It? the battle of the DJs: DJ video games that is.
Two Santa Monica video game publishers, Activision Blizzard Inc. and Genius Products Inc., are racing to bring out competing titles in which players take on the role of a disc jockey mixing tunes. The games are scheduled to be released this year and industry watchers say they have strong sales potential.
But the two are also battling in court over allegations that Activision kidnapped Genius Products??cratch: The Ultimate DJ?in order to prevent the game from hitting store shelves before its own ?J Hero.
The lawsuits open a window into the cutthroat world of the video game business. Genius?lawsuit, filed in mid-April, quotes an Activision executive warning that unless the company made a deal with Activision, the game would not ?ee the light of day.?p>At the center of the court battle is California 7 Studios, a video game developer near Culver City. California 7 was under contract with Genius and a second company to develop ?cratch,?a music game played on a turntable-style controller. At the same time, Activision, which publishes the multibillion-dollar ?uitar Hero?franchise, was developing ?J Hero,?a similar game.
In early April, Activision bought California 7 before it could finish ?cratch.?Genius then sued Activision and California 7, alleging the acquisition was made because Activision was worried ?cratch?would beat ?J Hero?to market. Genius also accused Activision of preventing California 7 from returning software codes and other technology.
Genius?lawsuit also suggests that Activision could have stolen code or technology for ?cratch?for use in ?J Hero.?If the judge finds that Activision did do that, he could prohibit Activision from releasing ?J Hero,?said attorneys who practice in the video game industry and are not associated with the case. That ruling could cost Activision millions of dollars in sales.
Activision has denied the charges. The company claims it bought California 7 to bolster its development capabilities and that it did not interfere with ?cratch.?p>In a countersuit against Genius, California 7 alleges that Genius put ?cratch?behind schedule, that Genius improperly tried to terminate its contract with California 7, and that California 7 owns some of the technology associated with the game that Genius claims for itself.
?t? just hardball business practices ?really hardball,?said Stephen S. Smith, a partner at Greenberg Glusker LLP in Century City who specializes in the video game industry but is not involved in this battle. ?nd one of the questions is if it is so hardball that it? actually illegal.?p>Executives at Genius, Activision and 7 Studios declined to comment.
New market
Up until now, most music rhythm video games such as ?uitar Hero?and Electronic Art? ?ock Band?have appealed mostly to fans of rock and roll. A DJ game could open the genre up to fans of rap, hip hop and dance music. And whoever turns out a game first could win a sizable chunk of the market.
In size, Activision towers over Genius. The former is one of the largest video game publishers in the world and owns several multimillion-dollar game franchises. The latter is primarily a DVD distributor that is making its first foray into video games with ?cratch.?p>The suits contain details that demonstrate the fierce competition for the games.
Genius alleges that when it was trying to recover nine custom-made game controllers from California 7, it went so far as to send employees to California 7? offices, only to have them barred from entering by security guards.
California 7? countersuit, meanwhile, details a dinner at which two businessmen associated with Genius tried to lure a key California 7 employee to its company to continue work on ?cratch.?The businessmen allegedly also asked the employee to give them contact information of other crucial California 7 workers and to approach them privately at work about leaving to develop ?cratch.?p>One industry watcher said it was unusual for Activision to buy California 7 while it was developing a competing game for a rival.
?ne of the reasons publishers buy independent developers is to lock up their capability, but it? often because they were already working with them and they want to make sure no one else steps in and monopolizes their production bandwidth,?said Patrick Sweeney, an attorney at Nixon Peabody LLP in downtown Los Angeles and part of the firm? video game division. ?t? not the most common scenario to buy a developer that? working on a game for a competing publisher when the acquiring publisher isn? working with them.?p>Genius is seeking the original technology for the game and possibly tens of millions of dollars in damages from Activision and California 7. The company scored a minor victory when the judge ordered California 7 to turn over the source code for ?cratch?to Genius, a ruling issued in April and affirmed in May. But lawyers following the case cautioned that the judge? order can? be interpreted as an endorsement of Genius?broader allegations.
California 7 is seeking an unspecified amount in damages and what it claims are unpaid development fees from Genius.
Legal play
This is not the first time Activision has been sued over a video game involving a special kind of game controller. About a year ago, Gibson Guitar Corp., a guitar manufacturer, sued Activision over guitar-shaped controllers for ?uitar Hero?that Gibson claimed infringed on its patents. A federal judge ruled in March in favor of Activision.
In the future, the video game industry could see more lawsuits related to games with special controllers as those games become increasingly popular and continue to reap profits.
?hat you are seeing in the video game world is more of an emphasis on creating a unique gaming experience through controllers, things that are not the game itself,?said Smith of Greenberg Glusker. ?herefore I think you will see more lawsuits over those kinds of peripherals and the IP and trade secrets that are bound up in them.?p>That could be bad news for Activision, which industry watchers said is developing a skateboarding game with a special controller than players can balance on and maneuver like a real skateboard. That game, the latest addition to the Tony Hawk franchise, is scheduled to come out by the end of 2010.
