3D Realms is Suing Gearbox for Unpaid Royalties Over Duke Nukem

The original developer of the Duke Nukem series, 3D Realms Entertainment, believes it is owed money by Gearbox Software. The latter studio took over the franchise and finished the development of the much-maligned Duke Nukem Forever.

Duke Nukem Forever had previously been in development at 3D Realms (also known as Apogee Software Ltd.) for well over a decade.

Apogee claims Gearbox owes it more than $2 million in unpaid royalties and advance payments after Gearbox acquired the rights to Duke Nukem. 3D Realms filed a breach of contract suit Friday in Texas state court.

In 2010, Gearbox purchased the rights to develop future games based on the “Duke Nukem” franchise, including “Duke Nukem Forever”, and “Duke Begins”. In addition to the agreement, Gearbox agreed to repay a $2.9 million loan that 3D Realms had owed another company, and agreed that 3D Realms would receive a percentage of Gearbox’s royalties for all future “Duke Nukem” games.

Apogee claims that Gearbox has failed to pay the money owed under the terms of a 2010 purchase agreement that both companies signed, and claims that Gearbox has prevented it from conducting an independent audit of the royalties Gearbox earned.

“3D Realms has therefore been required to file this lawsuit to enforce the purchase agreement, to recover the amounts due and owing from Gearbox and to enforce the audit right provided by the agreement to enable it to conduct an audit of Gearbox’s royalties,” the complaint reads.

Gearbox denies the allegations. Speaking to Law360, the company said that 3d Realms “received the full benefit of its bargain.”

“Gearbox, in fulfillment of its commitments, enriched 3D Realms, saved 3DR from its debts and rescued 3DR from its failed dozen plus year attempt to ship Duke Nukem Forever.”

“Everyone wished that 3DR’s game was better received by the market for the benefit of gamers and profit to its creators,” Gearbox added. “While 3DR might not wish the reality that the results make clear, 3DR turned out to be the only beneficiary of the deal. Gearbox Software, meanwhile, experienced damage to its credibility and loss of its money.”

Meanwhile, 3D Realms states that Gearbox refused to make any royalty payments to 3D Realms and allegedly refused to allow an independent auditor that 3D Realms hired to audit their records. 3D Realms claims that the royalty audits are standard practice in the industry.

The company contends the unpaid royalties on the $2.9 million loan exceed $800,000, and says that Gearbox has also failed to pay royalties on $4.5 million it received, resulting in a $1.3 million loss for 3D Realms. It also contends that Gearbox should send it more than $500,000 in future advances it has received, under the terms of their purchase agreement.

“Despite the assurance it provided to 3D Realms, Gearbox now claims that it is entitled to first deduct the full amount of the debt it assumed (i.e. the entire $2.9 million Duke Loan) before any royalty payments become due to 3D Realms,” the complaint says. “Thus, Gearbox is turning the tables.”

We’ll be keeping an eye on how this turns out, but it’s obvious that this lawsuit could get ugly for everyone involved.

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3 Comments on 3D Realms is Suing Gearbox for Unpaid Royalties Over Duke Nukem

Axetwin

On June 13, 2013 at 12:43 pm

Wait, let me get this straight.

Gearbox shells out 2.9 million to bail 3D Realms out of debt and then they turn around and sue Gearbox because they feel they are owed 2.1 million in royalties? Wow talk about a Scumbag Steve situation.

Aedelric

On June 13, 2013 at 2:54 pm

Did it even sell well? I remember the game was universally trashed, it absolutely sucked. it surely can not have generated that much money.

3D realms had some great games, but they dithered about for years on end instead of delivering quality games. They are the construct of their own demise.

I am surprised anyone is left at the company let alone bothered enough to even sue.

Fred Jones

On December 15, 2013 at 10:20 pm

Lawsuit dismissed.

http://www.ign.com/articles/2013/09/13/duke-nukem-creators-lawsuit-against-gearbox-dismissed