Serial development of video game IP is almost as old as the video game industry itself. From Pong Doubles (Atari’s 1973 follow-up installment to Pong) to today’s most cherished game franchises, it is a known fact that developers and publishers can and do cash in on the player nostalgia inextricably bound to familiar worlds. And few games are more evocative of the nostalgia of 90’s shooters than Duke Nukem 3D, developer 3D Realms’ iconic and controversial title following the adventures of Duke Nukem as he blasts his way through an alien invasion of Earth.
Development teams disband, studios wax and wane, and creatives plot visions for the future filled with sequels and reboots of tried-and-true IP. Duke Nukem is no different. And as with all sequels and reboots, be they embodied in celluloid or silicon, businesses must take note of where intellectual property rights, royalties, and legal quagmires lie, lest they inadvertently stroll into a pricey pitfall.
The Duke Nukem Dilemma
Enter the recent third-party complaint filed by Gearbox Software against Apogee Software (formerly 3D Realms) in the Eastern District of Tennessee concerning Gearbox’s 2016 release of Duke Nukem 3D: 20th Anniversary World Tour. Gearbox’s third-party complaint adds to the ongoing legal saga between celebrated video game music composer Bobby Prince and Gearbox. According to Gearbox’s third-party complaint, in 2010, Gearbox entered into an asset purchase agreement with 3D Realms whereby Gearbox acquired all of the rights to the Duke Nukem video game series. The asset purchase agreement included the quintessential holy trinity of representations and warranties any acquirer of rights should seek: (1) a representation that the Duke Nukem IP was owned fully free and clear by 3D Realms; (2) a representation that 3D Realms had the right to use the Duke Nukem IP “without payment to a [t]hird-[p]arty;” and (3) a representation that no copyright was infringed by use of the Duke Nukem IP in the game’s series. In addition, Gearbox allegedly secured the customary obligation for 3D Realms to indemnify Gearbox from third-party claims arising from 3D Realms’ breach of the asset purchase agreement or any of 3D Realms’ representations or warranties therein.
Despite 3D Realms’ representations in the asset purchase agreement, Bobby Prince brought suit in 2019 against Gearbox, alleging Gearbox infringed upon his copyright to certain music included in Gearbox’s Duke Nukem reboot. Prince further alleged that his music in earlier Duke Nukem games was subject to a license agreement between Prince and 3D Realms. Gearbox, naturally, sought indemnification from 3D Realms for its alleged breach of the asset purchase agreement -- and 3D Realms has thus far dragged its feet in indemnifying Gearbox (a common trend in many indemnification scenarios). As a result, Gearbox brought its third-party complaint on Friday against 3D Realms, alleging breach of the 2010 asset purchase agreement, and prospectively seeking damages equal to “…the difference in value of what 3D Realms agreed to transfer to Gearbox and what Gearbox actually received,” along with interest and attorney’s fees.
Inestimable Instruction: What Developers And Publishers Can Take From Prince v. Gearbox Software
The lesson to be taken from this is less a checklist or kernel of wisdom, and more a cautionary tale of the realities of serial game development. Could Gearbox have done more due diligence prior to its acquisition of Duke Nukem’s rights? Perhaps. But, truthfully, even the most fastidious diligence cannot completely eliminate the risk that comes with the acquisition of game rights – it can only serve to mitigate them. Gearbox’s plight is illustrative of the dangers inherent in purchasing game rights from third parties, rebooting beloved classics, and developing existing IP. If Gearbox’s allegations about its asset purchase agreement are to be believed and no undisclosed terms in the agreement fatal to Gearbox’s claims exist, Gearbox did its homework and included the appropriate protections on its investment when purchasing the rights to Duke Nukem. However, even for conscientious developers and publishers, this suit tells a tale of interstitial expense. In the end, either Prince or 3D Realms is correct, and regardless of the outcome Gearbox is left (at least in the short term) footing the bill for that determination.