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Judge grants Epic’s motion to exclude reports and testimony by key Silicon Knights expert.

Judge grants Epic’s motion to exclude reports and testimony by key Silicon Knights expert.

Search Thesis Though the final resolution of the case is still in dispute, a December 22 ruling by Chief District Judge James Dever III reveal Silicon Knights has suffered a major setback in its suit against Epic Games. According to The Escapist an order by the court granting Epic’s motion to exclude the reports and testimony of Terry Lloyd. Lloyd, a Certified Public Accountant and Chartered Financial Analyst, was retained by Silicon Knights “to render an opinion regarding Silicon Knights’ alleged damages.”
The case stems from Silicon Knights’ decision in May 2005 to license the Unreal Engine 3 in developing Too Human for Microsoft. After a particularly embarrassing E3 demo, Silicon Knights rebuilt Epic’s engine, which resulted in a two-year delay for the game. Silicon Knights alleges “during the parties’ license-agreement negotiations, Epic made false representations concerning the license agreement and the functionality of UE3.” The consequent delay, according to Silicon Knights, “caused decreased sales of Too Human, caused Microsoft to end negotiations to develop two sequels… damaged Silicon Knights reputation, and impaired Silicon Knights’ ability to secure future development projects.”
According to the court papers, Lloyd identified over $58 million in damages across six key categories:

1) lost royalties due to decrease sales ($6.2 mil)
2) lost publisher bonus ($750k)
3) lost ancillary royalties ($810k)
4) lost profits from sequels ($16+ mil for Too Human II, $14+ mil for Too Human III) and another Sega title, The Ritualyst ($8+ mil)
5) cost to develop a new engine ($2.3 mil)
6) economic harm to Silicon Knights’ reputation ($8.9 mil)

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