Harmony Gold vs. BattleTech – An Actual Lawyer Weighs In

courtesy of marcomazzoni.dunked.com

courtesy of marcomazzoni.dunked.com

There’s been a lot of speculation on the Harmony Gold v. BattleTech lawsuit, and I’m sorry to say some of that speculation may have come from this very publication. Previous articles from yours truly may have made it seem like the ongoing lawsuit is on its last legs and that we were all moments away from our triumphant victory.

That may have been more wishful thinking on my part, as it turns out. But, rather than me preface every article with the now-standard “I’m not a lawyer, but”, we’ve reached out to an ACTUAL lawyer to get his professional two cents.

Let me introduce you all to Robert Spendlove, an intellectual property lawyer and partner at the law firm of Laubscher, Spendlove & Laubscher. In his own words, Robert “has worked extensively in the gaming and toy industry, for and against such companies as Nintendo, Zuru, Disney, Turbine, and Sony.”

But more importantly, Robert is also a huge BattleTech nerd with over thirty years of losing countless hours to various iterations of the franchise on either tabletop or personal computer. This guy knows two things: BattleTech and IP law, and he’s also pretty damned good at explaining the two.

So good, in fact, that he wrote a big long essay on the current state of the lawsuit that I just couldn’t bear to slice and condense. Thus, to correct my own mistakes and give us all a unique insight into what’s going on, I present to you Robert’s take. Enjoy!

Everyone hates lawyers but loves watching a good legal fight. I guess we are kind of like the Kardashians that way. And the BattleTech/Harmony Gold saga has provided years of… well, I don’t think entertainment is the right word, but “interesting viewing,” maybe? The latest case, styled Harmony Gold U.S.A. Inc. v. Piranha Games Inc. et al., is currently pending in the United States District Court for the Western District of Washington. It might be helpful to provide a brief overview of what Harmony Gold has to prove, what the two sides are really arguing about right now, and where the case might go from here.

Unfortunately, that means talking a little bit about the requirements of copyright law and the history of BattleTech. I’ll be as concise as I can; try not to let your eyes glaze over.

A little timeline to keep the players straight:

The case deals with the defendants’ (Piranha, Harebrained, and InMediaRes/Catalyst Games) use of the original character artwork. To get my biases out of the way, I think that every BattleTech game should use the original Marauder artwork, but it’s not my job to be the good news fairy. So, let’s talk about proving a copyright case.

In order to prevail, the plaintiff (Harmony Gold) must prove two things: (1) that it owns a valid copyright in an original work, and (2) that the defendants (Piranha and others) copied the original work. The question of copyright ownership comes first. If you don’t own the copyright, it doesn’t matter if the defendants copied. And, to make things more complicated, you can split up copyright ownership into pieces; lawyers often use the analogy of a bundle of sticks. A copyright owner can transfer the entire bundle or break it apart into separate sticks. For example, DC Comics could license someone to make a movie featuring the Batmobile while retaining the right to sell merchandise based on the Batmobile. That’s the current issue before the court.

Piranha has filed a motion for summary judgment, essentially asking the Court to throw out the case because Harmony Gold does not own the copyright to the original characters. Piranha argues that Big West only gave Tatsunoko a license to the Macross Motion Picture and not to the original character artwork. This would mean that Tatsunoko could not license the copyright to Harmony Gold because it never owned the copyright in the first place. Piranha’s position has merit. Prior litigation and arbitration between Harmony Gold, Tatsunoko, and Big West suggest that Tatsunoko did not acquire copyright in the original artwork, which resulted in Big West separately registering copyrights in 2002.

So, that’s it, right? Big West never licensed the original character artwork to Tatsunoko. Therefore, Tatsunoko couldn’t license it to Harmony Gold, and Harmony Gold has no standing to bring the case—game over. Not so fast. It isn’t that straightforward; it never is.

courtesy of Kotaku

First, Harmony Gold argues that it did get the copyright to the original characters because Big West gave Tatsunoko exclusive rights to the Macross movie, including the right to merchandise the characters. And the right to merchandise the characters includes the right to exclude others from merchandising the characters. In addition, an outside party cannot challenge the transfer of rights if the original owner concedes the transfer. Harmony Gold claims that Big West doesn’t challenge the transfer, so Piranha cannot either.

I would be surprised if the judge ruled in Piranha’s favor on the summary judgment motion.

More importantly, at this stage of the litigation, Piranha has asked the judge to dismiss the case on summary judgment. A case can only be decided on summary judgment if one party will prevail “as a matter of law.” When applying this standard, the judge assumes all disputed facts and inferences in favor of the non-moving party. What does that mean in this case? In order to keep the case moving forward, Harmony Gold does not have to prove that it has a license to the copyright, it just has to raise enough evidence to show that there is a genuine issue for trial.

In my experience, federal judges are very reluctant to decide a case on summary judgment if there are non-crazy arguments on both sides. Here, Piranha may eventually prevail, but Harmony Gold’s arguments don’t strike me as frivolous. I would be surprised if the judge ruled in Piranha’s favor on the summary judgment motion. I fully expect the judge to concede that there are unresolved issues and allow the case to proceed through the discovery process and trial, which would include investigation and arguments about the alleged copying as well as ownership issues. The trial is currently scheduled for February 4, 2019.

If Piranha can win now, they will save millions versus going all the way through trial.

So, the case looks to be around for a while even if there aren’t any other delays.  

Why would Piranha file this motion? First and foremost, their arguments are reasonable, and they may convince the judge. I don’t expect the judge to grant summary judgment, but I’m not the one wearing the black dress. If Piranha can win now, they will save millions versus going all the way through trial.

The motion may also provide leverage if there is any chance the parties might reach an agreement. Harmony Gold now faces the possibility a judge will decide that they have no rights to the original characters. Harmony Gold may be willing to make some compromises rather than risk losing everything.

If Piranha prevails on the summary judgment, are they free and clear? No. Big West would still own the copyright, and Piranha would have to reach an agreement with them or face the possibility of litigation with Big West on the second prong—whether Piranha is actually copying the original characters.

courtesy of Harebrained Schemes

Harebrained and Harmony Gold almost certainly reached an agreement.

What about Harebrained Schemes and the recently launched BattleTech game? On April 9, 2018, Harebrained and Harmony Gold stipulated to a voluntary dismissal of the claims against Harebrained and Weisman. This dismissal was with prejudice, which means that Harmony Gold cannot re-file the same claims at a later date. Because the stipulation was a joint stipulation, Harebrained and Harmony Gold almost certainly reached an agreement. But we are unlikely to ever know the specifics of that agreement. Harebrained may have agreed to pay Harmony Gold some amount of money to go away. Harebrained may just have agreed not to use the original character artwork. We won’t know until they show up in the game–or not.

My guess? This dismissal was highly influenced by the fact that Harmony Gold’s copying claims against Harebrained are much weaker than against Piranha. Harmony Gold’s complaint against Harebrained alleges that a Locust is a copy of a Marauder and an Atlas is a copy of a Crusader. Quite apart from the ownership issue, this seems like an uphill battle to me.

courtesy of unitedstatescourts.org

And Catalyst Game Labs? InMediaRes, the owner of Catalyst Game Labs, failed to respond to the lawsuit and an order of default was entered on June 28, 2017. This means Catalyst cannot mount any defense to the allegations, but a hearing will still need to be held regarding what damages the court will award. If Piranha succeeds in proving that Harmony Gold does not have standing because it doesn’t own the copyright, then Catalyst would likely be able to have the default set aside.

If Piranha succeeds in proving that Harmony Gold does not have standing because it doesn’t own the copyright, then Catalyst would likely be able to have the default set aside.

For those craving more legal arcana, it might be interesting to look at a tactical (versus strategic) dispute currently before the court.

Harmony Gold requested that the U.S. court issue a request for international judicial assistance, known as a letter rogatory, to the judicial authority of Japan. Harmony Gold is looking for documents from Big West and claims that the letter rogatory represents a legitimate investigation. In contrast, Piranha contends that it will only create confusion and cause delay.

To understand the competing positions, it helps to understand a little about how cases typically proceed and the difficulties when things get international.

Litigation generally includes two phases: a discovery phase and a trial phase. The trial phase is what you see on TV; the discovery phase is longer and more boring. During the discovery phase, the parties are required to give each other certain information, often including producing documents, conducting witness depositions, and answering written questions. The goal is for both sides to have all the “facts” so that the jury can hear the evidence with no surprises at trial.

The standard for what information must be produced is very broad: “any nonprivileged matter that is relevant to any party’s claim or defense.” The parties can also request information from third-parties, which are required to produce the information within reasonable limits. Harmony Gold is asking Big West to produce documents relating to agreements and communications with Studio Nue and Tatsunoko. These documents, if any exist, almost certainly fall within the broad scope of being “relevant.”

courtesy of Studio Nue

So, what is the problem? Within the United States, the federal court could compel a recalcitrant third-party to produce the documents, but Big West is not a U.S. company. The U.S. courts have no authority over it. In order to force Big West to turn over documents, Harmony Gold has to go through procedural hoops governed by international treaty in which the U.S. court issues a request, which gets forwarded to the appropriate Japanese judicial authority, which in turn, if it agrees the request is appropriate, orders Big West to produce the documents.

Piranha contends that the entire litigation is unnecessary because by law Harmony Gold does not own copyrights to the original character artwork.

As you can imagine, this is a drawn out, if typically mundane, process.

Why then is it controversial here? Remember where we are in the case from our discussion above. Piranha contends that the entire litigation is unnecessary because by law Harmony Gold does not own copyrights to the original character artwork. Harmony Gold wants to win the war but must first win this battle.

The letter rogatory process often takes a year or more. If Harmony Gold can convince the court that Big West has critical information worth waiting for, it has as good as won the summary judgment argument. Not surprisingly, Piranha thinks this is all just to waste time, arguing that Harmony Gold should already have the relevant documents from its licensor, Tatsunoko, or at the very least should have started this process back when it filed the lawsuit on March 1, 2017.

Thank you, Robert, for giving us all a thorough understanding of where we’re at in this latest legal attack on our beloved fictional universe. As much as I want the courts to toss Harmony Gold out on their ass, wishing for the thing doth not make it so.

As for what happens next, we might hear back from that letter rogatory in the coming months, or we might not hear anything until the trial starts next year. Whatever happens, we’ll be sure to keep everyone in the loop.

And as always, MechWarriors: Stay Syrupy.

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