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Games Workshop Inc. v Chapterhouse Studios LLC - After Action Report - Part 1

Let’s start by taking a look at how and when the Games Workshop v Chapterhouse Studios lawsuit originated, which will help to define what Games Workshop’s goals were at the outset of the case.

Games Workshop filed its initial complaint against Chapterhouse and Jon Paulson (Paulson Games) on December 21, 2010. The case was filed in the Northern District of Illinois Federal Court (Chicago). That’s less than a week before Christmas, and less than three months after Games Workshop’s lawsuit against Curse, Inc. was dismissed on joint stipulation (this means the case settled out).

In March of 2010, Games Workshop sued Curse for infringing the registered WARHAMMER trademark in connection with the website’s Warhammer Online forum. Importantly, Games Workshop’s identified counsel on that case was Benjamin Drydan, an associate with Foley and Lardner LLP, the law firm that would shortly thereafter represent Games Workshop in its case against Chapterhouse Studios.

In contrast to its case against Curse, when it came time to sue Chapterhouse, Games Workshop accused “All 106 products that Chapterhouse currently markets and sells” of infringing some unspecified copyrighted work and/or trademark in its initial December 21st complaint. Additionally, Games Workshop accused “At least 14 of the 15” Paulson Games products of infringing Games Workshop’s unspecified copyrighted material.

Now, Games Workshop ostensibly brought Jon Paulson into the case on the allegation that one of the accused Chapterhouse products was co-created by Jon Paulson, an allegation which later proved to be entirely without any factual basis whatsoever. This begs the question of why Games Workshop chose to not only name Jon Paulson as a defendant, but to also accuse virtually every one of his company’s products of copyright infringement.

Jon Paulson was and is a resident of the Chicago area, in contrast to Chapterhouse Studios, which is located in Dallas, TX. As it happens, Foley and Lardner has an office in Chicago, making it easy for Games Workshop’s lawyers to litigate a case in a Chicago court, as opposed to a court in Dallas, which is 830 miles away from the closest Foley and Lardner office. So one reason Games Workshop may have implicated Jon Paulson was to secure proper venue in Chicago. Again, why would Games Workshop also accuse virtually every Paulson Games product of infringement if its only goal was to obtain venue in a favorable district?

Games Workshop’s lead counsel in its lawsuit against Chapterhouse was Jonathan E Moskin, a partner with Foley and Lardner working out of the firm’s New York office. Mr. Moskin does not appear in the record until February 8th, 2011, contemporaneously with the appearance of Chapterhouse’s pro-bono counsel. But Mr. Moskin and Mr. Viallcci, the owner/operator of Chapterhouse Studios, had communicated via email shortly after Mr. Villacci was notified of the lawsuit.

Critically, in this communication Mr. Moskin explained to Mr. Villacci that because “virtually every” Chapterhouse product infringed Games Workshop’s copyrighted material, “we candidly do not know how to resolve the matter without your agreement to cease all such sales.” This email was dated January 10th, 2011 9:45 AM.

By January 10th, Games Workshop’s objective in the litigation was made perfectly clear. Chapterhouse must stop selling every single one of its products. In short, Chapterhouse Studios must go out of business. But more than that, Games Workshop was indicting the third party accessory market in its entirety.

Despite the fact that Games Workshop only (incorrectly and without basis) alleged that Jon Paulson was the co-creator of a single Chapterhouse product, Games Workshop also claimed that, much like Chapterhouse, ‘virtually all’ of the Paulson Games products infringed an unspecified Games Workshop-owned copyright. In fact, Games Workshop would later claim that Chapterhouse’s “entire website is an infringement,” and admitted, under oath, to having contacted Maxmini, Kromlech, Scibor, and Hitech Minaitures with allegations of trademark and copyright infringement, and that Games Workshop otherwise had “several hundred open case files” related to alleged trademark and copyright infringement.

From the outset of the litigation Games Workshop was engaged in what Magistrate Judge Gilbert would later describe as a “zero sum game” against both Chapterhouse Studios and, more significantly, against the third party accessory market writ large. In 2010, Games Workshop was making its first deployments in a litigation campaign that began with hiring Foley and Lardner to sue Curse Inc. in March of 2010.

Games Workshop may well have expected Chapterhouse Studios to fold just as quickly, if not far more so, than Curse Inc., a rapidly expanding dot com company that was flush with more than $11 million in revenue when Games Workshop filed its lawsuit. But as we know, the momentum of Games Workshop’s campaign came to a grinding halt when Winston and Strawn LLP chose to represent Chapterhouse Studios pro-bono.

In the next article we’ll take a look at the early phase of the litigation, after Winston and Strawn exploded into the litigation with two back-to-back motions to dismiss.


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