, and it's all Duke Nukem's fault.

Duke Nukem developer 3D Realms filed suit today against Borderlands house Gearbox Software, demanding over $2 million in royalties related to sales of the Duke Nukem franchise.

The complaint claims that Gearbox failed to pay 3D Realms royalties stemming from a February 2010 agreement that granted Gearbox certain rights to develop future Duke Nukem games Duke Nukem Forever (released in 2011) and an unreleased title, Duke Begins. Duke Nukem Forever was famously in development for over 12 years before Gearbox stepped in to take over development.

The knife-twist is the fact that the parties who inked the deal, Gearbox president Randy Pitchford and 3D Realms founders Scott Miller and George Broussard, had been friends for years. Pitchford had even worked on the original Duke Nukem before founding Gearbox.

But 3D Realms' complaint alleges that after the deal closed, Gearbox "refused and failed to make substantial royalty payments" that were due as part of the Duke Nukem purchase agreement. 3D Realms also claims that Gearbox is blocking an independent auditor from verifying royalty amounts.

On top of royalties, 3D Realms claims that as part of the 2010 deal, Gearbox assumed "certain liabilities," including the repayment of a $2.9 million loan that 3D Realms owed to another software developer.

The details surrounding that large loan are a point of contention -- 3D Realms claims Pitchford agreed that Gearbox would start paying royalties to 3D Realms as soon as Gearbox received its royalties from Duke Nukem sales, and those royalty rates would be paid before Gearbox could start recouping on the $2.9 million loan.

The complaint alleges: "Despite the assurance it provided 3D Realms, Gearbox now claims that it is entitled first to deduct the full amount of the debt it assumed (i.e. the entire $2.9M Duke Loan) before any royalty payments become due to 3D Realms. Thus, Gearbox is turning the tables and taking a position directly opposite to [a previous email from Pitchford to Miller]." [Emphases in original.]

In a statement to Law360, Gearbox said it got the short end of the bargain, losing money and credibility, while 3D Realms got all of the benefit.

"Gearbox, in fulfillment of its commitments, enriched 3D Realms, saved 3DR from its debts and rescued 3DR from its failed dozen-plus year attempt to ship Duke Nukem Forever," the statement read. "...3DR turned out to be the only beneficiary of the deal."

The full filing is below.

Duke Nukem by Kris Graft

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