Activision fired back at former Infinity Ward heads Jason West and Vince Zampella in state court pleadings filed Thursday, alleging in a cross-complaint that the two former execs breached multiple contracts, violated their fiduciary duty and loyalty duties to the company, and broke the implied covenant of good faith and fair dealing.

These terms can be a bit daunting and unfamiliar to those outside the legal field, so let’s break them down a bit, based on Activision's filings:

*Cross-Complaint: When a plaintiff (in this case, West and Zampella) files a lawsuit against a defendant, (in this case, Activision), they do so by a legal document known as a "Complaint" which outlines their legal claims.  In response, the defendant typically raises their defenses in a document known as an "Answer", which responds to each claim raised in the complaint, and either affirms or denies it.   At the same time, however, the defendant may have legal claims against the plaintiff that they too wish to raise.  So once the lawsuit has been initiated, the defendant may file what's known as a "Cross-Complaint", which the plaintiff must then answer. Even if the original case is dismissed or settled, the cross-complaint can continue until it too is resolved. This makes the titles for the parties involved somewhat confusing, as now West and Zampella are the Plaintiff/Cross-Defendants and Activision is now the Defendant/Cross-Complainant.

*Fiduciary Duty: When a corporation or a person (known as a beneficiary) places trust, faith, and confidence in other person or corporation (known as a fiduciary), this can give rise to a fiduciary relationship. The fiduciary has an obligation to act loyally and with reasonable care to the beneficiary and his assets.  The term is most often used between an attorney and his clients, or a board of directors and their corporate executives/employees. Activision is alleging that West and Zampella violated this obligation, and points to several clauses within their employment contracts, stating things like "West agreed to 'diligently perform, on a full-time and exclusive basis, such services as [Activision]....may reasonably require...[in a] loyal and conscientious manner'" and "West also specifically agreed to certain provisions in order to guarantee his loyalty to Activision during and after the term of his employment", etc.  Breaches of the fiduciary duty and duty of loyalty (the two are related) are especially egregious when they result in profits to the person violating the obligation. Activision alleges that Memorandum of Understanding West and Zampella signed provided for profit sharing and equity rights. Activision raises the legal implication that perhaps West and Zampella took actions to increase their own profit rather than those intended as the best course of action for Activision: they claim that West and Zampella allocated themselves 1/3 of the entire bonus pool for the Call of Duty franchise (up through Modern Warfare 1), and even more for Modern Warfare 2. Finally, the cross-complaint points out several instances where they threatened to halt production on Modern Warfare 2 and publicly accused Activision of incompetence.

*Covenant of good faith and fair dealing: This is a standard, unwritten assumption in contract law that means pretty much exactly what it says. The parties agree to deal fairly and not to mislead each other, or trick the other into breaching, or to use the language of the contract to intentionally get out of performing some obligation despite an understanding to the contrary.

Activision alleges in the cross-complaint that shortly after negotiating with West and Zampella to give them "millions of dollars in increased compensation", the two began planning to spin-off a company and take Infinity Ward members with them. They further allege that the two blocked efforts by Activision to increase compensation to Infinity Ward employees, and actively "poison[ed] the relationship between IW and Activision". The cross-complaint outlines in detail attempts to block Activision from fostering goodwill with their employees in an effort to get them to leave, all while Zampella and West allegedly were still under contract with Activision.

*Declaratory Judgment: A declaratory judgment is simply a binding statement from the judge as to the parties rights in a matter. Activision has asked the judge to clarify that they have the right under agreements and corporate compensation plans, to recover the equity and compensation given to Zampella and West during this period.  It's not actually necessarily a legal claim, but more a request to the judge asking "Can we do this?" If the judge agrees, then the determination is made binding for future proceedings on that question.

One last thing: for those of you who read all the way to the last couple of pages in the complaint, you'll notice that of the five causes of action (excluding the declaratory judgment), only the first asked for "exemplary damages". Exemplary damages are the same thing as punitive damages. They're used to "make an example" out of grossly reckless, malicious, fraudulent, or otherwise outrageous behavior.  The second, third, and fourth cause of action all generally involve breach of contract.

In most cases, a claim of breach of contract cannot be remedied with punitive damages, since the goal of the law is to make the harmed party whole again, not to make them profit.  However, the first cause of action involves fiduciary duty and loyalty, not contract, which means that on this count West and Zampella could be liable for a LOT of money. Expect this to be the one Activision fights the hardest over.

Dan Rosenthal is a legal analyst for the games industry.