[BRiT]

fearsomepirate, please do further research into this situation to get to know the truth so you can stop making further unfounded statements. It is exactly as others have stated, InfinityWard with Ward/Zampalla were in a significantly different situation than you seem to think. They had completely control and ownership of the MW brand. There is no sure-fire win for Activision in this legal matter. (MOU between Infinity Ward and Activision)

Originally Posted by Shifty Geezer

Interview with Ward and Zampalla.

Some specific highlights regarding the contract situation. Now of course this might be their spin, but we will fine out in court soon enough when the trial starts.

Schwartz: Here's what we think: If you go back to when they signed the contract, March 2008, it was a moment in time when these guys have leverage - for one of the few times in their relationship with Activision. What's their leverage? Their contract is up in less than seven months and Activision wants Modern Warfare 2. Modern Warfare just blew away their expectations and was a great game. They're in the middle of this merger with Vivendi. There's a provision in the merger agreement that says none of their executives or key employees have any plans to leave. That's a representation made by Activision to Vivendi. [Jason and Vince] are told that they have leverage - and they do, because they want this game and these guys *can *leave.

Our view is that there was no way they were not going to tie these guys in to get Modern Warfare 2. They were willing to promise them practically anything. What these guys wanted was two things: One, they wanted to control their destiny and be independent. They wanted control over the franchise that they'd been nurturing, and they wanted fair compensation. The real killer was *the *control.

There's this one sentence - that [Jason] fought for - that is the key to the whole contract. One sentence says, "Activision cannot commercially release a Modern Warfare game without their written authorization." Then it says, "In that regard, all exploitation or other licensing of the Modern Warfare brand and IP." Not only that, there's another sentence that says Activision cannot do a Call of Duty-branded game post-Vietnam without their permission. They can't do Vietnam, post-Vietnam, near-future, distant future without [Jason and Vince's] approval. What that means is, they finished Modern Warfare and Activision wants to use the multiplayer mode and perks and all this stuff and put it into Black Ops - they have to ask their permission. And, if Activision wants to do Call of Duty Asia as an MMO with Modern Warfare assets, they have got to get their permission.

[Shifty Geezer]

Certainly the defense spin is pretty compelling. Activision signed very generous contracts. I'm not sure they 'owned' W&Z in the same way a parent company is assumed to own a purchased company lock, stock and barrel.

[Jedi2016]

I think it's safe to say that the situation Fearsomepirate described does not apply here, for the very simple reason that the lawsuit never would have gotten off the ground, much less as far as it has. We wouldn't be reading about it if that were the case, so the very fact that it's making news is a pretty strong indicator that their contract situation was different.

[Zaphod]

Originally Posted by BRiT

InfinityWard with Ward/Zampalla were in a significantly different situation than you seem to think. They had completely control and ownership of the MW brand.

Creative control, as long as they remained with IW/Activision, certainly. But ownership? Where did you get that? See Section 4d of the document you linked.

Still, those guys taking their extension bonuses and stay on for another 3+ years, dicking around with some new IP as if they were an independent studio, while retaining the right to veto any new MW game or other use of the MW brand... That must have seemed like a pretty poor prospect for Activision at the time.

[fearsomepirate]

Originally Posted by Acert93

This isn't a widget industry like you are probably familiar with. IW was founded by Zampella, Collier, and West. Activision had purchased 30% into the company and, after IW was developing successful titles purchased the company.

"Widget companies" have lots of IP, including patents, labels, and brands. Employees don't own any of it. In acquisitions, previous owners rarely if ever retain ownership. In fact, in acquisitions, you've usually got a PLC or LLC acquiring an S-Corp, and the creative assets are owned by the S-corp, not the guy who founded it.

It's just a very, very weird situation for the most valuable assets a company works with to not be owned by the company (either IW, Inc or Activision, Inc), but personally by the employees, because they can't be used as collateral for loans or liquidated in the event of bankruptcy. It means Activision bought pretty much nothing except the computers and cubicle dividers in the offices. That's why I said if it's as straightforward as BRiT thinks it is, Activision is much stupider than any company I've worked with, worked for, or even known of.

And looking at that contract, it's not straightforward. Z&W are identified as "IW management," suggesting that the contract applies to them in their roles as IW employees, not as personal agents who retain those rights (which include personnel decisions and network infrastructure) for life. In fact, as Zaphod points out, that is explicitly spelled out in 4d. Z&W are basically arguing this contract guarantees them lifetime employment.

And it sounds like the grounds for termination was 4b, and the fact that they went off to EA immediately is not going to help their case (personally, I think non-competition clauses are bullshit and no judge should ever hold them up, ever, period, end, but I'm not the government).

Should both members of lW Management no longer be employed by lW, the operational and creative auihorily piovided to lW and lW Management under Sections 2(a) and (b) will be immediately rescinded

The only chance Z&W have is if they win a wrongful termination claim. Those claims are hard to win...not impossible, but hard. If they win that, they will win MW3 damages and possibly Black Ops 2. In the case of Black Ops, the contract says "post-Vietnam." Every mission in Black Ops takes place in 1968 or before, which is not "post-Vietnam," so I doubt they'll win that specific claim.

Since you think the press is so biased, what is your educated assessment of their corporate relationship with Activision? I ask because you come down pretty harsh, e.g. they cannot even comprehend simple things like it isn't their company.

Just a general observation that both gaming companies and the people who work for them don't think the same laws that apply to everyone else apply to them. Like if a Ford executive said, "Hey, let's put a contract in the glove box that every Mustang buyer automatically agrees to by opening the box," his lawyers would tell him to put the crack pipe down.

In context Activision has already settled $42M (hence admitting a degree of perceived fault) and dropped a suit against EA (indicating they don't believe it is winnable). So the whole "easily win this lawsuit" doesn't look so straight forward.

That was for denied compensation. Refusing to pay your employees is a much, much, much harder lawsuit to win than arguing that your employees don't own the property developed using company assets. I've seen corps do this kind of stunt before, and it's usually because they hope the employees (or small contractors) will balk at the legal fees and ask to settle out of court for less than what they're legally owed.

[Acert93]

Originally Posted by fearsomepirate

It's just a very, very weird situation for the most valuable assets a company works with to not be owned by the company (either IW, Inc or Activision, Inc), but personally by the employees, because they can't be used as collateral for loans or liquidated in the event of bankruptcy. It means Activision bought pretty much nothing except the computers and cubicle dividers in the offices. That's why I said if it's as straightforward as BRiT thinks it is, Activision is much stupider than any company I've worked with, worked for, or even known of.

Those are some pretty strong statements but to use a word we are both familiar with I would say it is a fallacious use of eisegesis to (a) take your own experience and (b) superimpose it on another industry and (c) conclude, with such strong words, things like "weird" "stupider" etc.

I didn't say Widget companies don't do research, have valuable IPs, etc. The different with creative industries like gaming is that the people are an extremely important resource. The industry has very few "mega-IPs" that can stand multiple iterations on their own (do you disagree?). Gutting out the core developers from an IP can destroy the value. Hence when the core at Bungie threatened walking MS sought a resolution that would maximize their investment.

Furthermore, I think you are looking at it very much as Activision was looking at CoD "at the time" versus the progression of the business relationship. The IW devs were valuable pre-CoD IP as their MoH resume was impressive. The IW games (CoD1, 2) were standing out due to development quality and not the IP so, on a progressive contract basis, it was the CoD development talent, not the "WWII themed IP" that was extremely valuable. Want some proof? Look how quickly MoH sales tanked

It really isn't until 3-6 months post-MW1 that there becomes a tension between IP value and developer value.

And from the article linked earlier it is shortly after this time in the relationship that Activision began to sour on the relationship and, if the *testimony is true* had requested a member of the IT staff to begin a search for data for grounds for dismissal.

And it sounds like the grounds for termination was 4b, and the fact that they went off to EA immediately is not going to help their case (personally, I think non-competition clauses are bullshit and no judge should ever hold them up, ever, period, end, but I'm not the government).

In some states they are actually illegal and, even in legal situations, they often apply only in one direction (e.g. you cannot terminate your own contract for a higher bid during the contract terms w/o a 6mo penalty BUT if the employer terminates the contract you are at free direction to seek immediate employment at no delay). It will be interesting to see if Activision has any legal legs to stand on: They are already being challenged on the basis of termination (even in right to work states seeking termination of a contract, especially one that includes profit sharing, with a non-disciplinary record basis may not sit well) but if Activision is found to have any fault in process (specifically seeking grounds for termination) and then trying to also impose a non-compete it may fall into very unfavorable territory. Yes, you have pointed out repeatedly that they were employees, but that isn't carte blanche for any and all activity.

But as I said I think we can go back to this statement later as it raised my eyebrow when you said, "Unless Activision's a lot stupider than the companies I've worked for, they're going to easily win this lawsuit." as I don't think it is an issue of Activision being stupid in regards to the contract but more in terms, if they lose, their actions.

It is really easy to look now backwards at CoD's IP value but I don't think that is as easy to say looking at CoD2-to-MW1 when many of these contracts went into place. IW was considered a top tier multiplatform developer and their services were in high demand on an open market. Incentivising a contract with profit sharing, creative control, and studio management when you consider the talent the driving force behind a companies profits isn't dumb.

Then again, big picture industry wide, is the cost of development, the fiscal failure of 70% of titles, and the publisher favorable contracts (which makes senses when they put up the cash) we will be seeing fewer and fewer of these issues as developers will be on a "take it on our terms or leave" option. From a big-box perspective the marketing aspect of big time publishing is considered as important, if not more so, and on big titles marketing can outstrip development costs. From a business perspective we don't have an industry with a sea of 3rd party independent developers having publishers bid on their projects; instead IPs are now almost always owned by the publisher and 3rd parties rarely have the funds to break into console development without publisher support.

It is my opinion, but this is why I think we have seen a resurgence in the "indie" industry and the movement toward lower cost development platforms because great development talent can afford to develop a title and have great control of development as well as profits; the cost of failure is also much, much lower. *IF* what Z&W is saying is true (if) it points a pretty ugly picture for console game development.

[fearsomepirate]

Originally Posted by Acert93

The different with creative industries like gaming is that the people are an extremely important resource.

You really have no idea, do you? You really think a guy who's responsible for two dozen patents isn't an "extremely important resource?" This is kind of what I'm talking about--people in the game industry are really convinced their industry is a super-special, super unique thing that doesn't operate by the same rules as the rest of the world. That just plain isn't true. And corporate law doesn't work any differently, either.

Furthermore, I think you are looking at it very much as Activision was looking at CoD "at the time" versus the progression of the business relationship.

No, I'm looking at this from the standpoint of corporate law. I'm not saying it's impossible. I'm saying it's very, very weird for a media company to not actually own the media created in its offices. And it turns out indeed, this is no exception.

It really isn't until 3-6 months post-MW1 that there becomes a tension between IP value and developer value.

That's not what I meant. I meant that in the event of bankruptcy, an entertainment company's IP is among its most valuable assets to be sold off and pay off creditors. Forming a corporation (like Infinity Ward, Inc) and still retaining most of the assets under your own name would make it nearly impossible to raise capital, since there are few assets backing the company's credit. Further, it means in the case of any lawsuits or regulatory action against the company arising from the COD or MW IPs would involve Z, W, & C personally, e.g., if Hasbro decides a COD game is infringes on G.I. Joe (suppose that some character in a COD game was a blatant ripoff of Cobra Commander), they could sue Vince Zampelli personally and, if they win, the courts slap him with a personal bajillion-dollar liability that he'll never pay off. It defeats the entire purpose of forming a limited liability corporation in the first place.

There is no clause in the contract giving them ownership. There are clauses giving them a certain amount of autonomy, authority, and privilege within the company. These were very smart clauses to have from the standpoint of IW, and reasonable concessions on Activision's part. But the developers have incorrectly confused these clauses with ownership, and it's a shame there's a lawyer happy to take their money to try to argue that case.

Incentivising a contract with profit sharing, creative control, and studio management when you consider the talent the driving force behind a companies profits isn't dumb.

No, it's not. Granting them personal ownership, which Activision didn't do, is. If it had, there would have been a clause like this in IW's original company charter:

Originally Posted by ImaginaryIWCharter

10z) All intellectual property developed at Infinity Ward is the personal property of the Z, W, & C, each of whom shall claim a 34%, 33%, and 33% share of joint ownership, respectively. No IP shall be understood to be the property of Infinity Ward, Inc, nor shall any intellectual property be used as security against any loans or other kind of capital raised by IW, Inc, etc and so forth. Assets owned by IW, Inc include all physical assets such as computers, chairs, cabinets, etc, but no images, likeness, names, slogans, artwork, etc produced while Z, W, & C remain with the company.

There's no clause like that, or Gamasutra would already be making hay out of it. The language of the Activision employment contract makes it pretty obvious that COD and MW were IW (and thus Activision) properties, not Z, W, & C properties.

[Shifty Geezer]

Well that was a miserable anticlimax!

Sacked Infinity Ward founders Jason West and Vince Zampella have settled their lawsuit with former employers Activision out of court.
"All parties have reached a settlement in the dispute, the terms of which are strictly confidential," read the official statement, as Tweeted by Los Angeles Times reporter Ben Fritz.

[TheChefO]

Originally Posted by Shifty Geezer

Well that was a miserable anticlimax!

I wonder if this settlement also includes the other IW employees and the bonuses they were due.

[Brad Grenz]

It covers everything. The suits had been combined into a single trial.

[Grall]

Looks like Kootick took a big one right in the nutsack as the end result of all this. Activision put out a statement this settlement would not affect expected earnings (much) due to stronger than expected sales, so that means a sizeable payout, and that most, maybe all, of that stronger sales got eaten by this lawsuit.

What goes around comes around eh, Bobby? Karma's a bitch.

[Shifty Geezer]

If Activision had to pay out loads, then it's a shame this didn't go to court. Companies settling out of court prevents rulings used as references for future cases. Had this gone through and Activision found to be at fault, publically, it'd extend a little extra protection to other workers.

[MfA]

The mou was exceptional (yes Activision WAS that stupid, they did not hand over ownership but handing someone a veto on new games is as good as). This situation is unlikely to ever happen again, even if it does the developers will want a stronger protection against getting fired next time.

[Silent_Buddha]

It goes both ways.

Developers will want stronger protection.

Publishers are unlikely to ever gives as good a deal to developers.

Regards,
SB

[fearsomepirate]

Originally Posted by Shifty Geezer

If Activision had to pay out loads, then it's a shame this didn't go to court. Companies settling out of court prevents rulings used as references for future cases. Had this gone through and Activision found to be at fault, publically, it'd extend a little extra protection to other workers.

Usually if there's a settlement, it's because both parties regard it as being in their interests. The IW execs made enough contestable claims that for all we know, they realized they were looking at a long, expensive court battle without nearly as big a guaranteed payoff as they were expecting. Perhaps the EA settlement had something to do with it, too. Or maybe they found out Activision did have some legitimate dirt on them that was going to make their argument a lot more difficult. Because if you've got a slam-dunk case for a billion dollar payout, you go to court. Or maybe someone at Activision made a mistake, thought Vietnam ended in 1967, and decided Z,C,&W did indeed have an incontestable claim for $1b, paid it out, and got on with things. We won't know for a long time.

Originally Posted by MfA

The mou was exceptional (yes Activision WAS that stupid, they did not hand over ownership but handing someone a veto on new games is as good as).

Executive power is neither exceptional nor equivalent to ownership.

[Shifty Geezer]

Originally Posted by fearsomepirate

Usually if there's a settlement, it's because both parties regard it as being in their interests. The IW execs made enough contestable claims that for all we know, they realized they were looking at a long, expensive court battle without nearly as big a guaranteed payoff as they were expecting.

Oh, absolutely. What we aren't getting out of this is the truth and a clear understanding and a secure position to work from in future for all people in similar industries. If the case had gone court, we'd have all the facts and an impartial interpretation and a better undertanding of where the law courts place the rights of creative people.

[fearsomepirate]

I wish a court would strike down non-compete clauses. I shouldn't be able to sign away my right to work in the future any more than I should be able to sign away my right to register for a political party or subscribe to a news site. It's probably not going to happen, though.

[Dr Evil]

Originally Posted by fearsomepirate

I wish a court would strike down non-compete clauses. I shouldn't be able to sign away my right to work in the future any more than I should be able to sign away my right to register for a political party or subscribe to a news site. It's probably not going to happen, though.

It would be beyond any measure of retardness if your proposition would happen. Are you seriously suggesting that for example a CEO of some publicly traded tech company should be able to just immediately be employed by their number one rival in the market?

Are you for real?

[MfA]

Originally Posted by fearsomepirate

Executive power is neither exceptional nor equivalent to ownership.

From a business point of view there is little distinction between owning a profitable franchise but having an exclusive publishing deal or having absolute control over the development of the franchise while a publisher owns it ... either way the bargaining strength of the two parties stays the same.