Legendary guitar company Gibson is stepping up pressure on national retail giants to pull Activision Inc.'s popular "Guitar Hero" games from store shelves.
Retailers are holding fast so far, content to take in money as the franchise continues to spin off new versions of the game the latest being a portable version called "Guitar Hero: On Tour."
Gibson, based in Nashville, Tenn., claims that Santa Monica-based Activision, among others, violated a 1999 technology patent for a mixer, headset and playback device that simulate a musical performance.
The "Guitar Hero" video games allow non-musicians to play along with a band on a modified guitar-like instrument that connects to a console programmed with recorded performances. The "Guitar Hero" franchise generated more than $1 billion in sales during its first 26 months in release, meaning that if Gibson were successful, it would be a big blow to Activision.
Gibson has a marketing agreement with Activision for the "Guitar Hero" franchise. In a lawsuit against Gibson filed March 11, Activision alleges the guitar company had full knowledge of all the issues three years ago. Gibson claims it only recently learned it had a patent for the basic technology that Activision had incorporated into its product.
About the same time that "Guitar Hero 3" sales exploded last year, Gibson's attorneys fired off a series of letters demanding that Activision either sign a licensing deal with Gibson or pull its product from store shelves.
Activision has argued that Gibson acted on the patent only after Activision made it clear that it would not renew its "Guitar Hero" marketing agreement with the guitar maker.
Many in the industry viewed Gibson's move as disingenuous.
"They're just trying to extort money out of Activision because of how successful Guitar Hero has become," said Michael Pachter, video game industry analyst at Wedbush Morgan Securities.
Gibson executives did not return a phone call.
Activision's suit seeks a court ruling on the patent issue. Gibson had earlier sued rival video game making and marketing trio Harmonix Music Systems, MTV Networks and Electronic Arts alleging similar patent violations on their "Rock Band" game spin-off.
In a statement, Gibson's attorneys said that they tried negotiating with the companies but had no choice but to take drastic legal action.
"The defendants have not responded in a timely manner with an intent to enter into negotiations for a patent license agreement," the statement said. "Gibson Guitar had no alternative but to bring the suit, and it will continue to protect its intellectual property rights against any and all infringing persons."
Instead of countersuing Activision, Gibson filed suit against Wal-Mart, Target, Kmart, Amazon.com, GameStop and Toys-R-Us demanding that they pull "Guitar Hero" from their shelves and pay unspecified damages.
By suing retailers that carry the "Guitar Hero" line instead of Activision itself, Gibson is "making a transparent end run," according to an Activision statement.
At least one patent legal expert said that Gibson may still have a case.
"Litigation serves as the one test to a patent's validity and enforceability," said Alan Fisch of Kaye Scholer LLP. "Until the court makes a ruling, it could go either way."
If the court were to rule in favor of Gibson, it would be a tremendous blow to Activision, which would theoretically have to pay significant damages and reimburse retailers for lost revenue.
For now, retailers and Activision's shareholders appear content to ride the "Guitar Hero" phenomenon out.
Activision's shares last week traded about $2 off the company's 52-week high of $29.87, and well above its low of $16.94.
Vivendi is purchasing Activision in a $19 billion deal that will form a video and computer giant entity called Vivendi Blizzard. A key to the deal was Activision's 2006 purchase of Red Octane, the original developer of the Guitar Hero line.
The merged company will combine the console-based success of Activision's product lines, which in addition to "Guitar Hero" are "Call of Duty" and "Tony Hawk," with Vivendi Games' online fantasy game "World of Warcraft," which has 9.3 million paying subscribers.
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