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Stardock Systems, Inc. v. Reiche

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Stardock Systems, Inc. v. Reiche
CourtUnited States District Court for the Northern District of California
Full case name Stardock Systems, Inc. v. Paul Reiche III and Robert Frederick Ford
DecidedDecember 27, 2018
CitationsStardock Systems, Inc. v. Reiche, No. 17-cv-07025-SBA, 2018 WL 7348858 (N.D. Cal. Dec. 27, 2018)[1]
Court membership
Judge sittingSaundra Brown Armstrong
Keywords
United States copyright law, United States trademark law, Digital Millennium Copyright Act

Stardock Systems, Inc. v. Paul Reiche III and Robert Frederick Ford, 2018 WL 7348858 (N.D. Cal. Dec. 27, 2018), is a case where the United States District Court for the Northern District of California applied American intellectual property law to the contents and sale of computer games. Paul Reiche III and Fred Ford are the makers of the critically acclaimed 1990 Star Control game series, and Stardock is the maker of the 2018 release Star Control: Origins. The lawsuit stems from a dispute over the ownership, licensing, and infringement of the Star Control intellectual property, including both trademarks and copyrights.

In the 1990s, Reiche and Ford licensed their copyrights to publisher Accolade, to create Star Control 3 without their involvement. That license expired in the early 2000s when the games stopped being sold, allowing Reiche and Ford to re-release their assets as the open source The Ur-Quan Masters. Around this time, Accolade and their Star Control trademark were acquired by Atari SA. Years later, Stardock purchased Atari's Star Control assets in a 2013 bankruptcy auction, and began developing their Origins game. In late 2017, Stardock's disagreement with Reiche and Ford escalated towards a legal battle, with each party asserting that the other was violating their intellectual property rights: Stardock was selling the original games on Steam without Reiche and Ford's consent, whereas Reiche and Ford announced Ghosts of the Precursors as a sequel to Star Control II without Stardock's consent. After Stardock filed a lawsuit on December 8, 2017, the dispute escalated to include the contents of the games, with Reiche and Ford counter-claiming Stardock misappropriated their characters and designs in Origins, and Stardock further claiming ownership over trademarks in the aliens from the original Star Control games.

In late 2018, Stardock applied for injunctive relief to protect Origins from a Digital Milllennium Copyright Act Takedown notice, which was denied by Judge Saundra Brown Armstrong. Reiche and Ford issued an uncontested notice soon after, and both Steam and GOG.com removed the games from their stores. Soon after, Stardock agreed to indemnify the digital sales platforms from litigation, who restored Origins to sale. In June 2019, the parties came to a mutual settlement agreement. Stardock would own the Star Control trademark, and drop their claims to the alien names from the original series. Reiche and Ford would own the copyrights in Star Control I and II, and the parties would avoid using characters or stories that might infringe on each other's separate games. Reiche and Ford agreed to refrain from any announcements about Ghosts of the Precursors for a few years, which would be renamed as part of the agreement.

Intellectual property history

Original Star Control series

Star Control and Star Control II were created by Paul Reiche III and Fred Ford and published by Accolade.[1] Released in 1990 and 1992 respectively, both games received numerous awards.[2] Journalists have listed Star Control among their best games of all time,[3] with Star Control II earning even more "best game" rankings through the 1990s,[4] 2000s,[5] and 2010s.[6] It is also ranked among the best games in several creative areas, including writing,[7] world design,[8] character design,[9] and music.[10]

Star Control was Ford and Reiche's first collaboration.[11][12] The sequel was more ambitious, forcing the duo to ask their creative friends for help,[13] and forcing Ford to financially support the team when the production went over schedule.[14] Accolade asked Ford and Reiche to make a third game at the same budget, which they turned down to pursue other projects.[15] As Reiche and Ford held the copyrights over first two Star Control games,[14] Accolade licensed Reiche and Ford's designs to make Star Control 3 with a different team.[16][14] Released in 1996, Star Control 3 did not enjoy the acclaimed legacy of the first two games, with reviewers noting the change in authorship.[17][11][18] Accolade's plans for a fourth Star Control game were ultimately cancelled during development,[19][20] and fans continued to demand a new Star Control game well into the late 2000s.[21][22]

The 1992 Star Control II cover describes Paul Reiche III and Fred Ford as the Copyright holders, with Accolade holding the trademark.

Separation of rights

By the early 2000s, the Accolade's publishing agreement with Reiche and Ford expired.[23] This was triggered by a contractual clause when the games were no longer generating royalties, allowing the copyrighted content to revert to Reiche and Ford.[24][25] As the games were no longer available in stores, Reiche and Ford wanted to keep their work in the public eye, to maintain an audience for a potential sequel.[24] Reiche and Ford still owned the copyrights in Star Control I and II, but they could not successfully purchase the Star Control trademark, leading them to consider a new title for a potential follow-up.[26][14] This led them to remake Star Control II as The Ur-Quan Masters,[27] which they released in 2002 as a free download under an open source copyright license.[28] The official free release prevented the game from becoming abandonware.[29]

Meanwhile, the Star Control trademark was transferred to Infogrames Entertainment.[27] This happened when Star Control publisher Accolade sold their company to Infogrames in 1999,[30] who merged with Atari and re-branded under the Atari name in 2003.[31][32] In 2011, GOG.com began selling a Star Control re-release on their digital store.[33] Ford contacted the sales platform, saying they could not sell the games without permission, leading GOG.com to separately license the Star Control trademark from Atari, and the games themselves from Reiche and Ford.[16][1][34]

Atari declared bankruptcy in 2013, and their assets were listed for auction.[35] Stardock became the top bidder on Atari's Star Control intellectual property.[36] Upon hearing the news, Paul Reiche indicated that he still owned the copyright in the original Star Control games, so Stardock must have purchased the Star Control trademark, and this was confirmed by Stardock.[37][38] Indeed, the Atari asset purchase agreement listed two assets sold to Stardock: the Star Control trademark and the Star Control III copyright.[1] As Stardock began developing their new Star Control game, they re-iterated that they did not acquire the copyright to the first two games, and that they would need a license from Reiche and Ford to use their content and lore.[31][39] Reiche and Ford echoed this understanding in a 2015 Game Developer Conference interview, stating that Stardock's game would use the Star Control trademark only.[40]

Facts

A promotional image from Stardock published by Ars Technica in September 2017,[41] illustrating Stardock's planned connection between Star Control: Origins and a "Future Fred Paul Sequel".

In September 2015, Stardock announced that their new game Star Control: Origins would be a prequel to Star Control.[42] Through email, Stardock asked Reiche and Ford for a license to use their character designs, but the duo repeatedly declined.[16][23] By 2016, Stardock described Origins as an alternative timeline in the same Star Control multiverse, but with none of the older games' characters,[26] to avoid infringing on Reiche and Ford's copyrighted lore.[31][39] Despite Stardock's continued offers, Reiche and Ford declined to collaborate on Origins, citing a desire to create their own sequel once they finished their ongoing projects with Activision.[26][1]

In October 2017, Stardock began selling the older Star Control games via the Steam store, as a promotion for Origins.[43] Through email, the parties began to dispute what legal rights Stardock had purchased from Atari,[44] and whether that included distribution rights over the original series.[1][45] Despite private negotiations, Stardock declined to stop selling the games, leading Reiche and Ford to formally request that Steam remove the original series from their store via a Digital Millennium Copyright Act (DMCA) takedown notice. Stardock formally contested the notice, and the sales continued.[44][1] When Reiche and Ford publicly announced that they did not consent to Stardock's sale of the original series, Stardock announced that they had purchased the Star Control publishing rights from Atari, while Reiche and Ford responded that Atari's publishing rights had lapsed by Atari's own admission.[45]

Also in October, Reiche and Ford announced Ghosts of the Precursors as a direct sequel to Star Control II.[46] Initially, Stardock supported this announcement for Ghosts of the Precursors as a "true sequel to Star Control 2",[46][47] and claimed their new Origins game would take place in an alternate universe that split off from the original series' universe.[48] By December 1, Reiche and Ford announced that Stardock had not negotiated their legal permissions, and that "our games’ universe has absolutely no connection, hyper-dimensional or otherwise".[49][50] Responding to allegations that Stardock threatened to stop Reiche and Ford from releasing Ghosts of the Precursors, Stardock announced their lawyers would handle the dispute.[51][23]

The Star Control II cover art.
Stardock claimed that Reiche and Ford's blog post about Ghosts of the Precursors infringed the Star Control trademark by featuring the Star Control II cover art.

Trademark claim

On December 8, 2017, Stardock filed a lawsuit against Reiche and Ford in the U.S. District Court for the Northern District of California. Stardock's main contention was that their Star Control trademark was infringed when Reiche and Ford announced Ghosts of the Precursors as a "direct sequel" to Star Control II.[1] Stardock further contended that Reiche and Ford were not the creators of Star Control, and were misleading consumers about their involvement in the series.[1] In the months that followed, Stardock applied for more than 20 new trademarks, and filed an amended claim in March 2018 to claim ownership over them. These trademark applications included names of alien races from the original Star Control, and the mark The Ur-Quan Masters.[52] If authorized by the United States Patent and Trademark Office, Stardock's new trademarks could have the effect of preventing Reiche and Ford from using those aliens in a new game.[53] When correspondence surfaced that Stardock planned to use The Ur-Quan Masters and Star Control trademarks to shut down criticism from both games' fan forums, Stardock CEO Brad Wardell responded that this was a moment of anger and he had no intention of actually doing so.[54]

In February 2018, Reiche and Ford answered Stardock's complaint by asserting several defenses, as well as raising a counterclaim against Stardock for copyright infringement.[55] Reiche and Ford argued that their Ghosts of the Precursors announcement did not infringe Stardock's trademark, and suggested that Atari's trademark renewal was invalid given that Star Control was not used in trade for several years.[16] Reiche and Ford also counterclaimed that Stardock was liable for copyright infringement due to Stardock's unauthorized use of characters and designs from Star Control I and II, and unauthorized sale of the original games.[1] Reiche and Ford further pointed out that Stardock had no valid copyright or distribution rights because, under their original contract, Accolade had lost those rights in 2001 when it ceased to sell the games in stores.[1] Reiche and Ford also represented that they never authorized Atari or Stardock to distribute their games, but that they did authorize GOG.com.[1] Reiche and Ford further contested Stardock's claim over The Ur-Quan Masters trademark, and alleged that Stardock had misled customers about the duo's involvement with Origins.[16]

Settlement discussions

In a 2015 Game Developers Conference interview, Reiche and Ford stated that they held the copyright in the first two games. Stardock later sued them personally in 2017.

In March 2018, Reiche and Ford described an alleged settlement offer made by Stardock, asking Reiche and Ford to compensate Stardock US$225,000 in damages, assign their Star Control intellectual property to Stardock, and refrain from making any game in the same genre as Stardock for five years. Reiche and Ford rejected this settlement as "unfathomable".[52] Stardock responded that the two has misrepresented the terms of the confidential settlement offer, leading Reiche and Ford to publish the settlement offer publicly.[56][57] A week later, the court ordered the parties to keep all settlement negotiations confidential.[58] As Reiche and Ford were sued personally, they turned to crowdfunding to pay for some of their legal costs.[59]

Ruling on Stardock's motion for preliminary injunction

In her 20-page order, Judge Saundra Brown Armstrong denied Stardock's motion for an injunction against Reiche and Ford.

On September 7, 2018, Stardock filed a motion with the Court requesting a preliminary injunction preventing Reiche and Ford from issuing a DMCA takedown notice against Stardock's forthcoming Origins game.[60][61] Judge Saundra Brown Armstrong denied Stardock's request on December 27, 2018, agreeing with Reiche and Ford that Stardock had been aware of the intellectual property issues by their own admission, but still started work on a potentially infringing product, calling the situation one of Stardock's own making.[61] Describing some of the claims as "frivolous", Judge Armstrong wrote:[62]

Defendants [(Reiche and Ford)] object to Wardell's declaration [that] "Stardock has not incorporated any copyrightable artwork from Star Control I, Star Control II or Star Control III into the Origins game itself," on the ground that Wardell lacks the expertise necessary to opine as to what constitutes "copyrightable artwork". Indeed, not only has Wardell failed to establish any such expertise, but his opinion as to whether the work in question is "copyrightable" constitutes an improper legal conclusion. Such legal conclusions are without evidentiary value.

...

Plaintiff [(Stardock)] had knowledge of Defendants’ copyright claims from the outset. Despite that knowledge, it developed potentially infringing material without resolution of the IP ownership issues, and then publicized the release of that material during the pendency of this action. It now claims that its investment in Origins and reputation are on the line. Given that Plaintiff largely created the foregoing predicament, the Court is disinclined to extricate Plaintiff from a peril of its own making.

After the ruling, Reiche and Ford issued a DMCA takedown notice to Steam and GOG.com. Stardock did not file a counter-notice, and the games were subsequently removed from sale at the beginning of 2019.[62] Reiche and Ford defended the DMCA takedown requests by pointing out that the substantial similarities between Origins and Star Control II were evidence of intentional copying, in violation of copyright.[63] Later that month, both Steam and GOG.com restored Origins for sale. When Stardock owner Brad Wardell mentioned that the digital stores had reviewed and reconsidered the takedown, Polygon revealed correspondence where Stardock offered to accept potential copyright liability and secure both stores from the consequences of litigation.[64]

Final settlement

In June 2019, the parties successfully negotiated a legal settlement. They agreed that Stardock will own the Star Control trademark, and Reiche and Ford will own the Ur-Quan Masters trademark, with a perpetual trademark license to the Ur-Quan Masters fan community for their open source project.[65] Stardock also agreed to avoid using any plots, characters, or locations that would infringe on Reiche and Ford's copyrights, with the parties committing to discuss further disputes.[66] As part of this, Stardock dropped their trademark claims to the alien names from the first two games.[65] Reiche and Ford also agreed to remain quiet about Ghosts of the Precursors for a few years, and that their game would be renamed as part of the agreement.[66] One of the unusual agreements in the settlement was that Stardock's owner Brad Wardell would provide Paul Reiche with honey from his bee hives, in return for which Reiche will provide Wardell with mead.[65]

See also

References

  1. ^ a b c d e f g h i j k Hutchinson, Lee (February 22, 2018). "Star Control countersuit aims to invalidate Stardock's trademarks". Ars Technica. Retrieved January 2, 2019.
  2. ^ Staff (2005). "Control & Conquer" (PDF). Retro Gamer. pp. 85–87. Archived from the original (PDF) on 2019-07-06.
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    Paul Reiche: There was a confluence of events that helped this. One was Accolade stopped selling the game and we stopped earning royalties right around your 2000 and that triggered the termination of their exclusive right to sell our game. So we got our game back. What we didn't have was the name Star Control. That was a trademark that the publisher owned and we negotiated back and forth with them, but ultimately we weren't able to come to terms for the name. So we decided, well we can't use that name, let's give it a new name, so we used the Ur-Quan Masters ... So the "Ur-Quan Masters" project, the open-source release of the game we created as Star Control II, that really kept our game alive in the doldrums between say 2001 or 2002 and then 2011 when our games began to be sold again through Good Old Games, known as GOG, which is an electronic distributor of classic games.
  25. ^ "Interview with Fred Ford". classicgaming.com. May 15, 2001. Archived from the original on May 15, 2001. Retrieved November 29, 2020. Fred Ford: [Accolade] owe us another payment for our portion of the property. They have told us they are going to default on this payment which means we are back to owning the characters and settings. They still own the trademark/name and continue to look for someone to buy it from them.
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  28. ^ Wen, Howard (11 August 2005). "The Ur-Quan Masters". linuxdevcenter.com. O'Reilly Media. Archived from the original on 2016-03-16. When the original developers of Star Control 2 contacted the online Star Control fan community, they presented an enticing question: if they released the source to the 3DO version of Star Control 2 under GPL, would anybody be interested in porting it to modern-day computers? Michael Martin, a 26-year-old Ph.D. student at Stanford University, answered the call. After removing proprietary 3DO-specific components from the code, the developers released the source for Star Control 2 to the public.
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  35. ^ "World of Tanks Dev Bids on Auctioned Atari Assets | The Escapist". v1.escapistmagazine.com. Retrieved 2020-11-15.
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  39. ^ a b Bradley Wardell (September 3, 2015). "Star Control: September 2015 update". Stardock. Archived from the original on 2016-08-26. Retrieved January 2, 2019. ... my position is that Stardock doesn't have the legal rights to the original lore either. Or, if we did, we have long since refuted those rights. The Star Control classic lore are the copyright of Paul Reiche and Fred Ford.
  40. ^ Fred Ford & Paul Reiche III (June 30, 2015). "Classic Game Postmortem: Star Control". YouTube. Game Developers Conference. Retrieved October 22, 2020. Paul Reiche III: When Accolade / Atari / the various companies that acquired it went out of business, they had the trademark Star Control. All of the material, all the aliens, all of the story belongs to Fred and myself. So they're taking the Trademark and moving forward with that.
  41. ^ Axon, Samuel (2017-10-19). "Stardock CEO talks Star Control: Origins' player crafting and upcoming beta". Ars Technica. Retrieved 2020-11-18.
  42. ^ Bradley Wardell (September 3, 2015). "Star Control: September 2015 update". Stardock. Archived from the original on 2019-01-03. Retrieved January 2, 2019. The new Star Control is a prequel. It takes place before the events of the original series.
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  47. ^ Austin Wood (October 10, 2017). "25 years later, Star Control 2 is getting a direct sequel". PC Gamer. Bradley Wardell: [Paul Reiche] asked us not to try to make a sequel to Star Control 2 and said that he hoped one day to be able to return to the universe he and Fred Ford created. Recently, Paul told me the good news: Activision was going to let him do a true sequel to Star Control 2.
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  51. ^ James Cunningham (December 2, 2017). "Bad Blood, IP Issues Have Stardock, Toys for Bob Squabbling for Star Control". Hardcore Gamer.
  52. ^ a b "Battle over Star Control franchise escalates, settlement offer leaked online". Polygon. March 21, 2018. Retrieved January 2, 2019.
  53. ^ "Star Control's future is in question as Ghosts of The Precursors devs legally clash with Stardock | PCGamesN". 2017-12-02. Archived from the original on 2017-12-02. Retrieved 2020-11-16.
  54. ^ Wardell, Brad (September 23, 2018). "Regarding 'Star Control: Origins' and Stardock". forum.uqm.stack.nl. Archived from the original on August 15, 2020. Retrieved 2020-11-17. Bradley Wardell: ... members of the community insisted that we needed to send Serge and co a trademark license in order to send a message that Stardock would not interfere with the UQM project. Thus, this past Summer, I relented and asked the lawyers to draft up a very short licensing agreement for the trademarks in question and sent it over. Your first response was simply to state that you didn't think you needed to sign a licensing agreement which echoed my position and I've seen no reason to pursue it further. If I don't see a reason and you don't see a reason then when should we invest time and energy pursuing it further? With regards to my *private* venting regarding some of the extremely toxic and hate-filled posts that have been directed at me *personally* from this forum. It is true that on occasion I have vented that this forum (not the project but the forum) should be shut down. ... But I would like to think that most of you understand the difference between being angry versus acting on that anger. We have not, nor do we plan to, take any action against any Star Control fan community.
  55. ^ "Stardock Counter-Sued for Copyright Theft by Star Control Creators". IGN India. 2018-02-23. Retrieved 2020-11-15.
  56. ^ Batchelor, James (March 22, 2018). "Star Control legal battle intensifies as alleged settlement offer surfaces". GamesIndustry.biz. Retrieved January 2, 2019.
  57. ^ "Stardock's Settlement Agreement, March 12, 2018". Issuu. Retrieved 2020-11-16.
  58. ^ Spero, Joseph C. (March 29, 2018). "Order Regarding Settlement Discussions" (PDF). United States District Court - Northern District of California. Retrieved December 13, 2020.
  59. ^ "Star Control Creators Crowdfunding $2M to Defend Against Stardock Lawsuit". GameRevolution. 2018-06-25. Retrieved 2020-11-16.
  60. ^ "Star Control: Origins removed from Steam by DMCA". Rock Paper Shotgun. January 2, 2018. Retrieved January 2, 2018.
  61. ^ a b Hall, Charlie (January 2, 2018). "Star Control: Origins removed from Steam, GOG following DMCA claim". Polygon. Retrieved January 2, 2018.
  62. ^ a b Lee Hutchinson (January 2, 2019). "Original Star Control Creators Deploy Nuclear Option Against Stardock". Ars Technica. Retrieved January 2, 2019.
  63. ^ Hall, Charlie (January 3, 2019). "Star Control creators defend their DMCA claim against Star Control: Origins". Polygon. Retrieved January 3, 2019.
  64. ^ Hall, Charlie (January 30, 2019). "Stardock says it's the victim of DMCA abuse as Star Control: Origins returns to Steam, GOG". Polygon. Retrieved January 30, 2019.
  65. ^ a b c O'Connor, Alice (2019-06-12). "Star Control lawfight settled by bees". Rock Paper Shotgun. Retrieved 2020-11-29.
  66. ^ a b Hutchinson, Lee (2019-06-11). "Stardock and Star Control creators settle lawsuits—with mead and honey". Ars Technica. Retrieved 2020-11-16.
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