NCsoft reports today that it has settled all legal claims with Marvel Entertainment, allowing its popular comic-inspired massively multiplayer online role-playing games to continue operations unfettered and avoiding a court decision with potentially wide-reaching implications.

　　Last fall, Marvel sued publisher NCsoft and developer Cryptic Studios, claiming the pair's highly successful City of Heroes MMORPG allowed players to create characters so close to Marvel properties that they constituted copyright infringement. NCsoft scored a partial victory in March, when a judge threw out many of Marvel's complaints. Terms of the settlement weren't disclosed, but NCsoft has said the character creation used in City of Heroes and the recently released City of Villains will not be changed as a result.

　　"The parties have agreed that protecting intellectual property rights is critically important and each will continue aggressively to protect such rights in accordance with all applicable laws," NCsoft said in a statement. "While the terms of the settlement were not disclosed, all parties agree that this case was never about monetary issues and that the fans of their respective products and characters are the winners in this settlement."

　　When news of the suit first broke last November, the Associated Press reported it as the first time any game maker had been sued over user-created, in-game content. Had Marvel won, it could have set a legal precedent that would hold developers and publishers responsible for player-created content. That in turn could have led to a drastic reduction of creative in-game options for gamers. With the settlement, that dilemma is avoided for the time being.

　　While the legal wranglings seems to be over with, the battle may soon be rekindled and expanded in the retail arena. In July, Marvel announced a deal with Microsoft to make an Xbox 360-exclusive MMO based on its universe of characters. The month before, Sony Online Entertainment snagged the rights to develop an MMO based on the heroes of Marvel's biggest competitor, DC Comics.