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Guitar Hero III: Fraudulently Induced Licensing?

Just a quick note about a case filed last week by singer Axl Rose of the Guns N’ Roses fame. According to his attorneys, the licensing of “Welcome to the Jungle” for Guitar Hero III was “fraudulently induced,” suggesting either that Rose is unhappy with the song’s inclusion in the game, is unhappy with how the song is included in the game (minor distinction), or simply wants more money for having allowed them to use the song at all. The complaint is apparently asking for $20 million in damages, which could be a calculation based on damage to reputation, or on lost profits from what they usually charge for the use of their song.

Is the case likely to succeed? Hard to say. The law firm states that they are filing on behalf of Rose, but that might not be true as well. Usually the court would say that for a sophisticated person in the business of licensing music, if they make a bad deal they have to live with it, so the lawsuit is actually more likely to succeed if the way the song is used potentially damages the band’s image rather than “the game made more money than we thought, so we should get more of the profit.” The problem with licensing a song for a game like this is that if the game is vastly successful, it’s very hard to tell which of the 42 story-based songs were the song that made the game popular. The band might usually ask for a flat fee for the use of their song, as with commercials, but might have wanted to try for a percentage of the gross profits from the game as well.

Would Activision have agreed to such terms? Probably not, because the first few Guitar Hero games were released using cover versions of popular songs because many bands refused to license their own recordings. As stated previously, after a song has been released for sale in the US, it’s much cheaper to pay one of the music clearinghouses a fee to produce a cover version than to obtain the right to use the original version in whatever form was intended.

Having played this particular game, however, I can also say that I was introduced to several of the songs for the first time, and then went out and bought .mp3s so that I could listen to them outside of the game interface. I particularly liked “The Metal” by Tenacious D, “Lay Down” by Priestess, and the end credits song “Through Fire and Flames” by Dragonforce. Dragonforce especially got a boost through their inclusion in Guitar Hero III, as many gamers would not otherwise have heard of them, and grew to enjoy their long riffs and showboating. Activision’s attorneys will probably look at the sales data for “Welcome to the Jungle” before and after the release of the game, and if there is a spike in sales, argue that Guns N’ Roses was adequately compensated, even without a percentage of the profits.

This is all speculative, however, fraudulent inducement suggests that there was something wrong with how the licensing deal was presented to the musicians, and not necessarily with the deal itself. I would be interested to see how this turns out, but this is one that seems very likely to settle before trial.

Posted in Monday: Legal Landscape.