The Sinking DMCA: Frogwares Copyright Strike Against Nacon

In the latest development of a lengthy legal dispute between developer Frogwares and publisher Nacon, Frogwares has issued a Digital Millennium Copyright Act (DMCA) strike against Nacon following the reappearance of The Sinking City on Steam’s digital storefront.

This well-documented legal dispute originates in June 2019. The Sinking City‘s release and resultant grievances between developer and publisher are detailed at length in Frogwares’ statement posted on August 25th, 2020.

At that time, Frogwares’ marketing manager Sergey Oganesyan posted an open letter on Frogwares’ website, maintaining that The Sinking City had been pulled from Steam and other storefronts due to a violation of the developer’s licensing agreement with Nacon.

In its original iteration, this contract signed 2 years after game production started, established that Nacon secured the right to sell and commercialize The Sinking City on Xbox One, PlayStation 4, Steam, and the Epic Games Store. In turn, Nacon would make a financial contribution to the game’s ongoing development, while Frogwares would maintain sole ownership of the game’s IP.

The terms of this agreement were that Frogwares would receive paid installments at agreed-upon production milestones. However, Frogwares maintains that Nacon soon began utilizing their involvement in sales and distribution to exert pressure on the developer. For instance, when Nacon bought a “competing” studio that was also working on a Lovecraft-inspired game, it demanded The Sinking City’s source code, despite the previously agreed upon ownership by Frogwares.

According to the statement, once Frogwares refused to comply with this demand, Nacon began withholding its agreed-upon financial contributions for a period of over four months. The publisher also communicated inconsistently, Oganesyan explained, about sales forecasts and plans. Together, these two issues impeded Frogwares’ capacity to plan the scope of not just The Sinking City but also its future actions and projects as a developer.

Finally, once The Sinking City was released on June 27th, 2019, Frogwares received communications from Nacon that the previously discussed milestone installments would be canceled. Thus commenced the legal difficulties in earnest.

The initial lawsuit filed by Frogwares produced incomplete and questionably accurate income reports from sales. Meanwhile, Frogwares contends, both physical and digital copies of The Sinking City were sold without copyright notices naming Frogwares as the owner of the IP and absent the Frogwares logo from some marketing materials.

Ultimately, after 11 months of failed attempts at resolving the issues, Frogwares opted to terminate the original licensing contract on April 20th, 2020. They utilised clause 4.2 of the contract to do so, which enables one party to the contract to terminate 30 days following formal notice if the breach of contract is not resolved in that time. The game was thus pulled from several digital storefronts by August 2020.

However, by March 2021 Nacon had, in turn, produced a statement that The Sinking City would be returning to the Microsoft, PlayStation, and Steam digital stores. This announcement followed an October 2020 court ruling decreeing that Frogwares take no further action regarding the contract until a final decision was reached, essentially maintaining the original publishing contract for the foreseeable future.

Frogwares responded not long after, maintaining that Nacon had altered and uploaded what essentially amounted to an illegally pirated version of the game to Steam’s storefront. They described the upload in stark terms as “corporate bullying and incompetent hacking, at its finest.”

Frogwares went on to explain at length in a blog post and a video, how Nacon had purchased a version of the game from digital retailer Gamesplanet, altered the code, and re-released the altered version. In addition to the removal of identifying features relating to the game version’s origin on Gamesplanet as well as Frogwares identifiers, Steam users soon also found that the re-release was missing some important features, including in-game achievements.

In essence, Frogwares’ claim is that Nacon purchased the game legally, altered the code, then uploaded the altered version to Steam, without informing Steam and other digital storefronts about its provenance.

Frogwares has made it unequivocally clear that no ill-will or mistrust is held toward Gamesplanet or Steam. They place the responsibility squarely at Nacon’s feet, specifically due to the alleged actions of a Neopica staff member, a Belgian Nacon subsidiary.

Nacon in turn responded with a statement maintaining that Frogwares is “playing the victim” and deliberately “disrupting the release of The Sinking City,” despite “thousands of hours of work and several million euros worth of investment” from the publisher.

Essentially backed into a corner, Frogwares moved from recommending players not download the re-release to issuing a DMCA strike against its own game. Frogwares acknowledges that this strike may be a “temporary fix,” and are aware that Nacon may find ways to work around it.

However, the developer expressed the hope that this measure will allow them time to gather additional evidence and make meaningful progress in the lengthy and costly legal proceedings that they hope will prevent such actions from recurring.

In the interim, Frogwares has stated that they will continue to provide storefront and marketing partners like Valve with ongoing updates, evidence, and rulings to allow for informed decisions in the longer term. Well aware that such proceedings involve considerable time and resources, however, the developer ultimately states that “they can only respect it” if Valve feels compelled to continue selling the game and that they will keep them informed of legal developments as they unfold.