Electronic Arts Asks Must Defend $400 Million Activision Suit, Judge Says

Electronic Arts Inc. (ERTS), the second- biggest U.S. video-game publisher, lost a court bid to dismiss the $400-million contract-interference claims by its larger rival Activision Blizzard Inc. (ATVI)

California Superior Court Judge Elihu Berle, at a hearing yesterday in Los Angeles, denied Electronic Arts’ request to throw out the claims, saying Activision had provided sufficient evidence that a jury should decide whether Electronic Arts broke the law by talking to two creators of Activision’s “Call of Duty” franchise while they were still under contract.

Berle rejected Electronic Arts’ argument that it was perfectly lawful for the two top executives of Activision’s Infinity Ward studio, Jason West and Vince Zampella, to explore future employment opportunities. It was ’’a whole different scenario’’ if Electronic Arts approached the two executives while there was still more than two years left on their contract, the judge said.

Activision, based in Santa Monica, California, last year added Electronic Arts as a cross-defendant to a lawsuit that was initially brought by West and Zampella after they were fired. They had sued for $36 million, saying Activision fired them to avoid paying the royalties they were owed for “Call of Duty: Modern Warfare 2,” the top-selling game the previous year.

Robert Klieger, a lawyer for Redwood City, California-based Electronic Arts, declined to comment after the hearing.

“We’re pleased with the ruling and look forward to proving our case at trial,” Steven Marenberg, a lawyer for Activision, said after the hearing.

‘Call of Duty’

Activision’s lawyers said in court filings that Electronic Arts wanted to lure away the “Call of Duty” developers because the game had displaced “Medal of Honor” by Electronic Arts as the dominant combat-game franchise, helping Activision to overtake its rival as the largest video-game publisher.

“EA dangled before West and Zampella a lucrative deal that incentivized them to terminate their Activision contracts prematurely, either by quitting or by behaving so badly that Activision had no choice but to fire them, which, of course, is exactly what happened,” Activision said in its opposition to Electronic Arts’ request to throw out its claims.

After they were fired, West and Zampella set up an independent studio, Respawn Entertainment. Electronic Arts said in court papers that it has no involvement with Respawn beyond an agreement to publish and distribute the studio’s games.

In addition, about 40 current and former employees of Infinity Ward sued last year, alleging they weren’t paid bonuses and royalties for their work on “Modern Warfare 2.” Their case has been consolidated with the case by West and Zampella against Activision.

The case is West v. Activision, SC107041, California Superior Court (Los Angeles County).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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