The Los Angeles based 7 Studios was at the heart of an ensuing lawsuit filed by Scratch publisher Genius Products and turntable controller maker Numark Industries. That suit alleged that Activision and 7 Studios conspired to withhold Scratch the Ultimate DJ "in an effort to delay the development and release of Scratch and to gain access to proprietary technology."

Activision denied any wrongdoing in its purchase of 7 Studios, saying the buy out was made to "bolster its development capabilities," that it "provided the fledgling developer with much needed financing during these difficult economic times."

Scratch the Ultimate DJ ultimately found a new developer in Commotion Interactive.

Activision reps provided the following statement to Kotaku.

"Since the completion of its acquisition by Activision, 7 Studios has realigned its business to focus its development resources on the music genre. As a part of this realignment, the studio is reducing its workforce to better reflect Activision's upcoming slate of music-based games."

The 30 or so employees let go today represented approximately half of the entirety of 7 Studios, according to our source. We're attempting to get confirmation from Activision on the accuracy of that figure.

The court first ordered that all materials pertaining to the Scratch DJ title be returned in an initial ruling on April 20th, which included provisions to prevent 7 Studios from discussing the Scratch DJ project with any other company, including their new parent company Activision. Lawyers for 7 Studios argued during that case over handing over the source code for the project, which included the developers own game engine, but the judge ruled that once the game engine was incorporated into the product it belonged to Scratch DJ.

A couple of weeks later and assets have indeed changed hands, but 7 Studios continues to hold onto the source code containing their engine, hence the judge's re-iteration of the order yesterday.

According to Scratch, once they obtain the source code the company will finally be able to move forward with the publishing of the game.

Jack O'Donnell, Manager of Scratch and Chief Executive Officer of Numark, stated, "We are very excited to finish Scratch – The Ultimate DJ. We hope that this clear victory ends the delay tactics employed by the defendants to date to stop our game from being completed and brought to market. We will continue to vigorously pursue our damages case against Activision, 7 Studios and Peterson resulting from their actions to delay and take over the Scratch game. With the injunction order, we will also now be able to move forward to complete and launch our much anticipated Scratch game."

We're still pretty skeptical that Scratch will ever see the light of day at this point, but hey - nice turntable.

The counter-suit alleges that Genius' actions are a "textbook case of unlawful and unsavory business practices", and that the game has been delayed a number of times thanks to Genius, not 7 Studios.

Genius are accused of being too slow to provide licensed music for the game, of not obtaining publishing approval (the suit even says that the game still isn't cleared for launch on PS3 yet), and that the game's custom turntable peripherals arrived so late that it delayed production by "several months".

Seems an awful big fuss for a game that wasn't really on many people's radars. Still, who doesn't love a good soap opera! Especially when it involves Activision lurking around in the background.

7 Studios counter-sues, says Genius committed the fraud [The Cut Scene]

With the LA Superior Court ruling this week that all intellectual property and source code be returned immediately to Scratch publisher Genius Products and an injunction against 7 Studios preventing them from discussing game code or trade secrets with Activision or any other third party, it appears that the publisher may be looking for a replacement altogether. Kotaku was told to expect a new release date shortly by a source.

Bottlerocket was most recently pulled off of Namco Bandai's update to Splatterhouse, a project that was allegedly handed to the team responsible for Afro Samurai. That action resulted in alleged layoffs at Bottlerocket, as well as some public back and forth between Namco Bandai executives and the developer.

The ex-Splatterhouse developer was also apparently working on a game based on DC Comics' The Flash with the defunct Brash Entertainment.

Representatives for Genius Products would not confirm the change in developers, only mentioning that we'll hear more about Scratch: The Ultimate DJ in the coming weeks. E-mails and phone calls to Bottlerocket Entertainment went unanswered.

Yesterday, Genius Products and Numark Industries announced they had filed suit against Activision and Scratch developers 7 Studios for "intentional interference with contract, breach of contract and misappropriation of trade secrets." Genius and Numark claim that Activision "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."

According to Activision's statement, the L.A. Superior Court seems to agree, finding no evidence of any wrongdoing by the publisher and refusing to grant any restraining order against it. Activision also calls the allegations levied against it "an attempt by Genius to place blame for the game's delay, as well as to divert attention from the cash flow, liquidity and revenue challenges" facing Genius.

"By their own admission in October 2008, the game had fallen behind in production, which was well before Activision had any involvement with Genius, Numark or California 7 Studios regarding the game," the statement reads.

Activision also confirms that it has purchased 7 Studios, completing the deal on April 6th to "bolster its development capabilities." Under the ownership of Activision, 7 Studios continued to develop Scratch without interference from its new owner, according to the company. It points out that Activision "Activision provided the fledgling developer with much needed financing during these difficult economic times."

Activision says that the lawsuit will have no impact on the release of DJ Hero, its turntable-based rhythm game planned for release later this year.

Yes, the publisher is suing its own developer, claiming that the two parties have interfered with efforts to complete the game and sabotage Scratch: The Ultimate DJ's release prior to the release of Activsion's own DJ Hero.

Scratch publisher Genius Products and turntable controller maker Numark Industries allege 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." The game, originally planned for a Summer release, is now delayed until Fall.

Genius and Numark are seeking "substantial damages" and are asking the court to order the game's immediate return.

The suit claims that Activision attempted to acquire 7 Studios, the developer contracted to create Scratch: The Ultimate DJ, after a failed attempt to buy the rights to the game planned to compete with Activision's own DJ Hero.

Following that alleged acquisition of 7 Studios, the suit contends that Activision and the developer "began conspiring to prevent Scratch from getting to market on a timely basis by withholding work product, code and the proprietary game controller."

"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," said Trevor Drinkwater, President and CEO of Genius Products.

"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."

We've contacted Activision for comment and will update when we hear more.

Scratch: The Ultimate DJ looks to borrow heavily (and intelligently) from the Guitar Hero and Rock Band style of play, with a note highway that melts off an on-screen LP, aping the interface from the already successful guitar god games. What Scratch hopes to improve upon is the Guitar Hero-style rock fantasy, adding improvisation and music personalization.

We got a chance to take a look at the game in action, along with its prototype controller, during a demo at 7 Studios.

Creative lead Dan Lerich guided us through our first Scratch: The Ultimate DJ experience, explaining that the game was born of his classical music training, his expertise in midi programming and Berklee School of Music education — plus a taste for live DJing.

While we initially thought the game's inspiration was grounded in games like Beatmania, PaRappa the Rapper and even a little bit of Wii Music (don't panic!), Lerich says he found a rhythm game model in Electronic Arts' Skate. The skateboarding game, Lerich says, was a diversion from the extreme sports model established by the Tony Hawk Pro Skater series. In Scratch, as in Skate, the game allows the player to experiment, to improvise, to trick, to chain together combos, all of which is available to the player from the get go.

Lerich showed us some of this improvisation in one of the game's tracks, Gorillaz "Feel Good, Inc." While the majority of beat-matching follows a pattern similar to Guitar Hero or Beatmania, keying sounds from drum beats to bass tracks to vocals, there's an opportunity to pattern add. It was surprising to hear how natural those adds sounded—when they were on beat, mind you.

Those pattern adds can also mean big points, as you'll earn not just for successful beat matches, but for fills as well. Lerich says that the scoring on these fills is still being honed. Since the game has a competitive multiplayer mode, fill spamming is something the 7 Studios team is aware of.

Improvisation occurs in another of the Scratch's segments, as portions of the note highway will encourage turntable tricks, not just button presses. This is where the "chika chika fantasy" comes in, with some 15 to 20 tricks available on the controller's spinning wheel. The DJ will be able to throw in sounds from a pre-picked "battle record," which can be packed with custom beats, quirky sound effects or even custom-recorded sounds via a USB microphone.

That will not only add replayability, but personalization. As performances can be recorded (but not uploaded online) then reviewed, those outstanding spins at the DJ table can be customized, then fondly remembered for years to come.

Scratch's controller is still being finalized, but 7 Studios is doing it in partnership with Numark, maker of fine audio equipment and DJ accessories. It comes with five colored buttons, touch sensitive analog turntable wheel, and a crossfader switch. It's also been designed ambidextrously, so lefties needn't feel excluded.

Our brief time seeing Scratch: The Ultimate DJ was impressive. While the game may not be strikingly original—it has to compete with Activision's own attempt, DJ Hero, due later this year—it has credibility by association courtesy of Beastie Boys DJ Mix Master Mike's input and a controller co-designed with turntable manufacturer Numark.

While pricing and final song selection is still being nailed down, 7 Studios is looking at following the pricing and SKU structure of Guitar Hero and Rock Band, hopefully resulting in an affordable, high quality package. We're anxious to go hands on with it when it ships sometime this Summer.

Brash sued by two developers [Variety]

"Scratch will feature original recordings from the catalogs of many top urban artists and will allow players to re-imagine songs on the fly and add their own creativity," says Jones, "This feature sets it apart from other music rhythm games and makes it a dream come true for both casual music fans and serious DJs/producers."

If you were wondering how the 'scrolling fret' interface from all those other games might be translated into a more turntabulous mode, the answer seems to be.. exactly the same but with a picture of a deck next to it. Nice cel-shading, though.

Full press release after the bump...

GENIUS PRODUCTS AND GENCO INTERACTIVE PARTNER WITH
7 STUDIOS AND QUINCY JONES III (QD3) TO LAUNCH
NEW HIP HOP VIDEO GAME
Scratch: The Ultimate DJ
Fast Paced Rhythm Game Features Realistic
DJ Turntable-Style Controller From Numark

SANTA MONICA, Calif.- October 7, 2008 - Genius Products, Inc. (OTCBB: GNPI) announced that Genius Products, LLC and Genco Interactive, the gaming subsidiary of Genco Media, entered into a new partnership with 7 Studios and QD3 to develop and release a new hip-hop video game: Scratch: The Ultimate DJ. Developed by 7 Studios with creative input from music legend Quincy Jones III, CEO and chief creative officer of QD3 Entertainment and music producer for top artists Tupac Shakur, LL Cool J and Ice Cube, among others, Scratch combines free-form DJ tricks with great rhythm game-play. Scheduled to arrive in stores next spring, Scratch is set in distinctive urban environments and features songs from the biggest names in Hip Hop.

Featuring game-play similar to top-selling rhythm games, Scratch players use a realistic turn-table controller, the Scratch Deck, created by Numark, the world's largest manufacturer of DJ equipment, to manipulate music tracks in real-time. Players can choose from a diverse array of DJ personalities to make their way from garage DJ to scratch-master of the hottest nightclubs.

Scratch will be available on multiple next generation game systems.

"We are thrilled to be teaming with 7 Studios and Quincy Jones III to release a cutting-edge game that captures the vital energy of hip-hop culture", said Trevor Drinkwater, President and CEO of Genius Products. "We're confident that Scratch will take interactive music gaming to the next level and excite a large and relatively untapped fan base."

"With the recent success of music-driven videogames and the dominance of urban culture in the youth market, the potential for Scratch is endless," said Quincy Jones III, CEO and chief creative officer of QD3 Entertainment. "Having spent 20 years as a music producer for artists such as Tupac, LL, and Ice Cube, it is rewarding to work with 7 Studios, Genius and Genco to ensure that there is authenticity in every detail of this game.

"Scratch will feature original recordings from the catalogs of many top urban artists and will allow players to re-imagine songs on the fly and add their own creativity," he added. "This feature sets it apart from other music rhythm games and makes it a dream come true for both casual music fans and serious DJs/producers."

"Genco is focused on providing content creators the means to fund the development of a range of entertainment related products, including video games," said Alan Quasha, President of Quadrant Management and Chairman of Genco Media. "Scratch presents a great opportunity to work with some of the most talented people in the Hip Hop music industry and bring an exciting new game to market."