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In And Out Of Court: Viacom And Activision Meet In Private

Within the span of two days, Viacom-owned Harmonix Music Systems has filed and withdrawn a lawsuit alleging Activision owes it royalties of $14.5 million for GUITAR HERO III and other spinoff products, VARIETY reports.

Harmonix, the developer of the first two GUITAR HERO games and the ROCK BAND game, filed the suit on Monday, saying Activision improperly used their technology to create the third installment of the hugely popular franchise.

By Tuesday night, Viacom reported that it was withdrawing the suit, with discussions to commence out of court.

Harmonix created GUITAR HERO for publisher RedOctane, and was bought by Activision in 2006.

Harmonix made GUITAR HERO II for Activision, but was then acquired by Viacom's MTV Networks later in 2006.

In 2007, MTV published Harmonix's new game ROCK BAND, which sold 1.5 million units in the US alone.

Meanwhile, Activision's GUITAR HERO III was released with a new developer, Neversoft, and sold more than 6.5 million units.

GUITAR HERO as a whole has earned more than $820 million and is the leader in the video game world.

The lawsuit filed in California Superior Court in Los Angeles, alleges Activision owes Harmonix about $14.5 million in royalties for using their technology.

It also claimed Activision owes money for GUITAR HERO song downloads, in-game advertising and other products.

According to the suit, Harmonix's original agreement with RedOctane allowed for Harmonix to be paid the higher of two royalty rates if any sequel it doesnât create "incorporates, uses, or is derived from Harmonix property."

Harmonix says Activision paid the lower rate, which is about half the higher rate, which should only apply if a GUITAR HERO sequel is built from scratch.

VARIETY quotes the lawsuit as saying, "(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."

Activision says it has paid all royalties and the "claims otherwise do not have merit," general counsel George Rose told VARIETY.

A precedent could be set in the world of video game royalties, as at least three new GUITAR HERO games are planned by Activision, including one with music from Aerosmith.

Harmonix claims it could lose tens of millions of dollars if the lower royalty rate continues to be paid.

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