Southpeak has had a lower court victory over Timegate Studios overturned on appeal, according to a rather in-depth report on the case over at the Gamer/Law Blog. A Texas District Court Judge has vacated a lower court ruling in which Southpeak was awarded damages of $7.3 million and the intellectual property rights to the Timegate-developed game Section 8 by an arbitrator – including the right to create sequels based on the franchise.
The lawsuit itself stemmed from a contract that publisher Gamecock had with Timegate. Southpeak acquired Gamecock and tried to enforce the contract with Timegate, which Timegate later declared "voided." Southpeak naturally sued them. Timegate's argument in the lower court was that it had a contract with Gamecock and not with Southpeak.
The District Court judge said in his ruling that the arbitration of the case was unlawful and was directly contrary to the original contract. From Gamer/Law:
"The Fifth Circuit has explained that, where an arbitrator exceeds his contractual authority, vacatur or modification of the award is an appropriate remedy. Delta Queen Steamboat Co. v. Dist. 2 Marine Engineers Beneficial Ass’n, AFL-CIO, 889 F.2d 599, 602 (5th Cir. 1989). The Court concludes that it cannot modify the award while still preserving its intent, and acting consistently with the essence of the parties’ contract. The award therefore must be VACATED."
This is probably not the end of the story because Southpeak is likely to appeal this decision. We'll let you know if they do.
Source: Gamer/Law Blog