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WWE: Company Files Lawsuit Against Jakks/THQ Over Video Game Rights

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WWE license sparks new Jakks/THQ suit

By Tom Magrino, GameSpot
Posted Jul 1, 2009 10:28 am PT

Publisher petitions court following toy maker’s one-sided decision to renew rights to make wrestling games for five more years.

For years, THQ, Jakks Pacific, and World Wrestling Entertainment have faced off in a Triple Threat match over the WWE vs. SmackDown franchise. WWE has sued the THQ-Jakks joint venture twice seeking to have its licensing agreement terminated, all while the game and toy companies have been locked in their own dispute over royalty rates on WWE-branded games.

With the current WWE game licensing deal set to expire on December 31, 2009, Jakks said today that it would be exercising its right to renew the contract to make the games for five more years, through December 31, 2014. As could be expected given the license’s turbulent history, the move has sparked a new round of legal posturing. THQ has responded by filing a suit claiming that it had not yet decided whether it would renew the WWE license.

In its filing with the Los Angeles County Superior Court, THQ is seeking declaratory judgment on three issues. First, THQ wants a determination that Jakks cannot unilaterally renew the WWE license as part of the terms of its joint venture with the toy maker. Second, THQ claims it is not obligated to consent to a renewal of the WWE license. And third, the restriction prohibiting THQ from publishing any wrestling-based game without Jakks for at least a year after the termination of the WWE agreement can not be enforced under California law, the publisher claims.

Jakks further noted that it has entered into arbitration proceedings with THQ related to this and other issues concerning the WWE license. THQ had not responded to requests for comment on the suit or Jakks’ renewal announcement as of press time.

The WWE license contributes heavily to THQ’s bottom line, with about 25 percent of the publisher’s revenues for calendar year 2007 being derived from the wrestling franchise. However, the series saw a substantial drop-off in popularity in 2008. As part of THQ’s grim fiscal year-end report in May, CFO Paul Pucino noted that WWE franchise sales slipped 24 percent year-over-year. Still, WWE SmackDown vs. RAW 2009 shipped more than 4.5 million units during the period