To gamers with some experience of past console generations, Silicon Knights may be a name that provokes waves of nostalgia. From a Nintendo perspective its stand-out games are Eternal Darkness: Sanity's Requiem and Metal Gear Solid: The Twin Snakes on the GameCube. Its development history since those days is less illustrious, however, and a legal battle with Epic Games that's been running since 2007 appears to have reached its end point; the outcome is not good for the struggling company.
The lawsuit with Epic Games was launched by Silicon Knights, accusing the former of failing to deliver on guarantees regarding its Unreal Engine 3 technology, with the suggestion that delays to optimising the engine so that it was usable had damaged SK's projects. The lawsuit also implied that Epic Games, rather than support licensees, had used money gained from the engine to directly fund its own games. In response Epic Games counter-sued, accusing Silicon Knights of copying and incorporating the Unreal Engine 3 code for its own engine without permission. In 2012 Epic Games won that lawsuit, with the court awarding $4.5 million, as well as an additional $4.7 million for legal costs — a total of $9.2 million for Silicon Knights to pay, as well as an order to destroy code and content determined by the court to be infringing the copyright of Epic Games.
In May last year SK's Mike Mays stated that the company was still in business, yet little has been heard since; founder Denis Dyack has had his own problems at Precursor Games since leaving Silicon Knights, with multiple crowdfunding campaigns for Shadow of the Eternals ending in failure. Now, in what could be a fatal development for Silicon Knights, it has failed in its appeal to overturn the previous court defeat to Epic Games, with all previous awards upheld. It's questionable whether the company will be in a position to pay the fees.
For fans of those classic GameCube titles or other games from Silicon Knights this is likely to be sad news. If the company issues any statements we'll provide an update.