Interplay and Bethesda quietly settle Fallout lawsuit?

For much of this year, Interplay and Bethesda have been at each other’s throats in a lawsuit over which of them owns the IP in the Fallout series of games (more on that here).  Earlier this year, Bethesda tried but failed to secure a preliminary injunction blocking Interplay from doing any further Fallout-related work, including work on Interplay’s rumoured Fallout MMO.  This was a severe, but not fatal, blow for  Bethesda in the lawsuit.
Then, not much seemed to happen.  Until, in June this year, details of a new Fallout MMO began to trickle out.  Did this mean they have done a deal?  As far as I can see, no formal announcement of the settlement of the lawsuit had been announced.
Now, TVG has spotted that the new Fallout MMO website includes the following text at the bottom of the page:
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.”
This suggests very strongly indeed that a settlement has in fact been reached, with Interplay acknowledging Bethesda’s ownership (at least in part) of the Fallout IP, in return for which Interplay has been granted a licence to exploit the Fallout IP in relation to the Fallout MMO and possibly beyond. 
If so, it’s good to see that Bethesda and Interplay have been able to resolve their differences, but why not make a public announcement to capitalise on the new goodwill?  Also, what does this mean in terms of Bethesda’s creative/commercial involvement in Fallout Online – are they involved at all?  One would also imagine (and hope) that both sides have had their lawyers go over a new suite of agreements to ensure that the working relationship between them does not break down in the future.  Here’s hoping…
Image credit: WikiMedia
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Fallout MMO details published – have Interplay and Bethesda done a deal?

Duck and Cover reports that Interplay have released a lot of new material on their Fallout MMO, named “Fallout: Online”, including a new website.

I’ve discussed on this blog several times previously the lawsuit between Interplay and Bethesda with the future of the Fallout IP (including Interplay’s Fallout MMO project) at stake.  So far, there has been no publicised resolution of that dispute.  So, either:

(1) Interplay is forging ahead with its MMO project despite the litigation – which could be risky if the lawsuit goes against Interplay (though it may be that Interplay was emboldened by Bethesda’s failure to obtain a preliminary injunction barring Interplay from using the Fallout IP pending resolution of the lawsuit); OR

(2) There has been an unpublicised settlement enabling Interplay to go ahead with its MMO (though one would imagine Bethesda would fight hard for Fallout MMO rights, given the value of that IP). 

So what has happened?

(Image credit: Wikimedia)

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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]
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Bethesda vs Interplay: Bethesda appeals over Fallout litigation

The Fallout litigation continues with Bethesda reportedly going to the US Court of Appeal over its claim for a preliminary injunction to restrain Interplay using the Fallout IP, including developing ‘Project V13’,  Interplay’s rumoured Fallout MMO.  Bethesda’s original claim for a preliminary injunction was rejected in December 2009 (our summary of the dispute is here).
We have not yet seen any information regarding the grounds of the appeal, though no doubt they will emerge on the blogosphere in due course, at which point we will be able to have a closer look at the legal arguments.
In the meantime, Duck and Cover has released partial transcripts of Bethesda’s last attempt to secure the preliminary injunction – which do not appear to have been particularly successful.  The court’s formal judgment on the matter has not been released as far as we are aware, but from the transcripts of the actual arguments before the judge, it seems that Bethesda ran into difficulties with the judge over the exact reasons it sought a preliminary injunction.  The judge’s reasoning appeared to be that the purpose of a preliminary injunction is to prevent one party from doing something until the court has time to establish whether it is legally entitled to do that thing or not – but if Interplay is not actually working on its Fallout MMO project then logically there would be nothing to temporarily ban them from doing.  There were also issues regarding Bethesda’s claim of trademark infringement, which Interplay argued has no merit because there was never any breach of contract by Interplay and therefore it always owned the Fallout trademarks.
Now, some bloggers have derived from the above that Bethesda’s lawyers did not understand the purpose of preliminary injunctions.  That is of course possible, but also seems somewhat unfair.  A more likely explanation (assuming US preliminary injunctions are anything like their English counterparts, which seems very broadly right) is that they understand exactly what a preliminary injunction is for, understand that it could be an uphill struggle to win it at court, but they also understand that if they did win they could inflict serious damage on Interplay by effectively stopping them from doing anything with the Fallout IP for potentially quite a long time.  In fact, in some cases obtaining preliminary legal relief from the court can bring the other side to the negotiating table or even cause them to fold altogether (although obviously that doesn’t necessarily mean that Interplay would have done either).
So it may simply be that Bethesda gambled and lost the first time around.  Now, clearly, they would like another bite at the preliminary injunction cherry.  It will be interesting to see if they fare any better this time around…

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[Image source: Wikipedia]

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…

News: Interplay vs Bethesda (Part 2)

We previously blogged about Interplay’s lawsuit against Bethesda regarding the Fallout series of games.  Now read on for another update in the ongoing litigation…

To recap, Interplay sold the Fallout IP to Bethesda in 2007 having retained certain rights, including the rights to develop a Fallout MMO.  Bethesda has now commenced this (US) 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.

The position now seems to be (courtesy of Game Politics) that Interplay has counterclaimed for Bethesda’s repudiatory breach of their agreement, apparently to the extent of claiming that the Fallout IP has reverted to Interplay and Bethesda now sub-licences the IP from Interplay (a complete reversal of the current position). 

It’s worth taking all of this with a heavy dose of salt since (as far as we are aware) the relevant court documents have not yet been published on the net and therefore there is no way of being sure of the accuracy of any of this (unless one of Interplay or Bethesda make a press statement on this anytime soon).

That said, defending an action against you for breach of an agreement by counterclaiming yourself for breach of the same agreement is a standard litigation tactic, which it seems clear Interplay has decided to adopt in this case.  Of course, the devil is in the detail: in order to substantiate a claim for breach of contract Interplay’s lawyers will need to set out in detail how the contract operated and exactly which provisions of that contract have been breached by Bethesda. 

Of course, the main question from all this is what will eventually happen to the Fallout IP.  If Game Politic’s report is accurate, then Interplay is not just arguing for damages for breach of contract, but a version of the Fallout IP back to it in some way – which is by no means impossible in theory, but it will be interesting to see how they play that argument out.  Keep watching this space…

News: Interplay vs Bethesda

Bethesda has commenced Court proceedings in the USA against Interplay over the Fallout series of games (story first covered by Gamasutra). 

The facts seems to be: Interplay sold the Fallout IP to Bethesda in 2007, as part of which they agreed that Interplay would retain certain license rights, including the right to develop a Fallout MMO.  Bethesda now alleges that Interplay is in breach of that agreement and has infringed Bethesdra’s trademark rights in the Fallout series.

So, a straightforward piece of commercial and IP litigation then, which is likely to be of interest to the industry, given Bethesda’s current (and Interplay’s historic) importance as publishers, but also of interest to gamers at large for the impact it may have on Fallout itself.  In particular, if this case continues there will eventually have to be disclosure about what exactly Interplay has been doing (or should have been doing) with the Fallout MMO.

In the meantime, a spirited discussion is fully underway at Gamasutra.  One really very interesting point which has already emerged from that discussion is the potential PR impact of all this – does this claim risk Bethesda alienating its customerbase, even if legally the Court eventually rules in its favour?  This is of course always an issue when a high-profile company decides whether to bring high-profile litigation and no doubt Bethesda will have carefully weighed up its option before deciding to act.  Either way, we will be keeping an eye on this one…