Wizards files lawsuit against Pokemon USA/TPC/Nintendo

Discussion in 'TCG News & Gossip Discussion' started by GymLeaderPhil, Oct 11, 2003.

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  1. GymLeaderPhil

    GymLeaderPhil New Member


    Saturday, October 11, 2003

    It's Wizards vs. Pokemon as ex-partners square off


    The Pokemon trading card game has entertained more than 30 million children worldwide.

    But now the companies that helped turn the game into a billion-dollar sensation are fighting like two kids in a sandbox.

    Renton-based Wizards of the Coast, which until last month was the exclusive manufacturer, distributor and marketer of the cards in North America, Europe and the Middle East, filed a lawsuit last week against Nintendo of America, The Pokemon Co., Pokemon USA and two former executives.

    Filed in U.S. District Court in Seattle, the suit alleges patent infringement, breach of contract, misappropriation of trade secrets, tortuous interference with a business relationship, unjust enrichment and other claims.

    "Wizards of the Coast has built tremendous brand equity over the years with our popular proprietary trading card games, and aggressively seeks to protect its valuable intellectual property and trade secrets," the company said in a statement.

    Wizards of the Coast spokeswoman Barbara Dawson said the companies initiated settlement talks this week. She expressed confidence that the issue, which does not seek a specific monetary figure, would be resolved.

    Pokemon USA spokeswoman Amy Wexler declined to comment on the settlement talks or the case. But the New York company -- a partner with Redmond-based Nintendo of America -- issued a short statement yesterday denying any wrongdoing.

    "We were sued the day after our distribution agreement with Wizards ended," the statement said. "We are confident that we've acted both legally and fairly with respect to Wizards and believe these issues will be resolved."

    The Wizards lawsuit alleges that at least nine employees were hired by Pokemon USA, including Rene Flores, vice president of marketing, and Richard Arons, senior vice president of non-Magic trading card games. All of the employees had signed non-disclosure agreements in which they agreed not to reveal confidential information to competitors.

    Arons and Flores, who were hired in 2002 by Pokemon USA, are named as defendants in the lawsuit.

    After those hires, Wizards of the Coast said the relationship with Pokemon USA "turned sour."

    "Pokemon USA used the intervening period to undermine its relationship with Wizards, deprive Wizards of the benefit of its bargain and take its intellectual property, all to gain competitive advantage over its longtime partner," the lawsuit says.

    Although the contract between the two companies ended Sept. 30, Nintendo of America issued a news release six months ago announcing a new division to manage its trading card business.

    "Since Nintendo already produces the Pokemon video games, it's a natural extension for them to distribute and market the trading card games," Pokemon USA President Akira Chiba said in a statement at the time of the release.

    Wizards suit alleges that Pokemon USA failed to carry out its contract and therefore Wizards is "entitled to an award of exemplary damages to punish Pokemon USA's wrongful conduct and to make an example of it."

    Once the hottest trading card game on U.S. playgrounds, the Pokemon phenomena has run out of steam in recent years. Cards that once traded for hundreds of dollars are now sold for pennies.

    In late 2000, Wizards of the Coast laid off 100 employees owing in part to the weakening demand for the game.

    Wizards of Coast, which employs 850 people, was purchased by Hasbro Inc. for $325 million in 1999. It is best known for the Magic trading card game.

    Nintendo of America is a subsidiary of Nintendo Co., the Japanese game maker that owns the Pokemon trademarks. Pokemon has generated more than $15 billion in merchandise sales.
  2. Tego

    Tego New Member

    Oh my... anyone remember the talk about the "friendly parting"?

    They haven't been good friends at all. Well, a lot of us began to suspect this when suddenly Jamboree and LC2 was canceled by Nintendo/TPC/whatever.
  3. GymLeaderPhil

    GymLeaderPhil New Member


    A suit of cards: Wizards of the Coast sues Nintendo over Pokemon game

    By Eric Engleman
    Puget Sound Business Journal (Seattle)

    Oct. 13 — Renton-based game developer Wizards of the Coast Inc. has sued Redmond-based Nintendo of America Inc. and several affiliates for breach of contract and patent infringement over the hit Pokemon trading-card game.
    The lawsuit, filed Oct. 1 in U.S. District Court in Seattle, accuses Nintendo affiliate Pokemon USA of abandoning a contract with Wizards, the longtime producer and distributor of Pokemon trading-card games, and using Wizards-patented methods and technology to manufacture the games itself. The lawsuit also names two former Wizards executives who were hired away by Pokemon USA, accusing them of revealing trade secrets.
    The suit provides a glimpse of a bitter behind-the-scenes dispute over the Pokemon trading-card games, which became hugely popular in the late 1990s and sold millions of copies nationwide. The game allows players to do imaginary battle using illustrated cards.
    Wizards, a subsidiary of Hasbro Inc., claims it pioneered the idea of a trading-card game and holds the patent rights to it. Its own Magic: The Gathering card game became a cult phenomenon, and generated sales of hundreds of millions of dollars in the mid-1990s.
    The company signed an agreement with Nintendo in 1998 to manufacture and distribute the Pokemon trading card games outside Asia, the lawsuit says. The Pokemon companies are affiliates of Nintendo's parent company in Japan, according to the suit.
    The collaboration lasted for several years, but relations between the partners began to sour in 2002, when Pokemon USA hired away a Wizards senior vice president, Richard Arons, and a vice president, Rene Flores, according to the lawsuit. Several other Wizards executives also went to work for Pokemon, says the suit.
    In March 2003, Pokemon USA refused to allow Wizards to release two trading card games -- the Jamboree and Legendary II expansion sets for the Pokemon Gold & Silver edition -- which the Wizards team had spent considerable time and money developing, says the suit. Pokemon also informed Wizards that it had not been chosen to manufacture and distribute a new Pokemon trading-card game, the Ruby/Sapphire edition, the lawsuit says.
    Pokemon began producing the Ruby/Sapphire edition itself -- using Wizards' proprietary methods and materials, according to the lawsuit -- and made Nintendo the distributor.
    The lawsuit says Pokemon representatives offered to approve release of the Legendary II set, if Wizards agreed to provide free marketing support and confidential information about tournament players. Wizards refused. The day after its last set of agreements with Pokemon USA expired on Sept. 30, Wizards filed the lawsuit, seeking a trial by jury and unspecified damages.
    The lawsuit accuses Pokemon of soliciting and hiring at least seven former Wizards employees to work on the Ruby/Sapphire trading-card game edition, including Wizards' former art director, senior graphic designer, business manager, events marketing director and project management director.
    All had signed nondisclosure agreements prohibiting them from using or disclosing confidential information about Wizards to third parties, according to the lawsuit.
    The lawsuit alleges that the former Wizards employees had access and were responsible for "every critical" stage of converting the Japanese version of the Pokemon Ruby/Sapphire edition to English, as well as manufacturing, packaging, marketing and distributing it.
    The suit accuses Pokemon USA of using Wizards' proprietary information to solicit Wizards' distributors, vendors and customers.
    "Wizards of the Coast has built tremendous brand equity over the years with our popular proprietary trading-card games and aggressively seeks to protect its valuable intellectual property and trade secrets," Wizards said in a statement.
    Barbara Dawson, a spokeswoman for Wizards, said the parties had entered into settlement talks but provided no further details.
    Pokemon USA, in a written statement responding to the suit, insisted it did nothing wrong or illegal. "We were sued the day after our distribution agreement with Wizards ended. We are confident that we've acted both legally and fairly with respect to Wizards and believe the issues will be resolved," the company said.
    Nintendo of America, which owns the Pokemon trademark in the United States, did not return calls seeking comment.

    Copyright 2003 American City Business Journals Inc.
  4. Tego

    Tego New Member

    The lawsuit says Pokemon representatives offered to approve release of the Legendary II set, if Wizards agreed to provide free marketing support and confidential information about tournament players. Wizards refused.

    That is... more than just interesting. o_O; It's shocking.
  5. GymLeaderPhil

    GymLeaderPhil New Member

    From what I've heard from an official representative: WotC jumped the gun when releasing that information. It was still waiting to be confirmed by TPC.
    Last edited: Oct 11, 2003
  6. Jim Ferrell

    Jim Ferrell New Member

    Good God...

    ...*wonders where this leaves the game*

    Such a shame really...*shrugs*...business will be business I guess... :nonono:

    ~Jim Ferrell
  7. Tego

    Tego New Member

    The whole Wizards-to-Nintendo transfer has been so mysterious and with so many unanswered questions. Everyone shut their mouths about it until now, but this lawsuit finally gives us some information on what really was going on.
    Last edited: Oct 11, 2003
  8. Raikou

    Raikou New Member

    awww wotc is jus mad that nintendo got it and they're trying to get some cash like every other loser in the world who thinks money is a means to an end

    this case is just like all the mcdonalds cases where they involved either stupidity or just wanting some cash in their pocket, except for the fact that wotc makes some solid statements if infact they are true.

    those statements such as the 7 former NDAed wotc people...making the cards using wotc stuff...though i thought proprietary allows anyone to use it for free so that stuff can be done (example such as macromedia flash needed to view some sites) Why doesnt macromedia jus start suing everyone for using their proprietary stuff too =/

    wotc jus wantz deh cash....what losers =/
  9. RaNd0m

    RaNd0m New Member

    I seriously doubted it was a "friendly parting" between WotC and TPC. There always seemed to be so many tensions.

    I'm GUESSING this is what happened, and by no means am I saying I'm right.

    Nintendo probably offered the 8 employees that were working for WotC a larger salary + signing bonus + benefits, and WotC did not top the offer. Those 8 employees quit, and signed with Nintendo. They probably gave Nintendo some ideas that were initially thought up at WOTC HQ... or something. Regardless, WotC DOES have some potential to win this case.

    ~ RaNd0m
  10. Dro~

    Dro~ New Member

    I feel sorry for wizards. Afterall, it was wizards who brought up the pokemon TCG.
  11. marril2k

    marril2k Member

    Hmm... a good question, what will happen IF wizards wins this case? How badly will it damage Pokemon USA, Inc. (if at all), and what eccoing ripples will it hit the players (if any)?

    If those some (or all) of those ex-wizards employees where part of that mass-layoff... its kinda ironic wizards saw it okay for them to go away, but now its wrong since they work for PUI?... Intresting how things work out... If they are up for getting at PUI, why not try and wack at AEG for having L5R or Upper Deck for the creating of Card Games? Just a thought...

  12. *sigh*

    Heaven forbid they do what's best for the game.

    All about money. But then, thinking they'd do what's best for the game and not what nets the most money is incredibly foolish thinking.

  13. Water Pokemon Master

    Water Pokemon Master <a href="http://pokegym.net/gallery/browseimages.p

    If they continue to fight over this issue, Wizards may try to shut down Nintendo from making any of the future sets (kind of like destiny bond) and then what will happen?

    I hope this doesn't become a serious issue. If it does, I say we make our own cards on the internet with the help of PA! and Zeo! :)
  14. mysterioustrainer

    mysterioustrainer New Member


    Umm this could be bad, how bad? I can't say. A situation like this you can only strap on a seat belt and hope your air bags won't fire off. I'm speechless today.

    I think that the only thing we should do is NOT hail Nintendo, Pokemon USA, or WotC with emails, letters, etc. I honestly can't say we will lose Pokemon from a simple lawsuit however who knows what changes there will now be if or if not Wizards wins this. I wish there was more information about this however we can only wait until the courts decide this one. Sigh too much to take in.
    Last edited: Oct 11, 2003
  15. Pidgeotto Trainer

    Pidgeotto Trainer New Member

    :( :(
    Just when things were finally looking up with the announcement of Eon, more details coming about Dragon, we get this. :(
    Wizards sounds like it has a good point. Having Nintendo stop the release of 2 sets that they apparently started to make. That would be something you could see Wizards losing money and wanting money for.
    All we can do is hope for the best. Which would be something like Wizards or Nintendo somehow gets to release LC2 and Jamboree. :clap:
    We can dream can't we? :D
  16. Orange Soda

    Orange Soda New Member

    Way back in the day, Nintendo was sued by Universal Studios. Universal claimed that the arcade game Donkey Kong was infringement upon its movie, King Kong. Nintendo countersued, saying King Kong was never Universal's intellectual property. Nintendo won. The character Kirby is named after their lawyer from this case.

    Now that's not to say that Wizards doesn't have a chance. But if this does go to court, Nintendo's sure to put up a darned good fight.
  17. yoshi1001

    yoshi1001 Active Member

    I remember that from the book Game Over (an excellent read for those of you interested in Nintendo history).

    Of course, none of us has enough information to make a decision, leave the lawyering to the laywers.
    Last edited: Oct 11, 2003
  18. UncleBob

    UncleBob New Member

    Okey... from what I read in those two posted articles (which wasn't much) and what I know about the legal issues involved (which isn't much either) TPC may be *********. But, as others have said, wait and see...
  19. ToysRUsKid

    ToysRUsKid Active Member

    - Cleflytuff told me to post this since he'z too lazy to make an account ;/

    "Everyone's saying that WotC has a good point, that's the whole point for filing a lawsuit, isn't it? Even if their point isn't complete enough to sue, they're going to pull everything they can, so as yoshi said, leave the lawyering to the lawyers, nobody here has seen both sides just yet"


    This is interesting really, I didn't expect this too happen. I just hope this doesn't kill the game.
  20. ShadowCard

    ShadowCard Active Member

    that is so wrong of WOTC. They don't even wish to sell nintendo's Pokemon TCG until they finally see it's larger than expected sales and decide to get back involved and sue Nintendo.

    I cheer for Nintendo's victory in this case. The only thing WOTC should be allowed to do is release Jamboree.

    they probably won't be allowed in Modified.

    ooooo, no. then we'd get sued.
    Last edited: Oct 11, 2003
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