In September 2006, just before the Wii launch, Nintendo asked to producers of various japanese publishers to share their thoughts about the new platform in an interview. The first interviewee was Tales Studio‘s producer Makoto Yoshizumi. While discussing the system he talked about Sword of Legendia briefly showing an artwork about the project.
After that the title was cited on Namco site as an RPG exclusive to Wii but nothing else was released for several years. In 2008 Tsutomu Gouda confirmed that he was in charge of the project and that contrary to what was thought it wasn’t related to “Tales of” franchise ( conclusion inducted by the likeness with a past “Tales of” game, Tales of Legendia).
In 2009, while discussing Fragile, Kentarou Kawashima confirmed that Sword of Legendia was still on going but after that another information blackout began until Japan Expo 2011 where Makoto Yoshizumi revealed the project “was cancelled several years ago”. Very little is known about this mysterious game and ironically the only evidence ever show to prove its existence was the initial artwork that you can see below.
Thanks to Kurosaki Ichigo for the old NeoGaf thread.