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Marvelous conspired for hostile takeover of indie studio, says suit
Marvelous conspired for hostile takeover of indie studio, says suit Exclusive
October 31, 2012 | By Frank Cifaldi




An independent game studio is bringing Japanese publisher Marvelous AQL to court, claiming that it tried to initiate a hostile takeover and poach its employees in order to avoid a $2.5 million payment.

According to a complaint filed in a California civil court this month by CEO Brian Wiklem, the story began late last year, when Marvelous paid his studio Checkpoint a total of $2.5 million in start-up costs in exchange for a 35 percent share of the privately-owned company and two shipped games by the end of 2012.

Wiklem was to retain the remaining 65 percent, and as part of the deal, Marvelous promised to negotiate a similar deal in good faith for another $2.5 million to ship more titles in 2013.

The two games -- AviNation and Party Politics -- were released, but according to Wiklem, Marvelous refuses to negotiate for 2013, and has also withheld other unrelated payments.

Instead, the suit alleges, Marvelous and former Checkpoint CTO Christopher Masterton "conspired to try to engineer a hostile takeover of Checkpoint."

Wiklem had by this point sold a 24 percent share of the company to Masterton. Apparently Masterton flew out to Japan in September to meet with Marvelous without notifying Wiklem, allegedly to try to sell those shares and give Marvelous majority ownership of the studio.

Contractually, Marvelous wasn't able to purchase those shares without Wiklem's consent. And besides, even if they did have a majority ownership, they wouldn't have had control of the board, as Masterton's shares did not have any voting rights.

Instead, the complaint says, Marvelous hired Masterton away to work at its U.S. subsidiary, XSeed, as well as 14 more of Checkpoint's key development staff, leaving the company gutted and unable to ship product.

The suit claims that the former employees are illegally using Checkpoint-developed technology and assets over at XSeed. Further, apparently Masterton is refusing to provide the login and passwords for "various essential Checkpoint accounts," including its Facebook page.

"These purely malicious actions have no purpose other than to prevented [sic] Checkpoint from effectively doing business, which they have done," the complaint reads, saying that this intentional harm "is part of [Marveous and Masterton's] conspiracy."

The suit claims that Checkpoint has been damaged to the tune of "at least $5 million."

Checkpoint is suing Marvelous, Masterton, XSeed and ten unnamed additional parties on several counts, including a breach of contract, a breach of Marvelous and Masterton's fiduciary duties as board members, and the theft of trade secrets, among other claims.

The attorneys representing Checkpoint offered some points of clarification for this article, but would not give a further statement. MarvelousAQL simply says that it "has no comment."


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Comments


Amanda Fitch
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Is this really considered an indie company?

Andrew Dice
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Given the partial corporate ownership, one does have to wonder about the "indie" label here.

Toby Grierson
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They're independent of all kinds of things, like the Roman Empire.

Richard Ellicott
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so wait you want a company that stays independent... ie resists hostile takeover... however not with any legal shenanigans, that's not allowed.. indie companies should be expected to defend themselves... what with exactly? bows and arrows?

Sean Danielson
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Who cares if Checkpoint was corporate or not? The point is that they weren't a large company, and that Marvelous' actions have essentially forced Checkpoint to cease most business functions (including production), and there are allegations that Marvelous is now using assets belonging to Checkpoint.

Given that there are people in the industry that do not understand the importance of respecting your current/former employers' technologies, methods of doing trade (trade secrets), and other pertinent data, I am not surprised that Checkpoint's former CTO turned this into a giant shitball.

Alan Barton
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Disclaimer: I'm not trying to take any side and I don't know this case and I'm not a lawyer, but I think we are only hearing one side to this story and there are multiple important points to this story.

Firstly: @"former employers' technologies,"

If they are using an existing code base developed at Checkpoint, then yes, they are in violation of that IP. However, bosses often (conveniently) overlook the blindly obvious fact that every programmer they hire is only ever hired if they already know exactly how to write a games engine. Almost every games programmer I've ever meet has been a very highly talented person who can write any games engine given sufficient development time ... and they could do it all on their own, if given sufficient time.

As for the poaching of staff, that does sound bad. However to be fair to any staff member who leaves a company, they are obviously going to go to where they get the best deal. That is after all the very nature of business itself and for bosses to be successful in business, they are only to happy to seek the best deals for themselves, so its only fair for everyone else to do the same as the boss. So there is definitely multiple sides to that aspect of the story. So whilst the boss doesn't like it that his former staff got a better deal elsewhere, we also have to consider that bosses in general all too often hire staff on the lowest wages they can get away with giving that person. So if someone then gets a much better offer elsewhere, I don't think in all fairness, any of us can judge poorly against that person.

Now the boss can rightly bring up the issue of the lack of loyalty of his staff leaving him. But in my experience games development staff are extremely loyal to their bosses, far more than many bosses ever truly want to believe or realize. Yet if only the bosses would truly look rather than assume, they would see their staff are only too happy and willing to invest every idea they have in the company without them ever truly seeing a financial return on their investments for their ideas, simply because the staff want their place of work to succeed. So if a boss has a problem of staff loyalty, like any general leading an army, if moral is so low, then the boss has to take the painful view that moral stems from their leadership.

The irony of that painful truth is that Gamasutra has shown up in the past week a massive cause of bosses destroy their staff's moral. I'm referring to the tactic (highlighted on Gamasutra in multiple stories) of some bosses treating permanent staff as if they are contractors, where these bosses get rid of staff at the end of projects, as its too expensive to keep them around between projects. If any boss does that to staff, then all staff remaining will be shocked and devastated and moral will hugely suffer. Because as much as any boss doesn't want to believe it, that act of loosing staff is gross disloyalty to all staff (including the ones who stay, who will be rightfully fearful of their jobs and their efforts to invest into that business). Therefore once that is done by any boss for any reason, not matter how valid from the bosses point of view, the boss cannot expect loyalty from anyone else, as they have shown such deep disloyalty to others who have tried to invest into their business and had their time sacrifices and idea investments thrown away for them. So when the bosses, even after showing such disloyal to the staff, still see their remaining staff trying to still invest ideas into their company, i.e. staff showing loyalty!, the boss would do very well to reward such loyalty! ... That should be bloody obvious, but sadly as the other Gamasutra stories this week show all to well, it isn't at all obvious to some bosses.

So anyway, we can't know what has gone on behind the scenes in this case, so I can only comment in general about our industry, but even from what we can see of this case, its very clear the staff involved have felt their best move is to leave. So in all fairness, its very hard to judge against them once we consider the point of view of all sides.

Plus (if all of that isn't enough to drive home there is multiple sides to this story), we have to consider the general problem of selling off more than 50% of your company (even if its broken up between different people). This still means that you run the risk of anyone left with just a minority stake in a business. Corporate history is littered with stories of company owners selling off the majority of their business only to end up finding they are out of that business when the shareholders get together and decide they don't want the current CEO. So to find out the shareholders have been meeting behind the current CEO's back to discuss what to do with the business isn't so surprising. I would expect it to happen. They do after all own a total of 59% of the business. So if any of us owned a big slice of a company, we would want to know our money is being used wisely, so we would all want to meet with other shareholders.

So anyway, as I hope you can see, I'm really not trying to take any side. I'm just trying to play devil's advocate to explore as many sides as I can, I hope in a fair way. It does feel like we are only hearing one side to this story, so we need to be fair to all sides.

Craudimir Ascorno
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The headlines and the one-sided version are terrible, since many people already decided that the big and evil company is using their evil money and illegal means to destroy the poor, innocent and helpless indie hero. For many people that is already all they needed to know about the matter, and the damage has already been done.

If we can trust in the legal system of a country that doesn't seem to be systematically affected by corruption, we will eventually learn the truth, the justice will be made and the wrong side will be punished. We don't need any of the parties screaming out loud that they are being oppressed by the evil forces.

Greg Hinkle
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As irrelevant as this story is to the rest of the whole gaming world, I feel obligated to post.

I am a former Checkpoint Studios employee (lucky enough to not be involved in this most ludicrous lawsuit), and I've got to tell you, you're definitely getting half of the story here. I should first say that I have not been privileged enough to view the legal documents, and I don't know the details of the agreements with Marvelous AQL.

Here's what I do know:

Brian Wiklem will try and make himself out to be a victim for the sake of his "lawsuit". The victims are the approximately 40 employees, and their families, who were laid off. We were laid off because Wiklem would rather dismantle a company, initiate a lawsuit, and drag his former employees names through the dirt than to simply admit that he mismanaged a company. His nearsightedness, blatant nepotism, and selfishness derailed an otherwise capable and willing team from completing tasks and meeting deadlines.

From the beginning, Wiklem made arrogant, grandiose promises to the investors. Promises that were damn near impossible to keep. The studio was in a constant crunch for 11 months. Meanwhile, Wiklem was somewhere. Doing something. No one could figure out exactly what it was our CEO did. We'd go days without seeing him. When we did see him it was to get berated. He had absolutely no idea where the games were in terms of development. Ridiculous amounts of money were spent on furniture and useless online services. Our marketing department was virtually nonexistent. But we had some damn fine desks.

To my understanding, Marvelous AQL did everything it possibly could to keep the studio up and running. CTO Masterton travelled to Japan as an ambassador of sorts for the employees of Checkpoint. His trip was to smooth over relations between the development team and our investors. Marvelous even sent more experienced directors from Japan in an effort to provide addition oversight to our projects.

I can't speak for the entire studio, but I feel comfortable saying that in the days leading up to the studio's collapse, every single employee I spoke with hoped and prayed that Wiklem would either step down or be replaced. His complete ineptitude and contempt for his employees was unbelievable. Even now, with this lawsuit, Wiklem would rather blame someone else than take responsibility for even one misstep.

Checkpoint Studios collapsed because of Brain Wiklem.

Justin LeGrande
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"If we can trust in the legal system of a country that doesn't seem to be systematically affected by corruption, we will eventually learn the truth, the justice will be made and the wrong side will be punished. We don't need any of the parties screaming out loud that they are being oppressed by the evil forces."

Where on Earth would this be?

Cyndi Vuong
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I'm also a former employee of Checkpoint Studios and Brian Wiklem was indeed an unbelievably clueless CEO. I've read the legal complaint he filed, and the fact that more than half the paragraphs start with "On information and belief" confirms how little he knew about what was going on in his own company. The article also fails to mention that Chris Masterton was not only the CTO, but a co-founder of Checkpoint Studios.

The development team worked long nights on a regular basis (most of the programmers worked for 16 hours per day or longer; sleepovers at the office weren't uncommon) trying to meet unrealistic deadlines, while Wiklem regularly left in the afternoon, and in the last few months was rarely seen at all. Alan Barton's comment is completely right when he mentions development staff being extremely loyal to their bosses, but it was Masterton that the majority of us were loyal to.

Despite everyone's hard work, our biggest obstacle to success was usually the CEO himself and his wife, who he appointed as the head of our marketing team and initially kept their marriage a secret from MarvelousAQL. His wife contributed very little, if anything, to the creative process and if anything lowered morale. She made flippant comments about how programming shouldn't take that long, insisted on allowing the marketing team to update the website directly despite none of them knowing web design, and tried to get our only UI artist at the time to turn her attention on making illustrations she hadn't even thought of a purpose for. She also sent out a marketing copy to the relevant employees, and when the UI designer told her that many of the features it described didn't exist in our game, she wrote back that it was for review, not for revision.

MAQL was very unhappy with the lack of marketing for our games, yet Brian Wiklem had the nerve to tell the CTO Chris Masterton that it was the programmers' faults for not working hard enough. He also complained about the artists wasting time on custom features in our first game, AviNation, but after implementation they were one of the features that earned the most revenue in the game. When Masterton finally told Wiklem that he wanted his wife off the team, Wiklem tried to fire him.

After Wiklem's meeting with MAQL in the summer, he came back with the news that our funding for AviNation was being cut. When Masterton met with MAQL, he came back with a signed check and was optimistic that Checkpoint Studios would stay afloat. MAQL wanted Checkpoint Studios to succeed, but couldn't trust Brian Wiklem. Masterton (who took a large pay cut to work for XSeed) and the 14 employees hired on to XSeed were meant to work on a different title that wasn't owned by Checkpoint Studios, while the people left would finish polishing and creating a mobile version of Party Politics, which was scheduled until January 2013. Party Politics was already released by then and the project's programming lead was still with Checkpoint, so hiring off 15 people wouldn't have left the company "gutted and unable to ship product." The check was to keep Checkpoint running for the next few months, and MAQL would send more money if the company was progressing to their satisfaction.

The only person responsible for gutting the company was Brian Wiklem himself. For a few days Brian Wiklem didn't come to work at all and no one was able to reach him, but the MAQL representatives in our office informed us that Wiklem was attempting to negotiate directly with the chairman of MarvelousAQL. He sent a notice for an emergency meeting in which no one knew what was going to happen, and then on September 27th he held a ten minute meeting in which he announced he was dissolving the company. He said he would stay for the next 30 minutes in case anyone had questions or needed to discuss anything with him, and was gone in less than ten minutes.

One of the main claims his lawsuit is based on is that Marvelous AQL refused to negotiate the remaining $2.5 million for 2013, but they had until the rest of the year to negotiate and Brian Wiklem single-handedly shut down Checkpoint Studios far earlier than that. Everyone involved, including Marvelous AQL, desperately wanted to keep Checkpoint Studios going. Brian Wiklem is the only one delusional enough to think we were all conspiring against the company and he was the sole victim here.


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