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Silicon Knights to destroy games, code, and give up millions in Epic lawsuit: the story thus far

Silicon Knights to destroy games, code, and give up millions in Epic lawsuit: the story thus far

Silicon Knights released the first of a planned trilogy of games, Too Human, in August of 2008. The game sold fairly well, despite its mediocre rating of 65 on Metacritic. Silicon Knights president Denis Dyack told Joystiq in 2011 that the game had sold 700,000 units since its release 30 months prior.

Unfortunately, the story of an okay game making okay-level sales didn’t end there. Too Human was criticized both prior to and after release for its numerous bugs and glitches, a complaint Dyack deflected onto Epic Games, the creator of Unreal Engine 3. Dyack claimed that Epic hadn’t delivered a complete, working engine as promised, and the time Silicon Knights had spent re-writing code had damaged the game’s quality.

Silicon Knights sued in July 2007, and events have since snowballed into a clusterfuck of… well, epic proportions. Silicon Knights now owes Epic upward of $9 million, the Canadian government $4 million, and must recall and destroy all unsold copies of games the company developed using Unreal Engine 3. This isn’t the slow sink that THQ is experiencing; this is a death spiral.

A losing battle

Silicon Knights’ original lawsuit stated that Epic kept viable Unreal Engine code for itself as it was developing Gears of War while leaving Silicon Knights and other developers who had licensed the engine out in the cold.

“Epic apparently was able to achieve a very useable version of the Engine for the Xbox 360 – the version that it kept to itself, for use only on its Gears of War game,” the court document reads. “Epic’s plan to avoid its obligations and hoard all of the necessary functionalities not only harmed Silicon Knights and all of Epic’s other licensees in the industry, but also gave Epic a clearly unfair advantage in the industry.”

“That advantage was nowhere more evident than at E3 2006, where Gears of War was awarded ‘Best Game in Show’ and garnered nothing but laudatory press. By contrast, Silicon Knights – one of the only other developers to publicly display a playable demonstration of its game – saw Too Human roundly criticized in the videogame press for its technical problems and generally unpolished appearance. The damage to Silicon Knights caused by Epic’s misconduct was manifest, because E3 attendees were able to compare Too Human with another game running ostensibly the same game engine, Gears of War, with vastly superior results.”

A red flag is immediately apparent here: if Epic was out to harm a multitude of companies and not just Silicon Knights, why wasn’t this a class-action lawsuit? Rainbow 6: Vegas, Ghost Recon: Advanced Warfighter, and Splinter Cell: Double Agent were all in development around the same time as Too Human, so why didn’t Ubisoft voice any complaints? Epic’s engines are worth much more to the company as working, ubiquitous pieces of technology than a simple game using that tech would be; it would make little sense for Epic to sabotage third-parties in order to make its own game look better.

The Empire strikes back

Epic counter-sued Silicon Knights in August 2007, a move “pretty common in the legal world,” according to Mark Mathenitis, as written on his Law of the Game blog. The counter-suit charged Silicon Knights with copyright infringement, breach of contract, and misappropriation of trade secrets.

A statement regarding the counter-suit from Epic VP Mark Rein read in part, “...Silicon Knights wants to take Epic’s Licensed Technology, pay nothing for it, and use it any way it pleases.” Rein’s statement directly references Silicon Knights’ earlier claim that, due to the lack of a full-featured engine, the company had to develop their own technology, the “Silicon Knights Engine.” The problem was that engine seemed to use a large amount of Epic’s code.

Silicon Knights lost the case in May 2012. James C. Dever, the presiding judge of Silicon Knights v. Epic Games, wrote in his 47-page summary that thanks to “significant” work by Epic’s lawyers, it had come to light that “Silicon Knights deliberately and repeatedly copied thousands of lines of Epic Games’ copyrighted code, and then attempted to conceal its wrongdoing by removing Epic Games’ copyright notices and by disguising Epic Games’ copyrighted code as Silicon Knights’ own.”

It’s hard to feel bad for Silicon Knights. The company complained about an engine everyone else was able to use propertly, tried to blame Epic, and in doing so dragged themselves into the court system where they were caught in their own mess. In Judge Dever’s words: “Silicon Knights… covered up its coverup, until Silicon Knights’ wrongdoing was revealed at trial through Epic Games’ cross-examination and the court’s own inquiries.”

As a result, a jury in the court of Judge Dever sided with Epic, awarding the Unreal Engine developer $4.45 million in damages. Further, Judge Dever ordered Silicon Knights to pay an additional $4.678 million split across attorneys’ fees, court costs, and prejudgment interest.

As a particularly brutal piece of his ruling, Judge Dever also ordered all unsold copies of games created by Silicon Knights which used Unreal Engine 3 to be recalled and destroyed. Code for games that were in production must also be destroyed, wiping out much of the hard work done on upcoming projects.

It feels like destiny

The problems at Silicon Knights don’t appear to be limited to the courts. In a fascinating exposé on Kotaku, freelance writer Andrew McMillen – the same writer who uncovered deplorable working conditions at Team Bondi – detailed the troubled development of another Silicon Knights game, X-Men: Destiny. The article reads, in part:

“Dyack holds three degrees: two in Computer Science and one in Physical Education. It’s the latter qualification that shines through, according to former employees. ‘He runs his company like a high school gym class or football team,’ one said. ‘He sets examples of those who offend him. He is incapable of celebrating others’ successes. He is irrationally competitive to a fault; for example, he has to sue Epic Games and gloat about it online . [In his mind] you’re either for him, or against him.’”

Many people complain about their boss, but these reports paint an ugly picture in conjunction with Judge Dever’s ruling. Silicon Knights seems to be plagued by poor management, and its financial problems are only starting. The company took out a federal loan of $4 million in 2010, and starting next year, it has to start paying that back. It likely also made future plans that took into account an additional $3 million in planned provincial grants, which it hasn’t, and likely won’t, ever see. The court order to destroy code for games that were in development will also set the company back what could be years of development time and millions of dollars of work.

So in summation, Silicon Knights is facing $4.45 million in damages, $4.678 million in court and lawyer fees, $4 million owed to the Canadian government, $2.5 million the company was likely expecting but won't get, and the cost to recall and destroy all unsold copies of its Unreal Engine 3 games. That's over $15 million erased from the company’s ledger.

Silicon Knights plans to appeal the court’s decision, but it’s unlikely the ruling will be overturned with such damning evidence. Judge Dever’s summary reveals that not only did Silicon Knights allegedly copy functional code, but non-functional, internal comments left by programmers as well. “Silicon Knights even failed to remove or correct typographical errors Epic Games’ programmers had left in those comments,” it reads.

Although the studio has contributed to other titles, Silicon Knights has released just two games over the past eight years under its own name: X-Men: Destiny and Too Human. Its other games, The Ritualyst, Siren in the Maelstrom and The Sandman were either canceled or ordered destroyed by Judge Dever’s ruling. Silicon Knights has been on the ropes for years, this could be the killing blow.