Nothing like cutting it close. Less than a day before the case was set to go to trial, Activision Blizzard decided to settle in the lawsuits over Call of Duty: Modern Warfare 2 brought by former employees and Infinity Ward founders Vincent Zampella and Jason West. Pre-trial hearings were repeatedly delayed throughout the week leading up to the Friday trial, with representation from both camps trying frantically to reach a settlement in the dispute. At stake were proceeds earned from the Call of Duty franchise in full, a series of games that has generated $7 billion in sales over the past 9 years. Rather than face a jury though, Activision ceded enough ground to satisfy its former creators.
The Associated Press (via The Washington Post) reported that the parties were able to come to agree before the 1:30pm PST deadline on Thursday. While neither party disclosed the terms of the agreement, the settlement is no doubt substantial. Activision issued a statement immediately seeking to calm shareholders in the company, assuring that the payout to Zampella, West, and the Infinity Ward Employee Group would not affect either the company’s earnings in the second quarter of 2012 or its full fiscal year.
Zampella and West were fired by Activision after the publisher discovered that the duo had been meeting with competitor Electronic Arts to discuss a partnership that would allow the duo and other Infinity Ward employees to found a new studio. This was in early 2010, just months after Call of Duty: Modern Warfare 2’s release, and a period when Infinity Ward was already having trouble getting Activision to pay agreed upon royalties based on the game’s success. After their dismissal, the two initially sued Activision for $36 million dollars, a figure that was eventually raised to a total of $2 billion in owed pay and damages.
The battle between the former Infinity Ward staff and Activision was just the tip of the iceberg though. After Zampella and West filed against Activision in 2010, the publisher sued Electronic Arts seeking $400 million in damages for poaching employees. That lawsuit was settled earlier in May.
While the settlement won’t negatively impact Activision’s earnings, this entire ordeal has been an important lesson for Activision Blizzard. The publisher cannot treat its talent like garbage and not expect them to fight back. Studios like Treyarch, who continue to push out titles like Call of Duty: Black Ops 2, better be fairly compensated for their work on a series that continues to rake in billions each year. Otherwise they’ll abandon the company and force Activision to pay up one way or another.