Epic in a lawsuit. Will this effect the upcoming UT3?

[Dark Saiyan]

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(Updated/reorganized) Silicon Knights, developer of upcoming Microsoft-published Xbox 360 action game Too Human, has sued Epic Games due to grievances with Epic's handling of its widely-licensed Unreal Engine 3. News of the suit came from Epic Games, which notified the press of the legal action. Silicon Knights issued a press release, and the full lawsuit was made available by San Francisco-based law firm Krieg, Keller, Sloan, Reilley & Roman LLP. Microsoft has claimed a lack of involvement in the suit.
The thrust of the complaint seems centered around E3 2006, where Too Human was demonstrated and subsequently criticized for, as the lawsuit describes, "technical problems and generally unpolished appearance." Silicon claims that Epic withheld a "very useable version" of the Xbox 360 engine for its own purposes, only delivering a fully functional version of the software in November of that year--roughly eight months past the original March 2006 deadline.

Silicon seeks several concessions from their licensor, including a negation of the original licensing agreement, the unrestricted legal right to alter the engine, and, most significantly, forfiture of all profits gained through sales of Epic's Gears of War to Silicon Knights in the form of awarded damages.

Reads the lengthy lawsuit: "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."

Earlier this year, rumors surfaced that Silicon Knights had dropped Unreal Engine 3 and switched to a new development solution, but company founder Denis Dyack quickly denied the reports. According to the suit, it now appears that the company has indeed developed its own engine, dubbed "The Silicon Knights Engine," which is described as an "enhanced" version of Epic's engine. The suit alleges that "actions and the consequent increasing delay and cost of development of Silicon Knights' own game caused by the unworkable Engine" lead to the decision. The document also notes that Epic's code will be entirely dropped from the game following Too Human's release. In summary, the charges levied against Epic by Silicon Knights include Fraud, Negligent Misrepresentation, and Breach of Contract.

"This morning we were served with a lawsuit by Silicon Knights," said Epic VP Mark Rein in a statement. "We believe the claims against us are unfounded and without merit and we intend to fully defend against them." Rein declined to comment in greater depth about the specific allegations contained in Silicon Knights' suit. "We'd love to tell you more about it but unfortunately our lawyers want us to save our comments for the courthouse so we're going to do our best to comply with their wishes," he added.

Dyack issued a short comment to the press, expressing reluctance in moving the issue to the courtroom, but maintaining his company's position. "Our strong preference is to focus on making games, not be in court," he said. "Unfortunately though, as explained in our lawsuit, we have had extensive problems with the Unreal Engine 3 that Epic has been unwilling or unable to rectify. For more than a year, we have been trying to reach an agreement with Epic to resolve these issues without resorting to litigation, but were unable to come to reasonable terms with Epic. We remain hopeful, however, that we can reach a reasonable business resolution with Epic at some point."

Other third party licensees are also mentioned in the suit, with Silicon claiming other developers were also forced to abandon the engine as they had. The company also charges that Epic failed to deliver on time a version of their engine for use in development of a PlayStation 3 game. "Final development kits for that console were released in and around mid-August, 2006, making the functional Engine due to Silicon Knights in February, 2007. Silicon Knights has received no such Engine from Epic," the complaint reads.

When reached for comment, a Microsoft representative stated, "Microsoft is not involved in or a party to this litigation and therefore has no comment."

I have to say that this is pretty sad.....and interesting. I wondered to myself if this will effect the release date for Unreal Tournament 3, whereas this has been rumored to be pushed back to early 2008?!!

What do you guys think of all this?