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38 at Infinity Ward file lawsuit against Activision over royalties

Wed 28 Apr 2010 7:37am GMT / 3:37am EDT / 12:37am PDT
Development

Group claims $54m is owed; accuses publisher of holding them "hostage" until delivery of MW3

Activision Blizzard

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online...

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Infinity Ward

Infinity Ward is an accomplished team of game makers focused on creating games that are fun, exciting,...

infinityward.com

A lawsuit has been filed against Activision by 38 employees of Infinity Ward, both past and present, who claim that the publisher owes them over $54 million in bonus payments.

And according to the suit, Activision has been holding its staff "hostage" since the release of Call of Duty: Modern Warfare 2 by withholding payments due to them until the completion of Modern Warfare 3.

The lawsuit, which was discovered by G4TV, was filed in the Los Angeles Superior Court by 38 employees calling themselves the "Infinity Ward Employee Group".

One of the group's attorneys Bruce Issacs of Wyman & Isaacs LLO explained: "Activision owes my clients approximately $75 million to $125 million dollars. Activision has withheld most of the money to force many of my people to stay, some against their will, so that they would finish the delivery of Modern Warfare 3.

"That is not what they wanted to do. Many of them. My clients are entitled to their money. Activision has no right to withhold their money."

According to the filing, $28 million has been delivered to Infinity Ward workers in bonuses, but at least $54 million is still owed to them from 2009 profits alone.

However, taking into account other considerations - including bonuses due past the first quarter of 2010 and interest rates - the group is looking "to recover between $75 million and $125 million, if not more, in compensatory damages," said Isaacs.

According to the lawsuit Activision has "improperly withheld this specifically identifiable sum of money from the members of IWEG in order to force them to keep working for Activision so that Activision could receive delivery of Modern Warfare 3."

Activision "made a calculated, purposeful and malicious decision" to withhold proper bonuses "in an attempt to force employees of Infinity Ward to continue to work at a job that many of them did not want just so Activision could force them to complete the development, production and delivery of Modern Warfare 3," it continues.

"In short, Activision withheld the property of the IWEG in an attempt to keep the employees hostage so that Activision could reap the benefit of the completion of Modern Warfare 3."

In response to the lawsuit however Activision has issued a brief statement saying that it believes it is within its rights to determine the schedule of bonus payments.

"Activision believes the action is without merit," said a company spokesperson. "Activision retains the discretion to determine the amount and the schedule of bonus payments for MW2 and has acted consistent with its rights and the law at all times. We look forward to getting judicial confirmation that our position is right."

Last week an Activision employee wrote on Facebook that the bonuses due to employees of Infinity Ward that have since left the company would be "redistributed to everybody else."

Former Infinity Ward heads Jason West and Vince Zampella have also filed a lawsuit against their former employer, suing them for upwards of £36 million. They alleged that Activision forced employees to produce games at "breakneck pace" under "aggressive schedules" and also claimed bonus payments were being withheld.

"West and Zampella were not eager to extend their employment; especially as they watched their games receive countless awards and make Activision billions of dollars, while many Infinity Ward employees were not being provided a fair share," stated the filing.

Activision has counter-sued the pair, accusing them of attempting to hijack its assets and delaying pre-production of Modern Warfare 3.

21 Comments

Terence Gage Freelance writer

1,288 120 0.1
Bloody hell, the whole Activision/Infinity Ward scenario seems to get more and more conspicuous as each week passes by!

While withholding bonuses for work already completed seems utterly abhorrent, I suppose it comes down to what is outlined in each employee's contract, and whether there is such a clause and so on. It's difficult to speculate too wildly without knowing the finer points of the court proceedings.

Anyway, I can't see all this not ending badly. Respawn will probably grow at an extraordinary rate while IW will continue to lose tens of employees. In the long term I think this is a very poor decision for Activision to treat their top studio so badly. They should cultivate creativity, not quell it.

Posted:4 years ago

#1

Michael Abraham game designer

37 0 0.0
with all the drama going on, it's turning into a soap opera of sorts.

what activison is saying regarding bonuses seems quite dangerous to me. even if they are in their rights to withhold payment of bonuses (and then redistribute allocation of them when people leave), that basically is saying: any bonuses IW employees are due are indeed technically worthless. the system they are touting lets them promise bonuses, but at the same time they basically can avoid paying a single penny, considering that within this system they can just withhold the bonus payments indefinetly, in the knowledge that employees will eventually move on - thus forfeiting their unpaid bonuses.

i honestly don't see how any company can expect to survive for long with that kind of mentality.

Posted:4 years ago

#2
I'm not sure how Activision could owe 38 "employees" $75m+ --> that comes to almost $2m each. Even with bonuses, wages, options it should come to a fraction of that.

We'll find out how water-tight the contracts at Activision are.

Posted:4 years ago

#3

Gregory Keenan

102 11 0.1
Pursuing the culture of fear a bit are we activision?

Posted:4 years ago

#4

Terence Gage Freelance writer

1,288 120 0.1
@ Michael - "I'm not sure how Activision could owe 38 "employees" $75m+"

Well, it looks like they are seeking $54 million in unpaid bonuses as well as the extra $75 million and more for compensation and damages. I would imagine West & Zampella are not part of this, but if it concerns a bunch of head people from Infinity Ward it's not unreasonable that it could be going into millions for some individuals. Plus, if it's performance-based, that could explain why the figures are so high.

Does this mean 38 people who were involved in the development of MW2 have now left IW? I can't see people still working there participating in this, unless they are able to do so anonymously or it is their intention to not be with the company for much longer.

Posted:4 years ago

#5

Antony Cain Lecturer, Wakefield College

263 21 0.1
"Does this mean 38 people who were involved in the development of MW2 have now left IW? I can't see people still working there participating in this, unless they are able to do so anonymously or it is their intention to not be with the company for much longer."

I imagine that even those who intend to stick with IW will be getting (openly) frustrated by the delay. Rightly so too - it's not their money to keep. It doesn't exactly show faith/respect/loyalty to the employees.

I remember the term 'unbridled greed' from the early days of this story, quite fitting!

Posted:4 years ago

#6

Joe Bognar PR Account Executive / Journalist

99 2 0.0
Ridiculous! I can't believe that Activision is doing this... Very sad. I don't think that paying this money would be a big thing for them. Keep going on like this and their reputation will be in ruins. It's not some unknown game, it's MW2! Every gamer will hear about this and probably 90% will go with IW.

Hopefully this will end soon.

Posted:4 years ago

#7

Terence Gage Freelance writer

1,288 120 0.1
Sadly Joe I suspect most of the 15 million (or however many) people who bought MW2 couldn't care less about the ongoing Activision/IW issues, and would continue to buy games in the series purely based on the Call of Duty and/or Modern Warfare brands.

Posted:4 years ago

#8

Cobey Jones Studying Game development, University of Advancing Technology

20 0 0.0
Wow.. How can a studio focus on putting put out a good product with all of this going on behind the scenes? Why would Activision do this to the people that made the largest entertainment launch of all time? Why would another studio even consider working with Activision?

There has to be a better business model instead of Publishers buying up studios and studios relinquishing creative control like this.

Posted:4 years ago

#9

Joe Bognar PR Account Executive / Journalist

99 2 0.0
Terence, I'm not saying that they won't buy the games because you're right, they will. However that's another thing if not IW will make the games. Gamers are informed enough to know the difference between a game that IW made and a game that some unknown or less good developer made. Then the publisher can do whatever it wants... That's what Activision didn't realise just yet. Hopefully they will!

Obviously I don't see into this whole problem but I feel that IW might be right on this one.

Posted:4 years ago

#10

Steve Hart Producer, Rebellion

1 0 0.0
"Sadly Joe I suspect most of the 15 million (or however many) people who bought MW2 couldn't care less about the ongoing Activision/IW issues, and would continue to buy games in the series purely based on the Call of Duty and/or Modern Warfare brands."

Don't be so sure Terrence. When SI left Eidos for Sega and started Football Manager, Champ Manager sales nose-dived and Sega had an instant hit. It suggests at least some will follow the talent, rather than the brand.

Posted:4 years ago

#11

Tommy Thompson Studying Artificial Intelligence (PhD), University of Strathclyde

110 0 0.0
Quoted from Joe: "Gamers are informed enough to know the difference between a game that IW made and a game that some unknown or less good developer made."

Are you sure about that? CoD:World at War appears to have sold as many copies (if not more) than the original Modern Warfare. Furthermore, it is still the 5th most played game on Xbox live, while the original MW has dropped to 9th.

(see: [link url=http://majornelson.com/archive/2010/04/27/live-activity-for-week-april-19.aspx)
]http://majornelson.com/archive/2010/04/2...[/link]

I would agree with Terrence that the more savvy gamers will recognise the current state of affairs at IW and Activision and steer clear of future releases. However, this would only be a very small percentage of the actual number of people interested in purchasing a new Call of Duty. The same can be applied to the people who protested the lack of dedicated servers, the cost of the Stimulus map pack or even Left 4 Dead 2. In the majority of these situations, the very vocal internet community is but a small, albeit bitter demographic, of the overall consumer base.

Provided the next Call of Duty - be it Modern Warfare 3, Victory in Vietnam, Insurgents in Iraq, whatever - maintains the quality of prior releases (which wouldn't be difficult given they'll be using the same engine) then it will sell like hot cakes. Only after a few more releases when it becomes clear that creativity and ingenuity is dead in the series will it stagnate.

Posted:4 years ago

#12

Joe Bognar PR Account Executive / Journalist

99 2 0.0
Well, I don't want to rate anyone but I really didn't like CoD: World at War...

I'd say people want perfect games and with saying what they need, just want to make the game better as they want to make their wishes come true in a form of an update or sequel...etc.

Your last paragraph is the most important thing I'd say. It doesn't matter whether it'll be MW3 or GI Joe warfare 25, gamers will buy the game because every article, the cover and all the videos will say that this game was made by the guys who were Infinity Ward one day. It won't matter whether Activision will publish it or Grandma's Videogames Store. Good story, gameplay, graphics...etc. that's what counts.

Posted:4 years ago

#13

Aidan Fitzpatrick Artist

48 2 0.0
Don't forget guys that the previous 'best in show' war shooter around was the Medal of Honor series...
Made by the same people who formed Infinity Ward, who then made the Call of Duty Series...
Now that Respawn has been formed as a company, lets see if history repeats itself.

Posted:4 years ago

#14

CaseyB Artist, Digital Extremes

12 0 0.0
video game content creators should unionize. lol what?!

Posted:4 years ago

#15
Aidan has a point there. When you got talent... (hint hint ! )
I'm really thrilled to "see if history repeats itself. "
Ow... and if this soap opera continue, we should definitly have a section to "false-bid"/pronostic on the next episode. This could turn out to be very entertaining.

Edited 1 times. Last edit by Aurélien Dussalve on 28th April 2010 6:08pm

Posted:4 years ago

#16

Haven Tso Web-based Game Reviewer

255 8 0.0
I wish the employees win as they deserved to be paid for what they have already done and not what they are supposed to do in the future. Activision is just low company that only cares about their pocket not the employees. I am glad that IW takes action against it and expose their greed to the world.

Posted:4 years ago

#17

Shane Bryan Site Owner, Xbox World Australia

1 0 0.0
It's amazing to see that how over the last 3-5 years EA have turned themselves around in the eyes of the industry, and most gamers, from a loser sports game developer with yearly rehashes and little innovation to the exact opposite while Activision have gone from highs during the Vivendi/Blizzard merge, Modern Warfare 1 and breaking the music genre into the mainstream (in the west) with the Guitar Hero series to now being the publisher seen as the 'evil one' with rehashed releases with little innovation.

Sorry that's a long sentence containing poor grammar and probably poor spelling and fact checking :p sue me.

The point I raise is valid though. EA managed to turn themselves around by increasing profit through innovation while Activision seek to increase profit by stifling it.

Posted:4 years ago

#18

Roland Austinat roland austinat media productions|consulting, IDG, Computec, Spiegel Online

138 80 0.6
All this while Activision Publishing CEO and President Mike Griffith "resigns" as vice chairman of the board for a quarter of a million per year, including stock options, and, wait for this, bonuses.

http://www.gamesindustry.biz/articles/mi...

Posted:4 years ago

#19

Rob Schatz Student, Bellevue College

2 0 0.0
250k is nothing compared to the Wall Street Robber Barrons. But that's for another discussion...in any case, how much leverage does an individual employee have on their contract? The higher you are on the totem pole the more flexibility you have to push for more?

Posted:4 years ago

#20

Tom Keresztes Programmer

693 348 0.5
Next title in MW franchise well sell, the one after that will flop, unless they were made by the same team. Nothing new, happened a couple times in the industry. People who like the current iteration will look out for a sequel. After being disappointed (if), they will probably avoid the one after that, as they expected something different.
It has happened before and happening again. Or not.

Posted:4 years ago

#21

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