Though it was the party that brought the lawsuit, videogame-maker Bethesda Softworks LLC has agreed to pay $2 million to a West Coast competitor it accused of infringing on its trademark for the lucrative “Fallout” series depicting a violent post-nuclear war world.
In return, Interplay Entertainment Corp. of Beverly Hills, Calif., agreed to stop producing its own series of “Fallout” games by the end of next year.
Interplay’s attorney, Jeffrey F. Gersh, agreed it was “a little interesting” that the company that brought the case ended up paying $2 million to end it. However, Gersh warned against reading too much into a settlement and trying to determine a winner and a loser.
“I think the parties are satisfied with the result and how this works for them from a business standpoint,” said Gersh, of Gersh/Derby in Encino, Calif. “It just means they found a way to resolve it.”
Bethesda Softworks’ attorney, Howard H. Stahl, did not return telephone and email messages seeking comment on the settlement. Stahl is with Fried, Frank, Harris, Shriver & Jacobson LLP in Washington, D.C. The videogame company is based in Rockville.
During the course of the lawsuit in U.S. District Court in Greenbelt, each party accused the other of breaching their April 4, 2007, contract under which Bethesda Softworks bought the rights to Interplay’s Fallout trademark for $5.75 million.
Interplay had been issued the trademark for Fallout in August 1998 and created the games “Fallout,” “Fallout 2” and “Fallout Tactics: Brotherhood of Steel.”
The contract permitted Interplay to continue selling the Fallout games it had on the market when the contract was signed, both sides agreed.
Bethesda Softworks, which initiated the lawsuit in 2009, claimed Interplay violated the contract by continuing to use the “Fallout” name in a manner designed to exploit the tremendous popularity of Bethesda’s games, which can be played on a personal computer or television.
For instance, when Bethesda Softworks introduced “Fallout 3” in October 2008, Interplay soon followed with “Fallout Trilogy,” the complaint stated. And when Bethesda Softworks later released “Fallout New Vegas,” Interplay followed with “Fallout Collection” and “Saga Fallout.”
Interplay’s game titles are deliberately and “confusingly similar” to Bethesda’s trademarked name in “sound, appearance, meaning and overall commercial impression,” the company said.
The use of the name Fallout “indicates falsely to the relevant purchasing public” that Interplay’s games are associated with Bethesda’s, the complaint alleged.
Interplay’s use has also been “malicious, deliberate, willful, intentional and in bad faith, committed with full knowledge and conscious disregard of Bethesda’s rights in the FALLOUT mark and with an intent to trade on Bethesda’s substantial goodwill in the FALLOUT mark,” the complaint stated.
That goodwill included the “tens of millions of dollars” Bethesda spent developing and promoting its Fallout games and its “worldwide sales of millions” of game units, the complaint stated.
Bethesda Softworks also claimed that Interplay’s website at www.fallout-on-line.com was designed to “deliberately confuse the public into believing that Bethesda [Softworks] approved, sponsored or otherwise is affiliated” with Interplay’s Fallout games.
In its response, Interplay said its actions complied with the 2007 agreement’s provision that permits it to market its pre-existing games. Interplay also countered that Bethesda Softworks had breached the contract by contacting Interplay’s customers and potential business partners about the company’s alleged trademark infringement.
Under the settlement agreement, Interplay “forever gives up any and all rights” to its Fallout games as of Dec. 31, 2013. Interplay also agreed to take down the website, which it has done. (As of Friday, clicking on that site brought up an “under construction” notice.)
Neither party admitted liability in agreeing to the settlement, which, by its terms, “was reached to avoid the expense and burden of litigation.”
U.S. District Judge Deborah K. Chasanow, citing the settlement, ordered the case dismissed on Jan. 9.
BETHESDA SOFTWORKS LLC V. INTERPLAY ENTERTAINMENT CORP.
U.S. District Court, Greenbelt
Deborah K. Chasanow
Event: April 4, 2007-Sept. 8, 2009
Suit filed: Sept. 8, 2009
Settlement order: Jan. 9, 2012
Plaintiff’s/Counter Defendant’s Attorney:
Howard H. Stahl of Fried, Frank, Harris, Shriver & Jacobson LLP in Washington, D.C.
Defendant’s/Counter Plaintiff’s Attorney:
Jeffrey F. Gersh of Gersh/Derby in Encino, Calif.
Trademark infringement, Unfair competition, Breach of contract.