Lawful Neutral: The war over Star Citizen in Crytek v. Cloud Imperium Games

    
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Hello citizens! Today, I’m going to talk about a little game that’s been flying under the radar and I think deserves some air time: Star Citizen. I’m obviously being a bit facetious here as Star Citizen is no stranger to the limelight or drama. This week I want to review the Crytek v. Cloud Imperium Games lawsuit filed back in 2017 that’s now finally stumbling to a close.

I read the entire case history of Crytek v. Cloud Imperium Games, creator of Star Citizen, and in seven minutes or less, I can get you to the main deciding factor of this lawsuit and why it’s important. There are several hundred pages of complaints, motions, memoranda, and general legal chicanery attached to this suit so far, and frankly I’m going to skip over most of it. Chances are I left something out that someone feels is super important, and if so, drop me a note in the comments and I’ll try to address it.

But within the scope of this piece, there are a total of five documents we are going to focus on: the First Amended Complaint (FAC) from Crytek, the Second Amended Complaint from Crytek (SAC), the Order on the Motion to Dismiss the FAC, the Order on the Motion to Dismiss the SAC, and the Game License Agreement (GLA). It’s going to be an acronym-heavy one, folks. You may also want to dive in to our coverage from the last year and a half of the suit, where we’ve addressed additional points of the case that we won’t bring back up here:

The First Amended Complaint

In the FAC, Crytek lists five complaints it says justifies Breach of Contract and therefore entitles it to damages. Four of those complaints are almost entirely dependent on the 5th, so I’m going to skip those in favor of the really important one. On Page 8, Line 1 of the FAC, Crytek alleges that the “Defendants [Cloud Imperium Games and Roberts Space Industries) Broke Its Promise to Exclusively Use CryEngine for the Game.”

Paragraphs 36 – 39 go to cite the GLA in section 2.1.2 and its use the word “exclusivity,” which Crytek interprets like so: “Section 2.1.2 of the GLA contained a critical promise from Defendants that they would not develop the Star Citizen video game using any other video game engines.” This means that Crytek believes that when CIG pivoted to using Lumberyard, it breached its contract.

This is important because Crytek needs to show not only that did CIG break the contract in December of 2016 but that it is still in breach of the contract. The other complaints are all predicated under the idea that CIG is still under contract and is still obligated to use CryEngine – and is therefore in violation for the other points.

A few days after Crytek filed the FAC, CIG filed its first Motion to Dismiss.

Order on CIG’s Motion to Dismiss

Fast forward to August 2018 when Judge Dolly Gee (amazing name) released her order on CIG’s Motion to Dismiss the complaint. On the surface, it looked like a solid win for Crytek: Judge Gee denied the Motion to Dismiss for everything except for punitive damages and the exclusivity argument we just talked about. Under California Law, the contract terms must be interpreted “in their ordinary and popular sense that a lay person would attach to them.” Under this requirement and looking at the rest of GLA, Judge Gee ordered that the exclusivity language governed only CIG’s ability to use CryEngine and did not constitute an obligation to do so.

Yeah, we saw that one coming.

The rest of the complaints from Crytek started to fall over at that point either because they require the actual use of the CryEngine to be valid or because the amount of time they could potentially claim damages for is now minuscule. Some complaints could get damages for about a year, others for only a few months if at all. It was really bad for Crytek even though it looked good on paper.

Interestingly though, Judge Gee seems to take pity on Crytek and points it to section 2.4 of the GLA with a wink and a nudge that it might have a case there. Thus was born the Second Amended Complaint.

The Second Amended Complaint

This complaint is almost exactly the same the FAC, except for the exclusivity section on Page 8, line 1. It now reads, “Defendants Broke Their Promise Not to Compete with CryEngine by Adopting And Promoting a Competing Game Engine.” Crytek points to, no surprise, section 2.4 of the GLA as justification:

“During the Term of the License, or any renewals thereof, and for a period of two years thereafter, Licensee, its principals, and Affiliates shall not directly or indirectly engage in the business of designing, developing, creating, supporting, maintaining, promoting, selling or licensing (directly or indirectly) any game engine or middleware which compete with CryEngine.”

Crytek alleges that CIG violated section 2.4 on two different occasions: in September of 2016 when Chris Roberts made mention of “Star Engine” in place of CryEngine and then in December 2016 when CIG announced that it was moving to Lumberyard. Those two instances, Crytek argues, constitute a breach of contract because they are promoting a competing engine.

As expected, CIG files a second Motion to Dismiss to go with the Second Amended Complaint.

The Order on CIG’s Motion to Dismiss the Second Amended Complaint

So now we jump ahead a few months again and Judge Gee is back with her Order for CIG’s Motion to Dismiss. In what I can only assume is a coup de grâce of judicial trolling, Judge Gee grants the motion to dismiss because based on section 2.4 of the GLA, which she pointed Crytek toward in her first Order, CIG was not “in the business of” promoting a competing game engine. The two singular references to Star Engine and Lumberyard were not enough to justify a breach or establish that CIG was in the business of promoting either of those engines. Even worse, Judge Gee says that even repeatedly mentioning either Star Engine or Lumberyard still wouldn’t have been enough to breach section 2.4.

There’s also a section in section 2.4 about licensing “to a third party” vs. “from a third party,” where Crytek again unsuccessfully argues that section 2.4 prevents CIG from licensing Lumberyard (hearkening back to its exclusivity argument from the FAC) because section 2.4 prevents licensing from a third party. Judge Gee points out that the language governs whether CIG could license to a third party when taken in the context of the rest of section 2.4, which again, it is required to do as part of California law.

At this point, Crytek has lost the ability to mandate that CIG has to use CryEngine, which has summarily the same effects on the four remaining complaints, which no longer apply because they govern only when the CryEngine is in use, and the amount of damages Crytek could be awarded is less than the cost of actually pushing the case forward.

Several weeks after Judge Gee’s order, Crytek responded that it was not going to submit a Third Amended Complaint. While there are technically still four complaints Judge Gee didn’t dismiss, it’s probably not worth the time and especially the legal fees to pursue them.

The settlement

As MassivelyOP reported back in March 2019, legal proceedings have since moved to “alternative dispute resolution.” This likely means that Crytek is trying to settle out of court to avoid the frankly astronomical legal feeds that it would be obligated to pay to CIG because of the failed lawsuit. The current date for the hearing is June 28th, 2019, so either way, we should have an end to this particular bit of Star Citizen drama soon.

Finally, I would love to claim all of this legal know-how for myself, I would be remiss to not mention YouTuber Law, whose video was super helpful in helping sift through the piles of court documents to confirm the stuff that really matters.

Every other week, Andy McAdams braves the swarms of buzzwords and esoteric legalese of the genre to bring you Massively OP’s Lawful Neutral column, an in-depth analysis of the legal and business issues facing MMOs. Have a topic you want to see covered? Shoot him an email!

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Joe Blobers

Thanks Andy that was interesting to read.

At each steps of the procedure, it could have taken another direction because justice decision can be sometime very surprising.
It looks so far that the project is totally safe from Crytek claims and potential financial or technical consequences.
This is a great news for backers, at least those who add a real doubt about the positive issue.

Let’s see what is coming next and let’s enjoy the free week :)

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dsmart

“As MassivelyOP reported back in March 2019, legal proceedings have since moved to “alternative dispute resolution.” This likely means that Crytek is trying to settle out of court to avoid the frankly astronomical legal feeds that it would be obligated to pay to CIG because of the failed lawsuit. “

wot?

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Natalyia

One of the ironies involved in the lawsuit is that Lumberyard is a branch of CryEngine. Amazon bought it from Crytek (and then expanded it and integrated it with AWS/Twitch/etc…)

From https://aws.amazon.com/lumberyard/faq/
Q: Is Lumberyard based on other technologies
A: Lumberyard is made up of proven technology from CryEngine, AWS, Twitch, EMotion FX, and Double Helix. We’ve hired some of the best game technologists in the world, who have already made over 3,300 improvements, new features, and fixes to Lumberyard since launch…

Reports indicated they bought the rights to make Lumberyard for something like $70 million ( https://www.gamesindustry.biz/articles/2015-04-07-amazon-licensing-deal-may-have-saved-crytek-report ) At the time Crytek was having difficulties paying its employees.

This is why it was even possible to move Star Citizen to Lumberyard. The version of CryEngine Amazon bought was very similar to the version CIG based Star Citizen on, so integrating the game into Lumberyard wasn’t a total re-write, and allowed them to leverage AWS and the other improvements Amazon was making. Improvements Crytek was in no position (either fiscal or talent-wise) to make.

So Crytek was/is suing CIG for moving Star Citizen to another version of CryEngine they licensed to Amazon, knowing Amazon was going to license it to others. It seems improbable that they did not realize the most likely customers of Amazon’s new branch were existing CryEngine licensees who were making games with large networking needs.

It was never likely that this was going to end well for Crytek. Hopefully this won’t go down the SCO vs. IBM zombie-lawsuit-of-doom route, and it will be over soon.

deekay_000
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deekay_000

i honestly felt the strongest part of the whole thing was the copyright infringement stuff from bugsmashers.

i always forget what came of that part of the thing but probably got dismissed because amazon could give them permission to broadcast that stuff.

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Jeremy Barnes

This is good content. Seeing more article this well researched would be nice.

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Fervor Bliss

Got to feel for Crytek on this one. No doubt the intent of the clause, but Judge Gee is right.
CIG is like a “producer” that signs a new musical act in a bad contract. CIG has no honor.

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Jeremy Barnes

If that was the intent of the clause then I don’t feel sorry for them because instead of creating a product that CIG wanted to use, they tried to force them with legalese to use it.

“Exclusivity” deals are almost always bad for the consumer.

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ichi sakari

interesting, but I wonder what is left to arbitrate? seems like a broad win for CIG

I also wonder if losing this case would be the camel’s straw for Crytek

deadjim.jpg
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Armsman

In California an ADR conference is REQUIRED for a Civil case to move forward in the litigation process.

However, the fact Crytek has basically no case left means that it’ll be a 5 minute conference with CIG telling Crytek to go away and “see you in court” if Crytek is stupid enough to think they’ll come out with a decision favorable to them in a trial.

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dsmart

In California an ADR conference is REQUIRED for a Civil case to move forward in the litigation process.

Yup

However, the fact Crytek has basically no case left means that it’ll be a 5 minute conference with CIG telling Crytek to go away and “see you in court” if Crytek is stupid enough to think they’ll come out with a decision favorable to them in a trial.

I wouldn’t be so sure. CIG tried the settlement route last year, and Crytek refused – opting to wait for the discovery process to conclude.

They will probably settle. The defining factor will be how much money is involved.

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TheDonDude

Well written article summarizing the hilarity to date. Nicely done.