VD, any reference to the GT incident that you are talking about? I
tried looking it up, but it is hard to search for, apparently, for
someone that isn’t already familiar with the story.
It’s a matter of public record:
Contracts; pleading; prevention of performance of condition precedent; repudiation and right to terminate; implied duty of good faith and fair dealing. Tortious interference with contractual relations. Alleged breach of agreement granting defendant rights relating to two software video games. Motion to dismiss (CPLR 3211(a)(7)). Standards for pleading breach of contract. The court upheld a breach claim. The court rejected an argument that plaintiff had failed to comply with a condition precedent because defendant had allegedly prevented the performance of the condition. The court dismissed a claim for repudiation of the entire agreement since under it defendant had had an unconditional right to terminate, which it did, and thus could be liable only through that date, there being no provision for acceleration of future payments. The court ruled that a fair reading of the contract indicated that defendant had an implied duty of good faith to assist, or not interfere with, plaintiff’s entering into bundling arrangements with computer manufacturers. A third claim was thus upheld. The court found that plaintiff had set forth only conclusory allegations regarding interference with prospective contractual relations and thus dismissed that claim. Fenris Wolf Ltd. v. GT Interactive Software Corp., Index No. 601206/99, 10/15/99 (Cozier, J.)
We were working on a groundbreaking SF 3D shooter with AI-driven squadplay called Rebel Moon Revolution that was signed to GT Interactive. We’d had a huge success with Rebel Moon Rising thanks to bundling deals with IBM and Intel; GT used to joke that we were the only developer who had ever sent THEM checks for hundreds of thousands of dollars.
(This is why I’m never bothered by people claiming I’m a failure. My most spectacularly stupid moves, the mistakes I would most like to have back, have usually been related to my failure to properly exploit either opportunity or success. We gave GT a percentage of our revenue to handle the tech support; it turned out to be the most expensive tech support in computer game history. Idiotic.)
However, GT lost their crown jewels to Activision and soon came under financial pressure due to their funding practically every type of shooter EXCEPT the one that we pitched them twice: a WWII shooter. No one, they explained, would be interested in THAT. No wonder they went out of business.
In the summer of 1998, they went weirdly silent after we delivered a milestone that should have been routinely approved and paid. I got a phone call from our producer, who was very upset and told me that the milestone was not going to be approved. When I asked what was wrong with it, he said, “nothing”. Then he told me it would never be approved, and that they were terminating many development contracts, pretty much everything that wasn’t due to ship before the end of the year.
I’d heard rumors that this might be in the works; Sega of Japan had recently shut down Sega of America, and with it our Dreamcast launch title, an SF RPG that we were developing with Julian LeFay of Daggerfall fame, so I wasn’t exactly shocked. I asked when we could expect the termination notice, which was due within 30 days of a milestone rejection according to the contract, and was shocked when he said, “yeah, that’s the thing, they’re not going to terminate.”
You see, what GT was doing was trying to get back the money it had already paid out to its developers by refusing to release their claim on the IP unless the developer returned a substantial percentage of the advance it had already earned via milestones. This meant that the developers couldn’t take their projects elsewhere; we had good relationships with Microsoft at the time and would almost surely have gone there. Unlike other developers, we resisted their legal pressure, filed a lawsuit, beat them in the initial rounds of court, and ultimately forced a settlement in the place of the simple letter of termination they should have sent us.
The victory came at a serious cost, though. The legal process takes a long time, and by the time GT offered us a settlement worth taking, our entire team was already dispersed throughout the industry in the jobs we’d helped them find. My partner and I were so burned out and disenchanted that we both left the industry for several years. It was a substantial victory, but a Pyrrhic one; we would have been much better off in the long term just signing up with Microsoft and letting them deal with the legal complications such an action would have created.