American McGee says they were "emotionally quite destroyed" by EA canceling Alice Asylum, and now they can't touch the IP "for the rest of [their] life
He can make something based off of Through the Looking Glass, but he can't make something called American McGee's Alice or use any established characters from that IP.
They can't touch an IP derived from a public domain work. If they want to make a new IP, they have to go through all the effort of re-deriving it from the public domain work. Hope this makes sense, I'm just a creative person and not a lawyer.
Edit: If derivative works from public domain were not protected, WOO BOY would Disney be in trouble.
I mean, if EA wants to reboot the whole franchise, they can do so. But they can't use any of the stuff in American McGee's Alice IP, or anything too closely resembling that stuff. The question then becomes this: do they want to use their creative budget to do that... or do they want to use their budget for something else entirely? In other words: Is American McGee's Alice an IP that's financially worth it to rebuild from scratch? Answer: Probably no.
I haven't seen the sequel, but the original is basically taking a children's story and making it twisted and gory (kind of the reverse of what happened to Grimm Brothers fairytales, now that I think about it). If that's the magic sauce, I'd think that it'd be possible to do something similar with any children's story.
Well, if American McGee wants to rebuild the franchise from scratch, then he faces the exact same problem, doesn't he?
If EA wants to remake the franchise, they're basically saying "Look, we filed the serial markers off, here's a new Dark Alice in the Wonderland IP", and they know nobody will buy it.
If American McGee wants to remake the franchise, it's basically "Look EA, we can't actually remake the Dark Alice in the Wonderland IP, but here's Wark Dalice in the Anderland IP", and none of the EA's lawyers will buy it, and he get sued to oblivion by EA.
It's an extermely uncomfortale stalemate regardless of the fact that the original stories were in public domain.
Sure, American McGee can go "well fuck it, here's a super fucking cute and lore-friendly happy trippy Alice in the Wonderland remake that totally goes to a whole different direction this time, HEY BACK OFF DISNEY LAWYERS, I said totally different direction", but that's no longer American McGee's Alice, now is it?
There is no way EA owns the rights to every implementation of "Lewis Carrol but macabre!" any more than Rhys Frake-Waterfield could stop me from making a film where Winnie The Pooh kills people with a chainsaw.
That's a good angle to speculate on it. But the main thing to take away is this: Do they want to pursue this angle, or are they more willing to sit on this IP until the end of the time? I mean, sitting on an IP is a whole lot more legally safe than, you know, attempting to make some new wild legally-distinct numbers-filed-off things from it. (PROTIP: EA does this really well.)
And more importantly, is American McGee willing to rework this whole thing from the ground up?
Speaking as a random creative person: If I was in American McGee's position, I'd drop this stuff right away and go think of other ventures. The moneybagmen sadly won.
It's very likely that as a part of whatever existing deal he has with EA, he had to specifically sign some form of non-competition clause that made it so he can't just leave and make "shmalice in shmonderland" and say it's technically distinct, despite being the obvious follow up to the games owned by EA. Greedy? Yeah. But it's not like he didn't know what he was signing up for. There's plenty of other options for publishers out there who are perfectly willing to not give a fuck about your IP, and just want up front cash and/or a cut of sales. The downside being that, unlike someone like EA, theyre going to have a much more limited reach in terms of getting your game on store shelves, and getting ads in front of eyeballs, if they even do that much.