Publisher Genius Products and hardware maker Numark allege that Activision tried to sabotage the development of Scratch: The Ultimate DJ by buying its developer, 7 Studios, to benefit Activision's upcoming DJ Hero. Activision claims that it bought 7 Studios to "bolster its development capabilities" and did not interfere with Scratch.
The announcement specifies that Activision and 7 Studios must turn over "all source code related to Scratch"--including the code for 7 Studios' "pre-existing" development tools--by the end of today due to a ruling from last week, and also sees Genius and Numark reiterate their strongly worded accusations.
Scratch DJ Game LLC, a joint venture between Genius Products, LLC ("Genius") and Numark Industries LLC ("Numark"), announced today that the Los Angeles County Superior Court ("the Court") has granted it a Temporary Restraining Order ("TRO") in its lawsuit against Activision Publishing, Inc., a subsidiary of Activision Blizzard, Inc. (NASDAQ:ATVI) ("Activision"), and California 7 Studios ("7 Studios") and its Chief Executive Officer, Lewis Peterson. The TRO must be complied with by close of business today.
On Wednesday, April 15, 2009, as requested by Scratch DJ Game LLC, the Court ordered 7 Studios, which was recently acquired by Activision, to turn over to Scratch DJ Game LLC within five days all source code related to Scratch - The Ultimate DJ game, including 7 Studio's pre-existing developer software tools and technology that went into developing the game. Despite arguments from Activision's counsel, the Court clearly concluded that the source code was the property of Scratch DJ Game LLC. The Court also granted an injunction preventing 7 Studios from disclosing or discussing the game code or Scratch trade secrets with Activision or any other third party. This decision by the Court is a setback for Activision which only acquired 7 Studios after Genius rejected Activision's offers to buy the Scratch game. Activision is now "walled off" by the Court's order from discussing Scratch or its game code or confidential information with its own subsidiary - which had previously worked on Scratch for 18 months as a contract work-for-hire developer.
In addition to winning the requested injunctive relief, Scratch DJ Game LLC will aggressively pursue its court case against Activision, 7 Studios and Peterson for damages resulting from their actions to delay and take over the Scratch game. Scratch DJ Game LLC contends it will prove that, only after venture partner Genius rejected multi-million dollar offers from Activision for Scratch - The Ultimate DJ Game, Activision then used information it obtained under a non-disclosure agreement with Genius to buy financially struggling contract developer 7 Studios in order to delay and control completion and release of Scratch, which is to compete with the DJ Hero game Activision has announced it has under development. Scratch DJ Game LLC believes Activision's actions with regard to Scratch were clearly an attempt to prevent the game from getting to market ahead of its own prospective game, DJ Hero, or to exact a lower price for the Scratch game after it took control of the contract developer working for its competitor.