According to a report in Variety, Harmonix Music Systems filed suit against Activision on
Monday for $14.5 million in Guitar Hero royalties. However, the Viacom-owned company
withdrew the suit on Tuesday night, with the Activision negotiations to continue out of court.
The dispute boils down to an agreement made with RedOctane (now owned by Activision). The
deal stated that Harmonix would receive a higher royalty rate if any Guitar Hero sequel used
Harmonix technology in any way. However, Harmonix was paid a lower royalty rate, which
doesn't sit well with the music game developer.
"(Activision) has failed to pay Harmonix its full share of royalties earned in connection with
Harmonix's essential and undisputed contributions of its intellectual property and technology to
the bestselling video game Guitar Hero III," said the suit.
Activision, for its part, asserts that it has paid Harmonix the appropriate amount of royalties for
Guitar Hero. "Activision believes it has made sufficient payments to Harmonix and the claims
otherwise do not have merit," said General Counsel George Rose.
Along with the money derived from retail sales, Harmonix asserts it has not been compensated
for money received from song downloads and in-game advertising. With more Guitar Hero
products planned in the future, Harmonix wants to stake its claim now. At the current royalty
rate, Harmonix says that it will be denied "tens of millions of dollars per year" that it believes it
is owed.
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