I saw this on Slashdot comments
"Yesterday we discussed Too Human's absence from this year's E3 event, and briefly mentioned the just-announced lawsuit between Silicon Knights and Epic. Today there's a bit of a clarification. Silicon Knights is suing Epic because, according to Kotaku, Epic failed to 'provide a working game engine' to SK causing them to 'experience considerable losses.' Essentially Knights argues that the Gears of War version of the Unreal engine was withheld by Epic so that Epic products could show up competitors at trade events. For a deeper look at this, the blog runs down the allegations in detail, and concluded by noting that a slew of next-generation titles slated to use the Unreal Engine have been delayed several times. This includes Stranglehold, BioShock, Lost Odyssey, Mass Effect, Rainbow Six: Vegas, Turok, Frame City Killer, Fatal Inertia and Brothers in Arms: Hell's Highway ... a somewhat persuasive list, when it's all laid out in front of you. "
Certainly, delayed games do not necessarily imply that Epic is doing anything inappropriate but I found it interesting none the less; the list could represent a lack of understanding on how difficult it would be to create a next-generation game, that the Unreal Engine is more complicated than expected, or (hypothetically) that these companies were not given the timely updates that they were promised.
One comment that I saw which was fairly likely is that Epic diverted resources from the development of the engine to Gears of War when the game needed enhanced performance; many of these changes were probably dirty hacks which could not be added to the basecode but emulated many of the features that were delayed by the shift in resources.