Duke Nukem: Contractual Clarity

The issue of who owns what can be a sticky one, particularly when talking about something intangible, like intellectual property. Ownership can be transferred in just a few phrases. Ownership can be shared. Ownership can be divided piecemeal between several parties. Without seeing the written agreement that draws these lines, it’s impossible to determine where ownership lies; and, this is the problem facing Gearbox and 3D Realms, a subsidiary of Interceptor, over Duke Nukem.

In 2010, depending on who you ask, 3D Realms sold some or all of its Duke Nukem intellectual property rights to Gearbox. According to Gearbox, the acquisition was part of a bailout package meant to save 3D Realms and resuscitate the failing Duke Nukem Forever; it was all an attempt to help out a friend. Also, according to Gearbox, 3D Realms has worked hard to convince everyone that the transfer of the Duke Nukem IP never happened. Regardless of what exactly was transferred, both parties acknowledge that 3D Realms retained the rights to older franchise titles, including the right to rerelease.

3D Realms recently announced its plans to release a new game, Duke Nukem Mass Destruction, with a teaser site in tow, alloutofgum.com. On February 13, 2014, Gearbox sent 3D Realms a cease and desist letter demanding a stop to Duke Nukem Mass Destruction. Three days later, 3D Realms’ CEO signed a breach notice in which he apparently agreed to stop using the transferred Duke Nukem IP.

On February 21, 2014, Gearbox filed suit against 3D Realms to halt production. About a month later, 3D Realms released its response, in which it denies all the allegations set forth in the complaint. 3D Realms claims that it retained several rights, including the right to produce Duke Nukem Survivor, the working title for Duke Nukem Mass Destruction, and ownership of the Duke Nukem trademark. 3D Realms further claims that Gearbox had an obligation to enter into negotiations before filing suit.

So where does that leave us? Without access to the contract, it’s not readily obvious what was or was not transferred in any bailout that may have happened. The breach notice seems to indicate that both Gearbox and 3D Realms agree something was transferred in relation to Duke Nukem. The entire matter may actually be a matter of developer confusion on who owns what.

Transferring intellectual property is generally done by assignment or license, with an assignment actually causing ownership to change hands while a license does not. Each type of intellectual property, trademarks, copyrights, patents, and trade secrets, have different rights associated with them; and, just because a right is assigned or licensed, doesn’t mean the assignment or license is necessarily exclusive. For example, 3D Realms may have non-exclusively licensed the right to use the Duke Nukem trademark to Gearbox or they may have assigned some rights while reserving or requiring a license back of others, meaning in either case that 3D Realms could still use the mark. These contractual nuances can be hidden throughout a document, making it difficult to figure out where one party’s rights end and another’s begin. Similarly, issues like exclusivity may not be dealt with at all. 3D Realms may have transferred the use right without any note on exclusivity, leaving each side to rely on its expectations of what the contract meant.

Without reading the document, which is likely under a confidentiality agreement, it’s difficult to tell why there’s such a large discrepancy between the expectations of the two parties. It may be a matter of blatant infringement following a complete transfer of rights. But, it is also possible that the contract was unclear or misunderstood, so each party chose to interpret it in the way that most benefited their studio. It may have also been an assignment with a reservation of rights or a complex license. If it was an exclusive license, Gearbox likely had reason to believe the rights entirely belonged to them. On the other hand, if it were a non-exclusive license, 3D Realms may have an argument for continued use.  The key here is all in the document, which we will unfortunately likely never get to see.

About Suzanne Jackiw

Suzanne Jackiw is an official contributor to Law of the Game. She’s a student at Chicago-Kent College of Law, focused on Business and Intellectual Property issues related to video game law; and, she works as a business intern with several small indie game companies and as a law clerk for The Game Attorney. She has attended many video game development conferences, including Steam Dev Days and the Game::Business::Law Summit. The opinions expressed in her columns are her own. Reach her at Suzanne[dawt]Jackiw[aat]Gmail[dawt]com.

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