Crytek

WORK IN PROGRESS

Crytek is a video game and software developer and a publisher.

They have developped among others Farcry, The Crysis series, Warface, Ryse: Son of Rome, Hunt: Showdown and the CryEngine game engine.

Background
When Chris Roberts was making games in the past he always had to build his own engine, and there was a lot of investment because every single one of his games was made with technology built from the ground up. So a good portion of the development time was spent in actually just building the technology, and now he feel like there’s a lot of really good, mature technologies out there that one can just take and build on top of. With time and team size limitations, not having to build the basics of a 3D engine means spending more time making the game, and just enhancing the engine to do things that are perfect for Star Citizen.

He made the decision to go for CryEngine because he felt like its DNA was PC, which is what he is focusing on. It was very powerful and expandable – so CIG was able to take the engine and build extra functionality for the spaceships, which are obviously an important part of the gameplay. In addition the rendering look and feel of CryEngine is more photo-realistic, and he wanted to go for that almost film visual effect, not quite as stylized as some engines come across.

Crytek and CIG agreed to preliminary license terms, and Crytek invested time and expense in creating demonstrations and proofs-of-concept that were used to persuade the public to contribute financially to the crowdfunding campaign to support development of the game, which was a success.

On November 20, 2012 Crytek officially licensed CryEngine to Cloud Imperium Games, signing the General License Agreement.

CIG needed to make a lot of modifications to CryEngine to suit its needs, and thus it ended up developping its own engine, the Star Engine.

On the 23 of Decenber 2016 CIG announced switching engines to use Amazon Lumberyard, which is itself based on CryEngine.

Employees
Crytek staff that joined CIG at one point or another includes among others John Crewe, Todd Papy, Christopher Bolte, Steve Bender, Brian Chambers and Michel Kooper.

In 2014, Cloud Imperium Games wasn't legally allowed to poach Crytek staff, however after Crytek failed to pay their staff for 2,5 months some of their staff left to look for other work, and some came over to Cloud Imperium Games of their own accord.

Transition Period
In 2014 while wages at Crytek went delayed or unpaid, rumors of Crytek bankruptcy started making the rounds, which Crytek denied. Trust was eroded by the lack of communication. Concerns were raised over the future of Homefront: The Revolution and Ryse 2 got cancelled. Crytek announced having secured capital, which was followed by anouncing the sale of Homefront and of Crytek UK to publisher Deep Silver. Staff was downsized by about 200-250 and costs were cut.

"we have two choices: either we let people go immediately and pay the remainder, or we can't pay you right now and we stick together" -Cevat Yerli, Crytek CEO

The primary cause of the financial difficulties according to the CEO was the transformation of the industry, with free-to-play or games as a service - online services in general - to become the future of gaming, which they knewn for a while but were finishing up their retail games or still had them in development. That shift required a whole different capitalisation, as well as additional talent pool and different types of spending and forecasting. All of that caused temporarily diminished capital resource, which Crytek had now said had been overcome.

In 2015, Crytek found emergency funding from Amazon, which spent millions on CryEngine tech used to create the Lumberyard engine, which was named in the later lawsuit when CIG switched to Lumberyard in 2016.

In December 2016, reports of delayed and unpaid wages surfaced once again. Crytek announced that their studios in Hungary, Bulgaria, South Korea and China would be shut down.

Then, in January 2017, Crytek found more money by selling Warface publishing rights to Russian-owned game giant My.com

On 7 March 2017, Crytek sold Crytek Black Sea to Sega and The Creative Assembly.

On 28 February 2018, Crytek announced that Cevat Yerli was stepping down as chief executive officer (CEO) of Crytek, with his brothers, Avni and Faruk Yerli, taking over the company's leadership as joint CEOs.

It was in the context of this transitional phase that the lawsuit took place and that that a bond was later requested.

Crytek vs Cloud Imperium Games lawsuit
The Crytek vs Cloud Imperium Games lawsuit lasted from December 2017 to March 2020, concluding in a dismissal with prejudice, meaning that the claims won't be abled to be raised again. It concerned Crytek claims surrounding CryEngine.

As some claims were repeated over the initial complaint, the first amended complaint and the second amended complaint before they were dismissed with prejudice, in order to avoid repetitions of the claims and their defense, each is presented only once, which makes for a less chronological presentation of the events.

Initial Complaint
On December 12th 2017 Crytek sued Cloud Imperium Games for copyright infringement and breach of contract according to the General Licence Agreement (GLA) both parties signed, asking for direct and indirect damages as well as a permanent injunction against further use of the CryEngine in any Star Citizen or Squadron 42 materials. Crytek did not attach the agreement itself to the complaint.


 * Crytek claimed that CIG was only given permission to make one game with CryEngine, Star Citizen, not two, Star Citizen & Squadron 42. However the GLA specifies granting the license to use CryEngine for "the game currently entitled Star Citizen and it's related space fighter game Squadron 42" . The Game in the GLA is defined as both together, and described as all content accessed by players throught the game launcher. Additionally, this term only applies to games made with CryEngine, while Squadron 42 is no longer made using it.


 * Crytek claimed copyright infringement for removing Crytek’s trademarks and copyright notices for the game engine, however CIG no longer uses CryEngine, therefore the claim was dismissed by the court. Crytek itself admitted that CIG didn't use CryEngine by suing CIG for replacing CryEngine with Lumberyard.
 * Crytek claimed copyright infringement for removing Crytek’s trademarks and copyright notices for the game engine, however CIG no longer uses CryEngine, therefore the claim was dismissed by the court. Crytek itself admitted that CIG didn't use CryEngine by suing CIG for replacing CryEngine with Lumberyard.


 * Crytek claimed that CIG had the obligation to use CryEngine and wasn't allowed to move away from it, since CIG were given "exclusive rights to use CryEngine". However there was no merit to the case as it didn't mean "exclusively": the license was giving the right to use CryEngine but no the obligation. What CIG was forbidden to do was using CryEngine in any other format in any other game except this particular Game.

As the lawsuit continued, Cloud Imperium Games argued that Crytek was "selectively" and "misleadingly" appropriating the agreements made between the two companies. and that the original agreement barred "either party from seeking damages"
 * Crytek claimed that Ortwin Freyermuth was employed by CryTek prior to becoming CIG's attorney and co-founder so he had a conflict of interest when negotiating the contract, however he had received a signed waiver from CryTek dismissing any conflict of interest. Furthermore, the false statement was called immaterial, impertinent and scandalous.
 * Crytek claimed that confidential source code was shown on unspecified Bugsmashers videos, and disclosed to FaceWare in violation of the GLA and no defense was provided as CIG was not allowed to present any evidence on a motion to dismiss.
 * Crytek claimed that CIG was required to provide any bugfixes and optimizations they developed for CryEngine up until launch and no defense was provided as CIG was not allowed to present any evidence on a motion to dismiss.
 * Cryted sought damages, however the General License Agreement bars either party from seeking damages from the other.

but in August that same year the judge denied the dismissal with an exception of a single claim and the pursuit of punitive damages. However, in December 2018, the judge dismissed claims regarding Cloud Imperium Games' right to use another game engine and their obligation to promote CryEngine.

However in August 2018 the court did state that section 2.4 of the General Licence Agreement which might support Crytek theory of breach of contract.

First Amended Complaint

 * On January 2nd 2018 Crytek ammended it's complaint, saying that it no longer claims that CIG could never use another game engine but that CIG is never allowed to promote any other game engine. However this was in the specific context of "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" and was therefore dismissed by the court as well.


 * Crytek also sued for the promotion of StarEngine based on the announcement of it, however this was dismissed by the court as a single announcement did not constitue engaging in the business of promoting StarEngine.


 * Crytek sued for the promotion of Amazon Lumberyard, also based on the announcement in December 2016, which was equally dismissed by the court since the announcement did not constitue engaging in the business of promoting Amazon Lymberyard.


 * Crytek claim that CIG breached the license agreement by licensing from amazon lumberyard was also dismissed by the court, as the licensing agreement prevents CIG from licensing out a competing game engine to someone, not licensing from someone.


 * Crytek presented it's licensing agreement with CIG as an investment promoting CryEngine and claimed that it would "Not receive the benefit it otherwise would have have derived from defendants use of CryEngine in Star Citizen and attendant promotion of CryEngine", claim which was dismissed by the court as there was nothing in the agreement obligating CIG to promote CryEngine.
 * CIG adressed the claims that had not been adressed previously: bug fixes, Bugsmashers and Faceware. Crytek can't seek damages for the alleged breach of contract, nor are Bugsmashers and Faceware claims enumerated as breaches of contract in the charging allegations and Crytek cannot use its opposition to allege claims that are absent from its pleading. In addition Crytek admits that the sole reason for its belief that CIG gave access to CryEngine source code is CIG's announcement of a partnership with Faceware. Even if it were true, merely granting access to a copyrighted work wouldn't violate Crytek's exclusive rights. Crytek not specifying which video or which code infringes upon copyright makes it impossible for CIG itself from the claim. Crytek had already made a substantial amount of the source code available publicly.
 * Faceware declared not having had any access to CryEngine source code.

Cloud Imperium Games called the lawsuit "meritless" and filed a motion to dismiss on January 5th 2018.

Second Amended Complaint
On August, 16, 2018, Crytek filed the operative Second Amended Complaint against CIG and RSI alleging breach of contract and copyright infringement.

On September 6, 2018 CIG filled the motion to dismiss

After dismissing every single claim made by Crytek the court allowed Crytek to come back and amend their complaint for a third time if Crytek could provide evidence that would bolster their original claims.

In the meantime, CIG motion to dismiss has been granted in December 2018.

In october 2019 Crytek released its first set of interrogatories towards CIG, that is a written discovery request to identify and present evidence regarding Squadron 42 stand alone release and release date. CIG answer was unsifficient to go forward, prompting Crytek to fill a motion to dismiss the lawsuit without prejudice so as to resume the lawsuit following the release of Squadron 42. According to CIG, this concedes that no breach can occur until Squadron 42 is released.

Evidence uncovered in the discovery on the Amazon License shows that in May 2019, a year and half after launching the action, Crytek emailed Amazon to ask if it had truly granted CIG a license covering prior versions of CryEngine, including those license to CIG under the GLA, which Amazon confirmed.

Lawsuit dismissed with prejudice
Crytek filed a motion to dismiss the lawsuit without prejudice or legal fees in January 2020 with an option to resume the lawsuit following the release of Squadron 42.

Cloud Imperium Games countered with a motion to dismiss and requested a bond of $US 2,193,298.45 from Crytek to be held in escrow for the payement of legal expense should CIG win, with the court granting a bond of US$500,000 so as not to jeopardize Crytek ability to kepp going with the legal actgion in view of concerns of Crytek financal stated that had been shared by CIG itself.

During the dismissal motions, Cloud Imperium Games submitted an email sent from Amazon to Crytek in May 2019, stating that the company granted a license to its Lumberyard engine in 2016, which included rights to CryEngine in their license agreement.

In February 2020, Crytek and Cloud Imperium Games filed for a settlement proposal, with a 30-day request to file a joint dismissal of the lawsuit with undisclosed terms.

In March 2020 the case was dismissed with prejudice, making the claims unable to be brought again, with Crytek and CIG to bear their own respective attorneys’ fees and costs.

Since then
The annual report published by Cloud Imperium Games in early 2021 revealed that Cloud Imperium Games acquired a license for CryEngine from Crytek in 2020.

Crytek has released all three Crysis games Remastered, The Climb 2 for Occulus Quest 1 and 2, and is currently working on Crysis 4.

Trivia

 * The General License Agreement names Star Citizen 'Space Citizen' at one point.
 * Crytek names Roberts Space Industries in its lawsuit, despite it not being a party to the General License Agreement.
 * As of January 17th 2020, CIG had incurred over $900,000 in attorney’s fees.
 * Crytek chose not to attach the General License Agreement to it's lawsuit, it was attached by CIG.
 * CIG compared Crytek to a car smashing a storefront window, stomping the accelerator, doing doughnuts for years, then backing out and maybe circling around to crash CIG again another day. It said that Crytek deserves to have its keys taken away for all time, so that CIG can conduct responsible business without further interference from Crytek or its series of lawyers.