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NOV
9
2 YEARS

Beyonce Denied Second Attempt to Escape $100 Million Video Game Lawsuit

An appeals court says there are triable issues as to whether Beyonce breached a licensing deal by walking away from a dance video game.

Beyonce Knowles

Beyonce is performing at the Super Bowl halftime show Feb. 3, and there's also a good chance she'll appear in a New York court soon after for a potential jury trial.

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The singer is facing a lawsuit in New York from a company called Gate Five that alleges that on a Christmas Eve "whim" in 2010, she abandoned development of a motion-sensing dance video game that was going to be called Starpower: Beyoncé. Gate Five is asking for huge damages -- "the hundreds of millions of dollars in profits that Gate Five could have realized if she had honored the Agreement," according to the lawsuit.

Last April, a judge denied Beyonce's motion for summary judgment, which was premised on the belief that she had a right to cancel the video game contract because Gate Five hadn't obtained a necessary $5 million financing commitment.

On Thursday, after Beyonce asked for a second opinion, a New York appellate court affirmed the lower court's order.

According to Gate Five, it had developed a technology that was better than the motion-driven video games on the market, that would track a far wider range of body movements than Nintendo's Wii, and the game technology was presented to representatives for top-selling artists including Lady Gaga and the Black Eyed Peas, who purportedly expressed interest.

Ultimately, the company signed a deal with Beyonce, but the contract had a termination clause requiring certain financing by a certain date or else the singer could back out.

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Gate Five alleges that it spent $6.7 million on the game and had a financier lined up to provide $19.2 million in financing when Beyonce exercised her termination rights.

Before she did, Gate Five says Beyonce demanded a new compensation package. During the course of litigation, the video game company began investigating whether Beyonce terminated so as to sign a deal with another video game company such as Ubisoft or Electronic Arts.

Now, the New York State Supreme Court Appellate Division has affirmed the denial of her summary judgment motion, which doesn't necessarily mean she's at fault, only that evidence needs to be presented to a jury to determine whether or not she honored the contract.

According to the ruling, issues of fact remain as to whether Beyonce intended to forgo her right to terminate the licensing agreement. The appeals court points to the record showing that she never objected to the loan as it was closing.

The ruling goes onto say:

"In addition, whether the non-finalized financing agreements obtained by plaintiff prior to the financing contingency deadline and prior to defendants' termination of the agreements constituted 'committed financing,' which term is not defined in the agreement, remains an issue for the trier of fact. The record also raises issues as to whether defendants' own actions or bad faith caused or prevented plaintiff from securing financing by the deadline ... and whether plaintiff is entitled to an injunction to prevent defendants from utilizing their services in a competing video game project during the prescribed period."

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner