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The Sinking City pulled from stores amid legal dispute

Developer Frogwares accuses publisher Nacon of missing payments, holding €1 million in royalties and claiming IP rights

Ukranian developer Frogwares has pulled its 2019 action game The Sinking City from Steam and other notable stores in the middle of a legal dispute with its publisher.

The studio says it was forced to terminate its contract with Nacon, formerly Big Ben Interactive, which it alleges breached several clauses of the licensing agreement for the game.

The contract was terminated earlier this year, but the publisher has still been receiving revenue from sales of The Sinking City, compelling Frogwares to pull the game.

Frogwares claims Nacon owes around €1 million in royalties.

GamesIndustry.biz has contacted Nacon for comment.

The dispute is detailed in an open letter on Frogwares' website, which says the two companies have been in a legal battle since last year.

According to Frogwares, the original licensing agreement for The Sinking City was signed in 2017, two years after production started.

It stipulated that Nacon -- Bigben Interactive at the time -- would have the right to sell and commercialise the game on Xbox One, PS4, Steam and Epic Games Store. The publisher would contribute funds to the game's development, but the IP and a share of the sales would belong to Frogwares.

The studio claims Nacon would be hundreds of days behind with each milestone payment, despite production being completed on time.

After Nacon acquired another studio working on a similar Lovecraftian game -- believed to be French developer Cyanide -- the publisher allegedly demanded that Nacon hand over the source code for The Sinking City.

When Frogwares refused to comply, it was reportedly not paid for over four months.

The game eventually launched on June 27, 2019, at which point Nacon informed Frogwares it was cancelling previously approved milestones, meaning it would not receive any share of the sales from the game.

"A retroactive cancellation on not delivering a product on time that is already out in the market is not acceptable," the studio wrote. "That was when our legal battle began."

Nacon also appeared to be claiming ownership of the IP, including in Bigben's stock market prospectus ahead of launching the Nacon entity on the public market.

Frogwares was removed from the PS4 and Xbox One game covers and some of the marketing materials. A tabletop RPG for The Sinking City was created and distributed with an incorrect copyright notice, and without informing Frogwares.

The studio notes the publisher even began to buy dozens of domain names related to The Sinking City and its previous Sherlock Holmes games without notifying the team.

Frogwares reiterates that it owns the IP and licensed it to the publisher.

The company filed a lawsuit against Bigben in August 2019.

It was only then the studio started to receive income reports, although it says these were "incomplete and undocumented," making it hard to see how many units were sold or check the revenue was correct.

Frogwares claims Nacon even told the team a console manufacturer hadn't paid royalties in over five months -- despite the fact the same company has been paying Frogwares directly for other games without delay.

After 11 months of failing to get a "satisfactory response" from Nacon, Frogwares terminated its contract on April 20, 2020.

Nacon claimed it could not be terminated due to emergency laws in France to protect businesses from the effects of the COVID-19 pandemic. However, Frogwares says this actually triggers the Force Majeure article of its contract, allowing it to terminate the agreement.

The studio claims a court ruling on July 17, 2020 prevented Nacon from opposing this, meaning the contract is now terminated in the eyes of the law.

But the publisher allegedly continued to collect royalties from sales of the game, leading Frogwares to pull it from stores to prevent the publisher receiving any further revenues.

The Sinking City is currently available from Frogwares own website, plus a handful of partners it has dealt with directly, including Origin and the Nintendo eShop.

"We only have one goal: helping to banish bad practices by speaking freely about them, instead of remaining subject to the code of silence," Frogwares' letter concludes.

"We know that we are not the only ones in this situation. This is our way to help the video game industry become more ethical."

Frogwares has previously had issues with another publisher, Focus Home Interactive. The studio claims that when the publishing agreement ended, Focus refused to transfer store listings back to the developer, leading it to pull the games from stores.

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