A young, slightly disreputable, scruffy stepchild – that’s how video games have been treated by the rest of the entertainment industry. But with sales of video games hitting $18 billion in 2007, a 43 percent annual increase, game makers are clearly doing well competing with more traditional forms of entertainment, such as movies and music.
A $13.2 million arbitration award to video game publisher Ubisoft Entertainment against MGA Entertainment, finalized in February, underscores the growing importance of the video game industry and its potential for more multimillion-dollar litigation. “Real money is at stake as the industry matures,” says Roxanne Christ, an IP and technology partner at Latham & Watkins in Los Angeles. The hefty size of the arbitration judgment also illustrates, says Christ, that “arbitration isn’t the nirvana that everyone presents it as.” The accepted wisdom is that “arbitration is usually smaller awards, more tempered, and not the big awards you get in front of a jury,” says Stephen Smith, the Greenberg Glusker partner who successfully represented Ubisoft. “This award [for lost-profit damages, attorneys' fees, and interest] broke the mold,” Smith says.
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