THQ and South Park Studios in Legal Battle Over License

In a bit of confusing legal news, South Park Digital Studios has filed a preliminary objection to THQ’s proposed sale of the upcoming South Park Game, The Stick of Truth.  This came just a day before THQ filed for Chapter 11 Bankruptcy, on January 19th, which lead to the auctioning off of company assets earlier this afternoon. 

Back on June 29th, 2011, THQ and South Park Studios entered into what is called a “Deal Memo”.  This granted THQ use of certain South Park trademarks and copyrights which they would need to make the game.  With THQ auctioning off their assets, they obviously included this Deal Memo.  This is where South Park Studios has the problem. 

They claim that the Deal does not allow other parties use of the South Park IP and, for that matter, if the game were to end up at a different company, THQ would still owe South Park Studios a whopping 2.275 million.  They also claim that they “reserve the right to exercise its option to acquire from THQ, all elements of the games and related products.”

Yesterday, a replay was filed by THQ requesting that the Deleware Bankruptcy court overrule the objection and allow the sale to continue, saying that they are working on a consensual resolution with South Park Studios.  However, they argue that the license is exclusive and is, therefore, transferable as THQ sees fit.

As for the auction itself, all bids in the THQ bankruptcy sale were due by 9 a.m. EST today and the auction began at 3 p.m. Hearing on the sale takes place tomorrow, January 23, at 9:30 a.m., with the closing on January 24. THQ will only sell assets individually if it receives bids of more than $60 million (plus a $10 million note) that Clearlake Capitol Group is offering for the entire company. The auction has attracted the attention of some big names, such as: Warner Bros., EA, and Double Fine Productions, just to name a few.

Stay tuned to SegmentNext for further developments on this story and the auctioning of THQ.

Writer’s Note: If you had any trouble following this story, a lawyer will be standing by to administer headache medication.