3Dfx wins injunction against Sega

Electronic News, Feb 2, 1998 by Peter Brown

San Jose, Calif.--3Dfx Interactive said last week that on Jan. 9 the Superior Court of Santa Clara County entered an injunction prohibiting Sega Corp. from using or disclosing any trade secrets or confidential information shared between the two companies during a development agreement.

In addition, the court ordered Sega to return to 3Dfx all intellectual property, trade secrets and confidential information. The orders come as part of a lawsuit filed by 3Dfx after Sega terminated their development agreement without cause, according to 3Dfx, in July of last year (EN, July 28, 1997).

The injunction formalizes a previous injunction that was originally filed by the court on Dec. 22, 1997. 3Dfx filed its lawsuit against Sega Enterprises, Sega of America, NEC and VideoLogic last year, alleging Sega terminated the contract because of unfair business practices by NEC and VideoLogic.

3Dfx initially filed the lawsuit against Sega America, Sega Enterprises and NEC seeking damages valued at approximately $155 million(EN, Sept. 8,1997). U.K.-based VideoLogic was added to the lawsuit as part of an amendment late last year (EN, Nov. 3, 1997).

In the lawsuit, 3Dfx said it believes that Sega has consciously attempted to deprive 3Dfx of its intellectual property and inhibit fair competition in the market for 3-D graphics chipsets. In addition, the company accused NEC and VideoLogic of "consciously and deliberately setting out to usurp the contract with Sega and force a breech of contract." 3Dfx alleges NEC officials were well aware of 3Dfx's contract with Sega and influenced Sega in some way to terminate the contract. Sega has declined all along to comment to Electronic News about the law suit.

VideoLogic said in a statement after it was added to the lawsuit that the claims from 3Dfx are entirely baseless and without merit. The company said it will defend itself aggressively alongside Sega and NEC and that NEC has pledged its full support to VideoLogic in its defense of the lawsuit. During its initial public offering last year, 3Dfx said it had inked a technology and licensing agreement with the Japanese game maker involving a high performance graphics accelerator to be developed for Sega's next generation home gaming console (EN, April 28, 1997).

3Dfx claimed Sega had bought a 3 percent stake in the company, or 700,000 shares of common stock. 3Dfx asserted it was meeting all the commitments for the graphics engine at the time Sega terminated the contract.