Call of Duty: The Lawsuit

[EDITOR'S NOTE: In January of this year, Gamasutra featured the full contract between Spark Unlimited and Activision for the development of Call of Duty: Finest Hour, with industry commentary by leading game attorneys.

For today's feature, we present the rest of the story, taken from additional court documents made available during Spark's related trials, this time covering its battles both with Electronic Arts leading up to the formation of Spark and Activision, following the release of Finest Hour.]

The legal dispute between Call of Duty: Finest Hour developer Spark Unlimited and its one-time publisher Activision must certainly be a vexing distraction for both companies. However, for the rest of us, their increasingly public argument provides a unique opportunity to learn from other people’s mistakes.

Spark’s founder Craig Allen had been in the video game industry for years, working as a producer for Disney Interactive and later an executive at Jim Henson Interactive. In early 2002 he decided the time was right to start a development studio of his own. It would be called Spark Unlimited and it would be employee owned and independent. Rather than investing in R&D, Spark would take advantage of middleware solutions and license any software tools it needed, enabling its artists to concentrate their talent on delivering immersive and compelling experiences.

The core of the startup would be Allen as CEO, Scott Langteau as Chief Operating Officer, and Adrian Jones as the company’s Chief Technical Officer. Both Langteau and Jones came from Electronic Arts Los Angeles, where they had been in key positions on the development of the Medal of Honor franchise’s two Playstation installments: Medal of Honor and Medal of Honor: Underground. They also contributed to Medal of Honor: Allied Assault for the PC and the upcoming Medal of Honor: Frontline for the Playstation 2. In addition to Langteau and Jones, Craig Allen was hiring many of the same artists and engineers who had previously worked on the Medal of Honor games at EA LA.

With dream team in hand, Allen approached Activision for a development deal. The publisher was making big plans for a World War II franchise of its own, having already commissioned Infinity Ward to create Call of Duty for the PC. Spark seemed to have the talent that Activision was looking for to carry its franchise on to home consoles and in the Fall of 2002, Activision and Spark signed a formal development contract.

Spark would create three AAA quality products for the Playstation 2, Xbox, and GameCube. The first would be Call of Duty: Finest Hour, an original, historically accurate World War II first-person shooter to be delivered within 24 months. The second and third would be either sequels to Finest Hour or games based on a new IP. The contract set monthly milestone goals for the first game as well as a payment schedule and royalty rates. The total cost for the first game was pegged at $8.5 million to be paid out in installments and Spark was given an advance of $1,023,000 to cover its start up costs.

Unfortunately, many of the experienced staff that Allen wanted for Spark had not actually left their Electronic Arts jobs at the time he made his pitch to Activision. Spark was starting from zero and would have no real capital behind it until the deal closed, so the employees were understandably reluctant to jump ship until the very last moment.

Meanwhile, Electronic Arts was not ignorant of Spark’s plans and when approximately twenty of its people suddenly quit, EA’s legal team went in to action, filing suit against Spark. Electronic Arts claimed that its former employees had helped form Spark while still earning paychecks at EA and further accused them of stealing trade secrets by copying proprietary development software, including source code, libraries of art work, and internally created tools prior to leaving. It would be the first of many lawsuits that would haunt Spark.

Electronic Arts’ computer forensics expert reported a number of questionable .zip and .gho files on EA’s network that appeared to be evidence of copying. In a court deposition listing the alleged instances of software theft, he stated “I find it alarming that these gentlemen were in possession of this information as a ‘.zip’ file, which is used to compress large amounts of data into a size for transfer over the Internet or by a medium such as a CD-ROM or DVD.” Among the suspicious zipped files he also discovered “a massive file named ‘JERRY.GHO,’ which appears to be the entire MOHFL [Medal of Honor: Frontline] art asset database. The ‘.gho’ extension indicates it was created using Ghost software, which is capable of copying entire directories or drives.”

In its opposition testimony, Spark countered that many examples of copied software could be attributed to errors on the part of EA’s own IT department, answering that “the receipt of a zipped file, and the unzipping process itself, will leave zip files on the recipient’s computer... The presence of zipped files on a computer may indicate that the user has created zipped files to copy onto a CD or to email to another user. However, it also may mean (as it does here) that the user has simply received and extracted zipped files.” Spark went on to point out that “Ghost files are often made by a company’s Information Technology department as a routine part of operations.” Spark further explained that any other files that its people may have copied while at EA were actually work samples to be used in their personal portfolios.

Activision had already advanced over a million dollars to Spark and the lawsuit threatened to kill the company before work on Finest Hour could even begin. When the case was settled in April of 2003, both parties agreed to pay their own costs, leaving Activision to foot the bill for Spark’s $850,000 in legal fees. It was not an auspicious start for the developer and their troubles were far from over.

In a 2005 postmortem of Call of Duty: Finest Hour that Craig Allen prepared for Activision called “Looking Back, Planning Ahead” the CEO candidly discussed Spark’s difficulties as a start up developer. A critical early decision that Spark had to make was on Finest Hour’s technology foundation. One of the company’s guiding principles was “empowering artistry through technology,” which ultimately led them to choose Criterion Software’s RenderWare Studio. Allen wrote, “Activision was very concerned about our decision and lobbied for working with them to develop and utilize a system being created called AGE (the Advanced Graphics Engine).”

However, Spark’s Chief Technical Officer Adrian Jones disagreed, feeling that AGE “might be good for the graphical pipeline but would not provide the wealth of needed tools for game creation.” Despite Activision’s objections, Spark remained committed to RenderWare. “At first blush, RenderWare seemed like a reasonable choice to get all 30 people at Spark up and running as soon as possible,” Allen wrote. “It seemed to allow for customization and, so the story goes, would allow the engineering team to focus their work on the specific features to be used in the game as opposed to more generalized tools.”

Work progressed slowly and Spark had great difficulty integrating RenderWare with its own custom object data base. According to Allen, “GOD [Spark’s custom coded Global Object Database] would cause many problems throughout the course of production, becoming slower and growing more difficult the more objects became used by the system.” Spark was unable to meet its monthly milestones, falling farther and farther behind.

“It was becoming painfully clear that the choice of using RenderWare as a foundational part of Spark’s production process was going to present significant challenges to finishing the project. The architecture of the software was not scaling to handle the complex demands of the game,” Allen wrote. “The results were instability, lost work, slow production pipelines and a ‘just live with it’ attitude.”

According to a Spark programmer quoted in the postmortem, “The tool chain implemented at Spark is the greatest factor in the slowness of development. I have often seen cases where getting an asset change in the game takes up to a week. Part of the reason revolves around the use of RenderWare Studio, but part of it was created at Spark.” The programmer went on to say, “When something goes wrong in the game, we don’t know if it’s an error in Maya, the export tool, the update latest tool, the import, or a bug in the code base, and it takes often days to figure that out.” Allen described it as, “One of the most painful and absurd production systems ever used to create a game.”

Spark’s disorganized management only exacerbated the problem as Allen frankly admitted. “The executive management team at Spark shoulders a great deal of responsibility for not insisting on more effective results,” he wrote. “We suffered because of poor scheduling, prioritization, and an imperfect definition of the work to be done.” Allen described a management team crippled by a “general predilection for debate over top-down decision making.”

According to Allen, the root of the problem was embedded in Spark’s origins at EA. “For some of us, Spark was a new company.” he wrote. “For others, Spark was a continuation of Electronic Arts Los Angeles and DreamWorks Interactive. Same people, same content, same issues, new building, new business card - but production as usual.” As well, Allen observed a “significant chasm between how the Spark team was used to working under the Electronic Arts methodology, and what Activision expected.”

A constant source of friction was Activision’s desire to see a fully functioning game early in the development process. “At Electronic Arts”, he wrote, “the level vision was able to be constructed without the constraints of frame rate, or memory to get the body of the game in and working,” a process which left polish until the end of the development cycle. “However, under the more risk-averse Activision system, polish happens through the entirety of the process and there is a consistent desire to have the game playable on disc and running at 30 fps.”

By January of 2004, Spark could demonstrate only one working level of a game that was intended to have fifteen and it seemed unlikely that Call of Duty: Finest Hour would meet its scheduled ship date of June. Allen wrote, “There was a general lack of documentation or organization around who had done what to the code base. It became clear that there was going to be a lot more work needed to be done to stabilize the system than anyone had expected.”

To get development back on track, Activision stepped in, advancing Spark additional funds and assigning some of its own software engineers to assist the struggling developer. Six of the game’s playable levels were reassigned to an outside contractor and the GameCube and Xbox conversions were outsourced, allowing Spark to focus its efforts solely on the Playstation 2 version.

Activision decided to add multiplayer functionality to Finest Hour, something that was not covered in the original development agreement and its implementation also had to be contracted out. The release date was moved to the end of the year, giving Spark the extra time it needed to restructure itself and complete the game.

In May of 2004, Spark’s Chief Technical Officer Adrian Jones left the company. A lawsuit soon followed, adding another $70,000 in legal fees to the company’s tab. As Finest Hour’s costs ballooned, the original development contract was amended to allow the publisher to recoup the $2.7 million in additional advances that were over the game’s original $8.5 million budget from future royalties.

In Activision’s 2005 countersuit against Spark, the publisher described its assistance to the beleaguered developer as a “veritable bucket brigade of rescue workers was deployed to work with a small team of talented and hardworking Spark employees who had suffered under the incompetent regime previously set in place by Spark. In total, over 30 Activision employees and contracted personnel working under Activision’s leadership were directly involved in completing Finest Hour.”

By October, after much hardship, Call of Duty: Finest Hour was finally completed. Although crunch time was over, Spark was entering perhaps the most critical period of its history. Its future existence as a company was dependent on quickly securing another development contract. It was at this point that CEO Craig Allen wrote “Looking Back, Planning Ahead,” including in the document a sequel pitch for a game called Call of Duty: Combined Forces.

Combined Forces Pitch Document

While the postmortem was an honest appraisal of Spark’s hardships and its progress towards better organization, the sequel pitch was less compelling. Disorganized and sketchy, the proposal seemed to describe a game that would be more of an expansion pack rather than a wholly new experience. Spark claimed it could start production in November and have the game ready in twelve months, estimating that it would require over $10.5 million in funding. Activision was unimpressed and felt that Spark had still not fully resolved its organizational issues. The publisher decided to wash its hands of the whole affair and rejected the proposal, releasing Spark from any future obligations.

Then things started to get ugly. Spark demanded a $500,000 cancellation fee from Activision, which the publisher refused. Activision argued that the cancellation fee only covered games already in development and further, that the fee had been amended out of the contract with Spark’s agreement. Meanwhile, Call of Duty: Finest Hour made to the shelves in November 2004. The game received general favorable scores from reviewers and was a big hit with consumers, reaching #5 on the December bestseller lists.

In July of 2005, Spark decided to take legal action against their former publisher, filing a lawsuit that accused Activision of breaching their publishing contract. In an interesting move, Spark’s lawyers attached a copy of the original Development Agreement and its amendments to the complaint without seeking to file them under seal thus making a wealth of confidential information available to the public. Activision quickly answered with a countersuit of its own, accusing Spark of fraudulently representing itself back in 2002, when the developer claimed that it had talent and experience to create a AAA console title.

Since its break with Activision, Spark has signed agreements with a number of publishers. In 2005, Atari announced an exclusive, long-term agreement to publish future titles from Spark, although few details were given. A year later, Sierra Entertainment signed agreement with Spark for an unspecified action game to be released in late 2007. Codemasters also announced that it would be publishing a new game from Spark in Q4 2007 with the working title of ‘Fall of Liberty’ which will utilize the Unreal Engine 3.

The lawsuit between Spark and Activision remains unresolved, still churning its way through the California court system. Spark Unlimited seems to have been born under an unlucky star. Dogged by lawsuits from its very inception, the developer has continued to muddle forward, determined to make it either by the fruits of its labor or the acumen of its lawyers.