Duck and Cover has obtained Interplay's latest court filing in its battle with Bethesda. This filing is a 17 page statement from Interplay CEO Herve Caen, and he is not very happy at all with Bethesda's conduct during the case. The filing mostly summarizes Interplay's legal arguments, but also allows Herve Caen to publically take shots at Bethesda. We also learn a bit more about Fallout Online's development status, including how fleshed out the game world is. Read on!
First, some background:
Interplay has continuously sold Fallout, Fallout 2, and Fallout Tactics since their initial release dates. Attached hereto as Exhibits "1"-"3" are true and correct copies of the box cover art used by Interplay with respect to such games for many years. At various times, Interplay also has sold compilations of two or all three of the titles. For example, Interplay sold Saga Fallout, a compilation of Fallout, Fallout 2, and Fallout Tactics, beginning in or about 2004. The same three-game-combo was distributed as Fallout Trilogy, Fallout Collection, or Fallout: The Ultimate Collection at least as early as about 2005 or 2006. Interplay has also sold a compilation called Fallout: Radioactive Collection.
On April 4, 2007, Interplay and Bethesda entered into an Asset Purchase Agreement (the "APA") releated to the Fallout intellectual property, which superseded the Exclusive License [the exclusive license agreement licesed the rights to make Fallout 3, 4, and 5 to Bethesda]. Under the APA, Interplay transferred the Fallout mark and related intellectual property to Bethesda, in consideration of Interplay receiving a certain cash payment and the perpetual, royalty-free, worldwide, and exclusive right to continue selling the Interplay-developed Fallout games, which consisted of Fallout, Fallout 2, Fallout Tactics and Fallout: Brotherhood of Steel, referred to collectively in the APA as the "Pre-existing Fallout Games."
Interplay retained the rights to "exclusively manufacture, have manufactured, sell and distribute" the Pre-existing Fallout Games (the "Merchandising Rights")....Interplay would never have entered into the APA unless it received the perpetual Merchandising Rights, as part of the considertaion for entering into said Agreement...If you takeaway the rights granted to Interplay, then a material portion of the consideration that Interplay was to receive in exchange for the transfer of rights to Bethesda is substantially, if not totally, eliminated.
In conjunction with the APA, Interplay and Bethesda also executed a Trademark License Agreement ("TLA"). (Exhibit "D" to Bethesda's Motion) The TLA conditionally licensed back to Interplay the right to create the Fallout massively multiplayer online game ("MMOG") that it had reserved for itself under the superceded Exclusive License. In exchange for the license, Interplay agreed to pay a royalty to Bethesda based on game sales, all as more particularly provided in the TLA. To retain the Fallout MMOG rights, Interplay had to begin development and secure development financing within two years of the effective date of the TLA. Nothing in the APA, however, requires Interplay to spend any particular amount of money to develop the MMOG. Rather Interplay must deliver a finished product approved by Bethesda within a certain period of time.
One of the major issues in the whole court case is the language used in the contracts. The agreements specify that Interplay had to begin full-scale development of the Fallout MMO by a certain date, as well as secure a certain amount of funding by a certain date. The language of these statements in the contracts is misleading, Caen claims. The two parties have two very different interpretations. Here is Herve Caen's:
The TLA requires Interplay to begin "full-scale development within two years of its effective date, April 4, 2007, but does not define what this means.
To create its MMOG, Interplay spent more than a year in pre-production. It hired the game designers from the original Fallout game to work on the game design. Interplay hired artists to create concept art for reference during production...Interplay also hired writers to work on the MMOG's story line. The current game design document is more than 600 pages long and describes background material, such as the game world, characters, creatures, weapons, equipment, back story and other key concepts concerning game play.
In conjunction with Earthrise, Masthead has already developed a proprietary MMOG engine and software tool sets over a period of several years and at an equivalent cost of several million U.S. dollars. Masthead has also developed its own networking software to permit thousands of simultaneous connections to and interactions with the game world. Interplay licensed Masthead's technology and hired it as a contractor to perform software programming and some game design services under Interplay's direction and control.
Bethesda also takes issue with the fact that Interplay is working with Masthead in creating Fallout Online. Bethesda apparently claims that this is tantamount to sublicensing the rights to a third party, something Interplay is not allowed to do. Herve Caen completely disagrees:
Interplay has not sub-licensed its rights to Masthead, but rather entered into a development agreement for Masthead to work with Interplay to develop the MMOG. Interplay has not assigned any rights in the Fallout mark or in its MMOG to Masthead or to anyone.
We also have confirmation that there is a playable build of the game:
The advanced state of Masthead's technology and Interplay's extensive pre-production phase resulted in a playable demonstration in March 2009. The demonstration is a portion of the post-apocalyptic game world, incorporating buildings, locations, objects, non-player characters, and controllable player characters. At the time of the hearing, or if requested by the Court prior thereto, we will submit the video demonstration of the game from March 2009.
As far as Interplay's perspective on full-scale development:
Interplay and Masthead currently have a number of artists, programmers, writers, and game designers working on this project so that Interplay can timely meet its deliverables as required by the TLA. I believe that Interplay has commenced what I would term "full-scale" development of its MMOG.
Another issue Interplay has with Bethesda's conduct is the fact that Bethesda has consistently denied them the use of the Fallout name in promoting their Fallout MMO:
Interplay has never used the Fallout mark in connection with the development of its MMOG since the Parties executed the APA and TLA, and has never used the Fallout mark in commerce related to its MMOG, which remains in development and has not been commercially released.
In fact, on April 3, 2008, Interplay sought approval to use the Fallout mark on its website to announce the MMOG project that it was working on in connection with the TLA...In a nutshull, Bethesda refused to permit Interplay to announce its Fallout MMOG even though it was entitled to make the announcement pursuant to the TLA. Interplay should have been, and should be, allowed to use the Fallout mark while it develops its MMOG, and the refusal of Bethesda to permit this is in bad faith.
Interplay, however, apparently showed some good faith:
The TLA does not specify any mechanism by which Interplay must communicate to Bethesda that it has satified the conditions of the TLA or that Interplay has to do this at all. Notwithstanding, Interplay voluntarily sent a letter to Bethesda on April 2, 2009 informing Bethesda that Interplay had satisfied the conditions of the TLA.
And here is where the gloves really come off:
It is interesting that in or about August 2007, just four months after Interplay had entered into the TLA with Bethesda, Bethesda's parent compabny, ZeniMax Media LLC, announced the creation of its own MMOG development house, ZeniMax Online Studios. Based on Bethesda's subsequent conduct it thus appears that Bethesda never intended to permit Interplay to develop an MMOG under the terms of the TLA and planned from the outset to terminate Interplay's rights and grant them instead to affiliated ZeniMax Online Studios for a Fallout MMOG.
Bethesda's attempt to terminate the MMOG rights undert the TLA is consistent with its overall conduct designed to interfere with Interplay's exploitation of rights granted undert the parties' agreements, including Interplay's Merchandising Rights to the Interplay-developed Pre-existing Fallout Games.
We have since learned that ZeniMax Online is most likely working on an Elder Scrolls Online game, not a Fallout MMO. Bethesda stated in court that they are NOT working on a Fallout MMO at this time.
One of the issues Bethesda had going into the preliminary injunction hearing was the fact that Interplay has been distributing the original Fallout games on services such as Steam and GOG. Interplay believes that they are well within their rights to distribute these games on these services, despite Bethesda's protestions, based on the following:
Nothing in the APA requires Interplay to seek permission to distribute the Pre-existing Fallout Games through third party distributors. In fact, the APA at Section 5.10 specifically states that Interplay has the right to "have manufactured" the Interplay-developed games, acknowledging that sublicenses to third parties in the context of distribution are intended.
The rest of the 17 page filing is mostly a rehash of what we already know and not worth posting again. From all of the filings that we have seen, Bethesda is being made out as the clear-cut bad guy trying to cheat the little guy. While this might not be the case, we haven't seen much from Bethesda's point of view on the matter and are, therefore, left to consider them as the aggressor. In a land of corporate legal departments and PR machines, we often find ourselves rooting for the little guy without really knowing both sides. While the Interplay v. Bethesda case is not really a case of David v. Goliath, we can't really help but to draw comparisons.
Anyways, it's all the Fallout community has to read about right now!