The legal tug-of-war over royalties between developer Valve and Activision continues and things seem to be getting a bit ugly. The dispute stems from the claim that Activision Blizzard owes Valve over half a million dollars in royalties.

The latest turn of events has Activision warning Valve that any attempt to secure those funds would be met with a countersuit. The battle royal, so to speak. is over a 2002 copyright infringement claim that Valve made against then-publisher Sierra. In 2005, Sierra and Valve agreed to let an arbitrator decide how much in royalties Valve was owed and agreed that his decision would be final.

The arbitrator decided that Valve was owed $2,391,932 including interest. Activision assumed Sierra’s responsibility due to the fact that  the company was acquired and declared that Valve was overpaid $424,136 in royalties; it said that it would subtract the overpayment amount from the ordered payment that the arbitrator awarded.

This is where the conflict started between the two companies, with Valve claiming that no one ever informed the arbitrator of the alleged overpayment and the fact that the companies had an agreement to abide by the arbitrator’s decision. Activision now has threatened Valve with a lawsuit to recover the $424,136 if Valve seeks to confirm the $2,391,932 order.

According to our sources things have grown nasty between the two companies, with each jockeying for position. It does look like more legal wrangling is on the horizon before this is settled between the two companies.