THQ wins WWE royalty case

THQ has won a legal dispute with Jakks Pacific over royalty payments.

The case regarded delays in reaching an agreement over the royalty rate that the US publisher would pay Jakks for use of the WWE licence.

Under the terms of the original partnership, a royalty rate would have begun by July 1st, 2006, was to have been determined by agreement, or failing that, by arbitration.

THQ argued that Jakks delayed this original agreement, forcing it to file a case with the California Superior Court to begin arbitration.

The publisher said that Jakks then petitioned the California Court of Appeals to disqualify all but one of the potential arbitrators assigned to the case.

The California Court of Appeals has now denied Jakks Pacific’s petition, which will allow the arbitration process to progress. The two companies are now arbitrating the royalty rate to be paid to Jakks.

Contrary to Jakks Pacific’s statements that the arbitration process has been slowed for ‘a host of reasons,’ the sole cause of delay has been Jakks,” said James M. Kennedy, THQ’s executive vice president of business and legal affairs.

We believed Jakks’ position in its petition from the judge’s appointment of an arbitrator was wrong, and the Court of Appeals has now agreed. As we have stated since we filed suit to compel arbitration and appoint an arbitrator, we look forward to moving the arbitration process forward expeditiously, and we expect to prevail once an arbitrator has the opportunity to consider the facts in this matter.”

THQ also added that certain comments made by Jakks Pacific during a recent conference call regarding the economics of the video game joint venture and expectations for future WWE video game sales, do not reflect the views of THQ or the THQ/Jakks Pacific joint venture”.

Under the joint venture operating agreement, THQ is the party responsible for the operations of the THQ/Jakks joint venture. Jakks Pacific is not currently actively involved in joint venture operations. Accordingly, Jakks Pacific’s statements regarding the economics of the joint venture and expectations of future joint venture performance are not based on any active involvement in the business operations of the joint venture.”

THQ CEO Brian Farrell added: The WWE is a tremendous brand and we have consistently grown this franchise in the video game space on a global basis, with life-to-date sales of more than $1 billion. We are excited about the continuing potential of this brand.”