Bankrupt publisher claims EA used insider knowledge to press for valuable licence

THQ sues EA, Zuffa over UFC licence transfer

THQ has filed a lawsuit against EA and the owner of the UFC brand, alleging that the deal awarding the much sought after licence the result of cloak-and-dagger negotiations and fraudulent under California law.

EA was awarded the UFC license by Zuffa in June 2012 six months before THQ declared bankruptcy.

Zuffa gave the publisher a $10 million payout for breaking its contract, which THQ claims should have rang more to the tune of $20 million.

The complaint, filed on October 4th in a Delaware U.S. District Court, claims that EA used documents obtained from THQ as part of a proposed purchase of the company to undermine its relationship with Zuffa.

The specific claim is that after the poor peformance of EA’s own MMA franchise the company provided details of THQ’s proposed marketing budget for its next UFC game and insolvency, which Zuffa then cited as grounds to terminate their previous agreement with the publisher.

THQ alleges that Zuffa’s motivation was that UFC had seen an “explosion of interest” which meant that the company could probably get a more favorable deal than it had agreed to in 2007, and EA needed a license if it expected sales on the scale of 2009’s UFC Undisputed.

Since THQ was very aware of the fact it wouldn’t have the capital to release its current line of products, the company claims it had “no choice” but to accept the $10 million payout.

The complaint also claims the transfer was fraudulent under California bankruptcy law, since THQ was insolvent when the transfer took place.

THQ is seeking to have the transfer nullified and recover the IP or an equivalent settlement in addition to damages of at least $10 million.

The full court filing is worth a read, and provides a rare look inside the events leading up to THQ’s collapse and the proposed sale of the company to EA.

The document also notes that Zuffa has filed two claims against THQ in bankruptcy court, which Develop has discovered through other legal filings amount to nearly $2 million after being amended.

EA has told Polygon that it believes THQ’s claims “are without merit.” Neither THQ or Zuffa have been willing to comment on the case so far.

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