It was a lawsuit between them and Ken Penders, who ran the Archie Sonic comics for a couple decades and is no joke one of the most influential furry artists of all time as a result. He launched a couple lawsuits claiming that his IP was being used in both the ongoing comics and in some games without him getting paid royalties.

He won that lawsuit, or at least he won one of the lawsuits, and Sega responded by completely purging every single character and story element he ever contributed in a series reset.

Honestly the comic today is a lot better than it was under Penders, but I've got a lot of nostalgia for that era since it was when I read it. Penders has a book coming out focusing on his own IP, which is supposed to wrap up the stories of the characters of his that got deleted from the main continuity, and it looks amazing I can't wait to read this dumpster fire holy shit.