THQ Inc. said Tuesday that it won a ruling in a procedural matter in its ongoing dispute with Jakks Pacific Inc. over royalty payments.

The Malibu- based Jakks and Agoura Hills-based THQ are renegotiating the royalties THQ has to pay Jakks for a WWE wrestling video games THQ developed. Jakks held the license for the WWE characters. Games based on WWE characters have generated sales of more than $1 billion worldwide, THQ said in the statement.

THQ sought arbitration and asked the court to appoint a neutral arbitrator while Jakks has sought to dismiss four of the five arbitrators, THQ said.

The decision by a California Court of Appeals judge on Feb. 28 on a technical point basically went in favor of THQ and allows the arbitration process to move forward.

Shares in THQ were down 1.4 percent to $17.48 while shares in Jakks were down 2.5 percent to $27.69 in early trading Tuesday. Both stocks are traded on the Nasdaq.