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Judge excludes Silicon Knights' expert testimony in suit with Epic

A recent judges' ruling in the Silicon Knights vs. Epic Games' fiasco gives a clear advantage to Epic, by omitting discredited reports and testimony of a Silicon Knights' 'expert.'

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A federal judge's ruling in the ongoing "Too Human" lawsuit brought against Epic Games does not bode well for developer Silicon Knights. (The case was granted a federal jury hearing back in May of this year.) In it, Chief District Judge James Dever III, excludes the testimony of Silicon Knights' expert witness Terry Lloyd, a Certified Public Accountant and Chartered Financial Analyst retained to provide an expert opinion on the damages alleged in the suit.

The court documents offer a rather scathing assessment of Lloyd's assertions, particularly the methodology he used to achieve them. The ruling finds him "not qualified," and asserts that his methods of assessment are "unreliable and speculative," and "do not fit the facts of the case." The documents also describe Lloyd's findings as "his own subjective conclusions about an industry in which he had no prior knowledge or experience." As a prime example, Lloyd claimed that the genre and marketing of a game play a key factor in overall sales; however, he used games with unlike genres or budgets for his comparisons.

According to information in the court documents discovered by The Escapist, Lloyd had broken down his assessment of the damages into the following six categories:

  • Lost royalties due to decrease sales ($6.2 mil)

  • Lost publisher bonus ($750k)

  • Lost ancillary royalties ($810k)

  • Lost profits from sequels ($16+ mil for Too Human II, $14+ mil for Too Human III) and another Sega title, The Ritualyst ($8+ mil)

  • Cost to develop a new engine ($2.3 mil)

  • Economic harm to Silicon Knights' reputation ($8.9 mil)

Lloyd's estimated costs for game engine development were also thrown out, given that Sega and Microsoft repay those types of related costs to the developer. The court documents also include the revelation that Silicon Knights is working on development plans for the games King's Quest and Sandmim, and has also engaged in talks with publishers Vivendi, Namco, Capcom, and THQ.

The lawsuit, originally filed in 2007 against Epic Games, seeks $58 million in damages related to the development and marketing of Too Human. Dollars for fallout and damage to the developer's reputation after the game was released are also included in the staggering figure. We reported that Silicon Knights is also claiming that Epic "defrauded" it and other developers about the limitations of Unreal Engine 3. We even found out what some other developers thought about the Dyack's claim at the time.

In what would seem to be a textbook example of a slippery slope, Silicon Knights is also seeking damages for two (unmade) Too Human sequels, which it claims became an impossibility after Microsoft cancelled negotiations due to Too Human's delayed release and poor sales. (However, it's worth noting that as recently as last May, Silicon Knights' Denis Dyack said that the team still intends to complete the trilogy.)

Epic fired back with a counter-motion shortly thereafter. "Having exploited Epic's intellectual property to its advantage, Silicon Knights now seeks to renege on its payment obligations under the License Agreement," it reads. "It is Silicon Knights, not Epic, that has engaged in deceit, infringement of Epic's intellectual property rights, breach of contract, and unfair business practices."

This latest ruling doesn't mark the end of the Silicon Knights vs. Epic Games lawsuit saga, but it sure seems to put a serious damper on the Too Human developer's claims for damages. The beleaguered developer also recently laid-off half of its 90-person staff, and still has a promised "prototype" game project it's supposed to be developing using government funding.

From The Chatty

  • reply
    December 29, 2011 6:00 AM

    Jeff Mattas posted a new article, Judge excludes Silicon Knights' expert testimony in suit with Epic.

    A recent judges' ruling in the Silicon Knights vs. Epic Games' fiasco gives a clear advantage to Epic, by omitting discredited reports and testimony of a Silicon Knights' 'expert.'

    • reply
      December 29, 2011 6:22 AM

      How many times have we read financial analysts making predictions about game sales, and said that they're living in a fantasy land? Glad to see the judge in agreement. "What?! You're making revenue projections for Too Human II?!"

      It's also interesting that Silicon Knights was negotiating a King's Quest game; is this why Activision was fighting The Silver Lining so much? http://www.shacknews.com/article/62558/fan-made-kings-quest-sequel

      Originally referred to as "King's Quest IX: Every Cloak Has A Silver Lining," the unofficial sequel to the long-dormant adventure series was initially halted in 2005 after Vivendi sent the team a cease-and-desist letter. However, the project was revived months later as "The Silver Lining" when Vivendi granted the team a non-commercial fan license to use King's Quest settings.

      But this time, "[Activision] have reached the decision that they are not interested in granting a non-commercial license," explained developer Phoenix Online. "We must and will comply with this decision, as much as we may wish we could do otherwise. "


      That was March 1, 2010, the same day that Activision had fired West and Zampella from Infinity Ward, and a month after Activision's annual February bloodbath of layoffs. Activision as a whole got criticized for those moves (particularly in The Idle Thumbs Podcast 3), and on May 5, 2010, Activision announced that they were back in "discussions" with The Silver Lining team: http://www.shacknews.com/article/63654/fan-made-kings-quest-sequel

      So yeah, if you have a non-commercial license for a remake, be worried about some developer out there wanting to make a sequel, and not have any competition from fans. If Silicon Knights hadn't been so flat-footed in their execution, would The Silver Lining have been released?

    • reply
      December 29, 2011 6:41 AM

      Gah, guess we'll never see Too Human sequels. :(

      • reply
        December 29, 2011 6:47 AM

        A tragedy. (I'm not kidding.)

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          December 29, 2011 7:04 AM

          I loved Too Human. I put it up there with Alpha Protocol as misunderstood masterpieces. The X-Men game was fucking weak as hell though.

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            December 29, 2011 7:23 AM

            I still need to try Too Human but Alpha Protocol ruined itself for me at the end.

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            December 29, 2011 7:56 AM

            You are correct good sir

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          December 29, 2011 7:47 AM

          I liked it.

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          December 29, 2011 8:45 AM

          no the tragedy is that anyone gave them that much money to begin with, and still gave them millions afterwards to make that awful xmen game.

    • reply
      December 29, 2011 6:49 AM

      Is Silicon Knights the ones who have gotten millions from the Canadian government?

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      December 29, 2011 7:14 AM

      I still don't understand why Silicon Knights have such a problem with Epic. Even if Epic had released a better engine for them, Silicon Knights would have still made a terrible game with it. Maybe Dyack should stop passing the buck and admit that the company itself is at fault.

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      December 29, 2011 7:17 AM

      Haha kudos to the judge on that.

      Lost profits on Too Human XII...
      Lost profits on Too Human MLXXXIII

    • reply
      December 29, 2011 7:44 AM

      lol.. the analyst was P A C H T E R 'D

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      December 29, 2011 8:56 AM

      what I never understood was SK's assertion that since Epic delivered a subpar engine they had the right to turn around and sell it as the Silicon Knights Engine

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        December 29, 2011 12:49 PM

        From what I remember, SK says they put in a lot of work on that engine to make it usable for them, and that is the heart of the disagreement (for them at least).

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      December 30, 2011 7:34 AM

      Their shitty game design has nothing to do with the Unreal engine. This is silly.

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      January 2, 2012 12:42 PM

      We made a bad game. We made ludicrous claims about a Trilogy before the first game was complete. Yes, we at SK are indeed that ignorant and arrogant. We have to blame someone!

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      January 3, 2012 6:39 AM

      Man what a load of shit. Claiming damages for potential sales of 2 other games that you havnt even fucking made? Haha, good luck trying to win.