In the lawsuit, Crytek is looking to reclaim direct damages of around $75,000, along with "indirect damages, consequential damages (including lost profits), special damages, costs, fees, and expenses incurred by reason of Defendants' breach of contract and copyright infringement".
We are aware of the Crytek complaint having been filed in the US District Court... It's that agreement which Crytek claim CIG and RSI have breached.
Moving onto the two games or one point it says 'Defendants to use CryEngine for the development of only one video game.' And continues: 'On February 5, 2016, Crytek notified Defendants that their plan to distribute Squadron 42 as a standalone game was not covered by the GLA's license, because the GLA did not grant Defendants a license to embed CryEngine in any game other than Star Citizen'. You can find the full text of the suit here, but the tl;dr version is that CIG and RSI are using the engine with proper attribution, and that the engine is being used across two distinct games.
Furthermore, we don't know whether their contract allowed Cloud Imperium to re-use all assets that were created in CRYENGINE in other engines, like the Lumberyard.
Crytek and Cloud Imperium may hold a lot of emotional weight when you hear them mentioned.
Awkardly, CIG co-founder and general counsel Ortwin Freyermuth has previously represented Crytek in similar agreements. "Notwithstanding that he had confidential information about Crytek's licensing practices that would unfairly advantage Defendants", the complaint states, "Freyermuth never recused himself from those negotiations and never resolved that conflict of interest with Crytek".
The counterargument, from is that neither game has used the CryEngine for a while. The filling specifically refers to Squadron 42 project. The lawsuit claims that both companies are continuing to us the CryEngine in a manner which breaches the original contract in a number of ways. Later that month, on February 14, CIG and RSI started selling Squadron 42.
The document also states as evidence that CIG and RSI considered Star Citizen and Squadron 42 as two games because, on December 23, 2014, they said in a press release that "b$3 oth games are now in development and are backed by a record-breaking $139 million crowd funded effort".
However, since CIG switched to the Lumberyard engine, all traces of said trademarks have been removed. Who the hell knows - we're game writers not lawyers. Saying the company 'utterly failed to follow through on those promises.' in reference to multiple alleged complaints.
This is where the bulk of the legal disagreement appears to come from - as part of this agreement, CIG and RSI agreed to use CryEngine exclusively. Back in November 2015, Crytek reportedly contacted CIG and were after a "long overdue" list of bug fixes and optimizations CIG made to CryEngine, but the developer did not provide them. This relationship was later formalised after the Kickstarter push with a Game License Agreement which Crytek says was done at a below-market price. According to the document, CIG and RSI said they were ready and willing to comply but then did not.
It definitely looks like Crytek is right to sue, but CIG has a completely different opinion.