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Derek Smart @dsmart
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BREAKING. RSI/CIG filed their response late last night. I will delve into it later today after I read it.…
As I mentioned earlier this week, they are represented by Jeremy Goldman at FKKS…
Earlier this week, I mentioned the firm in this thread.…
Anyone who has ever seen a contract before, or who understands contract law, can take one look at the Term, Termination and Exhibit sections to see why Crytek filed this suit.

RSI/CIG breached the GLA in so many ways, that I don't even know where to begin.

Thread coming later.
The RSI/CIG response and the GLA are so incredibly hilarious, that I am going to need more than 4 pages on this 8"x4"4 pad listing it all.

The fact that they spent more pages lamenting Ortwin's feelz, than defending a specific cause of action, says it all.
Having seen letters from Ortwin in my battles with him, the whole thing reads like something he would write, then pass along to Jeremy Goldman to file.

The whole section is to address a cursory conflict of interest issue, part of which were already removed in the amendment.
I REFUSE to believe that an experienced attorney like @ipprivacylawyer would compose such an elementary response, especially knowing what's at stake.

A paralegal could write this for $250 and file it before lunch.

ofc Ortwin couldn't do it, for obvious reasons.
Fact that they even went for a motion to dismiss, knowing that NOTHING in their response is strong enough to give it ANY chance of survival, just seems to be like buying time.

I hope they're talking about settling by now because this is just a lot of noise. And we're laughing.
FYI the deleted part in section 3 is immaterial.

The GLA is a template contract and that section didn't apply to this agreement. So it was deleted that way.

This is standard practice to prevent having to re-number sections in a document.
Anyway, I am still going through it and will post my full thoughts on each consequential part later.

But damn, they are so screwed, I don't even know how to express it in words. So, here's a meme.
You are going to have to wait a little while longer for my incoming analysis.

Because Goddamn, the response by RSI/CIG is so hilariously inept and fraught with lol-worthy bullshit, that I'm actually impressed they decided to use a multi-million Dollar lawsuit to troll Crytek
I have reviewed all my notes regarding the response to the Crytek lawsuit.

I am going to resume this thread. At the end, I will unroll & provide an HTML link to the full thing.

Remember, I am NOT an attorney, but have almost 30 yrs of reviewing & signing licensing contracts
If you didn't following my other threads since I lawsuit was filed on 12/12, you can catch up in this forum where I have them all listed.

I will be posting this one there as well after I complete and unroll it.…
Hyperbole & meandering aside, the gist of the Crytek lawsuit hinges on 3 keys things.

1) CryEngine was to be used exclusively with Star Citizen

2) Only one game, Star Citizen was licensed for use with CryEngine

3) Ortwin is a lying double dipping, dick…
The CIG response is astonishing in its ridiculousness, as it is hilarious in its premise.

There are 3 key docs filed in their response. I am not going to discuss or delve into them in detail, but I will be discussing the key relevant parts.

Trust me, it's hilarious. All of it.
1st, we have the declaration of the lead attorney.

He basically starts off by crying foul over allegations that Ortwin was involved in a conflict of interest.

I would bet cash money that Ortwin drafted this nonsense. It has his trademark all over it.…
Note that the part they are objecting to, was removed when they filed the amended complaint on Jan 3rd.

As I had written a week ago, the attorneys were already in contact over this conflict of interest issue; and that is confirmed here.
Though Crytek didn't have the waiver at the time, FKKS still threatened Skadden with a Rule 11 complaint.

That is NOT standard procedure for attorneys walking into a case. It's basically, guns drawn.

Again, that's an Ortwin move. He's THAT guy. I've dealt with him, so I know.
You see, Rule 11 is pretty clear. Had they filed it, I have no doubt that it would have failed on merits alone. Which explains why Skadden wasn't bothered by it, as per the declaratory statements.
In order for Skadden to have been found in violation of Rule 11, the [FKKS] would have had to show that the wording in the original complaint was not only frivolous, but also didn't have any evidentiary purpose.

Which is where the lols come in...
Ortwin is the attorney who helped draft and negotiate the GLA for both parties

He never recused himself from the negotiations

A conflict waiver does NOT alleviate nor remove the liability of same. They usually just ALLOW the attorney to proceed for both parties.
So even if both parties in a conflict decide to use one party's attorney, it does NOT remove that liability if a problem arises down the road.…
So Ortwin obviously realized the gravity of being on the receiving end of such an allegation.

And FKKS also being known as a "reputation management" firm, decided to respond to it anyway, for the mere fact that the allegation existed in the ECF and not the FAC.
Thing is, attorneys go to jail and are disbarred like literally almost every day in the US. They flaunt the law. They misinterpret the law. They break the law.

So a conflict of interest, waiver or not, is something that is vital to an attorney's reputation.
I had a discussion with attorney friends of mine. They agree that the filing of the waiver (which they curiously didn't include) would have sufficed. And that adding in the declaration that Skadden was threatened with a Rule 11 complaint, means that Ortwin made it personal.
FKKS had no reason to include any of that in the declaration. It is immaterial and inconsequential because Ortwin's conflict of interest was NOT a cause of action in the case. At best, it's Bar complaint fodder if Crytek decided to go that route.
Those of you who followed my legal exchanges with Ortwin, will recall that his style is to ALWAYS make his responses personal.

In fact, in two responses to my attorneys, he spent more time attacking me, than in addressing the issue I was threatening him with.
In his legal threat to The Escapist; as well as Chris Roberts' diatribe to myself and The Escapist, that same tactic comes out very clearly.

That's WHO these people are.

They are scum.
Right off the bat, Ortwin has drafted one of his signature responses for FKKS to review/edit etc, file with the court.

If you compare Skadden's original filing, with the FKKS response, it's clear to see which side isn't making it personal.

Depositions are going to be a blast.
In conclusion of this part, you should pay attention to how many words were spent on an issue that :

1) was removed in the FAC

2) were immaterial & inconsequential to the causes of action in the complaint

So, putting ALL this in the response, was about reputation management.
I would imagine that since FKKS didn't see it fit to include the Ortwin waiver in the response; and having gone on the offensive now, Skadden are most likely going to include the waiver in their response. If nothing else, it will explain WHY Skadden felt it was irrelevant.
It is also interesting to note that as I pointed out in my previous thread, why Skadden in the FACT made ample use of the words "intentionally" in the FAC. If they were already fighting with Ortwin et al, and threatened with a Rule 11, the FAC wording makes so much sense now.
Now, let's move on to the 2nd part of this thread, the Game Licensing Agreement (GLA).

The 3rd and last part will deal with the FKKS Motion To Dismiss.
I have seen some people saying Skadden didn't include the GLA in their ECF cuz they were wrong.

It's NOT standard practice to throw contracts into an initial filing.

In fact, most contracts are filed "under seal or camera view only" specifically for confidentiality reasons
FKKS, no doubt under guidance from their shitty clients, decided to put a highly confidential document into the public domain because Ortwin is a dick.

I can't think of any other explanation or reason for it.
Right off the bat, we already know what the intention of the GLA was and defines.

The name change to Star Citizen, came via the amendment, which we will get to later.
In all legal contracts, wording is key.

Note that aside from the incorrect name right on the FIRST PAGE of the GLA, there is NO description of what kind of game Space Citizen is.

But Squadron 42 has a description.
This is the original Star Citizen website as it appeared on Nov 3rd, 2012…
This is the original Star Citizen Kickstarter page as it appeared on Oct 12, 2012…
The GLA as per the 1st page, was executed on Nov 20, 2012.

During all that, nobody actually noticed that the primary name of the title was not only incorrect - right there on the 1st page - but was used correctly everywhere else in the GLA.
Naming conventions aside, Star Citizen was never described, while Squadron 42 was.

While this may be semantics, you would be surprised at how contract law works, where a simple misspelling can make all the difference.
Collectively, "Star Citizen", the all-encompassing wet dream and "Squadron 42" the space fighter combat game as described in the GLA and the Kickstarter campaign, were COLLECTIVELY regarded as the "GAME".

There is NO dispute here.
If you go back to the dates spanning the websites, as well as the GLA, you should note that there can be NO argument that the GLA was intended for ONE SINGLE GAME that encompassed one main game "Star Citizen" and it's single-player mod, "Squadron 42"

This goes to INTENT
Section 1.6 and Exhibit 2 are clear in the definition of "GAME" and there is nothing ambiguous about it.

Note that as development progressed, several other modes primarily Arena Commander (space combat) and Star Marine (fps combat) evolved out of Star Citizen
The GLA allows RSI/CIG to develop anything they want - within the confines of ONE GAME. As long as it is neither a sequel nor a prequel. ONE SINGLE GAME - and it doesn't matter what they call it, as long as any such name change was withing what Section 1.5 allows
And everything you see listed at the bottom of Exhibit A as defining the "GAME" is what was described in the Oct 2012 Kickstarter campaign which PRE-DATES the Nov 20, 2012 signing of the GLA.

Again, all very clear.
So, get this, right up to Nov 20, 2012, not only did RSI/CIG NOT have rights to use CryEngine commercially, but CryTek had done all this work and given to them - FREE OF CHARGE. As they stated in their lawsuit.
As I mentioned in my thread from last week, when Chris Roberts was making public statements in 2012 that development was "one year in" - meaning since 2011 - not only was there NO development - at all, but the tech demos being passed off as such, were just tech demos.
They couldn't possibly have been in development without a custom engine, let alone a valid GLA to CryEngine.

And as far as we know, they have never used, nor prototyped, any other engine for Star Citizen besides CryEngine.
I have linked this in a prior thread, but it's important.

This is Chris Roberts in Oct 2012 not only describing both Star Citizen and Squadron 42 as a SINGLE experience, but also - again - saying that development was one year in.…
Some have also started claiming that 2.1.1 and 2.1.2 are somehow ambiguous.

It says CIG are NOT the only ones who would be doing what is listed in that section. Other licensees would too. In order words, they do NOT have the exclusive right to do those things with CryEngine
2.1.2, which Ortwin/FKKS hilariously and embarrassingly latched onto in their Mtd (part 3 of my thread) as an ambiguity is the sort of thing that courts look upon and ask "So, what was the intent, here?"

It's pathetic. Here's why.
That section, as CLEAR AS DAY, says that CIG can only EXCLUSIVELY use CryEngine in the GAME.

That EXCLUSIVE clause means they can't use ANY other engine for Star Citizen.

Period. End of story.
To give context. If a race car sponsor tells a driver that he can only exclusively wear their brand, what do you think that means?…
2.1.3 is pretty clear.

CIG owns the GAME; so of course they would retain the exclusive rights to do all those things in that section.
2.2.1 - 2.2.3 is where the scares continue.

It doesn't matter how many sub-contractors (besides Faceware named in the FAC), if just ONE entity not listed in the GLA had access to any part of CryEngine, that's a material breach of the GLA.

That's why there is a list in Exhibit 3
Forget about the disclosure of CryTek code that has appeared on Bugsmashers over the years, and which have been correlated to their Github repo.

The GLA has NO provision for what percentage of code disclosure would be a violation. It basically says, don't do it.
This issue was key in the Silicon Knights v Epic Games lawsuit in which SK claimed they only modified 20%. The judge basically claimed that was too much. They lost. The End.
2.8.1 - 2.8.2 deals with another FAC cause of action.

This relates to the display of the Crytek and CryEngine marks and logos.

CIG was doing this, right up to the point where they claimed to have switched to Lumberyard.
5.1 is where a few things come into play.

1st, Erin Roberts and others at CIG have done on the record claiming that they bought out their CryEngine license. I had written that this was false. And the GLA proves this to be the case.
As can be seen, the "buyout fee" is related to royalties.

Instead of sticking with a perpetual royalty on the GAME for the term of the GLA, they opted to pay it up front instead.

They paid 600K Euros for the license + 1.25M Euros for the "future" royalties.
Basically Crytek shot themselves in the foot with this deal because back in the day, license royalties were as high as 10% of gross income.

CIG claim to have raised $175M to date.

Do the math.

They got less than 1% of 2017 gross, back in 2012.
Long and short of it is CIG did not buyout CryEngine.

They paid a license fee.

Paid a buyout fee of FUTURE royalties.

It's hilarious to me that they signed this back in Nov 2012 when they hadn't even raised enough money to cover it!!
And if you look at the payment dates, the compare to their claimed funding drive numbers, you can see how they were able to afford to pay such a steep fee in the first place.…
Of course we don't know if they even paid these on time, though sources tell me that they didn't, and that they have been some payment disputes over the years.

I guess that's what depositions and discovery are for. We'll know soon enough.
Hey! Remember back when those Shitizens parked on Reddit were saying that Crytek was responsible for the shitty state of Star Citizen because they didn't provide support, fix their engine bugs etc?

LOL!! Yeah, me too.

I present to you Section 6.1.3
In 6.1.4, we're going back to why Ortwin is a name target in this lawsuit and why I believe he has some serious issues to address going forward.

Which attorney on planet Earth, drafts an agreement with NO DAMAGES CLAUSE?
This section basically says that either side can breach the GLA, as along as it wasn't "intentional" and they won't be entitled to damages from the other party.

LOL!! Yeah.
Now you see why Skadden sprinkled generous amounts of "intentionally" in the FAC.

That aside, even if CIG were to be found negligent, the max liability would be the cost of what they paid: 1.85M Euros.
Remember when I said this Crytek v CIG has been going on for months? And everyone was wondering why it got to the point of a lawsuit being filed?

CIG could have done a GLA amendment, agreed to pay some damages while not admitting fault. Problem solved.

They don't have the money
8.1 - 8.3, the termination section, is hilarious in its stringent stipulations.

Basically, CIG was locked to using CryEngine with NEAR ZERO chances of termination the agreement.

And without such termination, they had NO grounds to switch to another engine.
CIG, by basically claiming to have switched engines (to Lumberyard), not only breached the GLA, but also they didn't even terminate it.

They couldn't terminate it because they had NO grounds to terminate it.

Goddamn LOL!!
And if they had in fact terminated it, well Section 8.3 is just as laughable as to how CIG just basically screwed up so badly, that Bards will be singing about this in Federal court.
Where we are right now is that CIG has a valid & paid up CryEngine license that they claim to no longer be using.

Even if they were still using it, along with Lumberyard, they would be violating the GLA because well, remember Section 2.1.2 and 2.1.4?
For an extra laugh. The TERM of the license is in perpetuity.

So 2.4 which says they can't do that for 2 yrs after, pretty much means NEVER.

Goddamn LOL!!
I swear this shit just writes itself now.

They used CryEngine 3.7x to build a custom engine for Star Citizen, call StarEngine.

They switched to Lumberyard which is a custom build of CryEngine 3.7x

But wait....!
But unlike CIG, Amazon, as per their ability to sub-license and freely distributed CryEngine components, clearly has the rights to build and sub-license Lumberyard.

But wait....!
Amazon, having used CryEngine to build their own custom engine, Lumberyard, which they could sell, give away etc, have their own licensing agreement.

Collectively ALL of that makes Lumberyard a competing engine.

To wit: a violation of 2.4 in the GLA.

LOL!!! I'm in stitches.
Then those clowns at CIG, go and switch to Lumberyard, admitted to it before they even answered the complaint. Then, in the complaint, attached a press release showing that they had violated 2.4 of the GLA.…

Goddamn LOL!!
AND that they admitted that they were now using Lumberyard to develop not 1 but 2 (part of the complaint) games they were already locked to CryEngine via the GLA - which was STILL IN EFFECT AND HAD NOT BEEN TERMINATED.
Note that they announced the Squadron 42 split from Star Citizen in Jan 2016. The split happened in Feb 2016.

Next thing you know, they're switching engines in Dec 2016.

These are all my notes and opinions from this morning.

Tomorrow, time permitting, I will do pt 3 regarding the hilarious Motion To Dismiss which I envision the judge is going shred & turn into puree without even reading past the first page. It's just that ridiculous.
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