Thanks to the ruling of a Texas district court judge, Section 8 developer TimeGate Studios won't be forced to pay millions in allegedly misused development funds to publisher SouthPeak, nor will SouthPeak retain a permanent license for the Section 8 IP and its sequels. The dispute originated way back in 2009, when Timegate sued SouthPeak for allegedly embezzling royalties by altering revenue reports. At the time, SouthPeak counter-sued, claiming that $7.5M in funding had been "misused" by the developer, in addition to $2.5M in development costs TimeGate failed to provide.
As noted by Joystiq, and as spelled out in exhaustive detail by GamerLaw, the initial decision to have TimeGate repay development costs to SouthPeak was based on an adjustment to the contract made during arbitration. Thing is, because the changes made during arbitration were viewed as contrary to the intent of the initial publishing agreement, Texas district court judge Keith Ellison invalidated the contract.
The court documents for the recent decision (which can be viewed in-full, here), may not contain the final word on the issue, given that SouthPeak still has the opportunity to appeal the ruling. As it stands, however, TimeGate will retain exclusive rights to the Section 8 IP, and publisher SouthPeak won't get any damages or licensing rights for Section 8 or related properties.