GameStreamer Execs File Lawsuits Over Trade Secrets, Religious Discrimination
August 31, 2010
After being sued in May this year on multiple counts, Tim Roberts and Terrance Taylor, former CEO and CFO of digital distribution provider GameStreamer, have filed a countersuit against the company’s current board chairman and majority stakeholder, Ronald Westman.
Roberts and Taylor, who resigned from the company in May 2010, claim Westman used predatory loans to gain his majority share, according to court documents received by Gamasutra.
In a strange twist, the suit claims that he fired the pair in part because they would not convert to Seventh Day Adventists. The suit also alleges that Westman intended to misrepresent the company’s value in a presentation to blue chip giant Cisco by inflating it by some $20 million.
GameStreamer is a PC and Mac digital download store which currently includes titles spanning Popcap’s Plants Vs. Zombies through WB’s Lego Harry Potter and 2K’s Civilization Complete, and which competes with download stores such as Valve’s Steam, IGN’s Direct2Drive and GamersGate.
The company once focused its promotions on its claimed progressive download technology, allowing "a ready-to-play stream that eliminates the need for consumers to install games".
However, this precursor to the ‘cloud gaming’ video-based approach taken by OnLive and Gaikai is not currently the focus of its current business, in white-label PC digital download game stores.
Roberts and Taylor’s countersuit arrives three months after Westman’s GameStreamer sued the pair on multiple counts. These include cybersquatting, trademark infringement, breach of fiduciary duty, misappropriating trade secrets, and violation of the Florida anti-trust act, among other accusations.
The GameStreamer lawsuit, which occurred in May and has gone unreported until also obtained by Gamasutra, claimed that Roberts and Taylor worked together in allegedly holding GameStreamer domain names hostage and registering for GameStreamer-owned trademarks.
Following his resignation, Roberts also allegedly threatened GameStreamer that he would publicly reveal confidential company information that would damage the firm’s business, according to a revised version of the original May complaint, released last week.
In particular, GameStreamer claims a few days following Roberts and Taylor’s resignation from the company in spring this year, the two formed a digital distribution company called "Platformz," a name that GameStreamer "planned to use for its new brand and website." The company said the ex-executives had the intention of competing with its former employer.
The complaint also accused the two of registering for trademarks that their former employer already owned, including StreamPlay, PCGameStore and GameSpeedTest, alleging Roberts also purchased several domain names related to GameStreamer not under the company’s name, but his own name using company funds. GameStreamer claimed that Roberts did not transfer the domain names to the company until two months after the original complaint against him was filed in late May (GameStreamer issued a revised complaint last week).
GameStreamer additionally said that Roberts’ services came through his financial services company called CEOSavvy, to which GameStreamer said it paid a monthly fee plus expenses to Roberts. GameStreamer claims that Roberts racked up nearly $300,000 in expenses for which the company has no receipts, and that Roberts and Taylor "improperly diverted" GameStreamer funds for their own personal use.
Roberts was founder or co-founder of tech companies Infinium Labs and Phantom Entertainment, primarily known for its Lapboard hardware and for the development of the much-discussed digital distribution-based Phantom console hardware that never saw launch.
A turbulent history, including an SEC charge that was subsequently settled, surrounded his firms and their dissolution. The 2008 settlement with the SEC included $60,000 in fines, with a judge barring Roberts "from acting as an officer or director" of any publicly traded company for five years from the date of the settlement.
Taylor, Roberts’ Allegations
Roberts formed GameStreamer in 2008, bringing with him tech he created at Phantom, and shortly thereafter took out a loan from Westman, a businessman who’d loaned Roberts funds once in the past during his time at Phantom.
According to the claims Taylor and Roberts made against Westman, the chairman made several loans to GameStreamer, and through them gained a seat on the Board of Directors — from there, Roberts and Taylor claim he made repeated high-interest loans to the company so as to "extort" the company and increase his share until he gained full control of the Board.
The complaint also claims that Westman made a total 31 loans in the total amount of $8,850,000, debts the pair said they "had no choice" but to accept, since Westman had defined terms that prohibited them from seeking funding from anyone but him.
The pair also claimed that Westman asked Roberts and Taylor to "cook the books" when representing the company’s value to Cisco for an unspecified business interest. In the planned presentation, the pair alleged, Westman wanted to tack on $20,000,000 on to the actual value of the company and its technology, assigning it to Phantom technology that had cost $100,000 to buy.
Among the other allegations in the suit is the pair’s claim that Westman practiced religious discrimination, promoting or hiring to executive roles only those who practiced the Seventh Day Adventist religion. Roberts and Taylor say their refusal to convert made their work environment "hostile" and eventually led to their wrongful termination, as did their unwillingness to participate in accounting practices they claim are illegal.
In a trial by jury in the state of Florida, in their countersuit the pair are seeking back pay and benefits, interest on their back pay, lost wages, "compensatory damages" and attorney’s fees.
This post has been written by Leigh Alexander, Kris Graft on August 31, 2010 couresy of gamasutra.com.