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Why Silicon Knights Vs. Epic Games Is Probably Over

The latest court ruling was handed down earlier this week, and Law 360 reporter Michael Lipkin's here to explain why it's likely the end of the road.

It looks like the lengthy legal battle between Epic Games and Silicon Knights over Too Human has, most likely, come to an end. On Monday, a fourth circuit panel court confirmed, again, Silicon Knights had lost.

Someone told me the co-op in Too Human was pretty good...?

Remember when Too Human was going to be a trilogy? 2005 was a long, long time ago.

Instead of a trilogy, Too Human became one action RPG that was either pretty okay or pretty boring, depending on who you talked to. It wasn't a disaster. But in 2007, well before Too Human was released, developer Silicon Knights sued Epic Games, the creators of the Unreal Engine technology. Silicon Knights had licensed Unreal Engine 3, the latest iteration, to develop Too Human, and blamed Epic Games' inability to provide the technology it promised in order to facilitate development of Too Human. At the time, Silicon Knights said it was embarking on developing its own engine. Rather than defend itself, Epic Games chose to up the stakes and countersue Silicon Knights.

Then, many things happened, including a court ruling stating Silicon Knights had knowingly stolen game code to develop X-Men: Destiny and several other unannounced games. Too Human and X-Men: Destiny were ordered to be destroyed at Silicon Knights' expense. Destroyed. It also owed lots of cash. In May 2013, as the case continued through appeals, Silicon Knights shut down its office and sold its physical assets.

Though this week's ruling isn't earth shattering, it may finally bring an end to the case.

The ruling was brought to my attention by Michael Lipkin, a reporter for Law 360, a business lawyer-focused newswire. To understand what happened on Monday, and to get some context, I hopped on the phone with Lipkin to break down the past, present, and future of Silicon Knights vs. Epic Games.

Giant Bomb: Why don’t we start with what you do and how you came to write a story about this?

Michael Lipkin: Sure. I’m a reporter for a newswire called Law 360, which is aimed at business lawyers to keep them up-to-date on what’s going on. It just came through on our docket system and got assigned to me. I jumped at it because I knew the parties involved, but it was basically an appeals decision, the final appeal decision in the Epic and Silicon Knights case. The appeals court for the fourth circuit, because this is a North Carolina case, ruled on Silicon Knights’ objections to the final verdict, which was against them and in favor of Epic.

GB: This all started, ironically enough, with Silicon Knights suing Epic Games. That backfired because Epic Games countersued, and it feels like we’ve hit a logical conclusion where Epic Games has won outright, correct?

Lipkin: Yeah. In this latest ruling, Epic won on all counts. Silicon lost all of their arguments. You’re right.

It started in 2007 when Silicon Knights accused Epic of not giving them working software that wasn’t up to the standards that they wanted, and that Epic was using the licensing fees from Too Human to make Gears of War, which was a direct competitor, in their mind, for Too Human. They had some claims that Epic was disrupting Silicon Knights’ relationships with Microsoft and Sega. Epic hit them right back and said “not only do we disagree with you on all of those counts, but you used our code for other games that we did not give you permission to use for. Not only do you owe us licensing fees for those games, specifically X-Men Destiny, but you also owe us profits from those games that you earned that you had no right to earn. You have to make your own engine, unless you signed a licensing deal with us, which you did not do.”

GB: Right. Early on, when Too Human was being shown, the frame rate was this big, big thing that came up over and over again. It was part of the reason Silicon Knights said “fine, we’re just build our own engine.” But one of the things that you pointed out is the court essentially found that Silicon Knights had used roughly 20% of actual code from the Unreal Engine 3 in developing its own technology. It really had completely infringed upon Epic.

Lipkin: So Silicon Knights’ argument was that “we only used between half-of-a-percent and two percent of their code.”

GB: That’s a very specific percentage!

Lipkin: Exactly. [And they said] “it was just basically mathematical formulas not covered by copyright, just really basic stuff. We are continuing to clean out the Epic code as the development process continued.” But Epic said that by 2007, around the time that the suit was filed, 20% of the Unreal Engine was still in the Silicon Knights engine. The legal term is de minimis—it’s so small that it doesn’t matter in terms of the law. They said 20% is not de minimis, it’s far from it. The court sided with Epic, and said 20% is too high, and said “you are liable for this copyright infringement.”

GB: Silicon Knights was essentially arguing that what they were doing in building an engine was common knowledge, not technology that was exclusive to Epic.

Lipkin: One of the most damning things from the lower court, the actual trial court, was that not only had Epic’s code been put into the Silicon Knights engine, even comments from Epic’s coders were transferred over, a wholesale copy-and-paste.

X-Men Destiny was the most recent game released by Silicon Knights. It will probably be its last.

GB: [laughs]

Lipkin: This is non-functional code. A programmer might say “we need to check out this” or something like that. These were preserved, including their typographical errors.

GB: I didn’t mean to immediately start laughing, but that just seems so egregious. It feels like when a child is lying to you, and you can just tell.

Lipkin: I’m not going to comment on that! But the district court did say this was evidence that this was a willful copyright infringement, it wasn’t just an accident. Silicon Knights had operated in bad faith. One of Silicon Knights’ arguments was that Epic wasn’t entitled to get back attorneys fees or some amount of attorneys fees because this was a very complex case, and in complex cases, often times the prevailing party, the winners, aren’t allowed to get back the attorneys fees. And the court basically said “this was really hard and time consuming for Epic because of all the walls you put up. Your actions made it harder for them because you were trying to cover up what was happening.” They even said there was a cover-up of the cover-up at one point. [And the court said] “So, no, you can’t use the argument that it was too complex to give back money because you’re the ones who made it too complex."

GB: But Silicon Knights made it unnecessarily complex through these road blocks.

Lipkin: It was time consuming but not necessarily complex in the legal sense. The arguments were relatively straightforward, the court said, but the amount of effort Epic had to exert to prove that the code was copied was unnecessarily large because of Silicon Knights’ cover up, according to the court.

GB: In the paperwork that you’ve read, when you use the term cover-up, did they give any sense of what that meant?

Lipkin: Silicon Knights had removed copyright notices from Epic in the code, and replaced it with their own in what the court cited as part of the cover-up. If you looked at the code immediately, you’d say “oh, copyright Silicon Knights! This is Silicon Knights’ code!”” But, in fact, they had just deleted, according to the opinion, the Epic copyright.

GB: For myself and a lot of other folks that don’t have a good sense of the legal system, it feels like these just keep going and going. Does this bring some finality to this case? Is there any other avenue for Epic or Silicon Knights to reasonably pursue going forward?

Lipkin: So I reached out to the lawyers on both sides, but they didn’t get back to me for my piece. I don’t have anything straight from them on whether they plan on further appeals, but basically, the way it works, there was a decision in the trial court. The jury said “this is what we think. We think that Epic is the victor here.” And the judge in that case said “okay, here are what the damages are.”

Then, Silicon Knights appealed to the court of appeals, which is in-between trial court and Supreme Court in the American justice system. They said “there are all these substantive problems.” Then, the appeals court said on Monday, January 6, [that] “we disagree with you for a variety of technical reasons,” and they sent the case back down to that lower court. The lower court issued a very brief, one-sentence pro forma ruling that said “given the appeals court did not agree with Silicon Knights, we’re gonna go ahead with the verdict we have already entered.”

From what I understand, the money hasn’t changed hands yet. Also, I’m not sure whether Silicon Knights has the money. That’s unclear, too. The trial court is in the mode right now of achieving finality. It doesn’t appear that there are other grounds for appeal. There’s something called an en banc hearing. Normally, in an appeals case like this one, only three judges hear it out of 10 or 12. You can ask for a full hearing before the appeals court, but these are extremely rare. There also doesn’t seem to be any constitutional issues that would merit some sort of Supreme Court appeal.

Patrick Klepek on Google+
94 Comments
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Edited by MrCHUP0N

Is SK still an entity? I forgot the whole story. I can only imagine a shell entity at the most.

Edited by Sammo21

I stil lol when people try to talk to me about how good this game is. Having played it, that argument doesn't work on me.

Posted by FuriousJodo

I bought Too Human at Half-Price Books the other day just because I like living outside of the law.

Also, I think it was $3.

Posted by Sgtpierceface

This was a great run done of the situation. I really can't understand what Silicon Knights was thinking throughout this whole thing.

Posted by aidros

Sounds like there is some nefarious business-dealing going on at SK. Good explanation of the legal landscape in this story, though. I like this seeing this kind of news stuff. Fascinating article, Scoops!

Posted by Morningstar

Thanks for this.

Edited by Korolev

Wow. Silicon Knights or Silicon Knaves?

How's Denis Dyack's (3rd or 4th) Kickstarter going anyhow?

Posted by porjos

Awesome article Patrick, thanks!

Edited by Livingitlarge224

@patrickklepek you made a mistake by not including this video in the body of your article:

Edited by Snail

Man, Denis Dyack is the worst.

Posted by Shortbreadtom

Scoops living up to his name. Good article, especially for someone like me who had no idea what all the lawsuits were originally about.

Posted by joetom

Funny, I was just thinking about Silicon Knights last night. I go to school near their offices, so they tend to come up every now and again.

Edited by AtomicEdge

An excellent article Patrick. I know when I click one of your articles that I am going to get something interesting and thought out, as opposed to click bait.

Posted by NPfeifer

Sliiiiiiimy stuff. Great article.

Edited by blacklab

VIDEO THING!

Edited by AngriGhandi

Ohh, so they actually stole code from Epic!

When this originally happened, I thought they had just gotten countersued for wasting Epic's time, or impudence, or something crazy. Which made the "destroy all copies of your games" seem pretty harsh!

I feel like nobody mentioned the stealing part.

Man... Silicon Knights. What the hell was going on over there?

Edited by Chris2KLee

I hope it's finally over for real this time, what a mess. I can't believe they didn't scrub the original comments from the code! That is literally what classmates in my comp sci class got busted for in high school! HIGH SCHOOL! What a bush league con job SK was. Unbelievable.

Posted by ptc

How is it that I can go to Amazon right now and order a brand new copy of Too Human for $20?

Edited by Brodehouse

Silicon Knights can join Atari and 3D Realms in a long line of industry cautionary tales.

Edited by RuthLoose

@ptc: This is likely due to back inventory sold through one of Amazon's partners (currently Lotsa Electronics) and fulfilled by Amazon's Prime Membership program. Somebody, somewhere at sometime between 2008-2012 figured that this game was going to sell well and there are a ton of non-purchased copies of Too Human floating around this mortal coil. Amazon's doesn't technically have this game in their distribution warehouses, instead Lotsa Electronics does. Pity on them I suppose.

Posted by Shevar

Silicon Knights what happened to you? I mean, you gave us Blood Omen.

I don't understand how this studio went sideways so badly.

Posted by ThunderSlash

BLAT BLAT BLAT! Man what happened to Silicon Knights, they seemed so promising 2 gens ago.

Posted by KirkDouglas

I remember when they put a picture of him up in the lobby of Brock University showing off what an honoured son of the school he was. They made him some important figure as a successful Brock graduate. I'd be interested if he's still up there, I'd check but I graduated years ago.

I used to drive past the SK offices every day. Then one day all the equipment was on the curb, and they were gone. Now it sounds like Precursor Games has disbanded too. I think they had gone up the QEW to Stoney Creek.

Edited by GaspoweR

@livingitlarge224 said:

@patrickklepek you made a mistake by not including this video in the body of your article:

YEAH, KLEPEK. YOU FUCKED UP MAJORLY, SON. CHOCO TACO.

Posted by elko84

I'm gonna go play Too Human.

Edited by Nux

That was a really interesting read. Thanks Patrick!

Posted by Trilogy

I can't tell if Silicon Knights were brazen, lazy, or both. I like Patrick's comparison of a lying child.

It's like when a little kid erases the name off of one of his fellow students test, and writes his own name instead. Then when the teacher sees the eraser and the remnants of the original students name, she confronts the little cheater only to be poorly lied to.

Edited by Oni

Insightful interview, Scoops.

If anyone wants further reading, a while back Kotaku did a good piece (I know right) on how messed up SK's behavior was during the development of X-Men Destiny. http://kotaku.com/5955223/what-went-wrong-with-silicon-knights-x+men-destiny

Basically they stole the publisher's money to make something else and cranked out a shitty game just to fulfill their end of the bargain. GG, Dyack.

Posted by MonkeyKing1969

What I would love to know is who started the legal proceedings on Silicon Knights side. It must be Denis Dyack because he was a founder of the company and was President as late as 2009 when this suit was in full swing. But, it could have been on the advice of legal council or someone lower down than Denis. Who started the suit and what they knew or didn't know matters so much to figure out what was going on.

You have to think the coders who knew that they had stolen code were shaking in their boots. That is the real story, who knew 'what' and when did they know it? And, if the coders knew did they think they would get away with it? There was a cover up at SK, but by who and why? Did the Sr. Executives know, or was someone covering their ass lower down the ladder? Did someone tell the coders to grab Epics code; and if so why to save time, to get the games out, or some other reason?

Edited by Gildermershina

So I'm not a legal expert or anything, but it seems like appeals like this are mostly stays of execution. It seemed pretty much done and dusted, SK appeals to, uses the extra time to desperately find a technical way out of paying all the money, and I don't want to be making accusations here, but basically do their best to wind down their operations in such a way that by the time they're finally ordered to pay all of that money there literally isn't any... And then "hey, we've learned our lessons, everyone give us your money so we can make an unauthorised sequel whose dubious origin is potentially a legal issue in itself but don't worry about it because we've learned our lessons (and one of us is into child pornography)."

Posted by Sooty

Booooooooring.

These legal battles come across so petty.

Posted by MrCHUP0N

@meteora3255: Yeah I gotta read the interview more carefully when I have a break in my work. I knew he hightailed it out of there to start that new studio but I had assumed that SK eventually crumbled into nothingness--nary an employee nor office trash bin to be found.

Edited by Sweetz

So what killed Silicon Knights was using UE3 code to develop X-Men and it appears they were certainly in the wrong there, but what was the verdict of their initial suit against Epic?

I mean, before Gears came out, it really isn't hard to imagine that UE3 wasn't up to quality standards of an established engine and that Epic was dropping the ball on supporting it in favor of making sure their own game was good. The initial batch of UE3 games before Gears was pretty rough (which I know includes Bioshock, but that was mostly based on UE2, which was already well developed) and everything that started development after Gears was much improved.

A developer selling an engine and also making their own game that's likely to compete with games from other developers they sell that engine to does seem like a questionable conflict of interest.

Edited by Shaunage

One of my least favourite games of the entire generation.

Posted by AnEternalEnigma

Still hilarious how all this started because Silicon Knights sued Epic first. Definition of backfire.

Posted by cooljammer00

Is Dyack still working with that child molester?

Posted by AlwaysBeClothing

The Target near me has a copy of X-men Destiny, for $60. That's outrageous.

Also, BLAT BLAT BLAT ALL Y'ALL

Posted by SomberOwl

It sucks that the only major studio in my area had to go like this.

Posted by Jack_Frost
@sweetz said:

So what killed Silicon Knights was using UE3 code to develop X-Men and it appears they were certainly in the wrong there, but what was the verdict of their initial suit against Epic?

I mean, before Gears came out, it really isn't hard to imagine that UE3 wasn't up to quality standards of an established engine and that Epic was dropping the ball on supporting it in favor of making sure their own game was good. The initial batch of UE3 games before Gears was pretty rough (which I know includes Bioshock, but that was mostly based on UE2, which was already well developed) and everything that started development after Gears was much improved.

A developer selling an engine and also making their own game that's likely to compete with games from other developers they sell that engine to does seem like a questionable a conflict of interest.

I was literally just going to say something like this...

Posted by Hailinel

@cooljammer00: One, no he is not. Two, the guy isn't a child molester. There's a difference between child pornography and molestation. Still gross either way, but it's not a trivial distinction.

Edited by LoMo

@livingitlarge224: you sir are on my Christmas Card list. I had never seen that video.

Posted by Firrae

@mrchup0n: Only in the same way that a ghost is. It's still technically a company with 0 employees that do anything other than work on this case. I assume it will no longer be around at all now with all the employees in different places at this point.

Posted by GERALTITUDE

@korolev said:

Wow. Silicon Knights or Silicon Knaves?

hahaha I can't believe I've never heard this before.

Posted by ch3burashka

This is the third or fourth article I've read about this ordeal, but goddamn did this get fucked sideways. First they fucked up the "trilogy", then they fucked up their trial, and last they fucked up their Eternal Darkness Kickstarter. It's kind of like a snowball, but instead of snow it's shit. A shitball, if you will.

Usually I'd end a comment on a depressing article with "best of luck to all involved", but it seems like they brought it upon themselves and have had no intention of stopping this shit show. I don't want the people involved to starve, but maybe take a mid-manager role in an industry far away from video games.

Posted by Livingitlarge224

@lomo: It is one of the oldest videos on the site! Go to "Featues" go to the second last page, there it is, in all it's glory!

Posted by TowerSixteen

So...Justice? Sounds like SK earned this good and proper.

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