There is plenty of bad blood brewing with the news that game and media publisher Genius Products and DJ technology company Numark have filed a legal action against its previous partner, 7 Studios (also the developer of the game, Scratch) as well as against Activision Publishing.

The basis for the legal action is said to center on the fact that Activision recently acquired 7 Studios, which Genius and Newmark claim was motivated by Activision’s intent to suppress the video game, Scratch: The Ultimate DJ, before Activision can release its rival video game, DJ Hero.

An official press statement indicated that Scratch DJ Game LLC (a joint venture of Genius Products and Numark), has filed a legal action against Activision Publishing, 7 Studios and Lewis Peterson, its CEO. The action alleges Activision has violated a laundry list of contract and business terms, included breach of contract, intentional interference with contract and conversion and misappropriation of trade secrets as part of its purchase of 7 Studios. 7 Studios is currently under contract to develop the highly anticipated new Hip Hop game, Scratch: The Ultimate DJ.

The Newmark and Genius Products action alleges that Activision and 7 Studios "...have conspired to withhold the current version of Scratch in an effort to delay the development and release of Scratch and to gain access to proprietary technology." As part of its claim for damages Newmark and Genius Products are asking the court for immediate return of the Scratch video game as well as other immediate and permanent injunctive relief. Activision is also being sued for interfering with a non-disclosure and confidentiality agreement between 7 Studios and Genius after Activision made an offer for the Scratch game that was rejected; the suit claims that Activision then intentionally went after and acquired 7 Studios.

The complaint alleges that after 7 Studios was acquired by Activision the two companies conspired to keep the Scratch video game from reaching the market by withholding work product, code and the proprietary game controller from Genius Products and Numark.

Trevor Drinkwater, President and CEO of Genius Products, Inc., released the following statement: "We believe that Activision realizes the tremendous opportunity that our game, Scratch, represents to the video game industry, the retail marketplace and the consumer. After demonstrating our game, pursuant to the confidentiality agreement with Activision, we believe Activision concluded that Scratch: the Ultimate DJ is a superior offering to their prospective game, DJ Hero.”

He added, "We believe that Activision and 7 Studios have improperly used confidential information obtained from Genius and 7 Studios to interfere with our efforts to complete the game. In short, we believe that Activision is attempting to sabotage the release of our much anticipated game and prevent it from getting to market prior to the release of DJ Hero."

The CEO of Numark, Jack O'Donnell, went on to say, "We also firmly believe the recent actions by 7 Studios are an obvious breach of the development agreement and we look forward to receiving our work product and property back and completing and successfully launching our game on schedule."

Genius and Numark have requested that the court award it an injunction so that 7 Studios cannot develop a competitive game for one year after release of the Scratch DJ game, and that 7 Studios be barred from disclosure of the game’s trade secrets. The court will decide this one and it seems unlikely that the complicated allegations will be determined quickly.