Silicon Knights Loses Key Witness in Epic Legal Fight

Silicon Knights has suffered a major setback in its ongoing legal battle with Epic Games over its Unreal Engine 3 licensing dispute. A judge has granted Epic a motion to exclude an expert witness's testimony and reports that were considered key to SK's case.

The witness in question was financial analyst and accountant Terry Lloyd, who argued on SK's behalf that problems with Epic's Unreal Engine 3 licensing and functionality caused more than $58 million in damages to Silicon Knights.

Ontario-based Silicon Knights brought in Lloyd to offer an expert opinion on damages caused by issues with Unreal Engine 3, which the developer claims caused a two-year delay and low sales of its 2008 game Too Human for Xbox 360.

SK filed a lawsuit in 2007 alleging that Epic failed to provide a functional version of Unreal Engine 3 because it was too busy developing technology for Gears of War. Epic filed a countersuit at the time denying that it promised to deliver a "fully-operational version" of the engine within six months of the Xbox 360's launch.

Silicon Knights further claimed that during the license-agreement negotiations, Epic made false representations concerning the license agreement and the functionality of UE3. It also claimed that the deal "caused decreased sales of Too Human, caused [publisher] Microsoft to end negotiations to develop two sequels... damaged Silicon Knights reputation, and impaired Silicon Knights' ability to secure future development projects."

In opposing Lloyd, Epic described him as unqualified and filed a motion to exclude his testimony. Further, they called his estimates "unreliable," "speculative," "made up," and "uninformative guesses."

North Carolina chief district judge James Dever III agreed, taking issue with how Lloyd calculated potential sales for Too Human, and the value of the rejected projects Silicon Knights was negotiating with publishers such as Capcom, THQ, Vivendi, Namco, and Sega.

Source: Gamasutra