Bethesda sues Interplay over Fallout

Three years after licensing the Fallout intellectual property in 2004, Bethesda Softworks bought it outright for $5.75 million from Interplay, which created the franchise. Under the terms of the deal, Bethesda licensed the rights to make a Fallout massively multiplayer online role-playing game back to Interplay, with the caveat that the fallen publisher had to start full-time development within two years. That deal imploded in April, when Bethesda, dissatisfied with Interplay's efforts, revoked the Fallout MMORPG rights.

This week, the Bethesda-Interplay disagreement was elevated to a legal level, when Bethesda filed suit in federal court in Maryland. The suit accuses Interplay of 10 counts of breach of contract and trademark infringement by not abiding by a trademark license agreement (TLA) it had with Bethesda. The first was in relation to the Fallout MMORPG, which stipulated that Interplay had to have raised at least $30 million in funding for the project by the end of March 2009. As evidence such fund-raising did not occur, Bethesda points to a June 30 filing with the Securities and Exchange Commission, which said Interplay had $2.54 million in debt and only $16,000 in cash assets.

Bethesda's complaint also claims that 11 days after being informed that the Fallout MMORPG license had been revoked and it could not enter into a deal with any third parties, Interplay formalized a deal with Bulgarian studio Masthead to develop the MMORPG Project V13.

The second part of the suit accuses Interplay of riding the coattails of Fallout 3 by re-releasing and repackaging older Fallout games without permission. Specifically, it says that the company was selling a compilation of Fallout, Fallout 2, and Fallout Tactics as boxed products called "Fallout Trilogy" and "Saga Fallout." The packaging of any such new boxed product needed to be approved by Bethesda, which claims it never did so. Bethesda also feels the name "Fallout Trilogy" was deliberately misleading consumers into thinking the compilation contained Fallout 3.

Finally, Bethesda accuses Interplay of entering into deals with several online game distributors without its consent, violating the licensing agreement yet again. GameTap, Good Old Games (aka GOG.com), and Valve Software's Steam service are all named as outlets that sold Fallout products without any permission from Bethesda, in violation of the licensing agreement.

Bethesda is demanding that the court formally declare that Interplay no longer has any rights to the Fallout name or trademark. It also wants the court to place a preliminary and permanent injunction on Interplay to stop it from selling any Fallout-branded products. It also wants Interplay to submit in writing a declaration that it no longer has any rights to the Fallout brand.

[UPDATE] Bethesda is not seeking a specific monetary amount in punitive damages, as many lawsuits do. However, it is, as is standard practice in virtually all lawsuits, asking to recover any attorney's fees resulting from the suit. It also wants Interplay to forfeit any profits it took from sales of Fallout games that violated the licensing agreement, as well as unspecified "damages pursuant to Delaware statutory and common law."

(GameSpot initially reported that Bethesda was seeking no monetary damages whatsoever, and regrets the error.)