Fortnite Chapter 2 leaker sued by Epic Games for breaching NDA

James Brightman, Monday, October 28th, 2019 8:50 pm

[Update 10/28/2019] Epic Games’ legal team has been keeping very busy. Shortly after publication, we learned that Epic Games is also going after purveyors of counterfeit Fortnite merchandise. The company, Polygon reports, is targeting a group of  bootleg storefronts that have allegedly set themselves up to look like retailers of genuine merchanidise. Epic is seeking $2 million in statutory damages “for each and every use of the Fortnite trademark.”

Original story (10/28/2019)

Epic Games’ “black hole” event at the conclusion of Season 10 of Fortnite took a lot of players by surprise as Epic took the entire game offline for a couple days before coming back with Chapter 2 and a new map. Not everyone was caught off guard, however, as a user experience tester at the company had leaked some details and is now being sued by Epic as a result.

The full suit, discovered and posted by Polygon, alleges that Ronald Sykes broke his non-disclosure agreement (NDA) and spoiled the suspense that Fortnite’s marketing team worked so hard to create with the “black hole” stunt. “He did so at the expense of Epic and those in the Fortnite community who were anxiously awaiting the new season of Fortnite only to have some of Epic’s planned surprises spoiled by Sykes’ leaks,” the suit claims.

Sykes, whose Twitter account no longer exists, is cited in the lawsuit as having tweeted to another Twitter user that he “played S11 and can tell you the new stuff,” and it’s mentioned that Sykes then used a different account to unveil Fortnite secrets, including players’ ability to swim in Chapter 2, as well as the game’s new map. All of this continued in the lead-up to the “black hole” event in Season 10. 

Epic claims that the leaks caused the company financial harm and they are seeking not only injunction relief but maximum damages for breach of contract and willful misappropriation of trade secrets. 

“Leaks negatively impact the financial performance of current and future versions of the game,” Epic says in the suit. “They tend to lessen the excitement and enthusiasm of a game’s players and audience, potentially leading them to move to other games.” 

If there was a financial hit to Epic caused by this leak, it may be hard to pinpoint. If anything, the launch of Chapter 2 led to an immediate and significant bump in mobile revenues, according to Sensor Tower. And SuperData told us previously that Chapter 2 is likely to bring back a number of players who had stepped away from Fortnite over the last year.

“The damages argument is very difficult to make on the basis that their sales were harmed,” explained Richard Hoeg, attorney at Hoeg Law. “In fact, while I can see Epic winning the case rather easily (again assuming the facts are as alleged), this might be the kind of case where you see the court award $1 in damages to the winning side (or in this case $1 plus attorney’s fees). Even if that is not the case, Epic will have a great deal of difficulty showing the true extent of any damage caused (which is one reason why they don’t even try to quantify damages in their claim).”

From a legal perspective, the case appears to be fairly straightforward, and it’s not a good situation at all for the defendant. 

“There was an NDA in place and, according to the complaint, he violated it. This is pretty standard fare. Looking at the tweets, I think it will be a difficult lawsuit for him. To argue he isn’t at fault, in the face of the tweets in the complaint, will be tough,” said Brandon J. Huffman, attorney and founder of Odin Law & Media.

“Key legal considerations are: was the information protected confidential information? It seems like ‘yes.’ Was the information leaked? ‘Yes.’ What are the damages? I suspect this is where the biggest argument is… The game is doing well, but it might be doing better but for the leaks – hard to say.”

Leaks in the game industry are often hard to control, and while Epic isn’t setting any precedent here with its lawsuit, the company is clearly being aggressive in its strategy to defend its trade secrets. Notably, Epic sued a quality assurance tester over a year ago for leaking details of Fortnite Season 4. The company has also wielded its legal hammer against cheaters, arguing that the cheats altered copyrighted code in the game. 

“I’m not familiar with many companies recently going after leakers this hard, but Epic seems in a fairly unique position,” Hoeg commented. “Most leaks are not something that a content creator can necessarily control. Things like early URLs, online retailer game listings, photos of movie sets, etc. are all leaks where (presuming there wasn’t hacking or trespassing or the like), the content company is simply out of luck. We also see things like controlled leaks to sympathetic press outlets (which I would argue is what Blizzard is doing right now in all likelihood) where nobody is going to get sued, because it’s what the content company wants to happen.

“In the Epic cases on the other hand, these are folks with direct contractual obligations to Epic. At the point where someone with an NDA flagrantly breaches that NDA, the company effectively has two choices: let it go or sue on the breach.”

Letting it go may feel like the “nice thing to do,” but if Epic doesn’t stand by its NDAs, people may not take them seriously and could try to get away with other breaches in the future. Much like parenting, it’s all about setting the right tone and sticking to the rules.

“While Epic is being aggressive here in electing to sue, I would argue it is doing so with the clear intention of sending a message to all future contract parties,” Hoeg continued. “Even if you are uncollectible (as would appear to be the case here), we will sue you, and we will make your life difficult. Our NDAs are not to be disregarded.

“Given that they want trade secret status for the IP they are protecting in this way, there is also an incentive to bring actions against NDA violators, due to the fact that the law only affords trade secret protection to those taking the necessary steps to protect those secrets. If everyone knows your NDAs are a dead letter, then you might have difficulty suing someone who really causes harm.”

Huffman agreed, noting that Epic can’t afford to look impotent with its own contracts. “I think Epic has a long history of working to ensure its agreements are upheld, including litigation where needed. They expect the people on the other side of the agreement to keep their word. I think by taking this general stand, they make their agreements more credible,” he said.

Ultimately, a case like this is likely to settle, Hoeg reminded us. In the meantime, Epic’s shot across the bow has been noticed and the message is abundantly clear: leakers will be prosecuted. © 2024 | All Rights Reserved.