Gibson sues MTV, EA over "Guitar Hero"

By Ilaina Jonas

NEW YORK (Reuters) - Gibson Guitar said on Friday that it filed a patent infringement lawsuit against Viacom Inc's MTV networks and Harmonix as well as Electronic Arts relating to the wildly popular "Guitar Hero" video games.

The lawsuit, filed in Federal District Court in Tennessee, relates to the same patent involved in another suit Gibson filed earlier against various retailers, the Tennessee-based guitar maker said in a statement.

The "Guitar Hero" series has sold more than 14 million units in North America and raked in more than $1 billion since its 2005 debut.

Gibson said the games, in which players use a guitar-shaped controller in time with notes on a television screen, violate a 1999 patent for technology to simulate a musical performance.

Harmonix developed the first "Guitar Hero" game and was later bought by MTV. Electronic Arts and another company, Activision Inc, as well as several retailers, either develop, distribute or sell one or several of the games in the "Guitar Hero" series.

"This lawsuit is completely without merit and we intend to defend it vigorously," Harmonix said in a statement.

A spokesperson for Electronic Arts could not be reached for comment.

Earlier this month, Activision filed a preemptive suit against Gibson, which had complained that the games infringe upon one of its patents.

Activision filed a lawsuit asking the U.S. District Court for Central California to declare Gibson's patent invalid and to bar it from seeking damages.

Gibson, whose electric guitars are used by legendary blues and rock artists such as Eric Clapton, B.B. King and Slash, has been a high-profile partner in the "Guitar Hero" games.

Activision licensed the rights to model its video controllers on Gibson guitar models and to use their likenesses in the game.

Activision has said that by waiting three years to raise its claim, Gibson had granted an implied license for any technology.

Take Two is offered by EA ( Electronic Arts )

SAN FRANCISCO (Reuters) - Electronic Arts Inc (ERTS.O: Quote, Profile, Research) on Thursday launched a tender offer for rival video game maker Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research) at $26 a share, indicating its $2 billion bid is turning hostile.

Take-Two, publisher of the popular "Grand Theft Auto" video games, last month rejected EA's unsolicited all-cash offer at the same price. The bid represents a 64 percent premium over Take-Two's closing stock price on February 15, the last trading day before EA sent the proposal to the company.

"We believe Take-Two investors will see our tender offer as the best way to maximize the value of their investment in Take-Two," EA Chief Executive John Riccitiello said in a statement.

Take-Two Chairman Strauss Zelnick has said the bid was "the wrong price and the wrong time," arguing that EA was trying to buy his company on the cheap just before the April 29 launch of "Grand Theft Auto 4."

Take-Two this week forecast quarterly earnings above Wall Street estimates, saying orders for "Grand Theft Auto 4" were better than expected.

Earlier this week, Take-Two's two biggest shareholders disclosed that they had drastically cut their stakes, potentially undermining management's stance that the $1.9 billion buyout offer was too low.

U.S. mutual fund company Oppenheimer Funds, Take-Two's biggest shareholder, halved its holdings to 8.8 million shares, reducing its stake to 11.5 percent from 23 percent, according to U.S. regulatory filings.

FMR LLC, the parent company for the Fidelity mutual funds and the second-largest owner of Take-Two shares, reported that it had slashed its stake to 2.75 percent from 14.7 percent.

But Zelnick said earlier in the week that the big stock sales did not cause executives to reconsider their rejection of EA's offer.

"It certainly doesn't put any pressure on us," Zelnick said. "Who owns your shares isn't really the issue; after all, we're here for all the shareholders."

Take-Two shares closed up 1 percent at $24.91 on Wednesday, but have fallen from a high of $27.61 set on February 28, shortly after EA announced its offer.

EA's tender offer will expire at midnight on April 11, but could be extended. Take-Two's annual meeting is scheduled for April 10.

Morgan Stanley & Co Inc is dealer manager for the tender offer, for which Georgeson Inc is information agent.