Tag: Southpeak

A UK High Court judge has found games publisher SouthPeak liable for inducing copyright infringement in a long-running legal battle between CDV, a German distributor of games including Velvet Assassin and Pirates vs Ninjas, and Gamecock, a SouthPeak subsidiary. The judgment follows a November 2009 Court ruling which saw CDV win a breach of contract claim against Gamecock and SouthPeak.

The root of the battle lies in a 2008 distribution agreement between CDV and Gamecock, under which Gamecock agreed to license exclusively to CDV seven games (“Dementium“, “Insecticide“, “Mushroom Men“, “Velvet Assassin“, “Hail to the Chimp“, “Pirates vs Ninjas” and “Stronghold Crusader Extreme“).

CDV claimed that it had paid Gamecock advances of over $7 million but that, contrary to their agreement, four of the games were not delivered in time for a pre-Christmas 2008 release.  CDV therefore gave a notice to part-terminate its agreement with Gamecock and subsequently sued Gamecock for damages for breach of contract, as well as arguing that SouthPeak was liable for inducing copyright infringement and breach of contract.  Gamecock and SouthPeak defended the lawsuit, arguing that CDV had no right to terminate the contract.

In November 2009, Mrs Justice Gloster published her judgment which found in favour of CDV on the breach of contract claims for three of the four games.  However, she reserved her judgment regarding CDV’s claim against SouthPeak for (i) inducing copyright infringement; (ii) inducing breach of contract; and (iii) legal costs.

In her second judgment published on Friday, Mrs Justice Gloster ruled as follows:

Mrs Justice Gloster ruled that she was:

“Satisfied, on the basis of the evidence before [her] at trial, that CDV has established on the balance of probabilities that SouthPeak US has both participated in, and authorised, the infringing activities in relation to the making, distribution, and sale” of the four CDV games in question.

In a nutshell, the legal reasoning went like this: Gamecock had licensed games to CDV, but when Gamecock breached its agreement with CDV it forfeited those rights to CDV and therefore the copyright in the games became CDV’s.  However, Gamecock refused to admit this and tried to sell the games itself, which constituted copyright infringement.  SouthPeak, as Gamecock’s parent, was found liable for inducing that copyright infringement.

CDV had claimed that SouthPeak, as Gamecock’s parent, had induced Gamecock to breach its contract with CDV and should be liable for damages.  Mrs Justice Gloster ruled that CDV failed in this argument.

Legal nutshell: if Alan has a contract with Bob and Chris persuades Bob to breach that contract, then Alan can sue Bob for breach of contract but can also potentially sue Chris for inducing the breach of contract.  However, case-law states that Chris has to intend to induce a breach of contract.  There is no liability if Chris didn’t realise he was inducing Bob to breach the contract with Alan.

Here, Mrs Justice Gloster held that SouthPeak did not realise it was acting wrongly, in fact its witnesses gave evidence “to the effect that they believed that they were entitled to act as they did” and there was nothing “which suggested that they did not genuinely believe that Gamecock and the other defendants were entitled to act in the way which they did“.  Therefore, CDV lost its claim for inducement of breach of contract.

Mrs Justice Gloster ruled that “SouthPeak US must, jointly and severally with the other Defendants, pay the Claimant’s costs of the claim and of the counterclaim, including any reserved costs”.  We do not know exactly how much those costs were (yet), but they are likely to be substantial.

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