Atari 2011 Annual Report Download - page 111

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
111
23.2. Operating lease commitments
The Company leases the premises where it has its Lyon’s office. The lease is for nine years and began in June 2001.
The Company has opted for a partial extension of the lease. The lease expires March 31
st
, 2012 only for an area of
approximately 1,700 square meters.
The Company signed a three-year lease starting on June 15, 2010 for its headquarters office in Paris. The annual rent is
€51,000.
23.3. Capital leases
As of March 31, 2011 no capital lease was in effect.
23.4. Pension obligations
Given the small size of the Company's workforce, pension obligations are not material.
24. LITIGATION
In the ordinary course of business, the Company may be involved in various court, arbitral, administrative and tax
proceedings. Although the final outcome of such proceedings is uncertain, the Company considers that any resulting
obligations should not have a material impact on its earnings or financial position.
24.1. Litigation between a former employee and the Company
A significant case arose in a previous year, in which the Company was sued by a former employee who claimed that he
had co-authored one of the Group’s best-selling franchises. The plaintiff was seeking damages for moral prejudice and
financial loss suffered as a result of the allegedly unlawful distribution by the Group of games based on that universe.
The claim was for close to €17 million. At this stage of the proceeding, the Company is categorically rejecting the
plaintiff’s claim of authorship and/or co-authorship and considers the grounds and amount of his claim to be unfounded.
The parties have filed their respective briefs with the judge in charge of preparations for the trial, after no significant
progress was made during the Fiscal Year 2010/2011.The preliminary audience’s court started in September 2010. The
audience has been postponed to the summer of 2011, no court decision is expected before end of 2011.
24.2. BVT production funds v. Atari Europe SAS
This dispute concerned two German entities, the BVT production funds, which financed the production of certain
interactive games, under a series of agreements entered into with various Group companies.
Following exchanges of letters and an audit in December 2008, the BVT funds instituted proceedings in February and
March 2009 in Germany, claiming that Atari Europe had failed to perform several contractual obligations arising from its
publishing agreements with the funds. The funds are suing Atari Europe in the German courts for €2 million in damages.
Atari Europe contested all of the plaintiffs’ allegations. A full complaint was filed with the courts of competent jurisdiction
in early November 2009 and a hearing took place in November 2009. The Munich Court issued an opinion in February of
2010, where most of BVT’s claims were dismissed. The Munich Court ordered Atari to provide data related to the MAC
sales to BVT. Atari complied but appealed the Munich Court’s ruling. BVT has also appealed the court’s decision. Oral
argument on these appeals took place in December 2010. Subsequently, the parties successfully settled the suit. In
exchange for a full release, Atari agreed to pay 400K Euros for each suit for a total of 800K Euros. These payments
have been made in full and the settlement was filed with the court.
24.3. Hasbro, Inc. vs. ATARI SA, ATARI Inc., ATARI Interactive Inc.
Hasbro, Atari’s licensor for exclusive, world-wide rights to create, design, develop, manufacture, have manufactured,
market and sell digital games based upon the Dungeons & Dragons worlds, sued Atari in federal District Court in Rhodes
Island on December 16, 2009. Hasbro’s Complaint alleged breach of contract, asserting that Atari had entered into
unapproved sublicenses, allowed access by an un-authorized sub-licensee to confidential information as well as other
claims such as intentional misrepresentation and an accounting of monies paid for certain activities. Hasbro is requesting
that the court determine that contract can be terminated. Atari countersued Hasbro on December 22, 2009 for over $100
million in damages, alleging, among other things, breaches of contract including unapproved removal of certain
Dungeons and Dragons realms, and a claim of tortuous interference with Atari’s relationship with its potential sub-
licensees. In 2010, Atari and Hasbro engaged in mediation. Upon the conclusion of the mediation, the case did not
settle. Subsequently, discovery commenced and will be ongoing through early to mid-2012. The parties have engaged in
motion practice on various issues. There have been settlement discussions between the parties, but it has not been
finalized. There is no scheduled trial date.