Wizards of the Coast and Cryptozoic Entertainment have settled a dispute that saw the former sue the latter in federal court with allegations of copyright, patent, and trade dress infringement. WOTC had essentially claimed that Cryptozoic’s digital trading-card game, Hex: Shards of Fate, was a copy of Magic: The Gathering.

Other than to say that “the parties have entered into a settlement agreement and license with undisclosed terms,” no further details of the deal were provided.

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Wizards of the Coast isn’t the only company that has a problem with Cryptozoic’s Hex: Shards of Fate digital CCG. Cryptozoic’s trademark application for “Hex” is being held up by a potential opposition from Innovation First, makers of  Hexbug robotic toys.

Cryptozoic is seeking a trademark covering computer game software, as well as “comic books, strategy guides,… trading cards, coloring books, adhesive stickers, rub-on transfers, notebooks and stationery-type portfolios, posters, greeting cards, calendars, pictures,… photographs, and prints.”

Innovation First holds trademarks covering “Hex” for toys and playsets and “Hexbug” for “downloadable computer and mobile game software”.

Innovation First has been given until November 19th by the Trademark Trial and Appeal Board to file its formal opposition. The company may be using that time to work out an arrangement with Cryptozoic.

[via The Cardboard Connection]

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Cryptozoic has filed with the federal district court in Washington its answer to WOTC’s suit over Hex: Shards of Fate. Not surprisingly, the answer by Cryptozoic paints a very different picture than the complaint by Wizards.

Recall that WOTC alleges infringement of copyright, trade dress, and patents related to Magic: The Gathering. Cryptozoic’s reply [PDF], however, leads off with the bold statement:

Fearing competition in the trading card game industry, and frantic about the loss of its monopoly position due to the expiration of its patent two months ago, Wizards seeks to eliminate Hex: Shards of Fate through litigation rather than fair marketplace competition. Wizards is understandably concerned about the success and significant support Hex: Shards of Fate enjoys in a community yearning for innovation. Wizards’ Amended Complaint relies, in substantial part, on the hearsay allegations of unknown bloggers. The confused, vague, and egregious allegations in that Amended Complaint constitute a blatant attempt to use the legal process to achieve market dominance and eliminate a competitor which is creating truly competitive and innovative products.

Cryptozoic contends that Wizards of the Coast has improperly disguised a patent argument as a copyright claim, explaining that the issues raised are ones of function, not expression.

On the subject of trade dress, Cryptozoic argues that the question is whether the design of Hex cards creates confusion in the marketplace. Cryptozoic further points out that even the bloggers that WOTC quotes as comparing the two games clearly know the difference.

Finally, with respect to WOTC’s patent infringement allegation, Cryptozoic notes that the patent expired in June. At best, the company argues, any infringement was brief and represents minimal value.

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Wizards of the Coast today filed suit in federal court against Cryptozoic over the Hex: Shards of Fate online trading card game. WOTC claims infringement of various intellectual property rights in Magic: The Gathering.

In a deliberate attempt to profit from Wizards’ valuable intellectual property and hard-earned reputation, Cryptozoic [has] copied the look and feel, the ornamental aspects, and the pleasing and ornamental layout of the functional features of Magic trading cards. Cryptozoic [has], further, implemented those copied playing cards in promulgation of a game that substantially duplicates the mechanics, plot, actions and elements of Magic, often retaining the same name for actions within the game play. Moreover, Cryptozoic’s willful intent to trade off of Wizards’ intellectual property and to create a false association between Hex and Magic is evident by the fact that it chose to copy the distinctive Magic playing pieces. Wizards brings this suit to address its considerable losses and prevent the willful infringement of its valuable intellectual property rights. Cryptozoic’s willful and malicious misappropriation has caused and will continue to cause irreparable and continuing harm to Wizards.

Specifically, Wizards of the Coast alleges infringement of copyright, trade dress, and patents and seeks $1.5 million in damages.

Interestingly, the complaint filed by WOTC quotes extensively from a blogger’s review of Hex, using the opinions stated by Threshold as evidence of similarity between the games.

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