Note: The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of WRAL.com.

CARY, N.C. – Two high-profile gaming companies will soon be swinging legal swords in court with attorneys replacing war fighters in duels before a jury.

Epic Games is headed to trial in its continuing four-year-old legal battle with rival game developer Silicon Knights.

The Cary-based developer of the award-winning “Gears of War” franchise and the widely used Unreal game development engine Unreal is fighting with Silicon Knights over licensing and other issues. Silicon Knights is the developer of “Too Human,” the game at the center of the dispute, and “Metal Gear Solid.”

Silicon Knights licensed Epic’s “Unreal 3” game engine to develop “Too Human,” and the companies have been fighting outside of cyberspace with each claiming the other is guilty in committing a multitude of legal sins.

Silicon Knights sued Epic for fraud, breach of contract and other claims. The developer said Unreal Engine 3 did not work as Epic represented it would and that Epic has been unable or unwilling to fix it.
Epic countersued, claiming that Silicon Knights misappropriated Epic’s technology.
However, both sides failed to win court requests for a summary judgment and dismissal of the other claims last week in the federal court hearing the case. While some claims were thrown out, others will now be heard by a jury.

The suits have trigged some bad publicity for Epic, which has built an extremely successful and growing international company due in part to licensing of the Unreal engine. It is used on all major game platforms and by a wide variety of customers. Epic also recently moved into the realm of the Apple operating system.

Fresh from the successful launch of “Bulletstorm,” Epic is preparing for the launch of its third “Gears” title this fall.

Epic says it will be “fully vindicated”

Obviously sensitive about the case, executives at the Cary-based company responded at length when contacted by WRAL Tech Wire and WRAL.com for an update about the trial.

“Epic remains confident that it will be fully vindicated at trial,” Epic said in a statement.

“The court entered judgment in favor of Epic on several claims, rejecting Silicon Knights’ claims that it could cancel its license agreement, that Epic interfered with its contractual relationships with publishers, and that Epic has acted unjustly under the license,” the company said.

“The court did not rule on the merits of Silicon Knights’ remaining claims. The court was not permitted to judge the credibility of witnesses or evidence, or otherwise take into account Epic’s opposing evidence, and therefore merely acknowledged that, under the rules of civil procedure, it had to allow a jury to consider both sides’ evidence on the remaining claims.

“Allowing those claims to move forward to a jury is not a ruling on their merits. The court simply concluded that the disputed evidence should be heard and resolved by the jury.

“In addition, the court had previously rejected Silicon Knights’ motion to summarily dismiss Epic’s claims against it and upheld Epic’s right to present all of its claims to a jury, including claims that Silicon Knights breached its license agreement, stole Epic’s technology and infringed Epic’s copyrights.”

Silicon Knights anticipates victory

Silicon Knights also is confident that it will prevail.

“When Epic first went public about our case to the press, they said that our claims were without merit,” Silicon Knights President Denis Dyack said in a statement provided to the gaming website Kotaku. “Two separate federal court judges have now disagreed with Epic, and have ruled that the case does have merit.”

Dyack added that the ruling “will allow us to have our day in court, before a jury, and to shine the light publicly on Epic’s conduct. We are very confident the jury will see the truth behind Epic’s actions.”

The suit was filed in Greenville, N.C.

Read the Kotaku report here.

WRAL Tech Wire reported extensively about the cases when they were first filed. Read about Silicon Knights’ suit here and Epic’s countersuit here.

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