Now, you know you're in the right. They have no real case against you. In an ideal world, you'd take them into court, spank them, and get some extra money out of them for wasting your time. But this is not an ideal world. This is a world where they are a multi-billion dollar company and you have just enough cash in the bank to pay your salaries for five more months. You need that money they're withholding if you ever want to finish your next game. The publisher can delay and make the case drag on for months while you go broke.
A single lawyer can cost more than many, many artists, and you need a lot more than one lawyer to fight this. Do you want to burn through all the money you've managed to make in the last five years and maybe end up going out of business? Do you want to have to lay off your friends after everyone left their day jobs to chase this dream of becoming game developers and bringing Shoot Guy to the world? Aren't Allen and his wife expecting their first child pretty soon? Do you really want to put him out on the street? In this economy? And what about Barbara, who left a brilliant career in advertising so that she could come here and create the character designs that made Shoot Guy so iconic? Do you want to tell her she left that high-paying job so some publisher could take her Shoot Guy designs and make a Facebook game out of him?
Many people see the writing on the wall and give in before the court papers are even filed. Some fight, run out of money and options, and lose. Oh, and as part of the settlement, you're not allowed to discuss this case in public, ever. Sign here.
This is not an exaggeration. This is frequently how these stories end. I've seen a few and heard of worse. (And, true story, I'm not allowed to talk about the outcome of the ones I was in.) Not all stories end this way, and sometimes the little guy wins and we all cheer. Those are nice, but the odds favor the large and the aggressive. Activision might have lost against Greg Hastings, but there are going to be a lot more losers than winners. And we don't usually hear from the losers. Activision wouldn't be dragging people into court on such a regular basis if the odds weren't in their favor.
Now, idealistic young people shake their fist at this sort of thing and shout corruption. The truth is, this isn't so much a corruption of a perfect system as it is someone exploiting a flawed system. Arbitrating contracts between parties is incredibly complicated, and human beings have never really gotten it right. Some systems are better than others, but we've never had a perfect one. The one we have now is actually pretty good (historically speaking) when it comes to disputes between same-sized opponents. You could try to change the laws so that Activision (or some other bully) couldn't do this, but in doing so you'd just be opening up a new hole someplace else. There is basically no solution for this.
The only thing that really restrains companies from acting like this is a sense of shame and the threat of public outcry. It's worked against companies outside of the gaming industry. EA seemed to clean up their act a bit. The same might happen to Activision in time, which is why I keep harping on it when they act like jerks. Some people yawn, "Yeah, yeah. Activision is evil. Everyone knows this. This isn't news." But I'd rather keep the conversation going. Keep telling new people about it. Keep making clear just how cancerous they are to the industry. Keep demanding better. An organized internet boycott / petition isn't usually very harmful to a publisher, but having a majority of your customers hate your freaking guts is bad for any business.
In the meantime: You know what? A cool idea for a game would be SimLawsuit, a kind of Evil Genius-style game where you get ahead by building an army of lawyers and suing other companies.
I'd buy that.