Defunct publisher THQ is suing Electronic Arts and Zuffa, the parent company of the Ultimate Fighting Championship (UFC), over the UFC video game license, which THQ formerly held and EA now possesses.
In the complaint, which THQ filed on Oct. 4 in U.S. District Court in Delaware, THQ alleges that EA and Zuffa worked together to bring about the termination of THQ's licensing agreement with Zuffa for the UFC series, as well as the transfer of that agreement to EA.
THQ originally signed a licensing agreement with Zuffa in January 2007 to produce UFC video games. Under the deal, the publisher released three well-received UFC titles: UFC Undisputed 2009 (May 2009), UFC Undisputed 2010 (May 2010) and UFC Undisputed 3 (February 2012). But by 2011, THQ was struggling financially, and according to the complaint, the publisher began to explore options such as a sale to an outside company.
EA and THQ had "several discussions" in early December 2011 about such a sale, says THQ in the complaint. Before EA broke off the talks later that month, THQ shared "internal financial information, including detailed sales and revenue figures for the UFC franchise, and projected marketing expenditures on the next UFC franchise game," with EA.
EA and THQ had "several discussions" about a sale in early December 2011
At the end of December 2011, Zuffa sent THQ a letter saying it wanted to terminate the licensing agreement because of THQ's financial difficulties. In the complaint, THQ says the letter led the company to believe that EA had provided Zuffa with information about THQ's finances — details that EA could only have gotten from its confidential discussions with THQ about buying out the company. Here's how THQ thinks it went down:
"Prior to the Demand Letter, EA contacted Zuffa, informed Zuffa of THQ's perilous financial condition and expressed interest in acquiring the UFC franchise directly from Zuffa, causing Zuffa to threaten termination of the UFC license."
THQ ended up transferring the UFC license to EA in June 2012, about six months before declaring bankruptcy. Zuffa paid THQ $10 million for the termination of their existing agreement and for the license of THQ's UFC-related intellectual property, according to the complaint. THQ believes that at the time, the UFC franchise was worth at least $20 million and likely more than that to EA.
In the complaint, THQ is charging that the UFC license changeover was a fraudulent transfer under U.S. bankruptcy law. The company is additionally alleging that EA, by sharing THQ's confidential financial information with Zuffa, committed "tortious interference" with the licensing agreement between THQ and Zuffa. THQ is seeking the nullification of the transfer and the recovery of the intellectual property — or the value of it — as well as damages amounting to at least $10 million.
THQ is seeking damages amounting to at least $10 million
In addition, THQ wants EA to "turnover [sic] the profits of the UFC franchise," and wants the court to disallow Zuffa's bankruptcy claims against THQ, which amount to $1.96 million. Under EA's new agreement with Zuffa, the publisher is producing EA Sports UFC (image above), which is set for release next spring on Xbox One and PlayStation 4.
"We believe these claims are without merit," said an EA spokesperson in an email to Polygon. A representative for THQ told Polygon the company could not comment on pending litigation. We've reached out to the UFC for comment and will update this article with any information we receive.
We've uploaded a PDF of the full complaint; you can read it at the source link below.