The world of big-budget game development is got particularly murky today as Activision, who will be releasing the forthcoming DJ Hero title, was accused of interfering with a contract and misappropriating trade secrets relating to the development of a competing title.

“Scratch: The Ultimate DJ” is the game in question, which is being developed by a company called 7Studios and published by lawsuit-filer Genius Products. The latter alleges that Activision approached it to buy Scratch, but when the company turned down the offer, Activision bought the developers (7Studios) instead. Now, Genius claims, Activision and 7Studios have been withholding code, controllers and other products so that the launch of Scratch will be delayed.

Whether the lawsuit succeeds will depend very much on what the contract between 7Studios and Genius says. If 7Studios has indeed been sharing proprietary technology with Activision and withholding code then there might be trouble. For the moment, 7Studios are continuing work on the game, but given the legal situation the whole thing has got into, I wouldn’t be surprised if the whole project ends up eventually cancelled.

Full text of lawsuit (via Variety)