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Bethesda vs. Interplay court transcripts: Snow White, Donald Duck and hair falling out

Ausir February 19, 2011 User blog:Ausir
Bethesda vs Interplay

As I have posted last month, Bethesda's motion to dismiss Interplay's latest counterclaim was denied by the court but details of that court session were not made public. However, I have now received the court transcripts from that very session. Here are some of the more interesting quotes.

Note that I have preserved the original spelling, including some names that were misspelled in the transcripts. "Mr. Kaen" refers to Herve Caen, CEO of Interplay, while "Mr. Leader" is James Leder, COO of Bethesda.

Howard H. Stahl, Bethesda's lawyer, argued that the name in itself has enormous value, which is why Interplay actually licensed only that.

Because it is just reconfirming what otherwise was clear. You know how lawyers can be, it does not confirm that it was included, it merely confirms it was never included.

(...)

The name, Your Honor, has enormous value. They wanted that name for this MMOG.

However, after he compared the value of the name "Fallout" to licensing the name "Walt Disney" to use with a movie, judge Deborah K. Chasanow asked:

But is the value of that -- unlike Walt Disney I do not necessarily agree that there is an equation here between Fallout and Walt Disney. There may be an equation here between Walt Disney and either Interplay and Bethesda as opposed to Snow White and Fallout. So, let's set that aside.

(...)

Let me ask you this about your analogy, what if someone was allowed to use the mark Snow White but none of the characters or pictures or storyline or anything else, so what they did is they labeled it Snow White but you look at it and it is Donald Duck?

Stahl replied:

They could have come up with an entirely different game, and entirely different scenariothat is post whatever went on in the earlier Fallout games. But there is absolutely no conveyance Your Honor of any other rights other than the mark to them.

Jeffrey Gersh, Interplay's lawyer, in stated in reply to that that prior to this motion, Bethesda never took the position that Interplay had never had any rights to use established elements of the Fallout world.

(...) while Betheda has taken the position they didn't know earlier on that in fact Interplay was making a game using Fallout characters, images, likenesses, scene et cetera, the statement is untrue. They knew it going back to the preliminary injunction stage (...)

As evidence of that, Gersh presented the early proof of concept screenshots, which clearly show such elements as super mutants and Nuka-Cola.

Bethesda wants you to say, look it is only the word Fallout and that is all they get to do and they get to slap it on some game. What game do we slap that mark on?

Do we slap it on a game where people are losing their hair and as hair falls out we say, okay it is a Fallout game?

Do we put that on a game that says that there are people falling out of windows and when they hit the ground we killthem and we say that is a Fallout and they are falling out of cars or do we put it on some car racing game set in a time that is not an apocalyptic time like a Fallout game?

(...)

Can anybody honestly think for one second that if a game didn't look, smell, taste, feel like a Fallout game that Bethesda would ever approve it?

That Bethesda would say it is okay, you can put out a game with a bunch of rainbow ponies prancing around and we will call it Fallout and Bethesda is going to say, that is great because people are going to really understand it is related to Fallout? The answer is no.

With goodwill and a mark you want the images, you want that game that people are going to pick up and buy that see the word Fallout. They are going to say wow that is a Fallout game, I remember playing that game on a standalone on my computer, looks great, we like it.

It couldn't be anything else. It would be impossible to suggest. The problem is as we suggest Iin our papers is that I think it is ambiguous from this agreement what did we really get? It is why we think that the intent of the parties need to be delved into in great depth.
Interplay has one little lawyer and Mr. Kaen handling this. I think Mr. Leader said that they had something like seven or eight lawyers from DLA representing them at the time all looking through this.

I submit to you they left it out, but completely explaining what was going to be part of that. But what is interesting is they didn't come to this Court previously and simply say to you at the preliminary injunction, we want an injunction Judge because they don't have any right to do anything wit it except put a game out there with a mark Fallout on it.

That would have been simple and why didn't they do that? Because I submit that Mr. Leader and Mr. Lesher in declarations, they knew what the intent was, they knew that Interplay was going to make a game that looked like Fallout, they knew that it was going to have similar characters to it, they wouldn't have had to make the arguments that they are making now had they really believed that is what it was before. To think anything else is simply ridiculous.

Mr. Stahl answered with the following:

No one has told you what term is ambiguous in this agreement. No one has told you where the language here would even permit this Court to listen to as a matter of evidence, (...) There is no ambiguity in this agreement.

If there is anything, it is absolutely clear that anything that is not specifically licensed to Interplay is completely exclusively owned by it and entitled to be used by Bethesda.

To say there is no control in this agreement about what kind of game they could create under the Fallout mark is really not accurate Your Honor.

Look at all of Section 5 of the Trademark License Agreement, it goes on for pages about quality control, about using confusing marks, about samples, about what is to be in it, about the rest of it.

He also reaffirmed that Bethesda never knew about Interplay using established elements of the Fallout world in their game, ignoring the proof of concept screenshots from the preliminary injunction stage:

For Interplay to now say to Your Honor, well no one objected earlier about the use of Fallout characters in this MMOG. Your Honor, you recall we just had a motion Your Honor resoled yesterday where we said they refused to give us any of the MMOG materials at all. We have never seen anything. No one knew.

Eventually, the judge decided to deny Bethesda's motion to dismiss Interplay's counterclaim.

The parties agree that Delaware law applies to this claim. Delaware like most states I think adheres to the objective interpretation of contracts. We are looking for what an objective reasonable person would understand the contract terms ot mean.

We use a common ordinary meaning, we do not read any particular term in isolation, we have to read the contracts as a whole and here we have two documents that were executed at the same time, refer to each other and therefore are to be interpreted together.

(...)

While this [Bethesda's interpretation] is a possible reading, I am not saying ultimately that they won't succeed. I find that they have not persuaded me at this juncture that it is the clearly unambiguous meaning of these documents.

(...)

The Asset Purchase Agreement differentiates in the intellectual property definition between the trademarks and the brand indicating that they are not necessarily synonymous so the license that licenses the ability to create a Fallout branded MMOG indicates to me that maybe we have mroe than the marks involved.

We need, as I have said, to look at the contracts as a whole and I looked at Section 3.4 where the parties outlined what they expect to happen if the TLA was terminated and it refers to Interplay's right to retain elements of the MMOG that it created but excluding any game elements that used, incorporated, traded on or otherwise exploited any Fallout related intellectual property (...).

I question that if it never granted iNterplay the right to use any of this intellectual property there would be no need and no reason to have the return of it contained in the agreement and I do not think we are to read a contract so as to render nugatory or ineffective any other provisions.

Additional discovery hearings are to take place in the next few months to determine the actual meaning of the agreements between the parties. Interplay was also ordered to submit additional documentation regarding financing and development of Fallout Online by February 7.

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