Section 8 Developer Is Suing SouthPeak

TimeGate Studios, which has recently released the multiplayer-oriented shooter Section 8 and worked on franchises like the FPS F.E.A.R. and the strategy series Kohan, has filed a lawsuit against publisher SouthPeak, accusing it of breach of contract, withholding royalty payments and making a separate deal for the PlayStation 3 port of Section 8 with 1C Company.

TimeGate is asking the court to grant it compensation but it does not specify the amount. The two companies involved in the legal action have not offered any details on the suit.

The documents accompanying the lawsuit, which were obtained by Joystiq, say that SouthPeal, as the publisher, “failed to provide a sufficient sales report, withheld royalty payments and did not adhere to the obligation to act in good faith and fair dealing when they established the sham transaction in order to deprive TimeGate of royalties despite the special relationship between the parties and being in a position of trust.”

SouthPeak is also accused of having slashed the price of Section 8 significantly before the 90-day mark that TimeGate Studios had specified, which led to a smaller revenue than expected being drawn from the game.

It appears that TimeGate funded development on Section 8 by using its own resources, which means that the payment of royalties by the publisher was especially important for the company, considering that it had already spent about 2.5 million dollars on the title.

The initial deal TimeGate had was with Gamecock, a company that went belly up in 2008 and was taken over in a zero cash deal with SouthPeak. Since then, various sources have accused the publisher of not making payments to contracts linked with Gamecock. If the suit is successful, TimeGate might get the rights to Section 8 back and opt to handle further publishing for the title itself.