7 Studios was working on Genius Products' Scratch the Ultimate DJ, but Activision bought out the developer. Genius then sued Acti for sabotaging Scratch's launch and pinching ideas.
Activision of course vehemently denied the accusation but a court judge was less than impressed with the publishers actions, and ordered them to return all source code and tools to Genius Products immediately.
"Since the completion of its acquisition by Activision, 7 Studios has realigned its business to focus its development resources on the music genre. As a part of this realignment, the studio is reducing its workforce to better reflect Activision's upcoming slate of music-based games," said an Activision spokesperson, reports .
At the time of the acquisition, Activision said it was to "bolster its development capabilities," and to provide "the fledgling developer with much needed financing during these difficult economic times." The honeymoon period is over it seems.