December 5th Bethesda v. Interplay Court Hearing

Post by **King of Creation** » Thu Dec 08, 2011 10:51 am

[ Company -> Update ] - News related to <a href="http://www.duckandcover.cx/archives.php ... y=126">Top Story: Bethesda v. Interplay Motions Results</a> | More info on <a href="http://www.falloutwiki.com/Bethesda v. Interplay">Company: Bethesda v. Interplay</a> | More info on <a href="http://www.falloutwiki.com/Fallout: Online">Game: Fallout: Online</a>

UPDATE: Thurs, 08 DEC 09:40 GMT: Here are the results!:
There is a lot referenced in the court transcripts from the Motions in Limine, so if you don't yet know what they were about, please click the links at the bottom of this bottom of this post to familiarize yourself with them.

The court hearing was a mixed bag for both Interplay and Bethesda. Neither company was a clear winner or loser, as both had things approved and denied.

Here is the main decision (ignore the numbers..they are line numbers from the transcript):
<blockquote>
1 THE COURT: Okay. All right. With regard to
2 Bethesda's Softworks' motion. The first request is that
3 I hold Interplay Entertainment to have the burden of
4 proof on three separate or three potentially separate
5 issues. One, that Interplay has a trademark and
6 copyright license; that Interplay commenced full scale
7 development by April 4, 20-- I just said seven, but it
8 could have been nine. And second -- and third, that
9 Interplay had secured financing also by April of 2009.
10 The parties, I think, seem to agree that the party
11 asserting a license wants the party owning copyright and
12 the trademark rights to have shown ownership and copying
13 that the party asserting license has the burden of
14 proving the license. The parties agree there is a
15 document called Trademark License Agreement which at
16 least initially both sides asserted valid and
17 appropriately enforced. The question arises as to what
18 -- how to approach the problem as of April 4th 2009.
19 My conclusion is that the license was granted for
20 an initial period of two years. And while Bethesda is
21 calling this a "condition precedent" using contract
22 terms, I think more appropriately it is a condition to
23 the continued existence of the grant of the license.
24 This is a condition that automatically reverted the right
25 to Bethesda unless the condition was satisfied.
1 And, thus, I think it does come down to
2 Interplay's burden, at least of production, with regard
3 to the satisfaction of the condition in the grant. That
4 is, that it will be the burden on Interplay Entertainment
5 to come forward with evidence that it satisfied the
6 conditions in the TLA for a license as of April 4th 2009.
7 This is an express condition in the documents. It is one
8 the treatise writers, at least, talk about as one that is
9 -- results in an automatic rescission or reclamation of
10 rights if a grantee fails to perform the conditions and,
11 thus, it would, if they can't prove to the satisfaction
12 -- produce evidence of the satisfaction of the condition,
13 meaning they have not satisfied their burden of
14 production with regard to having a license.
15 I say "burden of production" because there is at
16 least one commentator that talks about separating out
17 perhaps a burden of persuasion from a burden of
18 production. It's "Patree" or "Patri" on Copyright. And
19 I'm not foreclosing the possibility, assuming that
20 evidence is in equipoise, which it rarely is, of deciding
21 that while Interplay has the burden of production on the
22 issue of compliance with the condition, that it may
23 ultimately remain Bethesda Softworks's burden of
24 persuasion.
25 I'm not -- the parties haven't -- you talked in a
1 uniform way about burden of proof, which is perhaps a
2 combination of both a burden of production and a burden
3 of persuasion. And so I think it only necessary at this
4 point to let you know that the burden of production of
5 evidence on all of these issues will apply to Interplay
6 Entertainment. The reason I asked you the question at
7 the beginning about whether there were any trademark or
8 copyright claims being asserted by Bethesda Softworks
9 before April of 2009 was that at -- if there were, that
10 potentially was raising a scope issue as opposed to the
11 existence issue about the license.
12 And so let me be clear that when we're talking
13 about whether there was a trademark and/or copyright
14 license post-April 2009, the burden of production is on
15 Interplay Entertainment. If we are litigating any
16 question as to the scope of any license pre-April 2009,
17 then it's likely a scope issue but only because the
18 parties, at least initially, agree that there is a TLA
19 in place. So, that's my ruling with regard to the first
20 issue.
21 The second issue is articulated as precluding
22 Interplay from offering parol evidence to support its
23 defense that the TLA granted a copyright license. This
24 would only come into play if in fact there was a TLA of
25 some sort that continued in existence if we're dealing
1 with the post-April 2009 time frame, if you're
2 understanding how I'm proceeding here.
3 So, if there is no license at all then, of course,
4 there is no looking at an April 11 date. At this stage
5 I'm really not prepared to rule in an almost summary
6 judgment-type scenario where I will come out. So I am
7 not going to preclude Interplay from putting on what is
8 being characterized as parol evidence in hard and fast
9 terms. That does not mean that I have decided that it is
10 relevant to any contractual interpretation issue that I
11 need to resolve. It's simply that in a bench trial I am
12 electing to defer any ultimate decisions about that legal
13 question. If this were a jury trial, I might have to
14 take a different approach.
15 The third issue is whether Interplay should be
16 precluded from arguing that it had satisfied full scale
17 development and minimum financing. Again, I'm not, at
18 this juncture, going to grant any summary judgment in the 19 guise of a motion in limine though. Depending on whether
20 they come forward with some evidence or not, they can
21 argue that it does or that I should find that it does
22 satisfy those conditions. But the burden is on Interplay
23 to come forward with some evidence.
24 Now, if there were rulings made during discovery
25 that preclude going beyond what was produced at
1 discovery. That's a different matter, and it's not my
2 understanding that's really at issue. But, rather, what
3 Bethesda Softworks was seeking here was almost a partial
4 summary judgment, and that I'm not going to enter at this
5 point.
6 Finally, though, Interplay is seeking only in
7 their pre-trial order to amend the pleadings to assert an
8 affirmative defense of mistake. Here, what I heard from
9 Mr. Gersh today differs from what was in his response to
10 this issue in the papers. Here you're saying it's
11 nothing new in terms of what the meaning might be of full
12 scale development and secured financing. In the response
13 to this motion, you point to language in the first
14 amendment answer and counter-claim dealing with, in
15 essence, additional trademarks and copyrights in terms of
16 what you were permitted to do. Because, at the time, I
17 thought this was stemming from the dispute as to whether
18 assuming there was a license to use the Fallout
19 trademark, what that meant. Did this have to be an MMOG
20 with the name "Fallout" but look like, whatever, Mickey
21 Mouse or some other character. And today I'm hearing a
22 different perspective all together.
23 In any event, "mistake" is an affirmative defense.
24 It must be pled with particularity; it has not been. It
25 isn't even proposed to be in the response to the motion
1 in limine, and I'm not going to entertain any amendment
2 to the defenses by way of a mistake. What I thought I
3 heard Mr. Gersh talking about today is that the true
4 battleground is whether there is evidence of full scale
5 development or the proper financing, but it's far too
6 late for Interplay to be contending that the TLA itself
7 should be rescinded, in essence, because of a mutual
8 mistake way back in 2007.
9 They have failed to articulate in any sufficient
10 manner what that might have been, and it's far too late
11 to infuse into this case a totally different issue. So,
12 we won't be amending the answer with the affirmative
13 defense of "mistake." Okay.
</blockquote>
 
As for Interplay's Motion to have Thomas Bidaux barred from testifying:
<blockquote>
25 THE COURT: Okay. Then, first of all, with regard
1 to the absence of a deposition, I am finding that
2 Interplay had an opportunity to take this deposition if
3 it wished, and I am not going to preclude Bethesda from
4 calling the witness on that basis. I find that I can't
5 rule, based on the current record at least, that
6 Mr. Bidaux will not have information that will be of
7 assistance to the trier of fact, and I'm not going to
8 preclude his testimony on that ground.
9 On the other hand, in reading the report, he
10 doesn't mention that he's seen material concerning what
11 Interplay had done. Instead, his report is based
12 entirely on his own experience, and he will not be
13 permitted to opine at all on whether Interplay had or had
14 not reached the -- satisfied the conditions in the TLA.
15 Rather, he is going to be permitted to testify as
16 proposed in his report as to what an MMOG is and entails
17 and nothing specific to this case, other than that
18 background education for the trier of fact which is going
19 to be me.
</blockquote>
To summarize the above and other little bits from the hearing:

1. The burden of proof is on Interplay to prove 3 things.
A. it has a trademark and copyright license
B. it was in full scale development
C. It had secured funding of 30 million.
2. Interplay is not precluded from presenting parole evidence.
3. Interplay is not precluded from presenting evidence showing minimum financing and full scale production.
4. Affirmative defense of mistake will not work for Interplay.
5. Bethesdas witness can be at the trial, but can only testify as to what an mmo is and what it entails...he cannot comment on what Interplay has done.
6. Trial will be at 9:30 A.M. on Dec 12
7. Interplay thinks it will take 2 to 2 1/2 days for the entire trial.

So stay tuned to Duck and Cover for the latest!
 
 
 
UPDATE: Thurs, 08 DEC 03:45 GMT: I have the results of the assorted pre-trial motions in limine! It's a mix of wins and losses for both Interplay and Bethesda. I will be posting my writeup on them later today.
 
The big Bethesda v. Interplay court hearing that we've been reporting about took place today. It was, unexpectedly, a telephonic hearing rather than a standard in-court situation. Today's hearing was mainly about Interplay and Bethesda's separate Motions in Limine. We should find out soon what issues will be allowed and denied when the main trial takes place. I'm putting this post at the top and will keep updating it as more info becomes available. Right now, all we have is the following:
<blockquote>
Telephonic Motions Hearing held on 12/5/2011 re [150] MOTION in Limine filed by Bethesda Softworks LLC and [151] MOTION in Limine No. 1 filed by Interplay Entertainment Corporation - Argued - "GRANTED" in part and "DENIED" in part for reasons stated on the record by Chief Judge Deborah K. Chasanow. (Court Reporter: Tracy Dunlap) (td, Deputy Clerk)
</blockquote>


Granted in part and denied in part? But what parts? For reference, here is a list of recent relevant posts, with the earliest first:
<a href="../../forums/viewtopic.php?t=25791">Bethesda files Motion in Limine</a>
<a href="../../forums/viewtopic.php?t=25793">Interplay fires back</a>
<a href="../../forums/viewtopic.php?t=25796">Interplay goes for jugular, no more jury trial</a>
<a href="../../forums/viewtopic.php?t=25833">Interplay tears into Bethesda's legal argument</a>
<a href="../../forums/viewtopic.php?t=25841">Bethesda launches a volley</a>
<a href="../../forums/viewtopic.php?t=25847">Interplay fits in a final argument before Dec. 5 hearing</a>

agent_c · Post by **agent_c** » Thu Dec 08, 2011 3:36 pm

Its all getting exiting now... Let the main event begin!

The truth will all now come out - does Interplay have the cash?

SenisterDenister · Post by **SenisterDenister** » Thu Dec 08, 2011 4:22 pm

Probably not since Bethesda forced them to spend it all in court.

The-Master · Post by **The-Master** » Thu Dec 08, 2011 5:49 pm

Interplay had funding of 35 million total (15 million via I2G and 20 million via Masthead) before the cut off date. The COO of Bethesda stated that they did not have to have it in a bank account or a line of credit. (puts .357 to foot and pulls trigger)

Since what secured funding is was never defined in the contract, nor does an industry standard exist, the judge will have to use common sense and look at what the intent was of the 30M (my guess).

I would venture it was to ensure a quality fallout branded MMO.

2nd issue is Full Scale development.. again... never defined in the contract nor industry. So again,, common sense approach.
Thousands upon thousands of pages of design notes and a fallout wiki = check.
teams in the U.S. and europe = check.
Working demo that was played via video in court with working networking ability that allowed players in the U.S. to play people in Europe.. = check.

NOTE , it says full scale development.. NOT a completed game before the cut off date. NOT a completed game but simply a game thats in development. A working demo to me seems pretty serious.

3rd Trademark/Copyright issue. Bethesda claims they only have the right to use the word fallout and that they cant use any settings, creatures, locations, vaults, environments. etc etc etc of the fallout universe.

ok, now, no company in the world would say license Star Wars to make a game and put it out and it clearly says Star Wars and you install it and its a game about baking cookies (think cooking mama) and has 0% Star Wars content.. no Darth.... no Sith... no damn Ewoks nerfing stuff up and getting their grind on.

First the owner of the IP would be pissed b/c you just made Star Wars looks like shit and the buyers would be pissed.

Top of all that Interplay is required to give up 12% of all Revenue from the MMO. No ones going to agree w/o the underlying copyrights, characters, settings, etc etc

but the smoking gun is this.. it states in the contract that if Interplay Fails they they can still release the MMO but they have to REMOVE all references to fallout, all locations, all creatures that are fallout creatures, vaults, characters.

So riddle me this batman?.. how can you claim to not have given interplay the copyrights when you go on to say what copyrights have to be removed in case interplay fails. (Doh!)

The APA (asset purchase agreement.. aka 2nd contract) does not specifically state interplay gets the copyrights b/c the ELA (licensing agreement aka .. 1st contract) dealt w/ all of that. The APA is built upon the ELA. Then throw in some email from Bethesda where they talk about interplay making fallout mmo. Did Bethesda flip out and sue on the spot?... No, of course not, Interplay had the rights. They could not sue at the time.

But on the flip side its not all clear cut. The Judge can rule anyway she wants to. I'm sure both sides will be very convincing and new evidence might bring new things to light.

But my main point here is parts of bethesdas defense do not pass the common sense test.

Bethesda has a very remote possibility of losing fallout though.
IF interplay defends itself and wins and then Interplay wins the counter suit its possible that the APA contract would be voided and the rights could go back to interplay for fallout. Bethesda could still make fallout 5 but they would have to play 12% on past and future royalities of fallout.
Fyi, Fallout 3 and new vegas (aka fallout 4) did over 700 million in sales.
Thats 84 million if you do not factor in any compounding interest.
add damages at 3x, paying interplays lawyers and your looking at quite the risk.

again, this is all a small possibility.. the question is be will bethesda risk it? do they think their case is that solid?

A settlement is always a possibility even up to the court date.

Either way.. law.... law never changes.

Cimmerian Nights · Post by **Cimmerian Nights** » Thu Dec 08, 2011 6:22 pm

Bethesda's claims seem pretty weak from my perspective. It looks like they are just flailing around desperately trying to prevent Interplay from getting the precioussss, and using some really poor arguments to achieve that..

I'd like to see Bethesda lose this case, and I like the idea of Interplay getting a piece of the pie back. I'm so far past expecting anything resembling what the original Fallout stood for from either. I just like the idea of the two of them fucking with each other instead of fucking us over.

The-Master · Post by **The-Master** » Thu Dec 08, 2011 6:31 pm

i do not think the trademark argument has a chance.
Funding is kinda a gray area in my opinion. Yes Interplay has 15 million via what looks like a milestone payment system with I2G (Interactive Game Group, formerly called Microprose) but the gray area i think could be that Masthead said they would spend 20 million on the game via work, tools, engines, etc etc.

the end result would be the is same of course.. a quality product.

Far as development , well,, thats a simple matter of opinion.
I could understand if interplay had some 6th graders fantasy of what FOOL would be like written on a napkin as not being full scale development but when you have a working demo w/ networking.... i rest my case your honor.

but it could go either way. The law is strange and we do not know all the evidence that is going to be presented for either side.