THQ Wins Long-Running WWE Royalty Rate Dispute

THQ said Monday that it has prevailed in its dispute with joint venture partner Jakks Pacific in regards to royalty rates from World Wrestling Entertainment-licensed products. An arbitrator said that toymaker Jakks is entitled to 6 percent of sales from THQ WWE-based games, down from the previous rate of 10 percent. The decision is retroactive, effective for the period from July 1, 2006 to December 31, 2009. THQ filed suit against Jakks to compel arbitration in 2006, and a court ruled in favor of the company in 2008. THQ said it expects a one-time benefit of around $23 million during the second quarter of fiscal 2010 stemming from the newly-established royalty rates. THQ and Jakks entered a joint venture to sell licensed wrestling video games in 1999. Since then, the joint venture partners have repeatedly butted heads over contract disputes. Most recently, THQ filed another lawsuit against Jakks, as the game maker accused its partner of unilaterally deciding to extend the WWE licensing deal. THQ executive VP of business and legal affairs James Kennedy said in a statement, "As we expected, we have prevailed in this matter. We are gratified the arbitrator agreed the preferred return rate to Jakks Pacific on WWE video games will be significantly lower."