It’s no secret that Microsoft has had it’s share of problems with the Xbox 360 console. At launch, the biggest problem was console availability. However, Microsoft has faced a number of hardware issues since launch, most notably the “Red Ring of Death“. Despite numerous other Xbox 360-related lawsuits, Microsoft — perhaps to its own surprise — has yet to face any litigation related to the Red Ring issue.

That has recently changed. A class action lawsuit was recently filed in Sacramento Superior Court on behalf of all Xbox 360 purchasers and owners that experienced hardware malfunction, often accompanied by the “Red Ring of Death”. The complaint alleges that Microsoft engaged in unfair business practices by selling inherently defective consoles that are “unreasonably prone to malfunction”. The complaint further alleges that Microsoft concealed knowledge of the defects and otherwise engaged in fraudulent business acts.

The complaint seeks, among other things, equitable and injunctive relief in the form of an order requiring Microsoft to publicly announce and implement a program to refund the price of malfunctioning Xbox 360 consoles; restitution, disgorgement, and/or a constructive trust on profits attributable to any unjust enrichment; and any interest and related costs.

The full complaint can be downloaded from Laws of Play here.

[via DailyGamesNews.com]

Frank Buchanan, 30, and his mother Dorothy Mae Buchanan, 68, were recently arrested in Minnesota for engaging a in scam that defrauded retailers out of thousands of dollars worth of merchandise. Buchanan allegedly bought and returned nearly 200 video games from local retailers starting in October 2006. Buchanan’s major fault: retailers began to notice that the boxes he returned contained homemade game discs.

Buchanan reportedly would purchase games at retail, remove the game disc, create a fake disc by printing a label onto a blank CD, and then repackage the blank disc in the original box using a heat gun. By returning these fake games to stores, Buchanan allegedly racked up $23,178 in refunds to his credit card and sold the game discs on eBay for roughly $19,562.

Buchanan is formally charged with three felony counts of theft by swindle for obtaining credit on fraudulent merchandise at local Target, Wal-Mart, ShopKo, and Kmart stores.

After being tipped off by Target loss-prevention, Buchanan’s mother was also formally charged with a single felony count of theft by swindle for allegedly helping her son with his plot.

Silicon Knights, creators of Eternal Darkness: Sanity’s Requiem, recently filed suit against Epic Games claiming that Epic misrepresented the abilities of their money-printing Unreal Engine 3 when selling the license agreement for the engine to Silicon Knights. Silicon Knights claims that Epic provided developers with a dumbed-down version of the Unreal Engine 3 while advertising its abilities using a more complete version of the engine featured in Epic’s million-selling game Gears of War. The lawsuit further cites fraud, intentional interference with contractual relations, misrepresentation, intentional interference with prospective economic advantage, breach of warranty, and a violation of North Carolina’s unfair and deceptive trade practices act as causes of action.

Silicon Knights is seeking damages equivalent to revenue lost as a result of the considerable delay in developing its video game, Too Human.

In response to the suit, Epic’s Vice President, Mark Rein, sent out a press release saying that, “[Epic's executives] believe the claims against [them] are unfounded and without merit and [they] intend to fully defend against them.”

The lawsuit is being handled by Chris Holland of Krieg, Keller, Sloan, Reilley & Roman, LLP in San Francisco, California.

If the allegations are true, Epic could have a serious problem on their hands. With the immense popularity of the Unreal Engine 3, Epic could be looking at a potentially large class action lawsuit if some of the other 100+ Unreal Engine 3 licensees step forward to support Silicon Knights. Stay tuned to Laws of Play!

[Update] – Gamasutra has gotten their hands on the actual complaint and posted a summary of the main allegations:

The suit initially alleges that: “Rather than provide support to Silicon Knights and Epic’s other many licensees of the Engine, Epic intentionally and wrongfully has used the fees from those licenses to launch its own game to widespread commercial success while simultaneously sabotaging efforts by Silicon Knights and others to develop their own video games.”

It goes on to detail a number of specific alleged breaches of contract, particularly related to the delivery of Xbox 360 versions of the Unreal Engine 3 code. Epic’s licensing document stated that a functional version of the engine would be available within 6 months of development kits being available.

Silicon Knights claims: “The final development kit for the Xbox 360 was released in early September, 2005, such that Epic was obligated to release the functional Engine for that platform no later than March, 2006.”

The suit continues: “However, that deadline came and went without Epic providing Silicon Knights with a functional version of the Engine. Indeed, it was not until much later (November, 2006, far too late for time and cost-sensitive projects like SK’s videogames) that Epic ever provided anything resembling working Xbox 360 code to its licensees. Even at that belated date, though, Epic did not provide any guidance to licensees in how to implement the code it finally released.”

For more info, see: Kotaku
Gamasutra

A federal securities fraud suit filed in the United States District Court for the Northern District of Illinois alleges that Midway Games Inc., creators of Ms. Pac-Man and Mortal Kombat, misled their investors about the company’s financial condition and violated the Securities Exchange Act of 1934. The lawsuit, filed on behalf of shareholders who purchased stock between August 4, 2005 and May 24, 2006, alleges that Midway’s top officers and directors made false statements about Midway’s fourth quarter 2005 performance and sold off over $14 million worth of shares on the open market before announcing the decision to sell $75 million in convertible notes. This flood of notes diluted current shareholders’ stock and caused a 67% decline in share price.

In addition to Midway Games, Chief Executive Officer David Zucker, Chief Financial Officer Thomas Powell and numerous other executives were named in the suit. The suit is being handled by Amelia Newton of Chicago law firm Lasky & Rifkind.

[Update July 16, 2007] – This suit is now being taken over by Darren J. Check and Richard A. Maniskas of Schiffrin Barroway Topaz & Kessler.

For more info, see: The Chicago Tribune