Iam8bit has filed a lawsuit against Skybound Games, alleging fraud and breach of contract

Iam8bit, known for its specialty merchandise, has filed a lawsuit against Skybound Games, alleging fraudulent activities and contract violations. This legal move was made in the Superior Court of the State of California within Los Angeles County.

The legal action accuses Skybound of executing an extensive accounting manipulation, supposedly withholding accurate monthly financial statements. According to the court documents, iam8bit's attorneys alleged that Skybound inflated its expenses with numerous fictitious entries.

To investigate these claims, iam8bit engaged a third-party auditor, an endeavor that reportedly incurred costs of $4 million for the company.

Additionally, iam8bit alleges that Skybound disrupted a business arrangement related to the popular indie game, Stray. They assert that Skybound misused confidential information concerning iam8bit's royalty agreement with Annapurna to exclude them from the Nintendo Switch version's release plans. Moreover, it is claimed that Skybound replicated iam8bit's marketing materials.

The lawsuit states, as noted by Law360, that "Skybound surreptitiously negotiated an agreement with Annapurna for a new version of Stray on the Nintendo Switch, unbeknownst to iam8bit. Throughout this period, Skybound misrepresented their intention to work directly with Annapurna and, in doing so, exploited iam8bit's intellectual property."

The collaboration between iam8bit and Skybound Games initiated in April 2021 aimed to produce physical editions of indie titles. Since its establishment in 2005, iam8bit is recognized for its video game soundtrack vinyls, apparel, and artwork. In 2022, the company expanded its operations by running the Play Days live event for Geoff Keighley's Summer Game Fest and launching its own publishing label, iam8bit Presents.

Skybound Games Studio operates under Skybound Entertainment, the enterprise founded by Robert Kirkman, creator of The Walking Dead. Recently, it has taken on the name Paramount Skybound due to a merger with Paramount Pictures. Currently, this entity is attempting a takeover of Warner Bros, along with its gaming divisions.

Officials from GamesIndustry.biz have contacted Skybound Games Studios for their perspective on the lawsuit.