Activision ends fight with Modern Warfare 2 makers

The makers of 'Call of Duty: Modern Warfare 2' and game publisher Activision Blizzard Inc. have agreed to lay down arms in a legal fight over millions of dollars in royalties.

The two sides said Thursday that they had settled the matter out of court. The terms were not disclosed.

Activision, a subsidiary of France's Vivendi SA, said it doesn't believe the settlement's one-time expense will materially affect its earnings outlook for the current quarter or calendar year due to unexpectedly good performance recently.

Jason West and Vincent Zampella, former heads of Activision game studio Infinity Ward, had sued Activision for wrongful dismissal after the company fired them in March 2010. The pair claimed they were fired to avoid paying them bonuses and sought more than $36 million based on the game's profits following its release in November 2009. They later raised their claim to over $1 billion.

Activision countersued, accusing them of conspiring to take their secrets to rival Electronic Arts Inc. and breaching their contractual and financial duties. Activision also said West and Zampella poisoned the atmosphere at Infinity Ward against Activision, prompting dozens of developers to follow them out the door.

The pair later formed a new company called Respawn Entertainment LLC, which is currently developing games for EA.

Two weeks ago, Activision and EA settled a lawsuit over whether EA unfairly recruited the executives while they were under contract.

EA hailed the settlement between Activision and the game developers as a victory.

'Activision's refusal to pay their talent and attempt to blame EA were absurd. This settlement is a vindication of Vince and Jason, and the right of creative artists to collect the rewards due for their hard work,' it said in a statement.

Shares of Activision rose 9 cents to $11.83 in after-hours trading after closing down 17 cents, or 1.4 percent, at $11.74. EA shares were unchanged after-hours but had closed down 53 cents, or 3.8 percent, at $13.62 in the regular session.