Silicon Knights’ Lawsuit Takes a Turn in Epic’s Favor
By Yannick LeJacq | December 29, 2011 | News | No comments | Share
The Ontario-based game studio Silicon Knights suffered a setback earlier this week in its lawsuit against Epic Games when a judge granted Epic’s motion to exclude the reports and testimony of an analyst that was key to the studio’s case, The Escapist reports.
Expert testimony was originally meant to be provided by the financial analyst and accountant Terry Lloyd, who has argued that licensing and technical difficulties involved with Epic’s Unreal Engine 3 led to more than $58 million in damages to Silicon Knights during the development and release of their less-than-well-received 2008 title Too Human. Silicon Knights claims that these damages caused the two-year delay and middling sales for the struggling action-RPG. The company seeks further damages for the two aborted sequels that never saw the light of day once negotiations with Too Human publishers Microsoft Game Studios were severed following the game’s poor release.
According to court documents revealed by The Escapist, Lloyd specified six areas of damages:
- 1) lost royalties due to decrease sales ($6.2 mil)
- 2) lost publisher bonus ($750k)
- 3) lost ancillary royalties ($810k)
- 4) lost profits from sequels ($16+ mil for
Too Human II
- , $14+ mil for
Too Human III
- ) and another Sega title,
The Ritualyst
- ($8+ mil)
- 5) cost to develop a new engine ($2.3 mil)
- 6) economic harm to Silicon Knights’ reputation ($8.9 mil)
But the court’s recent decision decision dismisses any effect his points could have had on the suit. According to the report, Epic argued that his analysis should be dismissed from any legal proceedings, arguing that he is “not qualified,” his methodologies are questionable and “do not fit the facts of the case,” and are therefore “unreliable and speculative.” Silicon Knights responded that Lloyd’s methodology was indeed reliable, to which Epic replied that they seemed to be “uninformed guesses” or possibly worse, simply “made up.”
North Carolina chief district judge James Dever III agreed with Epic’s argument, finding issue with how Lloyd calculated potential sales figures for Too Human,in addition to the value of any prospective projects Silicon Knights had originally been negotiating with companies like Capcom, THQ, Vivendi, Namco, and Sega.
Silicon Knights first filed its lawsuit in 2007, claiming that Epic had failed to provide a functional version of Unreal Engine 3. The North Carolina based studio, famous not only for its Unreal and Gears of War series but also for frequently licensing its engines to other developers and offering freely available toolkits such as the Unreal Development Kit (UDK) to modders and indie developers, responded by filing a countersuit, denying that it promised to deliver “fully-operational version” of the engine within six months of the Xbox 360′s launch. According to the court documents, Silicon Knights maintains that that “during the parties’ license-agreement negotiations, Epic made false representations concerning the license agreement and the functionality of UE3.
While this latest development does not settle the legal battle between the two developers, it certainly takes any wind out of Silicon Knights’ sails for any claims for damages. This news comes little more than a month after the struggling developer let go of the majority of its staff following an announcement that one of its new projects was cancelled “at the final second.”
