Atari reaches settlement with American Video Graphics

Atari has released new financial documents which reveal that the lawsuit launched by American Video Graphics against a dozen major publishers has now been settled.

The lawsuit, which was filed in August 2004, accused Atari, Activision, Electronic Arts, LucasArts, Namco, Sega, Square-Enix, Take-Two, Tecmo and Vivendi of producing games with content which infringed AVG's patent rights. Separate lawsuits also accused Sony, Microsoft and Nintendo and PC manufacturers ATI and Intel of infringing the same rights by including specific technologies in their hardware.

According to Atari's documents, as reported by Gamasutra, the publisher has reached "A Patent License and Settlement Agreement pursuant to which we will pay $0.3 million in full settlement of the lawsuit and receive an irrevocable, nonexclusive, worldwide license to use, publish, sell, etc. products covered by the AVG patents." Atari is the only publisher to reveal details of the settlement so far.

The patent in question, which was first filed in 1987, refers to "a graphics display terminal [which] performs a pan operation with respect to a view motion center to effectuate spherical panning, thereby providing perspective and non-perspective views." In other words, any 3D game which features a moving camera and zoom effects could be accused of infringing the patent - resulting in costly lawsuits for games publishers across the board.

The Atari documents also confirmed that the publisher has reached a settlement with iEntertainment Network, which filed suit against Atari, Epic, Valve, Sierra and several Sony companies, including Sony Online Entertainment. The lawsuit referred to online games, specifically technologies which minimise latency. Atari has agreed to pay USD 25,000 as part of a total USD 175,000 settlement which releases all parties from the claims and grants patent usage rights.

The settlements are likely to compound Atari's financial difficulties - HSBC cut off its credit line after the company failed to meet its obligations, and up to 20 per cent of the workforce is set to be slashed as the publisher fights to keep its head above water.