B. Wizards Allegation of Breach of Contract by GF9
25. On November 9, 2020, Wizards sent to GF9 a notice of breach of the 2017 Agreement.
26. Wizards’ breach notice alleged two breaches of the 2017 Agreement by GF9 through the actions of two of GF9’s foreign translation and distribution subcontractors.
27. First, Wizards alleged that GF9 breached the 2017 Agreement through the actions of TRPG Club (GF9’s Korean translation and distribution subcontractor). Wizards alleged that certain unidentified products translated into Korean and distributed by TRPG Club were of low quality, including translations that were poorly done and included inaccurate, missing, and offensive translations. Wizards breach notice went on to further allege that TRPG Club failed to provide adequate customer service to consumers of Dungeons & Dragons materials.
28. Second, Wizards alleged a breach of the 2017 Agreement due to the actions of Black Book Editions FR (“BBE”). Wizards alleged that after BBE translated certain Dungeons & Dragons books into French, it republished certain portions of the translated product under its own brand “Heros & Dragons.”
29. Wizards’ notice of breach states that it intends to terminate of the 2017 Agreement, unless GF9 remedies its breach to Wizards’ satisfaction within the applicable time periods for cure.
30. However, the products translated and distributed by TRPG Club, which are the subject of Wizards’ allegation of breach, were submitted in their final translated form to Wizards and approved by Wizards for release. Wizards informed GF9 that it had reviewers on its staff who were fluent in Korean who reviewed the product as translated and did not note a single correction or issue.
31. GF9 disputes that the TRPG Club translation was of a poor quality, and TRPG Club provided a report stating the adequacy of its translation that was subsequently provided to Wizards, on November 12, 2019.
32. When the translation quality issue was brought to the attention of GF9 and Wizards, GF9 sought direction from Wizards on the action necessary to rectify the alleged translation issue. Although GF9 and TRPG Club disputed that any significant deficiency in the translation was present in the products, GF9 offered to remove the products from the market. However, Wizards directed GF9 to leave the products in the market and to not renew its contract with TRPG Club or submit any additional products for approval.
33. Acting on Wizards direction, GF9 did not take any further action related to the translated products, informed TRPG Club that its contract would not be renewed, and has not submitted any additional TRPG Club products for approval or release.
34. GF9 cured any breach of the 2017 Agreement it may have committed related to the alleged poor translation when it enacted the actions directed by Wizards.
35. Wizards’ breach notice further alleged a breach of the 2017 Agreement by the actions of TRPG Club for customer complaints about damaged books and orders that never arrived.
36. GF9 is aware of very few customer complaints related to TRPG Club produced products all of which occurred in fall 2019 (one year before the breach notice). Customer complaints stem largely from products being damaged in transit. The amount of products for which customers complained is extremely minimal and within the expected threshold of transit damaged products experienced in all other markets (including the US market).
37. GF9 worked with TRPG Club to ensure that each of the customer complaints TRPG Club received were rectified by either providing replacement products or a refund as requested by the respective customer.
38. GF9 and TRPG Club rectified each of the customer issues and therefore no breach exists. Even said breach did occur, it has since been cured.
39. GF9 disputes that it breached the 2017 Agreement due to the alleged actions of BBE in utilizing Wizards’ intellectual property for its own benefit.
40. GF9 does not have an obligation under the 2017 Agreement to prosecute and defend Wizards intellectual property from use by the translation and distribution subcontractors. The 2017 Agreement provides Wizards the sole right to determine whether or not any action shall be taken on account of an intellectual property infringement and GF9 is required to assist Wizards in this defense, if requested to do so.
41. On information and belief, Wizards has not instituted an action against BBE.
42. However, even if GF9 may have some responsibility under the 2017 Agreement for BBE alleged infringement, BBE did not utilize Wizards’ intellectual property gained through its relationship with GF9. BBE produced and distributed for sale its Heros & Dragons product in the fall of 2016, approximately ten months before it entered into the contract with GF9 to translate and distribute Dungeons & Dragons products. BBE’s Heros & Dragons product utilized text previously translated under a Dungeons & Dragons open gaming license, which permits the Dungeons & Dragons core rules and mechanics of game play to be used by others.
43. Upon information and belief, Wizards was aware of the Heros & Dragons products already in the market prior to GF9’s agreement with BBE to translate and distribute Dungeons & Dragons products in the French market. Wizards approved BBE as the French partner with knowledge that Heroes & Dragons already existed in the market.
44. Under its contract with GF9, when BBE translated the Dungeons & Dragons products, it utilized the same translated text it had previously translated and used in its Heros & Dragons products (i.e. the open gaming license core rules and game play mechanics). BBE did not use intellectual property gained through its contractual relationship with GF9 for its Heros & Dragons products, instead when translating the Dungeons & Dragons products it used translated text it already possessed before the contract with GF9 to expedite the translation process.
45. Upon Wizards informing GF9 of its belief that BBE was utilizing Wizards’ intellectual property in its Heros & Dragons products, GF9 entered into discussions with BBE to terminate the existing translation and distribution agreement between BBE and GF9, to purchase all outstanding stock of Heros & Dragons at GF9’s expense, to pull all existing Heros & Dragons products from the market, and to destroy all product purchased.
46. Agreement between GF9 and BBE was reached to accomplish the above stated objectives, and GF9 informed Wizards of the agreement. After reaching agreement with BBE and informing Wizards, Wizards required that BBE sign an admission of liability indicating that it had improperly utilized Wizards’ intellectual property. BBE refused to sign the admission of liability that Wizards demanded and the deal between GF9 and BBE was not completed.
47. Because BBE refused to sign the admission of liability demanded by Wizards, and upon the request of Wizards, in November 2019, GF9 terminated BBE for breach of its agreements with GF9 for failure to timely pay its royalties. The termination of BBE and settlement of outstanding claims was concluded fully in May 2020, with full agreement on termination and settlement from Wizards. A new French partner was approved and the market became active again in February 2020.
48. GF9 has no control over BBE after termination of its agreement with BBE and therefore, cannot cure any breach that Wizards has alleged relating to BBE’s continued use of intellectual property in BBE’s Heros & Dragons product.