Bethesa vs Interplay: the Fallout lawsuit isn’t over

Reports that Bethesda and Interplay have reached a settlement in their long-running US lawsuit over the Fallout series are incorrect.  All that has happened is that one element of the lawsuit has been dropped by Bethesda.  Until we hear differently from the companies themselves, the rest of the lawsuit seems very much alive.

A quick summary of the events so far: Interplay sold the Fallout IP to Bethesda in 2007, as part of which it is said that the parties agreed that Interplay would retain certain license rights, including the right to develop a Fallout MMO.  In 2009, Bethesda brought a lawsuit claiming that Interplay is in breach of that agreement, has infringed Bethesdra’s trademark rights in the Fallout series and that, as a result, Interplay has forfeited all remaining rights in the Fallout IP.  Interplay denied Bethesda’s claims and counterclaimed that it still has rights in the Fallout IP, including the right to create a Fallout MMO (known mysteriously as “Project V13”.

At the end of last year, Bethesda unsuccessfully applied to court for a preliminary injunction effectively prohibiting Interplay from doing anything with the Fallout IP until the resolution of the lawsuit.  A month later, Bethesda launched an appeal against the court’s refusal to grant the preliminary injunction.  

Now it appears that the parties have agreed some sort of deal which involves Bethesda dropping its appeal over the preliminary injunction – this is the “settlement” that the internets have been talking about today.  You can see an extract from the court order at Duck and Cover.

BUT – this is the crucial point – as a matter of law that deal does not affect the key issue in the lawsuit, i.e. who actually owns the Fallout IP.  Unless that wider issue is also settled, then the ownership of the Fallout IP will in principle have to be determined at trial.  And we’ve seen nothing public about such a wider settlement so far.

That said, legal rules aren’t the only factor at play here.  Bethesda forced an early trial of strength by seeking a preliminary injunction, which led to the court weighing the strength of its case and finding it wanting.  Now Bethesda has abandoned its appeal against the refusal to grant the preliminary injunction.  After two legal defeats, Bethesda must be considering its options.  Perhaps it will fight on to trial.  Or, maybe we will see a real comprehensive settlement being reached in the near future – though clearly for a legal settlement to work there would first have to be a commercial agreement between Interplay and Bethesda over what they will do with the Fallout IP.  One obvious solution to this would be for Bethesda to buy Interplay, but that may be so commercially undesirable/impossible to the parties that that there is no choice but to fight on…

For the moment, we just don’t know what is happening in the wider litigation for sure.  That said, Gamespot reports that Interplay has made a SEC filing in which it stated “Interplay will continue to defend its rights and to pursue its Counter-Claims against Bethesda, for among other things, Breach of Contract and Declaratory Judgment and an award of damages, attorney fees, and other relief.” 

That doesn’t sound too hopeful for a quick settlement, but you never know.  Watch this space, readers…

[Image source: Wikipedia]