Atari 2012 Annual Report Download - page 106

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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In the event Mr. Wilson is removed from office before the end of his appointment, the Board agreed a fixed severance
package equal to one year of his annual fixed gross compensation plus applicable bonus and benefits as determined by
the Board according to performance criteria.
23.2. Operating lease commitments
The Company leases the premises where it has its Lyon’s office. The lease had been terminated, and new offices have
been rent. The new lease is for three years, and began in April 2012. The annual rent is €47,000.
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, 2012 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 former 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 2009-2010. No date has been set for the trial and no decision is expected before
2012. The preliminary audience’s court has been postponed to September 2012.
24.2. Hasbro, Inc. vs. ATARI SA, ATARI Inc., ATARI Interactive Inc.
The case settled in July 2011 and each party fully released the other. Atari will continue to develop and market several
games under license from Hasbro and Wizards of the Coast, including the #1 Xbox LIVE® hit Dungeons & Dragons:
Daggerdale and Heroes of Neverwinter for Facebook. The litigation was as follows: 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 Rhode 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. On June 1 and 2, 2010 Atari and Hasbro
engaged in mediation. Upon the conclusion of the mediation, the case had not settled. Subsequently, discovery
commenced. The parties engaged in motion practice on various issues. There were discussion between the parties
about re-engaging in mediation in early 2011, but this process became unnecessary.
24.3. Walker Digital v. Atari, Inc., Cryptic Studios, Inc. and others.
Atari, Inc. and its former division, Cryptic Studios, Inc. have been sued, along with 20 other video-game-industry entities
by a company known as Walker Digital LLC for patent infringement. Walker Digital has not made a specified the amount
of money that they are claiming as damages. The suit resides in federal court in the District of Delaware and was filed
on April 11, 2011. Atari has been served. Walker Digital is operated out of Stamford, CT. Cryptic is being sued for
technology associated with the game known as Star Trek Online and Champions Online. The technology allegedly
infringed is associated with making and using systems for remote auditing of computer generated outcomes, allowing
saving of game outcomes for further use as well as monitoring the amount of time a player spends playing a game. Atari
is being sued for technology that is claimed to be utilized by Faries vs. Darklings, Yar’s Revenge and Asteroids Online in
that the Atari system allows the saving of game outcomes for further use, as well as monitoring the amount of time a
player spends playing a game. Company is participating in a joint defense. Atari has filed an Answer and
Counterclaims. A trial date is currently scheduled to take place in the last calendar quarter of 2013. Atari is indemnifying
Cryptic Studios for its legal costs and Atari is running the defense for Cryptic as per the terms of the Atari/Cryptic Studios
Share Purchase Agreement. The parties have commenced discovery.