|
Home
 About Us
Legal Services
CSR
Knowledge Base
Publications
News
Recruitment
Contact Us
|
 |
|
|
|
30 Old Burlington Street
London W1S 3NL
Tel: (+44) 020 7468 2600
Fax: (+44) 020 7437 8216
|
|
|
|
|
 |
|
|
|
|
'Star Wars': your brand - maintenance and support or stagnation
and decay?
(featured in MCV Magazine)
Brian Miller
|
|
The ties between game publishers and film studios goes back some years and increasingly film studios are seeing the merits of increasing their revenues by releasing a game at the same time as the movie. For example, ‘Enter the Matrix' was released to coincide with the release of ‘Matrix Reloaded' and sold 2.5 million copies worldwide in its first month of release. However, the success of such a game depends largely upon the success of the movie, sequels, spin-off T.V. shows or other related merchandising arising as a result of the marketing machine of the film studio. This article highlights how the relationship between a game publisher and a licence owner can turn sour if the licence owner decides there is diminishing value in the licensed work.
Santa Monica based games publisher, Activision, announced that it will not be publishing Star Trek video games anymore, after it claimed that Viacom, (the third largest US media company and the parent company of Paramount Studios, which owns the rights to Star Trek), has allowed the franchise to ‘stagnate and decay'. Activision issued proceedings against Viacom in the Superior Court of the State of California, in its hometown, Santa Monica, on June 30th 2003 and is seeking millions in damages from Viacom for the problems it has faced in trying to sell Star Trek related computer games as a result of Viacom's treatment of the Star Trek properties. Activision is also claiming to have already terminated the contract.
Activision owns the exclusive rights to produce Star Trek computer game titles as a result of entering into a 10 year licence agreement with Viacom in 1998. The initial licence agreement included $20 million in advance royalties with additional payments to be based on game sales. Activision is now accusing Viacom of breaching its fundamental obligation set out in the licence agreement that Viacom was to continue exploiting the Star Trek franchise consistent with its practice at the time the agreement was signed in 1998. Paramount Pictures has made 10 movies and five TV series of Star Trek since 1966. The complaint maintains that Viacom has only released one Star Trek movie since entering into the agreement, namely, Star Trek: Nemesis. Nemesis was the lowest grossing of all the Star Trek movies, taking $43.1 million in North America since December last year. It is reported that Viacom informed Activision that it has no current plans for further Star Trek films and that it has cancelled the ‘Voyager' and ‘Deep Space Nine' series with effect from1998. Activision claims that it "cannot successfully develop and sell Star Trek computer games without the product exploitation and support promised by Viacom". According to the law suit filed, "a continuing pipeline of movie and television production, and related marketing, is absolutely crucial to the success of video games based on a property such as Star Trek". It is also reported that Viacom frustrated Activision's attempts to co-ordinate the development and marketing of its games with Viacom's development and marketing of its Star Trek new movies and television series.
Activision claims that Viacom's handling of the Star Trek properties has lead to a substantial loss of revenue and is seeking millions in damages. It has already terminated the contract.
Clearly, there is a long way to go before the merits of this case are established in the courts, but it does highlight a number of important issues. It is essential when entering into an agreement that the necessary due diligence has been carried out and that a contracting party is confident that it will be able to perform and fulfil its obligations set out in any agreement. Failure to perform such obligations after execution of the agreement may result in the other party suing for breach of the agreement and seeking damages. The agreement will also usually provide a mechanism whereby a breach of an obligation may give the other party a right to terminate the agreement, where the defaulting party has not rectified any breach within a set period.
From the licensee's perspective, this case highlights the importance of endeavouring to negotiate a clause in the licence agreement which obligates the licensor to use its best (or at least reasonable) endeavours to promote and market the licence/franchise of another party for the duration of an agreement. In the absence of such a clause (it remains to be seen whether one was included within the Activision and Viacom licence agreement), it may be difficult for Activision to enforce its rights.
|
|
|
