Playing Games with Sega

Richard L. Abel

in Lawyers on Trial

Published in print December 2010 | ISBN: 9780199760374
Published online January 2011 | e-ISBN: 9780199827077 | DOI:
Playing Games with Sega

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Like other professionals—doctors, psychiatrists, priests—lawyers generally acquire immense authority over those they serve. This is particularly true if the clients are elderly, mentally or emotionally unstable, or uneducated. For this reason, it is essential that the lawyer perform a single, clearly defined, role, with undivided loyalty. This chapter presents a case that illustrates how role ambiguity and deceit can harm even a highly sophisticated corporation. Brian Depew was admitted to the bar in November 1979 and Robert Crane a year later. Crane joined the legal department of Sega Enterprises, Inc. in February 1982, with responsibility for developing business opportunities for non-arcade uses of video games by licensing spin-off products. In September 1983, Crane formed Universal Licensing, Inc., as sole proprietor. He convinced Sega to license Universal to manufacture and distribute floppy disks for Zaxxon, one of its most successful video games, for use on the Commodore C-64 home computer system, without disclosing that he was Universal, which could neither pay the license fees nor manufacture or distribute the disks. The contract provided for a $5,000 advance to Sega and a further guaranteed $5,000, against 6% royalties. After talking to Synapse Software, Inc., and Human Engineered Software Corp. (HES) and realizing Zaxxon was worth significantly more, he modified Sega's standard license to permit Universal to sublicense. Using the pseudonym “Steve Kness”, Crane, as Universal, sublicensed Zaxxon to Synapse and told Sega that because Universal could not manufacture it he had “saved the deal” by finding a suitable sublicensee. On October 12, he wrote as Universal's “Steve Kness” to himself at Sega, memorializing Sega's approval of the sublicense. Crane then paid his friend Depew $1,000 to pose as Universal's general counsel in a meeting with Synapse, resulting in a sublicense for which Synapse paid a $50,000 advance against 16% royalties.

Keywords: lawyers; legal services; conflict of interest; deception; Robert Crane

Chapter.  19674 words. 

Subjects: Legal System and Practice

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