THQ, Jakks comment on WWE suit

Late last night, THQ Inc. and Jakks Pacific, Inc. issued separate responses to the lawsuit filed in district court by World Wrestling Entertainment against the two companies, among others. The suit alleges that Jakks Pacific bribed a WWE vice president and licensing agent to secure the video game license that is currently held by a joint venture of Jakks Pacific and THQ. WWE seeks damages and hopes to have the license nullified.

"[Jakks Pacific] denies any allegations of wrongdoing and believes that it will be completely vindicated in the litigation, and looks forward to having the claims against it dismissed," the company revealed in its statement.

A THQ statement disclosed last night that the company was "unaware" of any wrongdoing on the part of Jakks Pacific. "As THQ is not directly accused of any wrongdoing in the complaint--rather the complaint alleges wrongdoing on the part of JAKKS Pacific and others of which THQ was and is unaware--THQ is not in a position to comment on these allegations."

THQ's statement further read, "In any event, either there is no basis for terminating the video game license, or THQ expects to be made whole by those whose conduct is eventually found to be unlawful."

Indeed, it is clear that the company hopes to keep its relationship with WWE. "THQ is committed to preserving its rights under the videogame license with the WWE. THQ believes the WWE is pleased with the manner in which THQ has managed their brand in the video game category. [...] THQ intends to vigorously protect and pursue its rights, if necessary."

Share prices for both THQ and Jakks Pacific dropped after the WWE's announcement. In trading today, before the bell, Jakks shares dropped from $24 down to $13, while THQ saw a comparatively lesser dip, from about $18.50 to $17. WWE stock rose about 30 cents following the announcement Tuesday afternoon.

The World Wrestling Entertainment license is not the only major property that could be in play at THQ. Last month, GameSpot reported that publisher Midway would seem to be the next home for the Nickelodeon properties currently held by THQ, because Sumner Redstone, CEO of Nick's parent company Viacom, owns 73.8 percent of Midway stock and is even toying with the idea of a takeover.

According to the allegations in the lawsuit, former WWE senior vice president of merchandising and licensing James Bell first conspired with Jakks Pacific to steer THQ away from pursuing video game rights to the WWE franchise. He then offered THQ partnership in a joint venture. The court filings did not indicate any belief on the part of WWE that THQ had any knowledge of the alleged bribery scheme.

Under the current terms of the agreement, THQ and Jakks' license to produce video games based on WWE properties is valid until December 2009, with a five-year right of renewal favoring Jakks. WWE alleges that the unorthodox length of the agreement was also a result of the backstage bribery deal.

WWE declined further comment on the matter, noting that the "court filing and news release clearly outline our position." GameSpot will continue to follow this story and will provide updates regarding any new or additional information gathered.