Epic Games filed a countersuit against developer Silicon Knights ...

licensing Silicon to use Epic’s Unreal Engine 3 technology to develop games. Epic “violated” the deal by “failing to provide a working game engine,” which caused Silicon to experience “considerable losses” and forced it to spend its minimal time and resources to build its own engine instead of developing a planned game, Silicon claimed. Silicon also accused Epic of “unfair competition,” claiming Epic “intentionally and wrongfully” used licensing fees collected for the engine “to launch its own game” -- Gears of War -- “to widespread commercial success while simultaneously sabotaging efforts” by Silicon and others to develop their own games. Silicon requested a jury trial, unspecified damages, for the deal with Epic to be “rescinded” or changed so that Silicon didn’t have to use the Unreal engine exclusively or at all, for a permanent injunction against Epic to prevent it from further “unfair” business practices against Silicon, and for Epic to give up any profits from Gears of War. But Epic Wednesday accused Silicon of misappropriating Epic’s licensed technology and claimed Silicon’s suit “lacks factual or legal merit” and is merely part of Silicon’s overall misappropriation plan. Epic complained Silicon wants to use Epic’s technology, “pay nothing for it and use it any way it pleases.” Epic requested compensatory damages “in excess of” $650,000, as well as unspecified punitive damages and legal fees. It also asked for preliminary and permanent injunctions against Silicon and an order that all infringing games, code and other articles from Silicon “be destroyed.”