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Updates to Crytek's lawsuit vs CIG


Gremlich

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On 12/31/2018 at 6:21 PM, FoxChard said:

Derek does not lay down dates. He just has a rant, shows some of their stuff from the financials website, rages that a company spends money, and then says something like "I told you so" at the end. I went to go look because I was morbidly curious. Normally I don't bother to read his drivel.

DS is a complete nutjob who desperately seeks attention because his own games fail miserably.
Chris Roberts could at this point literally save a litter of kittens from a burning house and DS would rant how that somehow means the end of Star Citizen:
How dare Chris Roberts spend backer money on kittens!? Those kittens are probably in on the whole deal... or in fact, there ARE no kittens and it's just kitten-jpegs!!
My inside sources confirm the kittens are actually shadowy investors! The fire was a distraction so we wouldn't see the sinking ship! Release your finances on kitten-saving, CIG!
GRAAAAAAH!

In any case, I think @Drum hit the nail on the head there. CryTek wants to be a part of these developments and to get their hands on all the sweet new tech.

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  • 2 weeks later...
Quote

Plaintiff hereby notifies Defendants and the Court that it will not be amending the Second Amended Complaint at this time. Plaintiff reserves its rights to seek leave to amend its pleading pursuant to Federal Rule of Civil Procedure 15(a)(2) at a later stage of the proceedings in this action.

Wierd... So this is why they needed 3 more weeks only to realize they have nothing left to twist into a complaint yet now it seems they want to postpone the right to amend indefinitely? 

I really wonder what "later stage" CryTek is referring to here. As I recall the main complaints ('Exclusive Use' and 'In the Business of') got thrown out completely. Unless they still want to harp on about alleged code being shown on a Bugsmashers episode (something they haven't shown any evidence of). I believe that one allegation is the only thing that 'survived' the pleading stage with the rest being just filler and you'd have to wonder how CryTek thinks it will get any money from that. 

EDIT: It looks like any and all complaints were thrown out after the Judge granted the MtD on the SAC as it replaced any and all complaints from the FAC. So not sure if there even is anything left.

"Plaintiff should note that when an amended complaint is filed, it supersedes the original and renders it of no legal effect, unless the amended complaint specifically refers to or adopts the earlier pleading. See West Run Student Housing Associates, LLC v. Huntington National Bank, 712 F.3d 165, 2013 WL 1338986, 5 (3d Cir. 2013)(collecting [12] cases). See also 6 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1476 (3d ed. 2008). An amended complaint may adopt some or all of the allegations in the original complaint, but the identification of the particular allegations to be adopted must be clear and explicit. Id. To avoid confusion, the safer course is to file an amended complaint that is complete in itself. Id."

 

Also 15(a)(2) which they're referring to here requires that either the Judge or CIG grants them permission to amend. If they do not get that permission the case will be closed.

Other Amendments.

In all other cases, a party may amend its pleading only with the opposing party’s written consent or the court’s leave. The court should freely give leave when justice so requires.

 

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moderate swing voter actually. i find devoted party affiliation to be like brand loyalty, a silly concept that leaves you wearing nikes to a board meeting. unacceptable, and that is coming from a man who doesn't wear pants during skype meetings. let's not turn this to politics though. i know i kindda went there a bit in effort for a joke, but let's keep it there.

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15 hours ago, Aleaf said:

what can i say about this lawsuit from crytek that has been said about the war with iraq ? crytek made claims, went all in with no proof, took casualties, and now doesn't have a exit strategy so it is having trouble pulling out.  

And made a group of people that was otherwise indifferent to them hostile, causing problems for them and anything they try to do in the future.

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  • 2 weeks later...
  • 2 weeks later...

CIG's answer to CryTek's SAC. Basically just CIG further clarifying their previous position as to why CryTek has no case. 

https://www.docdroid.net/WPfo6Rw/crytek-gmbh-v-cloud-imperium-games-corp-et-al-cacdce-17-08937-00530.pdf

 

It was interesting to read that after CIG had announced the SQ42 split CryTek contacted them about it by phone and claimed it would be a breach of the GLA but after CIG clarified it CryTek's counsel concluded it was not a breach and retracted their complaint (only to pretend it's now a breach again for their lawsuit).

Quote

 

24.

Defendants admit that, on a February 5, 2016 telephone call, Crytek’s counsel expressed to Mr. Freyermuth Crytek’s concern about Defendants distributing “Squadron 42” as a standalone game. Defendants aver that, on this phone call, Mr. Freyermuth clarified Defendants’ plans with respect to “Squadron 42,” which Crytek’s counsel agreed would not violate the GLA. Defendants further aver that, on February 7, 2016, Mr. Freyermuth sent an email to Crytek’s counsel memorializing their telephone conversation and stating that Defendants would publish a corrective statement to clarify that “Squadron 42” would remain functionally tied to “Star Citizen” and only accessible through the “Star Citizen” game client, which Defendants did on February 8, 2016.

 

 

It's also good to see CIG's legal counsel bringing up CryTek's failure to register their CryEngine3 at the copyright office and how CryTek is now effectively trying to claim copyright infringement for unregistered works (which is why they can't claim statutory damages). :P

Quote

 

TENTH AFFIRMATIVE DEFENSE

(Failure to Register)

Crytek has failed to register the copyrights in one or more of the versions of the

CryEngine computer program it alleges Defendants infringed and thus is not permitted to

file this suit or maintain this action as to those unregistered works.

 

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  • 1 month later...

There hasn't been much happening for a while apart from some minor stuff that wasn't really worth mentioning but yesterday CIG has filed a motion with the Judge for CryTek to provide money for a bond in the amount of $2,193,298.45 to secure the award of attorneys’ fees and costs that Defendants will be entitled to receive as the prevailing party in this action.

This sounds like CIG wants to make sure that CryTek will be forced to transfer funds into a holding account now so that CIG can lay claim to those funds later for their legal fees should they be deemed the prevailing party in the lawsuit (which is very likely now). Especially since CryTek was proven to have many financial issues in the past already and CIG doesn't want to be stuck holding the bill if CryTek has no intention to pay up should they lose (which is very likely as well).

CryTek has already refused to agree to this bond voluntarily hence why CIG is now filing a motion through the court for an Order by the Judge.

From what I understand this bond would make sure that CIG's legal team gets paid as per California Civil Code § 1717(a) should CIG be deemed the prevailing party instead of continuing with what's going on with CryTek attempting to play a game of high-stakes bluff poker without ever putting (or having) any money in the pot themselves.

This bond money would prevent CryTek (a foreign company) from simply jumping ship, flat-out refuse to pay, or filing for bankruptcy or something after losing in court just so they can stiff CIG on the estimated $2 Million+ in legal fees that CryTek is now forcing upon CIG for their defense while the 3 Yerli brothers could then simply run away back to Turkey with all the money they already funneled away from their dying company. They already performed a stunt where 1 brother stepped down as CEO and then the other 2 brothers became the new CEOs (with the former CEO naturally getting a lucrative severance package in the process). To me this entire lawsuit was done out of spite and I suspect that the Yerli brothers have no intention of paying CIG's legal costs after CryTek loses in court and ordered by the Judge to pay CIG's legal fees.

Also, the Director of Product Development at Faceware chimed in (Attachment 15) basically stating that CryTek are lying as Faceware was never provided with any CryEngine sourcecode as CryTek was claiming. :P

https://www.courtlistener.com/docket/6256484/crytek-gmbh-v-cloud-imperium-games-corp/?order_by=desc

CIG-Crytek-BOND1.thumb.png.1b737f35800eb26887a9cb23f64a5194.png

CIG-Crytek-BOND.thumb.png.d958ff8ffccbd7224420f82d537fb657.png

CIG-Crytek-BOND3.thumb.png.f5aa5eab105428619a364726276214bb.png

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  • 2 weeks later...

Looks like CryTek is finally realizing that they are on the losing end and are now aware of the risks involved with CIG's motion for the Judge to order a $2.2M bond from CryTek as they suddenly appear open to more realistic settlement talks now that CIG has a good chance at being deemed the prevailing party. CryTek has already agreed to put their demands for Discovery on hold with this Motion for Bond now looming over them.

As such I expect that CryTek is finally coming to the table in earnest and will be forced to agree to a reasonable (and likely much smaller) settlement or risk losing $2.2M if they persist in continuing this farce. Lior Leser already made a guess that it will likely be settled for $100k-$150k and then it's over. Ofcourse this might still be the final nail in the coffin for CryTek as a company once their expensive lawyers present their bill to them as each party would have to pay for their own legal fees. But that was the risk CryTek was willing to take when filing this joke of a lawsuit so them potentially going bankrupt over it is entirely their own fault. ;)

Ofcourse such a settlement would also cost CIG around $200k-$250k in settlement and legal fees but that's a drop in the bucket for CIG and I would be more than happy to buy another concept ship just to mitigate CIG's losses while CryTek will finally go away. :P

Quote

Joint STIPULATION to Continue HEARING ON DEFENDANTS MOTION FOR BOND PURSUANT TO CAL. CODE CIV. P. 1030 from April 26, 2019 to June 28, 2019 Re: NOTICE OF MOTION AND MOTION for Bond for Costs and Fees Pursuant to CCP ยง 1030 57 filed by plaintiff Crytek GmbH. (Attachments: # 1 Proposed Order Granting Joint Stipulation To Continue Hearing On Defendants Motion For Bond Pursuant To Cal. Code Civ. P. 1030)(Pak, James) (Entered: 04/04/2019)

Quote
  • "the parties have conferred and agree that postponing the hearing on the Motion for Bond will facilitate the complete briefing of the Motion for Bond and the parties’ ongoing efforts to resolve this matter through settlement"
  • "the parties further agree that a stay of Defendants’ obligation to respond to the pending discovery is appropriate pending the resolution of the Motion for Bond"

 

The Judge has already given her Order on the 8th of April regarding this matter but I wasn't able to get a copy of that document yet (as I don't want to pay for it). I assume she merely accepted the Proposed Order (Attachment 1) to postpone the hearing.

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Not a lawyer and some of this goes past me.
Is this a Put Up Or Shut Up strategy?
Forcing them to accept the possibility of costs when they lose?
Or just business as usual in these affairs? - DRUM out

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On 4/15/2019 at 11:37 PM, Drum said:

Not a lawyer and some of this goes past me.
Is this a Put Up Or Shut Up strategy?
Forcing them to accept the possibility of costs when they lose?
Or just business as usual in these affairs? - DRUM out

I'm not a lawyer either but it does appear to be as you say: "Put up or shut up"

Apparently there are actual procedures that serve to protect a defendant when they are being sued by a foreign plaintiff in a US California Court by demanding a bond from the foreign party if it can be reasonably shown that the defendants have a chance at being declared the prevailing party and then there is the concern that this foreign plaintiff may not (be able to) adhere to a ruling where they have to pay the defendant's legal costs.

As Crytek's big-ticket items have already been thrown out during the pleading stage with their remaining complaints being more of the minor "filler" variety while their own financial state is questionable at best CIG's legal team has shown that there is a reasonable chance of CIG being declared the prevailing party and wants to make sure their client won't get stiffed on the bill should CryTek refuse to pay for CIG's legal costs. 

The way I see it, if the Judge rules that the Motion for Bond is warranted and makes it an Order then CryTek has to make $2.2M available to a holding account (most likely set up and held by the Court). But if CryTek refuses to comply (or is unable to comply due to their financial state) the Judge may throw their entire case out and declare CIG to be the prevailing party right then and there.

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  • 3 weeks later...

https://massivelyop.com/2019/05/03/lawful-neutral-the-war-over-star-citizen-in-crytek-v-cloud-imperium-games/

Full article in spoiler below:

 

Spoiler

 

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

By
 Andy McAdams
 -
May 3, 2019 12:00 PM    
22
screenshot_000821-696x229.jpg

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:

 

starcitizen2.jpg

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.

Squadron-42-Star-Citizen-Screenshot-2019

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.

starcitizen-2.jpg

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.

 

 

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  • 4 weeks later...

It appears that CIG is opposed against CryTek's constant stalling tactics. Can't say I blame them when even the CEO of CryTek tries to string CIG along for months by pretending to be open to 'meaningful settlement talks' but won't even make a single concrete settlement demand when asked.

DEFENDANTS' OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION TO EXTEND PLAINTIFF'S TIME TO RESPOND DEFENDANTS' MOTION FOR A BOND PURSUANT TO CAL. CIV. P. CODE § 1030

 

TheMarcusArts over on Reddit found some interesting bits of information within the document. Seems like Yerli still thinks he can act like a bully by making demands and threatening CIG while it appears that CryTek's entire lawsuit was just shooting blanks and is now in shambles. :P

 

 

Quote

 

https://www.courtlistener.com/recap/gov.uscourts.cacd.696437/gov.uscourts.cacd.696437.62.0.pdf

BTW, I found this quite interesting:

On April 4, 2019, the parties stipulated to Crytek's request to postpone the hearing to June 28, 2019, making Crytek's opposition due May 28, 2019 and CIG's reply due June 7, 2019. ECF 58. While CIG had pushed Crytek to agree to a tighter schedule, Crytek induced CIG to agree to the more relaxed schedule by promising that Crytek would use the extra time to engage in "meaningful settlement talks,"

[...]

It was not until May 15, 2019 - 40 days after CIG filed the bond motion and less than two weeks before the opposition deadline—that Crytek's CEO Avni Yerli at last made himself available for a settlement call with CIG's Co-Founder and General Counsel Ortwin Freyermuth. Yerli, however, talked only in generalities and refused to make a concrete settlement demand. Instead, he insisted that the parties agree to meet in person in a few weeks to continue their discussions.

On May 21, 2019, a week after the call and just seven days before Crytek's opposition was due, Crytek's counsel emailed CIG's counsel to confirm the parties' plan to meet in person and to propose a 45-day extension of the briefing schedule. CIG's counsel promptly responded that "we would be happy to work out a reasonable adjustment to the schedule," but only if Crytek first honored its commitment by making "a definitive counter showing even the potential for fruitful settlement discussions around E3[.]" Crytek's counsel did not reply. Instead, on May 24, 2019, Yerli sent Freyermuth an email threatening that, unless CIG agreed to an extension, settlement discussion was over. In response, Freyermuth reiterated that CIG would be happy to extend the deadline but not without a settlement position from Crytek.

On May 24, 2019, Crytek filed the pending ex parte application for a two-and-ahalf week extension of its opposition deadline.

 

 

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It appears that the Judge is really starting to get fed up with CryTek and has DENIED CryTek's attempt at constantly delaying things by asking for further extensions on already extented time. She finds that another extension is unwarranted because, unlike CryTek's claim of wanting to engage in "meaningful settlement talks", both parties apparently aren't even close to reaching any sort of agreement with CryTek now resorting to threats and bully tactics when they have had more than enough time to "brief the Motion". 

The Judge had some choice words to say about the matter. Not looking good for CryTek if even the Judge is starting to get pissed off with them. :P

Quote

Defendants indicate that Plaintiff has stalled and threatened to abandon such talks. Regardless of which side is to blame for the talks’ lack of success, it does not appear that the parties are close to reaching any agreement. Nor is it clear to the Court why Plaintiff believes that briefing this Motion and pursuing an eventual settlement are mutually exclusive endeavors.

Quote

Plaintiff squandered the additional time allotted and further abused that extension when it contravened the Court’s Initial Standing Order by filing an ex parte request for a further extension on the eve of a holiday weekend, one business day before its opposition deadline. The Court therefore declines to delay proceedings on the Motion any further.

Quote

Plaintiff’s ex parte application to continue the hearing on the Motion for Bond to July 12, 2019 is DENIED. The schedule associated with Defendants’ pending Motion set forth in the Court’s May 24, 2019 order shall remain in place.

 

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It appears that Skadden is no longer able (or willing) to represent CryTek as their entire legal counsel has filed to withdraw.

 

CryTek is now being represented by two completely new attorneys; each from a different lawfirm. 

New attorneys are Ben M. Davidson from Davidson Law Group and Christopher R Schmidt from Erise IP.

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4 hours ago, Drum said:

Any clue as to why?

Typical stall tactic? Lack of funds? Lack of a case?

Does it change anything other than possibly pushing it down the road? - DRUM out

No clue as to why CryTek's legal representation suddenly chose to depart. They already tried stalling tactics by asking on an extension for their extension but the Judge put a stop to that after noting that CryTek had done absolutely nothing during the extra time that she had already been given to them. Now it could also be that Skadden finally caught on to CryTek's potential financial issues and didn't want to be left with unpaid legal fees. As such it's possible that Skadden demanded an up-front payment for continuing their representation and CryTek either refused or was unable to comply. This is all just speculation though...

Lack of a case was pretty apparent already and Skadden must have known how flimsy it was from the start. Guess Skadden was urging CryTek to engage in settlement talks but Avni Yerli is apparently too arrogant to see reason. After all, if he's resorting to threats in an email to Ortwin Freyermuth this does not strike me as a good tactic and it didn't appear to help matters at all (in fact it made things worse for CryTek).

No doubt CryTek will want to try to stall some more with some bullshit excuse (like their new legal counsel needing time to be brought up to speed or something) as this whole $2M bond seems to concern them greatly. I am not sure if the Judge will play along however as so far CryTek has been acting in bad faith while squandering the extra time the Judge already gave them on several occassions.

Guess we'll just have to wait and see what (if any) opposition CryTek will file in just a few days (CryTek’s deadline to oppose CIG's Motion for Bond is June 7 2019). :)

 

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Would Skadden have been able to lay claim to part of that bond if Crytek decided not to pay them, after any costs to CIG were paid?  Maybe Crytek was determined not to put up the bond and Skadden saw that as a sign they weren't going to get paid themselves.

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1 hour ago, Boildown said:

Would Skadden have been able to lay claim to part of that bond if Crytek decided not to pay them, after any costs to CIG were paid?  Maybe Crytek was determined not to put up the bond and Skadden saw that as a sign they weren't going to get paid themselves.

Afaik the bond would only be available for covering CIG's legal fees so if CryTek decided not to pay Skadden they would have to sue CryTek themselves. :P

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