Silicon Knights president Denis Dyack issued a statement to Kotaku saying that "Silicon Knights has always wanted to have our focus be on making great games, not litigation. This ruling will allow us to have our day in court, before a jury, and to shine the light publicly on Epic's conduct."
According to court documents obtained by Kotaku, a federal court saw evidence referring to other licensees, including Disney's Buena Vista Games, that "demonstrated that other [Unreal Engine] licensees expressed many of the very same frustrations that [Silicon Knights] did about representations made by Epic that were unfulfilled and perceived to be misleading."
Additional evidence supported the idea that "Epic had a possible motive to deceive SK into entering into the License Agreement in order to fund the development costs of its own games and delay the work of SK and other competing licensees on their video games." In fact, at the time the license agreement was signed, according to witnesses, Epic had no dedicated staff supporting licensees; instead "licensee support" was just a sub-task assigned to all programmers. This contradicts an apparent pledge from Epic that it would divide its programming staff between development of its own games and Unreal Engine development and support.
Internal emails cited by Silicon Knights provided further evidence that licensee support wasn't a top priority for Epic. SK produced emails including one from lead engine programmer Dan Vogel to Epic's other programmers that stated, "Gears [of War] comes first, so if you have any Gears tasks, drop work in the main branch and finish Gears tasks."
Update: Epic issued a statement to Joystiq today, clarifying some of the legal action taking place. " The court entered judgment in favor of Epic on several claims," it said, "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 court was not allowed to rule on the "credibility" of evidence or witnesses, and ruled to bring the case before a jury to "consider both sides' evidence." Epic expects to be "fully vindicated" when this case goes to trial. Find the full statement after the break.