"Epic apparently was able to achieve a very useable version of the Engine for the Xbox 360 the version that it kept to itself, for use only on its Gears of War game (as discussed below), to the detriment of Silicon Knights and Epic's other licensees... Epic's plan to avoid its obligations and hoard all of the necessary functionalities not only harmed Silicon Knights and all of Epic's other licensees in the industry, but also gave Epic a clearly unfair advantage in the industry," the lawsuit said.
"That advantage was nowhere more evident than at E3 2006, where Gears of War was awarded 'Best Game in Show' and garnered nothing but laudatory press. By contrast, Silicon Knights one of the only other [Unreal Engine 3] developers to publicly display a playable demonstration of its game saw Too Human roundly criticized in the videogame press for its technical problems and generally unpolished appearance. The damage to Silicon Knights caused by Epic's misconduct was manifest, because E3 attendees were able to compare Too Human with another game running ostensibly the same game engine, Gears of War, with vastly superior results."
Furthermore, according to a press release just sent to GameDaily BIZ, SK "has lost revenue as a result of the considerable delay in developing its video game for the Xbox 360, Too Human, because Unreal Engine 3, a game engine licensed from Epic, did not work as Epic represented it would and, moreover, Epic has been unable or unwilling to fix it."
"No doubt Gears is a fun and phenomenally successful game, but as we alleged in our complaint against them, we strongly believe that from the perspective of someone waiting for a game engine that Epic promised it would deliver almost two years ago, it seems pretty clear that Gears was built on the backs of the Unreal Engine licensees," he added. "We certainly stand by our allegations in the lawsuit that instead of using our licensing fees to develop and support the Unreal Engine 3, Epic used that money to build Gears."