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GC Dilemma: When Your Subsidiaries Sue Each Other

By George Khoury, Esq. | Last updated on

For general counsel, when lawsuits get filed by and/or against subsidiaries, it's usually no laughing matter. However, when subsidiaries of the same parent corporation sue each other, it's easy to see how a GC might just step back and have a little chuckle.

And while this is a rare occurrence, it is not that uncommon for companies that have the same shareholders to find themselves at odds in the courtroom. Recently, Epic Games, makers of the popular game Fortnite were sued by PUBG Corp., makers of the popular game PlayerUnknown Battleground, in a Korean court. Not surprisingly the case was dismissed with neither company saying much of anything about it.

Whoops, There It Ends

Though you'd hope that a subsidiary or company with share or stake-holders would take a look at who the share/stakeholders are for the company they plan to sue, sometimes that info can be elusive. However, when a parent company, or stakeholder discovers that there's fighting amongst the siblings, resolving the conflict before a court battle begins, or heats up, is generally a good idea. After all, at the end of the day, the parent or stakeholder is really only feeling the loss of each company paying for legal fees.

As such, the GC of a parent or common stakeholder could prove instrumental in influencing a mutually beneficial resolution that helps all involved see the bigger picture.

GC as Mediator

While companies like Epic and PUBG may be direct competitors, there's more cooperation than meets the eye. For one, PUBG runs its game off of technology that Epic developed. Additionally, as noted, both companies are partly owned by Tencent Holdings, the Chinese internet conglomerate that also owns other notable game companies including Supercell and Riot. It likely didn't take long before the legal team at Tencent to sit down PUBG and Epic to force them to squash the litigation.

Though this lawsuit was just dismissed, there's no word of a settlement, nor any hint that the copyright violation alleged was resolved. Interestingly, PUBG filed another lawsuit against a different game company (not even partly owned by Tencent) alleging copyright violations for copying PlayerUnknown's Battleground's "battle-royale" concept, as well as other specific in game features, even the "winner-winner chicken dinner" joke.

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