Earlier this week it was reported
that casual games developer MumboJumbo had succeeded in its legal action in Texas against fellow casual games developer Popcap Games, with the jury awarding MumboJumbo damages of $4.6m. More on the case below…
What do we know about the case?
The litigation stemmed from a 2006 contract under which MumboJumbo agreed to produce, distribute and sell certain PopCap games in North America. The jury reportedly found that “PopCap breached the contract when it went behind MumboJumbo’s back and decided to market and sell its games on its own”. The case involved findings of breach of contract
and tortious interference
on PopCap’s part against MumboJumbo (serious stuff). The press release states
“central to proving that portion of the case were PopCap’s own internal e-mail messages, which showed the company employed a calculated use of false and misleading statements in order to sour that business relationship
“. Serious stuff.
The jury awarded $4.6m in damages. Separately, there will be another court hearing to work out the lawyers’ costs (which is standard practice in England and could add a fair bit on to the $4.6m for which Popcap already has to cough up).
According to Gamesindustry.biz, Popcap’s VP of public relations Garth Chouteau said of the judgment: “PopCap continues to believe that it did nothing wrong in this case, and will vigorously pursue its claims and defend itself through the appeals process.” Which, it seems reasonably safe to assume, means that Popcap will be mounting an appeal against the decision.
What does all that legal mumbojumbo (ahahaha) mean?*
* sorry, couldn’t resist the weak pun
The judgment in the case has not been released, so there is very little to go upon at present unfortunately. But I thought it might helpful, in very general terms (based in English law, which is very similar to US law in these respects), to give the lowdown on what those legal findings of breach of contract, fraud and tortious interference mean:
Breach of contract
A contract is an agreement (whether written or verbal) between two or more persons which has four basic characteristics: (i) an offer, (ii) acceptance of that offer, (iii) consideration (i.e. something of value in return for what is being offered) and (iv) intention to create legal relations (i.e. meaning to enter the contract). Example: Ann buys from Bob a copy of Half Life 2 for £10 following an verbal agreement between them.
The ‘contract’ will contain the key elements of the deal (these are the ‘Terms and Conditions’ you hear about, plus other stuff), which both sides are meant to respect. But if one of side breaks the deal, then in principle that entitles the other side to go off to court, provided you can prove:
(i) there is a specific enforceable term in the contract on which you can rely (e.g. Ann promised to buy Half Life 2 from Bob)
(ii) breach of that term (e.g. Ann took the game but refused to pay Bob)
(iii) loss (e.g. Bob lost out financially as a result of the breach of contract)
The basic way you calculate the loss is this: how much would you have gained had the contract been properly performed? In the above example, Bob would have earned £10 had the contract been performed so that is the measure of his loss. Obviously, with large contracts like the one that MumboJumbo and PopCap entered into, the amounts at stake – and therefore the potential contractual damages – can be very large and difficult to quantify exactly.
Note: one important point of difference between England and the USA is that, in England, breach of contract cases are decided entirely by a single judge, who will determine how much damages should be paid if any. However, in the USA there is still jury trial available in breach of contract cases, in which case the jury determines the damages to be paid out (this is said to be one of the reasons that you see larger contract damages paid out in the USA than in England).
Obviously, real breach of contract cases are generally far more complicated than that. There are often difficult arguments as to what the contract actually said, what constitutes a ‘breach’ anyway and what the innocent party is entitled even if he/she is in the right. Then, on top of that, sometimes the innocent guy doesn’t just want compensation but also wants some protection that the wrongdoer won’t do it again…But you get the gist of it.
Fraud is fairly simple to explain: it is any act by Ann which is intended to deprive Bob of a benefit or to cause him harm, for the enrichment of Ann herself. The above example, where Ann takes the game but doesn’t pay Bob, could potentially be fraud if there was the appropriate intention. Another example would be Ann impersonating Bob in order to get a whole bunch more copies of Half Life 2 at his expense. A yet further example would be Ann entering into a business deal with Bob with the hidden purpose of making money at Bob’s expense or damaging his business in some way.
Fraud is one of the most serious legal offences around. As a result, the law treats it pretty seriously and so it can have both civil and criminal consequences (i.e. you can sued for lots of money AND face criminal prosecution potentially). If Ann was found liable for fraud, she could find herself having to (for example): compensate Bob for his loss; pay over to Bob all of the profit she made at his expense; give disclosure as to exactly what she did and how; and potentially face other legal/regulatory/professional proceedings depending on what she does for a living.
This is difficult to summarise because it is not clear exactly what kind of ‘tortious interference’ Popcap was found liable for. But, in very general terms, English and American law recognises the concept that a person can deliberately do things which are intended to disrupt other people contracting with each other or break their existing contracts with each other. For example, Ann finds out that Carl has contracted with Bob and offers Carl incentives/bribes/whatever in order to persuade him to contract with Ann instead. Obviously, in that kind of situation Ann may just be a good businesswoman and no harm in that, but sometimes it goes beyond that and the law needs to step in to stop someone deliberately encouraging the breaking of contracts.
If and when more details about the MumboJumbo/Popcap case are released, then hopefully we will able to apply some of the above to the actual facts. Now, that’s the end of Civil Law 101 for today, kids…
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