When last we left our heroes, Silicon Knights ("SK") and Epic, the motion to dismiss had been denied and discovery was on the horizon. Shacknews is reporting that a number of Unreal 3 licensees have been subpoenaed with respect to their license agreements. This is an interesting move that could turn the tide of battle.
Since the facts are widely being reported, I thought I would attempt to offer a little insight on the possible strategy behind this move. Of course, I'm not privy to any actual inside information, so this is all speculative. SK's theory seems to be proving a systematic lack of support of the Unreal 3 licensee while Epic developed Gears of War, including specific failures with respect to promises in the agreement.
So, here we have SK requesting the license agreements used with other developers. SK, I assume, is hoping for one of a few possible positive outcomes for them:
1. The other contracts lack the promises that SK is claiming, which can be argued that Epic therefore never intended to keep with respect to SK.
2. The other contracts are identical, and the other developers received the same support that SK did, showing a pattern of failure.
3. The other contracts are identical, and other developers received more than SK did, showing that SK was in fact neglected in terms of support.
4. The other contracts contain the same promises on a different timeline, evidencing that SK's contract was perhaps entered into improperly.
5. The contracts and support were identical, and other developers are in the same position, showing a pattern that the level of support has held back development universally.
Generally speaking, no matter how the contracts are similar or different, SK's counsel should be able to make an argument to support their case based on the contracts. Of course, on the flip side, Epic has a few possible arguments of their own:
1. If the contracts and support were identical and other developers made more progress, then Epic can argue that SK lacked the resources or know-how to make use of the engine.
2. If the contracts show a changing timeline over time, it could be argued that certain delays gave Epic a better idea of a realistic delivery date as time went on (and, assuming that the other contracts had provisions for reasonable delays, this could show SK hasn't been patient enough).
3. If the contracts were the same and support for SK was greater than other developers, with other developers making similar or more progress on their projects than SK on Too Human, it could again be argued that the issue was on SK's end.
There are many permutations of these arguments, but that should provide a pretty good idea of the possible result of these other contracts entering the record. Of course, I would still like to see the contracts to be able to weigh in more thoroughly, but as other sources have pointed out, it is likely those records will be sealed before anyone outside the case gets to review the documents.
[Via Joystiq]
Showing posts with label Silicon Knights. Show all posts
Showing posts with label Silicon Knights. Show all posts
Thursday, January 24, 2008
Thursday, November 1, 2007
Silicon Knights v. Epic: Motion to Dismiss Denied, Discovery Begins
GameDaily is reporting that the Silicon Knights v. Epic case is moving ahead after Epic's motion to dismiss has been denied. While they have mentioned this is "common," they haven't actually explained what it means. A motion to dismiss is essentially a motion to determine that the case isn't one for which there is a remedy at law even if the facts are true as stated. In this case, it would be the basic equivalent of Epic saying that Silicon Knights hasn't made any actual legal claims in their case. The judge, by denying this claim, is simply saying that he believes there is a claim or at least there is the appearance of a claim that can be remedied by law. The reason that it is common for motions to dismiss to be denied is that there is rarely something presented that is so outlandish that it makes no resemblance to a claim that can be remedied at law. If you would like an example of a time when a motion to dismiss would be appropriate, I would direct you to this lawsuit against Michael Vick.
The motion to dismiss is not to be confused with a motion for summary judgment, which is basically asking for a ruling without a trial in favor of one party. Put as simply as possible, if Epic had moved for summary judgment, they would stating that even if the facts are viewed in the manner most favorable to Silicon Knights, Epic would still be victorious in its claim. Motions for summary judgment generally occur after discovery, so they could still occur in this case. There is also a motion for a directed verdict, which would come after the plaintiff presents its case and essentially says the plaintiff has not proven their case. To use the continuing example, after Silicon Knights rests their case, Epic could move for a directed verdict on the basis that Silicon Knights has not sufficiently met the burden of proof necessary for their claims.
In sum, the Silicon Knights v. Epic case is moving forward at this time. Law of the Game will being more commentary as more developments occur. If you would like to read more about these motions, or about other motions, please visit this Wikipedia article.
[Via Joystiq]
The motion to dismiss is not to be confused with a motion for summary judgment, which is basically asking for a ruling without a trial in favor of one party. Put as simply as possible, if Epic had moved for summary judgment, they would stating that even if the facts are viewed in the manner most favorable to Silicon Knights, Epic would still be victorious in its claim. Motions for summary judgment generally occur after discovery, so they could still occur in this case. There is also a motion for a directed verdict, which would come after the plaintiff presents its case and essentially says the plaintiff has not proven their case. To use the continuing example, after Silicon Knights rests their case, Epic could move for a directed verdict on the basis that Silicon Knights has not sufficiently met the burden of proof necessary for their claims.
In sum, the Silicon Knights v. Epic case is moving forward at this time. Law of the Game will being more commentary as more developments occur. If you would like to read more about these motions, or about other motions, please visit this Wikipedia article.
[Via Joystiq]
Thursday, August 9, 2007
Epic v. Silicon Knights: The Countersuit
It was likely inevitable that Epic would launch a stout countersuit of Silicon Knights with regard to the Unreal 3 Engine issue. GameDaily.biz is reporting that such a suit has been filed, and makes a number of references to the text of the suit and the motion to dismiss Silicon Knight's suit without posting the entire text publicly.
This is, however, also pretty common in the legal world, just as Silicon Knight's original claim is relatively common in the realm outside the game industry. From what I have read, Epic is counter-claiming that Silicon Knights has has everything to gain from seeing the Unreal 3 code, and moving to dismiss based on their assertion that they wanted Silicon Knights to succeed as that would lead to greater income for Epic. This first issue touches on one of the most complex issues in the industry, whereas the second seems mildly flawed.
The first issue is about code, and it exceptionally complex. Code can be copyrighted, and it can also be patented (sometimes), and it can be protected by trade secret provisions. Much of this will come down to comparing the Unreal 3 and Silicon Knights engines, and the analysis will certainly be complex. In fact, it's so complex I'm not sure I can adequately explain it in the blog. To far over-simplify the matter, depending on how it is protected, different aspects of the engine are protected (the code itself, the idea of the code, the specific method, etc.), and the comparison will determine if Silicon Knights gained an unfair advantage by seeing the Unreal 3 code.
The motion to dismiss claims that Epic would profit from Silicon Knight's success, which is true. However, there is a fault with the argument. Epic would probably always profit more from selling their own game (Gears of War) than the small royalty/license fee they would get from any Silicon Knights project. Moreover, if you imagine that the game buying public can only expend X dollars per season, having titles that all profit Epic compete is bad for business. This is a little complicated as an example, so bear with me.
Say in Universe A, Gears of War and Too Human were both out last holiday season.
Say the average 360 owner can afford 2 titles for the holidays, and that both Gears and TH scored a respectable review of 9.5.
Many people will buy one, or the other, but not both. Why? There are many, many other games available.
Say in Universe B, Gears came out last year and TH was pushed to, say, June.
Say the average 360 owner can afford 2 titles at the holidays, and one more by June.
Many people will get both (especially given the summer drought), and Epic will likely see more total income as they are not having two Unreal 3 products in the market launching at the same time.
It's not an all-encompassing example, but it shows the basic element of the flaw. Competing against yourself isn't good for business.
Also remember that this case could end up with rulings for both parties, which typically offset each other to some extent. They may both owe each other money when the judge hits the gavel the last time. It will certainly be interesting to see who walks away with what as a result of the suit. There's also a distinct possibility of a settlement, as most cases never actually make it to trial. We will have to wait and see what Silicon Knight's next move is in this legal battle.
This is, however, also pretty common in the legal world, just as Silicon Knight's original claim is relatively common in the realm outside the game industry. From what I have read, Epic is counter-claiming that Silicon Knights has has everything to gain from seeing the Unreal 3 code, and moving to dismiss based on their assertion that they wanted Silicon Knights to succeed as that would lead to greater income for Epic. This first issue touches on one of the most complex issues in the industry, whereas the second seems mildly flawed.
The first issue is about code, and it exceptionally complex. Code can be copyrighted, and it can also be patented (sometimes), and it can be protected by trade secret provisions. Much of this will come down to comparing the Unreal 3 and Silicon Knights engines, and the analysis will certainly be complex. In fact, it's so complex I'm not sure I can adequately explain it in the blog. To far over-simplify the matter, depending on how it is protected, different aspects of the engine are protected (the code itself, the idea of the code, the specific method, etc.), and the comparison will determine if Silicon Knights gained an unfair advantage by seeing the Unreal 3 code.
The motion to dismiss claims that Epic would profit from Silicon Knight's success, which is true. However, there is a fault with the argument. Epic would probably always profit more from selling their own game (Gears of War) than the small royalty/license fee they would get from any Silicon Knights project. Moreover, if you imagine that the game buying public can only expend X dollars per season, having titles that all profit Epic compete is bad for business. This is a little complicated as an example, so bear with me.
Say in Universe A, Gears of War and Too Human were both out last holiday season.
Say the average 360 owner can afford 2 titles for the holidays, and that both Gears and TH scored a respectable review of 9.5.
Many people will buy one, or the other, but not both. Why? There are many, many other games available.
Say in Universe B, Gears came out last year and TH was pushed to, say, June.
Say the average 360 owner can afford 2 titles at the holidays, and one more by June.
Many people will get both (especially given the summer drought), and Epic will likely see more total income as they are not having two Unreal 3 products in the market launching at the same time.
It's not an all-encompassing example, but it shows the basic element of the flaw. Competing against yourself isn't good for business.
Also remember that this case could end up with rulings for both parties, which typically offset each other to some extent. They may both owe each other money when the judge hits the gavel the last time. It will certainly be interesting to see who walks away with what as a result of the suit. There's also a distinct possibility of a settlement, as most cases never actually make it to trial. We will have to wait and see what Silicon Knight's next move is in this legal battle.
Monday, July 30, 2007
Silicon Knights v. Epic: The Unreal 3 Engine Case
Now that I am back, I can address the Silicon Knights case, which unfortunately came to light during my brief break. The full complaint can be found here. Due to my slightly delayed response, many sites have already published their analysis of the complaint, and most of the major issues have been addressed. I personally think Gamasutra did an excellent job breaking down the actual complaint in their article.
There are a few issues, however, that I don't think other sites have adequately discussed.
1. If the allegations are accurate, this could result in a huge boost in licenses for id's new id Tech 5 engine and Valve's Half-Life 2 engine. The reality is licenses for engines sell just like any other product, and bad publicity hurts sales. While Epic may have fixed many of the Unreal 3 issues through Gears (at least in the Xbox 360 context), developers may be concerned about ongoing support for the engine, and may remain wary once Epic starts taking early orders for the seemingly inevitable Unreal 4 engine.
2. If Silicon Knights's engine is viable, I expect others will use it as well. In fact, I could see Microsoft possibly adapting it as an answer for their developers. The Halo 3 Engine, while impressive, will likely remain unlicensed (just as the prior Halo engines have not been used by other companies). With the SK Engine, the licensing seems more like an option, especially with so many companies complaining of the high development costs for the next gen consoles.
3. While this suit may be new for the game industry, it's relatively common in general. This is, at its core, one of the simplest contract disputes. Party A promised to deliver a good in form X, and Party B alleges that good arrived in form X-1 and Party A never fulfilled their contractual agreement. While this is a gross oversimplification, it is the core of the lawsuit.
4. While many have been quick to claim that Silicon Knights's demand for profits from Gears is over-reaching, it is actually quite common. When a company is unjustly enriched at the expense of other companies with whom they have a contract, damages are often taken as the best estimate of the unjust enrichment. If Too Human had launched close to the same time as Gears of War, would Gears have enjoyed such phenomenal sales? Maybe, maybe not. Was there a defined benefit in both publicity and sales for Gears as a result of having little competition? Almost certainly. Would Too Human have been competition? Most likely. Could the market then have supported full sales of both games? More likely then than now since fewer games were available for the Xbox 360. These are the kinds of questions that go into an analysis of unjust enrichment damages. Assuming Silicon Knights can show that Epic neglected the licensees in order to work on Gears, the Gears profits will become some measure of damages. While it seems unlikely Silicon will receive all of the profits they demanded, a substantial award for Silicon would not be out of the ordinary.
Those are just four comments on the case. It will be fascinating to see what results in the court, or the pre-trial settlement.
There are a few issues, however, that I don't think other sites have adequately discussed.
1. If the allegations are accurate, this could result in a huge boost in licenses for id's new id Tech 5 engine and Valve's Half-Life 2 engine. The reality is licenses for engines sell just like any other product, and bad publicity hurts sales. While Epic may have fixed many of the Unreal 3 issues through Gears (at least in the Xbox 360 context), developers may be concerned about ongoing support for the engine, and may remain wary once Epic starts taking early orders for the seemingly inevitable Unreal 4 engine.
2. If Silicon Knights's engine is viable, I expect others will use it as well. In fact, I could see Microsoft possibly adapting it as an answer for their developers. The Halo 3 Engine, while impressive, will likely remain unlicensed (just as the prior Halo engines have not been used by other companies). With the SK Engine, the licensing seems more like an option, especially with so many companies complaining of the high development costs for the next gen consoles.
3. While this suit may be new for the game industry, it's relatively common in general. This is, at its core, one of the simplest contract disputes. Party A promised to deliver a good in form X, and Party B alleges that good arrived in form X-1 and Party A never fulfilled their contractual agreement. While this is a gross oversimplification, it is the core of the lawsuit.
4. While many have been quick to claim that Silicon Knights's demand for profits from Gears is over-reaching, it is actually quite common. When a company is unjustly enriched at the expense of other companies with whom they have a contract, damages are often taken as the best estimate of the unjust enrichment. If Too Human had launched close to the same time as Gears of War, would Gears have enjoyed such phenomenal sales? Maybe, maybe not. Was there a defined benefit in both publicity and sales for Gears as a result of having little competition? Almost certainly. Would Too Human have been competition? Most likely. Could the market then have supported full sales of both games? More likely then than now since fewer games were available for the Xbox 360. These are the kinds of questions that go into an analysis of unjust enrichment damages. Assuming Silicon Knights can show that Epic neglected the licensees in order to work on Gears, the Gears profits will become some measure of damages. While it seems unlikely Silicon will receive all of the profits they demanded, a substantial award for Silicon would not be out of the ordinary.
Those are just four comments on the case. It will be fascinating to see what results in the court, or the pre-trial settlement.
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