Bethesda vs Interplay lawsuit isn’t over yet

The battle over Fallout continues.  Bethesda has failed in its attempt to obtain a preliminary injunction against Interplay in their ongoing legal battle over the Fallout IP – but this doesn’t mean the lawsuit is over by any means, contrary to what some reports have suggested.  The Fallout IP is still up for grabs
The story so far
We’ve blogged about this lawsuit previously (here and here), but here’s a quick summary:
Interplay agreed to sell the Fallout IP to Bethesda in 2007 as part of which it retained certain rights, including the right to develop a Fallout MMO.  Bethesda has now commenced a (USA) lawsuit arguing that Interplay is in breach of that agreement and has infringed Bethesdra’s trademark rights in the Fallout series.  In particular, it seems that Bethesda is angry that Interplay sold the Fallout 1 and 2 games and expansions as a ‘Fallout trilogy’ at around the same time that Bethesda released Fallout 3.  As a result, Bethesda argues that Interplay has lost its rights to develop a Fallout MMO (it is suspected that Interplay’s “Project V13” is its Fallout MMO).
Bethesda seeks an injunction 
Now it has emerged that Bethesda sought a preliminary injunction against Interplay.  The details of it have not been made public, but I would bet that what Bethesda did was ask the Court to order Interplay to effectively freeze doing anything in relation to the Fallout IP (including to stop selling Fallout games or developing the Fallout MMO) until the ownership of the Fallout IP is determined at trial.  At that point, the Court would either overturn the injunction (if Interplay won) or could be asked to make the order permanent (if Bethesda won).
But Bethesda clearly failed to convince the Court, whose order refusing to grant the injunction emerged on the net earlier this week.  The Court’s reasoned judgment has not been publicly released (and may never be) so we cannot know exactly why the Court came down on Interplay’s side.
But, in any event, Bethesda would probably have had a high hurdle to meet in the first place: injunctions are one of the judges’ nuclear weapons and therefore they will generally require a lot of convincing before they will grant you one.  Some jurisdictions make it harder than others to get injunctions: under English law, for example, even if you do get an injunction you may have to give the other side a “cross undertaking for damages” – in other words, a promise that if eventually it turns out you were wrong to obtain the injunction and the other guy was right all along, then you will compensate him for loss he suffers as a result of the injunction. 
What does this mean for Bethesda and Interplay?
This will have been a setback for Bethesda.  If they had won the injunction it would have been an important legal, commercial and psychological victory, and it may even have brought Interplay to the negotiation table (e.g. if the judge was particularly emphatic in Bethesda’s favour).
But the fact that Bethesda lost means that any legal and psychological victory belongs to Interplay.  Mind you, if Bethesda lost on a technical ground then maybe Interplay won’t have too much to crow about.  On the other hand, maybe Bethesda lost because the judge didn’t like its legal case – in which case, Interplay could take perhaps some heart that the court is on its side.  In fact, I have seen cases in the past when the guy who tried to get an injunction lost and then he made a settlement offer (though obviously there’s no evidence Bethesda might do that).  We just won’t know unless and until more details become public.
The battle will probably just continue anyway
Assuming that Bethesda does not wish to throw in the towel just yet (and recent comments from Bethesda suggest they still want to continue the fight), then it can just keep pushing ahead with the litigation – which would probably get to trial sometime in 2010 (unless it gets bogged down in skirmishes, of course).  Taking a long term view, all that will really matter is what the trial judge (and jury, if the parties have sought a jury trial) decides at the end of the day.
In the meantime, Interplay can still push ahead with selling Fallout games and developing its MMO (if that is indeed what it is doing) if wants, but would they want to go to all that expense if there is a real risk that they might lose their rights in the Fallout IP next year?  That will be one to discuss with the lawyers…
UPDATE: Interplay wants to keep fighting
Via Joystiq: Interplay had “released a short statement about the court case in the form of SEC Form 8-K, which is intended to provide information about major events to shareholders. Interplay is not happy to merely defend its rights to make and sell Fallout games: the statement reads that Interplay is going to continue pursuing ‘its Counter-Claims against Bethesda, including its claims for Breach of Contract, Tortious Interference with Prospective Economic Advantage, Rescission, Accounting and Declaratory Relief seeking an award of damages and other relief.’
Well, I just can’t wait for the next thrilling instalment…