In 2002, Jason Ward and Vince Zampella (along with another person, Grant Collier) formed a gaming company called Infinity Ward. They brought around two dozen people with them that had previously worked with them on the on the Medal of Honor series of games for another gaming company. Activision was an early supporter of Infinity Ward, purchasing 30% of the company when it started up.
In 2003, Infinity Ward released the first person shooter Call of Duty, a WWII game, which (according to wiki) won 90 Game of the Year awards and 50 editors choice awards, and continues to be one of the highest rated games of all time. Immediately after its release, Activision bought up the rest of Infinity Ward, and signed all the employees to 3 year contracts which included royalties from game sales. Infinity Ward continued to put out Call of Duty titles, including Call of Duty 4: Modern Warfare in 2007, which was also a commercial and critical success. Call of Duty 4 was the first “Modern Warfare” title, bringing the action into post-Vietnam era combat and using a proprietary graphics engine with dynamic lighting features.
In 2008, Ward, Zampella, and others at Infinity Ward re-signed with Activision in 3 year employment contracts, again including royalties and bonuses.
In November 2009, Call of Duty: Modern Warfare 2 hit the shelves with an even more improved graphics engine. Modern Warfare 2 was a huge success, with over $300MM in sales in the first 24 hours and over $500MM in sales in the first few days.
In March 2010, Activision announced that Jason Ward and Vince Zampella were being fired due to breach of contract and insubordination. Within two months, half of Infinity Ward (46 employees) also left to follow Ward and Zampella. These 46 people included top people, such as lead designers. By April/May of 2010, it was revealed that Ward, Zampella, and the other 46 people had formed a new game company, Respawn Entertainment, which was funded by Electronic Arts, the massive game company and one of Activision’s main rivals.
Now to the court stuff. In March 2010, shortly after being fired, Ward and Zampella filed a lawsuit against Activision, claiming that they were owed ~$36MM in royalties that Activision refused to pay. Essentially, they claimed the firing was part of plan by Activision to get out of paying royalties. Ward and Zampella are also seeking to have the court declare that they are the owners of the Modern Warfare franchise and prevent Activision from releasing any post-Vietnam Call of Duty games. The lawsuit was filed in California Superior Court in Los Angeles.
In early April 2010, Activision countersued against Ward and Zampella. Activision claims that Ward and Zampella were meeting with Electronic Arts (EA) representatives in 2009 to discuss leaving Activision in violation of their contracts. Basically, Activision is saying that Ward and Zampella began meeting with EA while still under contract with Activision, and intentionally began being insubordinate to force Activision to fire them so they could go work with EA.
In late April 2010, ~40 of the Infinity Ward people who left also filed a lawsuit against Activision for unpaid royalties and bonuses. They claim that Activision withheld bonuses in an effort to force them to stay and work on Modern Warfare 3. They are seeking ~$100MM in unpaid wages, plus up to a half billion in punitive damages. This case was also filed in LA Superior Ct. They filed under the name Infinity Ward Employee Group (IWEG).
Later in 2010, Activision amended their countersuit to include EA as a Cross-Defendant. Activision is seeking $400MM for contract interference over the 2009 meeting between EA, Ward, and Zampella. It was also in late 2010 that the IWEG case was consolidated with Ward and Zampella’s case.
This week, the court ruled on a motion for summary judgment filed by EA (A motion for summary judgment is a way to get a case thrown out before it goes to trial). EA’s motion claimed that it was perfectly fine for EA to meet with Ward and Zampella and that Activision essentially had no claims against them. The court disagreed.
Thus, this massive case is looking to go forward with a jury trial on May 7, 2012. Ward, Zampella, Electronic Arts, Activision, and the Infinity Ward Employee Group are set to have their modern legal warfare battle over hundreds of millions of dollars next year in a LA courtroom.