Interplay’s gamble: the Fallout lawsuit continues

We now have confirmation that the lawsuit between Interplay and Bethesda over the Fallout IP has not been quietly settled (thanks to The Vault).  In fact, it seems to be hotting up.

Longtime readers will know this already from my previous posts (see here and here), but here goes:

Interplay sold the post-nuclear dystopian games series Fallout to Bethesda in 2007, as part of which they agreed that Interplay would retain certain licence rights, including the right to develop a Fallout MMO.  In 2009 Bethesda commenced this lawsuit, claiming that Interplay had breached that agreement, 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 (then known, rather mysteriously, as “Project V13”).

At the end of 2009, 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 that preliminary injunction, which it later dropped.

Then it got a bit mysterious: at around the same time, a beta sign-up page for Fallout Online appeared, which appeared to suggest that Bethesda and Interplay were cooperating notwithstanding the litigation (the bottom of the sign-up page reads:
 
“Fallout® is a registered trademark of Bethesda Softworks LLC, a ZeniMax Media company, in the U.S. and/or other countries, and is used by Interplay under license from Bethesda Softworks LLC. All Rights Reserved.”

Which suggests ofc that perhaps Bethesda and Interplay are cooperating over Fallout Online after all…which made me wonder if maybe there had been a handshake and the lawsuit had quietly been settled?

In fact, the lawsuit continues – and how!  The Vault, a Fallout wiki, has received a further batch of court documents which both confirm that the lawsuit is ongoing and highlight some of the recent developments.  Now, I don’t yet have access to those court documents,  so I can’t establish myself exactly what is going on and how it relates to Fallout Online.  However, we do know that:

(1) Bethesda is continuing to argue that it owns all the IP rights in the Fallout series.

(2) Bethesda is now also arguing it gave Interplay rights over only the Fallout trademark and nothing else.  In other words, Bethesda argues that Interplay has no rights over any other Fallout IP, including for example artwork artwork (e.g. weapon art) or game concepts (e.g. the (in)famous “PIP Boy”), all of which Bethesda says it purchased from Interplay in 2007.

The practical effect of that argument (if successful) is that it would make it extremely difficult for Interplay to use much of the previous Fallout games in Fallout Online at all, which would be both a creative and commercial headache for Interplay.  Example off the top of my head: Interplay couldn’t, for example, just import Megaton (either nuked or not nuked, natch) into Fallout Online, at least as it is shown in Fallout 3 anyway. 

(3) Bethesda is also apparently taking other steps to make life difficult for Interplay, including demanding that Interplay provides it with access to its internal Fallout Online design document wiki as part of the litigation (which Interplay is refusing on the basis that it contains trade secrets).

So what?

Drawing all the above together, I think this is what has happened:

• The reference to Bethesda on the Fallout Online beta sign-up site does not mean that there has been any deal between Bethesda and Interplay.  We know this now because the litigation is ongoing: Interplay and Bethesda cooperating over Fallout Online would only make sense if they had settled the lawsuit.
• IF that’s right, then Interplay has taken advantage of Bethesda’s setbacks in the litigation by forging ahead with Fallout Online as a solo project.
• And, IF that’s also right, then Interplay is running a serious gamble that it will win the lawsuit and therefore be able to release Fallout Online itself…
• …BECAUSE, if Bethesda wins the lawsuit it would in principle have the ability either to shut Fallout Online down or to demand that it be transferred to Bethesda’s ownership.
• It would also mean that Bethesda has uncontested control over the Fallout IP in the future.
• Ouch.

I can see the commercial benefits of what Interplay is trying to do (if in fact I’m right on the above): get the game as far developed as possible, both as a bargaining chip with Bethesda in any negotiations and because, if Interplay wins, it already has a game ready to go.  On top of that, the Interplay Fallout MMO is now probably regarded by fans, gamers and the games industry as the Fallout MMO regardless of this lawsuit – so Interplay has won the PR contest there.  So it seems like a smart move in those respects…if it wasn’t for the legal risk that it could all be taken away from them.

That said, it’s worth remembering that ultimately all of this remains to be tested in the litigation, so the ownership and the future of the Fallout IP is still undecided.  

It also means I’ve stopped making any predictions about what or may not happen in this case – I’ll write another update when there’s another turn in this roller coaster…