Monday, June 18, 2012 1:04 PM PT
Paramount Backed Out of Video Game Deal, Swedish Company Claims

     (CN) - Paramount Pictures walked away from an agreement that gave a Swedish company worldwide exclusive rights to develop video games based on Paramount's movies, ProCloud Media claims in a lawsuit seeking $10 million.
     ProCloud claims in Federal Court in Los Angeles that it paid a $1 million license fee and fully performed as a co-producer, but that the movie studio's digital entertainment division had no intent to proceed under their agreement.
     ProCloud says Paramount even started producing the very same games that ProCloud was supposed to produce.
     Paramount Pictures' website offers games based on movies like the Tom Cruise alien invasion movie "War of the Worlds" and the animated movie "Rango," which starred Johnny Depp as a lizard that has an old west showdown with a snake.
     In the original agreement, ProCloud says it paid a $500,000 license fee for the rights to make video and web games from five Paramount films. ProCloud claims that Paramount needed an infusion of cash to support its digital entertainment options.
     The parties' deal memo acted as the binding agreement, and a long form agreement was never executed. The deal was then amended to give ProCloud the exclusive rights to develop games based on two more movies and to switch a few of the already agreed-upon titles. In exchange, ProCloud agreed to pay a second $500,000 license fee, and royalty agreements were amended.
     Immediately following the amendment, Paramount exercised its right to co-finance and co-produce the games. ProCloud claims that Paramount had to contribute 50% of the development costs or budget, whichever was less, for each project, with total budgets agreed at $8.75 million.
     Paramount was to receive compensation and act as publisher for each game, and ProCloud had the right to recoup its license fee and production costs from sales revenues, in addition to royalties, according to the complaint.
     But soon after the deal was amended, ProCloud alleges that the head of Paramount Digital Entertainment was fired. ProCloud claims it was further informed the Division would now report into Worldwide Marketing Partnerships and Licensing.
     In the end, ProCloud claims that four weeks after the agreement was amended, the Digital Entertainment division had been shut down.
     Since then, ProCloud asserts it has been virtually impossible to communicate with anyone at Paramount with any knowledge of its obligations under the agreement, despite the time sensitive nature of the projects.
     Paramount's abrupt structural change left ProCloud incapable of performing under the agreement, according to the lawsuit.
     In fact, ProCloud contends that Paramount's decision to dismantle the division has made it impossible for Paramount to hold up its end of the bargain, whether co-financed and co-produced or not. ProCloud claims that Paramount unequivocally indicated it did not intend to continue with the deal.
     The Swedish company accused Paramount of breach of contract and unjust enrichment, claiming Paramount left ProCloud without a viable business partner, caused the company to lose substantial revenues, and damaged ProCloud's reputation.
     ProCloud is represented by Adam Brezine and Richard Mooney with Bryan Cave in San Francisco.