THQ, Jakks WWE royalty fight drags on

The success of the WWE is fueled by conflict and drama, so it seems appropriate that the company's game license is marked by the same.

Since 1999, the right to turn the wrestling organization's in-ring action into interactive brawlers has been held by a joint venture of THQ and toy maker Jakks Pacific. But like many of the tag teams in the WWE's storied past, the union has been as volatile and contentious as it has been successful. WWE has twice sued the THQ-Jakks joint venture seeking to have its licensing agreement terminated, all while the game and toy companies have been locked in their own dispute over royalty rates on WWE games.

The latest example comes today as THQ touted a victory in its royalty dispute against Jakks after the California Court of Appeals denied one of the toy maker's petitions. THQ claims Jakks has been delaying arbitration on the matter and had recently petitioned the court to disqualify all but one of a slate of arbitrators considered by the judge to handle the dispute. That petition was denied, prompting THQ to announce that the arbitration process is moving forward.

In a post-earning conference call last month, Jakks Pacific CEO Jack Friedman told analysts that the arbitration process had been slowed for a number of reasons. However, he expressed confidence that the company would emerge from the dispute unscathed.

"From Jakks Pacific point of view, we're not at all nervous about it," Friedman said. "We think we're in a wonderful position and all of the economics are lined up that we should continue to get at least--if not more of--the same rates than we've been getting in the past."

As for the future of the WWE license, Friedman said he hoped to have one of the wrestling company's lawsuits resolved by May. Friedman also noted that Jakks' recent loss of the WWE toy license--Mattel will begin making action figures based on the brand in 2010--does not include the game license, which he said was locked up "for quite some time."

That could put Jakks in the position of making games for WWE while making action figures for its primary rival, TNA Wrestling, as the toy maker last month signed that brand's rights starting in 2010. The upstart TNA would be in a similar position of competing with itself on different fronts, as Midway Games debuts its TNA games by the end of June.

THQ referenced the Jakks conference call in its announcement, saying that some unspecified comments in the call about the economics of the joint venture did not reflect its own assessments.