Court upholds findings in $9.2M Epic Games, Silicon Knights lawsuit

Epic Games is entitled to the $9.2 million from Silicon Knights awarded to them in connection with a civil suit kicked off by Denis Dyack's Canadian studio more than half a decade ago, according to a recent ruling by the United States Court of Appeals for the Fourth Circuit.

"We are thankful for the time and efforts of the U.S. Court of Appeals for the Fourth Circuit on this case," an Epic Games spokesperson told Polygon.

We have reached out for comment from Dyack and will update this story when he responds.

The finding, made on Jan. 6, seems to conclude a case that started in 2005 over a license agreement between Silicon Knights and Epic Games. That suit led to counterclaims by Epic alleging breach of the agreement, infringement of copyrights and misappropriation of trade secrets. While the jury in the original trial rejected all of Silicon Knights' claims, it found in favor of Epic's counterclaims, awarding $4.5 million. A judge later more than doubled that award due to prejudgment interest, attorneys' fees and costs.

Silicon Knights appealed the case, which was argued in front of a court of appeals last month and decided upon on Jan. 6, according to court documents.

In the appeal, Silicon Knights attorneys basically argued that the district court was wrong in its findings and that the court included some evidence in the trial that shouldn't have been included.

In their decision, three members of the Court of Appeals dismissed all of the arguments made in appeal by Silicon Knights and affirmed the lower court's decision in favor of Epic Games.

Appeals cases are legal arguments over whether the lower court made an error in its judgement. Typically, an appeals court has the option to decide on the case or kick it back down to the district court. In some cases, the appeals decision can be reviewed by all of the judges of the Court of Appeal and in very rare instances the case can proceed to the U.S. Supreme Court, which then typically has the option of reviewing or declining to review the case.

Cases that proceed beyond an Appeals Court ruling are unusual.

What remains unclear is how Epic Games might try to collect the money now owed to it.

Silicon Knights, perhaps best known for its work on Too Human, appears to exist in name alone. Last summer, the developer was down to just a few employees, had closed its office and sold off office equipment and game assets.

While the listed phone number for the company was disconnected last summer, at the time Mike Mays, the studio's chief financial officer, told Polygon that the few remaining Silicon Knights employees were "very busy" and that the studio was "definitely alive."

At the time of the layoffs a core group of Silicon Knights employees, including Dyack, created a new studio: Precursor Games. That studio then purchased some of Silicon Knights' assets and office equipment. Precursor Games went on to try and fund the development of Shadow of the Eternals. That game was put on hold after it failed to receive funding from two different Kickstarter campaigns.

Messages to Mays and to the general email address for Silicon Knights went unanswered today. We will update this story when they respond.

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