Valve and VU end legal dispute, publishing agreement

Parties settle long-standing beef out of court, because as of August, VUG will no longer distribute any Valve titles, and cybercafe rights revert to the developer.


In August of 2002, Valve took its dispute with then-Sierra Online over cybercafe distribution rights to federal district court in Washington state. Today, in a joint statement, the two warring factions said they had settled their differences out of court. In a court order signed by presiding federal Judge Thomas Zilly on April 12, 2005, Valve's "Motion for Order to Dismiss with Prejudice" was granted. Judge Zilly's signed order made the lengthy legal dispute moot.

As reported earlier, last August 14, 2002, Valve served Sierra OnLine (now Sierra Entertainment) documents that alleged Vivendi-Universal-Games-owned Sierra had illegally placed Valve games in Internet cafes in the US and abroad. "Sierra has in the past and continues to reproduce, use, distribute, and/or license one or more of the Valve Games with regard to 'cyber cafes.' Sierra's activities are outside the scope of Sierra's limited license ... and therefore constitute copyright infringement in violation of the Copyright Act of 1976," the original complaint read.

Also at stake was a breach of contract claim seeking royalties owed and damages for, as Valve alleged, a VUG-caused delay in the release of Counter-Strike: Condition Zero. Valve claimed the game was ready in time for the 2003 holiday season but that VUG held the game back from retailers.

Specifics as to what monies may have changed hands in the settlement were not addressed. As a result, analysts and gamers may never know the full financial extent of the settlement, but what the two parties publicly stated was as follows:

First, that beginning August 31, 2005, VU Games will no longer distribute packaged versions of any Valve game, including Half-Life, Half-Life 2, Counter-Strike, Counter-Strike: Condition Zero, and Counter-Strike: Source. This makes it unlikely that VU will publish the Xbox version of Half-Life 2 if it is released following the end of August.

Second, VU Games will notify distributors and cybercafes that were previously licensed by VU Games that "only Valve is authorized to distribute Valve games to cyber cafes and grant cyber cafe licenses."

And third, all licensing agreements between cybercafe operators and Sierra Entertainment, Vivendi Universal Games, affiliates, or distributors that had previously "granted rights to use Valve games in cyber cafes, whether written or oral," are now null and void.

The long-standing complaint had consumed thousands of hours of legal research, stretched over 32 months, and was punctuated by more than 270 filings.

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