A bit of background for all of you non-gamers out there. Epic Games is the creator of the Unreal Engine (and the criminally-underrated Jazz Jackrabbit), industry-standard software used by many developers to make video games. To date, there have been three versions of the engine released, with a fourth planned for release soon.
Silicon Knights licensed Unreal Engine 3 for use in creating video games for the seventh-generation of PC hardware and consoles (Playstation 3 and Xbox 360), but was unsatisfied with the engine and Epic's support and documentation. They sued, but were slapped with a countersuit for failure to pay royalties, theft of trade secrets, copyright infringement, and breach of contract.