Developers threaten legal action over controversial Oxygen deal

Italian developer Twelve International is disputing that OG International has any right to its games after it bought assets from defunct publisher Oxygen Games.

Before going into administration Oxygen Games was owned by Jim Scott, who bought back the assets and IP of the company through his OG International business in a deal that has outraged many in the development and publishing community.

The developer claims the company has no rights to publish the CID The Dummy IP after it failed to pay money owed to Twelve, prompting the studio to sever ties with Oxygen earlier this year.

"Twelve Interactive wishes to make clear that OG International Limited has no right, title or interest in or to the game known as CID The Dummy and no licence or permission to deal in the game in any way," said the developer. "Twelve considers that it is necessary to make all retailers and distributors aware that Oxygen is and was not entitled to transfer any rights in the the game nor any stock of it."

The company has instructed legal firm Sheridans to act on its behalf. GamesIndustry.biz understands that a number of Oxygen creditors are also considering legal action against OG International.

"Many people are very disappointed at what happened with Oxygen but it is one thing for a company not to pay you - it is quite another if that company then sells your work to another company when it has no right to do so," said Giuseppe Crugliano, founder of Twelve.

"If you then consider the other special circumstances of this case you can understand our frustration. CID is our game and our IP. We are very proud of our work and committed to making sure that other people respect our rights in it."

Alex Chapman of Sheridans told GamesIndustry.biz that publishers are infringing copyright if they have not honoured payments to developers.

"Broadly speaking if someone grants someone else a permission to use their copyright in return for payment and that payment isn't made, the law says that the right to use that copyright may be terminated or may never have arisen."

"If a game contains copyright works such as translations, code, engine tech, art, logos or ages ratings and the owner of them has not been paid as it should then anyone selling those games may be liable for copyright infringement and the developer, localisation company, engine licensor and ratings organisations can all have a claim," he detailed.

OG International bought Oxygen's intellectual property in a pre-pack administration deal – a quick solution that kept all assets together and allowed staff to remain employed almost immediately after Oxygen went into administration.

However, such deals are controversial for giving the impression that the new owners – in this case the CEO of Oxygen – takes control of the business without the burden of debt or creditors.

"Pre-packs can be very diversive. The commercial logic is sound. But there's this idea that pre-packs are seen as a done deal that leave creditors out in the cold," Jas Purewal, an associate of legal firm Olswang told GamesIndustry.biz."In circumstances where it wasn't for the pre-pack [the company] would be broken up then pre-packs are becoming more and more common.

"It's worth noting that pre-packs are also under increasing amounts of scrutiny as well because there can be situations where a pre-pack is done in controversial circumstances and creditors may be willing to fund legal challenges against it."