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LucasArts v. Humongous
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LucasArts v. Humongous
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== Citation == '''LucasArts Entertainment Co. v. Humongous Entertainment Co.,''' 815 F. Supp. 332 (N.D. Cal. 1993) ([http://scholar.google.com/scholar_case?case=2338152294165019959&q=815+F.+Supp.+332&hl=en&as_sdt=2002 full-text]). == Factual Background == This suit arises from an [[agreement]] between Electronic Arts, Inc. (Electronic Arts) and defendant Humongous Entertainment Company (Humongous) granting Electronic Arts the right to distribute Humongous' products, including a [[computer videogame]] entitled "Putt Putt Joins the Parade." Humongous' principals are former [[employee]]s of plaintiff LucasArts Entertainment Company (LucasArts) who created a [[software tool]] called Script Creation Utility for Maniac Mansion (SCUMM) System. This is a tool used in the [[Software development|development]] of [[computer videogame]]s. LucasArts [[license]]d the SCUMM System to Humongous under limited terms and conditions. The [[license agreement]] provided that Humongous may not sell its [[Videogame|games]] which utilize the SCUMM [[program]] to any third party [[distributor]] other than LucasArts for less than a certain price and that Humongous must verify its compliance with the [[license agreement]] at LucasArts' request. == 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 βPutt Putt Joins the Parade.β 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. 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]]. 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]]. 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-U.S.-Federal]] [[Category:Case-U.S.-Contract]] [[Category:Contract]] [[Category:License]] [[Category:1993]]
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