Silicon Knights loses appeal for ruling on lawsuit with Epic Games

A United States Court of Appeals judge has upheld a lower court's decision concerning the legal battle between Silicon Knights and Epic Games. The post-trial motions for the previous ruling ordered Silicon Knights to destroy all unsold copies of their games that used Unreal Engine 3, which included Too Human and X-Men: Destiny. Epic was also awarded more than $9 million in the ruling - $4.45 million for damages, with the rest covering the studio's legal fees and prejudgment interest.

The dispute began back in 2007, when Silicon Knights claimed Epic delivered Unreal Engine 3 six months late while withholding a superior version just to be used for Epic's internal projects. Epic Games Vice President Mark Rein described the allegations as "unfounded and without merit," noting Epic's intention to defend themselves.

Silicon Knights' ability to pay the sentence is currently uncertain, as the studio followed the initial ruling by laying off "a small number of people." A report from last May also stated that the Silicon Knights offices were empty, with former studio head Denis Dyack gone and involved with a sequel to Silicon Knights' Eternal Darkness called Shadow of the Eternals. That project is an effort from Precursor Games and is uninvolved with Silicon Knights, but Precursor noted its team was "taking a break" in September and that the project is on hold after failing to meet funding goals.

This article was originally published on Joystiq.