Epic Games, which has been sued by Silicon Knights, isn't very happy. VP Mark Rein said that his company has done nothing wrong and Epic has now filed a counterclaim against Silicon Knights stating that SK has misappropriated Epic's technology and won't pay. [Update: more details]
Epic Games' VP Mark Rein today sent select members of the media, including GameDaily BIZ, and update on the company's legal battle with developer Silicon Knights. Silicon Knights' President Denis Dyack believes that Epic kept a usable version of the Unreal Engine to itself for Gears of War development and provided Silicon Knights (SK) with the kit far too late. SK alleges that Epic harmed development of Too Human, as well as other Epic licensees.
Rein, however, insists that Epic has "done nothing wrong." He added, "We continue to be committed to fully defending against Silicon Knights' unfounded allegations."
Epic has filed a counterclaim in the U.S. District Court for the Eastern District of North Carolina, which states that SK "decided to misappropriate Epic's licensed technology" and that their lawsuit "lacks factual or legal merit."
"Indeed, the plain language of the Silicon Knights' Complaint makes clear that Silicon Knights wants to take Epic's Licensed Technology, pay nothing for it, and use it any way it pleases," Epic said.
In the counterclaim, Epic outlined that it's "setting forth claims for copyright infringement, breach of contract, misappropriation of trade secrets, and for the imposition of a constructive trust, results from Silicon Knights' wrongful conduct, which is continuing... Epic seeks injunctive relief, compensatory and punitive damages, the destruction of infringing goods, including infringing computer code, and attorney's fees and costs."
[UPDATE] We're still combing through several super long legal documents that were provided to us. Some other important points in the counterclaim include the fact that Silicon Knights actually received a "substantial discount" on Unreal Engine 3 because it promised to use the engine on all of its upcoming 360, PS3 and PC titles. Also, Epic says that SK knew when it signed on that Epic was still working on certain features of Unreal Engine 3 and that features would continue to be developed and added as Epic completed Gears of War. As such, Epic claims that "SK knew when it committed to the licensing agreement that Unreal Engine 3 may not meet its requirements and may not be modified to meet them."
Furthermore, Epic said that SK admitted to developing a competing engine, "Silicon Knights Engine," as early as May 2006, and that this engine incorporates Epic's Licensed Technology, including code from Unreal Engine 3. Therefore, Epic is claiming that SK has "made unauthorized use of Epic's Licensed Technology and has infringed and otherwise violated Epic's intellectual property rights, including Epic's copyrighted works, trade secrets, know how and 'Confidential Information' as defined in the License Agreement."
In addition to injunctive relief, Epic is seeking compensatory damages "in an amount to be proven at trial, but in any event in excess of $650,000."
[UPDATE 2] In a memo provided to support Epic's motion to dismiss, the company said, "This lawsuit is a cynical effort by SK to unlawfully enrich itself at the expense of Epic Games... After having exploited Epic's intellectual property to its advantage, SK now seeks to renege on its payment obligations under the License Agreement. It is SK, not epic, that has engaged in deceit, infringement of Epic's intellectual property rights, breach of contract and unfair business practices."
The memo continues, "Moreover, SK's criticism of Epic makes no sense on its face. SK contends that Epic sabotaged SK's ability to develop video games with Epic's software engine. Epic's incentive, however, is for SK to develop as many successful games as possible with Epic's software engine... The more successful SK is, the more Epic receives... In short, SK's lawsuit is a pretense... The court should not countenance SK's conduct and should dismiss the complaint."
