The Court of Appeal has allowed a part of
Atari's argument to remain in its case, even though it has no
prospect of success under current law. The Court said that the law
could change because of two landmark verdicts expected between now
and the hearing of the case.
The case involves game developer Chris Sawyer
and Atari, which publishes and markets Sawyer's RollerCoaster
Tycoon series of games.
The ruling relates to a counter-claim made by
Atari against Sawyer and is part of pre-trial hearings. The full
case is unlikely to be heard at the High Court until 2008.
The dispute began when Sawyer asked auditors
to examine Atari's accounts in relation to his games, but was told
that auditors could not see accounts further back in time than a
certain date. Sawyer disputed this and said that Atari was
breaching the terms of the licence he had signed with it.
Atari counter-claimed that Sawyer had broken
its exclusive licensing agreement. They say he permitted a company
called Frontier to produce an additional format of the game to be
sold to a third party called the Thrills Game. Frontier produced a
demo under the condition that it was only to be used as a
demonstration version.
Atari argued that in granting Frontier the
right to produce a demo disc, Sawyer was effectively enabling
Frontier to sell its vision of the next game in the series to
parties other than Atari, and was therefore an inducement on
Frontier to breach its contractual obligations to Atari.
It is this point which has led to the Court of
Appeal hearing. The counter-claim was ruled against by the High
Court, but Atari sought leave to appeal to the Court of Appeal.
That Court said that its appeal will depend on awaited Lords
rulings.
According to the most recent judgments on the
issue, someone can only be guilty of inducing someone to breach a
contract if there is an intention to harm. That interpretation of
the law is the subject of two separate appeals to the House of
Lords, prompting fears that the law could change soon. Appeals
court judge Lord Justice Chadwick said that it would be unfair to
rule now if the law was about to change.
The two cases which have already been heard
and await judgment from the Lords are that of Michael Douglas and
Hello! magazine, and an employment contracts dispute involving
Mainstream Properties.
"We must consider whether – notwithstanding
that the judge took a correct view on the law as it was when the
matter was before him (and as it remains in this Court) – this is
one of those unusual cases in which a claim which the court
considers has no real prospect of success (as the law stands)
should, nevertheless, be permitted to go to trial," said Chadwick
in his ruling.
"In my view this is such a case. This Court
must recognise the possibility that, when judgments in Douglas v
Hello! Ltd and Mainstream have been delivered by the House of
Lords, it will be seen that the view of the law taken by the Court
of Appeal in the Mainstream case was not correct. If that were the
position, then there would be a potential for injustice if Atari's
claim in respect of inducement to breach of contract were struck
out on the basis of the law as it is now understood."
"The more sensible course, as it seems to me,
is to allow the claim to proceed on the basis that, by the time the
issue comes to trial, judgments in Douglas v Hello! Ltd and the
Mainstream case may well have been handed down by the House of
Lords," he said.
In his ruling, Chadwick said he would expect
Atari to withdraw its case should the Lords leave the precedents
set in the Douglas and Mainstream cases unchanged.
"If those judgments uphold the view of the law
taken by this Court, then it may be expected that Atari will
recognise that its claim in respect of inducement to breach of
contract must fail; and the claim will be abandoned," he said..
"Alternatively, Mr Sawyer can apply, again, for the claim to be
struck out. If those judgments indicate that a different view of
the law should be taken, then the trial will proceed on the basis
of the law as revealed by the House of Lords."
