Case Study

Copyright/trade secret: An epic battle of game giants

Silicon Knights, Inc. v. Epic Games, Inc.
Stroz Friedberg is a specialized risk management firm built to help clients solve the complex challenges prevalent in today’s digital, connected, and regulated business world

In one of the largest software code copyright/trade secret investigations on record, Elysium and the expert witnesses it supported performed crucial and innovative analyses to support the winning arguments of infringement and misappropriation.

1. Pre-litigation

A game engine is software that renders shapes, texture, color, light and shadow in video games, and that also makes objects appear in perspective and behave according to the laws of physics (when desired). Silicon Knights (SK), an Ontario-based game developer, licensed the Unreal Engine 3 (UE3) game engine from Epic Games (Epic) for use in its game Too Human. By terms of its license, Epic (developer of the megahit Gears of War and several sequels) agreed to continue developing UE3 and deliver improvements to SK.

2. Beginning of Litigation

SK sued Epic in 2007, claiming that Epic did not deliver a working game engine. Epic soon countersued SK, claiming that SK had breached its license agreement, misappropriated Epic’s trade secrets, and infringed Epic’s copyrights in the Unreal Engine 3 code by incorporating it into a new game engine (which SK claimed to have developed).

Through its counsel Hunton & Williams, Epic retained Elysium Digital, now a Stroz Friedberg company through a 2015 acquisition, expert and Princeton University Professor Edward Felten, alongside two other computer science and game industry expert witnesses. Hunton, Epic, and their experts needed to know:

    • Literal  Was there literal copyright infringement – how much of Epic’s code appeared in SK’s code, where SK was not licensed to be using it?
    • Nonliteral  Was there nonliteral copyright infringement – had SK copied the structure, sequence, and organization of Epic’s code even where they did not directly reuse it?
    • Misappropriated  Of Epic’s features and ideas that embodied trade secrets, which had SK misappropriated?

    3. Discovery

    Fittingly, Epic was an epic computer science case. At the outset of litigation, Epic designated over 1,400 trade secrets that were embodied within its source code. The collected game code and associated files produced by the litigants filled a 12 terabyte server – a tremendous volume of code, particularly in 2008.

    In order to handle this volume of material, Elysium needed to create numerous innovative tools and analysis techniques:

    • To find matches that might be concealed by modifications to the code, Elysium’s computer scientists created proprietary high-volume code comparison software that could compare every version of code in one developer’s repositories to every version of code in the other’s.
    • To make testifying expert review more efficient, Elysium created additional tools that automatically detected when one source code match completely contained another, and when matches were identical across different versions – which eliminated the need for hundreds of redundant citations to be checked at testifying expert billing rates.
    • Elysium analysts researched the code embodiments of more than 1,400 trade secrets in Epic and SK code (ultimately, about 330 trade secrets were tried).
    • To make coordination possible, Elysium created a trade secrets database that tracked code citations and team task assignments. The database featured an intranet web application front end to facilitate collaborative editing, and a back end that helped track expert report exhibits detailing the matches found in code and interrogatory responses containing trade secret metadata.
    • To enable the testifying experts to reach their own conclusions, Elysium wrote workflow tools that gave the experts final approval of each code citation.

    Elysium supported Professor Felten and Epic’s other experts through their reports, rebuttals, depositions and trial testimony. In the end, the experts found significant literal and nonliteral code copying, as well as the use of Epic’s trade secrets, in the SK engine.

    4. Trial

    The case went to trial before United States District Judge James C. Dever III in Raleigh, North Carolina, on May 14, 2012. Elysium supported the trial and expert teams with on-site and remote on-call computer scientists. The trial concluded on May 30 with the jury finding in favor of Elysium’s client 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. Subsequently, Epic won an additional nearly $4.5 million in attorneys’ fees, and Silicon Knights was further ordered to destroy all works derived from Epic’s engine, allow audits of its servers to ensure compliance, and recall unsold copies of previously released games incorporating Epic’s code.

    5. Post-verdict

    Epic has continued to be a major innovator in game development and has recently released version 4.5 of its industry-leading Unreal Engine. Elysium has continued to develop the industry-leading proprietary software comparison tools developed for this case; these tools have since been used in high-profile code copyright, trade secret, and similar investigations for private firms and for a major agency of the U.S. government.


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