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== District Court Proceedings ==
 
== District Court Proceedings ==
   
LucasArts brought this suit alleging that Humongous violated the terms of the [[license agreement]] by failing to follow the terms of the price restriction provision and by allowing a [[third party]] (Electronic Arts) to publish “Putt Putt Joins the Parade.” LucasArts asked the court to grant a [[preliminary injunction]] against Humongous. LucasArts would be entitled to a [[preliminary injunction]] if it could show either: (1) [[Likelihood of success on the merits|probable success on the merits]] and the possibility of [[irreparable injury]] or (2) serious questions going to the merits and a [[balance of hardships]] tipping in its favor.
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LucasArts brought this suit alleging that Humongous violated the terms of the [[license agreement]] by failing to follow the terms of the price restriction provision and by allowing a third party (Electronic Arts) to publish “Putt Putt Joins the Parade.” LucasArts asked the court to grant a [[preliminary injunction]] against Humongous. LucasArts would be entitled to a [[preliminary injunction]] if it could show either: (1) [[Likelihood of success on the merits|probable success on the merits]] and the possibility of [[irreparable injury]] or (2) serious questions going to the merits and a [[balance of hardships]] tipping in its favor.
   
LucasArts claimed that Humongous had [[breach of contract|breached]] at least three material aspects of the [[license agreement]]. First, Humongous breached its obligation to sell its [[videogame|games]] developed with SCUMM System to [[third parties]] at a certain price when it contracted with Electronic Arts to sell SCUMM-based [[Videogame|games]] below that price. Second, Humongous [[breach of contract|breached its contractual obligation]] to make available to LucasArts documentation that would verify Humongous' compliance with the pricing regime to which it had agreed. Third, the [[license agreement]] only permitted Humongous to publish SCUMM-based [[videogame|games]] and Humongous [[Breach of contract|breached]] this obligation by serving as a contract games [[software developer|developer]] for other [[software publisher|publishers]], such as Electronic Arts.
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LucasArts claimed that Humongous had [[Breach of contract|breached]] at least three material aspects of the [[license agreement]]. First, Humongous breached its obligation to sell its [[videogame|games]] developed with SCUMM System to third parties at a certain price when it contracted with Electronic Arts to sell SCUMM-based [[Videogame|games]] below that price. Second, Humongous [[Breach of contract|breached its contractual obligation]] to make available to LucasArts documentation that would verify Humongous' compliance with the pricing regime to which it had agreed. Third, the [[license agreement]] only permitted Humongous to publish SCUMM-based [[Videogame|games]] and Humongous [[Breach of contract|breached]] this obligation by serving as a contract games [[Software developer|developer]] for other [[software publisher|publishers]], such as Electronic Arts.
   
Humongous did not dispute that it failed to make its documents available or that it sold the [[software]] at a lower price. But Humongous argued that the [[license agreement]] was never intended to prohibit Humongous from selling any SCUMM-based products to [[third party]] [[software publisher|publishers]]. LucasArts said otherwise. But the court disagreed with LucasArts' interpretation.
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Humongous did not dispute that it failed to make its documents available or that it sold the [[software]] at a lower price. But Humongous argued that the [[license agreement]] was never intended to prohibit Humongous from selling any SCUMM-based products to third party [[software publisher|publishers]]. LucasArts said otherwise. But the court disagreed with LucasArts' interpretation.
 
 
LucasArts also argued that the [[breach of contract|breaches]] amounted to a material [[failure of consideration]]. LucasArts contended that Humongous' [[license agreement|agreement]] to [[software publisher|publish]] its own [[videogame|games]] and not to [[Software development|develop]] SCUMM-based [[videogame|games]] for a competitor, such as Electronic Arts, provided the essential [[consideration]] to LucasArts for the [[license agreement]]. However, the court found that the [[consideration]] for the [[license agreement|contract]] would have been something more valuable, such as promises for continued [[support]] and [[upgrade]]s, rather than just the promise not to sell any SCUMM-based [[videogame|games]] for less than a certain price. Thus, the court found that Humongous' failure to abide by the [[license agreement]] did not amount to a material [[failure of consideration]].
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LucasArts also argued that the [[Breach of contract|breaches]] amounted to a material [[failure of consideration]]. LucasArts contended that Humongous' [[License agreement|agreement]] to [[software publisher|publish]] its own [[videogame|games]] and not to [[Software development|develop]] SCUMM-based [[videogame|games]] for a competitor, such as Electronic Arts, provided the essential [[consideration]] to LucasArts for the [[license agreement]]. However, the court found that the [[consideration]] for the [[License agreement|contract]] would have been something more valuable, such as promises for continued [[support]] and [[upgrade]]s, rather than just the promise not to sell any SCUMM-based [[videogame|games]] for less than a certain price. Thus, the court found that Humongous' failure to abide by the [[license agreement]] did not amount to a material [[failure of consideration]].
 
 
 
Next, LucasArts argued that the material [[failure of consideration]] gives LucasArts the right to [[rescind]] its [[license agreement]] with Humongous. However, since the court found that there was no material [[failure of consideration]], [[rescission]] was not available as a remedy. LucasArts also claimed that after the [[license agreement]] was [[rescind]]ed, Humongous' continued use of its [[copyright]]ed SCUMM System constituted [[copyright infringement]]. But, again without a material [[failure of consideration]], there could be no [[rescission]] and thus no [[copyright infringement]].
 
Next, LucasArts argued that the material [[failure of consideration]] gives LucasArts the right to [[rescind]] its [[license agreement]] with Humongous. However, since the court found that there was no material [[failure of consideration]], [[rescission]] was not available as a remedy. LucasArts also claimed that after the [[license agreement]] was [[rescind]]ed, Humongous' continued use of its [[copyright]]ed SCUMM System constituted [[copyright infringement]]. But, again without a material [[failure of consideration]], there could be no [[rescission]] and thus no [[copyright infringement]].
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LucasArts claimed that it would suffer [[irreparable harm]] if the court did not [[enjoin]] Humongous. The court found that since LucasArts failed to show a reasonable [[likelihood of success on the merits]] of its claim, it was not entitled to a [[presumption of irreparable harm]]. Finally, LucasArts claimed that the [[balance of hardships]] tipped in its favor. The court found otherwise. As a result, the court denied plaintiff's motion for a [[preliminary injunction]].
 
LucasArts claimed that it would suffer [[irreparable harm]] if the court did not [[enjoin]] Humongous. The court found that since LucasArts failed to show a reasonable [[likelihood of success on the merits]] of its claim, it was not entitled to a [[presumption of irreparable harm]]. Finally, LucasArts claimed that the [[balance of hardships]] tipped in its favor. The court found otherwise. As a result, the court denied plaintiff's motion for a [[preliminary injunction]].
 
[[Category:Case]]
 
[[Category:Case]]

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