Take-Two Interactive Software, Inc. v. Apogee Software, Ltd.
United States District Court for S.D.N.Y.
Case No. 1:2009-cv-05054, Filed May 11, 2009
Case Update:This case was dismissed with prejudice on May 28, 2010, pursuant to a confidential settlement agreement by the parties. The parties agreed to bear their own costs of litigation, and not to seek any costs or sanctions.
Original Post:Take-Two is a publisher, developer and distributor of video game software, hardware and accessories for PCs and game consoles including the Grand Theft Auto series.

Apogee, also known as 3D Realms, develops and publishes video games such as the Duke Nukem franchise.

In 2000, Take-Two entered an agreement giving it publishing and distribution rights to Duke Nukem Forever (DNF), a game that began development in 1997. Take-Two claims to have paid $12 million for those rights. Take-Two and Apogee formed another agreement in 2007 under which Take-Two advanced $2.5 million to Apogee to aid in development. According to Take-Two, the agreement guaranteed the game would be done by 2012, otherwise the advance would immediately become due.

In early 2009, Take-Two informed Apogee it wanted to exercise an option to develop a console version of DNF for Xbox 360 and wanted Apogee to do that development. Apogee insisted that Take-Two provide the funding for the project, but Take-Two was wary of putting more money into development and so proposed various funding/development milestones. Apogee rejected the proposal and negotiations came to a standstill.

Take-Two claims Apogee consistently gave assurances of near completion but then shut down its studio, halted development on DNF and laid off its staff on May 6, 2009 without Take-Two’s approval. Take-Two further alleges that Apogee has sufficient funds to cover its outstanding obligations in an off-shore account.

Take-Two brought this lawsuit against Apogee for breach of contract related to Apogee’s alleged continual delays and failure to complete the game. To hammer home the effect of the delays, the complaint states that “[t]he protracted development of the game was well-publicized and became the subject of ridicule. For example, in a 2007 article entitled, ‘The Most Delayed Games Ever,’ an industry columnist remarked that ‘[elither this is the longest game ever in production or an elaborate in-joke at the expense of the industry.’” Take-Two seeks to recover its advances and to have Apogee deliver the source and object code already developed (to independently develop the game for Xbox 360) and wants Apogee’s cooperation in future endeavors to finish the game. Take-Two also wants to enjoin DNF developers from further leaking any art or code from the game which Take-Two says interferes with its “exclusive rights to publish, exploit and control the DNF brand.”

Shacknews reports that after the lawsuit was filed, Apogee founder Scott Miller said, “Do readers here realize that filed lawsuits are entirely one-sided statements, based on knee-deep BS and with more spin that[sic] a top? 3DR has been in nearly a dozen lawsuits (including against Warner and Fox). We’re always innocent, and we always win. This one is no exception. Give it a year, then the truth will come out.”

In response to Take-Two’s suit, Apogee filed an answer and counterclaim on June 19. In its answer, Apogee states the development of DNF was largely self-funded and that the company invested $20 million of its own money. Apogee claims DNF had no deadline for completion. According to the answer, the option to develop DNF for Xbox 360 only becomes exercisable after the release of the PC version which hasn’t occurred, so Take-Two allegedly has no right to the source code until the game is completed. Apogee’s answer also mentions that Take-Two’s advance would be paid back with royalties Apogee would receive from a new Duke Nukem-based game supposedly also in development by another developer and due by 2010. Apogee claims Take-Two knew for weeks that the DNF team would be laid off if a funding agreement wasn’t reached.

Apogee brought a counterclaim against Take-Two for breach of contract. Apogee claims that in the 2007 agreement, Take-Two agreed to hire a third-party developer to create a new game based on the Duke Nukem franchise (“Duke Begins”). Apogee retained development approval rights, including right to approve the development schedule. Apogee’s counterclaim echoes Take-Two’s complaint in that Take-Two was entitled to royalties from Duke Begins to recoup the advance it paid. Apogee claims Take-Two halted the third-party developer’s work on Duke Begins indefinitely in April 2009 in order to delay its release, limiting Apogee’s ability to pay back Take-Two’s advance on time. The counterclaim alleges that Take-Two is “taking such actions with a goal of pressuring Apogee to sell the Duke Nukem franchise rights to Take-Two for less than their true value.” Apogee is seeking monetary damages.

So it appears that twelve years after first announcing the development of Duke Nukem Forever, the game still faces many hurdles and may never be completed. Still, in Apogee’s answer it alleges “that it has continually worked on the development of the DNF for many years, and continues to do so” – signaling that development is ongoing, but with only the few DNF team members remaining. Given that Wired News created the Vaporware Lifetime Achievement Award exclusively for DNF, maybe fans shouldn’t hold their collective breath.

It’ll be interesting to see how this one plays out and whether DNF or Duke Begins will ever come to fruition. We’ll keep you posted.

The case was initially filed in state court in the Supreme Court of New York on May 12, but was transferred to the U.S. District Court for the Southern District of New York on May 29.

Read Take-Two’s complaint here and Apogee’s counterclaim here.

Nintendo Faces Suit over 3DS
Case Update: Zynga Game Network v. Playdom