Bit Parts

The U.S. Court of Appeals for the Fifth Circuit upheld a perpetual license an arbitrator awarded a video-game publisher in a game's intellectual property rights ' as a remedy for the publisher's contract dispute with the game developer. Timegate Studios Inc. v. Southpeak Interactive LLC, 12-20256. Video-game developer Timegate and publisher Gamecock Media Group (now owned by Southpeak Interactive) entered into a contract to develop the futuristic game Section 8. The parties subsequently entered arbitration on Timegate's claims that Southpeak wasn't properly paying over profits. But the arbitrator instead awarded Southpeak a perpetual license in Section 8's intellectual property rights, on the ground that Timegate had breached the video-game agreement by failing to meet its promises and that the developer fraudulently induced Gamecock to enter into the contract. The Fifth Circuit noted: 'Timegate committed an extraordinary breach of the Agreement [e.g., by failing to use any of its own promised $2.5 million on the game] and an equally extraordinary realignment of the parties' original rights is necessary to preserve the essence of the Agreement. Because the Agreement bestowed broad remedial powers upon the arbitrator and because it was fraudulently induced and irreversibly violated by Timegate, the perpetual license is a rational and permissible attempt to compensate Gamecock and maintain the Agreement's essence.'

Musical Composition Doesn't Infringe Screenplay