Business, Software Programs, Technology Security

U.S. Court: Electronic Arts Foiled in Attempt to Renege on Contract

The programmer who first designed Madden NFL Football video games just handed Electronic Arts a slap from the justice system. Robin Antonick sued EA for breach of contract and fraud. EA tried to have the suit dismissed, but a United States District Court denied the motion.

EA wanted to get out from under the allegations because they say Antonick?s claims were barred by the statute of limitations and he failed to state a claim for either breach of contract or fraud. Neither point held water with the court. The dismissal stated:

"Plaintiff [Antonick] here seeks to avail himself of the principle of fraudulent concealment and the discovery rule, alleging that due to Defendant?s [Electronic Arts] express misrepresentations, he had no reason to be aware of Defendant?s contract breaches and fraudulent actions within the limitations period."

EA claims Antonick had his head in the sandEA felt that Antonick should have figured out a long time ago that they were playing him and since he did nothing then, the statute of limitations for bringing a claim should find them scot free. But the court stated:

"For the purposes of this Motion to Dismiss it is plausible to the Court that without access to the code, Plaintiff would have no way of knowing if such elements appearing in later versions of Madden were independently developed, or derived from his original work, simply by viewing the game."

So how did this brouhaha get its start? The details of the case were reported by BSN*. Here is a synopsis – In 1983, EA and Robin Antonick signed a contract wherein Antonick, a computer programmer and former college football player, would design a computer video game to simulate a form of NFL football. John Madden, an NFL football coach at the time, agreed to let EA use his playbook and his likeness in developing and marketing the game.

In 1986, EA and Antonick renegotiated that contract wherein the programmer would make money off the derivative works and remote derivative works, as well as off his original program. "Derivative" being the magic word here. Antonick designed NFL games for the now outdated Apple II, Commodore C64, and IBM PC. Things went along well until 1992 when the checks stopped coming.

In the meantime, EA went forward having others develop similar games on other platforms. Finally, Antonick realized those games were derivations of his work and eventually sued Electronic Arts. EA filed for a dismissal, the court said no way. The entire judgment can be accessed on line.

Electronic Arts Madden NFL helped to create a multi-billion dollar EA Sports subsidiary, with multiple sports franchisesSo, the saga continues. If his law suit is successful as it goes forward, Antonick could stand to gain a chunk of the billions of dollars EA has made off the Madden Series. That does not bode well for EA?s financial future. They?ve had inconsistent success over the years. In 2009, they acquired Playfish in an attempt to buck up the titles under their umbrella at the same time they were laying off 1,500 employees. Today, analysts are looking at weak video game results across the industry. Therefore, we can anticipate EA?s bottom line declining, even without the effect of Antonick?s impending law suit.

EA stock (NASDAQ: ERTS) stands at $20.45 right now, just before the Monday trading commences. The Street tagged EA as their featured loser in the software and services sector. Yet overall, they rate EA at 4.5 stars out of 5 in total return saying: "The stock performance of this company has beaten 80% of the companies we cover." They also give them 5 stars for solvency, a measurement based on several ratios. They indicate: "The company is more solvent than 90% of the companies we analyze."

Trying to continue on a positive note, Electronic Arts is planning to launch Battlefield 3, a first person shooter game for Xbox360, PlayStation, and PC?s at the end of October. EA and Virgin Gaming are also planning a World Conquest Tournament around the game to be played out in 2012.

The biggest battlefield for Electronics Arts may be played out in the US District Courts as Antonick vs. EA moves towards a settlement or a judgement.