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Bethesda Loses Again In Fight Against Fallout MMOG

This week Bethesda received another blow by the courts in its battle with Interplay over the Fallout MMOG (aka Project V13) project. This time Bethesda was denied its bid for a temporary restraining order against the game's co-developer, Masthead Studios.

The fight over the MMOG seemingly began back in April 2007 when Bethesda and Interplay entered into an asset purchase agreement where all rights in the Fallout trademarks and copyrights were assigned to Bethesda in exchange for $5.75 million USD. The company then licensed out the rights to develop a Fallout MMOG to Interplay, but under certain conditions. If Interplay failed to meet those conditions, then the agreement would be terminated.

"Subject to the terms and conditions set forth in this Agreement, Bethesda grants to Interplay an exclusive, non-transferable license an right to use the Licensed Marks on and in connection with Interplay’s FALLOUT-branded [Massively Multiplayer Online Game] MMOG (the “FALLOUT MMOG” or “Licensed Product”) and for no other purpose," the agreement stated. "The conditional license herein does not grant Interplay any right to sublicense any of the licensed rights without Bethesda’s prior written approval."

But in September 2009, Bethesda filed a lawsuit against Interplay claiming that the studio violated their agreement because the project had not yet taken off in April as agreed. Interplay counter-sued, stating that interrupting was against the original contract of the sale of the Fallout IP, thus making the sale obsolete. A U.S. District Court judge eventually denied Bethesda's motion for a preliminary injunction against Interplay.

Not giving up, Bethesda filed another suit against Interplay in January 2010 stating that the licensing deal it made with Interplay only allowed the developer to use the Fallout name for the MMOG, nothing else. The company filed its injunction against Interplay just six months before the Fallout MMOG would go into testing.

Naturally Interplay disagreed with Bethesda's interpretation of the agreement. "For at least four years, Bethesda has known that Interplay interpreted its right to create the Fallout-branded MMOG to include copyrighted content from the Fallout universe in order to make the MMOG a recognizable Fallout game," Interplay stated in a court filing. "Bethesda never objected and did not seek an injunction because it knew Interplay was doing exactly what the parties intended under their agreements."

As previously stated, Bethesda also went after Fallout MMOG co-developer Masthead Studios, repeating the same claims as before: that Interplay had improperly sub-licensed Bethesda’s intellectual property, and that Bethesda “granted Interplay a conditional license to use only the ‘FALLOUT’ trademark and nothing more relative to a Fallout-branded MMOG. Bethesda did not provide Interplay with any license to use any copyrighted materials relating to Fallout -- all copyrighted materials were retained exclusively by Bethesda."

Bethesda said it has gone after Masthead because its duties under the Interplay agreement is both "a direct and contributory infringement of its copyrights and filed for a temporary restraining order."

But without even listening to Masthead's opposition, a U.S. District Judge, the Honorable John F. Walter, denied the temporary restraining order. "[Bethesda] has not demonstrated that it will be irreparably prejudiced if the requested ex parte relief is not granted, or that it is without fault in creating the crisis that requires ex parte relief," he argued. "Indeed, [Bethesda] was aware as early as February 2011 that Masthead was potentially infringing its copyrights... Yet, Plaintiff waited seven months to apply for ex parte relief."

"The Court finds that Plaintiff unreasonably delayed in seeking relief, and that the emergency that allegedly justifies a [temporary restraining order] is self-created," he concluded.