Paramount Sued for Video Game Licensing Deal Gone Wrong

According to a story on Courthouse news, Swedish game developer ProCloud Media is suing Paramount Pictures for $10 million in a California court claiming that the movie studio walked away from an agreement that gave them the right to develop games based on popular Paramount films.

In the lawsuit ProCloud filed in the Federal Court of Los Angeles it claimed that it paid  Paramount Pictures a $1 million license fee and "fully performed" as a co-producer (part of the terms of the agreement), but the movie studio had no intention to honor the agreement. In fact, they claim, the company's digital entertainment division started producing the games that ProCloud was supposed to produce.

In the original agreement, ProCloud paid a $500,000 licensing fee for the rights to make games based on five Paramount films including War of the Worlds and Rango. The deal memo between the two companies acted as the binding agreement, according to ProCloud, but a long form agreement was never executed. The deal was later amended to give ProCloud "exclusive rights" to develop games based on two additional movies and to change out a few of the titles agreed on in the first agreement. In exchange, ProCloud agreed to pay an additional $500,000 license fee, and to amend the royalty agreements.

The company claims that Paramount then exercised its right under the agreement to co-finance and co-produce the games. ProCloud claims that, under the agreement, Paramount agreed to contribute 50 percent of the development costs or budget – whichever was less – for each project, with total budgets agreed at $8.75 million.

ProCloud further claims that it was to be compensated and to be designated as the "publisher" for each game and that it had a right to recoup its licensing fees and production costs from royalties and sales revenues.

But the company claims that four weeks after amending the original agreement Paramount Digital Entertainment was shut down, which made it impossible for them to communicate with anyone within the parent company who was aware of their agreement. Ultimately they accuse Paramount of breach of contract and unjust enrichment, loss of substantial revenues, and damage to its reputation.

Source: Courthouse news

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