Infinity Ward, a unit of Activision (acquired by the company in 2003), struck solid gold with Call of Duty: Modern Warfare 2.  The game enjoyed a more lucrative debut then any movie, music, or video game release in history, selling $310M USD worth of units in a mere 24 hours.  As of March, over 14 million copies have been sold worldwide, indicating that the game raked in over $700M USD.

Following that success, though, the studio has been slowly falling apart from the inside.  In March, Activision fired Jason West (Infinity Ward president, game director, co-CCO, and CTO) and Vince Zampella (CEO and co-founder of Infinity Ward) for "breaches of contract and insubordination".

West and Zampella accused Activision of an "Orwellian" and "pre-ordained" campaign to try to "manufacture a basis to fire" the studio's founders.  The pair filed suit, claiming Activision owes them $36M USD in unpaid royalties.

The pair launched a new company, Respawn Entertainment, which signed a distribution deal with Electronic Arts, their formal rival.  Since, 26 of Infinity Ward's 80 COD:MW2-era employees have left the company on their own volition, with many joining the ranks at Respawn, angry at Activision's treatment of West and Zampella.

Now a decimated Infinity Ward has been smacked with a suit by the "Infinity Ward Employee Group" -- a collection of about half the employees who worked on COD:MW2 -- seeking half a billion dollars, alleging breach of contract and unpaid royalties.

The $500M USD bounty may seem an astronomical sum, but that's what the 38 employees contend they were owed.  They say that Activision contractually promised them unpaid bonuses, royalties, profit sharing.  Further, they're seeking a payout for future profits from games such as Modern Warfare 3, which they helped plan, and punitive damages.

The Modern Warfare devs, some of whom still work at Infinity Ward, claim that Activision is exploiting the unit.  They state in the court documents, "In short, Activision withheld the property of the IWEG in an attempt to keep the employees hostage so that Activision could reap the benefit of the completion of Modern Warfare 3."

An Activision spokesperson comments, "Activision believes the action is without merit.  Activision retains the discretion to determine the amount and the schedule of bonus payments for MW2 and has acted consistent with its rights and the law at all times. We look forward to getting judicial confirmation that our position is right."

Whoever wins the case, it spells bad news for Activision.  The company's most profitable unit seems on the verge of internal collapse, allegedly thanks to the company's fiscal tightness and questionable firings.

Call of Duty: Modern Warfare 3, the sequel to the best-selling COD:MW2, currently sits in pre-production with the release date unannounced.