Legal spat highlights gaming industry war for talent

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What could have been the video-game industry’s trial of the decade ended up being more of a fizzle. Proceedings of the legal spat—the relevant players included publishers Activision and Electronic Arts, game designers Jason West and Vince Zampella, and employees of Infinity Ward—were postponed, then cancelled as each of the various lawsuits was settled. Nobody admitted fault and terms of the deals were not disclosed, but the high-profile nature of the disputes indicates just how nasty this business can get.

West and Zampella are two of three cofounders of the California-based development studio Infinity Ward. (The third is Grant Collier.) In 2003, the company was acquired by Activision after the release of Call of Duty, which Infinity Ward developed. In March 2010, the two were fired in the midst of the development of Modern Warfare 3. Activision alleges the duo had been meeting with rival publisher Electronic Arts (EA) while employees of Activision. West and Zampella filed a suit for wrongful dismissal and unpaid royalties. They have since created Respawn Studios, which has signed a long-term publishing deal with EA.

Whatever the particulars of this case, it highlights the fact that the still-young video-game industry has expanded so quickly that there just aren’t enough senior people to fill the available jobs. The business of sourcing, acquiring, and retaining talent has become something of a battle.

It’s been particularly fraught in Montreal, where until a few years ago, nearly all video-game developers were employed by Ubisoft. Numerous other publishers, enticed by lucrative tax credits offered by the provincial government, have opened studios and have been drawing employees away. Square Enix (2007), EA (2004), THQ (2011), and Warner Bros. Interactive (2010) have all opened workshops in Montreal.

Alexandre Buswell, a partner with the Montreal law firm Heenan Blaikie, told the Straight that noncompete covenants are frequently used in Quebec. “The fact that you can include a stipulation of noncompetition in a contract is specifically provided for in the Civil Code [of Quebec],” he said in a phone interview.

These so-called noncompete clauses are intended to prevent workers from taking company assets, including creative ones, to another company. In 2010, THQ announced it intended to hire Patrice Désilets, formerly creative director on Ubisoft’s Assassin’s Creed franchise, to open a studio in Montreal, but that it would be a year before he actually joined the staff. THQ’s Danny Bilson said that was to allow for the expiry of a noncompete.

Ubisoft’s temporary injunction to prevent THQ from recruiting its employees, granted in early 2011, was
ultimately struck down by the Court of Appeal for Quebec. Buswell said that, although noncompetition covenants are allowed, they’re not necessarily easy to enforce. “It’s a subjective exercise in many cases,” he explained. And while the Civil Code of Quebec allows for noncompetition, it does not specifically refer to nonsolicitation. Buswell said the difference between those two concepts has not yet been fully argued in Quebec courts.

In B.C., which operates under common—not civil—law, both non-compete and nonsolicit clauses are part of a more general category: restrictive covenants. Michael Bain, a partner at Hamilton Howell Bain & Gould, said that the more specific the clauses, the more enforceable they tend to be. On the phone from his Vancouver office, he explained that in B.C., courts take into account how long the noncompete clause lasts and what area it encompasses. In the end, he said, the clauses are assessed on a case-by-case basis. And under common law, Bain said, there is a general, implied “duty of loyalty” that applies to any employment agreement. “You can’t take the customer lists with you when you go, for example.”

Jackie Copland is the head of recruiting at EA Canada. She told the Straight that in this country, Electronic Arts does not include restrictive covenants in its employment agreements. “It’s restrictive,” she said, “and mobility of talent is very important to a successful gaming industry.”

And bitter court battles over employees don’t happen in B.C. because, as Copland suggested, the studios operating here aren’t using those clauses. “It’s a reality of the industry here in Vancouver that people do move around,” she said. Being able to work at other companies and return to a company you’ve worked for before is important for employees growing and improving their skills, Copland explained.

Howard Donaldson, president of DigiBC—a Vancouver-based digital media and wireless industry association—has worked for Disney Interactive and EA Canada. He said that in the video-game business, nonsolicitation is the more important issue. “You shouldn’t use your previous employer to hire talent,” he reasoned.

Bain said employees should be aware of restrictive covenants when they negotiate a contract, and that they should expect to be compensated for giving up the right to compete. And he recommends that those who are considering making a move have their contracts reviewed by someone who understands the language and implications.

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