Like a band-manager relationship gone sour, developer Harmonix recently filed a royalty lawsuit against old publisher Activision for what the complainant says is the incorrect payment of dues. As quickly as the case was filed, however, it was dropped in favor of talks outside court.

Harmonix says that Activision used its technology to develop Guitar Hero III: Legends of Rock (Xbox 360, Wii, PS3, PC),  but did not pay the full royalties prescribed by a valid contract in effect between the two parties. As a result, Harmonix claims that Activision owes them US$ 14.5 million worth of royalties that the latter made from Guitar Hero III and other spin-offs.

In the deal between Activision and Harmonix, any sequel that Activision publishes which "incorporates, uses, or is derived from Harmonix property," should get the higher of the two prescribed royalties. In the suit filed by the complainant, it was stated that the defendant only paid the lower royalty rates.

Harmonix developed the first Guitar Hero under publisher RedOctane. It then produced the sequel for Activision, but was later acquired by Viacom and MTV Games to develop Rock Band (Xbox 360, PlayStation 3).

Reports suggest that the suit was dropped to give way to an out-of-court settlement between the two parties. It is believed that Activision decided not to make the matter public, and decided to go for more amicable options.

So far, Activision's Guitar Hero III has been beating Harmonix's Rock Band in terms of sales. Guitar Hero III has sold 6.5 million units since late last year, while the more critically-acclaimed Rock Band has sold a solid 1.5 million units.