Elysium Digital & Edward Felten Help Epic Games in Total Victory at Trial

IP Litigation

Client Bulletin

June 20, 2012

Video game developer Epic Games, Inc. makes the award-winning Unreal Engine 3 technology that powers hundreds of successful PC, console, and mobile games, including Epic’s own critically-acclaimed “Gears of War” series. However, after several years of licensing Unreal Engine 3, game developer Silicon Knights sued Epic in 2007, contending that Epic had failed to deliver a working game engine or provide support. Epic countersued, alleging that Silicon Knights continued to use Unreal Engine 3 for unlicensed purposes, thereby violating Epic’s copyrights and misappropriating Epic’s trade secrets.

Epic retained Elysium Digital and Princeton University Professor Edward Felten, through its counsel Hunton & Williams, to determine whether Silicon Knights used Epic's source code and trade secrets for unlicensed purposes, including within a new game engine Silicon Knights claimed to have developed. Professor Felten, supported by Elysium Digital, found significant literal and non-literal code copying, as well as the use of Epic’s trade secrets, in the Silicon Knights’ engine by performing a variety of analyses on the parties’ multi-terabyte C++ code repositories. These analyses traced the use of Epic’s code over time in several games developed by Silicon Knights. Elysium Digital also provided support for depositions, expert reports, and trial testimony in the case.

The Epic Games v. Silicon Knights case went to trial before United States District Judge James C. Dever III in Raleigh, North Carolina, on May 14, 2012. The trial concluded on May 30 with the jury finding in favor of Epic on all counts. The jury determined that Epic Games had not breached its license agreement with Silicon Knights, and that Silicon Knights had breached the agreement, violated Epic’s copyrights, and misappropriated Epic’s trade secrets. The jury awarded Epic $4.45 million in unpaid license fees and damages stemming from this IP misuse. Further, Judge Dever left the door open for Epic's recovery of attorneys’ and experts’ fees and to seek injunctive relief regarding Silicon Knights’ continued use of its technology.

Tim Sweeney, the Founder and Technical Director of Epic Games, wrote: "Having closely followed Professor Felten's analysis efforts in the 1998 U.S. vs. Microsoft antitrust case, I was honored to have him and the Elysium team help defend Epic in this important case, and was very impressed by the depth and professionalism of their analysis."

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About Epic Games, Inc.

Epic Games, Inc., based in Cary, NC and established in 1991, develops cutting-edge games and cross-platform game engine technology. The company has created multiple million-selling, award-winning titles in its “Unreal” series, including “Unreal Tournament 3” for PC, PlayStation®3 and Xbox 360®. The first two games in Epic’s "Gears of War" franchise have sold more than 13 million copies and won more than 50 game of the year awards. The third installment, “Gears of War 3,” sold more than 3 million copies within its first week of release, catapulting the franchise beyond $1 billion in lifetime sales. Epic's Unreal Engine 3 holds more than 20 industry technology awards and powers many bestselling games. Additional information about Epic can be obtained at www.epicgames.com.

About Elysium Digital, LLC

Elysium Digital is a consulting firm based in Greater Boston that delivers analyses on software patents, computer hardware patents, software trade secrets, and electronic copyright matters to a selection of the world's most prominent intellectual property law firms and technology companies. Our consultants offer expert-witness testimony, and have testified on behalf of the US. Department of Justice, IBM, Oracle, Samsung, and many other major technology companies. For more information, please contact Jeremy Lang, General Manager, at jlang@elys.com or 617-621-3100 x105.

About Hunton & Williams LLP

Hunton & Williams LLP provides legal services to corporations, financial institutions, governments and individuals, as well as to a broad array of other entities. Since our establishment more than a century ago, Hunton & Williams has grown to more than 800 lawyers serving clients in 100 countries from 19 offices around the world. While our practice has a strong industry focus on energy, financial services and life sciences, the depth and breadth of our experience extends to more than 100 separate practice areas, including intellectual property, commercial litigation, corporate transactions and securities law, bankruptcy and creditors rights, international and government relations, regulatory law, products liability, and privacy and information management.

For additional information visit our website at www.hunton.com, or contact:

Douglas W. Kenyon (919-899-3076, dkenyon@hunton.com),
Michael M. Shebelskie (804-788-8716, mshebelskie@hunton.com),
Cassandra C. Collins (804-788-8692, scollins@hunton.com).