iam8bit suing Skybound Game Studios for fraud and design theft

At a glance

• Allegations: Skybound Game Studios is facing a lawsuit from iam8bit over fraud and breach of contract.
• Financial Issues: iam8bit claims Skybound failed to provide accurate financial reports, resulting in over $4 million in damages.
• Intellectual Property: The lawsuit also accuses Skybound of misusing iam8bit’s trade secrets for a deal involving the game Stray.
• Legal Demands: iam8bit is seeking monetary damages, punitive damages, and attorneys’ fees in their complaint.

Skybound Game Studios is being sued by indie outfit iam8bit over fraud and breach of contract, including the theft of original designs. Skybound Entertainment, the parent company of Skybound Game Studios, is chaired by Robert Kirkman, who may be best known for creating the original comic book of The Walking Dead. We’ve reached out to Skybound for comment on the lawsuit but have not received a response as of publication.

iam8bit is a video game producer as well as a merchandise operation selling vinyl soundtracks and other geek gear. The company entered into a partnership with Skybound Game Studios in April 2021. Since then, iam8bit alleges that Skybound conducted a multi-year accounting scheme and failed to provide accurate financial reports for the partnership each month. “Skybound failed to provide the monthly reports as agreed,” the Los Angeles Superior Court complaint reads. “It also padded its expenses with millions of dollars in fake line items.” iam8bit claims Skybound has yet to explain the line items, even to a third-party auditor that it engaged. The company is alleging more than $4 million in damages related to the accounting issues.

iam8bit also accused Skybound of cutting it out of a deal regarding indie video game Stray. According to the company’s counsel, iam8bit designed and developed promotional materials for the launch of Stray on PlayStation and Xbox consoles. The complaint claims that Skybound used trade secrets from iam8bit to secure its own deal for the Nintendo launch of the game. It alleges Skybound used confidential information about iam8bit’s royalty split with publishing Annapurna Interactive to cut out its business partner, while also using “almost exact copies” of its creative output for marketing.

The full list of allegations in iam8bit’s complaint include breach of contract, fraud, conversion, unjust enrichment and misappropriation. The company’s legal team is seeking monetary damages, punitive damages and attorneys’ fees in compensation.