Frogwares, a Ukraine-based indie developer with a subsidiary in Ireland, is in an ongoing legal dispute with France-based publisher Nacon over The Sinking City, which has resulted in the game being removed from and later reappearing on stores. The game has once again been removed from Steam after Frogwares submitted a DMCA takedown notice on March 2nd claiming that the version of The Sinking City uploaded to the platform on February 26, 2021 "contains content that Nacon has absolutely no rights to."
As the story goes, The Sinking City was originally released in June 2019 and has since been the subject of the parties' dispute. When the game was first pulled from Steam and other storefronts in August 2020, Frogwares explained its grievances with Nacon and its parent Bigben Interactive in, what the developer declared as an act of transparency, an open letter on its website. Frogwares alleged that Nacon's multiple violations of the publishing agreement, such as withholding milestone payments and ?1,000,000 in unpaid royalties, forced Frogwares to file suit in August 2019. Frogwares also alleged that Nacon's marketing materials contained incorrect legal lines to create a perception that Nacon owned the game and that a pirated version of the game was released on a third-party PC gaming subscription service in February 2020. After multiple purported attempts to contact Nacon, Frogwares terminated the agreement in April 2020. On July 17, 2020, a judge allegedly rejected Nacon's attempt to oppose the termination, indicating that (in Frogwares' words) "the contract is now terminated in the eyes of the law." Then, as Frogwares further explained, they were compelled to pull the game from stores in August 2020 as a last resort to prevent further revenues going to Nacon.
On January 5, 2021, Nacon released a statement ("for the sake of transparency") that although the interpretation of the publishing agreement is still pending before the French courts, "a first enforceable decision" by the Paris Court of Appeal on October 28, 2020 ruled that Frogwares' termination was in a "manifestly unlawful" manner. Nacon further explained that it was proceeding based on this decision by asking stores and platforms to make The Sinking City available again "so that no one is held hostage to this situation." (The timeline gets a little muddled here, but apparently the game was up on Steam for a short period around the end of December 2020 and pulled after Nacon's statement.) Next, Frogwares announced that they were acting as the publisher for the game on PlayStation 5 releasing February 19, 2021, also clarifying that the game on PlayStation 4 has a different publisher and would not be eligible for a platform upgrade due to the current legal situation. When the game appeared on Steam on February 26, 2021, Frogwares posted a tweet recommending that players not purchase this version because it was not created by the developer.
On March 1, 2021, Frogwares uploaded a detailed blog and accompanying video alleging that the version of the game on Steam was a pirated and modified copy of the game and that Nacon had downloaded it from another store, used Frogwares' encryption to reverse engineer the source code, and swapped out certain logos for Nacon's own before uploading it to Steam. According to Frogwares, this was Nacon's third attempt to release a pirated copy of the game, plus it included DLC from a deluxe version for which Nacon does not control the publishing rights.
On March 2, the game was removed from Steam in response to Frogwares' DMCA takedown notice for the allegedly pirated game. On March 3, Nacon basically confirmed the acts but said they were within their rights under the contract to have the game "adapted by a third party" after Frogwares refused to make the game available on Steam and were "sabotaging" Nacon's investments. Frogwares acknowledged that the DMCA takedown may only be temporary, but they are awaiting a final ruling - in the coming months or years - on whether they are required to deliver a Steam version to Nacon.
While disputes over royalty payments and marketing efforts are not new in video games, the trend for more transparency is on the rise as many companies seek to make the industry a more ethical and balanced environment. However, these types of self-help measures are not risk-free and may cause more trouble. Before you decide to take matters into your own hands, check the relevant provisions of the agreement (if there is one), including for termination and confidentiality, to avoid violating any of its terms. Consult with counsel to understand the potential risk and weigh your options before inadvertently giving rise to legal claims. We will continue to monitor this story as the saga continues.
Originally Published by Frankfurt Kurnit, March 2021
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.