Activision settles Call of Duty lawsuits

A day before a bitterly contested set of lawsuits was set to begin trial, Activision Blizzard Inc. on Thursday settled the case with the original creators of its blockbuster Call of Duty game franchise.

The last-minute agreement ends two years of acrimonious litigation that ensued after the Santa Monica game publisher fired Jason West and Vincent Zampella, developers of the multibillion-dollar shooter franchise. West and Zampella sued Activision after they were let go in March 2010, claiming wrongful termination. Activision countersued, accusing the developers of being disloyal.

After West and Zampella’s departure, more than 40 game developers who had worked for them at Activision quit. Forty of those developers, led by Todd Alderman, filed a separate lawsuit against Activision, alleging that the company deprived them of hundreds of millions of dollars in bonus payments and royalties.

The settlement, whose terms were not disclosed, resolves all three lawsuits.

“All parties have reached a settlement in the dispute, the terms of which are strictly confidential,” said Robert Schwartz, an attorney representing West and Zampella. West, who appeared in court, declined to comment, but was seen smiling broadly as he left the courtroom.

Attorneys for all three parties confirmed to California Superior Court Judge Elihu Berle that they had reached a settlement during a brief hearing Thursday and would soon file dismissals for all claims.

Many in the game industry have been riveted by the conflict, which pitted the world’s largest game company against some of the industry’s most talented developers. Some game developers saw it as a case for artists’ rights, while investors closely watched how far Activision would go to assert control over its most valuable franchise, one that has generated an estimated $7 billion in revenue.

“This legal battle between the old employees of Infinity Ward and Activision is the most significant in video game history,” said Evan Wilson, an analyst with Pacific Crest Securities. “It’s been a major distraction for senior management at Activision at a time when the industry is going through one of its most difficult periods. It will be good for Activision to be able to move past this.”

Activision, which also sued Electronic Arts Inc.claiming its rival improperly recruited West and Zampella while the two were still working at Activision, settled that lawsuit on May 17. Terms were not disclosed.

“Activision’s refusal to pay their talent and attempt to blame EA were absurd,” EA said in a statement. “This settlement is a vindication of Vince and Jason, and the right of creative artists to collect the rewards due for their hard work.”

Activision’s stock fell 17 cents to close at $11.74 Thursday. Its shares started the month at $12.82 but steadily dropped as the lawsuits marched toward a June 1 trial date.

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